STAR FUNDS
STOCK AND BOND FUNDS
Combined
Semi-Annual Report
to Shareholders
May 31, 1995
Portfolios of Star Funds
Star Capital Appreciation Fund
Star Growth Equity Fund
Star Relative Value Fund
The Stellar Fund
Star Strategic Income Fund
Star U.S. Government Income Fund
Star Bank, N.A.
Investment Adviser
Federated Securities Corp.
Distributor
Cusip 854911807
Cusip 854911864
Cusip 854911401
Cusip 854911708
Cusip 854911609
Cusip 854911880
Cusip 854911500
G00446-01 (7/95)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the combined Semi-Annual Report to shareholders for the
Star Bond and Equity Funds for the six-month period ended May 31, 1995. This
report provides complete financial information for Star U.S. Government Income
Fund, Star Strategic Income Fund, The Stellar Fund, Star Relative Value Fund,
Star Growth Equity Fund, and Star Capital Appreciation Fund. Of particular note
are the investment reviews written by the portfolio managers of the respective
funds. Also included is a listing of investments for each fund, as well as
series of comprehensive financial statements.
Total net assets for the six funds documented in this report amounted to $377
million at the end of the period. Designed to meet a wide array of investment
needs, the funds can be combined to create a comprehensive, personal investment
program. If you own shares in one or two Star Bond and Equity Funds, now may be
an excellent time to add to your holdings. Contact your investment
representative for more information.
As always, we thank you for putting your confidence in the Star Funds as a way
to put hard-earned money to work. We will continue to keep you informed on your
investment, and remain committed to delivering the highest level of personal
service.
Sincerely,
/s/Edward C. Gonzales
Edward C. Gonzales
President
July 17, 1995
INVESTMENT REVIEWS
- --------------------------------------------------------------------------------
STAR CAPITAL APPRECIATION FUND
Q For the most recent six month period, how did the Star Capital Appreciation
Fund perform? And, what are the highlights of its asset allocation?
A For the six-month period ended May 31, 1995, the fund had a total return of
10.66% based on net asset value.* During that same period, the Standard and
Poor's ("S&P") MidCap 400 Index** had a total return of 14.04%. The fund is
diversified across the sectors of the economy with a current emphasis on
basic industry, capital goods, and energy stocks. Recently, the fund's
cash level has fluctuated between 10% and 20%.
Q Why should I be interested in owning a mid-cap fund right now? Why not buy
only large, blue chip stock funds?
A One of the themes we are currently emphasizing is investing in the mid-cap
portion of the domestic equity market. Generally, these are stocks with
market capitalizations of $500 million to $3 billion. Basing our theory on
history, we noted that, since the 1930s, we have experienced four six-year
cycles of strong performance for domestic mid-cap stocks. An important
characteristic of these cycles was that at least half of the strong
performance generally occurred in the last two years of the cycle. If we
combine the cycles (1950-1956; 1963-1969; and 1978-1984) we see a
definite pattern of accelerated performance during the final two years.
We believe we are currently in another such cycle, with 1995 and 1996
being the final two years of the current cycle, which began in
January 1991.
Q What about the economy? How will it effect the outlook for mid-cap stocks?
A Since we do not expect an economic "soft landing" in 1995, we still look
for some rise in domestic inflation over the next year. So, contrary to the
expectations of many investors, we believe interest rates could rise. As
interest rates rise, price per earnings ("P/E") ratios tend to fall,
because investors are not willing to pay as much for the same earnings
growth rate. The average stock looks less attractive than bonds. Rising
interest rates usually cause corporate profits to slow. Consequently, we
believe that overall S&P 500 Stock Index** earnings growth could slow to
less than a 10% growth rate by the end of 1995. Mid-cap growth stocks,
having less mature product lines, often maintain stronger profit growth.
This stronger growth "stands out from the crowd", and should make the
stocks appear more attractive. Any capital gains tax cut should help the
stock market, especially growth stocks which often pay lower or no
dividends. We believe it is an ideal time to buy mid-cap stocks.
*Past performance may not be indicative of future performance. Investment
return and principal value will fluctuate, therefore an investor's shares when
redeemed may be worth more or less than the original cost. Total return based
on offering price is 5.67%.
**This index is unmanaged.
- --------------------------------------------------------------------------------
STAR GROWTH EQUITY FUND
Q Are you concentrating on any particular sectors of the stock market?
A Yes, early in the year we were most heavily exposed to the capital goods
and energy sectors of the market. We recently shifted to a heavier weight
in basics and consumer cyclicals based upon our view that the economy
should strengthen as we move into the third and fourth quarters. This
means that we have not seen the cyclical peak in earnings and, therefore,
these stocks are undervalued. We will continue to underweight utilities
and consumer staples where we see earnings difficulties in the near future.
Q What is your outlook for the remainder of 1995?
A We believe the economy will continue to rebound and that the likelihood of
the Federal Reserve Board (the "Fed") making further cuts is slim. Earnings
should remain fairly strong although the year-over-year growth rates will
start to slow. This leads us to the question of what multiple the market
will pay for those earnings. Presuming that Congress passes a tax cut and
makes further progress on the budget, the market should be able to do
fairly well.
While we have hedged the portfolio with some cash, we remain committed to
the long-term positives of the equity market.
- --------------------------------------------------------------------------------
STAR RELATIVE VALUE FUND
Q After the interest rate increases of 1994, can you tell us how the fund has
reacted during the first half of 1995?
A During the first half of 1995, the Star Relative Value Fund reacted in a
positive manner with above average investment performance. The fund
continues to be overweighted in capital goods, energy and multiple industry
companies. These sectors of the market have all been above average
performers during a time period in which the Fed has been very
accommodating.
Q How has the fund performed when compared to the overall stock market?
A The Star Relative Value Fund has generated a total return of 19.54% based
on net asset value (14.11% based on offering price)* compared to a return
of 19.20% for the S&P 500 Index** for the six months ended May 31, 1995.
Q With interest rates appearing to be stable, have you made any changes to
the holdings of the fund?
A During the first half of 1995, portfolio turnover in the Star Relative
Value Fund was minimal. Strong performing stocks such as: Intel Corp, ITT
Corp, and Royal Dutch Petroleum saw their share prices continue to increase
in value. Cash position throughout the first half of the year was
approximately 10%.
Q What is the outlook for the fund for the rest of 1995?
A In looking ahead to the balance of 1995, the outlook for the equity market
should continue to be impacted by the Fed's policy with interest rates. A
gradual decline in interest rates would allow corporate earnings to
continue to grow and thus translate into a positive stock market
environment. Any increase in interest rates would create a negative
impact on corporate earnings and more than likely cause the market to
begin to decline in value. We are forecasting economic growth to continue
and, therefore, are moving more money into consumer cyclicals and basic
industry stocks to take advantage of the positive earnings that we
foresee in these areas.
*Past performance may not be indicative of future performance. Investment
return and principal value will fluctuate, therefore an investor's shares when
redeemed may be worth more or less than the original cost.
**This index is unmanaged.
- --------------------------------------------------------------------------------
THE STELLAR FUND
Q Let us turn to the international component of the fund. How did its
International Stock and Bond holdings perform?
A The international markets really produced a mixed bag of results thus far
this year. The best performing market has been in Great Britain which is up
10.2%, while the worst performer has been the NIKKEI 225 Index ("NIKKEI"),
down over 25%. The average World Market for equity returns is about 8.5%.
Therefore, the U.S. market has been the stellar performer in the developed
markets (although the S&P 500 Index* was vastly exceeded in some of the
markets in developing nations such as Chile and Turkey). However, due to
the weak dollar, when measured in conversion terms, the developed markets'
returns were more comparable to the U.S. market. For example, due to the
strength of the Swiss Franc versus the dollar, the Swiss market's return
of 6.7% is translated into a 21% return. Likewise, the NIKKEI after
conversion, dropped only 12.2% for the year-to-date.
Q Which regions of the world seem to show the most opportunity, and how have
you structured the fund's holdings to respond?
A During the past six months we have made several significant changes to the
portfolio. By adhering to a dual strategy of a top-down assessment of the
economic conditions of the country and a bottoms-up restructuring of the
valuation of the companies, we positioned the portfolio differently than
last year. Our largest exposure is in Britain, followed by Canada and
Australia. During the past six months we have lightened our exposure to
Canada and have added a number of individual holdings in Denmark and
Norway. Japan continues to be of concern to us due to real estate losses,
the yen-dollar impact upon trade and the growing loan problems in the
nation's banking system. Consequently, we hold only two positions in the
world's second largest market.
*This index is unmanaged.
- --------------------------------------------------------------------------------
STAR STRATEGIC INCOME FUND
Q What impact did interest rates have on the Star Strategic Income Fund
during the six-month period ended May 31, 1995?
A Bond yields fell precipitously in the first half of 1995. Thirty-year
Treasury bond yields began the year at 7.88%, but have subsequently
declined to 6.60% for a total return of over 20%. Through May, the Lehman
Brothers Government Corporate Bond Index* registered a year-to-date total
return of 10.90%, more than offsetting the dismal 1994 performance. We
believe three key factors have led to the strong performance of fixed
income investments: a slowdown in economic growth; foreign central bank
purchases of Treasury securities; and supply/demand influences.
Total assets in Star Strategic Income Fund have grown over 300% since the
fund's inception. For the thirty-day period ended May 31, 1995, the fund's
distribution rate increased to 7.93%. For the same period, the fund's SEC
yield was 5.77%.** This is a rather remarkable feat considering the
decline in interest rates and exclusion of non-investment grade
investments. Shifting between asset classes and employing yield-enhancing
strategies resulted in above average yields with lower overall risk.
Q While the Star Strategic Income Fund is a multi-asset fund, are you
emphasizing any particular investment classes?
A Yes, this fund offers considerable flexibility to achieve high yields
without undue investment risks. While the bond and stock markets have
provided stunning returns during the first half of the year, the Real
Estate Investment Trust ("REIT"), preferred stock, and mortgage classes
have lagged behind their more commonly quoted brethren. REITs in
particular embody our emphasis because of the strong appeal of income
with growth. Going forward, we believe that the REIT stocks which have
sound management teams in place and possess a focused business strategy
will produce the greatest positive returns.
Q Given the current interest rate environment, have you made any significant
changes?
A During the first half of 1995, mortgage related securities significantly
lagged the performance of Treasury securities (similar to REITs). Our
outlook of slightly higher yields for the balance of 1995 should benefit
the mortgage sector tremendously and for that reason has become a major
focus for the Star Strategic Income Fund. We are increasing our mortgage
allocation to improve the fund's income and investment return profile.
Q What is your outlook for the fund for the remainder of 1995?
A Despite the observations of the Federal Reserve System regarding economic
growth, we believe this is a temporary pause in the level of economic
activity. However, we do not foresee a rapid expansion due to the slow
growth in the labor force and the level of consumer indebtedness. Most
likely we will witness a period of modestly higher interest rates in the
coming months. The fund has been positioned to benefit in this environment
by maintaining a conservative portfolio average maturity, increasing
diversification, and increasing the allocation to lagging investment
classes.
*This index is unmanaged.
**Past performance may not be indicative of future performance. Investment
return and principal value will fluctuate, therefore an investor's shares when
redeemed may be worth more or less than the original cost.
- --------------------------------------------------------------------------------
STAR U.S. GOVERNMENT INCOME FUND
Q What impact did interest rates have on the Star U.S. Government Income Fund
during the six-month period ended May 31, 1995?
A Bond yields fell precipitously in the first half of 1995. Thirty-year
Treasury bond yields began the year at 7.88%, but have subsequently
declined to 6.60% for a total return of over 20%. Through May, the Lehman
Brothers Government Corporate Bond Index* registered a year-to-date total
return of 10.90%, more than offsetting the dismal 1994 performance. We
believe three key factors have led to the strong performance of fixed
income investments: a slowdown in economic growth; foreign central bank
purchases of Treasury securities; and supply/demand influences.
Q Compared to the market, how has the fund performed?
A While 1994 was a year most bond investors would prefer to forget, it was a
great year for the Star U.S Government Income Fund on a relative
performance basis. For the six-month period ended May 31, 1995, the Star
U.S. Government Income Fund achieved a total return of 9.50% based on net
asset value.** While the fund's performance has somewhat lagged the market
thus far in 1995, its returns have more than compensated for losses that
shareholders sustained in 1994.
Q Given the current interest rate environment, have you made any significant
changes?
A During the first half of 1995, mortgage related securities significantly
lagged the performance of Treasury securities. Our outlook of slightly
higher yields for the balance of 1995 should benefit the mortgage sector
tremendously and for that reason has become a major focus for the Star U.S.
Government Income Fund. We are increasing our allocation to improve the
fund's income and investment return profile.
Q What is your outlook for the fund for the remainder of 1995?
A Despite the observations of the Federal Reserve System regarding economic
growth, we believe this is a temporary pause in the level of economic
activity. However, we do not foresee a rapid expansion due to the slow
growth in the labor force and the level of consumer indebtedness. Most
likely we will witness a period of modestly higher interest rates in the
coming months. The fund has been positioned to benefit in this environment
by maintaining a conservative portfolio average maturity, increasing
diversification, and increasing the allocation of mortgage related bonds.
*This index is unmanaged.
**Past performance may not be indicative of future performance. Investment
return and principal value will fluctuate, therefore an investor's shares when
redeemed may be worth more or less than the original cost. Total return based
on offering price is 5.62%.
STAR CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
COMMON STOCK--80.4%
- ---------------------------------------------------------------------------------------------------
BASIC INDUSTRY--12.6%
-------------------------------------------------------------------------------------
7,600 Cabot Corp. $ 320,150
-------------------------------------------------------------------------------------
46,666 Commercial Metals Co. 1,277,482
-------------------------------------------------------------------------------------
94,750 Lilly Industries, Inc. 1,065,937
-------------------------------------------------------------------------------------
55,000 Lyondell Petrochemical Co. 1,375,000
-------------------------------------------------------------------------------------
73,300 *Magma Copper Co. 1,053,688
------------------------------------------------------------------------------------- -------------
Total 5,092,257
------------------------------------------------------------------------------------- -------------
CAPITAL GOODS--18.5%
-------------------------------------------------------------------------------------
26,200 *Arrow Electronics, Inc. 1,205,200
-------------------------------------------------------------------------------------
64,200 *Exabyte Corp. 874,725
-------------------------------------------------------------------------------------
30,000 *Exar Corp. 795,000
-------------------------------------------------------------------------------------
18,100 *Integrated Device Technology 787,350
-------------------------------------------------------------------------------------
4,800 *KLA Instruments Corp. 334,800
-------------------------------------------------------------------------------------
57,700 Ply-Gem Industries, Inc. 915,987
-------------------------------------------------------------------------------------
30,000 *Sybase, Inc. 630,000
-------------------------------------------------------------------------------------
25,000 *Varity Corp. 1,078,125
-------------------------------------------------------------------------------------
93,200 Winnebago Industries, Inc. 873,750
------------------------------------------------------------------------------------- -------------
Total 7,494,937
------------------------------------------------------------------------------------- -------------
ENERGY--5.0%
-------------------------------------------------------------------------------------
75,000 *California Energy Co. Inc. 1,200,000
-------------------------------------------------------------------------------------
29,900 *Seitel, Inc. 844,675
------------------------------------------------------------------------------------- -------------
Total 2,044,675
------------------------------------------------------------------------------------- -------------
CONSUMER CYCLICAL--11.6%
-------------------------------------------------------------------------------------
97,000 Callaway Golf Co. 1,394,375
-------------------------------------------------------------------------------------
39,743 Dollar General Corp. 1,127,708
-------------------------------------------------------------------------------------
25,966 Lancaster Colony Corp. 941,267
-------------------------------------------------------------------------------------
30,000 Leggett & Platt, Inc. 1,252,500
------------------------------------------------------------------------------------- -------------
Total 4,715,850
------------------------------------------------------------------------------------- -------------
CONSUMER STAPLES--4.3%
-------------------------------------------------------------------------------------
63,000 Armor All Products Corp. 1,181,250
-------------------------------------------------------------------------------------
14,900 IBP, Inc. 558,750
------------------------------------------------------------------------------------- -------------
Total 1,740,000
------------------------------------------------------------------------------------- -------------
HEALTH CARE--5.3%
-------------------------------------------------------------------------------------
36,600 *Hillhaven Corp. 1,047,675
-------------------------------------------------------------------------------------
70,000 *Ornda Healthcorp 1,111,250
------------------------------------------------------------------------------------- -------------
Total 2,158,925
------------------------------------------------------------------------------------- -------------
</TABLE>
STAR CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
COMMON STOCK--CONTINUED
- ---------------------------------------------------------------------------------------------------
FINANCE--9.0%
-------------------------------------------------------------------------------------
16,000 BayBanks, Inc. $ 1,160,000
-------------------------------------------------------------------------------------
22,000 Berkley (WR) Corp. 808,500
-------------------------------------------------------------------------------------
31,300 Equitable Iowa Cos. 1,044,638
-------------------------------------------------------------------------------------
15,000 Green Tree Financial Corp. 654,375
------------------------------------------------------------------------------------- -------------
Total 3,667,513
------------------------------------------------------------------------------------- -------------
MISCELLANEOUS--4.0%
-------------------------------------------------------------------------------------
56,000 Horsham Corp. 770,000
-------------------------------------------------------------------------------------
19,000 Pentair, Inc. 869,250
------------------------------------------------------------------------------------- -------------
Total 1,639,250
------------------------------------------------------------------------------------- -------------
UTILITIES--10.1%
-------------------------------------------------------------------------------------
32,400 *ALC Communications Corp. 1,409,400
-------------------------------------------------------------------------------------
20,800 *Centigram Communications Corp. 275,600
-------------------------------------------------------------------------------------
44,400 Century Telephone Enterprises, Inc. 1,304,250
-------------------------------------------------------------------------------------
66,800 ECI Telecommunications Ltd. 1,127,250
------------------------------------------------------------------------------------- -------------
Total 4,116,500
------------------------------------------------------------------------------------- -------------
TOTAL COMMON STOCK (IDENTIFIED COST, $30,256,867) 32,669,907
------------------------------------------------------------------------------------- -------------
U.S. GOVERNMENT OBLIGATIONS--4.9%
- ---------------------------------------------------------------------------------------------------
$ 2,000,000 Federal National Mortgage Association, 11.15%, 6/12/95
(IDENTIFIED COST, $2,002,793) 2,002,793
------------------------------------------------------------------------------------- -------------
**REPURCHASE AGREEMENT--15.7%
- ---------------------------------------------------------------------------------------------------
6,389,000 Donaldson Lufkin Jenrette, 6.15%, dated 5/31/95, due 6/1/95
(at amortized cost) 6,389,000
------------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST, $38,648,660) $ 41,061,700+
------------------------------------------------------------------------------------- -------------
</TABLE>
* Non-income producing.
** The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
+ The cost of investments for federal tax purposes amounts to $38,648,660. The
net unrealized appreciation of investments on a federal tax basis amounts to
$2,413,040, which is comprised of $3,646,415 appreciation and $1,233,375
depreciation at May 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($40,590,534) at May 31, 1995.
(See Notes which are an integral part of the Financial Statements)
STAR CAPITAL APPRECIATION FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------------------------
Investments in repurchase agreements $ 6,389,000
- -----------------------------------------------------------------------------------
Investments in securities 34,627,700
- ----------------------------------------------------------------------------------- -------------
Total Investments in securities, at amortized cost and value
(identified and tax cost $38,648,660) $ 41,061,700
- --------------------------------------------------------------------------------------------------
Cash 261
- --------------------------------------------------------------------------------------------------
Income receivable 170,178
- --------------------------------------------------------------------------------------------------
Receivable for shares sold 12,207
- --------------------------------------------------------------------------------------------------
Deferred expenses 9,514
- -------------------------------------------------------------------------------------------------- -------------
Total assets 41,253,860
- --------------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------------------------
Payable for investments purchased 638,450
- -----------------------------------------------------------------------------------
Accrued expenses 24,876
- ----------------------------------------------------------------------------------- -------------
Total liabilities 663,326
- -------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 3,636,701 shares outstanding $ 40,590,534
- -------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSISTS OF:
- --------------------------------------------------------------------------------------------------
Paid in capital $ 36,943,521
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 2,413,040
- --------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments 1,227,830
- --------------------------------------------------------------------------------------------------
Undistributed net investment income 6,143
- -------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 40,590,534
- -------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE and Redemption Proceeds Per Share:
- --------------------------------------------------------------------------------------------------
($40,590,534 / 3,636,701 shares outstanding) $11.16
- -------------------------------------------------------------------------------------------------- -------------
Offering Price Per Share (100/95.50 of $11.16)* $11.69
- -------------------------------------------------------------------------------------------------- -------------
</TABLE>
* See 'What Shares Cost' in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
STAR CAPITAL APPRECIATION FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest $ 184,915
- ----------------------------------------------------------------------------------------------------
Dividends (net of foreign tax) 169,565
- ---------------------------------------------------------------------------------------------------- ------------
Total income 354,480
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Investment advisory fee $ 166,599
- ----------------------------------------------------------------------------------------
Administrative personnel and services fee 24,931
- ----------------------------------------------------------------------------------------
Custodian fees 4,384
- ----------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 12,689
- ----------------------------------------------------------------------------------------
Trustees' fees 1,273
- ----------------------------------------------------------------------------------------
Auditing fees 6,620
- ----------------------------------------------------------------------------------------
Legal fees 2,715
- ----------------------------------------------------------------------------------------
Portfolio accounting fees 27,293
- ----------------------------------------------------------------------------------------
Shareholder services fee 1,937
- ----------------------------------------------------------------------------------------
Share registration costs 7,001
- ----------------------------------------------------------------------------------------
Printing and postage 6,912
- ----------------------------------------------------------------------------------------
Insurance premiums 3,167
- ----------------------------------------------------------------------------------------
Miscellaneous 1,867
- ---------------------------------------------------------------------------------------- ----------
Total expenses 267,388
- ----------------------------------------------------------------------------------------
Deduct--Waiver of administrative personnel and services fee 4,969
- ---------------------------------------------------------------------------------------- ----------
Net expenses 262,419
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income 92,061
- ---------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (identified cost basis)
(includes $182,302 loss on options) 1,230,621
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 2,321,498
- ---------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain (loss) on investments 3,552,119
- ---------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 3,644,180
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR CAPITAL APPRECIATION FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MAY 31, 1995 YEAR ENDED
(UNAUDITED) NOVEMBER 30, 1994*
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------
Net investment income $ 92,061 $ 7,982
- ----------------------------------------------------------------
Net realized gain (loss) on investments ($1,230,621 and $111,347
gains, respectively, as computed for federal income tax
purposes) 1,230,621 111,347
- ----------------------------------------------------------------
Net change in unrealized appreciation/depreciation 2,321,498 91,542
- ---------------------------------------------------------------- ---------------------- ------------------------
Change in assets resulting from operations 3,644,180 210,871
- ---------------------------------------------------------------- ---------------------- ------------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------
Distributions from net investment income (93,900) --
- ----------------------------------------------------------------
Distributions from net realized gains (114,138) --
- ---------------------------------------------------------------- ---------------------- ------------------------
Change in net assets resulting from distributions to
shareholders (208,038) --
- ---------------------------------------------------------------- ---------------------- ------------------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------
Proceeds from sale of Shares 9,515,144 30,230,908
- ----------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of
distributions declared 98,897 --
- ----------------------------------------------------------------
Cost of Shares redeemed (2,472,597) (428,831)
- ---------------------------------------------------------------- ---------------------- ------------------------
Change in net assets resulting from share transactions 7,141,444 29,802,077
- ---------------------------------------------------------------- ---------------------- ------------------------
Change in net assets 10,577,586 30,012,948
- ----------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------
Beginning of period 30,012,948 --
- ---------------------------------------------------------------- ---------------------- ------------------------
End of period (including undistributed net investment income of
$6,143 and $7,982, respectively) $ 40,590,534 $ 30,012,948
- ---------------------------------------------------------------- ---------------------- ------------------------
</TABLE>
* For the period from May 16, 1994 (start of business) to November 30, 1994.
