1933 Act File No. 33-26915
1940 Act File No. 811-5762
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 22 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 23 X
STAR FUNDS
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
on _________________ pursuant to paragraph (b)
X 60 days after filing pursuant to paragraph (a)
on pursuant to paragraph (a) of Rule 485.
Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940, and:
X filed the Notice required by that Rule on January 18, 1994; or
intends to file the Notice required by that Rule on or about
____________; or
during the most recent fiscal year did not sell any securities pursuant
to Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to
Rule 24f-2(b)(2), need not file the Notice.
Copies to:
Thomas J. Donnelly, Esquire Charles H. Morin, Esquire
Houston, Houston & Donnelly Dickstein, Shapiro & Morin
2510 Centre City Tower 2101 L Street, N.W.
650 Smithfield Street Washington, D.C. 20037
Pittsburgh, Pennsylvania 15222
CROSS-REFERENCE SHEET
This Amendment to the Registration Statement of the Star Funds, which
is comprised of seven portfolios: (1) Star Prime Obligations Fund,
(2) Star Tax-Free Money Market Fund, (3) Star Treasury Fund, (4) Star
Relative Value Fund, (5) The Stellar Fund, (a) Investment Shares and
(b) Trust Shares, (6) Star U.S. Government Income Fund, and (7) Star Growth
Equity Fund, relates only to one of the portfolios, Star Growth Equity
Fund, and is comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page (1-7) Cover Page.
Item 2. Synopsis (1-3) Synopsis; (1-7) Summary of
Fund
Expenses.
Item 3. Condensed Financial
Information (1-6) Financial Highlights; (1-7)
Performance Information.
Item 4. General Description of
Registrant (4-7) General Information; (4-7)
Investment Information; (1-3)
Objective and Investment Policies of
Each Fund; (1-3) Money Market Funds;
(4-7) Investment Objective(s); (4-7)
Investment Policies; (1-7)
Investment
Limitations.
Item 5. Management of the Trust (1-7) Star Funds Information; (1-7)
Management of the Trust;
(1,2,3,4,6,7)
Distribution of Fund Shares; (5a)
Distribution of Investment Shares;
(5b) Distribution of Trust Shares;
(1-7) Administrative Arrangements;
(1,2,3,4,5a,6,7) Distribution Plan;
(1-7) Administration of the Fund(s);
(7) Shareholder Services Plan; (5a)
Expenses of the Fund and Investment
Shares; (5b) Expenses of the Fund
and
Trust Shares; (7) Expenses of the
Fund; (4-7) Brokerage Transactions.
Item 6. Capital Stock and Other
Securities (1-3) Dividends; (1-3) Capital
Gains;
(4-7) Dividends and Capital Gains;
(1-7) Shareholder Information; (1-7)
Voting Rights; (1-7) Massachusetts
Partnership Law; (1-7) Effect of
Banking Laws; (1-7) Tax Information;
(1-7) Federal Income Tax; (2)
Additional Tax Information; (5)
Other
Classes of Shares.
Item 7. Purchase of Securities
Being Offered (1-7) Net Asset Value; (1,2,3,4,6,7)
Investing in the Fund; (5a)
Investing
in Investment Shares; (5b) Investing
in Trust Shares; (1-7) Share
Purchases; (1-7) Minimum Investment
Required; (1-7) What Shares Cost;
(4,5a,6,7) Systematic Investment
Plan;
(4,5a,6,7) Reducing the Sales
Charge;
(1-7) Exchanging Securities for Fund
Shares; (7) Subaccounting Services;
(1-7) Certificates and
Confirmations;
(1-7) Exchange Privilege.
Item 8. Redemption or Repurchase (1,2,3,4,6,7) Redeeming Shares; (5a)
Redeeming Investment Shares; (5b)
Redeeming Trust Shares; (1-3)
Automatic Redemptions; (4-6)
Redemption Before Purchase
Instruments
Clear; (4,5a,6,7) Systematic
Withdrawal Plan; (1-7) By Telephone;
(7) By Mail; (1-7) Accounts with Low
Balances; (1,2,3,4,6) Redemption in
Kind.
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page (1-7) Cover Page.
Item 11. Table of Contents (1-7) Table of Contents.
Item 12. General Information and
History (1-7) General Information About the
Fund; (1-7) Investment Limitations.
Item 13. Investment Objectives and
Policies (1-7) Investment Objective(s) and
Policies.
Item 14. Management of the Fund (1-7) Trust Management.
Item 15. Control Persons and Principal
Holders of Securities (1-7) Fund Ownership.
Item 16. Investment Advisory and Other
Services (1-7) Investment Advisory Services;
(1-7) Administrative Services; (1-7)
Custodian.
Item 17. Brokerage Allocation (1-7) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not applicable.
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered (1-7) Purchasing Shares; (1-7)
Exchange Privilege; (1-7)
Determining
Net Asset Value; (1-7) Redeeming
Shares.
Item 20. Tax Status (1-7) Tax Status; (1-7) Yield; (1-3)
Effective Yield; (2) Tax-Equivalent
Yield; (4-7) Total Return.
Item 21. Underwriters (1-7) Administrative Arrangements;
(1,2,3,4,5a,6,7) Distribution Plan.
Item 22. Calculation of Performance
Data (1-7) Performance Comparisons.
Item 23. Financial Statements (1-6) Filed in Part A; (7) To be
filed
with 4-6 month update.
ETP--DRAFT NO. 3--03/17/94
STAR GROWTH EQUITY FUND
(A Portfolio of the Star Funds)
Prospectus
The shares offered by this prospectus represent interests in Star Growth
Equity Fund (the "Fund"), which is a diversified investment portfolio in the
Star Funds (the "Trust"), an open-end management investment company (a mutual
fund).
The investment objective of the Fund is to maximize capital appreciation.
The
Fund pursues this investment objective by investing primarily in equity
securities of U.S. companies.
The shares offered by this prospectus are not deposits or obligations of Star
Bank, N.A., or its affiliates, are not endorsed or guaranteed by Star Bank,
N.A., or its affiliates, and are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other government agency.
Investment in these shares involves investment risks, including the possible
loss of principal.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated
_____________, 1994, with the Securities and Exchange Commission. The
information contained in the Statement of Additional Information is
incorporated by reference into this prospectus. You may request a copy of
the
Statement of Additional Information free of charge, obtain other information
or make inquiries about the Fund by writing to the Fund or calling
1-800-677-FUND.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Prospectus dated ______________, 1994
TABLE OF CONTENTS
SUMMARY OF FUND EXPENSES
GENERAL INFORMATION
INVESTMENT INFORMATION
Investment Objective
Investment Policies
Acceptable Investments
Domestic Equity Securities
Domestic Debt Securities
International Securities
Money Market Instruments
Convertible Securities
Zero Coupon Securities
U.S. Government Securities
Repurchase Agreements
When-Issued and Delayed Delivery Transactions
Investing in Securities of Other Investment Companies
Lending of Portfolio Securities
Restricted and Illiquid Securities
Foreign Securities Risks
Foreign Companies
Put and Call Options
Futures and Options on Futures
Risks
Investment Limitations
STAR FUNDS INFORMATION
Management of the Trust
Board of Trustees
Investment Adviser
Advisory Fees
Adviser's Background
Distribution of Fund Shares
Distribution Plan
Administrative Arrangements
Administration of the Fund
Administrative Services
Shareholder Services Plan
Custodian
Transfer Agent, Dividend Disbursing Agent, and
Portfolio Accounting Services
Legal Counsel
Independent Public Accountants
Brokerage Transactions
Expenses of the Fund
NET ASSET VALUE
INVESTING IN THE FUND
Minimum Investment Required
What Shares Cost
Purchases at Net Asset Value
Sales Charge Reallowance
Reducing the Sales Charge
Quantity Discounts and Accumulated Purchases
Letter of Intent
Reinvestment Privilege
Concurrent Purchases
Systematic Investment Plan
Share Purchases
Through Star Bank
By Mail
Exchanging Securities for Fund Shares
Subaccounting Services
Certificates and Confirmations
Dividends and Capital Gains
EXCHANGE PRIVILEGE
Star Funds
Exchanging Shares
Exchange-by-Telephone
REDEEMING SHARES
By Telephone
By Mail
Signatures
Systematic Withdrawal Plan
Accounts with Low Balances
SHAREHOLDER INFORMATION
Voting Rights
Massachusetts Partnership Law
EFFECT OF BANKING LAWS
TAX INFORMATION
Federal Income Tax
PERFORMANCE INFORMATION
ADDRESSES Inside Back
Cover
<TABLE>
<CAPTION>
SUMMARY OF FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 4.50%
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, as applicable) None
Redemption Fees (as a percentage of amount
redeemed, if applicable). None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES*
(As a percentage of projected average net assets)
Management Fees %
12b-1 Fees (1) 0.00%
Total Other Expenses %
Shareholder Services Fees (2) 0.00 %
Total Fund Operating Expenses (3) %
(1) Under the Fund's Rule 12b-1 distribution plan, the Fund can pay the
distributor up to 0.25% as a 12b-1 fee. The 12b-1 fee was reduced to
reflect the waiver of compensation by the distributor. The distributor
can terminate this voluntary waiver at any time at its sole discretion.
The distributor has no present intention of collecting a 12b-1 fee.
(2) The maximum shareholder services fee is 0.25%. There is no present
intention to charge a shareholder services fee.
(3) The Total Fund Operating Expenses are estimated to be ___ % had the
shareholder services fee been in effect.
*Expenses in this table are estimated based on average expenses
expected
to be incurred during the fiscal year ending November 30, 1994. During the
course of this period, expenses may be more or less than the average amount
shown.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF SHARES OF THE FUND WILL
BEAR,
EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS
COSTS AND EXPENSES, SEE "STAR FUNDS INFORMATION" AND "INVESTING IN THE FUND."
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
EXAMPLE 1 year 3 years
You would pay the following expenses on
a $1,000 investment assuming (1) 5% annual
return and (2) redemption at the end of each time
period $ $
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FISCAL YEAR ENDING NOVEMBER 30,
1994.
</TABLE>
GENERAL INFORMATION
Star Funds was established as a Massachusetts business trust under a
Declaration of Trust dated January 23, 1989. The Declaration of Trust
permits
the Trust to offer separate series of shares of beneficial interest
representing interests in separate portfolios of securities. The shares in
any one portfolio may be offered in separate classes. This prospectus
relates
only to that portfolio of the Trust known as the Star Growth Equity Fund.
The Fund is designed primarily for customers of StarBanc Corporation and its
subsidiaries as a convenient means of accumulating an interest in a
professionally managed, diversified portfolio consisting primarily of equity
securities of U.S. companies. A minimum initial investment of $1,000 ($25
for Star Bank Connections Group Banking customers and Star Bank employees and
members of their immediate family) is required.
Except as otherwise noted in this prospectus, shares of the Fund are sold at
net asset value plus an applicable sales charge and redeemed at net asset
value.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is to maximize capital appreciation.
The
investment objective cannot be changed without approval of shareholders.
While there is no assurance that the Fund will achieve its investment
objective, it endeavors to do so by following the investment policies
described in this prospectus.
INVESTMENT POLICIES
Under normal circumstances, the Fund pursues its investment objective by
investing at least 65% of the value of its total assets in equity securities
of U.S. companies. The Fund may also invest in domestic debt securities,
international securities, U.S. government securities, and money market
securities. The Fund's investment adviser attempts to maintain an acceptable
level of risk through careful investment analysis including, but not limited
to, the following: the employment of disciplined value measures (such as
price/earnings ratios) when selecting equity securities; use of ratings
assigned by nationally recognized statistical rating organizations (where
applicable); credit research; review of issuer's historical performance;
examination of issuer's dividend growth record; and consideration of market
trends.
Unless indicated otherwise, the investment policies of the Fund may be
changed
by the Board of Trustees ("Trustees") without the approval of shareholders.
Shareholders will be notified before any material change in these policies
becomes effective.
ACCEPTABLE INVESTMENTS. The securities in which the Fund invests include the
following:
DOMESTIC EQUITY SECURITIES. The domestic equity securities of the Fund
will usually consist of U.S. common and preferred stocks of companies
with between $200 million and $2 billion in equity and which are listed
on the New York or American Stock Exchange or traded in the
over-the-counter market. The companies will be selected by the Fund's
investment adviser based on traditional research techniques and
technical
factors, including assessment of earnings and dividend growth prospects
and of the risk and volatility of the company's industry. Other
factors,
such as product position or market share, will also be considered by the
Fund's investment adviesr.
DOMESTIC DEBT SECURITIES. The Fund may also invest in notes, warrants,
zero coupon bonds, and convertible securities of the U.S. companies
described above, all of which are rated investment grade, i.e., Baa or
better by Moody's Investors Service, Inc. ("Moody's"), or BBB or better
by Standard & Poor's Corporation ("S&P") or Fitch Investors Service,
Inc.
("Fitch") (or, if unrated, are deemed to be of comparable quality by the
Fund's investment adviser). The Fund may also invest in securities
issued and/or guaranteed as to the payment of principal and interest by
the U.S. government or its agencies or instrumentalities. It should be
noted that securities receiving the lowest investment grade rating are
considered to have some speculative characteristics. Changes in
economic
conditions or other circumstances are more likely to lead to weakened
capacity to make principal and interest payments than higher rated
bonds.
In the event that a bond which had an eligible rating when purchased is
downgraded below Baa or BBB, the Fund's adviser will promptly reassess
whether continued holding of the security is consistent with the Fund's
objective.
INTERNATIONAL SECURITIES. The Fund may invest in equity securities of
non-U.S. companies and corporate and government fixed income securities
denominated in currencies other than U.S. dollars. The international
equity securities in which the Fund may invest include international
stocks traded domestically or abroad through various stock exchanges,
American Depositary Receipts ("ADRs"), and International Depositary
Receipts ("IDRs"). The international fixed income securities will
include ADRs, IDRs, and government securities of other nations. No
ratings for international securities are available from Moody's or S&P;
however, the Fund will invest in international securities which are
deemed by the investment adviser to be of a quality comparable to
domestic bonds rated at least Baa by Moody's or BBB by S&P. In the
event
that an international security which had an eligible rating when
purchased is downgraded below Baa or BBB, the Fund's adviser will
promptly reassess whether continued holding of the security is
consistent
with the Fund's objective. The Fund may also invest in shares of
open-end and closed-end management investment companies which invest
primarily in international equity securities described above.
MONEY MARKET INSTRUMENTS. For temporary defensive purposes (up to 100%
of total assets) and to maintain liquidity (up to 35% of total assets),
the Fund may invest in U.S. and foreign short-term money market
instruments, including:
- commercial paper rated A-1 or A-2 by S&P, Prime-1 or Prime-2 by
Moody's, or F-1 or F-2 by Fitch, and Europaper (dollar-denominated
commercial paper issued outside the United States) rated A-1, A-2,
Prime-1, or Prime-2. In the case where commercial paper or Europaper
has received different ratings from different rating services, such
commercial paper or Europaper is an acceptable temporary investment
so
long as at least one rating is in the two highest rating categories
of
the nationally recognized statistical rating organizations described
above;
- instruments of domestic and foreign banks and savings and loans (such
as certificates of deposit, demand and time deposits, savings shares,
and bankers' acceptances) if they have capital, surplus, and
undivided
profits of over $100,000,000, or if the principal amount of the
instrument is insured by the Bank Insurance Fund, which is
administered by the Federal Deposit Insurance Corporation ("FDIC"),
or
the Savings Association Insurance Fund, which is also administered by
the FDIC. These instruments may include Eurodollar Certificates of
Deposit ("ECDs"), Yankee Certificates of Deposit ("Yankee CDs"), and
Eurodollar Time Deposits ("ETDs");
- obligations of the U.S. government or its agencies or
instrumentalities;
- repurchase agreements;
- securities of other investment companies; and
- other short-term instruments which are not rated but are determined
by
the investment adviser to be of comparable quality to the other
obligations in which the Fund may invest.
