Reg. No. 33-
811-5762
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No.
STAR FUNDS
(Exact Name of Registrant as Specified in Charter)
(412) 288-1900
(Area Code and Telephone Number)
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
JOHN W. MCGONIGLE, ESQUIRE
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
Approximate date of proposed public offering: As soon as practicable
after the effective date of this Registration Statement.
It is proposed that this filing will become effective on March 4,
1995 pursuant to Rule 488.
An indefinite amount of the Registrant's securities has been
registered under the Securities Act of 1933 pursuant to Rule 24f-2 under The
Investment Company Act of 1940. In reliance upon such Rule, no filing fee is
being paid at this time. A Rule 24f-2 notice for the Registrant for the year
ended November 30, 1994 was filed on January 17, 1995.
Copies to:
Matthew G. Maloney, Esquire
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
CROSS REFERENCE SHEET
Pursuant to Item 1(a) of Form N-14 Showing Location in
Prospectus of Information Required by Form N-14
Item of Part A of Form N-14 and Caption Caption or Location in Prospectus
1. Beginning of Registration Statement
and Outside Front Cover Page
of Prospectus.......................... Cross Reference Sheet; Cover Page
2. Beginning and Outside Back Cover
Page of Prospectus.................... Table of Contents
3. Synopsis Information and Risk Factors. Summary; Risk Factors
4. Information About the Transaction..... Information About the
Reorganization
5. Information About the Registrant...... Information About the Trust, the
Portfolio and the Fund
6. Information About the Company
Being Acquired........................ Information About the Trust, the
Portfolio and the Fund
7. Voting Information.................... Voting Information
8. Interest of Certain Persons
and Experts........................... Not Applicable
9. Additional Information Required
for Reoffering by Persons Deemed
to be Underwriters.................... Not Applicable
Star Prime Obligations Fund
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Dear Shareholder:
The Board of Trustees and management of Star Prime Obligations Fund
("Prime Obligations Fund") are pleased to submit for your vote a proposal to
transfer all of the assets of Prime Obligations Fund to Star Treasury Fund
("Treasury Fund"). Prime Obligations Fund and Treasury Fund (collectively
"the Funds") are both portfolios of the Star Funds (the "Trust"). As part of
the transaction, shareholders in Prime Obligations Fund would receive shares
of the Treasury Fund equal in value to their shares of the Prime Obligations
Fund. The Prime Obligations Fund would then be dissolved.
The Funds are money market mutual funds with similar investment
objectives. The Board of Trustees of the Trust, as well as Star Bank, N.A.,
the adviser of the Funds, believe the proposed agreement and plan of
reorganization offers the shareholders of Prime Obligations Fund the
opportunity to pursue similar investment objectives with a potentially lower
expense ratio due to improved economies of scale.
We believe the transfer of Prime Obligations Fund's assets in this
transaction will present an excellent investment opportunity for our
shareholders. Your vote on the transaction is critical to its success. The
transfer will be effected only if approved by the holders of a majority of
Prime Obligations Fund's outstanding shares on the record date. We hope you
share our enthusiasm and will participate by casting your vote in person, or
by proxy if you are unable to attend the meeting. Please read the enclosed
prospectus/proxy statement carefully before you vote. If you have any
questions, please feel free to call us at 1-800-245-5000.
Thank you for your prompt attention and participation.
Sincerely,
Prime Obligations Fund
President
STAR FUNDS
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO SHAREHOLDERS OF STAR PRIME OBLIGATIONS FUND:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Star Prime
Obligations Fund ("Prime Obligations Fund"), a portfolio of Star Funds (the
"Trust"), will be held at 2:00 p.m. on April 20, 1995 at Federated Investors
Tower, 19th Floor, Pittsburgh, Pennsylvania 15222-3779 for the following
purposes:
1.To approve or disapprove a proposed Agreement and Plan of
Reorganization between Prime Obligations Fund and Star
Treasury Fund ("Treasury Fund"), portfolios of the Trust,
whereby Treasury Fund would acquire all of the assets of Prime
Obligations Fund in exchange for Treasury Fund shares to be
distributed pro rata by Prime Obligations Fund to its
shareholders in complete liquidation and termination of Prime
Obligations Fund; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
By Order of the Board of Trustees,
Dated: March 17, 1995 John W. McGonigle
Secretary
Shareholders of record at the close of business March 6, 1995 are
entitled to vote at the meeting. Whether or not you plan to attend the
meeting, please sign and return the enclosed proxy card. Your vote is
important.