(See Notes which are an integral part of the Financial Statements)
STAR CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
MAY, 31 1995 NOVEMBER 30,
(UNAUDITED) 1994(a)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.15 $ 10.00
- --------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------
Net investment income 0.03 0.003
- --------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.05 0.147
- -------------------------------------------------------------------- ------- -------
Total from investment operations 1.08 0.150
- --------------------------------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------
Distributions from net investment income (0.03) --
- --------------------------------------------------------------------
Distributions from net realized gain on investment transactions (0.04) --
- -------------------------------------------------------------------- ------- -------
Total distributions (0.07) --
- -------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 11.16 $ 10.15
- -------------------------------------------------------------------- ------- -------
TOTAL RETURN (b) 10.66% 1.50%
- --------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------
Expenses 1.50%(c) 1.58%(c)
- --------------------------------------------------------------------
Net investment income 0.52%(c) 0.08%(c)
- --------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.03%(c) 0.10%(c)
- --------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 40,591 $ 30,013
- --------------------------------------------------------------------
Portfolio Turnover 53% 36%
- --------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from June 13, 1994 (date of initial
public investment) to November 30, 1994. For the period from May 16, 1994
(start of business) to June 12, 1994, all income was distributed to the
administrator.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
STAR GROWTH EQUITY FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--87.7%
- ---------------------------------------------------------------------------------------------------
AEROSPACE--2.4%
-------------------------------------------------------------------------------------
15,795 Lockheed Martin Corp. $ 939,803
------------------------------------------------------------------------------------- -------------
AUTOMOBILE--2.4%
-------------------------------------------------------------------------------------
10,310 Ford Motor Co. 301,568
-------------------------------------------------------------------------------------
12,000 Goodyear Tire and Rubber Co. 507,000
-------------------------------------------------------------------------------------
2,121 Johnson Controls, Inc. 121,427
------------------------------------------------------------------------------------- -------------
Total 929,995
------------------------------------------------------------------------------------- -------------
BANKING--3.5%
-------------------------------------------------------------------------------------
15,236 Citicorp 815,126
-------------------------------------------------------------------------------------
10,120 Corestates Financial Corp. 336,490
-------------------------------------------------------------------------------------
9,199 Signet Banking Corp. 208,127
------------------------------------------------------------------------------------- -------------
Total 1,359,743
------------------------------------------------------------------------------------- -------------
BROADCASTING & PUBLISHING--1.2%
-------------------------------------------------------------------------------------
5,000 Capital Cities ABC, Inc. 482,500
------------------------------------------------------------------------------------- -------------
CHEMICALS--5.3%
-------------------------------------------------------------------------------------
13,147 duPont (EI) deNemours & Co. 892,353
-------------------------------------------------------------------------------------
29,128 Lyondell Petrochemical Co. 728,200
-------------------------------------------------------------------------------------
5,219 Monsanto Co. 434,482
------------------------------------------------------------------------------------- -------------
Total 2,055,035
------------------------------------------------------------------------------------- -------------
COMPUTERS & SOFTWARE--4.7%
-------------------------------------------------------------------------------------
3,070 Hewlett Packard Co. 203,004
-------------------------------------------------------------------------------------
7,970 International Business Machines Corp. 743,202
-------------------------------------------------------------------------------------
6,681 Microsoft Corp. 565,797
-------------------------------------------------------------------------------------
14,310 Sybase, Inc. 300,510
------------------------------------------------------------------------------------- -------------
Total 1,812,513
------------------------------------------------------------------------------------- -------------
CONSUMER STAPLES--4.1%
-------------------------------------------------------------------------------------
5,954 Gillette Co. 502,369
-------------------------------------------------------------------------------------
15,329 Procter & Gamble Co. 1,101,772
------------------------------------------------------------------------------------- -------------
Total 1,604,141
------------------------------------------------------------------------------------- -------------
DRUGS--5.0%
-------------------------------------------------------------------------------------
12,540 Bristol Myers Squibb Co. 832,342
-------------------------------------------------------------------------------------
15,269 Merck & Co., Inc. 719,552
-------------------------------------------------------------------------------------
5,000 Schering Plough Corp. 393,750
------------------------------------------------------------------------------------- -------------
Total 1,945,644
------------------------------------------------------------------------------------- -------------
ELECTRIC--4.6%
-------------------------------------------------------------------------------------
16,639 Duke Power Co. 694,678
-------------------------------------------------------------------------------------
</TABLE>
STAR GROWTH EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
ELECTRIC--CONTINUED
-------------------------------------------------------------------------------------
50,000 Southern Co. $ 1,106,250
------------------------------------------------------------------------------------- -------------
Total 1,800,928
------------------------------------------------------------------------------------- -------------
ELECTRICAL EQUIPMENT--3.5%
-------------------------------------------------------------------------------------
10,804 Emerson Electric Co. 742,775
-------------------------------------------------------------------------------------
7,000 General Electric Co. 406,000
-------------------------------------------------------------------------------------
10,500 Mark IV Industries, Inc. 211,312
------------------------------------------------------------------------------------- -------------
Total 1,360,087
------------------------------------------------------------------------------------- -------------
ELECTRONICS--1.9%
-------------------------------------------------------------------------------------
4,235 Intel Corp. 475,379
-------------------------------------------------------------------------------------
4,162 Motorola, Inc. 249,200
------------------------------------------------------------------------------------- -------------
Total 724,579
------------------------------------------------------------------------------------- -------------
ENERGY--10.6%
-------------------------------------------------------------------------------------
6,000 Amoco Corp. 410,250
-------------------------------------------------------------------------------------
11,858 Ashland, Inc. 440,228
-------------------------------------------------------------------------------------
11,250 Chevron Corp. 552,656
-------------------------------------------------------------------------------------
15,000 Halliburton Co. 585,000
-------------------------------------------------------------------------------------
9,000 Mobil Corp. 903,375
-------------------------------------------------------------------------------------
32,700 Panhandle Eastern Corp. 821,587
-------------------------------------------------------------------------------------
20,000 Seagull Energy Corp. 387,500
------------------------------------------------------------------------------------- -------------
Total 4,100,596
------------------------------------------------------------------------------------- -------------
ENTERTAINMENT--2.4%
-------------------------------------------------------------------------------------
8,175 Disney (Walt) Co. 454,734
-------------------------------------------------------------------------------------
13,850 Hasbro, Inc. 488,213
------------------------------------------------------------------------------------- -------------
Total 942,947
------------------------------------------------------------------------------------- -------------
FINANCE--1.1%
-------------------------------------------------------------------------------------
9,155 Dean Witter Discover & Co. 436,007
------------------------------------------------------------------------------------- -------------
FOOD--3.9%
-------------------------------------------------------------------------------------
15,000 Hudson Foods, Inc. 206,250
-------------------------------------------------------------------------------------
16,526 Premark International, Inc. 824,234
-------------------------------------------------------------------------------------
17,000 Sara Lee Corp. 473,875
------------------------------------------------------------------------------------- -------------
Total 1,504,359
------------------------------------------------------------------------------------- -------------
HEALTH MAINTENANCE ORGANIZATION--.8%
-------------------------------------------------------------------------------------
9,567 U. S. Healthcare, Inc. 297,175
------------------------------------------------------------------------------------- -------------
HOSPITAL MANAGEMENT--1.5%
-------------------------------------------------------------------------------------
14,167 Columbia/HCA Healthcare 579,076
------------------------------------------------------------------------------------- -------------
HOSPITAL SUPPLIES--1.3%
-------------------------------------------------------------------------------------
7,385 Johnson & Johnson 489,256
------------------------------------------------------------------------------------- -------------
INSURANCE--6.0%
-------------------------------------------------------------------------------------
9,041 American International Group, Inc. 1,028,414
-------------------------------------------------------------------------------------
</TABLE>
STAR GROWTH EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
INSURANCE--CONTINUED
-------------------------------------------------------------------------------------
19,000 Aon Corp. $ 693,500
-------------------------------------------------------------------------------------
12,051 Protective Life, Corp. 598,031
------------------------------------------------------------------------------------- -------------
Total 2,319,945
------------------------------------------------------------------------------------- -------------
MACHINERY--3.2%
-------------------------------------------------------------------------------------
8,925 Illinois Tool Works, Inc. 444,019
-------------------------------------------------------------------------------------
18,199 Varity Corp. 784,832
------------------------------------------------------------------------------------- -------------
Total 1,228,851
------------------------------------------------------------------------------------- -------------
METALS--3.5%
-------------------------------------------------------------------------------------
9,795 Aluminum Co. of America 455,467
-------------------------------------------------------------------------------------
10,000 Barrick Gold Corp. 252,500
-------------------------------------------------------------------------------------
8,000 Chesapeake Corp. 228,000
-------------------------------------------------------------------------------------
13,000 Magma Copper Co. 186,875
-------------------------------------------------------------------------------------
6,000 Newmont Gold Co. 242,250
------------------------------------------------------------------------------------- -------------
Total 1,365,092
------------------------------------------------------------------------------------- -------------
MISCELLANEOUS--3.7%
-------------------------------------------------------------------------------------
14,529 Allied Signal, Inc. 586,608
-------------------------------------------------------------------------------------
5,135 ITT Corp. 574,478
-------------------------------------------------------------------------------------
10,000 WMX Technologies, Inc. 272,500
------------------------------------------------------------------------------------- -------------
Total 1,433,586
------------------------------------------------------------------------------------- -------------
REAL ESTATE--1.0%
-------------------------------------------------------------------------------------
10,000 Camden Property Trust 228,750
-------------------------------------------------------------------------------------
13,799 South West Property Trust, Inc. 170,763
------------------------------------------------------------------------------------- -------------
Total 399,513
------------------------------------------------------------------------------------- -------------
RESTAURANTS--0.8%
-------------------------------------------------------------------------------------
13,536 Morrison Restaurants, Inc. 291,024
------------------------------------------------------------------------------------- -------------
RETAIL--4.2%
-------------------------------------------------------------------------------------
15,000 Circuit City Stores, Inc. 412,500
-------------------------------------------------------------------------------------
7,540 Nordstrom, Inc. 312,910
-------------------------------------------------------------------------------------
19,540 Penny J. C., Inc. 920,823
------------------------------------------------------------------------------------- -------------
Total 1,646,233
------------------------------------------------------------------------------------- -------------
TELEPHONE--2.7%
-------------------------------------------------------------------------------------
12,644 AT & T Co. 641,683
-------------------------------------------------------------------------------------
11,905 GTE Corp. 397,329
------------------------------------------------------------------------------------- -------------
Total 1,039,012
------------------------------------------------------------------------------------- -------------
TOBACCO--1.6%
-------------------------------------------------------------------------------------
8,547 Philip Morris Cos., Inc. 622,863
------------------------------------------------------------------------------------- -------------
TRANSPORTATION--0.8%
-------------------------------------------------------------------------------------
5,000 Burlington Northern, Inc. 305,625
------------------------------------------------------------------------------------- -------------
TOTAL COMMON STOCKS (IDENTIFIED COST, $31,030,401) 34,016,128
------------------------------------------------------------------------------------- -------------
</TABLE>
STAR GROWTH EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
PREFERRED STOCKS--0.6%
- ---------------------------------------------------------------------------------------------------
ENERGY--0.6%
-------------------------------------------------------------------------------------
10,000 Atlantic Richfield Co. $ 251,250
------------------------------------------------------------------------------------- -------------
TOTAL PREFERRED STOCKS (IDENTIFIED COST, $267,805) 251,250
------------------------------------------------------------------------------------- -------------
U.S. GOVERNMENT OBLIGATIONS--2.8%
- ---------------------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANKS--2.8%
-------------------------------------------------------------------------------------
$ 500,000 5.50%, 12/8/1995 499,135
-------------------------------------------------------------------------------------
500,000 5.85%, 4/29/1996 498,920
-------------------------------------------------------------------------------------
100,000 9.3%, 6/27/2000 100,288
------------------------------------------------------------------------------------- -------------
TOTAL U.S. GOVERNMENT OBLIGATIONS (IDENTIFIED COST, $1,096,135) 1,098,343
------------------------------------------------------------------------------------- -------------
*PUT OPTION PURCHASED--0.00%
- ---------------------------------------------------------------------------------------------------
100 Citicorp (IDENTIFIED COST $11,650) 625
------------------------------------------------------------------------------------- -------------
**REPURCHASE AGREEMENT--7.4%
- ---------------------------------------------------------------------------------------------------
$ 2,870,000 Donaldson, Lufkin & Jenrette Securities Corp., 6.15%, dated 5/31/1995, due 6/1/1995
(at amortized cost) 2,870,000
------------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST, $35,275,991) $ 38,236,346+
------------------------------------------------------------------------------------- -------------
</TABLE>
* The security is held in connection with a purchased put option which expires
on July 21, 1995.
** The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
+ The cost of investments for federal tax purposes amounts to $35,275,991. The
net unrealized appreciation of investments on a federal tax basis amounts to
$2,960,355 which is comprised of $3,448,012 appreciation and $487,657
depreciation at May 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($38,801,628) at May 31, 1995.
(See Notes which are an integral part of the Financial Statements)
STAR GROWTH EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Investments in securities, at amortized cost and value
(identified and tax cost $35,275,991) $ 38,236,346
- ---------------------------------------------------------------------------------------------------
Cash 541
- ---------------------------------------------------------------------------------------------------
Income receivable 145,515
- ---------------------------------------------------------------------------------------------------
Receivable for investments sold 2,686,617
- ---------------------------------------------------------------------------------------------------
Receivable for shares sold 30,140
- --------------------------------------------------------------------------------------------------- -------------
Total assets 41,099,159
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------------------
Payable for investments purchased $ 2,152,867
- -------------------------------------------------------------------------------------
Accrued expenses 9,664
- -------------------------------------------------------------------------------------
Options written, at value (premium received $26,224) 135,000
- ------------------------------------------------------------------------------------- ------------
Total liabilities 2,297,531
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 3,407,979 shares outstanding $ 38,801,628
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 35,256,258
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments and options written (includes $108,776
depreciation on options written) 2,851,579
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments 642,298
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income 51,493
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 38,801,628
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE and Offering Price Per Share:
- ---------------------------------------------------------------------------------------------------
($38,801,628 / 3,407,979 shares outstanding) $11.39
- --------------------------------------------------------------------------------------------------- -------------
Redemption Proceeds Per Share (95/100 of $11.39)* $10.82
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
* See 'Redeeming Shares' in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
STAR GROWTH EQUITY FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest $ 130,065
- ----------------------------------------------------------------------------------------------------
Dividends 328,208
- ---------------------------------------------------------------------------------------------------- ------------
Total income 458,273
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Investment advisory fee $ 96,895
- ----------------------------------------------------------------------------------------
Administrative personnel and services fee 23,287
- ----------------------------------------------------------------------------------------
Custodian fees 3,230
- ----------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 5,555
- ----------------------------------------------------------------------------------------
Legal fees 1,679
- ----------------------------------------------------------------------------------------
Portfolio accounting fees 15,503
- ----------------------------------------------------------------------------------------
Shareholder services fee 1,819
- ----------------------------------------------------------------------------------------
Printing and postage 6,460
- ----------------------------------------------------------------------------------------
Insurance premiums 2,196
- ----------------------------------------------------------------------------------------
Miscellaneous 2,842
- ---------------------------------------------------------------------------------------- ----------
Total expenses 159,466
- ----------------------------------------------------------------------------------------
Deduct--Waiver of administrative personnel and services fee 8,665
- ---------------------------------------------------------------------------------------- ----------
Net expenses 150,801
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income 307,472
- ---------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 642,298
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 2,851,579
- ---------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain (loss) on investments 3,493,877
- ---------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 3,801,349
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR GROWTH EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MAY 31, 1995
(UNAUDITED)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------------------------------------
Net investment income $ 307,472
- ------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments ($642,298 gain as computed for federal income tax
purposes) 642,298
- ------------------------------------------------------------------------------------------------
Net change in unrealized appreciation/depreciation on investments 2,851,579
- ------------------------------------------------------------------------------------------------ ----------------
Change in assets resulting from operations 3,801,349
- ------------------------------------------------------------------------------------------------ ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------------------------------------------
Distributions from net investment income (255,979)
- ------------------------------------------------------------------------------------------------ ----------------
SHARE TRANSACTIONS
- ------------------------------------------------------------------------------------------------
Proceeds from sale of Shares 37,467,996
- ------------------------------------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of distributions declared 205,200
- ------------------------------------------------------------------------------------------------
Cost of Shares redeemed (2,416,938)
- ------------------------------------------------------------------------------------------------ ----------------
Change in net assets resulting from share transactions 35,256,258
- ------------------------------------------------------------------------------------------------ ----------------
Change in net assets 38,801,628
- ------------------------------------------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------------------------------------------
Beginning of period --
- ------------------------------------------------------------------------------------------------ ----------------
End of period (including undistributed net investment income of $51,493) $ 38,801,628
- ------------------------------------------------------------------------------------------------ ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR GROWTH EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
MAY, 31 1995(a)
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------
Net investment income 0.14
- ----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.37
- ---------------------------------------------------------------------------------------------- -------
Total from investment operations 1.51
- ----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------------------------
Distributions from net investment income (0.12)
- ---------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 11.39
- ---------------------------------------------------------------------------------------------- -------
TOTAL RETURN (b) 15.17%
- ----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------------
Expenses 1.17%(c)
- ----------------------------------------------------------------------------------------------
Net investment income 2.38%(c)
- ----------------------------------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.07%(c)
- ----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 38,802
- ----------------------------------------------------------------------------------------------
Portfolio Turnover 70%
- ----------------------------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from December 12, 1994 (date of initial
public investment) to May 31, 1995. For the period from November 10, 1994
(start of business) until December 11, 1994, all income was distributed to
the administrator.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
STAR RELATIVE VALUE FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- --------------
COMMON STOCKS--87.3%
- -------------------------------------------------------------------------------------------------
BASIC INDUSTRY--7.5%
----------------------------------------------------------------------------------
35,000 Aluminum Co. of America $ 1,627,500
----------------------------------------------------------------------------------
52,500 Dow Chemical Co. 3,852,187
----------------------------------------------------------------------------------
85,000 Lyondell Petrochemical Co 2,125,000
---------------------------------------------------------------------------------- --------------
Total 7,604,687
---------------------------------------------------------------------------------- --------------
CAPITAL GOODS--17.9%
----------------------------------------------------------------------------------
52,000 General Electric Company 3,016,000
----------------------------------------------------------------------------------
22,000 Deere & Co. 1,903,000
----------------------------------------------------------------------------------
45,000 Intel Corp. 5,051,250
----------------------------------------------------------------------------------
55,000 Lockheed Martin Corp. 3,272,500
----------------------------------------------------------------------------------
31,000 Motorola, Inc. 1,856,125
----------------------------------------------------------------------------------
40,500 Raytheon Co. 3,138,750
---------------------------------------------------------------------------------- --------------
Total 18,237,625
---------------------------------------------------------------------------------- --------------
CONSUMER CYCLICAL--11.1%
----------------------------------------------------------------------------------
35,500 Eastman Kodak Co. 2,143,312
----------------------------------------------------------------------------------
83,000 Goodyear Tire and Rubber Co. 3,506,750
----------------------------------------------------------------------------------
14,900 Johnson Ctls., Inc. 853,025
----------------------------------------------------------------------------------
64,500 Penney (J.C.), Inc. 3,039,563
----------------------------------------------------------------------------------
30,000 Whirlpool Corp. 1,713,750
---------------------------------------------------------------------------------- --------------
Total 11,256,400
---------------------------------------------------------------------------------- --------------
CONSUMER STAPLES--10.0%
----------------------------------------------------------------------------------
38,000 Gillette Co. 3,206,250
----------------------------------------------------------------------------------
40,000 Philip Morris Cos., Inc. 2,915,000
----------------------------------------------------------------------------------
57,000 Procter & Gamble Co. 4,096,875
---------------------------------------------------------------------------------- --------------
Total 10,218,125
---------------------------------------------------------------------------------- --------------
ENERGY--9.0%
----------------------------------------------------------------------------------
57,000 Ashland Oil, Inc. 2,116,125
----------------------------------------------------------------------------------
15,000 Mobil Corporation 1,505,625
----------------------------------------------------------------------------------
66,000 Nicor, Inc. 1,757,250
----------------------------------------------------------------------------------
30,000 Royal Dutch Petroleum 3,802,500
---------------------------------------------------------------------------------- --------------
Total 9,181,500
---------------------------------------------------------------------------------- --------------
FINANCE--5.0%
----------------------------------------------------------------------------------
48,000 Citicorp 2,568,000
----------------------------------------------------------------------------------
22,500 Mellon Bank Corp. 961,875
----------------------------------------------------------------------------------
27,000 NationsBank Corp. 1,528,875
---------------------------------------------------------------------------------- --------------
Total 5,058,750
---------------------------------------------------------------------------------- --------------
</TABLE>
STAR RELATIVE VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FINANCIAL SERVICES--2.1%
----------------------------------------------------------------------------------
60,000 American Express Co. $ 2,137,500
---------------------------------------------------------------------------------- --------------
HEALTH CARE--7.3%
----------------------------------------------------------------------------------
10,000 American Home Products Corp. 736,250
----------------------------------------------------------------------------------
58,000 Bristol Myers Squibb Co. 3,849,750
----------------------------------------------------------------------------------
61,500 Merck & Co., Inc. 2,898,188
---------------------------------------------------------------------------------- --------------
Total 7,484,188
---------------------------------------------------------------------------------- --------------
INSURANCE--2.2%
----------------------------------------------------------------------------------
29,400 Cincinnati Financial Corp. 1,624,350
----------------------------------------------------------------------------------
21,000 Ohio Casualty Corp. 640,500
---------------------------------------------------------------------------------- --------------
Total 2,264,850
---------------------------------------------------------------------------------- --------------
MISCELLANEOUS--4.8%
----------------------------------------------------------------------------------
32,000 Allied Signal, Inc. 1,292,000
----------------------------------------------------------------------------------
32,000 ITT Corp. 3,580,000
---------------------------------------------------------------------------------- --------------
Total 4,872,000
---------------------------------------------------------------------------------- --------------
TRANSPORTATION--0.8%
----------------------------------------------------------------------------------
13,000 Burlington Northn. 794,625
---------------------------------------------------------------------------------- --------------
UTILITIES--9.6%
----------------------------------------------------------------------------------
69,000 AT&T Co. 3,501,750
----------------------------------------------------------------------------------
103,000 GTE Corp. 3,437,625
----------------------------------------------------------------------------------
93,000 General Public Utilities Corp. 2,790,000
---------------------------------------------------------------------------------- --------------
Total 9,729,375
---------------------------------------------------------------------------------- --------------
TOTAL COMMON STOCKS (IDENTIFIED COST, $69,391,815) 88,839,625
---------------------------------------------------------------------------------- --------------
*REPURCHASE AGREEMENT--12.3%
- -------------------------------------------------------------------------------------------------
$ 12,560,000 Donaldson, Lufkin & Jenrette Securities Corp., 5.72%, dated 5/31/95, due 6/1/95
(at amortized cost) 12,560,000
---------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST, $81,951,815) $ 101,399,625+
---------------------------------------------------------------------------------- --------------
</TABLE>
* The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
+ The cost of investments for federal tax purposes amounts to $81,951,815. The
net unrealized appreciation of investments on a federal tax basis amounts to
$19,447,810 which is comprised of $19,586,101 appreciation and $138,291
depreciation at May 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($101,783,446) at May 31, 1995.