CONVERTIBLE SECURITIES. Convertible securities are fixed income securities
which may be exchanged or converted into a predetermined number of the
issuer's underlying common stock at the option of the holder during a
specified time period. Convertible securities may take the form of
convertible preferred stock, convertible bonds or debentures, units
consisting
of "usable" bonds and warrants or a combination of the features of several of
these securities.
ZERO COUPON SECURITIES. The Fund may invest in zero coupon bonds and zero
coupon convertible securities. The Fund may invest in zero coupon bonds in
order to receive the rate of return through the appreciation of the bond.
This application is extremely attractive in a falling rate environment as the
price of the bond rises rapidly in value as opposed to regular coupon bonds.
A zero coupon bond makes no periodic interest payments and the entire
obligation becomes due only upon maturity.
Zero coupon convertible securities are debt securities which are issued at a
discount to their face amount and do not entitle the holder to any periodic
payments of interest prior to maturity. Rather, interest earned on zero
coupon convertible securities accretes at a stated yield until the security
reaches its face amount at maturity. Zero coupon convertible securities are
convertible into a specific number of shares of the issuer's common stock.
In
addition, zero coupon convertible securities usually have put features that
provide the holder with the opportunity to sell the bonds back to the issuer
at a stated price before maturity.
Generally, the price of zero coupon securities are more sensitive to
fluctuations in interest than are conventional bonds and convertible
securities. Additionally, federal tax law requires the holder of a zero
counpon security to recognize income from the security prior to the receipt
of
cash payments. To maintain its qualification as a regulated investment
company and avoid liability of federal income taxes, the Fund will be
required
to distribute income accrued from zero coupon securities which it owns, and
may have to sell portolio securities (perhaps at disadvantageous times) in
order to generate cash to satisfy these distribution requirements.
U.S. GOVERNMENT SECURITIES
The types of U.S. government securities in which the Fund may invest
generally
include direct obligations of the U.S. Treasury (such as U.S. Treasury bills,
notes, and bonds) and obligations issued or guaranteed by the U.S.
government,
its agencies or instrumentalities. These securities are backed by:
- the full faith and credit of the U.S. Treasury;
- the issuer's right to borrow from the U.S. Treasury;
- the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
- the credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:
- Federal Farm Credit Banks;
- Federal Home Loan Banks;
- Federal National Mortgage Association;
- Student Loan Marketing Association; and
- Federal Home Loan Mortgage Corporation.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which
banks,
broker/dealers, and other recognized financial institutions sell securities
to
the Fund and agree at the time of sale to repurchase them at a mutually
agreed
upon time and price. To the extent that the original seller does not
repurchase the securities from the Fund, the Fund could receive less than the
repurchase price on any sale of such securities.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase
securities on a when-issued or delayed delivery basis. In when-issued and
delayed delivery transactions, the Fund relies on the seller to complete the
transaction. The seller's failure to complete the transaction may cause the
Fund to miss a price or yield considered to be advantageous.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest
in
securities of other investment companies, but it will not own more than 3% of
the total outstanding voting stock of any investment company, invest more
than
5% of its total assets in any one investment company, and invest no more than
10% of its total assets in investment companies in general. The Fund will
invest in other investment companies primarily for the purpose of investing
short-term cash which has not yet been invested in other portfolio
instruments. It should be noted that investment companies incur certain
expenses such as management fees and, therefore, any investment by a fund in
shares of another investment company would be subject to such duplicate
expenses. The investment adviser will waive its investment advisory fee on
assets invested in securities of such investment companies.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend portfolio securities up to one-third of the value of its total
assets, on a short-term or long-term basis, to broker/dealers, banks, or
other
institutional borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the
investment adviser has determined are creditworthy under guidelines
established by the Trustees and will receive collateral in the form of cash
or
U.S. government securities equal to at least 100% of the value of the
securities loaned at all times.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which
are subject to restrictions on resale under federal securities law. However,
the Fund will limit investments in illiquid securities, including restricted
securities not determined by the Trustees to be liquid, non-negotiable time
deposits, over-the-counter options, and repurchase agreements providing for
settlement in more than seven days after notice, to 15% of its net assets.
FOREIGN SECURITIES RISKS. Investing in foreign securities carries
substantial
risks in addition to those associated with domestic investments. Foreign
securities may be denominated in foreign currencies. Therefore, the value in
U.S. dollars of the Fund's assets and income may be affected by changes in
exchange rates and regulations. Although the Fund values its assets daily in
U.S. dollars, it will not convert its holding of foreign currencies to U.S.
dollars daily. When the Fund converts its holdings to another currency, it
may incur currency conversion costs. Foreign exchange dealers realize a
profit on the difference between the prices at which they buy and sell
currencies.
FOREIGN COMPANIES. Other differences between investing in foreign and U.S.
companies include:
- less publicly available information about foreign companies;
- the lack of uniform financial accounting standards applicable to foreign
companies;
- less readily available market quotations on foreign companies;
- differences in government regulation and supervision of foreign stock
exchanges, brokers, listed companies, and banks;
- generally lower foreign stock market volume;
- the likelihood that foreign securities may be less liquid or more volatile;
- generally higher foreign brokerage commissions;
- unreliable mail service between countries; and
- political or financial changes which adversely affect investments in some
countries.
PUT AND CALL OPTIONS. The Fund may purchase put options on its portfolio
securities. These options will be used as a hedge to attempt to protect
securities which the Fund holds against decreases in value. The Fund may
also
write call options on all or any portion of its portfolio to generate income
for the Fund. The Fund will write call options on securities either held in
its portfolio or for which it has the right to obtain without payment of
further consideration or for which it has segregated cash or U.S. government
securities in the amount of any additional consideration.
The Fund may generally purchase and write over-the-counter options on
portfolio securities in negotiated transactions with the buyers or writers of
the options since options on the portfolio securities held by the Fund are
not
traded on an exchange. The Fund purchases and writes options only with
investment dealers and other financial institutions (such as commercial banks
or savings and loan associations) deemed creditworthy by the Fund's
investment
adviser.
Over-the-counter options are two-party contracts with price and terms
negotiated between buyer and seller. In contrast, exchange-traded options
are third-party contracts with standardized strike prices and expiration
dates
and are purchased from a clearing corporation. Exchange-traded options
have a
continuous liquid market while over-the-counter options may not.
FUTURES AND OPTIONS ON FUTURES. The Fund may purchase and sell futures
contracts to hedge against the effect of changes in the value of portfolio
securities due to anticipated changes in interest rates and market
conditions.
Futures contracts call for the delivery of particular debt instruments at a
certain time in the future. The seller of the contract agrees to make
delivery of the type of instrument called for in the contract, and the buyer
agrees to take delivery of the instrument at the specified future time.
Stock index futures contracts are based on indices that reflect the market
value of common stock of the firms included in the indices. An index futures
contract is an agreement pursuant to which two parties agree to take or make
delivery of an amount of cash equal to the differences between the value of
the index at the close of the last trading day of the contract and the price
at which the index contract was originally written.
The Fund may also write call options and purchase put options on futures
contracts as a hedge to attempt to protect securities in its portfolio
against
decreases in value. When the Fund writes a call option on a futures
contract,
it is undertaking the obligation of selling a futures contract at a fixed
price at any time during a specified period if the option is exercised.
Conversely, as purchaser of a put option on a futures contract, the Fund is
entitled (but not obligated) to sell a futures contract at the fixed price
during the life of the option.
The Fund may also write put options and purchase call options on futures
contracts as a hedge against rising purchase prices of portfolio securities.
The Fund will use these transactions to attempt to protect its ability to
purchase portfolio securities in the future at price levels existing at the
time it enters into the transactions. When the Fund writes a put option on a
futures contract, it is undertaking to buy a particular furtures contract
at a
fixed price at any time during a specified period if the option is
exercised.
As a purchaser of a call option on a futures contract, the Fund isentitled
(but not obligated) to purchase a futures contract at a fixed price at any
time during the life of the option.
The Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the Fund's
existing futures positions and premiums paid for related options would exceed
5% of the market value of the Fund's total assets. When the Fund purchases
futures contracts, an amount of cash and cash equivalents, equal to the
underlying commodity value of the futures contracts (less any related margin
deposits), will be deposited in a segregated account with the Fund's
custodian
(or the broker, if legally permitted) to collateralize the position and
thereby insure that the use of such futures contract is unleveraged. When
the
Fund sells futures contracts, it will either own or have the right to receive
the underlying future or security, or will make deposits to collateralize the
position as discussed above.
RISKS. When the Fund uses futures and options on futures as hedging
devices, there is a risk that the prices of the securities subject to
the
futures contracts may not correlate perfectly with the prices of the
securities in the Fund's portfolio. This may cause the futures contract
and any related options to react differently than the portfolio
securities to market changes. In addition, the Fund's investment
adviser could be incorrect in its expectations about the direction or
extent of market factors such as stock price movements. In these
events,
the Fund may lose money on the futures contract or option.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the
investment adviser will consider liquidity before entering into these
transactions, there is no assurance that a liquid secondary market on an
exchange or otherwise will exist for any particular futures contract or
option at any particular time. The Fund's ability to establish and
close
out futures and options positions depends on this secondary market.
INVESTMENT LIMITATIONS
The Fund will not:
- borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for a
percentage of its cash value with an agreement to buy it back on a set
date) or pledge securities except, under certain circumstances, the Fund
may borrow up to one-third of the value of its total assets and pledge up
to 10% of the value of its total assets to secure such borrowings.
The above investment limitation cannot be changed without shareholder
approval.
STAR FUNDS INFORMATION
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The
Trustees
are responsible for managing the Trust's business affairs and for exercising
all the Trust's powers except those reserved for the shareholders. The
Executive Committee of the Board of Trustees handles the Board's
responsibilities between meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Star Bank,
N.A., the Fund's investment adviser (the "Adviser" or "Star Bank"), subject
to
direction by the Trustees. The Adviser continually conducts investment
research and supervision for the Fund and is responsible for the purchase or
sale of portfolio instruments, for which it receives an annual fee from the
Fund.
ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal to 0.95 of 1% of the Fund's average daily net assets. The Adviser
may voluntarily choose to waive a portion of its fee or reimburse the
Fund for certain operating expenses. The Adviser can terminate this
voluntary waiver of its advisory fee at any time at its sole
discretion.
This does not include reimbursement to the Fund of any expenses incurred
by shareholders who use the transfer agent's subaccounting facilities.
The Adviser has undertaken to reimburse the Fund, up to the amount of
the
advisory fee, for operating expenses in excess of limitations
established
by certain states.
ADVISER'S BACKGROUND. Star Bank, a national bank, was founded in 1863
and is the largest bank and trust organization of StarBanc Corporation.
As of December 31, 1993, Star Bank had an asset base of $7.6 billion.
Star Bank's expertise in trust administration, investments, and estate
planning ranks it among the most predominant trust institutions in Ohio,
with assets of $12.5 billion as of December 31, 1993. Star Bank has
managed commingled funds since 1957. As of December 31, 1993, it
manages
12 common trust funds and collective investment funds having a market
value in excess of $394 million. Additionally, Star Bank has advised
the
portfolios of the Trust since 1989.
As part of their regular banking operations, Star Bank may make loans to
public companies. Thus, it may be possible, from time to time, for the
Fund to hold or acquire the securities of issuers which are also lending
clients of Star Bank. The lending relationship will not be a factor in
the selection of securities.
Donald L. Keller has served as a Vice President and the Director of
Research of the Capital Management Division of Star Bank since October,
1993, and has managed the domestic equity securities component of the
Fund since its inception. From February, 1989, through October, 1993,
Mr. Keller served as Director of Portfolio Management of Star Bank.
Scott H. Dooley joined Star Bank in 1988 and is an Equity Fund Manager,
Senior Investment Analyst, and Trust Investment Officer for the Capital
Management Division of Star Bank's Trust Financial Services Division.
Mr. Dooley has managed the international equity securities component of
the Fund and co-managed the domestic equity securities component of the
Fund since its inception. He also manages the options and futures
securities component of the Fund.
Fred A. Brink has been a Fund Manager for the Capital Management
Division
of Star Bank since July, 1991, and has managed the cash equivalent
securities component of the Fund since its inception. Prior to July,
1991, Mr. Brink was in college.
DISTRIBUTION OF FUND SHARES
Federated Securities Corp. is the distributor for shares of the Fund.
It is a
Pennsylvania corporation organized on November 14, 1969, and is the
distributor for a number of investment companies. Federated Securities Corp.
is a subsidiary of Federated Investors.
DISTRIBUTION PLAN. Pursuant to the provisions of a distribution plan adopted
in accordance with the Investment Company Act Rule 12b-1 (the "Plan"), the
Fund may pay to Federated Securities Corp. an amount computed at an annual
rate of up to 0.25 of 1% of the average daily net assets to finance any
activity which is principally intended to result in the sale of shares
subject
to the Plan.
Federated Securities Corp. may from time to time, and for such periods as it
deems appropriate, voluntarily reduce its compensation under the Plan to the
extent the expenses attributable to the shares exceed such lower expense
limitation as the distributor may, by notice to the Trust, voluntarily
declare
to be effective.
The distributor may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers, and broker/dealers to
provide sales and support services as agents for their clients or customers
who beneficially own shares of the Fund. Financial institutions will receive
fees from the distributor based upon shares owned by their clients or
customers. The schedules of such fees and the basis upon which such fees
will
be paid will be determined from time to time by the distributor.
The Fund's Plan is a compensation type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund
does not pay for unreimbursed expenses of the distributor, including amounts
expended by the distributor in excess of amounts received by it from the
Fund,
interest, carrying or other financing charges in connection with excess
amounts expended, or the distributor's overhead expenses. However, the
distributor may be able to recover such amounts or may earn a profit from
future payments made by the Fund under the Plan.
The Glass-Steagall Act limits the ability of a depository institution (such
as
a commercial bank or a savings and loan association) to become an underwriter
or distributor of securities. In the event the Glass-Steagall Act is deemed
to prohibit depository institutions from acting in the capacities described
above or should Congress relax current restrictions on depository
institutions, the Trustees will consider appropriate changes in the
services.
State securities laws governing the ability of depository institutions to act
as underwriters or distributors of securities may differ from interpretations
given to the Glass-Steagall Act and, therefore, banks and financial
institutions may be required to register as dealers pursuant to state law.
ADMINISTRATIVE ARRANGEMENTS. The distributor may select brokers and dealers
to provide distribution and administrative services. The distributor may
also
select administrators (including depository institutions such as commercial
banks and savings and loan associations) to provide administrative services.
These administrative services include distributing prospectuses and other
information, providing accounting assistance, and communicating or
facilitating purchases and redemptions of Fund's shares.
Brokers, dealers, and administrators will receive fees from the distributor
based upon shares of the Fund owned by their clients or customers. The fees
are calculated as a percentage of the average aggregate net asset value of
shareholder accounts during the period for which the brokers, dealers, and
administrators provide services. The current annual rate of such fees is up
to 0.30 of 1% for the Fund. Any fees paid for these services by the
distributor will be reimbursed by the Adviser. Payments made here are in
addition to any payments made under the Fund's Rule 12b-1 Distribution Plan.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, Pittsburgh,
Pennsylvania, a subsidiary of Federated Investors, provides the Fund with
certain administrative personnel and services necessary to operate the Fund,
such as legal and accounting services. Federated Administrative Services
provides these at an annual rate as specified below:
Maximum Average Aggregate Daily
Administrative Fee Net Assets of the Trust
.150 of 1% on the first $250 million
.125 of 1% on the next $250 million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$50,000 per Fund. Federated Administrative Services may voluntarily waive a
portion of its fee.