To secure the largest possible representation and to save the
expense of further mailings, please mark your proxy card, sign it, and return
it in the enclosed envelope, which requires no postage if mailed in the United
States. You may revoke your proxy at any time at or before the meeting or
vote in person if you attend the meeting.
PROSPECTUS/PROXY STATEMENT
March 17, 1995
Acquisition of the Assets of
STAR PRIME OBLIGATIONS FUND
a Portfolio of STAR FUNDS
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Telephone Number: 1-800-245-5000
By and in exchange for shares of
STAR TREASURY FUND
a Portfolio of STAR FUNDS
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Telephone Number: 1-800-245-5000
This Prospectus/Proxy Statement describes the proposed Agreement and
Plan of Reorganization (the "Plan") whereby Star Treasury Fund ("Treasury
Fund"), would acquire all of the assets of Star Prime Obligations Fund ("Prime
Obligations Fund"), in exchange for Treasury Fund shares to be distributed pro
rata by Prime Obligations Fund to its shareholders in complete liquidation and
dissolution of Prime Obligations Fund. As a result of the Plan, each
shareholder of Prime Obligations Fund will become the owner of Treasury Fund
shares having a total net asset value equal to the total net asset value of
his or her holdings in Prime Obligations Fund. Prime Obligations Fund and
Treasury Fund (the "Funds") are portfolios of Star Funds (the "Trust").
The Trust is an open-end management investment company which
currently includes several portfolios, each of which has a distinct investment
objective. Prime Obligations Fund is a portfolio of the Trust whose
investment objective is to provide current income with stability of principal.
Prime Obligations Fund pursues this investment objective by investing in a
portfolio of high-quality money market instruments maturing in 397 days or
less at the time of purchase. Treasury Fund has a similar investment
objective, which it pursues by investing in a portfolio consisting exclusively
of short-term U.S. Treasury obligations. The Funds are money market mutual
funds which seek to stabilize their offering and redemption prices at $1.00
per share, although there can be no assurance that either of the Funds will be
able to do so. An investment in the Funds is neither insured nor guaranteed
by the United States government. For a comparison of the investment policies
of the Funds, see "Summary-Investment Objectives and Policies".
This Prospectus/Proxy Statement should be retained for future
reference. It sets forth concisely the information about the Trust and
Treasury Fund that a prospective investor should know before investing. This
Prospectus/Proxy Statement is accompanied by the Combined Prospectus of
Treasury Fund and Prime Obligations Fund dated January 31, 1994, and the
Combined Annual Report to Shareholders of Treasury Fund and Prime Obligations
Fund for the year ended November 30, 1994, both of which are incorporated
herein by reference. Statements of Additional Information for Treasury Fund
and Prime Obligations Fund, each dated January 31, 1994 (relating to the
Combined Prospectus of Treasury Fund and Prime Obligations Fund of the same
date), and March 17,1995 (relating to this Prospectus/Proxy Statement)
containing additional information have been filed with the Securities and
Exchange Commission and are incorporated herein by reference. Copies of the
Statements of Additional Information may be obtained without charge by writing
or calling the Trust at the address and telephone number shown above.
INVESTMENTS IN PRIME OBLIGATIONS FUND AND TREASURY FUND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT. PRIME OBLIGATIONS FUND AND TREASURY FUND
ATTEMPT TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE
NO ASSURANCE THAT THEY WILL BE ABLE TO DO SO.
THE SHARES OFFERED BY THIS PROSPECTUS/PROXY STATEMENT ARE NOT DEPOSITS OR
OBLIGATIONS OF STAR BANK, N.A., OR ITS AFFILIATES, ARE NOT ENDORSED OR
GUARANTEED BY STAR BANK, N.A., OR ITS AFFILIATES, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
Summary................................................................
Risk Factors...........................................................
Information About the Reorganization...................................
Information About the Trust, the Portfolio and the Fund................
Voting Information.....................................................