(See Notes which are an integral part of the Financial Statements)
STAR RELATIVE VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Investments in repurchase agreements $ 12,560,000
- ----------------------------------------------------------------------------------
Investments in securities 88,839,625
- ---------------------------------------------------------------------------------- -------------
Total Investments in securities, at amortized cost and value
(identified and tax cost $81,951,815) $ 101,399,625
- -------------------------------------------------------------------------------------------------
Cash 923
- -------------------------------------------------------------------------------------------------
Income receivable 353,001
- -------------------------------------------------------------------------------------------------
Receivable for shares sold 30,811
- -------------------------------------------------------------------------------------------------
Deferred expenses 2,399
- ------------------------------------------------------------------------------------------------- --------------
Total assets 101,786,759
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable for shares redeemed 267
- ----------------------------------------------------------------------------------
Accrued expenses 3,046
- ---------------------------------------------------------------------------------- -------------
Total liabilities 3,313
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 7,584,559 shares outstanding $ 101,783,446
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------------
Paid in capital $ 83,055,014
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 19,447,810
- -------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (1,003,297)
- -------------------------------------------------------------------------------------------------
Undistributed net investment income 283,919
- ------------------------------------------------------------------------------------------------- --------------
Total Net Assets $ 101,783,446
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE and Redemption Proceeds Per Share:
- -------------------------------------------------------------------------------------------------
($101,783,446 / 7,584,559 shares outstanding) $13.42
- ------------------------------------------------------------------------------------------------- --------------
Offering Price Per Share (100/95.50 of $13.42)* $14.05
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
* See 'What Shares Cost' in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
STAR RELATIVE VALUE FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest $ 288,266
- ---------------------------------------------------------------------------------------------------
Dividends 1,232,031
- --------------------------------------------------------------------------------------------------- -------------
Total income 1,520,297
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee $ 325,238
- ---------------------------------------------------------------------------------------
Administrative personnel and services fee 49,362
- ---------------------------------------------------------------------------------------
Custodian fees 9,228
- ---------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 16,830
- ---------------------------------------------------------------------------------------
Directors'/Trustees' fees 708
- ---------------------------------------------------------------------------------------
Auditing fees 8,401
- ---------------------------------------------------------------------------------------
Legal fees 2,159
- ---------------------------------------------------------------------------------------
Portfolio accounting fees 21,636
- ---------------------------------------------------------------------------------------
Shareholder services fee 4,814
- ---------------------------------------------------------------------------------------
Share registration costs 10,118
- ---------------------------------------------------------------------------------------
Printing and postage 8,854
- ---------------------------------------------------------------------------------------
Insurance premiums 1,335
- ---------------------------------------------------------------------------------------
Miscellaneous 2,783
- --------------------------------------------------------------------------------------- ----------
Total expenses 461,466
- --------------------------------------------------------------------------------------------------- -------------
Net investment income 1,058,831
- --------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (272,136)
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 15,173,832
- --------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain (loss) on investments 14,901,696
- --------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ 15,960,527
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR RELATIVE VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MAY 31, 1995 YEAR ENDED
(UNAUDITED) NOVEMBER 30, 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------
Net investment income $ 1,058,831 $ 1,270,860
- -----------------------------------------------------------------
Net realized gain (loss) on investments ($272,136 and $731,359,
net losses, respectively, as computed for federal tax purposes) (272,136) (731,359)
- -----------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on
investments 15,173,832 (1,941,545)
- ----------------------------------------------------------------- ---------------------- ----------------------
Change in net assets resulting from operations 15,960,527 (1,402,044)
- ----------------------------------------------------------------- ---------------------- ----------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------
Distributions from net investment income (981,953) (1,198,281)
- -----------------------------------------------------------------
Distributions from net realized gains -- (158,063)
- ----------------------------------------------------------------- ---------------------- ----------------------
Change in net assets resulting from distributions to
shareholders (981,953) (1,356,344)
- ----------------------------------------------------------------- ---------------------- ----------------------
SHARE TRANSACTIONS
- -----------------------------------------------------------------
Proceeds from sale of shares 18,922,553 35,499,767
- -----------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 221,715 239,448
- -----------------------------------------------------------------
Cost of shares redeemed (6,433,292) (8,587,617)
- ----------------------------------------------------------------- ---------------------- ----------------------
Change in net assets resulting from share transactions 12,710,976 27,151,598
- ----------------------------------------------------------------- ---------------------- ----------------------
Change in net assets 27,689,550 24,393,210
- -----------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------
Beginning of period 74,093,896 49,700,686
- ----------------------------------------------------------------- ---------------------- ----------------------
End of period (including undistributed net investment income of
$283,919 and $207,041, respectively) $ 101,783,446 $ 74,093,896
- ----------------------------------------------------------------- ---------------------- ----------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR RELATIVE VALUE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MAY 31, 1995 YEAR ENDED NOVEMBER 30,
(UNAUDITED) 1994 1993 1992 1991(a)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.36 $ 11.80 $ 10.52 $ 9.43 $ 10.00
- ---------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------
Net investment income 0.15 0.23 0.20 0.30 0.22
- ---------------------------------------------
Net realized and unrealized gain (loss) on
investments 2.05 (0.40) 1.30 1.12 (0.66)
- --------------------------------------------- ------- --------- --------- --------- -----------
Total from investment operations 2.20 (0.17) 1.50 1.42 (0.44)
- ---------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------
Distributions from net investment income (0.14) (0.23) (0.22) (0.33) (0.13)
- ---------------------------------------------
Distributions from net realized gain on
investment transactions -- (0.04) -- -- --
- --------------------------------------------- ------- --------- --------- --------- -----------
Total distributions (0.14) (0.27) (0.22) (0.33) (0.13)
- --------------------------------------------- ------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 13.42 $ 11.36 $ 11.80 $ 10.52 $ 9.43
- --------------------------------------------- ------- --------- --------- --------- -----------
TOTAL RETURN (b) 19.54% (1.54%) 14.47% 15.39% (4.31%)
- ---------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------
Expenses 1.04%(c) 1.15% 1.19% 0.47% 0.40%(c)
- ---------------------------------------------
Net investment income 2.39%(c) 2.02% 1.79% 3.01% 4.75%(c)
- ---------------------------------------------
Expense waiver/reimbursement (d) 0.00% 0.00% 0.31% 1.00% 0.93%(c)
- ---------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------
Net assets, end of period
(000 omitted) $101,783 $ 74,094 $ 49,701 $ 38,154 $ 33,015
- ---------------------------------------------
Portfolio turnover rate 19% 30% 59% 45% 38%
- ---------------------------------------------
</TABLE>
(a) Reflects operations for the period from June 5, 1991 (date of initial
public investment) to November 30, 1991. For the period from January 31,
1989 (start of business) to June 4, 1991, all income was distributed to the
administrator.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
THE STELLAR FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
U.S. EQUITIES--20.7%
- ------------------------------------------------------------------------------------------------
BASIC INDUSTRY--2.1%
- ------------------------------------------------------------------------------------------------
CHEMICALS & FERTILIZERS--1.1%
---------------------------------------------------------------------------------
12,000 DuPont E.I. De Nemours & Co. $ 814,500
---------------------------------------------------------------------------------
20,000 Lyondell Petrochemical Co. 500,000
--------------------------------------------------------------------------------- --------------
Total 1,314,500
--------------------------------------------------------------------------------- --------------
METALS & MINING--0.6%
---------------------------------------------------------------------------------
12,000 Aluminum Co. of America 558,000
---------------------------------------------------------------------------------
10,000 Magma Copper Co. 143,750
--------------------------------------------------------------------------------- --------------
Total 701,750
--------------------------------------------------------------------------------- --------------
PAPER--0.4%
---------------------------------------------------------------------------------
15,000 Chesapeake Corp. 427,500
--------------------------------------------------------------------------------- --------------
TOTAL BASIC INDUSTRY 2,443,750
--------------------------------------------------------------------------------- --------------
CAPITAL GOODS--4.0%
- ------------------------------------------------------------------------------------------------
AEROSPACE--0.5%
---------------------------------------------------------------------------------
10,000 Lockheed Martin Corp. 595,000
--------------------------------------------------------------------------------- --------------
ELECTRICAL EQUIPMENT--0.8%
---------------------------------------------------------------------------------
6,000 Emerson Electric Co. 412,500
---------------------------------------------------------------------------------
8,000 General Electric Co. 464,000
--------------------------------------------------------------------------------- --------------
Total 876,500
--------------------------------------------------------------------------------- --------------
ELECTRONICS--0.9%
---------------------------------------------------------------------------------
6,000 Intel Corp. 673,500
---------------------------------------------------------------------------------
6,000 Motorola Inc. 359,250
--------------------------------------------------------------------------------- --------------
Total 1,032,750
--------------------------------------------------------------------------------- --------------
INDUSTRIAL PRODUCTS--0.4%
---------------------------------------------------------------------------------
11,000 Varity Corp. 474,375
--------------------------------------------------------------------------------- --------------
OFFICE & BUSINESS EQUIPMENT--1.4%
---------------------------------------------------------------------------------
1,800 Hewlett Packard Co. 119,025
---------------------------------------------------------------------------------
5,000 International Business Machines 466,250
---------------------------------------------------------------------------------
10,000 *Microsoft Corp. 846,875
---------------------------------------------------------------------------------
10,000 Sybase Inc. 210,000
--------------------------------------------------------------------------------- --------------
Total 1,642,150
--------------------------------------------------------------------------------- --------------
TOTAL CAPITAL GOODS 4,620,775
--------------------------------------------------------------------------------- --------------
CONSUMER CYCLICAL--2.8%
- ------------------------------------------------------------------------------------------------
AUTOMOTIVE & RELATED--0.8%
---------------------------------------------------------------------------------
10,000 Ford Motor Co. 292,500
---------------------------------------------------------------------------------
10,000 Johnson Controls, Inc. 572,500
--------------------------------------------------------------------------------- --------------
Total 865,000
--------------------------------------------------------------------------------- --------------
</TABLE>
THE STELLAR FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
U.S. EQUITIES--CONTINUED
<CAPTION>
- ------------------------------------------------------------------------------------------------
CONSUMER CYCLICAL--CONTINUED
- ------------------------------------------------------------------------------------------------
ENTERTAINMENT & LEISURE--1.1%
---------------------------------------------------------------------------------
12,000 Callaway Golf Co. $ 172,500
---------------------------------------------------------------------------------
5,000 Capital Cities ABC Corp. 482,500
---------------------------------------------------------------------------------
10,000 Disney (Walt) Co. 556,250
--------------------------------------------------------------------------------- --------------
Total 1,211,250
--------------------------------------------------------------------------------- --------------
RETAILING & APPAREL--0.9%
---------------------------------------------------------------------------------
20,000 Circuit City Stores Inc. 550,000
---------------------------------------------------------------------------------
10,000 Penney (J.C.), Inc. 471,250
--------------------------------------------------------------------------------- --------------
Total 1,021,250
--------------------------------------------------------------------------------- --------------
TOTAL CONSUMER CYCLICAL 3,097,500
--------------------------------------------------------------------------------- --------------
CONSUMER STAPLES--3.2%
- ------------------------------------------------------------------------------------------------
HOUSEHOLD--1.1%
---------------------------------------------------------------------------------
6,000 Gillette Co. 506,250
---------------------------------------------------------------------------------
11,000 Procter & Gamble Co. 790,625
--------------------------------------------------------------------------------- --------------
Total 1,296,875
--------------------------------------------------------------------------------- --------------
FOOD & BEVERAGE--1.3%
---------------------------------------------------------------------------------
15,000 Hudson Foods Inc. 206,250
---------------------------------------------------------------------------------
20,000 Premark International, Inc. 997,500
---------------------------------------------------------------------------------
10,000 Sara Lee Corp. 278,750
--------------------------------------------------------------------------------- --------------
Total 1,482,500
--------------------------------------------------------------------------------- --------------
TOBACCO--0.8%
---------------------------------------------------------------------------------
12,000 Philip Morris Companies Inc. 874,500
--------------------------------------------------------------------------------- --------------
TOTAL CONSUMER STAPLES 3,653,875
--------------------------------------------------------------------------------- --------------
ENERGY--2.2%
- ------------------------------------------------------------------------------------------------
DOMESTIC OIL--1.1%
---------------------------------------------------------------------------------
10,000 Ashland Oil, Co. 371,250
---------------------------------------------------------------------------------
10,100 Atlantic Richfield Co. 253,763
---------------------------------------------------------------------------------
12,000 Chevron Corp. 589,500
--------------------------------------------------------------------------------- --------------
Total 1,214,513
--------------------------------------------------------------------------------- --------------
INTERNATIONAL OIL--0.4%
---------------------------------------------------------------------------------
5,000 Mobil Corp. 501,875
--------------------------------------------------------------------------------- --------------
ENERGY SERVICE & EQUIPMENT--0.3%
---------------------------------------------------------------------------------
10,000 Halliburton Co. 390,000
--------------------------------------------------------------------------------- --------------
NATURAL GAS & COAL--0.4%
---------------------------------------------------------------------------------
20,000 Panhandle Eastern Corp. 502,500
--------------------------------------------------------------------------------- --------------
TOTAL ENERGY 2,608,888
--------------------------------------------------------------------------------- --------------
EQUITY MUTUAL FUNDS--1.0%
- ------------------------------------------------------------------------------------------------
100,000 Gateway Trust (at net asset value) 1,129,000
--------------------------------------------------------------------------------- --------------
</TABLE>
THE STELLAR FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
U.S. EQUITIES--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--2.2%
- ------------------------------------------------------------------------------------------------
BANKS & SAVINGS INSTITUTIONS--0.9%
---------------------------------------------------------------------------------
4,000 Citicorp $ 579,576
---------------------------------------------------------------------------------
22,500 Signet Banking Corp. 509,063
--------------------------------------------------------------------------------- --------------
Total 1,088,639
--------------------------------------------------------------------------------- --------------
INSURANCE--0.9%
---------------------------------------------------------------------------------
9,000 American International Group, Inc. 1,023,750
--------------------------------------------------------------------------------- --------------
OTHER FINANCE--0.4%
---------------------------------------------------------------------------------
10,000 Dean Witter Discover & Co. 476,250
--------------------------------------------------------------------------------- --------------
TOTAL FINANCE 2,588,639
--------------------------------------------------------------------------------- --------------
HEALTH CARE--1.0%
- ------------------------------------------------------------------------------------------------
HOSPITAL MANAGEMENT--0.6%
---------------------------------------------------------------------------------
18,000 Columbia/HCA Healthcare Corp. 735,750
--------------------------------------------------------------------------------- --------------
HEALTH MAINTANCE ORGANIZATION--0.4%
---------------------------------------------------------------------------------
16,000 U.S. Healthcare, Inc. 497,000
--------------------------------------------------------------------------------- --------------
TOTAL HEALTH CARE 1,232,750
--------------------------------------------------------------------------------- --------------
MISCELLANEOUS--0.7%
- ------------------------------------------------------------------------------------------------
DIVERSIFIED--0.7%
---------------------------------------------------------------------------------
10,000 Allied Signal, Inc. 403,750
---------------------------------------------------------------------------------
4,000 ITT Corp. 447,500
--------------------------------------------------------------------------------- --------------
TOTAL MISCELLANEOUS 851,250
--------------------------------------------------------------------------------- --------------
UTILITIES--1.5%
- ------------------------------------------------------------------------------------------------
ELECTRIC--1.0%
---------------------------------------------------------------------------------
15,000 Duke Power Co. 626,250
---------------------------------------------------------------------------------
25,000 Southern Co. 553,125
--------------------------------------------------------------------------------- --------------
Total 1,179,375
--------------------------------------------------------------------------------- --------------
TELECOMMUNICATIONS--0.5%
---------------------------------------------------------------------------------
11,600 American Telephone & Telegraph Co. 588,700
--------------------------------------------------------------------------------- --------------
TOTAL UTILITIES 1,768,075
--------------------------------------------------------------------------------- --------------
TOTAL U.S. EQUITIES (IDENTIFIED COST, $21,454,361) 23,994,502
--------------------------------------------------------------------------------- --------------
INTERNATIONAL SECURITIES--21.8%
- ------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITIES--18.5%
- ------------------------------------------------------------------------------------------------
AUSTRALIA--2.4%
---------------------------------------------------------------------------------
20,000 National Australia Bank Ltd. 850,000
---------------------------------------------------------------------------------
80,000 News Corp. Ltd. 1,730,000
---------------------------------------------------------------------------------
10,000 **News Corp. Ltd. 196,250
--------------------------------------------------------------------------------- --------------
TOTAL AUSTRALIA 2,776,250
--------------------------------------------------------------------------------- --------------
CANADA--3.5%
---------------------------------------------------------------------------------
40,000 Alcan Aluminum Ltd. 1,185,000
---------------------------------------------------------------------------------
51,000 Canadian Pacific Ltd. 873,375
---------------------------------------------------------------------------------
</TABLE>
THE STELLAR FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
INTERNATIONAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITIES--CONTINUED
- ------------------------------------------------------------------------------------------------
CANADA--CONTINUED
---------------------------------------------------------------------------------
40,000 Rio Algom Ltd. $ 750,000
---------------------------------------------------------------------------------
12,500 Seagram Ltd. 375,000
---------------------------------------------------------------------------------
30,000 Total Petroleum North American Ltd. 393,750
---------------------------------------------------------------------------------
32,000 TransCanada Pipelines Ltd. 424,000
--------------------------------------------------------------------------------- --------------
TOTAL CANADA 4,001,125
--------------------------------------------------------------------------------- --------------
DENMARK--0.9%
---------------------------------------------------------------------------------
40,000 Novo Nordisk A S 1,070,000
--------------------------------------------------------------------------------- --------------
TOTAL DENMARK 1,070,000
--------------------------------------------------------------------------------- --------------
FRANCE--1.5%
---------------------------------------------------------------------------------
18,500 Rhone Poulenc Rorer, Inc. 763,125
---------------------------------------------------------------------------------
35,000 Thomson CSF 953,750
--------------------------------------------------------------------------------- --------------
TOTAL FRANCE 1,716,875
--------------------------------------------------------------------------------- --------------
GERMANY--.6%
---------------------------------------------------------------------------------
15,000 Daimler Benz A.G. 729,375
--------------------------------------------------------------------------------- --------------
TOTAL GERMANY 729,375
--------------------------------------------------------------------------------- --------------
GREAT BRITAIN--4.0%
---------------------------------------------------------------------------------
10,000 British Petroleum PLC 853,750
---------------------------------------------------------------------------------
60,000 Cable & Wireless Ltd. 1,230,000
---------------------------------------------------------------------------------
18,000 Reuters Holdings PLC 807,750
---------------------------------------------------------------------------------
30,600 SmithKline Beecham PLC 1,208,700
---------------------------------------------------------------------------------
15,000 **Vodaphone Group PLC 504,375
--------------------------------------------------------------------------------- --------------
TOTAL GREAT BRITAIN 4,604,575
--------------------------------------------------------------------------------- --------------
HOLLAND--1.7%
---------------------------------------------------------------------------------
33,300 *Philips Electronics N.V. 1,336,163
---------------------------------------------------------------------------------
4,400 PolyGram N.V. 256,850
---------------------------------------------------------------------------------
3,300 Royal Dutch Petroleum Co. 418,275
--------------------------------------------------------------------------------- --------------
TOTAL HOLLAND 2,011,288
--------------------------------------------------------------------------------- --------------
ITALY--0.3%
---------------------------------------------------------------------------------
8,000 Luxottica Group SPA 288,000
--------------------------------------------------------------------------------- --------------
TOTAL ITALY 288,000
--------------------------------------------------------------------------------- --------------
JAPAN--1.3%
---------------------------------------------------------------------------------
13,500 Hitachi Ltd. 1,326,375
---------------------------------------------------------------------------------
10,000 Pioneer Electric Corp. 183,750
--------------------------------------------------------------------------------- --------------
TOTAL JAPAN 1,510,125
--------------------------------------------------------------------------------- --------------
NORWAY--1.3%
---------------------------------------------------------------------------------
35,000 Norsk Hydro AS 1,443,750
--------------------------------------------------------------------------------- --------------
TOTAL NORWAY 1,443,750
--------------------------------------------------------------------------------- --------------
</TABLE>
THE STELLAR FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
INTERNATIONAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITIES--CONTINUED
- ------------------------------------------------------------------------------------------------
PORTUGAL--0.4%
---------------------------------------------------------------------------------
40,000 Espirito Santo Financial Holdings SA $ 500,000
--------------------------------------------------------------------------------- --------------
TOTAL PORTUGAL 500,000
--------------------------------------------------------------------------------- --------------
SPAIN--0.6%
---------------------------------------------------------------------------------
21,200 Repsol SA 691,650
--------------------------------------------------------------------------------- --------------
TOTAL SPAIN 691,650
--------------------------------------------------------------------------------- --------------
TOTAL INTERNATIONAL EQUITIES 21,343,013
--------------------------------------------------------------------------------- --------------
CLOSED-END INVESTMENT COMPANIES--3.3%
- ------------------------------------------------------------------------------------------------