SHAREHOLDER SERVICES PLAN. The Fund has adopted a Shareholder Services Plan
(the "Services Plan") with respect to shares of the Fund. Under the Services
Plan, financial institutions will enter into shareholder service agreements
with the Fund to provide administrative support and personal services to
their
customers who from time to time may be owners of record or beneficial owners
of shares of the Fund. In return for providing these support services, a
financial institution may receive payments from the Fund at a rate not
exceeding 0.25 of 1% of the average daily net assets of shares of the Fund
beneficially owned by the financial institution's customers for whom it is
holder of record or with whom it has a servicing relationship.
CUSTODIAN. Star Bank, N.A., Cincinnati, Ohio, is custodian for the
securities
and cash of the Fund.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING
SERVICES.
Federated Services Company, Pittsburgh, Pennsylvania, a subsidiary of
Federated Investors, is transfer agent and dividend disbursing agent for the
Fund. It also provides certain accounting and recordkeeping services with
respect to the Fund's portfolio investments.
LEGAL COUNSEL. Legal counsel for the Fund is provided by Houston, Houston &
Donnelly, Pittsburgh, Pennsylvania, and Dickstein, Shapiro & Morin,
Washington, D.C.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the
Fund are Arthur Andersen & Co., Pittsburgh, Pennsylvania.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Adviser looks for prompt execution of the order at
a favorable price. In working with dealers, the Adviser will generally
utilize those who are recognized dealers in specific portfolio instruments,
except when a better price and execution of the order can be obtained
elsewhere. In selecting among firms believed to meet these criteria, the
Adviser may give consideration to those firms which have sold or are selling
shares of the Fund and other funds distributed by Federated Securities Corp.
The Adviser makes decisions on portfolio transactions and selects brokers and
dealers subject to review by the Trustees.
EXPENSES OF THE FUND
The Fund pays all of its own expenses and its allocable share of Trust
expenses. These expenses include, but are not limited to, the cost of:
Trustees' fees; investment advisory and administrative services; printing
prospectuses and other Fund documents for shareholders; registering the
Trust,
the Fund, and shares of the Fund with federal and state securities
commissions; taxes and commissions; issuing, purchasing, repurchasing, and
redeeming shares; fees for custodians, transfer agents, dividend disbursing
agents, shareholder servicing agents, and registrars; printing, mailing,
auditing, accounting, and legal expenses; reports to shareholders and
governmental agencies; meetings of Trustees and shareholders and proxy
solicitations therefor; distribution fees; insurance premiums; association
membership dues; and such nonrecurring and extraordinary items as may arise.
However, the Adviser may voluntarily reimburse some expenses and has, in
addition, undertaken to reimburse the Fund, up to the amount of the advisory
fee, the amount by which operating expenses exceed limitations imposed by
certain states.
NET ASSET VALUE
The Fund's net asset value per share fluctuates. It is determined by
dividing
the sum of the market value of all securities and other assets, less
liabilities, by the number of shares outstanding.
INVESTING IN THE FUND
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund by an investor is $1,000 ($25 for
Star Connections Group Banking customers and Star Bank employees and members
of their immediate family). Subsequent investments may be in any amounts.
For customers of Star Bank, an institutional investor's minimum investment
will be calculated by combining all mutual fund accounts it maintains with
Star Bank and invests with the Fund.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received, plus a sales charge, as follows:
Sales Charge as Sales Charge as
a Percentage of a Percentage of
Amount of Transaction Public Offering Price Net Amount Invested
Less than $100,000 4.50% 4.71%
$100,000 but less than $250,000 3.75% 3.90%
$250,000 but less than $500,000 2.50% 2.56%
$500,000 but less than $750,000 2.00% 2.04%
$750,000 but less than $1 million 1.00% 1.01%
$1 million or more 0.25% 0.25%
The net asset value is determined at 4:00 p.m. (Eastern time), Monday through
Friday, except on: (i) days on which there are not sufficient changes in the
value of the Fund's portfolio securities that its net asset value might be
materially affected; (ii) days during which no shares are tendered for
redemption and no orders to purchase shares are received; and (iii) the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
PURCHASES AT NET ASSET VALUE. Shareholders who are trust or private banking
customers of StarBanc Corporation and its subsidiaries are exempt from sales
charges. In addition, the following persons may purchase shares of the Fund
at net asset value, without a sales charge: employees and retired employees
of Star Bank, Federated Securities Corp., or their affiliates, or any bank or
investment dealer who has a sales agreement with Federated Securities Corp.
with regard to the Fund, and members of the families (including parents,
grandparents, siblings, spouses, children, aunts, uncles, and in-laws) of
such
employees or retired employees.
SALES CHARGE REALLOWANCE. For sales of shares of the Fund, Star Bank or any
authorized dealer will normally receive up to 89% of the applicable sales
charge. Any portion of the sales charge which is not paid to Star Bank or a
dealer will be retained by the distributor. However, the distributor, in its
sole discretion, may uniformly offer to pay all dealers selling shares of the
Fund additional amounts, all or a portion of which may be paid from the sales
charge it normally retains or any other source available to it. Such
additional payments, if accepted by the dealer, may be in the form of cash or
promotional incentives and will be predicated upon the amount of shares of
the
Fund sold by the dealer.
The sales charge for shares sold other than through Star Bank or registered
broker/dealers will be retained by the distributor. The distributor may pay
fees to banks out of the sales charge in exchange for sales and/or
administrative services performed on behalf of the bank's customers in
connection with the initiation of customer accounts and purchases of Fund
shares.
REDUCING THE SALES CHARGE
The sales charge can be reduced on the purchase of Shares through:
- quantity discounts and accumulated purchases;
- signing a 13-month letter of intent;
- using the reinvestment privilege; or
- concurrent purchases.
QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES. As shown in the previous
table,
larger purchases reduce the sales charge paid. The Fund will combine
purchases made on the same day by the investor, his spouse, and his children
under age 21 when it calculates the sales charge.
If an additional purchase of Fund shares is made, the Fund will consider the
previous purchases still invested in the Fund. For example, if a shareholder
already owns shares having a current value at the net asset value of $90,000
and he purchases $10,000 more at the current net asset value, the sales
charge
on the additional purchase according to the schedule now in effect would be
3.75%, not 4.50%.
To receive the sales charge reduction, Star Bank or the distributor must be
notified by the shareholder in writing at the time the purchase is made that
Fund shares are already owned or that purchases are being combined. The Fund
will reduce the sales charge after it confirms the purchases.
LETTER OF INTENT. If a shareholder intends to purchase at least $100,000 of
Fund shares over the next 13 months, the sales charge may be reduced by
signing a letter of intent to that effect. This letter of intent includes a
provision for a sales charge adjustment depending on the amount actually
purchased within the 13-month period and a provision for the Fund's custodian
to hold 4.50% of the total amount intended to be purchased in escrow (in
shares of the Fund) until such purchase is completed.
The 4.50% held in escrow will be applied to the shareholder's account at the
end of the 13-month period unless the amount specified in the letter of
intent
is not purchased. In this event, an appropriate number of escrowed shares
may
be redeemed in order to realize the difference in the sales charge.
This letter of intent will not obligate the shareholder to purchase shares,
but if the shareholder does, each purchase during the period will be at the
sales charge applicable to the total amount intended to be purchased. This
letter may be dated as of a prior date to include any purchases made within
the past 90 days.
REINVESTMENT PRIVILEGE. If shares in the Fund have been redeemed, the
shareholder has a one-time right, within 30 days, to reinvest the redemption
proceeds at the next-determined net asset value without any sales charge.
Star Bank or the distributor must be notified by the shareholder in
writing or
by his financial institution of the reinvestment in order to eliminate a
sales
charge. If the shareholder redeems his shares in the Fund, there may be tax
consequences. Shareholders contemplating such transactions should consult
their own tax advisers.
CONCURRENT PURCHASES. For purposes of qualifying for a sales charge
reduction, a shareholder has the privilege of combining concurrent purchases
of two or more funds in the Trust, the purchase price of which includes a
sales charge. For example, if a shareholder concurrently invested $30,000 in
one of the other funds in the Trust with a sales charge and $70,000 in this
Fund, the sales charge would be reduced.
To receive this sales charge reduction, Star Bank or the distributor must be
notified by the shareholder in writing at the time the concurrent purchases
are made. The Fund will reduce the sales charge after it confirms the
purchases.
SYSTEMATIC INVESTMENT PLAN
Once a Fund account has been opened, shareholders may add to their investment
on a regular basis in a minimum amount of $100. Under this plan, funds may
be
withdrawn periodically from the shareholder's checking account and
invested in
Fund shares at the net asset value next determined after an order is received
by Star Bank, plus the applicable sales charge. A shareholder may apply for
participation in this plan through Star Bank.
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange and the Federal
Reserve Wire System are open for business.
A customer of Star Bank may purchase Shares through Star Bank. Texas
residents must purchase shares through Federated Securities Corp. at
1-800-356-2805. In connection with the sale of Fund shares, the distributor
may from time to time offer certain items of nominal value to any shareholder
or investor. The Fund reserves the right to reject any purchase request.
THROUGH STAR BANK. To place an order to purchase shares of the Fund, a
customer of Star Bank may telephone Star Bank at 1-800-677-FUND or place the
order in person. Purchase orders given by telephone may be electronically
recorded.
Payment may be made to Star Bank either by check or federal funds. When
payment is made with federal funds, the order is considered received when
federal funds are received by Star Bank. Purchase orders must be telephoned
to Star Bank by 4:00 p.m. (Eastern time) and payment by federal funds must be
received by Star Bank before 3:00 p.m. (Eastern time) on the following day.
For purchases by employees, individual investors, or through registered
broker/dealers, requests must be received by Star Bank by 4:00 p.m. (Eastern
time) and payment is normally required in five business days.
Shares cannot be purchased on days on which the New York Stock Exchange is
closed or on federal holidays restricting wire transfers.
BY MAIL. To purchase shares of the Fund by mail, individual investors may
send a check made payable to Star Growth Equity Fund to Star Shareholder
Services, Star Bank, N.A., 425 Walnut Street, ML 7135, Cincinnati, Ohio
45202.
Orders by mail are considered received after payment by check is converted by
Star Bank into federal funds. This is normally five business days after Star
Bank receives the check.
EXCHANGING SECURITIES FOR FUND SHARES
The Fund may accept securities in exchange for Fund shares. The Fund will
allow such exchanges only upon the prior approval of the Fund and a
determination by the Fund and the Adviser that the securities to be exchanged
are acceptable.
Any securities exchanged must meet the investment objective and policies of
the Fund, must have a readily ascertainable market value, must be liquid, and
must not be subject to restrictions on resale. The Fund acquires the
exchanged securities for investment and not for resale. The market value of
any securities exchanged in an initial investment, plus any cash, must be at
least $25,000.
Securities accepted by the Fund will be valued in the same manner as the Fund
values its assets. The basis of the exchange will depend upon the net asset
value of Fund shares on the day the securities are valued. One share of the
Fund will be issued for each equivalent amount of securities accepted.
Any interest earned on the securities prior to the exchange will be
considered
in valuing the securities. All interest, dividends, subscription, or other
rights attached to the securities become the property of the Fund, along with
the securities.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent
charges a fee based on the level of subaccounting services rendered.
Institutions holding shares of the Fund in a fiduciary, agency, custodial, or
similar capacity may charge or pass through subaccounting fees as part of or
in addition to normal trust or agency account fees. They may also charge
fees
for other services provided which may be related to the ownership of Fund
shares. This prospectus should, therefore, be read together with any
agreement between the customer and the institution with regard to the
services
provided, the fees charged for those services, and any restrictions and
limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder of record. Share certificates are not issued.
Detailed confirmations of each purchase or redemption are sent to each
shareholder and dividend confirmations are sent to each shareholder to report
dividends paid.
DIVIDENDS AND CAPITAL GAINS
Dividends are declared and paid quarterly. Capital gains realized by the
Fund, if any, will be distributed at least once every 12 months. Dividends
and capital gains will be automatically reinvested in additional shares on
payment dates at the ex-dividend date net asset value, unless cash payments
are requested by writing to the Fund or Star Bank.
EXCHANGE PRIVILEGE
STAR FUNDS
All shareholders of the Fund are shareholders of the Star Funds. Star Funds
currently consists of the Fund, Star Prime Obligations Fund, Star Treasury
Fund, Star Relative Value Fund, Star Tax-Free Money Market Fund, Star U.S.
Government Income Fund, and The Stellar Fund. Until further notice,
through a
telephone exchange program, shareholders invested in the money market funds
can exchange only among the other money market funds of the Trust, and
shareholders invested in the non-money market funds can exchange only among
the other non-money market funds of the Trust. Each portfolio in the Star
Funds is advised by Star Bank and distributed by Federated Securities Corp.
EXCHANGING SHARES
Shareholders of the Fund may exchange shares of the Fund for shares of the
other funds in the Star Funds. In addition, shares of the Fund may also be
exchanged for certain other funds distributed by Federated Securities Corp.
that are not advised by Star Bank, N.A. ("Federated Funds"). For further
information on the availability of Federated Funds for exchanges, call Star
Bank at 1-800-677-FUND. Shareholders who exercise this exchange privilege
must exchange Shares having a total net asset value of at least $1,000.
Prior
to any exchange, the shareholder must receive a copy of the current
prospectus
of the fund into which an exchange is to be effected.
Shares may be exchanged at net asset value, plus the difference between the
Fund's sales charge (if any) already paid and any sales charge of the fund
into which shares are to be exchanged, if higher.
When an exchange is made from a fund with a sales charge to a fund with no
sales charge, the shares exchanged and additional shares which have been
purchased by reinvesting dividends on such shares retain the character of the
exchanged shares for purposes of exercising further exchange privileges;
thus,
an exchange of such shares for shares of a fund with a sales charge would be
at net asset value.
The exchange privilege is available to shareholders residing in any state in
which the fund shares being acquired may legally be sold. Upon receipt of
proper instructions and all necessary supporting documents, shares submitted
for exchange will be redeemed at the next-determined net asset value.
Written exchange instructions may require a signature guarantee. Exercise of
this privilege is treated as a sale for federal income tax purposes and,
depending on the circumstances, a short or long-term capital gain or loss may
be realized. The exchange privilege may be terminated at any time.
Shareholders will be notified of the termination of the exchange
privilege. A
shareholder may obtain further information on the exchange privilege by
calling Star Bank at 1-800-677-FUND.
EXCHANGE-BY-TELEPHONE
Instructions for exchanges between funds which are part of the Star Funds may
be given by telephone to Star Bank at 1-800-677-FUND or to the distributor.
Shares may be exchanged by telephone only between fund accounts having
identical shareholder registrations. Exchange instructions given by
telephone
may be electronically recorded.
Telephone exchange instructions must be received before 3:00 p.m. (Eastern
time) in order for shares to be exchanged the same day. The telephone
exchange privilege may be modified or terminated at any time. Shareholders
will be notified of such modification or termination. Shareholders of the
Fund may have difficulty in making exchanges by telephone through brokers,
banks, or other financial institutions during times of drastic economic or
market changes. If a shareholder cannot contact his broker, bank, or
financial institution by telephone, it is recommended that an exchange
request
be made in writing and sent by overnight mail.
If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.
REDEEMING SHARES
The Fund redeems shares at their net asset value next determined after Star
Bank receives the redemption request. Redemptions will be made on days on
which the Fund computes its net asset value. Redemption requests cannot be
executed on days on which the New York Stock Exchange is closed or on federal
holidays restricting wire transfers. Requests for redemption can be made in
person, by telephone through Star Bank, or by mail.