SUMMARY
About the Proposed Reorganization
The Board of Trustees of Star Funds (the "Trust") has voted to
recommend to shareholders of Star Prime Obligations Fund ("Prime Obligations
Fund"), a portfolio of the Trust, the approval of an Agreement and Plan of
Reorganization (the "Plan") whereby Star Treasury Fund ("Treasury Fund"), also
a portfolio of the Trust, would acquire all of the assets of Prime Obligations
Fund in exchange for shares of Treasury Fund to be distributed pro rata by
Prime Obligations Fund to its shareholders in complete liquidation and
termination of Prime Obligations Fund (the "Reorganization"). As a result of
the Reorganization, each shareholder of Prime Obligations Fund will become the
owner of Treasury Fund shares having a total net asset value equal to the
total net asset value of his or her holdings in Prime Obligations Fund on the
date of the Reorganization, i.e., the Closing Date.
As a condition to the Reorganization transactions, the Trust will
receive an opinion of counsel that the Reorganization will be considered a tax-
free "reorganization" under applicable provisions of the Internal Revenue Code
so that no gain or loss will be recognized by either the Treasury Fund or
Prime Obligations Fund or their shareholders. The tax cost basis of the
Treasury Fund shares received by Prime Obligations Fund shareholders will be
the same as the tax cost basis of their shares in Prime Obligations Fund.
After the acquisition is completed, Prime Obligations Fund will be
terminated.
The following Summary of Fund Expenses shows the current fees for Treasury Fund
and Prime
Obligations Fund and pro forma fees for Treasury Fund after giving effect to the
Reorganization.
<TABLE>
<CAPTION>
Summary of Fund Expenses
Shareholder Transaction Expenses Actual
<S> <C> <C> <C>
Prime Treasury
Obligations Treasury Fund
Fund Fund Pro Forma
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) None None None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) None None None
Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, as applicable) None None None
Redemption Fees (as a percentage of amount
redeemed, if applicable) None None None
Exchange Fees None None None
Annual Investment Shares Operating Expenses
(As a percentage of average net assets)
Management Fees 0.55% 0.50% 0.50%
12b-1 Fees (1) 0.00% 0.00% 0.00%
Total Other Expenses 0.30% 0.20% 0.19%
Total Investment Shares Operating Expenses 0.85% 0.70% 0.69%
</TABLE>
(1) As of the date of this prospectus, the Funds are not paying or
accruing 12b-1 fees. The Funds can pay up to 0.25% as a 12b-1 fee to the
distributor. Trust and Investment agency clients of Star Bank or its
affiliates will not be affected by the Plan because the Plan will not be
activated unless and until a second "Trust" class of shares of the Funds
(which would not have a 12b-1 Plan) is created and trust and investment
agency clients' investments in the Fund are converted to such Trust class.
The prupose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of a Fund will bear, either
dirctly or indirectly. For more complete descriptions of the various costs and
expenses, see "Star Fund Information" in the Combined Prospectus of Treasury
Fund and Prime Obligations Fund dated January 31, 1994.
EXAMPLE
The following sets forth the expenses on a $1,000 investment which would be
incurred by a shareholder of Prime Obligations Fund and Treasury Fund,
respectively, and expenses which would be incurred by a shareholder of
Treasury Fund on a pro forma basis after giving effect to the Reorganization
under the existing and proposed fees and the expenses stated above assuming
(1) 5% annual return and (2) redemption at the end of each time period. As
noted in the table above the Fund charges no redemption fees.
1 year 3 years 5 years 10 years
Prime Obligations Fund $9 $27 $47 $105
Treasury Fund $7 $22 $39 $87
Treasury Fund (after merger) $7 $22 $39 $87
The above example should not be considered a representation of future
expenses. Actual expenses may be greater or less than those shown.
Investment Objectives, Policies, and Limitations
The investment objective of both Prime Obligations Fund and Treasury
Fund is current income consistent with stability of principal.
Prime Obligations Fund pursues its investment objective by investing
exclusively in a portfolio of money market instruments, maturing in 397 days
or less, which are either rated in the highest short-term rating category by
one or more nationally recognized statistical rating organizations or are of
comparable quality. Such money market instruments include, but are not
limited to, domestic issues of corporate debt obligations, commercial paper,
certificates of deposit, demand and time deposits and other bank instruments,
and government securities. Treasury Fund pursues its investment objective by
investing in a portfolio consisting exclusively of short-term U.S. Treasury
obligations the average maturity of which, computed on a dollar weighted
basis, will be 120 days or less. Both Prime Obligations Fund and Treasury
Fund may enter into repurchase agreements, reverse repurchase agreements and
may purchase securities on a when-issued or delayed delivery basis.