20,000 Chile Fund, Inc. 1,000,000
---------------------------------------------------------------------------------
33,000 France Growth Fund, Inc. 342,375
---------------------------------------------------------------------------------
20,053 Future Germany Fund, Inc. 318,341
---------------------------------------------------------------------------------
25,000 Latin America Equity Fund, Inc. 365,625
---------------------------------------------------------------------------------
28,508 Mexico Fund, Inc. 466,819
---------------------------------------------------------------------------------
15,072 New Germany Fund, Inc. 188,400
---------------------------------------------------------------------------------
54,000 Swiss Helvetia Fund, Inc. 1,161,000
--------------------------------------------------------------------------------- --------------
Total 3,842,560
--------------------------------------------------------------------------------- --------------
TOTAL INTERNATIONAL SECURITIES (IDENTIFIED COST, $22,393,164) 25,185,573
--------------------------------------------------------------------------------- --------------
REAL ESTATE--19.5%
- ------------------------------------------------------------------------------------------------
INVESTMENT TRUST--19.5%
---------------------------------------------------------------------------------
38,000 Avalon Properties, Inc. 750,500
---------------------------------------------------------------------------------
30,500 Camden Property Trust 697,688
---------------------------------------------------------------------------------
39,300 Centerpoint Properties Corp. 781,088
---------------------------------------------------------------------------------
38,000 Chateau Properties, Inc. 845,500
---------------------------------------------------------------------------------
30,000 Crown American Realty 356,250
---------------------------------------------------------------------------------
23,500 Developers Diversified Realty 663,875
---------------------------------------------------------------------------------
75,000 Equity Inns, Inc. 806,250
---------------------------------------------------------------------------------
34,400 Federal Realty Investment Trust 731,000
---------------------------------------------------------------------------------
34,000 Glimcher Realty Trust 705,500
---------------------------------------------------------------------------------
23,000 Health Care Properties Investments, Inc. 730,250
---------------------------------------------------------------------------------
36,400 Highwoods Properties, Inc. 878,150
---------------------------------------------------------------------------------
23,500 Kimco Realty Corp. 907,688
---------------------------------------------------------------------------------
26,600 Liberty Property 515,375
---------------------------------------------------------------------------------
51,500 LTC Properties 663,063
---------------------------------------------------------------------------------
19,532 Manufactured Home Communities, Inc. 307,629
---------------------------------------------------------------------------------
25,000 Meditrust 796,875
---------------------------------------------------------------------------------
19,000 Merry Land & Investment Co. 401,375
---------------------------------------------------------------------------------
32,100 Omega Healthcare Investors 818,550
---------------------------------------------------------------------------------
25,000 Post Properties, Inc. 771,875
---------------------------------------------------------------------------------
52,200 RFS Hotel Investors, Inc. 786,263
---------------------------------------------------------------------------------
</TABLE>
THE STELLAR FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
REAL ESTATE--CONTINUED
- ------------------------------------------------------------------------------------------------
INVESTMENT TRUST--CONTINUED
---------------------------------------------------------------------------------
45,000 Security Capital Pacific Trust $ 804,375
---------------------------------------------------------------------------------
21,000 Simon Property Group, Inc. 522,375
---------------------------------------------------------------------------------
71,500 Sizeler Property Investments, Inc. 732,875
---------------------------------------------------------------------------------
67,000 Southwestern Property Trust, Inc. 829,125
---------------------------------------------------------------------------------
19,840 Storage USA, Inc. 562,960
---------------------------------------------------------------------------------
31,800 Summit Properties, Inc. 544,575
---------------------------------------------------------------------------------
37,000 Sun Communities, Inc. 883,375
---------------------------------------------------------------------------------
30,000 Tanger Factory Outlet Centers, Inc. 750,000
---------------------------------------------------------------------------------
40,000 Taubman Centers Inc. 385,000
---------------------------------------------------------------------------------
65,700 United Dominion Realty Trust, Inc. 919,800
---------------------------------------------------------------------------------
22,500 Weingarten Realty Investment 810,000
---------------------------------------------------------------------------------
76,800 Winston Hotels 729,600
--------------------------------------------------------------------------------- --------------
TOTAL REAL ESTATE (IDENTIFIED COST, $21,383,972) 22,388,804
--------------------------------------------------------------------------------- --------------
FIXED INCOME OBLIGATIONS--19.3%
- ------------------------------------------------------------------------------------------------
FINANCE--1.3%
---------------------------------------------------------------------------------
$ 500,000 Citicorp, 8.625%, 12/01/2002 548,595
---------------------------------------------------------------------------------
250,000 General Electric Capital Corp., 8.75%, 11/26/96 258,773
---------------------------------------------------------------------------------
200,000 General Motors Acceptance Corp., 7.25%, 6/22/99 203,682
---------------------------------------------------------------------------------
250,000 International Lease Finance Corp., 5.90%, 3/24/99 244,975
---------------------------------------------------------------------------------
250,000 International Lease Finance Corp., 8.375%, 12/15/2004 274,020
--------------------------------------------------------------------------------- --------------
Total 1,530,045
--------------------------------------------------------------------------------- --------------
FOREIGN--0.5%
---------------------------------------------------------------------------------
500,000 Alcan Aluminum Ltd., 9.20%, 3/15/2001 533,680
--------------------------------------------------------------------------------- --------------
INDUSTRIAL--1.7%
---------------------------------------------------------------------------------
250,000 Ashland Oil, Inc., 7.90%, 8/5/2006 265,628
---------------------------------------------------------------------------------
250,000 Consolidated Rail Corp., 5.70%, 3/24/97 247,595
---------------------------------------------------------------------------------
250,000 Enron Corp., 7.625%, 9/10/2004 260,318
---------------------------------------------------------------------------------
750,000 General Motors Corp., 9.75%, 5/15/99 773,070
---------------------------------------------------------------------------------
400,000 Philip Morris Cos., Inc., 9.75%, 5/1/97 424,440
--------------------------------------------------------------------------------- --------------
Total 1,971,051
--------------------------------------------------------------------------------- --------------
TELECOMMUNICATIONS--.2%
---------------------------------------------------------------------------------
250,000 Pacific Telephone & Telegram Co., 7.80%, 3/1/2007 254,563
--------------------------------------------------------------------------------- --------------
U.S. GOVERNMENT AGENCIES--6.8%
---------------------------------------------------------------------------------
2,000,000 Federal Farm Credit Banks, 5.375, 8/1/95 1,998,740
---------------------------------------------------------------------------------
500,000 Federal Home Loan Banks, 8.875%, 6/26/95 501,215
---------------------------------------------------------------------------------
1,000,000 Federal Home Loan Banks, 8.36%, 2/28/2000 1,014,920
---------------------------------------------------------------------------------
179,593 Federal Home Loan Mortgage Corp., 7.50%, 8/15/2016 180,217
---------------------------------------------------------------------------------
</TABLE>
THE STELLAR FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
FIXED INCOME OBLIGATIONS--CONTINUED
- ------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES--CONTINUED
---------------------------------------------------------------------------------
$ 992,442 Federal Home Loan Mortgage Corp., 9.00%, 11/15/2019 $ 1,024,230
---------------------------------------------------------------------------------
250,000 Federal National Mortgage Association, 8.20%, 4/25/2006 253,885
---------------------------------------------------------------------------------
500,000 Federal National Mortgage Association, 7.25%, 1/25/2019 501,975
---------------------------------------------------------------------------------
500,000 Federal National Mortgage Association, 9.50%, 6/25/2020 554,465
---------------------------------------------------------------------------------
500,000 Federal National Mortgage Association, 7.25%, 1/17/2021 506,655
---------------------------------------------------------------------------------
475,648 FNMA Pool, 5.925%, 10/1/2024 492,286
---------------------------------------------------------------------------------
735,636 FNMA Pool, 8.50%, 1/1/2025 760,685
--------------------------------------------------------------------------------- --------------
Total 7,789,273
--------------------------------------------------------------------------------- --------------
U.S. TREASURY SECURITIES--7.9%
---------------------------------------------------------------------------------
500,000 U.S. Treasury Bonds, 7.625%, 2/15/2007 530,060
---------------------------------------------------------------------------------
250,000 U.S. Treasury Bonds, 11.75%, 11/15/2014 368,520
---------------------------------------------------------------------------------
750,000 U.S. Treasury Bonds, 8.875%, 2/15/2019 932,948
---------------------------------------------------------------------------------
700,000 U.S. Treasury Bonds, 8.125%, 8/15/2019 809,781
---------------------------------------------------------------------------------
375,000 U.S. Treasury Bonds, 7.875%, 2/15/2021 424,020
---------------------------------------------------------------------------------
1,000,000 U.S. Treasury Bonds, 7.5%, 2/15/2024 1,099,740
---------------------------------------------------------------------------------
1,400,000 U.S. Treasury Note, 6.875%, 10/31/96 1,419,558
---------------------------------------------------------------------------------
1,000,000 U.S. Treasury Note, 7.5%, 12/31/96 1,024,990
---------------------------------------------------------------------------------
600,000 U.S. Treasury Notes, 6.75%, 5/31/99 615,210
---------------------------------------------------------------------------------
1,000,000 U.S. Treasury Notes, 7.75%, 11/30/99 1,065,760
---------------------------------------------------------------------------------
750,000 U.S. Treasury Notes, 7.5%, 5/15/2002 806,138
--------------------------------------------------------------------------------- --------------
Total 9,096,725
--------------------------------------------------------------------------------- --------------
UTILITY--0.9%
---------------------------------------------------------------------------------
500,000 Cincinnati Gas & Electric Co., 8.95%, 12/15/2021 543,875
---------------------------------------------------------------------------------
500,000 Georgia Power Co., 6.625%, 4/1/2003 491,265
--------------------------------------------------------------------------------- --------------
Total 1,035,140
--------------------------------------------------------------------------------- --------------
TOTAL FIXED OBLIGATIONS (IDENTIFIED COST, $21,804,038) 22,210,477
--------------------------------------------------------------------------------- --------------
SHORT-TERM SECURITIES & PRECIOUS METALS--19.6%
- ------------------------------------------------------------------------------------------------
CASH EQUIVALENT--7.6%
---------------------------------------------------------------------------------
1,000,000 Federal Home Loan Mortgage Corp., Floating Rate Note 986,500
---------------------------------------------------------------------------------
5,000,000 Student Loan Marketing Assoc., Floating Rate Notes 4,999,822
---------------------------------------------------------------------------------
1,000,000 Student Loan Marketing Assoc., 5.315%, 6/30/95 999,910
---------------------------------------------------------------------------------
250,000 U.S. Treasury Note, 4.625%, 8/15/95 249,470
---------------------------------------------------------------------------------
1,000,000 U.S. Treasury Note, 7.875%, 2/15/96 1,013,980
---------------------------------------------------------------------------------
500,000 U.S. Treasury Note, 7.375%, 5/15/96 507,035
--------------------------------------------------------------------------------- --------------
Total 8,756,717
--------------------------------------------------------------------------------- --------------
REPURCHASE AGREEMENT--11.2%
---------------------------------------------------------------------------------
12,862,000 ***Donaldson, Lufkin & Jenrette Securities Corp., 5.72%, dated 5/31/95, due
6/1/95 (at amortized cost) 12,862,000
--------------------------------------------------------------------------------- --------------
</TABLE>
THE STELLAR FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
SHORT-TERM SECURITIES & PRECIOUS METALS--CONTINUED
- ------------------------------------------------------------------------------------------------
PRECIOUS METALS--0.8%
---------------------------------------------------------------------------------
20,000 Barrick Gold Corp. $ 505,000
---------------------------------------------------------------------------------
10,000 Newmont Gold Co. 403,750
--------------------------------------------------------------------------------- --------------
Total 908,750
--------------------------------------------------------------------------------- --------------
TOTAL SHORT-TERM SECURITIES & PRECIOUS METALS
(IDENTIFIED COST, $22,484,950) 22,527,460
--------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST, $109,520,485) $ 116,306,816+
--------------------------------------------------------------------------------- --------------
</TABLE>
* Non-income producing.
** American Depositary Receipts.
*** The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
+ The cost of investments for federal tax purposes amounts to $109,520,485.
The net unrealized appreciation of investments on a federal tax basis
amounts to $6,786,331, which is comprised of $8,791,268 appreciation and
$2,004,937 depreciation at May 31, 1995.
The following abbreviations are used in this portfolio:
PLC--Public Limited Company
SPA--Standby Purchase Agreement
Note: The categories of investments are shown as a percentage of net assets
($115,069,935) at May 31, 1995.
(See Notes which are an integral part of the Financial Statements)
THE STELLAR FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Investments in repurchase agreements $ 12,862,000
- ---------------------------------------------------------------------------------
Investments in securities 103,444,816
- --------------------------------------------------------------------------------- --------------
Total Investments in securities, at amortized cost and value
(identified and tax cost $109,520,485) $ 116,306,816
- -------------------------------------------------------------------------------------------------
Cash 296
- -------------------------------------------------------------------------------------------------
Receivable for investments sold 944,568
- -------------------------------------------------------------------------------------------------
Income receivable 651,995
- -------------------------------------------------------------------------------------------------
Receivable for shares sold 76,535
- -------------------------------------------------------------------------------------------------
Deferred expenses 1,113
- ------------------------------------------------------------------------------------------------- --------------
Total assets 117,981,323
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable for investments purchased 2,738,996
- ---------------------------------------------------------------------------------
Options written, at value (premium received $42,603) 103,937
- ---------------------------------------------------------------------------------
Payable for shares redeemed 16,527
- ---------------------------------------------------------------------------------
Accrued expenses 51,928
- --------------------------------------------------------------------------------- --------------
Total liabilities 2,911,388
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 9,860,491 shares outstanding $ 115,069,935
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------------
Paid in capital $ 108,197,559
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments and options written (includes $61,334
net unrealized depreciation on options written) 6,724,997
- -------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (197,223)
- -------------------------------------------------------------------------------------------------
Undistributed net investment income 344,602
- ------------------------------------------------------------------------------------------------- --------------
Total Net Assets $ 115,069,935
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE and Redemption Proceeds Per Share:
- -------------------------------------------------------------------------------------------------
Trust Shares ($64,605,216 / 5,537,632 shares outstanding) $11.67
- ------------------------------------------------------------------------------------------------- --------------
Investment Shares ($50,464,719 / 4,322,859 shares outstanding) $11.67
- ------------------------------------------------------------------------------------------------- --------------
OFFERING PRICE PER SHARE:
- -------------------------------------------------------------------------------------------------
Trust Shares $11.67
- ------------------------------------------------------------------------------------------------- --------------
Investment Shares (100/95.50 of $11.67)* $12.22
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
* See 'What Shares Cost' in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
THE STELLAR FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------
Interest $ 1,482,804
- --------------------------------------------------------------------------------------------------
Dividends 1,220,838
- -------------------------------------------------------------------------------------------------- -------------
Total income 2,703,642
- --------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------------------
Investment advisory fee $ 530,927
- -----------------------------------------------------------------------------------
Administrative personnel and services fee 63,718
- -----------------------------------------------------------------------------------
Custodian fees 16,616
- -----------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 68,044
- -----------------------------------------------------------------------------------
Directors'/Trustees' fees 1,060
- -----------------------------------------------------------------------------------
Auditing fees 10,368
- -----------------------------------------------------------------------------------
Legal fees 2,464
- -----------------------------------------------------------------------------------
Portfolio accounting fees 35,429
- -----------------------------------------------------------------------------------
Investment Shares--Distribution services fee 61,956
- -----------------------------------------------------------------------------------
Trust Shares--Shareholder services fee 3,156
- -----------------------------------------------------------------------------------
Investment Shares--Shareholder services fee 2,496
- -----------------------------------------------------------------------------------
Share registration costs 26,262
- -----------------------------------------------------------------------------------
Printing and postage 20,332
- -----------------------------------------------------------------------------------
Insurance premiums 3,224
- -----------------------------------------------------------------------------------
Taxes 1,062
- -----------------------------------------------------------------------------------
Miscellaneous 4,335
- ----------------------------------------------------------------------------------- -------------
Total expenses 851,449
- -------------------------------------------------------------------------------------------------- -------------
Net investment income 1,852,193
- -------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- --------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (includes $139,783 gain on options written) (281,703)
- --------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 8,493,579
- -------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain (loss) on investments 8,211,876
- -------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ 10,064,069
- -------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
THE STELLAR FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MAY 31, 1995 YEAR ENDED
(UNAUDITED) NOVEMBER 30, 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------
Net investment income $ 1,852,193 $ 2,681,306
- -----------------------------------------------------------------
Net realized gain (loss) on investments ($281,703 net loss and
$548,306 net gain, respectively, as computed for federal tax
purposes) (281,703) 429,048
- -----------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on
investments 8,493,579 (5,262,792)
- ----------------------------------------------------------------- ---------------------- ----------------------
Change in net assets resulting from operations 10,064,069 (2,152,438)
- ----------------------------------------------------------------- ---------------------- ----------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------
Dividends to shareholders from net investment income:
- -----------------------------------------------------------------
Trust Shares (1,064,023) (820,750)
- -----------------------------------------------------------------
Investment Shares (778,484) (1,311,297)
- -----------------------------------------------------------------
Distributions from net realized gains:
- -----------------------------------------------------------------
Trust Shares (127,314) --
- -----------------------------------------------------------------
Investment Shares (421,368) (510,297)
- ----------------------------------------------------------------- ---------------------- ----------------------
Change in net assets resulting from distributions to
shareholders (2,391,189) (2,642,344)
- ----------------------------------------------------------------- ---------------------- ----------------------
SHARE TRANSACTIONS
- -----------------------------------------------------------------
Proceeds from sale of shares 10,491,892 110,084,241
- -----------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 2,030,941 2,379,550
- -----------------------------------------------------------------
Cost of shares redeemed (16,595,768) (69,395,903)
- ----------------------------------------------------------------- ---------------------- ----------------------
Change in net assets resulting from share transactions (4,072,935) 43,067,888
- ----------------------------------------------------------------- ---------------------- ----------------------
Change in net assets 3,599,945 38,273,106
- -----------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------
Beginning of period 111,469,990 73,196,884
- ----------------------------------------------------------------- ---------------------- ----------------------
End of period (including undistributed net investment income of
$344,602 and $334,916, respectively) $ 115,069,935 $ 111,469,990
- ----------------------------------------------------------------- ---------------------- ----------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
THE STELLAR FUND
FINANCIAL HIGHLIGHTS--TRUST SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1995 NOVEMBER 30,
(UNAUDITED) 1994(a)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.90 $ 11.34
- -----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------
Net investment income 0.19 0.21
- -----------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.82 (0.48)
- ----------------------------------------------------------------------- ------- -------
Total from investment operations 1.01 (0.27)
- -----------------------------------------------------------------------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------
Distributions from net investment income (0.19) (0.17)
- -----------------------------------------------------------------------
Distributions from net realized gain on investment transactions (0.05) --
- ----------------------------------------------------------------------- ------- -------
Total distributions (0.24) (0.17)
- ----------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 11.67 $ 10.90
- ----------------------------------------------------------------------- ------- -------
TOTAL RETURN (b) 9.46% (1.81%)
- -----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------
Expenses 1.41%(c) 1.43%(c)
- -----------------------------------------------------------------------
Net investment income 3.42%(c) 3.57%(c)
- -----------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.00% 0.00%
- -----------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 64,605 $ 60,822
- -----------------------------------------------------------------------
Portfolio turnover rate 52% 79%
- -----------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from April 11, 1994 (date of initial
public investment) to November 30, 1994. For the period from April 5, 1994
(start of business) to April 10, 1994, all income was distributed to the
administrator.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
THE STELLAR FUND
FINANCIAL HIGHLIGHTS--INVESTMENT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MAY 31, 1995 YEAR ENDED NOVEMBER 30,
<S> <C> <C> <C> <C> <C>
(UNAUDITED) 1994 1993 1992 1991(a)
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.90 $ 11.34 $ 10.52 $ 9.80 $ 10.00
- ---------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------
Net investment income 0.18 0.29 0.24 0.29 0.05
- ---------------------------------------------
Net realized and unrealized gain (loss) on
investments 0.81 (0.41) 0.99 0.74 (0.25)
- --------------------------------------------- ------- --------- --------- --------- -----------
Total from investment operations 0.99 (0.12) 1.23 1.03 (0.20)
- ---------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------
Distributions from net investment income (0.17) (0.24) (0.28) (0.31) --
- ---------------------------------------------
Distributions from net realized gain on
investment transactions (0.05) (0.08) (0.10) (0.00) --
- ---------------------------------------------
Distributions in excess of net investment
income -- -- (0.03 (b) -- --
- --------------------------------------------- ------- --------- --------- --------- -----------
Total distributions (0.22) (0.32) (0.41) (0.31) --
- --------------------------------------------- ------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 11.67 $ 10.90 $ 11.34 $ 10.52 $ 9.80
- --------------------------------------------- ------- --------- --------- --------- -----------
TOTAL RETURN (c) 9.30% (1.22%) 11.99% 10.68% (2.00%)
- ---------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------
Expenses 1.66%(d) 1.55% 1.45% 1.53% 1.44%(d)
- ---------------------------------------------
Net investment income 3.17%(d) 2.32% 1.87% 3.03% 5.32%(d)
- ---------------------------------------------
Expense waiver/reimbursement (e) 0.00% 0.12% 0.25% 0.33% 0.29%(d)
- ---------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------
Net assets, end of period
(000 omitted) $ 50,465 $50,648 $73,197 $35,544 $13,942
- ---------------------------------------------
Portfolio turnover rate 52 % 79% 87% 98% 18 %
- ---------------------------------------------
</TABLE>
(a) Reflects operations for the period from October 18, 1991 (date of initial
public investment) to November 30, 1991. For the period from July 30, 1991
(start of business) to October 17, 1991, all income was distributed to the
administrator.
(b) Distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
distributions did not represent a return of capital for federal income tax
purposes for the year ended November 30, 1993.
(c) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(d) Computed on an annualized basis.