BY TELEPHONE. A shareholder who is a customer of Star Bank may redeem shares
of the Fund by telephoning Star Bank at 1-800-677-FUND. Redemption requests
given by telephone may be electronically recorded. For calls received by
Star
Bank before 4:00 p.m. (Eastern time), proceeds will normally be wired the
following day to the shareholder's account at Star Bank or a check will be
sent to the address of record. In no event will proceeds be wired or a check
mailed more than seven days after a proper request for redemption has been
received. If, at any time, the Fund shall determine it necessary to
terminate
or modify this method of redemption, shareholders would be promptly
notified.
An authorization form permitting the Fund to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Star Bank.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If such a case should
occur,
another method of redemption should be considered.
If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.
BY MAIL. Shareholders may also redeem Fund shares by sending a written
request to Star Shareholder Services, Star Bank, N.A., 425 Walnut Street,
ML 7135, Cincinnati, Ohio 45202. The written request must include the
shareholder's name, the Fund name, the account number, and the share or
dollar
amount requested. Shareholders may call the Fund for assistance in redeeming
by mail.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on
record with the Fund, or a redemption payable other than to the
shareholder of record must have signatures on written redemption
requests
guaranteed by:
- a trust company or commercial bank whose deposits are insured by the
Bank Insurance Fund ("BIF"), which is administered by the Federal
Deposit Insurance Corporation ("FDIC");
- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
- a savings bank or savings and loan association whose deposits are
insured by the Savings Association Insurance Fund ("SAIF"), which is
administered by the FDIC; or
- any other "eligible guarantor institution" as defined in the
Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting
signature guarantees from the above institutions. The Fund may elect in
the future to limit eligible signature guarantors to institutions that
are members of a signature guarantee program. The Fund and its transfer
agent reserve the right to amend these standards at any time without
notice.
Normally, a check for the proceeds is mailed within one business day,
but
in no event more than seven days, after receipt of a proper written
redemption request.
SYSTEMATIC WITHDRAWAL PLAN
Under a Systematic Withdrawal Plan, accounts may arrange for regular monthly
or quarterly fixed withdrawal payments. Each payment must be at least $100
and may be as much as 1.50% per month or 4.50% per quarter of the total net
asset value of the shares in the account when the Systematic Withdrawal Plan
is opened. Depending upon the amount of the withdrawal payments and the
amount of dividends paid with respect to Fund shares, redemptions may reduce,
and eventually deplete, the shareholder's investment in the Fund. For this
reason, payments under this plan should not be considered as yield or income
on the shareholder's investment in the Fund. Due to the fact that shares are
sold with a sales charge, it is not advisable for shareholders to be
purchasing shares of the Fund while participating in this plan.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below the required minimum value of $1,000 due to
shareholder redemptions. Before shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to purchase additional
shares to meet the minimum requirement.
SHAREHOLDER INFORMATION
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections
and
other matters submitted to shareholders for vote. All shares of each
portfolio in the Trust have equal voting rights, except that only shares of
the Fund are entitled to vote on matters affecting only the Fund. As a
Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust's or the Fund's operation and for the election of
Trustees under certain circumstances.
Trustees may be removed by a two-thirds vote of the number of Trustees prior
to such removal or by a two-thirds vote of the shareholders of the Trust at a
special meeting. A special meeting of shareholders shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
Trust's outstanding shares of all series entitled to vote.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable under
Massachusetts law for acts or obligations of the Trust. To protect
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of shareholders for such acts or obligations
of the Trust. These documents require notice of this disclaimer to be given
in each agreement, obligation, or instrument the Trust or its Trustees enter
into or sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required, by the Declaration of Trust, to use its
property to protect or compensate the shareholder. On request, the Trust
will
defend any claim made and pay any judgment against a shareholder for any act
or obligation of the Trust. Therefore, financial loss resulting from
liability as a shareholder will occur only if the Trust cannot meet its
obligations to indemnify shareholders and pay judgments against them from its
assets.
EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently
prohibit a bank holding company registered under the Bank Holding Company Act
of 1956 or any affiliate thereof from sponsoring, organizing, or
controlling a
registered, open-end management investment company continuously engaged in
the
issuance of its shares, and from issuing, underwriting, selling, or
distributing securities in general. Such laws and regulations do not
prohibit
such a holding company or affiliate from acting as investment adviser,
transfer agent, or custodian to such an investment company or from purchasing
shares of such a company as agent for and upon the order of their customer.
The Fund's investment adviser, Star Bank, is subject to such banking laws and
regulations.
Star Bank believes that it may perform the investment advisory services for
the Fund contemplated by its advisory agreements with the Trust without
violating the Glass-Steagall Act or other applicable banking laws or
regulations. Changes in either federal or state statutes and regulations
relating to the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of present or future statutes and regulations, could prevent
Star Bank from continuing to perform all or a part of the above services for
its customers and/or the Fund. In such event, changes in the operation of
the
Fund may occur, including the possible alteration or termination of any
automatic or other Fund share investment and redemption services then being
provided by Star Bank, and the Trustees would consider alternative investment
advisers and other means of continuing available investment services. It is
not expected that Fund shareholders would suffer any adverse financial
consequences (if another adviser with equivalent abilities to Star Bank is
found) as a result of any of these occurrences.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such
companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax
on any dividends and other distributions, including capital gains
distributions, received. This applies whether dividends and distributions are
received in cash or as additional shares. The Fund will provide detailed tax
information for reporting purposes.
Shareholders are urged to consult their own tax advisers regarding the status
of their accounts under state and local tax laws.
PERFORMANCE INFORMATION
From time to time the Fund advertises its total return and yield.
Total return represents the change, over a specified period of time, in the
value of an investment in the Fund after reinvesting all income and capital
gain distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of the Fund is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the
Fund over a thirty-day period by the maximum offering price per share of the
Fund on the last day of the period. This number is then annualized using
semi-annual compounding. The yield does not necessarily reflect income
actually earned by the Fund and, therefore, may not correlate to the
dividends
or other distributions paid to shareholders.
The performance information normally reflects the effect of the maximum sales
load which, if excluded, would increase the total return and yield.
Occasionally, performance information which does not reflect the effect of
the
sales load may be quoted in advertising.
From time to time the Fund may advertise its performance using certain
financial publications and/or compare its performance to certain indices.
ADDRESSES
Star Growth Equity Fund Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Investment Adviser
Star Bank, N.A. 425 Walnut Street
Cincinnati, Ohio 45202
Custodian
Star Bank, N.A. 425 Walnut Street
Cincinnati, Ohio 45202
Transfer Agent, Dividend Disbursing
Agent, and Portfolio Accounting Services
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
Legal Counsel
Dickstein, Shapiro & Morin 2101 L Street, N.W.
Washington, D.C. 20037
Independent Public Accountants
Arthur Andersen & Co. 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
STAR GROWTH EQUITY FUND
Prospectus
_______________, 1994
FEDERATED SECURITIES CORP.
Distributor
ETP--DRAFT NO. 3--03/17/94
STAR GROWTH EQUITY FUND
(A Portfolio of the Star Funds)
Statement of Additional Information
This Statement of Additional Information should be read with the
prospectus of
the Star Growth Equity Fund (the "Fund") dated ____________, 1994. This
Statement is not a prospectus itself. To receive a copy of the prospectus,
write to the Fund or call 1-800-677-FUND.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Statement dated ___________, 1994
STAR BANK, N.A.
Investment Adviser
FEDERATED SECURITIES CORP.
Distributor
TABLE OF CONTENTS
GENERAL INFORMATION ABOUT THE FUND
INVESTMENT OBJECTIVE AND POLICIES
Convertible Securities
Warrants
When-Issued and Delayed Delivery Transactions
Repurchase Agreements
Restricted and Illiquid Securities
Futures and Options Transactions
Futures Contracts
"Margin" in Futures Transactions
Put Options on Financial Futures Contracts
Call Options on Financial Futures Contracts
Purchasing Put Options on Portfolio Securities
Writing Covered Call Options on Portfolio Securities
Stock Index Options
Over-the-Counter Options
Reverse Repurchase Agreements
Portfolio Turnover
INVESTMENT LIMITATIONS
TRUST MANAGEMENT
Officers and Trustees
The Funds
Fund Ownership
Trustee Liability
INVESTMENT ADVISORY SERVICES
Adviser to the Fund
Advisory Fees
ADMINISTRATIVE SERVICES
CUSTODIAN
BROKERAGE TRANSACTIONS
PURCHASING SHARES
Distribution Plan
Administrative Arrangements
Conversion to Federal Funds
DETERMINING NET ASSET VALUE
Determining Market Value of Securities
Trading in Foreign Securities
EXCHANGE PRIVILEGE
Requirements for Exchange
Making an Exchange
REDEEMING SHARES
Redemption in Kind
TAX STATUS
The Fund's Tax Status
Foreign Taxes
Shareholders' Tax Status
TOTAL RETURN
YIELD
PERFORMANCE COMPARISONS
APPENDIX
GENERAL INFORMATION ABOUT THE FUND
The Fund is a portfolio of the Star Funds (the "Trust"). The Trust was
established as a Massachusetts business trust under a Declaration of Trust
dated January 23, 1989. The Declaration of Trust permits the Trust to offer
separate series of shares of beneficial interest representing interests in
separate portfolios of securities. On May 1, 1993, the Board of Trustees
(the
"Trustees") approved changing the name of the Trust, effective May 1, 1993,
from Losantiville Funds to Star Funds.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to maximize capital appreciation. The
investment objective cannot be changed without the approval of shareholders.
The policies described below may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material
change in these policies becomes effective.
CONVERTIBLE SECURITIES
Convertible bonds and convertible preferred stocks are fixed income
securities
that generally retain the investment characteristics of fixed income
securities until they have been converted but also react to movements in the
underlying equity securities. The holder is entitled to receive the fixed
income of a bond or the dividend preference of a preferred stock until the
holder elects to exercise the conversion privilege. Usable bonds are
corporate bonds that can be used, in whole or in part, customarily at full
face value, in lieu of cash to purchase the issuer's common stock. When
owned
as part of a unit along with warrants, which are options to buy the common
stock, they function as convertible bonds, except that the warrants generally
will expire before the bond's maturity. Convertible securities are senior to
equity securities and, therefore, have a claim to assets of the corporation
prior to the holders of common stock in the case of liquidation. However,
convertible securities are generally subordinated to similar nonconvertible
securities of the same company. The interest income and dividends from
convertible bonds and preferred stocks provide a stable stream of income with
generally higher yields than common stocks, but lower than non-convertible
securities of similar quality.
The Fund will exchange or convert the convertible securities held in its
portfolio into shares of the underlying common stock in instances in which,
in
the adviser's opinion, the investment characteristics of the underlying
common
shares will assist the Fund in achieving its investment objective.
Otherwise,
the Fund will hold or trade the convertible securities. In selecting
convertible securities for the Fund, the adviser evaluates the investment
characteristics of the convertible security as a fixed income instrument and
the investment potential of the underlying equity security for capital
appreciation. In evaluating these matters with respect to a particular
convertible security, the adviser considers numerous factors, including the
economic and political outlook, the value of the security relative to other
investment alternatives, trends in the determinants of the issuer's profits,
and the issuer's management capability and practices.
WARRANTS
The Fund may invest in warrants. Warrants are basically options to purchase
common stock at a specific price (usually at a premium above the market value
of the optioned common stock at issuance) valid for a specific period of
time.
Warrants may have a life ranging from less than a year to twenty years or may
be perpetual. However, most warrants have expiration dates after which they
are worthless. In addition, if the market price of the common stock does not
exceed the warrant's exercise price during the life of the warrant, the
warrant will expire as worthless. Warrants have no voting rights, pay no
dividends, and have no rights with respect to the assets of the corporation
issuing them. The percentage increase or decrease in the market price of the
warrant may tend to be greater than the percentage increase or decrease in
the
market price of the optioned common stock. The Fund will not invest more
than
5% of the value of its total assets in warrants. No more than 2% of this 5%
may be in warrants which are not listed on the New York or American Stock
Exchanges. Warrants required in units or attached to securities may be
deemed
to be without value for purposes of this policy.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are arrangements in which the Fund purchases securities
with payment and delivery scheduled for a future time. These transactions
are
made to secure what is considered to be an advantageous price and yield for
the Fund. Settlement dates may be a month or more after entering into these
transactions, and the market values of the securities purchased may vary from
the purchase prices.
No fees or other expenses, other than normal transaction costs, are
incurred.
However, liquid assets of the Fund sufficient to make payment for the
securities to be purchased are segregated at the trade date. These
securities
are marked to market daily and are maintained until the transaction is
settled. The Fund may engage in these transactions to an extent that would
cause the segregation of an amount up to 20% of the total value of its assets.
REPURCHASE AGREEMENTS
The Fund or its custodian will take possession of the securities subject to
repurchase agreements, and these securities will be marked to market daily.
To the extent that the original seller does not repurchase the securities
from
the Fund, the Fund could receive less than the repurchase price on any sale
of
such securities. In the event that such a defaulting seller filed for
bankruptcy or became insolvent, disposition of such securities by the Fund
might be delayed pending court action. The Fund believes that under the
regular procedures normally in effect for custody of the Fund's portfolio
securities subject to repurchase agreements, a court of competent
jurisdiction
would rule in favor of the Fund and allow retention or disposition of such
securities. The Fund will only enter into repurchase agreements with banks
and other recognized financial institutions, such as broker/dealers, which
are
deemed by the Fund's adviser to be creditworthy pursuant to guidelines
established by the Trustees.
RESTRICTED AND ILLIQUID SECURITIES
The Fund may invest in commercial paper issued in reliance on the exemption
from registration afforded by Section 4(2) of the Securities Act of 1933.
Section 4(2) commercial paper is restricted as to disposition under federal
securities law and is generally sold to institutional investors, such as the
Fund, who agree that they are purchasing the paper for investment purposes
and
not with a view to public distribution. Any resale by the purchaser must be
in an exempt transaction. Section 4(2) commercial paper is normally resold
to
other institutional investors like the Fund through or with the assistance of
the issuer or investment dealers who make a market in Section 4(2) commercial
paper, thus providing liquidity.
The ability of the Trustees to determine the liquidity of certain restricted
securities is permitted under a Securities and Exchange Commission ("SEC")
staff position set forth in the adopting release for Rule 144A under the
Securities Act of 1933 (the "Rule"). The Rule is a non-exclusive safe-harbor
for certain secondary market transactions involving registration for resales
of otherwise restricted securities to qualified institutional buyers. The
Rule was expected to further enhance the liquidity of the secondary market
for
securities eligible for resale under the Rule. The Fund believes that the
staff of the SEC has left the question of determining the liquidity of all
restricted securities to the Trustees. The Trustees may consider the
following criteria in determining the liquidity of certain restricted
securities:
- the frequency of trades and quotes for the security;
- the number of dealers willing to purchase or sell the security and the
number of other potential buyers;
- dealer undertakings to make a market in the security; and
- the nature of the security and the nature of the marketplace trades.
FUTURES AND OPTIONS TRANSACTIONS
As a means of reducing fluctuations in the net asset value of shares of the
Fund, the Fund may attempt to hedge all or a portion of its portfolio by
buying and selling financial futures contracts, buying put options on
portfolio securities and put options on financial futures contracts, and
writing call options on futures contracts. The Fund may also write covered
call options on portfolio securities to attempt to increase its current
income. The Fund will maintain its positions in securities, option rights,
and segregated cash subject to puts and calls until the options are
exercised,
closed, or have expired. An option position on financial futures contracts
may be closed out over-thecounter or on a nationally recognized exchange
which
provides a secondary market for options of the same series.