Prime Obligations Fund and Treasury Fund are subject to certain
investment limitations. The investment limitations of the two funds are
substantially identical. These limitations include provisions that, in
effect, prohibit either fund from: selling any securities short or purchasing
any securities on margin; issuing senior securities, except that each fund may
borrow up to one-third of the value of its total assets; mortgaging, pledging,
or hypothecating any assets except to secure permitted borrowings; lending any
of their respective assets; or investing more than 10% of the value of their
respective net assets in illiquid securities.
Reference is hereby made to the Combined Prospectus and the
Statements of Additional Information of Prime Obligations Fund and Treasury
Fund, all dated January 31, 1994, which set forth in full the investment
objectives and policies and investment limitations of both funds.
Distribution Arrangements
Federated Securities Corp. is the principal distributor for shares
of the Trust. Under a distribution plan adopted in accordance with the
Investment Company Act Rule 12b-1 (the "12b-1 Plan"), Prime Obligations Fund
and Treasury Fund may each pay to Federated Securities Corp. an amount
computed at an annual rate of 0.25 of 1% of each respective Funds average
daily net assets to finance any activity which is principally intended to
result in the sale of shares subject to the 12b-1 Plan. Currently neither
Fund is paying or accruing fees under the 12b-1 Plan.
Advisory and Other Fees
Star Bank N.A. is the investment adviser (the "Adviser") to Prime
Obligations Fund and Treasury Fund. The Adviser receives an annual investment
advisory fee equal to 0.55 of 1% of Prime Obligations Fund's average daily net
assets, and 0.50 of 1% of Treasury Fund's average daily net assets. The
Adviser has undertaken to reimburse each fund, up to the amount of its
advisory fee, for operating expenses in excess of limitations established by
certain states. The Adviser may further voluntarily waive a portion of its
fee or reimburse either fund for certain operating expenses. This agreement
to waive fees or reimburse expenses may be terminated by the Adviser at any
time at its discretion.
Federated Administrative Services, a subsidiary of Federated
Investors, provides the Funds with certain administrative personnel and
services necessary to operate the Funds. The rate charged is 0.15 of 1% of
the first $250 million of the Trust's average aggregate daily net assets,
0.125 of 1% on the next $250 million, 0.10 of 1% on the next $250 million and
0.075 of 1% of all of the Trust's average aggregate daily net assets in excess
of $750 million. The administrative fee received during any fiscal year shall
be at least $50,000 per fund. The administrative fee expense for Prime
Obligations Fund's most recent fiscal year was .12 of 1% of its average
aggregate daily net assets. Prime Obligations Fund estimates that its
administrative fee expense for the current fiscal year will be .11 of 1% of
its average aggregate daily net assets. The administrative fee expense for
Treasury Fund's most recent fiscal year was .12 of 1% of its average aggregate
daily net assets. Treasury Fund estimates that its administrative fee expense
for the current fiscal year will be .11 of 1% of its average aggregate daily
net assets.
The total annual operating expenses for Prime Obligations Fund is
expected to be .85 of 1% of average daily net assets and would be 1.10% of
average daily net assets absent the voluntary waiver of the 12b-1 fee by the
distributor. The total annual operating expenses for Treasury Fund is
expected to be .70 of 1% of average daily net assets and would be .95 of 1% of
average daily net assets absent the voluntary waiver of the 12b-1 fee by the
distributor.
Purchase, Redemption and Exchange Procedures
Procedures for the purchase and redemption of shares of Prime
Obligations Fund are identical to procedures applicable to the purchase and
redemption of Treasury Fund shares. For a complete description of the
purchase and redemption procedures applicable to purchases and redemptions of
shares, refer to the Combined Prospectus of the Funds dated January 31, 1994,
which is incorporated herein by reference. Any questions about such
procedures may be directed to, and assistance in effecting purchases,
redemptions, or exchanges of shares may be obtained from Star Bank at
(513) 632-5547.
Shares of Prime Obligations Fund and Treasury Fund are sold on days
that the New York Stock Exchange and the Federal Reserve Wire System are open
for business. Shares are sold at their net asset value next determined after
an order is received. The net asset value is calculated at 12:00 noon and
4:00 p.m. (Eastern time) on days shares are sold. Purchases of shares of
either fund may be made by wire or by check. Orders are considered received
after payment is converted into federal funds and received by Star Bank, the
custodian for the Funds. Payment by federal funds must be received by Star
Bank before 3:00 p.m. (Eastern time) on the same day as the order to earn
dividends for that day. The minimum initial investment in each of the Funds
is $1,000 ($25 for Star Bank Connections Group Banking customers and Star Bank
employees and members of their immediate family).