(e) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
STAR STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
COMMON STOCKS--23.2%
- ---------------------------------------------------------------------------------------------------
FINANCE--2.5%
----------------------------------------------------------------------------------
12,480 Corestates Financial Corp. $ 414,960
----------------------------------------------------------------------------------
4,000 NationsBank Corp. 226,500
---------------------------------------------------------------------------------- -------------
Total 641,460
---------------------------------------------------------------------------------- -------------
MANUFACTURING--1.1%
----------------------------------------------------------------------------------
5,000 Johnson Controls, Inc. 286,250
---------------------------------------------------------------------------------- -------------
REAL ESTATE--18.0%
----------------------------------------------------------------------------------
15,900 Camden Property Trust 363,712
----------------------------------------------------------------------------------
10,000 Centerpoint Properties Corp. 198,750
----------------------------------------------------------------------------------
28,300 Crown American Realty 336,063
----------------------------------------------------------------------------------
14,000 DeBartolo Realty Corp. 201,250
----------------------------------------------------------------------------------
11,200 Federal Realty Investment Corp. 238,000
----------------------------------------------------------------------------------
15,000 Glimcher Realty Trust 311,250
----------------------------------------------------------------------------------
21,800 Liberty Property 422,375
----------------------------------------------------------------------------------
25,000 LTC Properties 321,875
----------------------------------------------------------------------------------
20,000 Manufactured Home Communities, Inc. 315,000
----------------------------------------------------------------------------------
25,600 Omega Healthcare Investors 652,800
----------------------------------------------------------------------------------
33,000 Sizeler Property Investments, Inc. 338,250
----------------------------------------------------------------------------------
29,750 South West Properties Trust, Inc. 368,156
----------------------------------------------------------------------------------
22,000 Summit Properties, Inc. 376,750
----------------------------------------------------------------------------------
25,000 Winston Hotels 237,500
---------------------------------------------------------------------------------- -------------
Total 4,681,731
---------------------------------------------------------------------------------- -------------
UTILITIES--1.6%
----------------------------------------------------------------------------------
6,095 GTE Corp. 203,421
----------------------------------------------------------------------------------
10,000 Southern Co. 221,250
---------------------------------------------------------------------------------- -------------
Total 424,671
---------------------------------------------------------------------------------- -------------
TOTAL COMMON STOCKS (IDENTIFIED COST, $5,961,808) 6,034,112
---------------------------------------------------------------------------------- -------------
PREFERRED STOCKS--8.9%
- ---------------------------------------------------------------------------------------------------
BANKING--0.8%
----------------------------------------------------------------------------------
3,500 Bank One Corp., Series C, $3.50, Cum Cv. Pfd. 212,625
---------------------------------------------------------------------------------- -------------
ENERGY--3.2%
----------------------------------------------------------------------------------
33,000 Atlantic Richfield Co., 9.01% 829,125
---------------------------------------------------------------------------------- -------------
FINANCE--4.5%
----------------------------------------------------------------------------------
5,000 AON Corp., 6.25%, Cum Cv. Pfd. 261,250
----------------------------------------------------------------------------------
20,000 Enron Capital Resources, Series A, 9.00% 510,000
----------------------------------------------------------------------------------
15,000 Providian LLC 391,875
---------------------------------------------------------------------------------- -------------
Total 1,163,125
---------------------------------------------------------------------------------- -------------
</TABLE>
STAR STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
PREFERRED STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
TRANSPORTATION--0.4%
----------------------------------------------------------------------------------
1,700 Burlington Northern, Inc., Series A, 6.25%, Cum Cv. Pfd. $ 113,475
---------------------------------------------------------------------------------- -------------
TOTAL PREFERRED STOCKS (IDENTIFIED COST, $2,297,393) 2,318,350
---------------------------------------------------------------------------------- -------------
CORPORATE BONDS--33.4%
- ---------------------------------------------------------------------------------------------------
BANKING--2.0%
----------------------------------------------------------------------------------
$ 250,000 Citicorp, 8.625%, 12/1/2002 274,298
----------------------------------------------------------------------------------
239,000 NCNB Corp., 10.50%, 3/15/1999 246,629
---------------------------------------------------------------------------------- -------------
Total 520,927
---------------------------------------------------------------------------------- -------------
BASIC INDUSTRY--0.5%
----------------------------------------------------------------------------------
136,000 International Paper Co., 9.625%, 10/15/1995 137,609
---------------------------------------------------------------------------------- -------------
CHEMICAL--2.0%
----------------------------------------------------------------------------------
458,000 Dow Chemical Co., 9.35%, 3/15/2002 504,721
---------------------------------------------------------------------------------- -------------
CONSUMER DURABLES--2.2%
----------------------------------------------------------------------------------
550,000 General Motors Corp., 9.75%, 5/15/1999 566,918
---------------------------------------------------------------------------------- -------------
CONSUMER STAPLES--3.2%
----------------------------------------------------------------------------------
400,000 Philip Morris Cos., Inc., 9.25%, 12/1/1997 426,472
----------------------------------------------------------------------------------
400,000 Philip Morris Cos., Inc., 9.80%, 12/15/1998 407,236
---------------------------------------------------------------------------------- -------------
Total 833,708
---------------------------------------------------------------------------------- -------------
ENERGY--1.0%
----------------------------------------------------------------------------------
250,000 Consolidated Natural Gas Co., 7.25% Conv. Bonds, 12/15/2015 258,500
---------------------------------------------------------------------------------- -------------
FINANCIAL--4.7%
----------------------------------------------------------------------------------
105,000 General Electric Capital Corp., 7.98%, 12/15/2007 114,130
----------------------------------------------------------------------------------
1,000,000 International Lease Finance Co., 8.375%, 12/15/2004 1,096,080
---------------------------------------------------------------------------------- -------------
Total 1,210,210
---------------------------------------------------------------------------------- -------------
HEALTH SERVICES--0.7%
----------------------------------------------------------------------------------
200,000 Medical Care International, Inc., 6.75% Conv. Bonds, 10/1/2006 189,576
---------------------------------------------------------------------------------- -------------
INDUSTRIAL--2.0%
----------------------------------------------------------------------------------
500,000 Chevron Capital USA, Inc., 7.45%, 8/15/2004 524,440
---------------------------------------------------------------------------------- -------------
INSURANCE--4.2%
----------------------------------------------------------------------------------
1,000,000 Ohio National Life Insurance Co., 8.875%, 7/15/2004 1,090,980
---------------------------------------------------------------------------------- -------------
INTERNATIONAL--6.7%
----------------------------------------------------------------------------------
750,000 Alcan Aluminum Ltd., 9.20%, 3/15/2001 800,520
----------------------------------------------------------------------------------
850,000 Philips Electrs NV, 8.375%, 9/15/2006 938,986
---------------------------------------------------------------------------------- -------------
Total 1,739,506
---------------------------------------------------------------------------------- -------------
RETAIL--0.5%
----------------------------------------------------------------------------------
130,000 Wal-Mart Stores, Inc., 10.875%, 8/15/2000 134,367
---------------------------------------------------------------------------------- -------------
UTILITIES--3.7%
----------------------------------------------------------------------------------
185,000 Alabama Power Co., 9.00%, 12/1/2024 206,974
----------------------------------------------------------------------------------
</TABLE>
STAR STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR CONTRACTS VALUE
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
CORPORATE BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
UTILITIES--CONTINUED
----------------------------------------------------------------------------------
$ 500,000 Cincinnati Gas & Electric Co., 8.95%, 12/15/2021 $ 543,875
----------------------------------------------------------------------------------
62,000 Southern California Edison Co., 8.375%, 12/1/2017 64,296
----------------------------------------------------------------------------------
150,000 Southern California Edison Co., 9.25%, 6/15/2021 156,835
---------------------------------------------------------------------------------- -------------
Total 971,980
---------------------------------------------------------------------------------- -------------
TOTAL CORPORATE BONDS (IDENTIFIED COST, $8,331,095) 8,683,442
---------------------------------------------------------------------------------- -------------
U.S. GOVERNMENT OBLIGATIONS--26.7%
- ---------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--2.0%
----------------------------------------------------------------------------------
500,000 9.02%, 1/19/2005 507,865
---------------------------------------------------------------------------------- -------------
FEDERAL HOME LOAN MORTGAGE CORP.--3.2%
----------------------------------------------------------------------------------
330,814 9.00%, 11/15/2019 341,410
----------------------------------------------------------------------------------
477,494 11.00%, 4/1/2003 505,991
---------------------------------------------------------------------------------- -------------
Total 847,401
---------------------------------------------------------------------------------- -------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION --REMIC--13.9%
----------------------------------------------------------------------------------
750,000 8.20%, 4/25/2006 761,655
----------------------------------------------------------------------------------
1,000,000 9.00%, 11/25/2019 1,076,710
----------------------------------------------------------------------------------
835,454 9.40%, 6/25/2019 866,458
----------------------------------------------------------------------------------
600,000 9.50%, 6/25/2020 665,358
----------------------------------------------------------------------------------
225,000 10.00%, 12/25/2018 238,171
---------------------------------------------------------------------------------- -------------
Total 3,608,352
---------------------------------------------------------------------------------- -------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--1.7%
----------------------------------------------------------------------------------
157,640 9.00%, 1/15/2022 165,766
----------------------------------------------------------------------------------
262,444 10.00%, 11/15/2009 284,584
---------------------------------------------------------------------------------- -------------
Total 450,350
---------------------------------------------------------------------------------- -------------
U.S. TREASURY BONDS--5.7%
----------------------------------------------------------------------------------
1,000,000 11.75%, 11/15/2014 1,474,080
---------------------------------------------------------------------------------- -------------
U.S. TREASURY NOTES--0.2%
----------------------------------------------------------------------------------
50,000 10.50%, 8/15/1995 50,472
---------------------------------------------------------------------------------- -------------
TOTAL U.S. GOVERNMENT OBLIGATIONS (IDENTIFIED COST, $6,771,472) 6,938,520
---------------------------------------------------------------------------------- -------------
*PUT OPTION PURCHASED--0.00%
- ---------------------------------------------------------------------------------------------------
120 Citicorp (IDENTIFIED COST, $10,980) 750
---------------------------------------------------------------------------------- -------------
</TABLE>
STAR STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
**REPURCHASE AGREEMENT--13.3%
- ---------------------------------------------------------------------------------------------------
$ 3,467,000 Donaldson, Lufkin & Jenrette Securities Corp., 6.15%, dated
5/31/1995, due 6/1/1995 (at amortized cost) $ 3,467,000
---------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST, $26,839,748) $ 27,442,174+
---------------------------------------------------------------------------------- -------------
</TABLE>
* The security is held in connection with a purchased put option which expires
on July 21, 1995.
** The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
+ The cost of investments for federal tax purposes amounts to $26,839,748. The
net unrealized appreciation of investments on a federal tax basis amounts to
$602,426, which is comprised of $720,702 appreciation and $118,276
depreciation at May 31, 1995.
The following acronym is used throughout this portfolio:
REMIC--Real Estate Mortgage Investment Conduit
Note: The categories of investments are shown as a percentage of net assets
($26,002,604) at May 31, 1995.
(See Notes which are an integral part of the Financial Statements)
STAR STRATEGIC INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------------------------
Investments in repurchase agreements $ 3,467,000
- -----------------------------------------------------------------------------------
Investments in securities 23,975,174
- ----------------------------------------------------------------------------------- -------------
Total Investments in securities, at amortized cost and value
(identified cost and tax cost $26,839,748) $ 27,442,174
- --------------------------------------------------------------------------------------------------
Cash 896
- --------------------------------------------------------------------------------------------------
Receivable for investments sold 1,399,044
- --------------------------------------------------------------------------------------------------
Income receivable 374,213
- --------------------------------------------------------------------------------------------------
Receivable for shares sold 101,820
- -------------------------------------------------------------------------------------------------- -------------
Total assets 29,318,147
- --------------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------------------------
Payable for investments purchased 3,287,380
- -----------------------------------------------------------------------------------
Payable for shares redeemed 100
- -----------------------------------------------------------------------------------
Options written, at value (premium received $24,515) 28,063
- ----------------------------------------------------------------------------------- -------------
Total liabilities 3,315,543
- -------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 2,479,317 shares outstanding $ 26,002,604
- -------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------------------------
Paid in capital $ 25,238,236
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments and options written (includes $3,548
depreciation on options written) 598,878
- --------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments 59,499
- --------------------------------------------------------------------------------------------------
Undistributed net investment income 105,991
- -------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 26,002,604
- -------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE and Offering Price Per Share:
- --------------------------------------------------------------------------------------------------
($26,002,604 / 2,479,317 shares outstanding) $10.49
- -------------------------------------------------------------------------------------------------- -------------
Redemption Proceeds Per Share (95/100 of $10.49)* $9.97
- -------------------------------------------------------------------------------------------------- -------------
</TABLE>
* See 'Redeeming Shares' in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
STAR STRATEGIC INCOME FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest $ 459,813
- ----------------------------------------------------------------------------------------------------
Dividends 251,097
- ---------------------------------------------------------------------------------------------------- ------------
Total income 710,910
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Investment advisory fee $ 72,758
- ----------------------------------------------------------------------------------------
Administrative personnel and services fee 23,287
- ----------------------------------------------------------------------------------------
Custodian fees 1,915
- ----------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 3,829
- ----------------------------------------------------------------------------------------
Legal fees 1,149
- ----------------------------------------------------------------------------------------
Portfolio accounting fees 11,871
- ----------------------------------------------------------------------------------------
Shareholder services fee 980
- ----------------------------------------------------------------------------------------
Printing and postage 4,978
- ----------------------------------------------------------------------------------------
Insurance premiums 1,915
- ----------------------------------------------------------------------------------------
Miscellaneous 1,915
- ---------------------------------------------------------------------------------------- ----------
Total expenses 124,597
- ----------------------------------------------------------------------------------------
Deduct--Waiver of administrative personnel and services fee 19,636
- ---------------------------------------------------------------------------------------- ----------
Net expenses 104,961
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income 605,949
- ---------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and options
(includes $11,297 gain on options) 116,749
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 598,878
- ---------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain (loss) on investments 715,627
- ---------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 1,321,576
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR STRATEGIC INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MAY 31, 1995
(UNAUDITED)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------------------------------
Net investment income $ 605,949
- ------------------------------------------------------------------------------------------
Net realized gain (loss) on investments ($116,749, net gain,
as computed for federal tax purposes) 116,749
- ------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 598,878
- ------------------------------------------------------------------------------------------ ----------------------
Change in net assets resulting from operations 1,321,576
- ------------------------------------------------------------------------------------------ ----------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------------------------------------
Distributions from net investment income (499,958)
- ------------------------------------------------------------------------------------------
Distributions from net realized gains (57,250)
- ------------------------------------------------------------------------------------------ ----------------------
Change in net assets resulting from distributions to shareholders (557,208)
- ------------------------------------------------------------------------------------------ ----------------------
SHARE TRANSACTIONS
- ------------------------------------------------------------------------------------------
Proceeds from sale of shares 26,293,835
- ------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions declared 162,018
- ------------------------------------------------------------------------------------------
Cost of shares redeemed (1,217,617)
- ------------------------------------------------------------------------------------------ ----------------------
Change in net assets resulting from share transactions 25,238,236
- ------------------------------------------------------------------------------------------ ----------------------
Change in net assets 26,002,604
- ------------------------------------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------------------------------------
Beginning of period --
- ------------------------------------------------------------------------------------------ ----------------------
End of period (including undistributed net investment income of $105,991) $ 26,002,604
- ------------------------------------------------------------------------------------------ ----------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR STRATEGIC INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MAY, 31 1995(a)
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------
Net investment income 0.33
- ------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.48
- ------------------------------------------------------------------------------------------ -------
Total from investment operations 0.81
- ------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------------------------
Distributions from net investment income (0.29)
- ------------------------------------------------------------------------------------------
Distributions from net realized gain on investments (0.03)
- ------------------------------------------------------------------------------------------ -------
Total distributions (0.32)
- ------------------------------------------------------------------------------------------ -------
NET ASSET VALUE, END OF PERIOD $ 10.49
- ------------------------------------------------------------------------------------------ -------
TOTAL RETURN (b) 8.26%
- ------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------------------------
Expenses 1.37%(c)
- ------------------------------------------------------------------------------------------
Net investment income 7.91%(c)
- ------------------------------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.26%(c)
- ------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 26,003
- ------------------------------------------------------------------------------------------
Portfolio Turnover 144%
- ------------------------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from December 12, 1994 (date of initial
public investment) to May 31, 1995. For the period from November 10, 1994,
(start of business) to December 11, 1994, all income was distributed to the
administrator.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
STAR U.S. GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
CORPORATE BONDS--22.9%
- --------------------------------------------------------------------------------------------------
$ 100,000 Alabama Power Co., 8.75%, 12/1/2021 $ 108,213
-----------------------------------------------------------------------------------
1,150,000 Alcan Aluminum, 9.20%, 3/15/2001 1,227,463
-----------------------------------------------------------------------------------
1,000,000 Ashland Oil, Inc., 7.90%, 8/5/2006 1,062,510
-----------------------------------------------------------------------------------
500,000 Chevron Capital USA, Inc., 7.45%, 8/15/2004 524,440
-----------------------------------------------------------------------------------
1,000,000 Cincinnati Gas & Electric Co., 8.95%, 12/15/2021 1,087,750
-----------------------------------------------------------------------------------
750,000 Citicorp, 8.625%, 12/1/2002 822,893
-----------------------------------------------------------------------------------
1,000,000 Consolidated Rail Corp., 5.70%, 3/24/1997 990,380
-----------------------------------------------------------------------------------
2,500,000 Enron Corp., 7.625%, 9/10/2004 2,603,175
-----------------------------------------------------------------------------------
150,000 Ford Motor Credit Corp., 6.50%, 7/19/1995, LIBOR Floater 149,979
-----------------------------------------------------------------------------------
250,000 General Electric Capital Corp., 8.75%, 11/26/1996 258,772
-----------------------------------------------------------------------------------
1,000,000 General Electric Capital Corp., 7.98%, 12/15/1996 1,086,950
-----------------------------------------------------------------------------------
1,500,000 General Motors Acceptance Corp., 7.25%, 6/22/1999 1,527,615
-----------------------------------------------------------------------------------
1,100,000 General Motors Corp., 9.75%, 5/15/1999 1,133,836
-----------------------------------------------------------------------------------
2,250,000 Georgia Power Co., 6.625%, 4/1/2003 2,210,693
-----------------------------------------------------------------------------------
125,000 Georgia Power Co., 6.03%, 7/1/2032 124,929
-----------------------------------------------------------------------------------
1,750,000 International Lease Finance Co., 5.90%, 6/24/1995 1,714,825
-----------------------------------------------------------------------------------
250,000 International Lease Finance Co., 8.375%, 12/15/2004 274,020
-----------------------------------------------------------------------------------
500,000 McDonald's Corp., 8.375%, 10/29/1999 535,460
-----------------------------------------------------------------------------------
500,000 Ohio National Life Insurance Co., 8.875%, 7/15/2004 545,490
-----------------------------------------------------------------------------------
750,000 Pacific Telephone & Telegraph Co., 7.80%, 3/1/2007 763,688
-----------------------------------------------------------------------------------
300,000 Pacific Telephone & Telegraph Co., 7.25%, 2/1/2008 301,407
-----------------------------------------------------------------------------------
1,100,000 Philip Morris Cos., Inc., 9.75%, 5/1/1997 1,167,210
-----------------------------------------------------------------------------------
600,000 Philip Morris Cos., Inc., 9.80%, 12/15/1998 610,854
-----------------------------------------------------------------------------------
1,000,000 Procter & Gamble Co., 7.375%, 3/1/2023 1,008,180
----------------------------------------------------------------------------------- -------------
TOTAL CORPORATE BONDS (IDENTIFIED COST, $21,597,060) 21,840,732
----------------------------------------------------------------------------------- -------------
U.S. GOVERNMENT OBLIGATIONS--24.0%
- --------------------------------------------------------------------------------------------------
675,000 Federal Home Loan Banks, 10.00%, 6/26/1995 677,153
-----------------------------------------------------------------------------------
400,000 Federal Home Loan Banks, 7.26%, 5/26/1999 400,580
-----------------------------------------------------------------------------------
250,000 Federal Home Loan Banks, Step-up, 7.75%, 7/27/1995 255,312
-----------------------------------------------------------------------------------
2,000,000 Federal Home Loan Mortgage Corp., 5.15%, 6/2/1995 1,973,000
-----------------------------------------------------------------------------------
1,000,000 Federal Home Loan Mortgage Corp., 7.83%, 8/11/2004 1,024,170
-----------------------------------------------------------------------------------
538,778 Federal Home Loan Mortgage Corp., 7.50%, 8/15/2016 540,652
-----------------------------------------------------------------------------------
2,977,327 Federal Home Loan Mortgage Corp., 9.00%, 11/15/2019, REMIC 3,072,691
-----------------------------------------------------------------------------------
500,000 Federal Home Loan Mortgage Corp., 8.00%, 7/15/2020 511,375
-----------------------------------------------------------------------------------
</TABLE>
STAR U.S. GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
U.S. GOVERNMENT OBLIGATIONS--CONTINUED
- --------------------------------------------------------------------------------------------------
$ 2,000,000 Federal National Mortgage Association, 11.15%, 6/12/1995 $ 2,004,000
-----------------------------------------------------------------------------------
1,500,000 Federal National Mortgage Association, 7.25%, 1/25/2019, REMIC 1,505,925
-----------------------------------------------------------------------------------
500,000 Federal National Mortgage Association, 8.40%, 8/25/2019, REMIC 524,645
-----------------------------------------------------------------------------------
500,000 Federal National Mortgage Association, 9.50%, 6/25/2020, REMIC 554,465
-----------------------------------------------------------------------------------
3,000,000 Federal National Mortgage Association, 7.25%, 1/17/2021, REMIC 3,039,930
-----------------------------------------------------------------------------------
1,426,944 Federal National Mortgage Association--Pool Pound295782, 6.017%,
6/1/1995, ARM 1,476,859
-----------------------------------------------------------------------------------
4,167,944 Federal National Mortgage Association--Pool Pound250189, 8.50%, 1/1/2025 4,309,862
-----------------------------------------------------------------------------------
1,000,000 Student Loan Marketing Association, 6.04%, 6/6/1995 999,970
----------------------------------------------------------------------------------- -------------
TOTAL U.S. GOVERNMENT OBLIGATIONS (IDENTIFIED COST, $22,640,270) 22,870,589
----------------------------------------------------------------------------------- -------------
U.S. TREASURY OBLIGATIONS--43.7%
- --------------------------------------------------------------------------------------------------
U.S. TREASURY BONDS--16.6%
-----------------------------------------------------------------------------------
6,000,000 7.50%, 11/15/2024 6,598,440
-----------------------------------------------------------------------------------
1,250,000 7.625%, 2/15/2007 1,325,150
-----------------------------------------------------------------------------------
250,000 7.875%, 2/15/2021 282,680
-----------------------------------------------------------------------------------
5,950,000 8.125%, 8/15/2019 6,883,138
-----------------------------------------------------------------------------------
500,000 11.75%, 11/15/2014 737,040
----------------------------------------------------------------------------------- -------------
Total 15,826,448
----------------------------------------------------------------------------------- -------------
U.S. TREASURY NOTES--27.1%
-----------------------------------------------------------------------------------
4,400,000 6.75%, 5/31/1999 4,511,540
-----------------------------------------------------------------------------------
5,550,000 6.875%, 10/31/1996 5,627,534
-----------------------------------------------------------------------------------
2,250,000 7.125%, 9/30/1999 2,342,340
-----------------------------------------------------------------------------------
4,000,000 7.25%, 11/30/1996 4,078,680
-----------------------------------------------------------------------------------
1,000,000 7.375%, 5/15/1996 1,014,070
-----------------------------------------------------------------------------------
3,000,000 7.50%, 12/31/1996 3,074,970
-----------------------------------------------------------------------------------
2,000,000 7.75%, 11/30/1999 2,131,520
-----------------------------------------------------------------------------------
3,000,000 7.875%, 2/15/1996 3,041,940
----------------------------------------------------------------------------------- -------------
Total 25,822,594
----------------------------------------------------------------------------------- -------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST, $40,167,322) 41,649,042
----------------------------------------------------------------------------------- -------------
</TABLE>
STAR U.S. GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
*REPURCHASE AGREEMENT--9.5%
- --------------------------------------------------------------------------------------------------
$ 9,045,000 Donaldson, Lufkin & Jenrette Securities Corp., 6.15% dated 5/31/1995, due 6/1/1995
(at amortized cost) $ 9,045,000
----------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST, $93,449,652) $ 95,405,363+
----------------------------------------------------------------------------------- -------------
</TABLE>
* The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
+ The cost of investments for federal tax purposes amounts to $93,449,652. The
net unrealized appreciation of investments on a federal tax basis amounts to
$1,955,711, which is comprised of $2,327,194 appreciation and $371,483
depreciation at May 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($95,374,367) at May 31, 1995.