FUTURES CONTRACTS
The Fund may purchase and sell financial futures contracts to hedge against
the effects of changes in the value of portfolio securities due to
anticipated
changes in interest rates and market conditions without necessarily buying or
selling the securities. The Fund also may purchase and sell stock index
futures to hedge against changes in prices. The Fund will not engage in
futures transactions for speculative purposes.
A futures contract is a firm commitment by two parties: the seller who
agrees
to make delivery of the specific type of security called for in the contract
("going short") and the buyer who agrees to take delivery of the security
("going long") at a certain time in the future. For example, in the fixed
income securities market, prices move inversely to interest rates. A rise in
rates means a drop in price. Conversely, a drop in rates means a rise in
price. In order to hedge its holdings of fixed income securities against a
rise in market interest rates, the Fund could enter into contracts to deliver
securities at a predetermined price (i.e., "go short") to protect itself
against the possibility that the prices of its fixed income securities may
decline during the Fund's anticipated holding period. The Fund would "go
long" (agree to purchase securities in the future at a predetermined price)
to
hedge against a decline in market interest rates.
Stock index futures contracts are based on indices that reflect the market
value of common stock of the firms included in the indices. An index futures
contract is an agreement pursuant to which two parties agree to take or make
delivery of an amount of cash equal to the differences between the value of
the index at the close of the last trading day of the contract and the price
at which the index contract was originally written.
"MARGIN" IN FUTURES TRANSACTIONS
Unlike the purchase or sale of a security, the Fund does not pay or receive
money upon the purchase or sale of a futures contract. Rather, the Fund is
required to deposit an amount of "initial margin" in cash or U.S. Treasury
bills with its custodian (or the broker, if legally permitted). The
nature of
initial margin in futures transactions is different from that of margin in
securities transactions in that initial margin in futures transactions does
not involve the borrowing of funds by the Fund to finance the transactions.
Initial margin is in the nature of a performance bond or good faith deposit
on
the contract which is returned to the Fund upon termination of the futures
contract, assuming all contractual obligations have been satisfied.
A futures contract held by the Fund is valued daily at the official
settlement
price of the exchange on which it is traded. Each day the Fund pays or
receives cash, called "variation margin," equal to the daily change in value
of the futures contract. This process is known as "marking to market."
Variation margin does not represent a borrowing or loan by the Fund but is
instead settlement between the Fund and the broker of the amount one would
owe
the other if the futures contract expired. In computing its daily net asset
value, the Fund will mark to market its open futures positions.
The Fund is also required to deposit and maintain margin when it writes call
options on futures contracts.
PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS
The Fund may purchase listed put options on financial futures contracts to
protect portfolio securities against decreases in value resulting from market
factors, such as an anticipated increase in interest rates. Unlike entering
directly into a futures contract, which requires the purchaser to buy a
financial instrument on a set date at a specified price, the purchase of
a put
option on a futures contract entitles (but does not obligate) its
purchaser to
decide on or before a future date whether to assume a short position at the
specified price.
Generally, if the hedged portfolio securities decrease in value during the
term of an option, the related futures contracts will also decrease in value
and the option will increase in value. In such an event, the Fund will
normally close out its option by selling an identical option. If the
hedge is
successful, the proceeds received by the Fund upon the sale of the second
option will be large enough to offset both the premium paid by the Fund for
the original option plus the decrease in value of the hedged securities.
Alternatively, the Fund may exercise its put option to close out the
position.
To do so, it would simultaneously enter into a futures contract of the type
underlying the option (for a price less than the strike price of the option)
and exercise the option. The Fund would then deliver the futures contract in
return for payment of the strike price. If the Fund neither closes out nor
exercises an option, the option will expire on the date provided in the
option
contract, and only the premium paid for the contract will be lost.
CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS
In addition to purchasing put options on futures, the Fund may write listed
and over-the-counter call options on financial futures contracts to hedge its
portfolio against an increase in market interest rates. When the Fund writes
a call option on a futures contract, it is undertaking the obligation of
assuming a short futures position (selling a futures contract) at the fixed
strike price at any time during the life of the option if the option is
exercised. As stock prices fall or market interest rates rise, causing the
prices of futures to go down, the Fund's obligation under a call option on a
future (to sell a futures contract) costs less to fulfill, causing the value
of the Fund's call option position to increase.
In other words, as the underlying futures price goes down below the strike
price, the buyer of the option has no reason to exercise the call, so that
the
Fund keeps the premium received for the option. This premium can
substantially offset the drop in value of the Fund's portfolio securities.
Prior to the expiration of a call written by the Fund, or exercise of it by
the buyer, the Fund may close out the option by buying an identical option.
If the hedge is successful, the cost of the second option will be less than
the premium received by the Fund for the initial option. The net premium
income of the Fund will then substantially offset the decrease in value of
the
hedged securities.
The Fund will not maintain open positions in futures contracts it has sold or
call options it has written on futures contracts if, in the aggregate, the
value of the open positions (marked to market) exceeds the current market
value of its securities portfolio plus or minus the unrealized gain or
loss on
those open positions, adjusted for the correlation of volatility between the
hedged securities and the futures contracts. If this limitation is exceeded
at any time, the Fund will take prompt action to close out a sufficient
number
of open contracts to bring its open futures and options positions within this
limitation.
PURCHASING PUT OPTIONS ON PORTFOLIO SECURITIES
The Fund may purchase put options on portfolio securities to protect against
price movements in particular securities in its portfolio. A put option
gives
the Fund, in return for a premium, the right to sell the underlying security
to the writer (seller) at a specified price during the term of the option.
WRITING COVERED CALL OPTIONS ON PORTFOLIO SECURITIES
The Fund may also write covered call options to generate income and thereby
protect against price movements in particular securities in the Fund's
portfolios. As writer of a call option, the Fund has the obligation upon
exercise of the option during the option period to deliver the underlying
security upon payment of the exercise price. The Fund may only sell call
options either on securities held in its portfolio or on securities which it
has the right to obtain without payment of further consideration (or has
segregated cash in the amount of any additional consideration).
STOCK INDEX OPTIONS
The Fund may purchase put options on stock indices listed on national
securities exchanges or traded in the over-the-counter market. A stock index
fluctuates with changes in the market values of the stocks included in the
index.
The effectiveness of purchasing stock index options will depend upon the
extent to which price movements in the Fund's portfolio correlate with price
movements of the stock index selected. Because the value of an index option
depends upon movements in the level of the index rather than the price of a
particular stock, whether the Fund will realize a gain or loss from the
purchase of options on an index depends upon movements in the level of stock
prices in the stock market generally or, in the case of certain indices,
in an
industry or market segment, rather than movements in the price of a
particular
stock. Accordingly, successful use by the Fund of options on stock indices
will be subject to the ability of the Fund's adviser to predict correctly
movements in the directions of the stock market generally or of a particular
industry. This requires different skills and techniques than predicting
changes in the price of individual stocks.
OVER-THE-COUNTER OPTIONS
The Fund may purchase and write over-the-counter options on portfolio
securities in negotiated transactions with the buyers or writers of the
options when options on the portfolio securities held by the Fund are not
traded on an exchange.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase
agreement, the Fund transfers possession of a portfolio instrument to another
person, such as a financial institution, broker, or dealer, in return for a
percentage of the instrument's market value in cash, and agrees that on a
stipulated date in the future the Fund will repurchase the portfolio
instrument by remitting the original consideration plus interest at an agreed
upon rate. The use of reverse repurchase agreements may enable the Fund to
avoid selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase agreements
does not ensure that the Fund will be able to avoid selling portfolio
instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the Fund in a
dollar amount sufficient to make payment for the obligations to be purchased
are segregated at the trade date. These securities are marked to market
daily
and are maintained until the transaction is settled.
PORTFOLIO TURNOVER
Although the Fund does not intend to invest for the purpose of seeking
short-term profits, securities in its portfolio will be sold whenever the
Fund's adviser believes it is appropriate to do so in light of the Fund's
investment objective, without regard to the length of time a particular
security may have been held. It is not anticipated that the portfolio
trading
engaged in by the Fund will result in its annual rate of portfolio turnover
exceeding 75%.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any
securities on
margin, but may obtain such short-term credits as may be necessary for
clearance of purchases and sales of portfolio securities. The
deposit or
payment by the Fund of initial or variation margin in connection with
futures contracts or related options transactions is not considered the
purchase of a security on margin.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities, except that the Fund may
borrow money directly or through reverse repurchase agreements in
amounts
up to one-third of the value of its total assets, including the amount
borrowed; and except to the extent that the Fund may enter into futures
contracts. The Fund will not borrow money or engage in reverse
repurchase agreements for investment leverage, but rather as a
temporary,
extraordinary, or emergency measure or to facilitate management of the
Fund by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenience or
disadvantageous. The Fund will not purchase any securities while any
borrowings in excess of 5% of its total assets are outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may mortgage, pledge,
or
hypothecate assets having a market value not exceeding 10% of the value
of total assets at the time of the pledge. For purposes of this
limitation, the following will not be deemed to be pledges of the Fund's
assets: (a) the deposit of assets in escrow in connection with the
writing of covered put or call options and the purchase of securities on
a when-issued basis; and (b) collateral arrangements with respect to
(i) the purchase and sale of stock options (and options on stock
indices)
and (ii) initial or variation margin for futures contracts. Margin
deposits for the purchase and sale of futures contracts and related
options are not deemed to be a pledge.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities issued by any one issuer
(other than cash, cash items, or securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities, and repurchase
agreements collateralized by such securities) if, as a result, more than
5% of the value of its total assets would be invested in the securities
of that issuer. The Fund will not will not acquire more than 10% of the
outstanding voting securities of any one issuer.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may
be
deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its investment
objective, policies, and limitations.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited
partnership interests, although it may invest in the securities of
companies whose business involves the purchase or sale of real estate or
in securities which are secured by real estate or interests in real
estate.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts except to the extent that the Fund may
engage
in transactions involving financial futures contracts or options on
financial futures contracts.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except portfolio securities up
to one-third of the value of its total assets. This shall not prevent
the Fund from purchasing or holding U.S. government obligations, money
market instruments, variable rate demand notes, bonds, debentures,
notes,
certificates of indebtedness, or other debt securities, entering into
repurchase agreements, or engaging in other transactions where permitted
by the Fund's investment objective, policies, and limitations or the
Trust's Declaration of Trust.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in
any one industry (other than securities issued by the U.S. government,
its agencies or instrumentalities).
The above investment limitations cannot be changed without shareholder
approval. The following investment limitations may be changed by the
Trustees
without shareholder approval. Shareholders will be notified before any
material change in these limitations becomes effective.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets
in
securities of issuers with records of less than three years of
continuous
operations, including the operation of any predecessor.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES
OF THE TRUST
The Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Trust or the Fund's investment adviser
owning individually more than 1/2 of 1% of the issuer's securities
together own more than 5% of the issuer's securities.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will limit its investment in other investment companies to no
more than 3% of the total outstanding voting stock of any investment
company, invest no more than 5% of its total assets in any one
investment
company, and invest no more than 10% of its total assets in investment
companies in general. The Fund will purchase securities of investment
companies only in open-market transactions involving only customary
broker's commissions. However, these limitations are not applicable if
the securities are acquired in a merger, consolidation, or
acquisition of
assets.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest more than 5% of the value of its total assets
in
securities subject to restrictions on resale under the Securities Act of
1933, except for commercial paper issued under Section 4(2) of the
Securities Act of 1933 and certain other restricted securities which
meet
the criteria for liquidity as established by the Trustees.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of the value of its net assets in
illiquid securities, including repurchase agreements providing for
settlement in more than seven days after notice, non-negotiable fixed
time deposits with maturities over seven days, over-the-counter options,
and certain restricted securities not determined by the Trustees to be
liquid.
PURCHASING SECURITIES TO EXERCISE CONTROL
The Fund will not purchase securities of a compny for the purpose of
exercising control or management.
INVESTING IN WARRANTS
The Fund will not invest more than 5% of the value of its net assets in
warrants. No more than 2% of this 5% may be warrants which are not
listed on the New York Stock Exchange or the American Stock Exchange.
INVESTING IN PUT OPTIONS
The Fund will not purchase put options on securities, unless the
securities are held in the Fund's portfolio and not more than 5% of the
value of the Fund's total assets would be invested in premiums on option
put option positions.
WRITING COVERED CALL OPTIONS
The Fund will not write call options on securities unless the securities
are held in the Fund's portfolio or unless the Fund is entitled to them
in deliverable form without further payment or after segregating cash in
the amount of any further payment.
Except with respect to borrowing money, if a percentage limitation is adhered
to at the time of investment, a later increase or decrease in percentage
resulting from any change in value or net assets will not result in a
violation of such restriction.
The Fund does not expect to borrow money or pledge securities in excess of 5%
of the value of its total assets in the coming fiscal year.
For purposes of its policies and limitations, the Fund considers certificates
of deposit and demand and time deposits issued by a U.S. branch of a domestic
bank or savings and loan association having capital, surplus, and undivided
profits in excess of $100,000,000 at the time of investment to be "cash
items."
To comply with registration requirements in certain states, the Fund (1) will
limit the aggregate value of the assets underlying covered call options or
put
options written by the Fund to not more than 25% of its net assets, (2) will
limit the premiums paid for options purchased by the Fund to 5% of its net
assets, (3) will limit the margin deposits on futures contracts entered into
by the Fund to 5% of its net assets, and (4) will limit investment in
warrants
to 5% of its net assets. No more than 2% will be in warrants which are not
listed on the New York or American Stock Exchanges. Also, to comply with
certain state restrictions, the Fund will limit its investment in restricted
securities to 5% of total assets. (If state requirements change, these
restrictions may be revised without shareholder notification.)
TRUST MANAGEMENT
OFFICERS AND TRUSTEES
Officers and Trustees are listed with their addresses, principal
occupations, and present positions. Except as listed below, none of the
Trustees or officers are affiliated with Star Bank, N.A., Federated
Investors, Federated Securities Corp., Federated Services Company, Federated
Administrative Services, or the Funds (as defined below).
Positions with Principal Occupations
Name and Address the Trust____ During Past Five Years
John F. Donahue@* Chairman and Chairman and Trustee, Federated
Federated Investors Trustee Investors; Chairman and Trustee,
Tower Federated Advisers, Federated
Pittsburgh, PA Management, and Federated
Research; Director, AEtna Life
and Casualty Company; Chief
Executive Officer and Director,
Trustee, or Managing General
Partner of the Funds; formerly,
Director, The Standard Fire
Insurance Company.
John T. Conroy, Jr. Trustee President, Investment Properties
Wood/IPC Commercial Corporation; Senior Vice-President,
Department John R. Wood and Associates, Inc.,
John R. Wood and Realtors; President, Northgate
Associates, Inc., Realtors Village Development
3255 Tamiami Trail North Corporation; General Partner or
Naples, FL Trustee in private real estate
ventures in Southwest Florida;
Director, Trustee, or Managing
General Partner of the Funds;
formerly,
President, Naples Property
Management, Inc.
William J. Copeland Trustee Director and Member of the
One PNC Plaza - 23rd Floor Executive Committee, Michael
Pittsburgh, PA Baker, Inc.; Director, Trustee,
or Managing General Partner of
the Funds; formerly, Vice
Chairman and Director, PNC
Bank, N.A., and PNC Bank Corp.
and Director, Ryan Homes, Inc.
James E. Dowd Trustee Attorney-at-law; Director, The
571 Hayward Mill Road Emerging Germany Fund, Inc.;
Concord, MA Director, Trustee, or Managing
General Partner of the Funds;
formerly, Director, Blue Cross
of Massachusetts, Inc.