Redemptions may be made on days that the New York Stock Exchange and
the Federal Reserve Wire System are open for business. Shares are redeemed at
their net asset value next determined after the redemption request is
received. Proceeds will be distributed by wire or check. Requests for
redemption can be made in person or by telephone through Star Bank.
Exchange Privileges
The Trust currently has three money market portfolios, Treasury Fund, Prime
Obligations Fund, and Star Tax-Free Money Market Fund (the "Money Market
Funds"). Shareholders of one Money Market Fund may exchange shares of that
fund for shares of the other Money Market Funds at net asset value. In
addition shares of Prime Obligations Fund and Treasury Fund may be exchanged
for certain other funds distributed by Federated Securities Corp.
Shareholders who exercise this exchange privilege must exchange shares having
a net asset value of at least $1,000.
Tax Consequences
As a condition to the Reorganization transactions, the Trust will
receive an opinion of counsel that the Reorganization will be considered a tax-
free "reorganization" under applicable provisions of the Internal Revenue Code
so that no gain or loss will be recognized by either the Prime Obligations
Fund or the Treasury Fund or their respective shareholders. The tax cost
basis of Treasury Fund shares received by Prime Obligations Fund shareholders
will be the same as the tax cost basis of their shares in Prime Obligations
Fund.
RISK FACTORS
Investments in Prime Obligations Fund and Treasury Fund are not
insured and are not guaranteed by the United States government or any other
entity. As set forth in the Funds' Combined Prospectus dated January 31, 1994
and incorporated herein by reference, certain instruments issued by foreign
banks, in which Prime Obligations Fund (but not Treasury Fund) may invest, are
subject to different risks than are domestic obligations of domestic banks.
INFORMATION ABOUT THE REORGANIZATION_
Background and Reasons for the Proposed Reorganization
Like Treasury Fund, Prime Obligations Fund was established as a
portfolio of the Trust for the primary purpose of providing an investment
vehicle that provides current income consistent with stability of principal.
At the time the Prime Obligations Fund was established, it was believed that
yields of commercial paper and bankers acceptances would generally exceed
those of U.S. Treasury securities, thus distinguishing the Prime Obligations
Fund from the Treasury Fund on the basis of its potentially higher yield. The
ensuing lack of market demand for commercial paper and bankers acceptances,
however, lessened these instruments' yield advantage relative to U.S. Treasury
securities, so that at present there is virtually no advantage to investing in
Prime Obligations Fund rather than in a Treasury money market fund such as
Treasury Fund. The Board of Trustees and the Adviser have concluded that
economies of scale, and potentially lower expense ratios, could be realized by
transferring the assets of Prime Obligations Fund into Treasury Fund. The
Trustees also noted that shareholders of Prime Obligations Fund would continue
to receive the same quality investment management services from the Adviser as
shareholders of Treasury Fund.
The Trustees of the Trust, including the independent Trustees, have
unanimously concluded that consummation of the Reorganization is in the best
interests of the Trust and the shareholders of Prime Obligations Fund and
Treasury Fund and that the interests of Prime Obligations Fund and Treasury
Fund shareholders would not be diluted as a result of effecting the
Reorganization and have unanimously approved the Plan.
Description of the Plan of Reorganization
The Plan provides that Treasury Fund will acquire all of the assets
of Prime Obligations Fund in exchange for Treasury Fund shares to be
distributed pro rata by Prime Obligations Fund to its shareholders in complete
liquidation and termination of Prime Obligations Fund on or about April 24,
1995 (the "Closing Date"). Because both Prime Obligations Fund and Treasury
Fund seek to maintain a constant net asset value of $1.00 per share, it is
expected that Prime Obligations Fund shareholders will receive the same number
of Treasury Fund shares as they held in Prime Obligations Fund immediately
prior to the Closing Date. Shareholders of Prime Obligations Fund will become
shareholders of Treasury Fund as of 4:00 p.m. (Eastern time) on the Closing
Date and will begin accruing dividends on the next day. Shareholders of Prime
Obligations Fund will earn their last dividend from that fund on the Closing
Date.