The following abbreviations are used throughout this portfolio:
ARM--Adjustable Rate Mortgage
LIBOR--London Interbank Offered Rate
REMIC--Real Estate Mortgage Investment Conduit
(See Notes which are an integral part of the Financial Statements)
STAR U.S. GOVERNMENT INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Investments in securities, at amortized cost and value
(identified and tax cost $93,449,652) $ 95,405,363
- ---------------------------------------------------------------------------------------------------
Income receivable 1,240,311
- ---------------------------------------------------------------------------------------------------
Receivable for shares sold 11,775
- ---------------------------------------------------------------------------------------------------
Deferred expenses 18,651
- --------------------------------------------------------------------------------------------------- -------------
Total assets 96,676,100
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------
Payable for investments purchased $ 1,076,870
- -------------------------------------------------------------------------------------
Payable for shares redeemed 5,000
- -------------------------------------------------------------------------------------
Income distribution payable 96,297
- -------------------------------------------------------------------------------------
Accrued expenses 17,316
- -------------------------------------------------------------------------------------
Options written, at value (premium received, $28,867) 106,250
- ------------------------------------------------------------------------------------- ------------
Total liabilities 1,301,733
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 9,735,920 shares outstanding $ 95,374,367
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 95,944,378
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments and options written (includes $77,383
depreciation on options written) 1,878,328
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (2,448,339)
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 95,374,367
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, and Redemption Proceeds Per Share:
- ---------------------------------------------------------------------------------------------------
($95,374,367 / 9,735,920 shares outstanding) $ 9.80
- --------------------------------------------------------------------------------------------------- -------------
Offering Price Per Share (100/96.50 of $9.80)* $ 10.16
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
* See 'What Shares Cost' in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
STAR U.S. GOVERNMENT INCOME FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest $ 3,305,749
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Investment advisory fee $ 269,522
- ----------------------------------------------------------------------------------------
Administrative personnel and services fee 51,196
- ----------------------------------------------------------------------------------------
Custodian fees 10,312
- ----------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 16,779
- ----------------------------------------------------------------------------------------
Directors'/Trustees' fees 2,076
- ----------------------------------------------------------------------------------------
Auditing fees 8,972
- ----------------------------------------------------------------------------------------
Legal fees 2,182
- ----------------------------------------------------------------------------------------
Portfolio accounting fees 26,039
- ----------------------------------------------------------------------------------------
Shareholder services fee 4,649
- ----------------------------------------------------------------------------------------
Share registration costs 12,029
- ----------------------------------------------------------------------------------------
Printing and postage 7,534
- ----------------------------------------------------------------------------------------
Insurance premiums 1,387
- ----------------------------------------------------------------------------------------
Miscellaneous 2,510
- ---------------------------------------------------------------------------------------- ----------
Total expenses 415,187
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income 2,890,562
- ---------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (840,393)
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 6,144,973
- ---------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain (loss) on investments 5,304,580
- ---------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 8,195,142
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR U.S. GOVERNMENT INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MAY 31, 1995 YEAR ENDED
(UNAUDITED) NOVEMBER 30, 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------------
Net investment income $ 2,890,562 $ 3,611,329
- ------------------------------------------------------------------------
Net realized gain (loss) on investments ($840,393 and $1,455,104 net
losses, respectively, as computed for federal tax purposes) (840,393) (1,609,209)
- ------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 6,144,973 (3,895,379)
- ------------------------------------------------------------------------ ---------------- ----------------------
Change in net assets resulting from operations 8,195,142 (1,893,259)
- ------------------------------------------------------------------------ ---------------- ----------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------------------
Distributions from net investment income (2,890,562) (3,611,329)
- ------------------------------------------------------------------------
Distributions from net realized gains -- (461,372)
- ------------------------------------------------------------------------ ---------------- ----------------------
Change in net assets resulting from distributions to shareholders (2,890,562) (4,072,701)
- ------------------------------------------------------------------------ ---------------- ----------------------
SHARE TRANSACTIONS
- ------------------------------------------------------------------------
Proceeds from sale of shares 15,101,687 66,524,387
- ------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 1,418,077 1,313,490
- ------------------------------------------------------------------------
Cost of shares redeemed (14,374,109) (18,135,243)
- ------------------------------------------------------------------------ ---------------- ----------------------
Change in net assets resulting from share transactions 2,145,655 49,702,634
- ------------------------------------------------------------------------ ---------------- ----------------------
Change in net assets 7,450,235 43,736,674
- ------------------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------------------
Beginning of period 87,924,132 44,187,458
- ------------------------------------------------------------------------ ---------------- ----------------------
End of period $ 95,374,367 $ 87,924,132
- ------------------------------------------------------------------------ ---------------- ----------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR U.S. GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1995 NOVEMBER 30,
(UNAUDITED) 1994 1993(a)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.24 $ 10.25 $ 10.00
- ------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------
Net investment income 0.30 0.55 0.51
- ------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.56 (0.90) 0.25
- ------------------------------------------------------------------ ------- --------- -----------
Total from investment operations 0.86 (0.35) 0.76
- ------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------
Distributions from net investment income (0.30) (0.55) (0.51)
- ------------------------------------------------------------------
Distributions from net realized gain on investment transactions -- (0.11) --
- ------------------------------------------------------------------ ------- --------- -----------
Total distributions (0.30) (0.66) (0.51)
- ------------------------------------------------------------------ ------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 9.80 $ 9.24 $ 10.25
- ------------------------------------------------------------------ ------- --------- -----------
TOTAL RETURN (b) 9.50% (3.53%) 7.63%
- ------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------
Expenses 0.92%(c) 0.97% 1.12%(c)
- ------------------------------------------------------------------
Net investment income 6.43%(c) 5.87% 5.55%(c)
- ------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.00% 0.03% 0.30%(c)
- ------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 95,374 $ 87,924 $ 44,187
- ------------------------------------------------------------------
Portfolio turnover rate 107% 148% 105%
- ------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from January 5, 1993 (date of initial
public investment) to November 30, 1993. For the period from November 23,
1992 (start of business) to
January 4, 1993, all income was distributed to the administrator.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
STAR FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Star Funds (the "Trust"), is registered under the Investment Company Act of
1940, as amended
(the "Act"), as an open-end management investment company. The Trust consists of
eight diversified portfolios. The following portfolios comprise the Trust:
Portfolio Name
Star Capital Appreciation Fund ("Capital Appreciation")
Star Growth Equity Fund ("Growth Equity")
Star Relative Value Fund ("Relative Value")
The Stellar Fund ("Stellar")
Star Strategic Income Fund ("Strategic Income")
Star Tax-Free Money Market Fund ("Tax-Free")
Star Treasury Fund ("Treasury")
Star U.S. Government Income Fund ("U.S. Government Income")
The financial statements of the following portfolios (individually referred to
as the "Fund", or collectively as the "Funds") are presented herein:
Portfolio Name
Star Capital Appreciation Fund
Star Growth Equity Fund
Star Relative Value Fund
The Stellar Fund
Star Strategic Income Fund
Star U.S. Government Income Fund
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
Star Funds, except Stellar, are offered without class designation. Shares of
Stellar are offered in two classes: Investment shares and Trust shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--Listed equity securities and investments in closed
end investment companies, are valued at the last sale price reported on
national securities exchanges. U.S. government securities are generally
valued at the mean between the over-the-counter bid and asked prices as
furnished by an independent pricing service. Listed corporate bonds,
unlisted securities (and other fixed-income and asset-backed securities
and/or private placements) and short-term securities are valued at the
prices provided by an independent pricing service.
Investments in other open-end investment companies are valued at net asset
value.
Short-term securities with remaining maturities of sixty days or less at
the time of purchase may be valued at amortized cost, which approximates
fair market value.
B. REPURCHASE AGREEMENTS--It is the policy of the Funds to require a custodian
bank to take possession, to have legally segregated in the Federal Reserve
Book Entry System, or to have segregated within the custodian bank's vault,
all securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Funds to monitor, on
a daily basis, the market value of each repurchase agreement's collateral
to ensure
that the value of collateral at least equals the repurchase price to be
paid under the repurchase agreement transaction.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Funds' adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Funds could receive
less than the repurchase price on the sale of collateral securities.
C. INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS--Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
Interest income and expenses are accrued daily. Bond premium and discount,
if applicable, are amortized as required by the Internal Revenue Code, as
amended (the "Code").
D. FEDERAL TAXES--It is each Fund's policy to comply with the provisions of
the Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal taxes are necessary.
At November 30, 1994, Relative Value and U.S. Government Income for federal
tax purposes, had capital loss carryforwards of $731,359 and $1,445,104
respectively, which will reduce each Fund's taxable income arising from
future net realized gain on investments, if any, to the extent permitted by
the Code, and thus will reduce the amount of the distributions to
shareholders which would otherwise be necessary to relieve the Funds of any
liability for federal tax. Pursuant to the Code, such capital loss
carryforwards will expire in 2002.
Additionally, U.S. Government Income's net capital losses of $1,445,104
attributable to security transactions incurred after October 31, 1993 are
treated as arising on December 1, 1994, the first day of the Fund's taxable
year.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES--The costs incurred by each Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from each Fund's commencement date.
G. OPTION CONTRACTS WRITTEN--The Funds may write option contracts. A written
option obligates the Funds to deliver (a call), or to receive (a put), the
contract amount upon exercise by the holder of the option. The value of the
option contract is recorded as a liability and an unrealized gain or loss
is measured by the difference between the current value and the premium
received.
At May 31, 1995, Growth Equity, Stellar, Strategic Income and U.S.
Government Income had the following outstanding options:
<TABLE>
<CAPTION>
GROWTH EQUITY
<S> <C> <C> <C> <C> <C> <C>
NUMBER UNREALIZED
EXPIRATION EXERCISE OF APPRECIATION MARKET
ISSUER TYPE DATE PRICE CONTRACTS (DEPRECIATION) VALUE
Citicorp Call 7/21/95 $ 40 70 ($ 76,406) $ 94,500
- ----------------------------
Citicorp Call 7/21/95 40 30 (32,370) 40,500
- ---------------------------- ----------------- ----------
Total ($ 108,776) $ 135,000
- ---------------------------- ----------------- ----------
</TABLE>
<TABLE>
<CAPTION>
STELLAR
<S> <C> <C> <C> <C> <C> <C>
NUMBER UNREALIZED
EXPIRATION EXERCISE OF APPRECIATION MARKET
ISSUER TYPE DATE PRICE CONTRACTS (DEPRECIATION) VALUE
Repsol Call 7/21/95 $ 25 105 ($ 51,608) $ 82,687
- ------------------------
USTN Call 7/3/95 100 51/64 1,000 (3,906) 5,313
- ------------------------
FNMA Call 6/13/95 101 10/32 750 (10,898) 15,000
- ------------------------
USTN Put 6/21/95 101 17/64 1,000 5,078 937
- ------------------------ ----------------- ----------
Total ($ 61,334) $ 103,937
- ------------------------ ----------------- ----------
</TABLE>
<TABLE>
<CAPTION>
STRATEGIC INCOME
<S> <C> <C> <C> <C> <C> <C>
NUMBER UNREALIZED
EXPIRATION EXERCISE OF APPRECIATION MARKET
ISSUER TYPE DATE PRICE CONTRACTS (DEPRECIATION) VALUE
USTN Put 6/21/95 $ 101 17/64 1,000 $ 5,078 $ 938
- -------------------------
Southern Co. Call 8/18/95 20 100 (7,276) 21,875
- -------------------------
NationsBank Call 6/16/95 55 40 (1,350) 5,250
- ------------------------- ----------------- -----------
Total ($ 3,548) $ 28,063
- ------------------------- ----------------- -----------
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME
<S> <C> <C> <C> <C> <C> <C>
NUMBER UNREALIZED
EXPIRATION EXERCISE OF APPRECIATION MARKET
ISSUER TYPE DATE PRICE CONTRACTS (DEPRECIATION) VALUE
USTN Call 7/3/95 $ 100 51/64 4,000 ($ 15,625) $ 21,250
- ------------------------
FNMA Call 6/13/95 101 10/32 4,250 (61,758) 85,000
- ------------------------ ----------------- ----------
Total ($ 77,383) $ 106,250
- ------------------------ ----------------- ----------
</TABLE>
The following is a summary of the Capital Appreciation, Growth Equity,
Stellar, Strategic Income and U.S. Government Income written options
activity:
<TABLE>
<CAPTION>
CAPITAL APPRECIATION
<S> <C> <C>
NUMBER OF
CONTRACTS PROCEEDS*
Outstanding at December 1, 1994 -0- $ -0-
- -------------------------------------------------------------------------------
Contracts opened 2,187 285,159
- -------------------------------------------------------------------------------
Contracts expired (738) (15,022)
- -------------------------------------------------------------------------------
Contracts exercised (1,268) (230,137)
- -------------------------------------------------------------------------------
Contracts closed (181) (40,000)
- ------------------------------------------------------------------------------- ------- ------------
Outstanding at May 31, 1995 -0- $ -0-
- ------------------------------------------------------------------------------- ------- ------------
</TABLE>
<TABLE>
<CAPTION>
GROWTH EQUITY
<S> <C> <C>
NUMBER OF
CONTRACTS PROCEEDS*
Outstanding at December 1, 1994 -0- $ -0-
- -------------------------------------------------------------------------------
Contracts opened 1,960 259,669
- -------------------------------------------------------------------------------
Contracts expired (510) (40,323)
- -------------------------------------------------------------------------------
Contracts exercised (1,035) (156,358)
- -------------------------------------------------------------------------------
Contracts closed (315) (36,764)
- ------------------------------------------------------------------------------- ------- ------------
Outstanding at May 31, 1995 100 $ 26,224
- ------------------------------------------------------------------------------- ------- ------------
</TABLE>
<TABLE>
<CAPTION>
STELLAR
<S> <C> <C>
NUMBER OF
CONTRACTS PROCEEDS*
Outstanding at December 1, 1994 911 $ 88,270
- -------------------------------------------------------------------------------
Contracts opened 8,885 256,640
- -------------------------------------------------------------------------------
Contracts expired (1,346) (118,330)
- -------------------------------------------------------------------------------
Contracts exercised (5,295) (113,817)
- -------------------------------------------------------------------------------
Contracts closed (300) (70,160)
- ------------------------------------------------------------------------------- ------------- ------------
Outstanding at May 31, 1995 2,855 $ 42,603
- ------------------------------------------------------------------------------- ------------- ------------
</TABLE>
<TABLE>
<CAPTION>
STRATEGIC INCOME
<S> <C> <C>
NUMBER OF
CONTRACTS PROCEEDS*
Outstanding at December 1, 1994 -0- $ -0-
- -------------------------------------------------------------------------------
Contracts opened 17,245 212,274
- -------------------------------------------------------------------------------
Contracts expired (85) (2,998)
- -------------------------------------------------------------------------------
Contracts exercised (15,121) (46,417)
- -------------------------------------------------------------------------------
Contracts closed (899) (138,344)
- ------------------------------------------------------------------------------- ------------- ------------
Outstanding at May 31, 1995 1,140 $ 24,515
- ------------------------------------------------------------------------------- ------------- ------------
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT
INCOME
<S> <C> <C>
NUMBER OF
CONTRACTS PROCEEDS*
Outstanding at December 1, 1994 1,500 $ 10,547
- -------------------------------------------------------------------------------
Contracts opened 27,400 108,535
- -------------------------------------------------------------------------------
Contracts expired (1,500) (10,547)
- -------------------------------------------------------------------------------
Contracts exercised (19,150) (79,668)
- -------------------------------------------------------------------------------
Contracts closed -0- -0-
- ------------------------------------------------------------------------------- ------------- ------------
Outstanding at May 31, 1995 8,250 $ 28,867
- ------------------------------------------------------------------------------- ------------- ------------
</TABLE>
*Represents premium received less commissions paid.
H. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
CAPITAL APPRECIATION GROWTH EQUITY
<S> <C> <C> <C>
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED
MAY 31, 1995 NOVEMBER 30, MAY 31, 1995
(UNAUDITED) 1994* (UNAUDITED)
Shares sold 904,673 2,999,416 3,612,883
- ---------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 9,801 -- 19,330
- ---------------------------------------------------------
Shares redeemed (235,186) (42,002) (224,234)
- --------------------------------------------------------- ---------------- ----------------- ------------------
Net change resulting from Fund share transactions 679,288 2,957,414 3,407,979
- --------------------------------------------------------- ---------------- ----------------- ------------------
</TABLE>
*Reflects operations for the period from May 16, 1994 (start of business) to
November 30, 1994.
<TABLE>
<CAPTION>
RELATIVE VALUE
<S> <C> <C>
SIX MONTHS
ENDED YEAR ENDED
MAY 31, 1995 NOVEMBER 30,
(UNAUDITED) 1994
Shares sold 1,577,443 3,021,454
- -----------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 18,718 20,475
- -----------------------------------------------------------------------------
Shares redeemed (531,770) (734,612)
- ----------------------------------------------------------------------------- ---------------- -----------------
Net change resulting from Fund share transactions 1,064,391 2,307,317
- ----------------------------------------------------------------------------- ---------------- -----------------
</TABLE>
<TABLE>
<CAPTION>
STELLAR
<S> <C> <C> <C> <C>
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1995 NOVEMBER 30,
(UNAUDITED) 1994
<CAPTION>
INVESTMENT SHARES SHARES DOLLARS SHARES DOLLARS
- --------------------------------------------------------- --------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
Shares sold 181,981 $ 2,021,613 3,150,588 $ 36,158,470
- ---------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 90,948 998,382 151,340 1,726,229
- ---------------------------------------------------------
Shares redeemed (597,641) (6,616,608) (5,111,420) (58,040,284)
- --------------------------------------------------------- --------- ------------- ----------- --------------
Net change resulting from Investment share
transactions (324,712) ($ 3,596,613) (1,809,492) ($ 20,155,585)
- --------------------------------------------------------- --------- ------------- ----------- --------------
</TABLE>
STAR FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STELLAR
<S> <C> <C> <C> <C>
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1995 NOVEMBER 30,
(UNAUDITED) 1994*
<CAPTION>
TRUST SHARES SHARES DOLLARS SHARES DOLLARS
- --------------------------------------------------------- --------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
Shares sold 760,364 $ 8,470,279 6,530,935 $ 73,925,771
- ---------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 94,099 1,032,559 58,141 653,321
- ---------------------------------------------------------
Shares redeemed (897,513) (9,979,160) (1,008,394) (11,355,619)
- --------------------------------------------------------- --------- ------------- ----------- --------------
Net change resulting from Trust share transactions (43,050) ($ 476,322) 5,580,682 $ 63,223,473
- --------------------------------------------------------- --------- ------------- ----------- --------------
Net change resulting from Fund share transactions (367,761) ($ 4,072,935) 3,771,190 $ 43,067,888
- --------------------------------------------------------- --------- ------------- ----------- --------------
</TABLE>
*For the period from April 5, 1994 (start of business) to November 30, 1994.
<TABLE>
<CAPTION>
STRATEGIC INCOME
<S> <C>
SIX MONTHS
ENDED
MAY 31, 1995
(UNAUDITED)
Shares sold 2,582,779
- --------------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 15,738
- --------------------------------------------------------------------------------------------
Shares redeemed (119,200)
- -------------------------------------------------------------------------------------------- --------------------
Net change resulting from Fund share transactions 2,479,317
- -------------------------------------------------------------------------------------------- --------------------
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME
<S> <C> <C>
SIX MONTHS
ENDED YEAR ENDED
MAY 31, 1995 NOVEMBER 30,
(UNAUDITED) 1994
Shares sold 1,602,148 6,950,021
- -----------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 149,745 138,234
- -----------------------------------------------------------------------------
Shares redeemed (1,530,864) (1,885,603)
- ----------------------------------------------------------------------------- ---------------- -----------------
Net change resulting from Fund share transactions 221,029 5,202,652
- ----------------------------------------------------------------------------- ---------------- -----------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Star Bank, N.A., the Trust's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee based on
a percentage of each Fund's average daily net assets (see below). The Adviser
may voluntarily choose to waive a portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
<TABLE>
<CAPTION>
FUND ANNUAL RATE
<S> <C>
Capital Appreciation 0.95%
Growth Equity 0.75%
Relative Value 0.75%
Stellar 0.95%
Strategic Income 0.95%
U.S. Government Income 0.60%
</TABLE>
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides each Fund
with certain administrative personnel and services for which it receives a fee.