Lawrence D. Ellis, M.D. Trustee Hematologist, Oncologist, and
3471 Fifth Avenue Internist, Presbyterian and
Suite 1111 Montefiore Hospitals; Clinical
Pittsburgh, PA Professor of Medicine and
Trustee, University of
Pittsburgh; Director, Trustee,
or Managing General Partner of
the Funds.
Edward L. Flaherty, Jr.@ Trustee Attorney-at-law; Partner, Meyer
5916 Penn Mall and Flaherty; Director, Eat'N
Pittsburgh, PA Park Restaurants, Inc., and
Statewide Settlement Agency,
Inc.; Director, Trustee, or
Managing General Partner of
the Funds; formerly, Counsel,
Horizon Financial, F.A.,
Western Region.
Edward C. Gonzales* President, Vice President, Treasurer, and
Federated Investors Treasurer, Trustee, Federated Investors;
Tower and Trustee Vice President and Treasurer,
Pittsburgh, PA Federated Advisers, Federated
Management,
and Federated Research; Executive
Vice President, Treasurer, and
Director, Federated Securities
Corp.;
Trustee, Federated Services
Company; Chairman, Treasurer,
and Director, Federated
Administrative Services;
Trustee or Director of some of
the Funds; Vice President and
Treasurer of the Funds.
Peter E. Madden Trustee Consultant; State Representative,
225 Franklin Street Commonwealth of Massachusetts;
Boston, MA Director, Trustee, or Managing
General Partner of the Funds;
formerly, President, State Street
Bank and Trust Company and
State Street Boston Corporation
and Trustee, Lahey Clinic
Foundation, Inc.
Gregor F. Meyer Trustee Attorney-at-law; Partner, Meyer
5916 Penn Mall and Flaherty; Chairman, Meritcare,
Pittsburgh, PA Inc.; Director, Eat'N Park
Restaurants, Inc.; Director,
Trustee, or Managing General
Partner of the Funds; formerly,
Vice Chairman,
Horizon Financial, F.A.
Wesley W. Posvar Trustee Professor, Foreign Policy and
1202 Cathedral of Management Consultant; Trustee,
Learning Carnegie Endowment for
University of Pittsburgh International Peace, RAND
Pittsburgh, PA Corporation, Online Computer
Library Center, Inc., and U.S.
Space Foundation; Chairman,
Czecho Slovak Management
Center; Director, Trustee, or
Managing General Partner of the
Funds; President Emeritus,
University of Pittsburgh;
formerly, Chairman, National
Advisory
Council for Environmental Policy
and Technology.
Marjorie P. Smuts Trustee Public relations/marketing
4905 Bayard Street consultant; Director, Trustee,
Pittsburgh, PA or Managing General Partner of
the Funds.
Richard B. Fisher Vice President Executive Vice President and
Federated Investors Trustee, Federated Investors;
Tower Chairman and Director,
Pittsburgh, PA Federated Securities Corp.;
President or Vice President of
the Funds; Director or Trustee
of some of the Funds.
Joseph S. Machi Vice President Vice President, Federated
Federated Investors and Assistant Administrative Services;
Tower Treasurer Vice President and Assistant
Pittsburgh, PA Treasurer of some of the
Funds.
John W. McGonigle Vice President Vice President, Secretary,
Federated Investors and Secretary General Counsel, and Trustee,
Tower Federated Investors, Vice
Pittsburgh, PA President, Secretary, and
Trustee, Federated Advisers,
Federated Management, and
Federated Research; Trustee,
Federated Services Company;
Executive Vice President,
Secretary,
and Director, Federated
Administrative Services;
Director and Executive Vice
President, Federated Securities
Corp.; Vice President and
Secretary
of the Funds.
John A. Staley, IV Vice President Vice President and Trustee,
Federated Investors Federated Investors; Executive
Tower Vice President, Federated
Pittsburgh, PA Securities Corp.; President
and Trustee,
Federated Advisers, Federated
Management, and Federated
Research; Vice President of the
Funds; Director, Trustee, or
Managing General Partner of some
of the Funds; formerly, Vice
President, The Standard Fire
Insurance Company and President
of its Federated Research
Division.
* This Trustee is deemed to be an "interested person" of the Trust as defined
in the Investment Company Act of 1940.
@ Member of the Trust's Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board of
Trustees/Directors between meetings of the Board.
THE FUNDS
"The Funds" and "Funds" mean the following investment companies: A. T. Ohio
Municipal Money Fund; American Leaders Fund, Inc.; Annuity Management Series;
Automated Cash Management Trust; Automated Government Money Trust; The
Boulevard Funds; California Municipal Cash Trust; Cash Trust Series II; Cash
Trust Series, Inc.; DG Investor Series; Edward D. Jones & Co. Daily Passport
Cash Trust; FT Series, Inc.; Federated ARMs Fund; Federated Exchange Fund,
Ltd.; Federated GNMA Trust; Federated Government Trust; Federated Growth
Trust; Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated Intermediate
Government Trust; Federated Master Trust; Federated Municipal Trust;
Federated
Short-Intermediate Government Trust; Federated Short-Term U.S. Government
Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated U.S.
Government Bond Fund; First Priority Funds; Fixed Income Securities, Inc.;
Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress Municipal
Income
Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S. Government Securities,
Inc.; Government Income Securities, Inc.; High Yield Cash Trust; Insight
Institutional Series, Inc.; Insurance Management Series; Intermediate
Municipal Trust; Investment Series Funds, Inc.; Investment Series Trust;
Liberty Equity Income Fund, Inc.; Liberty High Income Bond Fund, Inc.;
Liberty
Municipal Securities Fund, Inc.; Liberty U.S. Government Money Market Trust;
Liberty Term Trust, Inc. - 1999; Liberty Utility Fund, Inc.; Liquid Cash
Trust; Managed Series Trust; Mark Twain Funds; Money Market Management, Inc.;
Money Market Obligations Trust; Money Market Trust; Municipal Securities
Income Trust; New York Municipal Cash Trust; 111 Corcoran Funds; Peachtree
Funds; The Planters Funds; Portage Funds; RIMCO Monument Funds; The Shawmut
Funds; Short-Term Municipal Trust; Signet Select Funds; Star Funds; The
Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Tax-Free Instruments Trust; Trademark Funds;
Trust for Financial Institutions; Trust For Government Cash Reserves; Trust
for Short-Term U.S. Government Securities; Trust for U.S. Treasury
Obligations.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees are not
liable for
errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
INVESTMENT ADVISORY SERVICES
ADVISER TO THE FUND
The Fund's investment adviser is Star Bank, N.A. ("Star Bank" or "Adviser").
Star Bank is a wholly-owned subsidiary of StarBanc Corporation. Because of
internal controls maintained by Star Bank to restrict the flow of non-public
information, Fund investments are typically made without any knowledge of
Star
Bank's or its affiliates' lending relationships with an issuer.
Star Bank shall not be liable to the Trust, the Fund, or any shareholder of
the Fund for any losses that may be sustained in the purchase, holding, or
sale of any security, or for anything done or omitted by it, except acts or
omissions involving willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by its contract with the
Trust.
ADVISORY FEES
For its advisory services, Star Bank receives an annual investment advisory
fee as described in the prospectus.
STATE EXPENSE LIMITATIONS
The Fund has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses)
exceed 2-1/2% per year of the first $30 million of average net assets,
2%
per year of the next $70 million of average net assets, and 1-1/2% per
year of the remaining average net assets, the Adviser has agreed to
reimburse the Fund for its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the Adviser will
be limited, in any single fiscal year, by the amount of the investment
advisory fee.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
ADMINISTRATIVE SERVICES
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee as
described in the prospectus.
In addition, John A. Staley, IV, an officer of the Trust, holds approximately
15% of the outstanding common stock and serves as a director of Commercial
Data Services, Inc., a company which provides computer processing services to
Federated Administrative Services. For the fiscal years ended November 30,
1993, 1992, and 1991, Federated Administrative Services paid approximately
$164,324, $186,144, and $193,178, respectively, for services provided by
Commercial Data Services, Inc.
CUSTODIAN
Star Bank is custodian for the securities and cash of the Fund. Under the
Custodian Agreement, Star Bank holds the Fund's portfolio securities in
safekeeping and keeps all necessary records and documents relating to its
duties. The custodian receives an annual fee equal to 0.025 of 1% of the
Fund's average daily net assets.
BROKERAGE TRANSACTIONS
The Adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the
Adviser and may include:
- advice as to the advisability of investing in securities;
- security analysis and reports;
- economic studies;
- industry studies;
- receipt of quotations for portfolio evaluations; and
- similar services.
The Adviser exercises reasonable business judgment in selecting brokers who
offer brokerage and research services to execute securities transactions. It
determines in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research
services
provided.
Research services provided by brokers and dealers may be used by the Adviser
in advising the Fund and other accounts. To the extent that receipt of these
services may supplant services for which the Adviser might otherwise have
paid, it would tend to reduce its expenses.
PURCHASING SHARES
Except under certain circumstances described in the prospectus, shares of the
Fund are sold at their net asset value plus a sales charge, if any, on days
the New York Stock Exchange and the Federal Reserve Wire System are open for
business. Except under the circumstances described in the prospectus, the
minimum initial investment in the Fund by an investor is $1,000. The minimum
initial investment may be waived from time to time for employees and retired
employees of Star Bank, N.A., and for members of the families (including
parents, grandparents, siblings, spouses, children, aunts, uncles, and
in-laws) of such employees or retired employees. The procedure for
purchasing
shares of the Fund is explained in the prospectus under "Investing in the
Fund."
DISTRIBUTION PLAN
With respect to the Fund, the Trust has adopted a Plan pursuant to Rule 12b-1
which was promulgated by the Securities and Exchange Commission pursuant to
the Investment Company Act of 1940 (the "Plan"). The Plan provides for
payment of fees to Federated Securities Corp. to finance any activity
which is
principally intended to result in the sale of the Fund's shares subject to
the
Plan. Such activities may include the advertising and marketing of shares of
the Fund; preparing, printing, and distributing prospectuses and sales
literature to prospective shareholders, brokers, or administrators; and
implementing and operating the Plan. Pursuant to the Plan, Federated
Securities Corp. may pay fees to brokers and others for such services.
The Trustees expect that the adoption of the Plan will result in the sale
of a
sufficient number of shares so as to allow the Fund to achieve economic
viability. It is also anticipated that an increase in the size of the Fund
will facilitate more efficient portfolio management and assist the Fund in
seeking to achieve its investment objective.
ADMINISTRATIVE ARRANGEMENTS
The administrative services include, but are not limited to, providing office
space, equipment, telephone facilities, and various personnel, including
clerical, supervisory, and computer, as is necessary or beneficial to
establish and maintain shareholders' accounts and records, process purchase
and redemption transactions, process automatic investments of client account
cash balances, answer routine client inquiries regarding the Fund, assist
clients in changing dividend options, account designations, and addresses,
and
providing such other services as the Fund may reasonably request.
CONVERSION TO FEDERAL FUNDS
It is the Fund's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be
in federal funds or be converted into federal funds. Star Bank acts as the
shareholder's agent in depositing checks and converting them to federal funds.
DETERMINING NET ASSET VALUE
The net asset value generally changes each day. The days on which the net
asset value is calculated by the Fund are described in the prospectus.
DETERMINING MARKET VALUE OF SECURITIES
Market or fair values of the Fund's portfolio securities are determined as
follows:
- for equity securities, according to the last sale price on a national
securities exchange, if applicable;
- in the absence of recorded sales for listed equity securities, according
to
the mean between the last closing bid and asked prices;
- for unlisted equity securities, latest bid prices;
- for bonds and other fixed income securities, as determined by an
independent pricing service;
- for short-term obligations, according to the mean between bid and asked
prices as furnished by an independent pricing service, or for short-term
obligations with maturities of less than 60 days, at amortized cost; or
- for all other securities, at fair value as determined in good faith by the
Trustees.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may reflect: institutional trading
in similar groups of securities, yield, quality, coupon rate, maturity, type
of issue, trading characteristics, and other market data.
The Fund will value futures contracts, options and put options on financial
futures at their market values established by the exchanges at the close of
options trading on such exchanges unless the Trustees determine in good faith
that another method of valuing option positions is necessary to appraise
their
fair value.
Over-the-counter put options will be valued at the mean between the bid and
the asked prices. Covered call options will be valued at the last sale price
on the national exchange on which such option sis traded. Unlisted call
options will be valued at the latest bid price as provided by brokers.
TRADING IN FOREIGN SECURITIES
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange. In computing the net asset value,
the
Fund values foreign securities at the latest closing price on the exchange on
which they are traded immediately prior to the closing of the New York Stock
Exchange. Certain foreign currency exchange rates may also be determined at
the latest rate prior to the closing of the New York Stock Exchange. Foreign
securities quoted in foreign currencies are translated into U.S. dollars at
current rates. Occasionally, events that affect these values and exchange
rates may occur between the times at which they are determined and the
closing
of the New York Stock Exchange. If such events materially affect the value
of
portfolio securities, these securities may be valued at their fair value as
determined in good faith by the Trustees, although the actual calculation may
be done by others.
EXCHANGE PRIVILEGE
REQUIREMENTS FOR EXCHANGE
Shareholders using the exchange privilege must exchange shares having a net
asset value of at least $1,000. Before the exchange, the shareholder must
receive a prospectus of the fund for which the exchange is being made.
This privilege is available to shareholders resident in any state in which
the
fund shares being acquired may be sold. Upon receipt of proper instructions
and required supporting documents, shares submitted for exchange are redeemed
and the proceeds invested in shares of the other fund. Further information
on
the exchange privilege and prospectuses may be obtained by calling Star Bank
at the number on the cover of this Statement.
MAKING AN EXCHANGE
Instructions for exchanges may be given in writing. Written instructions may
require a signature guarantee.
REDEEMING SHARES
The Fund redeems shares at the next computed net asset value after Star Bank
receives the redemption request. Redemptions will be made on days on which
the Fund computes its net asset value. Redemption requests cannot be
executed
on days on which the New York Stock Exchange is closed or on federal holidays
restricting wire transfers. Redemption procedures are explained in the
prospectus under "Redeeming Shares."
REDEMPTION IN KIND
Although the Trust intends to redeem shares in cash, it reserves the right
under certain circumstances to pay the redemption price in whole or in part
by
a distribution of securities from the respective fund's portfolio. To
satisfy
registration requirements in a particular state, redemption in kind will be
made in readily marketable securities to the extent that such securities are
available. If this state's policy changes, the Fund reserves the right to
redeem in kind by delivering those securities it deems appropriate.
Redemption in kind will be made in conformity with applicable Securities and
Exchange Commission rules, taking such securities at the same value employed
in determining net asset value and selecting the securities in a manner the
Trustees determine to be fair and equitable.
The Trust has elected to be governed by Rule 18f-1 under the Investment
Company Act of 1940 under which the Trust is obligated to redeem shares for
any one shareholder in cash only up to the lesser of $250,000 or 1% of the
respective class' net asset value during any 90-day period.
Redemption in kind is not as liquid as a cash redemption. If redemption is
made in kind, shareholders receiving their securities and selling them before
their maturity could receive less than the redemption value of their
securities and could incur certain transaction costs.
TAX STATUS
THE FUND'S TAX STATUS
The Fund will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment, the Fund must,
among other requirements:
- derive at least 90% of its gross income from dividends, interest, and
gains
from the sale of securities;
- derive less than 30% of its gross income from the sale of securities held
less than three months;
- invest in securities within certain statutory limits; and
- distribute to its shareholders at least 90% of its net income earned
during
the year.