Consummation of the Reorganization is subject to the conditions set
forth in the Plan, including receipt of an opinion in form and substance
satisfactory to the Trust, as described under the caption "Federal Income Tax
Consequences" below. The Plan may be terminated and the Reorganization may be
abandoned at any time before or after approval by shareholders of Prime
Obligations Fund prior to the Closing Date by either party if it believes that
consummation of the Reorganization would not be in the best interests of its
shareholders.
The Adviser is responsible for the payment of all expenses of the
Reorganization incurred by either party, whether or not the Reorganization is
consummated. Such expenses include, but are not limited to, legal fees,
registration fees, transfer taxes (if any), the fees of banks and transfer
agents and the costs of preparing, printing, copying and mailing proxy
solicitation materials to shareholders of Prime Obligations Fund and the costs
of holding the Special Meeting of Shareholders.
The foregoing description of the Plan entered into between Prime
Obligations Fund and Treasury Fund is qualified in its entirety by the terms
and provisions of the Plan, a copy of which is attached hereto as Exhibit A
and incorporated herein by reference.
Description of Treasury Fund Shares
Shares of Treasury Fund to be issued to shareholders of Prime
Obligations Fund under the Plan will be fully paid and nonassessable when
issued and transferable without restriction and will have no preemptive or
conversion rights. Reference is hereby made to the Combined Prospectus of the
Funds dated January 31, 1994 provided herewith for additional information
about Treasury Fund shares.
Federal Income Tax Consequences
As a condition to the Reorganization transactions, the Trust will
receive an opinion from Dickstein, Shapiro & Morin, L.L.P., counsel to the
Trust, to the effect that, on the basis of the existing provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), current administrative
rules and court decisions, for federal income tax purposes: (1) the
Reorganization as set forth in the Plan will constitute a tax-free
reorganization under section 368(a)(1)(C) of the Code; (2) no gain or loss
will be recognized by Treasury Fund upon its receipt of Prime Obligations
Fund's assets solely in exchange for Treasury Fund shares; (3) no gain or loss
will be recognized by Prime Obligations Fund upon the transfer of its assets
to Treasury Fund in exchange for Treasury Fund shares or upon the distribution
(whether actual or constructive) of Treasury Fund shares to Prime Obligations
Fund shareholders in exchange for their shares of Prime Obligations Fund;
(4) no gain or loss will be recognized by shareholders of the Prime
Obligations Fund upon the exchange of their Prime Obligations Fund shares for
Treasury Fund shares; (5) the tax basis of Prime Obligations Fund's assets
acquired by Treasury Fund will be the same as the tax basis of such assets to
Prime Obligations Fund immediately prior to the Reorganization; (6) the tax
basis of Treasury Fund shares received by each shareholder of Prime
Obligations fund pursuant to the Plan will be the same as the tax basis of
Prime Obligations Fund shares held by such shareholder immediately prior to
the Reorganization; (7) the holding period of the assets of Prime Obligations
Fund in the hands of Treasury Fund will include the period during which those
assets were held by Prime Obligations Fund; and (8) the holding period of
Treasury Fund shares received by each shareholder of Prime Obligations Fund
pursuant to the Plan will include the period during which the Prime
Obligations Fund shares exchanged therefor were held by such shareholder,
provided the Prime Obligations Fund shares were held as capital assets on the
date of the Reorganization.
Comparative Information on Shareholder Rights and Obligations
The Trust is organized as a business trust pursuant to a Declaration
of Trust under the laws of the Commonwealth of Massachusetts. The rights of
shareholders of Prime Obligations Fund and Treasury Fund as set forth in the
Declaration of Trust are substantially identical. Set forth below is a brief
summary of the significant rights of shareholders of Prime Obligations Fund
and Treasury Fund.
Neither fund is required to hold annual meetings of shareholders.
Shareholder approval is necessary only for certain changes in operations or
the election of trustees under certain circumstances. A special meeting of
shareholders of either fund for any permissible purpose is required to be
called by the Trustees upon the written request of the holders of at least 10%
of the outstanding shares of the relevant Fund.
Under certain circumstances, shareholders of Prime Obligations Fund,
Treasury Fund, or any other portfolio of the Trust ("Trust Portfolios"), may
be held personally liable as partners under Massachusetts law for obligations
of the Trust. To protect shareholders of all Trust Portfolios, the Trust has
filed legal documents with the Commonwealth of Massachusetts that expressly
disclaim the liability of shareholders of Trust Portfolios for such acts or
obligations of the Trust. These documents require that notice of this
disclaimer be given in each agreement, obligation or instrument that the Trust
or its trustees enter into or sign on behalf of the Trust.