The FAS fee is based on the level of average aggregate net assets of the Trust
for the period. FAS may voluntarily choose to waive a portion of its fee.
DISTRIBUTION AND SHAREHOLDER SERVICES FEE--The Trust has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the
Plan, the Funds will compensate Federated Securities Corp. ("FSC"), the
principal distributor, from the net assets of the Funds to finance activities
intended to result in the sale of the shares subject to the Plan. The Plan
provides that the Funds may incur distribution expenses up to .25 of 1% of the
average daily net assets of the shares subject to the Plan, annually, to
compensate FSC. The Funds will not accrue or pay any distribution expenses
pursuant to the Plan until a second class of shares has been registered with the
Securities and Exchange Commission.
Under the terms of the Shareholder Services Agreement with Star Bank, N.A., each
Fund will pay Star Bank up to 0.25 of 1% of its average daily net assets for the
period. For the foreseeable future the Funds plan to limit the Shareholder
Servicing fee to 0.03% of average daily net assets. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES, PORTFOLIO ACCOUNTING
AND CUSTODIAN FEES--Federated Services Company ("FServ") serves as transfer and
dividend disbursing agent for the Funds for which it receives a fee. The fee is
based on the size, type, and number of accounts and transactions made by
shareholders.
FServ also maintains the Funds' accounting records for which it receives a fee.
The fee is based on the level of each Fund's average net assets for the period,
plus out-of-pocket expenses.
Star Bank, N.A., is the Funds' custodian for which it receives a fee of .025 of
1% of average daily net assets. The fee is based on the level of each Funds'
average net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses were initially borne by FAS.
The Funds have agreed to reimburse FAS for the organizational expenses during
the five year period following the Funds' effective date.
<TABLE>
<CAPTION>
EXPENSES OF AMOUNTS REIMBURSED TO
ORGANIZING FAS FOR THE SIX MONTHS
EFFECTIVE DATE THE FUND ENDED MAY 31, 1995
<S> <C> <C> <C>
Capital Appreciation May 16, 1994 $ 30,000 1,167
Growth Equity November 14, 1994 30,000 1,167
Relative Value December 5, 1990 33,500 2,078
Stellar July 31, 1991 23,641 2,794
Strategic Income November 14, 1994 30,000 1,167
U.S. Government Income November 23, 1992 25,000 3,225
</TABLE>
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended
May 31, 1995, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
<S> <C> <C>
Capital Appreciation $ 18,759,518 $ 13,795,885
Growth Equity 48,856,304 16,953,893
Relative Value 28,696,228 14,909,237
Stellar 54,202,312 48,798,134
Strategic Income 44,618,281 21,356,873
U.S. Government 88,641,754 91,617,726
</TABLE>
(6) CONCENTRATION OF CREDIT RISK
Stellar invests in equity and fixed income securities of non-U.S. issuers.
Although, Stellar maintains a diversified investment portfolio, the political or
economic developments within a particular country or region may have an adverse
effect on the ability of domiciled issuers to meet their obligations.
Additionally, political or economic developments may have an effect on the
liquidity and volatility of portfolio securities and currency holdings.
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Edward C. Gonzales
William J. Copeland President and Treasurer
James E. Dowd Richard B. Fisher
Lawrence D. Ellis, M.D. Vice President
Edward L. Flaherty, Jr. Joseph S. Machi
Edward C. Gonzales Vice President and Assistant Treasurer
Peter E. Madden John W. McGonigle
Gregor F. Meyer Vice President and Secretary
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Assistant Treasurer
Marjorie P. Smuts C. Grant Anderson
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risks,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Trust's prospectus which contains facts concerning its
objective and policies, management fees, expenses and other information.
STAR FUNDS
MONEY MARKET FUNDS
Combined
Semi-Annual Report
to Shareholders
May 31, 1995
Portfolios of Star Funds
Star Tax-Free Money Market Fund
Star Treasury Fund
Star Bank, N.A.
Investment Adviser
Federated Securities Corp.
Distributor
Cusip 854911302
Cusip 854911104
2062306 (7/95)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the combined Semi-Annual Report to shareholders for the
Star Money Market Funds for the six-month period ended May 31, 1995. This report
provides complete financial information for Star Tax-Free Money Market Fund and
Star Treasury Fund. Of particular note are the investment reviews written by the
portfolio managers of each fund. Also included is a listing of investments for
each fund, as well as series of comprehensive financial statements.
Total combined assets for the two funds documented in this report amounted to
more than
$636 million at the end of the period. Designed to put your hard-earned money to
work, the Star Money Market Funds can be an excellent way to make the most of
the cash you keep on-hand.*
Of special note this reporting period was a meeting of the shareholders of Star
Funds on
April 20, 1995. At the time of the meeting, there was a total of 94,628,060.56
outstanding shares. The following item was considered by shareholders, and the
result of their voting follows:
1. To approve or disapprove an agreement and plan of reorganization for the
acquisition of Star Prime Obligations Fund by Star Treasury Fund.
<TABLE>
<S> <C> <C> <C> <C>
Voting WITHHELD
Results FOR AGAINST ABSTAIN AUTHORITY TO VOTE
- ----------------------------------------------------------------------------------------------------------------
64,872,432.51 98,848.96 29,528,553.27 0
</TABLE>
As always, we thank you for putting your confidence in the Star Money Market
Funds. We will continue to keep you informed on your investment, and remain
committed to delivering the highest level of personal service.
Sincerely,
/s/Edward C. Gonzales
Edward C. Gonzales
President
July 17, 1995
*Money market funds seek to maintain a stable net asset value of $1.00 per
share. There is no assurance that they will be able to do so. An investment in
the Funds is neither insured nor guaranteed by the U.S. government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Star Treasury Fund and Star Tax-Free Money Market Fund
Q After several interest rate increases in 1994, it seems rates have
stabilized, or even decreased slightly in the first half of 1995. What
impact did interest rates have on the Star Money Market Funds during the
six-month period ended May 31, 1995?
A The impact to the Star Money Market Funds is actually positive because the
interest rate increases in 1994 gave us a buying opportunity to "lock-in"
higher yields for the portfolios. So, as interest rates declined in the
first half of 1995, we were able to maintain competitive yields for
shareholders.
Q Have you made any significant changes in the strategy for each fund, given
the current interest rate environment?
A The primary change was to move from a "defensive" to "neutral" portfolio
stance by increasing the funds' average maturity to market weighted.
Essentially this means shifting from variable rate instruments to fixed
rate securities.
Q What is your outlook for short-term rates for the rest of 1995?
A Despite the observations of the Federal Reserve System regarding economic
growth, we believe this is a temporary pause in the level of economic
activity. However, we do not foresee a rapid expansion due to the slow
growth in the labor force and the level of consumer indebtedness. Most
likely we will witness a period of modestly higher interest rates in the
coming months. The funds have been positioned to benefit in this
environment by maintaining a conservative portfolio average maturity,
increasing diversification, and increasing the allocation to mortgage
related bonds. Looking ahead, we foresee somewhat higher interest rates
in the coming months.
STAR TAX-FREE MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ----------------------------------------------------------------- ---------------- --------------
SHORT-TERM MUNICIPAL SECURITIES--96.9%
- -------------------------------------------------------------------------------
ALABAMA--0.8%
-----------------------------------------------------------------
$ 1,200,000 Montgomery, AL, BMC Special Care Facilities Financing Authority,
Weekly VRDNs Revenue Refunding Bonds (VHA of Alabama,
Inc.)/(Series G)/ (First National Bank of Chicago SPA)/(AMBAC
Insured) A-1 $ 1,200,000
----------------------------------------------------------------- --------------
CALIFORNIA--2.0%
-----------------------------------------------------------------
3,000,000 California Higher Education Loan Authority, 3.90% (Series B)/
(SLMA LOC), 7/1/1995 VMIG1/A-1+ 3,000,000
----------------------------------------------------------------- --------------
COLORADO--2.9%
-----------------------------------------------------------------
720,000 Loveland, CO, IDR, 3.95% (Safeway, Inc.)/(Bankers Trust Co. LOC),
12/1/1995 A-1+ 720,000
-----------------------------------------------------------------
720,000 Loveland, CO, IDR, 4.45% (Safeway, Inc.)/(Bankers Trust Co. LOC),
6/1/1995 A-1+ 720,000
-----------------------------------------------------------------
3,000,000 Smith Creek, CO, Weekly VRDNs Metropolitan District Revenue Bonds
(NationsBank, TX LOC) A-1 3,000,000
----------------------------------------------------------------- --------------
Total 4,440,000
----------------------------------------------------------------- --------------
FLORIDA--2.3%
-----------------------------------------------------------------
2,000,000 Escambia County, FL, Weekly VRDNs Revenue Bonds (Pacer
Industries, Inc.)/(Trust Co. Bank LOC) Aa3 2,000,000
-----------------------------------------------------------------
1,500,000 University Athletic Association, FL, Daily VRDNs Revenue
Refunding Bonds (University of Florida Stadium Project)/ (Sun
Bank LOC) VMIG1 1,500,000
----------------------------------------------------------------- --------------
Total 3,500,000
----------------------------------------------------------------- --------------
ILLINOIS--22.1%
-----------------------------------------------------------------
1,260,000 Chicago, IL, 4.60% GO Notes (Series A)/(Morgan Guaranty & Trust
Co. LOC), 10/31/1995 VMIG1/SP1+ 1,260,000
-----------------------------------------------------------------
2,300,000 Chicago, IL, Weekly VRDNs GO Notes (Series B)/ (Societe Generale
LOC) VMIG1/A-1+ 2,300,000
-----------------------------------------------------------------
2,200,000 Cook County, IL, Weekly VRDNs Revenue Refunding Bonds (Series
A-1)/(Catholic Charities Housing Development Corp.)/(National
Westminster LOC) VMIG1 2,200,000
-----------------------------------------------------------------
1,500,000 Illinois Development Finance Authority, 3.90% Pollution Control
Revenue Refunding Bonds (Illinois Power Co. Project)/(Series
C)/(Canadian Imperial Bank LOC), 8/3/1995 VMIG1/A-1+ 1,500,000
-----------------------------------------------------------------
1,055,000 Illinois Development Finance Authority, Weekly VRDNs Revenue
Bonds (Lake Forest Academy)/ (Northern Trust Co. LOC) A-1+ 1,055,000
-----------------------------------------------------------------
</TABLE>
STAR TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ----------------------------------------------------------------- ---------------- --------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------------
ILLINOIS--CONTINUED
-----------------------------------------------------------------
$ 2,000,000 Illinois Development Finance Authority, Weekly VRDNs Revenue
Bonds (Roosevelt University Project)/ (American National Bank
LOC) A-1+ $ 2,000,000
-----------------------------------------------------------------
3,000,000 Illinois Development Finance Authority, Weekly VRDNs Revenue
Bonds (St. Ignatius College)/ (Northern Trust Co. LOC) A-1+ 3,000,000
-----------------------------------------------------------------
2,200,000 Illinois Educational Facilities Authority, Weekly VRDNs Revenue
Refunding Bonds (Newberry Library)/(Northern Trust Co. LOC) VMIG1 2,200,000
-----------------------------------------------------------------
1,600,000 Illinois Health Facilities Authority, Weekly VRDNs Revenue Bonds
(Evangelical Hospital Corp.)/(Series A)/ (First National Bank of
Chicago LOC) VMIG1 1,600,000
-----------------------------------------------------------------
4,000,000 Illinois Health Facilities Authority, 4.15% Revenue Bonds
(Victory Health Services Project)/(Series C)/ (First National
Bank of Chicago LOC), 7/19/1995 VMIG1 4,000,000
-----------------------------------------------------------------
4,000,000 Illinois Health Facilities Authority, Weekly VRDNs Revenue Bonds
(Gottlieb Health Resources, Inc.)/ (Harris Trust & Savings Bank
LOC) VMIG1 4,000,000
-----------------------------------------------------------------
4,000,000 Illinois Health Facilities Authority, Weekly VRDNs Revenue Bonds
(West Suburban Hospital Medical Center)/(First National Bank of
Chicago LOC) VMIG1 4,000,000
-----------------------------------------------------------------
2,000,000 Illinois State, 4.75% GO Bonds, 6/15/1995 MIG1/SP1+ 2,000,550
-----------------------------------------------------------------
1,830,000 Schaumburg, IL, IDR, Weekly VRDNs (La Quinta Motor
Inns)/(NationsBank of Fort Worth LOC) Aa3 1,830,000
-----------------------------------------------------------------
450,000 Springfield, IL, Weekly VRDNs Revenue Refunding Bonds (Kent
Family, Inc. Project)/(PNC Bank, PA LOC) A-1 450,000
----------------------------------------------------------------- --------------
Total 33,395,550
----------------------------------------------------------------- --------------
INDIANA--8.1%
-----------------------------------------------------------------
3,195,000 Logansport, IN, Weekly VRDNs (MMM Investment Project)/(Bank One
of Indianapolis LOC) NR(B) 3,195,000
-----------------------------------------------------------------
2,000,000 Indiana Bond Bank, 5.75% (Series A-2), 1/10/1996 SP-1+/MIG1 2,008,179
-----------------------------------------------------------------
4,000,000 Indianapolis, IN, EDR, Weekly VRDNs (Rand McNally Project)/(First
Union National Bank, NC LOC) A-1 4,000,000
-----------------------------------------------------------------
2,000,000 Purdue University, IN, Weekly VRDNs University Revenue Bonds
(Student Fee)/(Series H) VMIG1/A-1+ 2,000,000
-----------------------------------------------------------------
1,000,000 Purdue University, IN, Weekly VRDNs University Revenue Bonds
(Student Fee)/(Series K) VMIG1/A-1+ 1,000,000
----------------------------------------------------------------- --------------
Total 12,203,179
----------------------------------------------------------------- --------------
KENTUCKY--3.1%
-----------------------------------------------------------------
1,000,000 Boone County, KY, IDR, Weekly VRDNs (Square D Co.)/ (Series
A)/(Societe Generale LOC) A-1+ 1,000,000
-----------------------------------------------------------------
</TABLE>
STAR TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ----------------------------------------------------------------- ---------------- --------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------------
KENTUCKY--CONTINUED
-----------------------------------------------------------------
$ 2,000,000 Fulton, KY, Weekly VRDNs Revenue Bonds (United Health Care of
Kentucky, Inc.)/(First Union National Bank, Charlotte LOC) VMIG1 $ 2,000,000
-----------------------------------------------------------------
1,700,000 Louisville, KY, Weekly VRDNs (222 Project)/(PNC Bank, KY LOC) A-1 1,700,000
----------------------------------------------------------------- --------------
Total 4,700,000
----------------------------------------------------------------- --------------
MARYLAND--0.7%
-----------------------------------------------------------------
1,000,000 Maryland State, IDA, EDR, Weekly VRDNs (Maryland Academy of
Sciences)/(NationsBank, NC LOC) VMIG1 1,000,000
----------------------------------------------------------------- --------------
MICHIGAN--0.6%
-----------------------------------------------------------------
875,000 Lenawee County, MI, Economic Development Corp. Weekly VRDNs
(Hardwoods Michigan, Inc.)/National City Bank LOC) VMIG1 875,000
----------------------------------------------------------------- --------------
MISSISSIPPI--1.3%
-----------------------------------------------------------------
2,000,000 Forest, MS, Weekly VRDNs Revenue Refunding Bonds (Sara Lee Corp.) A1+ 2,000,000
----------------------------------------------------------------- --------------
MISSOURI--11.2%
-----------------------------------------------------------------
2,000,000 Independence, MO, 4.00% Water Utility Revenue Bonds (National
Westminster LOC), 6/20/1995 VMIG1 2,000,000
-----------------------------------------------------------------
2,100,000 Independence, MO, 4.10% Water Utility Revenue Bonds (National
Westminster LOC), 6/22/1995 VMIG1 2,100,000
-----------------------------------------------------------------
800,000 Independence, MO, IDA, Weekly VRDNs (Shoney's Inn
Project)/(Wachovia Bank, NC LOC) NR(B) 800,000
-----------------------------------------------------------------
3,000,000 Missouri State, Environmental Improvement & Energy Resources
Authority, Weekly VRDNs Revenue Refunding Bonds (Kansas City
Power & Light Co.) VMIG1/A-1 3,000,000
-----------------------------------------------------------------
2,366,000 Missouri State Environmental Improvement & Energy Resources
Authority, 4.00% Revenue Refunding Bonds (Kansas City Power &
Light Co.), 10/11/1995 VMIG1/A-1 2,366,000
-----------------------------------------------------------------
1,300,000 Missouri State, HEFA, Daily VRDNs Revenue Bonds (Washington
University)/(Series A) VMIG1/A1+ 1,300,000
-----------------------------------------------------------------
5,300,000 Missouri State, HEFA, Weekly VRDNs Revenue Bonds (Washington
University)/(Series A) VMIG1/A1+ 5,300,000
----------------------------------------------------------------- --------------
Total 16,866,000
----------------------------------------------------------------- --------------
NEW MEXICO--1.3%
-----------------------------------------------------------------
2,000,000 Belen, NM, IDR, Weekly VRDNs Revenue Refunding Bonds (United
Desiccants, Inc.)/(National City Bank, KY LOC) NR(B) 2,000,000
----------------------------------------------------------------- --------------
OHIO--8.9%
-----------------------------------------------------------------
1,000,000 Butler County, OH, 4.74% BANs, 4/19/1996 NR(C) 1,003,731
-----------------------------------------------------------------
750,000 Butler County, OH, 4.80% BANs, 11/3/1995 NR(C) 751,220
-----------------------------------------------------------------
</TABLE>
STAR TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ----------------------------------------------------------------- ---------------- --------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------------
OHIO--CONTINUED
-----------------------------------------------------------------
$ 1,000,000 Butler County, OH, 4.86% BANs (Series B), 3/15/1996 NR(C) $ 1,003,480
-----------------------------------------------------------------
350,000 Butler County, OH, 5.07% BANs, 3/15/1996 NR(C) 351,237
-----------------------------------------------------------------
500,000 Centerville, OH, Weekly VRDNs Health Care Revenue Bonds (Bethany
Lutheran Village)/(PNC Bank, OH LOC) VMIG1 500,000
-----------------------------------------------------------------
500,000 Columbus, OH, Sewer Revenue, Weekly VRDNs VMIG1/A-1+ 500,000
-----------------------------------------------------------------
480,000 Hamilton County, OH, 4.99% BANs, 9/13/1995 NR(AB) 480,508
-----------------------------------------------------------------
1,310,000 Marion County, OH, Hospital Revenue, Weekly VRDNs (Pooled Lease
Program)/(Bank One of Columbus LOC) VMIG1 1,310,000
-----------------------------------------------------------------
1,965,000 Ohio State, IDR, Weekly VRDNs (Cincinnati Riverfront Coliseum,
Inc.)/(PNC Bank, OH LOC) A1 1,965,000
-----------------------------------------------------------------
550,000 Ohio State University, Weekly VRDNs (General Receipts)/(Series B) VMIG1/A-1+ 550,000
-----------------------------------------------------------------
3,000,000 University of Cincinnati, OH, 4.75% BANs, 8/30/1995 MIG1/SP-1+ 3,004,983
-----------------------------------------------------------------
2,000,000 University of Cincinnati, OH, 5.00% BANs, 3/21/1996 MIG1/SP-1+ 2,005,363
----------------------------------------------------------------- --------------
Total 13,425,522
----------------------------------------------------------------- --------------
PENNSYLVANIA--5.6%
-----------------------------------------------------------------
1,300,000 Allegheny County, PA, Hospital Development Authority, Daily VRDNs
(Presbyterian University Hospital)/(Series C) (Credit Suisse
SPA)/(MBIA Insured) VMIG1/A-1+ 1,300,000
-----------------------------------------------------------------
100,000 Allegheny County, PA, Hospital Development Authority, Daily VRDNs
(Presbyterian University Hospital)/(Series D) (Credit Suisse
SPA)/(MBIA Insured) VMIG1/A-1+ 100,000
-----------------------------------------------------------------
6,000,000 Allegheny County, PA, IDR, 4.80% Revenue Bonds (Duquesne Light
Co.)/(Series A)/(Canadian Imperial Bank LOC), 10/17/1995 P1/A-1+ 6,000,000
-----------------------------------------------------------------
1,000,000 East Penn, PA, Industrial & Commercial Development Authority,
Weekly VRDNs Revenue Refunding Bonds (Electric Data System
Corp.)/(Wachovia Bank, GA LOC) Aa2 1,000,000
----------------------------------------------------------------- --------------
Total 8,400,000
----------------------------------------------------------------- --------------
TENNESSEE--4.6%
-----------------------------------------------------------------
1,000,000 Greenville, TN, IDR, Weekly VRDNs Revenue Refunding Bonds (Ball
Corp. Project)/(Wachovia Bank, GA LOC) A-1+ 1,000,000
-----------------------------------------------------------------
3,900,000 Sullivan County, TN, Health, Education & Housing Facilities
Revenue Weekly VRDNs (Asbury Center Residential Care
Facility)/(NationsBank, NC LOC) NR(C) 3,900,000
-----------------------------------------------------------------
1,000,000 Tennessee State, Weekly VRDNs BANs (Series A) VMIG1/A-1+ 1,000,000
-----------------------------------------------------------------
</TABLE>
STAR TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ----------------------------------------------------------------- ---------------- --------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------------
TENNESSEE--CONTINUED
-----------------------------------------------------------------
$ 1,000,000 Tennessee State, Weekly VRDNs BANs (Series B) VMIG1/A-1+ $ 1,000,000
----------------------------------------------------------------- --------------
Total 6,900,000
----------------------------------------------------------------- --------------
TEXAS--14.9%
-----------------------------------------------------------------
2,580,000 Bexar County, TX, HFDC, Weekly VRDNs (Army Retirement-Residence
Foundation)/(Banque Paribas LOC) A-1 2,580,000
-----------------------------------------------------------------
3,500,000 Greater East, TX, Higher Education Authority, Weekly VRDNs
Revenue Refunding Bonds (Series A)/(SLMA LOC), VMIG1/A-1+ 3,500,000
-----------------------------------------------------------------
1,800,000 Harris County, TX, HFDC, Hospital Revenue, Daily VRDNs (Harris
County Methodist Hospital)/(Morgan Guaranty Trust Co. SPA) A-1+ 1,800,000
-----------------------------------------------------------------
500,000 Harris County, TX, HFDC, Hospital Revenue, Daily VRDNs (St.
Luke's Episcopal Hospital)/(Series B)/ (Morgan Guaranty Trust Co.