FOREIGN TAXES
Investment income on certain foreign securities in which the Fund may invest
may be subject to foreign withholding or other taxes that could reduce the
return on these securities. Tax treaties between the United States and
foreign countries, however, may reduce or eliminate the amount of foreign
taxes to which the Fund would be subject.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends and capital gains
received as cash or additional shares. The dividends received deduction for
corporations will apply to ordinary income distributions to the extent the
distribution represents amounts that would qualify for the dividends received
deduction to the Fund if the Fund were a regular corporation and to the
extent
designated by the Fund as so qualifying. These dividends and any short-term
capital gains are taxable as ordinary income.
CAPITAL GAINS
Shareholders will pay federal tax at capital gains rates on long-term
capital gains distributed to them regardless of how long they have held
Fund shares.
TOTAL RETURN
The average annual total return for the Fund is the average compounded rate
of
return for a given period that would equate a $1,000 initial investment to
the
ending redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of shares owned at the end of the period
by
the maximum offering price per share at the end of the period. The number of
shares owned at the end of the period is based on the number of shares
purchased at the beginning of the period with $1,000, less any applicable
sales load, adjusted over the period by any additional shares, assuming the
quarterly reinvestment of all dividends and distributions.
YIELD
The yield for the Fund is determined by dividing the net investment income
per
share (as defined by the Securities and Exchange Commission) earned by the
Fund over a thirty-day period by the maximum offering price per share of the
Fund on the last day of the period. This value is then annualized using
semi-annual compounding. This means that the amount of income generated
during the thirty-day period is assumed to be generated each month over a
twelve-month period and is reinvested every six months. The yield does not
necessarily reflect income actually earned by the Fund because of certain
adjustments required by the Securities and Exchange Commission and,
therefore,
may not correlate to the dividends or other distributions paid to
shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in the
Fund, the performance will be reduced for those shareholders paying those
fees.
PERFORMANCE COMPARISONS
The performance of the Fund depends upon such variables as:
- portfolio quality;
- average portfolio maturity;
- type of instruments in which the portfolio is invested;
- changes in interest rates and market value of portfolio securities;
- changes in the Fund's expenses; and
- various other factors.
The Fund's performance fluctuates on a daily basis largely because net
earnings and the maximum offering price per share fluctuate daily. Both net
earnings and offering price per share are factors in the computation of yield
and total return.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors such as the composition of any
index used, prevailing market conditions, portfolio compositions of other
funds, and methods used to value portfolio securities and compute offering
price. The financial publications and/or indices which the Fund uses in
advertising may include:
- Lipper Analytical Services, Inc., ranks funds in various fund categories
by
making comparative calculations using total return. Total return assumes
the reinvestment of all income dividends and capital gains distributions,
if any. From time to time, the Fund will quote its Lipper ranking in the
"growth" category in advertising and sale literature.
- Standard & Poor's Daily Stock Price Index of 500 Common Stocks, a
composite
index of common stocks in industry, transportation, and financial and
public utility companies, can be used to compare to the total returns of
funds whose portfolios are invested primarily in common stocks. In
addition, the Standard & Poor's index assumes reinvestments of all
dividends paid by stocks listed on its index. Taxes due on any of these
distributions are not included, nor are brokerage or other fees calculated
in Standard & Poor's figures.
Advertisements and other sales literature for the Fund may quote total
returns
which are calculated on non-standardized base periods. These total returns
also represent the historic change in the value of an investment in the Fund
based on quarterly reinvestment of dividends over a specified period of time.
Advertisements may quote performance information which does not reflect the
effect of the sales load.
APPENDIX
STANDARD AND POOR'S CORPORATION CORPORATE BOND RATINGS
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay
interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
NR--Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that Standard & Poor's
does not rate a particular type of obligation as a matter of policy.
PLUS (+) OR MINUS (-):--The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or fluctuation
of protective elements may be of greater amplitude or there may be other
elements present which make the long term risks appear somewhat larger than
in
Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate but elements
may be
present which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great
length of time. Such bonds lack outstanding investment characteristics and,
in fact, have speculative characteristics as well.
NR--Not rated by Moody's.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA--Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA. Because bonds rated in the
AAA and AA categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions
and circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds,
and therefore, impair timely payment.
NR--NR indicates that Fitch does not rate the specific issue.
STANDARD AND POOR'S CORPORATION COMMERCIAL PAPER RATINGS
A-1--This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. The issues determined to
possess overwhelming safety characteristics are denoted with a plus (+) sign
designation.
A-2--Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues
designated
A-1.
MOODY'S INVESTORS SERVICES, INC., COMMERCIAL PAPER RATINGS
P-1--Issuers rated PRIME-1 (for related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations.
PRIME-1
repayment capacity will normally be evidenced by the following
characteristics: conservative capitalization structures with moderate
reliance on debt and ample asset protection; broad margins in earning
coverage
of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources
of
alternate liquidity.
P-2--Issuers rated PRIME-2 (for related supporting institutions) have a
strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be
more
subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
FITCH INVESTORS SERVICE, INC., SHORT-TERM RATINGS
F-1+--(Exceptionally Strong Credit Quality). Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1--(Very Strong Credit Quality). Issues assigned to this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2--(Good Credit Quality). Issues carrying this rating have a satisfactory
degree of assurance for timely payment but the margin of safety is not as
great as the F-1+ and F-1 categories.
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements (Filed in Part A)
(b) Exhibits:
(1) Conformed copy of Declaration of Trust of the
Registrant (15);
(i) Conformed copy of Amendment No. 1 to
Declaration of Trust (2);
(ii) Conformed copy of Amendment No. 2 to
Declaration of Trust (2);
(iii) Conformed copy of Amendment No. 3 to
Declaration of Trust (2);
(iv) Conformed copy of Amendment No. 4 to
Declaration of Trust (4);
(v) Conformed copy of Amendment No. 5 to
Declaration of Trust (12);
(vi) Conformed copy of Amendment No. 6 to
Declaration of Trust (12);
(vii) Conformed copy of Amendment No. 7 to
Declaration of Trust (12);
(viii) Conformed copy of Amendment No. 8 to
Declaration of Trust (15);
(ix) Conformed copy of Amendment No. 9 to
Declaration of Trust (15);
(x) Conformed copy of Amendment No. 10 to
Declaration of Trust (15);
(xi) Conformed copy of Amendment No. 11 to
Declaration of Trust (15);
(xii) Conformed copy of Amendment No. 12 to
Declaration of Trust;+
(2) Copy of By-Laws of the Registrant (1);
(3) Not applicable;
(4) Not applicable;
+ All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed February 3, 1989. (File
Nos. 33-26915 and 811-5762)
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A filed
April 10, 1989. (File Nos. 33-26915 and 811-5762)
4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 2 to the Registration Statement on Form N-1A filed
December 6, 1989. (File Nos. 33-26915 and 811-5762)
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 to the Registration Statement on Form N-1A filed
January 29, 1992. (File Nos. 33-26915 and 811-5762)
15. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 19 to the Registration Statement on Form N-1A filed
July 2, 1993. (File Nos. 33-26915 and 811-5762)
(5) Conformed copy of Investment Advisory Contract between
Losantiville Funds and Star Bank, N.A. (13);
(i) Form of Exhibit H to Investment Advisory
Contract of the Registrant to add Star Growth
Equity Fund to the present Investment Advisory
Contract;+
(6) (i) Conformed copy of Distributor's Contract
of the Registrant (13);
(ii) Conformed copy of Exhibit F to
Distributor's Contract of the Registrant (17);
(iii) Form of Exhibit G to Distributor's
Contract of the Registrant (17);
(iv) Form of Exhibit H to Distributor's
Contract of the Registrant to add Star Growth
Equity Fund to the present Distributor's
Contract;+
(7) Not applicable;
(8) Conformed copy of Custodian Contract of the
Registrant (15);
(9) (i) Conformed copy of Fund Accounting and
Shareholder Recordkeeping Agreement (16);
(ii) Copy of Amendment No. 1 to Fund Accounting and
Shareholder Recordkeeping Agreement (15);
(iii) Conformed copy of Administrative Services
Agreement (17);
(iv) Form of Shareholder Services Plan of the
Registrant;+
(10) Paper copy of Opinion and Consent of Counsel as
to Legality of Shares being Issued (2);
(11) (i) Conformed copy of Consent of Independent
Public Accountants (17);
(ii) Opinion and Consent of Special Counsel (9);
(12) Not applicable;
(13) Conformed copy of Initial Capital Understanding
(2);
(14) Not applicable;
+ All exhibits have been filed electronically.
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A filed
April 10, 1989. (File Nos. 33-26915 and 811-5762)
9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 9 to the Registration Statement on Form N-1A filed
March 12, 1991. (File Nos. 33-26915 and 811-5762)
13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 to the Registration Statement on Form N-1A filed
November 20, 1992. (File Nos. 33-26915 and 811-5762)
15. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 19 to the Registration Statement on form N-1A filed
July 2, 1993. (File Nos. 33-26915 and 811-5762)
16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 18 to the Registration Statement on Form N-1A filed
January 21, 1993. (File Nos. 33-26915 and 811-5762)
17. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 21 to the Registration Statement on Form N-1A filed
February 4, 1994. (File Nos. 33-26915 and 811-5762)
(15) (i) Conformed copy of Distribution Plan
(13);
(ii) Copy of Rule 12b-1 Agreement (7);
(iii) Copy of Amendment No. 2 to Exhibit A to 12b-1
Agreement (11);
(iv) Copy of Amendment No. 3 to Exhibit A to 12b-1
Agreement (11);
(v) Copy of Amendment No. 4 to Exhibit A to 12b-1
Agreement (13);
(vi) Conformed copy of Exhibit E to the
Distribution Plan (17);
(vii) Copy of Amendment No. 5 to Exhibit A to 12b-1
Agreement;+
(viii) Form of Exhibit F to Distribution Plan of the
Registrant to add Star Growth Equity Fund to
the present Distribution Plan;+
(16) (i) Schedule for Computation of Fund
Performance Data (11);
(ii) Copy of Schedule for Computation of Fund
Performance Data, The Stellar Fund (12);
(iii) Copy of Schedule for Computation of
Fund Performance Data, Star U.S.
Government Income Fund (15);
(17) Conformed copy of Power of Attorney (15);
(18) Not applicable.
Item 25. Persons Controlled by or Under Common Control with Registrant:
None.
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 to the Registration Statement on Form N-1A filed
December 4, 1990. (File Nos. 33-26915 and 811-5762)
11. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 to the Registration Statement on Form N-1A filed
August 29, 1991. (File Nos. 33-26915 and 811-5762)
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 to the Registration Statement on Form N-1A filed
January 29, 1992. (File Nos. 33-26915 and 811-5762)
13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 to the Registration Statement on Form N-1A filed
November 20, 1992. (File Nos. 33-26915 and 811-5762)
15. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 19 to the Registration Statement on Form N-1A filed
July 2, 1993. (File Nos. 33-26915 and 811-5762)
17. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 21 to the Registration Statement on Form N-1A filed
February 4, 1994. (File Nos. 33-26915 and 811-5762)
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of December 31, 1993
Shares of beneficial interest
(no par value)
Star Treasury Fund 12
Star Prime Obligations Fund 12
Star Relative Value Fund 144
Star Tax-Free Money Market Fund 8
The Stellar Fund 4077
Star U.S. Government Income Fund 188
Star Growth Equity Fund 0
Item 27. Indemnification: (3)
Item 28. Business and Other Connections of Investment Adviser:
(a) Star Bank, N.A. ("Star Bank"), a national bank, was founded
in 1863 and is the largest bank and trust organization of
StarBanc Corporation. Star Bank had an asset base of $7.6
billion as of December 31, 1993, and trust assets of
$12.5 billion as of December 31, 1993.
Star Bank has managed commingled funds since 1957. It
currently manages eleven common trust funds and collective
investment funds having a market value in excess of $303
million.
The officers and directors of the Star Bank any other
business, profession, vocation, or employment of a
substantial nature in which each such officer and director is
or has been engaged during the past two years, is set forth
below. Unless otherwise noted, the position listed under
"Other Business, Profession, Vocation or Employment" is with
Star Bank.
3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 to the Registration Statement on Form N-1A filed
July 26, 1989. (File Nos. 33-26915 and 811-5762)
(b)
Other Substantial
Position with Business, Profession,
Name the Adviser Vocation or Employment
Samuel M. Cassidy President and Chief N/A
Executive Officer
Jerry A. Grundhofer Chairman of the Board N/A
Oliver W. Waddell Vice Chairman of the Board N/A
David M. Moffett Executive Vice President N/A
Richard K. Davis Executive Vice President N/A
Joseph A. Campanella Executive Vice President N/A
Thomas J. Lakin Executive Vice President N/A
Timothy J. Fogarty Senior Vice President N/A
Stephen E. Smith Senior Vice President N/A
F. Kristen Koepcke Vice President and N/A
Secretary
J. R. Bridgeland, Jr. Director Partner, Taft, Stetinius
& Hollister
L. L. Browning, Jr. Director Emerson Electric Co.
V. B. Buyniski Director United Medical
Resources, Inc.
Samuel M. Cassidy Director President & CEO, Star
Bank, N.A.
Raymond R. Clark Director Cincinnati Bell
Telephone Company
V. Anderson Coombe Director Wm. Powell Company
John C. Dannemiller Director Bearings, Inc.
Jerry A. Grundhofer Director President and CEO, Star
Banc Corp.
J. P. Hayden, Jr. Director The Midland Company
Roger L. Howe Director U.S. Precision Lens,
Inc.
T. J. Klinedinst, Jr. Director Thomas E. Wood, Inc.
Chares S. Mechem, Jr. Director Ladies Professional Golf
Association
Other Substantial
Position with Business, Profession,
Name the Adviser Vocation or Employment
Daniel J. Meyer Director Cincinnati Milacron,
Inc.
O. M. Owens, M.D., M. Director Christ Hospital
Thomas E. Petry Director Eagle-Picher Industries,
Inc.
William C. Portman Director Portman Equipment
Company
Oliver W. Waddell Director Star Banc Corporation
Bradley L. Warnemunde Director Ohio National Life
Insurance Company
Item 29. Principal Underwriters:
(a) Federated Securities Corp., the Distributor for shares
of the Registrant, also acts as principal underwriter for
the following open-end investment companies: A.T. Ohio
Municipal Money Fund; American Leaders Fund, Inc.; Annuity
Management Series; Automated Cash Management Trust;
Automated Government Money Trust; BankSouth Select Funds;
BayFunds; The Biltmore Funds; The Biltmore Municipal Funds;
The Biltmore Municipal Funds; The Boulevard Funds;
California Municipal Cash Trust; Cambridge Series Trust;
Cash Trust Series, Inc.; Cash Trust Series II; DG Investor
Series; Edward D. Jones & Co. Daily Passport Cash Trust; FT
Series, Inc.; Federated ARMs Fund; Federated Exchange Fund,
Ltd.; Federated GNMA Trust; Federated Government Trust;
Federated Growth Trust; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust;
Federated Index Trust; Federated Intermediate Government
Trust; Federated Master Trust; Federated Municipal Trust;
Federated Short-Intermediate Government Trust; Federated
Short-Term U.S. Government Trust; Federated Stock Trust;
Federated Tax-Free Trust; Federated U.S. Government Bond
Fund; Financial Reserves Fund; First Priority Funds; First
Union Funds; Fixed Income Securities, Inc.; Fortress
Adjustable Rate U.S. Government Fund, Inc.; Fortress
Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.;
Fountain Square Funds; Fund for U.S. Government Securities,
Inc.; Government Income Securities, Inc.; High Yield Cash
Trust; Independence One Mutual Funds; Insurance Management
Series; Intermediate Municipal Trust; Investment Series
Funds, Inc.; Investment Series Trust; Liberty Equity Income
Fund, Inc.; Liberty High Income Bond Fund, Inc.; Liberty
Municipal Securities Fund, Inc.; Liberty U.S. Government
Money Market Trust; Liberty Utility Fund, Inc.; Liquid Cash
Trust; Managed Series Trust; Mark Twain Funds; Marshall
Funds, Inc.; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; The Monitor Funds;
Municipal Securities Income Trust; New York Municipal Cash
Trust; 111 Corcoran Funds; Peachtree Funds; The Planters
Funds; Portage Funds; RIMCO Monument Funds; The Shawmut
Funds; Short-Term Municipal Trust; Signet Select Funds;
SouthTrust Vulcan Funds; The Starburst Funds; The Starburst
Funds II; Stock and Bond Fund, Inc.; Sunburst Funds;
Targeted Duration Trust; Tax-Free Instruments Trust; Tower
Mutual Funds; Trademark Funds; Trust for Financial
Institutions; Trust for Government Cash Reserves; Trust for
Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; Vision Fiduciary Funds, Inc.; and
Vision Group of Funds, Inc.
Federated Securities Corp. also acts as principal
underwriter for the following closed-end investment company:
Liberty Term Trust, Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief, Vice President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice President,
Federated Investors Tower President, and Treasurer, Treasurer, and
Pittsburgh, PA 15222-3779 Federated Securities Corp. Trustee
John W. McGonigle Director, Executive Vice Vice President and
Federated Investors Tower President, and Assistant Secretary
Pittsburgh, PA 15222-3779 Secretary, Federated
Securities Corp.
John A. Staley, IV Executive Vice President Vice President
Federated Investors Tower and Assistant Secretary,
Pittsburgh, PA 15222-3779 Federated Securities Corp.
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust, Federated
Pittsburgh, PA 15222-3779 Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James R. Ball Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David C. Glabicki Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William J. Kerns Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Francis J. Matten, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Jeffery Niss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charles A. Robison Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Brian L. Sullivan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Sharon M. Morgan Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, Federated Assistant
Federated Investors Tower Securities Corp. Secretary
Pittsburgh, PA 15222-3779
(c) Not applicable.
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and
Rules 31a-1 through 31a-3 promulgated thereunder are
maintained at one of the following locations:
Registrant Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Services Company Federated Investors Tower
("Transfer Agent, Dividend Pittsburgh, PA 15222-3779
Disbursing Agent and Portfolio
Recordkeeper")
Federated Administrative Federated Investors Tower
Services Pittsburgh, PA 15222-3779
("Administrator")
Star Bank, N.A. 425 Walnut Street
("Adviser") Cincinnati, OH 45202
Star Bank, N.A. 425 Walnut Street
("Custodian") Cincinnati, OH 45202
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
Registrant hereby undertakes to file a post-effective amendment on
behalf of Star Growth Equity Fund using financial statements for
Star Growth Equity Fund, which need not be certified, within four
to six months from the effective date of this Post-Effective
Amendment No. 22.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, STAR FUNDS, has duly
caused this Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Pittsburgh and Commonwealth of Pennsylvania, on the 17th day of March,
1994.
STAR FUNDS
BY: /s/ C. Grant Anderson
C. Grant Anderson, Assistant Secretary
Attorney in Fact for John F. Donahue
March 17, 1994
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE DATE
By: /s/ C. Grant Anderson
C. Grant Anderson Attorney In Fact March 17,
1994
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Edward C. Gonzales* President, Treasurer, and Trustee
(Principal Financial and
Accounting Officer)
John T. Conroy, Jr.* Trustee
William J. Copeland* Trustee
James E. Dowd* Trustee
Lawrence D. Ellis, M.D.* Trustee
Edward L. Flaherty, Jr.* Trustee
Peter E. Madden* Trustee
Gregor F. Meyer* Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
Exhibit 1(xii) under Form N-1A
Exhibit 3(a) under Item 601/Reg. S-K
STAR FUNDS
(formerly: Losantiville Funds)
Amendment No. 12
DECLARATION OF TRUST
dated January 23, 1989
THIS Declaration of Trust is amended as follows:
Strike the first paragraph of Section 5 of Article III from
the Declaration of Trust and substitute in its place the
following:
"Section 5. Establishment and Designation of Series
or Class. Without limiting the authority of the
Trustees set forth in Article XII, Section 8, inter
alia, to establish and designate any additional
Series or Class or to modify the rights and
preferences of any existing Series or Class, the
Series and Classes of the Trust are established and
designated as:
Star Growth Equity Fund
Star Prime Obligations Fund
Star Relative Value Fund
Star Tax-Free Money Market Fund
Star Treasury Fund
Star U.S. Government Income Fund
The Stellar Fund
Investment Shares
Trust Shares"
The undersigned Assistant Secretary of Star Funds hereby
certifies that the above stated Amendment is a true and
correct Amendment to the Declaration of Trust, as adopted by
the Board of Trustees on the 24th day of February, 1994.
WITNESS the due execution hereof this 25th day of February,
1994.
/s/ C. Grant Anderson
C. Grant Anderson,
Assistant Secretary
Exhibit 5(i) under Form N-1A
Exhibit 10 under Item 601/Reg.
S-K
EXHIBIT H
to the
Investment Advisory Contract
STAR GROWTH EQUITY FUND
For all services rendered by Adviser hereunder, the above-named
Fund of the Trust shall pay to Adviser and Adviser agrees to accept as
full compensation for all services rendered hereunder, an annual
investment advisory fee equal to 0.95 of 1% of the average daily net
assets of the Fund.
The portion of the fee based upon the average daily net assets of
the Fund shall be accrued daily at the rate of 1/365th of 0.95 of 1%
applied to the daily net assets of the Fund(s).
The advisory fee so accrued shall be paid to Adviser daily.
Witness the due execution hereof this 1st day of March, 1994.
Attest: STAR BANK, N.A.
By:
Secretary Vice President
Attest: STAR FUNDS
By:
Assistant Secretary President
Exhibit 6(iv) under Form N-1A
Exhibit 1 under Item 601/Reg.
S-K
Exhibit H
to the
Distributor's Contract
Star Funds
Star Growth Equity Fund
The following provisions are hereby incorporated and made part of the
Distributor's Contract dated the 15th day of November, 1990, between Star
Funds and Federated Securities Corp. with respect to Classes of the Funds set
forth above.
1. The Trust hereby appoints FSC to engage in activities principally
intended to result in the sale of shares of the above-listed Classes
("Shares"). Pursuant to this appointment, FSC is authorized to select a group
of brokers ("Brokers") to sell Shares at the current offering price thereof as
described and set forth in the respective prospectuses of the Trust, and to
render administrative support services to the Trust and its shareholders. In
addition, FSC is authorized to select a group of administrators
("Administrators") to render administrative support services to the Trust and
its shareholders.
2. Administrative support services may include, but are not limited
to, the following functions: 1) account openings: the Broker or
Administrator communicates account openings via computer terminals located on
the Broker's or Administrator's premises; 2) account closings: the Broker or
Administrator communicates account closings via computer terminals; 3) enter
purchase transactions: purchase transactions are entered through the Broker's
or Administrator's own personal computer or through the use of a toll-free
telephone number; 4) enter redemption transactions: Broker or Administrator
enters redemption transactions in the same manner as purchases; 5) account
maintenance: Broker or Administrator provides or arranges to provide
accounting support for all transactions. Broker or Administrator also wires
funds and receives funds for Trust share purchases and redemptions, confirms
and reconciles all transactions, reviews the activity in the Trust's accounts,
and provides training and supervision of its personnel; 6) interest posting:
Broker or Administrator posts and reinvests dividends to the Trust's accounts;
7) prospectus and shareholder reports: Broker or Administrator maintains and
distributes current copies of prospectuses and shareholder reports; 8)
advertisements: the Broker or Administrator continuously advertises the
availability of its services and products; 9) customer lists: the Broker or
Administrator continuously provides names of potential customers; 10) design
services: the Broker or Administrator continuously designs material to send
to customers and develops methods of making such materials accessible to
customers; and 11) consultation services: the Broker or Administrator
continuously provides information about the product needs of customers.
3.
During the term of this Agreement, the Trust will pay FSC for services
pursuant to this Agreement, a monthly fee computed at the annual rate of 0.25
of the average aggregate net asset value of the shares of the Star Growth
Equity Fund held during the month. For the month in which this Agreement
becomes effective or terminates, there shall be an appropriate proration of
any fee payable on the basis of the number of days that the Agreement is in
effect during the month.
4. FSC may from time-to-time and for such periods as it deems
appropriate reduce its compensation to the extent any Classes' expenses exceed
such lower expense limitation as FSC may, by notice to the Trust, voluntarily
declare to be effective.
5. FSC will enter into separate written agreements with various
firms to provide certain of the services set forth in Paragraph 1 herein.
FSC, in its sole discretion, may pay Brokers and Administrators a periodic fee
in respect of Shares owned from time to time by their clients or customers.
The schedules of such fees and the basis upon which such fees will be paid
shall be determined from time to time by FSC in its sole discretion.
6. FSC will prepare reports to the Board of Trustees of the Trust on
a quarterly basis showing amounts expended hereunder including amounts paid to
Brokers and Administrators and the purpose for such payments.
In consideration of the mutual covenants set forth in the Distributor's
Contract dated November 15, 1990 between Star Funds and Federated Securities
Corp., Star Funds executes and delivers this Exhibit on behalf of the Funds,
and with respect to the separate Classes of Shares thereof, first set forth in
this Exhibit.
Witness the due execution hereof this 1st day of March, 1994.
ATTEST: STAR FUNDS
By:
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
By:
Secretary Executive Vice President
(SEAL)
Exhibit 9(iv) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
Star Funds
SHAREHOLDER SERVICES PLAN
This Shareholder Services Plan ("Plan") is adopted as of this 1st
day of March, 1994, by the Board of Trustees of Star Funds (the "Fund"),
a Massachusetts business trust with respect to certain classes of shares
("Classes") of the portfolios of the Trust ("the Portfolios") set forth
in exhibits hereto.
1. This Plan is adopted to allow the Fund to make payments as
contemplated herein to obtain certain personal services for shareholders
and/or the maintenance of shareholder accounts ("Services").
2. This Plan is designed to compensate broker/dealers and other
participating financial institutions and other persons ("Providers") for
providing services to the Fund and its shareholders. The Plan will be
administered by Federated Administrative Services, ("FAS"). In
compensation for the services provided pursuant to this Plan, Providers
will be paid a monthly fee computed at the annual rate not to exceed .25
of 1% of the average aggregate net asset value of the shares of the Fund
held during the month.
3. Any payments made by the Portfolios to any Provider pursuant
to this Plan will be made pursuant to the "Shareholder Services
Agreement" entered into by FAS on behalf of the Fund and the Provider.
Providers which have previously entered into "Administrative Agreements"
or "Rule 12b-1 Agreements" with Federated Securities Corp. may be
compensated under this Plan for Services performed pursuant to those
Agreements until the Providers have executed a "Shareholder Services
Agreement" hereunder.
4. The Fund has the right (i) to select, in its sole
discretion, the Providers to participate in the Plan and (ii) to
terminate without cause and in its sole discretion any Shareholder
Services Agreement.
5. Quarterly in each year that this Plan remains in effect, FAS
shall prepare and furnish to the Board of Trustees of the Fund, and the
Board of Trustees shall review, a written report of the amounts expended
under the Plan.
6. This Plan shall become effective (i) after approval by
majority votes of: (a) the Fund's Board of Trustees; and (b) the
members of the Board of the Trust who are not interested persons of the
Trust and have no direct or indirect financial interest in the operation
of the Trust's Plan or in any related documents to the Plan
("Disinterested Trustees"), cast in person at a meeting called for the
purpose of voting on the Plan; and (ii) upon execution of an exhibit
adopting this Plan.
7. This Plan shall remain in effect with respect to each Class
presently set forth on an exhibit and any subsequent Classes added
pursuant to an exhibit during the initial year of this Plan for the
period of one year from the date set forth above and may be continued
thereafter if this Plan is approved with respect to each Class at least
annually by a majority of the Trust's Board of Trustees and a majority
of the Disinterested Trustees, cast in person at a meeting called for
the purpose of voting on such Plan. If this Plan is adopted with
respect to a class after the first annual approval by the Trustees as
described above, this Plan will be effective as to that Class upon
execution of the applicable exhibit pursuant to the provisions of
paragraph 6(ii) above and will continue in effect until the next annual
approval of this Plan by the Trustees and thereafter for successive
periods of one year subject to approval as described above.
8. All material amendments to this Plan must be approved by a
vote of the Board of Trustees of the Fund and of the Disinterested
Trustees, cast in person at a meeting called for the purpose of voting
on it.
9. This Plan may be terminated at any time by: (a) a majority
vote of the Disinterested Trustees; or (b) a vote of a majority of the
outstanding voting securities of the Fund as defined in Section 2(a)(42)
of the Act.
10. While this Plan shall be in effect, the selection and
nomination of Disinterested Trustees of the Fund shall be committed to
the discretion of the Disinterested Trustees then in office.
11. All agreements with any person relating to the
implementation of this Plan shall be in writing and any agreement
related to this Plan shall be subject to termination, without penalty,
pursuant to the provisions of Paragraph 9 herein.
12. This Plan shall be construed in accordance with and governed
by the laws of the Commonwealth of Pennsylvania.
Witness the due execution hereof this 1st day of March, 1994
STAR FUNDS
By:
President
EXHIBIT A
to the
Plan
Star Funds
Star Growth Equity Fund
This Plan is adopted by Star Funds with respect to the Class of
Shares of the portfolio of the Trust set forth above.
In compensation for the services provided pursuant to this Plan,
Providers will be paid a monthly fee computed at the annual rate of 0.25
of 1% of the average aggregate net asset value of the Star Growth Equity
Fund held during the month.
Witness the due execution hereof this 1st day of March, 1994.
Star Funds
By:
President
Exhibit 15(vii) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
FEE SCHEDULE FOR RULE 12b-1 AGREEMENT WITH
FEDERATED SECURITIES CORP.
STAR FUNDS
__________________________
Amendment No. 5 to EXHIBIT A
to 12b-1 Agreement with
Federated Securities Corp. ("FSC")
Portfolios
FSC will pay Administrator fees for the following portfolios (the
"Funds") effective as of the dates set forth below:
Name Date
STAR RELATIVE VALUE FUND December 5, 1990
STAR TAX-FREE MONEY MARKET FUND March 14, 1991
STAR PRIME OBLIGATIONS FUND July 25, 1991
STAR TREASURY FUND July 25, 1991
THE STELLAR FUND - INVESTMENT SHARES April 5, 1994
STAR U.S. GOVERNMENT INCOME FUND November 23, 1992
STAR GROWTH EQUITY FUND , 1994
Administrative Fees
1. During the term of this Agreement, FSC will pay Administrator a
quarterly fee in respect of each Fund. This fee will be computed at the
annual rate of .25% of the average net asset value of Shares held during
the quarter in accounts for which the Administrator provides services
under this Agreement, so long as the average net asset value of Shares in
each Fund during the quarter equals or exceeds such minimum amount as FSC
shall from time to time determine and communicate in writing to the
Administrator.
2. For the quarterly period in which the Administrative Agreement
becomes effective or terminates, there shall be an appropriate proration
of any fee payable on the basis of the number of days that the Agreement
is in effect during the quarter.
Exhibit 15(viii) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
EXHIBIT F
to the
Plan
STAR FUNDS
Star Growth Equity Fund
The Plan is adopted by Star Funds with respect to the Class of Shares of
the portfolio of the Trust set forth above.
In compensation for the services provided pursuant to this Plan, FSC
will be paid a monthly fee computed at the annual rate of 0.25 of 1% of the
average aggregate net asset value of Star Growth Equity Fund held during the
month.
Witness the due execution hereof this 1st day of March, 1994.
STAR FUNDS
By:
President