SPA) A-1+ 500,000
-----------------------------------------------------------------
1,800,000 Harris County, TX, HFDC, Hospital Revenue, Daily VRDNs (St.
Luke's Episcopal Hospital)/(Series D)/ (Morgan Guaranty Trust Co.
SPA) A-1+ 1,800,000
-----------------------------------------------------------------
2,000,000 Houston, TX, ISD, 4.50% TRANs (Series A), 8/31/1995 MIG1/SP1+ 2,002,604
-----------------------------------------------------------------
1,100,000 Houston, TX, Weekly VRDNs (Series A)/(Morgan Guaranty Trust Co.
SPA) VMIG1/A-1+ 1,100,000
-----------------------------------------------------------------
2,000,000 Lone Star, TX, Airport Improvement Authority, 4.10% Revenue Bonds
(Multiple Mode)/(Series A-1)/(Royal Bank of Canada LOC),
6/15/1995 VMIG1 2,000,000
-----------------------------------------------------------------
2,200,000 Lone Star, TX, Airport Improvement Authority, 4.60% Revenue Bonds
(Multiple Mode)/(Series B-3)/(Royal Bank of Canada LOC),
7/11/1995 VMIG1 2,200,000
-----------------------------------------------------------------
1,100,000 Lone Star, TX, Airport Improvement Authority, 4.60% Revenue Bonds
(Multiple Mode)/(Series B-4)/(Royal Bank of Canada LOC),
7/11/1995 VMIG1 1,100,000
-----------------------------------------------------------------
1,900,000 San Antonio, TX, IDA, IDR, Weekly VRDNs (Rivercenter Association
Project)/(PNC Bank, PA LOC) A1 1,900,000
-----------------------------------------------------------------
2,000,000 Texas State, 5.00% TRANs, 8/31/1995 MIG1/Sp1+ 2,001,789
----------------------------------------------------------------- --------------
Total 22,484,393
----------------------------------------------------------------- --------------
UTAH--0.3%
-----------------------------------------------------------------
400,000 Castle Dale, UT, IDR, 4.90% Revenue Refunding Bonds (Safeway,
Inc. Project)/(Bankers Trust Co. LOC),
8/1/1995 A-1+ 400,000
----------------------------------------------------------------- --------------
VIRGINIA--5.4%
-----------------------------------------------------------------
1,840,000 Charlottesville, VA, IDA, IDR, 3.95% Revenue Refunding Bonds
(Safeway, Inc. Project)/(Banker Trust Co. LOC), 12/1/1995 A-1+ 1,840,000
-----------------------------------------------------------------
</TABLE>
STAR TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ----------------------------------------------------------------- ---------------- --------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------------
VIRGINIA--CONTINUED
-----------------------------------------------------------------
$ 1,920,000 Charlottesville, VA, IDA, IDR, 4.45% Revenue Refunding Bonds
(Safeway, Inc. Project)/(Banker Trust Co. LOC), 6/1/1995 A-1+ $ 1,920,000
-----------------------------------------------------------------
4,400,000 Roanoke, VA, IDA, Hospital Revenue, Daily VRDNs Revenue Bonds
(Roanoke Memorial Hospital Project)/ (Series A)/(Morgan Guaranty
Trust Co. LOC) VMIG1/A-1+ 4,400,000
----------------------------------------------------------------- --------------
Total 8,160,000
----------------------------------------------------------------- --------------
WYOMING--0.8%
-----------------------------------------------------------------
1,200,000 Gillette, WY, 4.20% Pollution Control Revenue Bonds (PacificCorp
Project)/(Deutsche Bank, A.G., LOC),
6/23/1995 P-1/A-1+ 1,200,000
----------------------------------------------------------------- --------------
TOTAL SHORT-TERM MUNICIPAL SECURITIES 146,149,644
----------------------------------------------------------------- --------------
OTHER--4.5%
- -------------------------------------------------------------------------------
6,420,630 S.E.I. Tax Exempt Trust (at net asset value) 6,420,630
-----------------------------------------------------------------
435,164 Vanguard Municipal Bond Fund, Inc. (at net asset value) 435,164
----------------------------------------------------------------- --------------
TOTAL OTHER 6,855,794
----------------------------------------------------------------- --------------
TOTAL INVESTMENTS AT AMORTIZED COST AND VALUE $ 153,005,438+
----------------------------------------------------------------- --------------
</TABLE>
+ Also represents cost for federal tax purposes.
* Please refer to the appendix of the "Statement of Additional Information" for
an explanation of the credit ratings.
Note: The categories of investments are shown as a percentage of net assets
($151,152,782) at May 31, 1995.
The following abbreviations are used throughout this portfolio:
AMBAC--American Municipal Bond Assurance Corp.
BANs--Bond Anticipation Notes
EDR--Economic Development Revenue
GO--General Obligation
HEFA--Health and Education Facility Authority
HFDC--Health Facilities Development Corporation
IDA--Industrial Development Authority
IDR--Industrial Development Revenue
ISD--Independent School District
LOC(s)--Letter(s) of Credit
MBIA--Municipal Bond Investors Assurance
MMMs--Money Market Municipals
SLMA--Student Loan Marketing Association
SPA--Standby Purchase Agreement
TRANs--Tax Revenue Anticipation Notes
VHA--Veterans Housing Administration
VRDNs--Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements)
STAR TAX-FREE MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $ 153,005,438
- -------------------------------------------------------------------------------------------------
Income receivable 1,174,715
- -------------------------------------------------------------------------------------------------
Deferred expenses 5,837
- ------------------------------------------------------------------------------------------------- --------------
Total assets 154,185,990
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable for investments purchased $ 2,560,000
- -----------------------------------------------------------------------------------
Income distribution payable 453,079
- -----------------------------------------------------------------------------------
Accrued expenses 20,129
- ----------------------------------------------------------------------------------- ------------
Total liabilities 3,033,208
- ------------------------------------------------------------------------------------------------- --------------
Net Assets for 151,152,782 shares outstanding $ 151,152,782
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
($151,152,782 / 151,152,782 shares outstanding) $1.00
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR TAX-FREE MONEY MARKET FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest $ 2,961,278
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Investment advisory fee $ 405,095
- --------------------------------------------------------------------------------------
Administrative personnel and services fee 83,938
- --------------------------------------------------------------------------------------
Custodian fees 17,700
- --------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 14,887
- --------------------------------------------------------------------------------------
Directors'/Trustees' fees 1,290
- --------------------------------------------------------------------------------------
Auditing fees 8,815
- --------------------------------------------------------------------------------------
Legal fees 2,517
- --------------------------------------------------------------------------------------
Portfolio accounting fees 19,209
- --------------------------------------------------------------------------------------
Shareholder services fee 7,594
- --------------------------------------------------------------------------------------
Share registration costs 16,695
- --------------------------------------------------------------------------------------
Printing and postage 9,699
- --------------------------------------------------------------------------------------
Insurance premiums 2,998
- --------------------------------------------------------------------------------------
Miscellaneous 2,245
- -------------------------------------------------------------------------------------- ------------
Total expenses 592,682
- --------------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee 110,480
- -------------------------------------------------------------------------------------- ------------
Net expenses 482,202
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income $ 2,479,076
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR TAX-FREE MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MAY 31, 1995 YEAR ENDED
(UNAUDITED) NOVEMBER 30, 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------------
Net investment income $ 2,479,076 $ 2,912,754
- ------------------------------------------------------------------------ ---------------- ----------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------------------
Distributions from net investment income (2,479,076) (2,912,754)
- ------------------------------------------------------------------------ ---------------- ----------------------
SHARE TRANSACTIONS
- ------------------------------------------------------------------------
Proceeds from sale of shares 243,855,078 431,948,243
- ------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 131 42
- ------------------------------------------------------------------------
Cost of shares redeemed (228,129,080) (431,543,978)
- ------------------------------------------------------------------------ ---------------- ----------------------
Change in net assets resulting from share transactions 15,726,129 404,307
- ------------------------------------------------------------------------ ---------------- ----------------------
Change in net assets 15,726,129 404,307
- ------------------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------------------
Beginning of period 135,426,653 135,022,346
- ------------------------------------------------------------------------ ---------------- ----------------------
End of period $ 151,152,782 $ 135,426,653
- ------------------------------------------------------------------------ ---------------- ----------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR TAX-FREE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MAY 31, 1995 YEAR ENDED NOVEMBER 30,
(UNAUDITED) 1994 1993 1992 1991(a)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------
Net investment income 0.02 0.02 0.02 0.03 0.03
- --------------------------------------------------- ------- --------- --------- --------- -----------
LESS DISTRIBUTIONS
- ---------------------------------------------------
Distributions from net investment income (0.02) (0.02) (0.02) (0.03) (0.03)
- --------------------------------------------------- ------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------- ------- --------- --------- --------- -----------
TOTAL RETURN (B) 1.70% 2.15% 1.91% 2.59% 2.84%
- ---------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------
Expenses 0.65%(c) 0.65% 0.65% 0.66% 0.55%(c)
- ---------------------------------------------------
Net investment income 3.37%(c) 2.12% 1.90% 2.54% 3.95%(c)
- ---------------------------------------------------
Expense waiver/reimbursement (d) 0.15%(c) 0.15% 0.40% 0.40% 0.48%(c)
- ---------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------
Net assets, end of period (000 omitted) $151,153 $135,427 $135,022 $144,487 $113,731
- ---------------------------------------------------
</TABLE>
(a) Reflects operations for the period from March 15, 1991 (date of initial
public investment) to November 30, 1991.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
STAR TREASURY FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- --------------
SHORT-TERM OBLIGATIONS--17.6%
- -------------------------------------------------------------------------------------------------
$ 10,000,000 U.S. Treasury Bond, 8.375%, 8/15/1995 $ 10,047,052
----------------------------------------------------------------------------------
75,000,000 U.S. Treasury Notes, 3.875%-8.50%, 7/31/1995-5/15/1996 74,699,764
---------------------------------------------------------------------------------- --------------
TOTAL SHORT-TERM OBLIGATIONS 84,746,816
---------------------------------------------------------------------------------- --------------
*REPURCHASE AGREEMENTS--82.6%
- -------------------------------------------------------------------------------------------------
23,000,000 Bear, Stearns & Co., Inc., 6.125%, dated 5/31/1995, due 6/1/1995 23,000,000
----------------------------------------------------------------------------------
23,000,000 CS First Boston Corp., 6.05%, dated 5/31/1995, due 6/1/1995 23,000,000
----------------------------------------------------------------------------------
23,000,000 Dean Witter Reynolds, Inc., 6.08%, dated 5/31/1995, due 6/1/1995 23,000,000
----------------------------------------------------------------------------------
119,329,000 Donaldson, Lufkin & Jenrette Securities Corp., 6.125%, dated
5/31/1995, due 6/1/1995 119,329,000
----------------------------------------------------------------------------------
23,000,000 Fuji Securities Corp., 6.10%, dated 5/31/1995, due 6/1/1995 23,000,000
----------------------------------------------------------------------------------
23,000,000 HSBC Securities, Inc., 6.05%, dated 5/31/1995, due 6/1/1995 23,000,000
----------------------------------------------------------------------------------
23,000,000 Merrill Lynch, Pierce, Fenner & Smith, Inc., 6.00%, dated 5/31/1995, due 6/1/1995 23,000,000
----------------------------------------------------------------------------------
20,000,000 Morgan Stanley & Co., Inc., 5.95%, dated 5/30/1995, due 6/1/1995 20,000,000
----------------------------------------------------------------------------------
119,500,000 Natwest Investor Services Corp., 6.10%, dated 5/31/1995, due 6/1/1995 119,500,000
---------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 396,829,000
---------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS, AT AMORTIZED COST $ 481,575,816+
---------------------------------------------------------------------------------- --------------
</TABLE>
* The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($480,519,142) at May 31, 1995.
(See Notes which are an integral part of the Financial Statements)
STAR TREASURY FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Investments in repurchase agreements $ 396,829,000
- ---------------------------------------------------------------------------------
Investments in securities 84,746,816
- --------------------------------------------------------------------------------- --------------
Total Investments in securities, at amortized cost $ 481,575,816
- -------------------------------------------------------------------------------------------------
Cash 24,980
- -------------------------------------------------------------------------------------------------
Income receivable 1,009,183
- ------------------------------------------------------------------------------------------------- --------------
Total assets 482,609,979
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Income distribution payable 2,040,327
- ---------------------------------------------------------------------------------
Accrued expenses 50,510
- --------------------------------------------------------------------------------- --------------
Total liabilities 2,090,837
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 480,519,142 shares outstanding $ 480,519,142
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
($480,519,142 / 480,519,142 shares outstanding) $1.00
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR TREASURY FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest $ 10,939,551
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee $ 940,627
- ---------------------------------------------------------------------------------------
Administrative personnel and services fee 214,019
- ---------------------------------------------------------------------------------------
Custodian fees 46,066
- ---------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 15,807
- ---------------------------------------------------------------------------------------
Directors'/Trustees' fees 2,880
- ---------------------------------------------------------------------------------------
Auditing fees 7,824
- ---------------------------------------------------------------------------------------
Legal fees 2,734
- ---------------------------------------------------------------------------------------
Portfolio accounting fees 39,275
- ---------------------------------------------------------------------------------------
Shareholder services fee 21,948
- ---------------------------------------------------------------------------------------
Share registration costs 36,474
- ---------------------------------------------------------------------------------------
Printing and postage 6,679
- ---------------------------------------------------------------------------------------
Insurance premiums 3,412
- ---------------------------------------------------------------------------------------
Miscellaneous 1,894
- --------------------------------------------------------------------------------------- ----------
Total expenses 1,339,639
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 9,599,912
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR TREASURY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MAY 31, 1995 YEAR ENDED
(UNAUDITED) NOVEMBER 30, 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------
Net investment income $ 9,599,912 $ 10,830,098
- ---------------------------------------------------------------------- ----------------- ----------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------
Distributions from net investment income (9,599,912) (10,830,098)
- ---------------------------------------------------------------------- ----------------- ----------------------
SHARE TRANSACTIONS
- ----------------------------------------------------------------------
Proceeds from sale of shares 2,235,436,710 4,438,594,909
- ----------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 22,329 2,753
- ----------------------------------------------------------------------
Cost of shares redeemed (2,113,705,868) (4,465,851,804)
- ---------------------------------------------------------------------- ----------------- ----------------------
Change in net assets resulting from share transactions 121,753,171 (27,254,142)
- ---------------------------------------------------------------------- ----------------- ----------------------
Change in net assets 121,753,171 (27,254,142)
- ----------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------
Beginning of period 358,765,971 386,020,113
- ---------------------------------------------------------------------- ----------------- ----------------------
End of period $ 480,519,142 $ 358,765,971
- ---------------------------------------------------------------------- ----------------- ----------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR TREASURY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MAY 31, 1995 YEAR ENDED NOVEMBER 30,
(UNAUDITED) 1994 1993 1992 1991 1990 1989(a)
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------
INCOME FROM INVESTMENT
OPERATIONS
- -----------------------------
Net investment income 0.03 0.03 0.03 0.03 0.06 0.07 0.05
- ----------------------------- ------- --------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
- -----------------------------
Distributions from net
investment income (0.03) (0.03) (0.03) (0.03) (0.06) (0.07) (0.05)
- ----------------------------- ------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------- ------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN (B) 2.56% 3.30% 2.56% 3.41% 5.72% 7.72% 5.36%
- -----------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------
Expenses 0.71%(c) 0.70% 0.70% 0.71% 0.71% 0.73% 0.77%(c)
- -----------------------------
Net investment income 5.10%(c) 3.24% 2.53% 3.33% 5.51% 7.44% 8.28%(c)
- -----------------------------
Expense waiver/
reimbursement (d) 0.00% 0.00% 0.25% 0.25% 0.10% 0.03% 0.01%(c)
- -----------------------------
SUPPLEMENTAL DATA
- -----------------------------
Net assets,
end of period
(000 omitted) $480,519 $358,766 $386,020 $346,508 $307,278 $226,519 $174,062
- -----------------------------
</TABLE>
(a) Reflects operations for the period from April 14, 1989 (date of initial
public investment) to November 30, 1989.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
STAR FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Star Funds (the "Trust"), is registered under the Investment Company Act of
1940, as amended
(the "Act"), as an open-end management investment company. The Trust consists of
eight diversified portfolios. The following portfolios comprise the Trust:
PORTFOLIO NAME
Star Capital Appreciation Fund ("Capital Appreciation")
Star Growth Equity Fund ("Growth Equity")
Star Relative Value Fund ("Relative Value")
The Stellar Fund ("Stellar")
Star Strategic Income Fund ("Strategic Income")
Star Tax-Free Money Market Fund ("Tax-Free")
Star Treasury Fund ("Treasury")
Star U.S. Government Income Fund ("U.S. Government Income")
The financial statements of the following portfolios (individually referred to
as the "Fund", or collectively as the "Funds") are presented herein:
PORTFOLIO NAME
Star Tax-Free Money Market Fund
Star Treasury Fund
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
Star Funds, except Stellar, are offered without class designation. Shares of
Stellar are offered in two classes: Investment shares and Trust shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Funds' use of the amortized cost method to value
their portfolio securities is in accordance with Rule 2a-7 under the Act.
Investments in other open-end investment companies are valued at net asset
value.
B. REPURCHASE AGREEMENTS--It is the policy of the Funds to require a custodian
bank to take possession, to have legally segregated in the Federal Reserve
Book Entry System, or to have segregated within the custodian bank's vault,
all securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Funds to monitor, on
a daily basis, the market value of each repurchase agreement's collateral
to ensure the value of collateral at least equals the repurchase price to
be paid under the repurchase agreement transaction.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Funds' adviser to be creditworthy pursuant to guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Funds
could receive less than the repurchase price on the sale of collateral
securities.
C. INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS--Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the
Internal Revenue Code, as amended (the "Code"). Distributions to
shareholders are recorded on the ex-dividend date.
D. FEDERAL TAXES--It is each Fund's policy to comply with the provisions of
the Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal taxes are necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES--The costs incurred by each Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from each Fund's commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At May
31, 1995, capital paid-in for Tax-Free and Treasury aggregated $151,152,782 and
$480,519,142, respectively. Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
TAX-FREE
SIX MONTHS
ENDED
MAY 31, 1995 YEAR ENDED
(UNAUDITED) NOVEMBER 30, 1994
<S> <C> <C>
Shares sold 243,855,078 431,948,243
- ---------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 131 42
- ---------------------------------------------------------------------
Shares redeemed (228,129,080) (431,543,978)
- --------------------------------------------------------------------- ---------------- ----------------------
Net change resulting from Fund share transactions 15,726,129 404,307
- --------------------------------------------------------------------- ---------------- ----------------------
</TABLE>
<TABLE>
<CAPTION>
TREASURY
SIX MONTHS
ENDED
MAY 31, 1995 YEAR ENDED
(UNAUDITED) NOVEMBER 30, 1994
<S> <C> <C>
Shares sold 2,235,436,710 4,438,594,909
- --------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 22,329 2,753
- --------------------------------------------------------------------
Shares redeemed (2,113,705,868) (4,465,851,804)
- -------------------------------------------------------------------- ---------------- ----------------------
Net change resulting from Fund share transactions 121,753,171 (27,254,142)
- -------------------------------------------------------------------- ---------------- ----------------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Star Bank, N.A., the Trust's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee based on
a percentage of each Fund's average daily net assets (see below). The Adviser
may voluntarily choose to waive a portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
<TABLE>
<CAPTION>
ANNUAL
FUND RATE
<S> <C>
Tax-Free Fund 0.55%
- -------------------------------------------------------------------------------------------------------
Treasury Fund 0.50%
- -------------------------------------------------------------------------------------------------------
</TABLE>
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides each Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust for the period. FAS may
voluntarily choose to waive a portion of its fee.
DISTRIBUTION AND SHAREHOLDER SERVICES FEE--The Trust has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the
Plan, the Funds will compensate Federated Securities Corp. ("FSC"), the
principal distributor, from the net assets of the Funds to finance activities
intended to result in the sale of the shares subject to the Plan. The Plan
provides that the Funds may incur distribution expenses up to 0.25 of 1% of the
average daily net assets of the shares subject to the Plan, annually, to
compensate FSC. The Funds will not accrue or pay any distribution expenses
pursuant to the Plan until a second class of shares has been registered with the
Securities and Exchange Commission.
Under the terms of the Shareholder Services Agreement with Star Bank, N.A., each
Fund will pay Star Bank up to 0.25 of 1% of its average daily net assets for the
period. For the foreseeable future, the Funds plan to limit the Shareholder
Servicing fee to 0.03% of average daily net assets. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES, PORTFOLIO, ACCOUNTING
AND CUSTODIAN FEES--Federated Services Company ("FServ") serves as transfer and
dividend disbursing agent for the Funds for which it receives a fee. The fee is
based on the size, type, and number of accounts and transactions made by
shareholders.
FServ also maintains the Funds' accounting records for which it receives a fee
of .025 of 1% of the average daily net assets. The fee is based on the level of
each Fund's average net assets for the period, plus out-of-pocket expenses.
Star Bank, N.A., is the Funds' custodian for which it receives a fee. The fee is
based on the level of each Fund's average net assets for the period, plus
out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses were initially borne by FAS.
The Funds have agreed to reimburse FAS for the organizational expenses during
the five year period following the Funds' effective date.
<TABLE>
<CAPTION>
EXPENSES OF AMOUNTS REIMBURSED TO
EFFECTIVE ORGANIZING FAS FOR THE SIX MONTHS
DATE THE FUND ENDED MAY 31, 1995
<S> <C> <C> <C>
Tax-Free 3/14/91 $ 17,739 $ 1,054
- ------------------------------------------------------
Treasury 4/14/89 $ 35,260 --
- ------------------------------------------------------
</TABLE>
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Edward C. Gonzales
William J. Copeland President and Treasurer
James E. Dowd Richard B. Fisher
Lawrence D. Ellis, M.D. Vice President
Edward L. Flaherty, Jr. Joseph S. Machi
Edward C. Gonzales Vice President and Assistant Treasurer
Peter E. Madden John W. McGonigle
Gregor F. Meyer Vice President and Secretary
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Assistant Treasurer
Marjorie P. Smuts C. Grant Anderson
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed
by any bank, and are not insured or guaranteed by the U.S. government,
the Federal Deposit Insurance Corporation, the Federal Reserve Board, or
any other government agency. Investment in mutual funds involves
investment risks, including the possible loss of principal. Although money
market funds seek to maintain a stable net asset value of $1.00 per share,
there is no assurance that they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Trust's prospectus which contains facts concerning its
objective and policies, management fees, expenses and other information.