In the unlikely event a shareholder of a Trust Portfolio is held
personally liable for the Trust's obligations, the Trust is required to use
its property to protect or compensate the shareholder. On request, the Trust
will defend any claims made and pay any judgment against a shareholder of a
Trust Portfolio for any act or obligation of the Trust. Therefore, financial
loss resulting from liability as a shareholder of a Trust Portfolio will occur
only if the Trust cannot meet its obligations to indemnify shareholders and
pay judgments against them from the assets of the Trust.
Capitalization
The following table sets forth the capitalization of Prime Obligations Fund
and Treasury Fund as of November 30, 1994, and on a pro forma basis as of that
date:
Prime
Treasury Obligations Pro Forma
Fund Fund Combined
Net Assets $358,765,971 $86,343,422 $445,109,393
Price Per Share $1.00 $1.00 $1.00
INFORMATION ABOUT THE TRUST, PRIME OBLIGATIONS FUND, AND TREASURY FUND
Information about the Trust, Prime Obligations Fund, and Treasury
Fund is contained in the Combined Prospectus dated January 31, 1994, a copy of
which is included herewith and incorporated by reference herein. Additional
information about the Trust and Prime Obligations Fund is included in the
Statement of Additional Information of Prime Obligations Fund dated January
31, 1994, which is incorporated herein by reference. Additional information
about the Trust and Treasury Fund is included in the Statement of Additional
Information of Treasury Fund dated January 31, 1994, which is incorporated
herein by reference. Additional information about the Trust, Prime
Obligations Fund and Treasury Fund relating to information contained in this
Prospectus/Proxy statement is contained in the Statement of Additional
Information of the Trust, Prime Obligations Fund and Treasury Fund dated March
17, 1995, which is incorporated herein by reference. Copies of the Statements
of Additional Information, which have been filed with the Securities and
Exchange Commission (the "SEC"), may be obtained without charge by contacting
the Trust at (513)632-5547 or by writing the Trust at Federated Investors
Tower, Pittsburgh, PA 15222-3779.
The Trust, on behalf of the Funds, is subject to the informational
requirements of the Securities Act of 1933 (the "1933 Act"), the Securities
Exchange Act of 1934 (the "1934 Act") and the Investment Company Act of 1940
(the "1940 Act") and in accordance therewith files reports and other
information with the SEC. Reports, proxy and information statements and other
information filed by the Trust, on behalf of the Funds, can be obtained by
calling or writing the Trust and can also be inspected and copied by the
public at the public reference facilities maintained by the SEC in Washington,
D.C. located at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and
at certain of its regional offices located at Suite 1400, Northwestern Atrium
Center, 500 West Madison Street, Chicago, IL 60621 and 13th Floor, Seven World
Trade Center, New York, NY 10048. Copies of such material can be obtained at
prescribed rates from the Public Reference Branch, Office of Consumer Affairs
and Information Services, SEC, 450 Fifth Street, N.W., Washington, D.C. 20549.
This Prospectus/Proxy Statement and the related Statement of
Additional Information do not contain all of the information set forth in the
registration statement that the Trust has filed with the SEC under the 1933
Act and the 1940 Act, to which reference is hereby made. Statements contained
herein concerning the provisions of documents are necessarily summaries of
such documents, and each such statement is qualified in its entirety by
reference to the copy of the applicable documents filed with the SEC. The SEC
file number for the Star Funds prospectuses and related Statements of
Additional Information which are incorporated by reference herein is
Registration No. 33-26915.
VOTING INFORMATION
This Prospectus/Proxy Statement is furnished in connection with the
solicitation by the Board of Trustees of Prime Obligations Fund of proxies for
use at the Special Meeting of Shareholders (the "Meeting") to be held on
April 30, 1995 and at any adjournment thereof. The proxy confers
discretionary authority on the persons designated therein to vote on other
business not currently contemplated which may properly come before the
Meeting. A proxy, if properly executed, duly returned and not revoked, will
be voted in accordance with the specifications thereon; if no instructions are
given, such proxy will be voted in favor of the Plan. A shareholder may
revoke a proxy at any time prior to use by filing with the Secretary of the
Trust an instrument revoking the proxy, by submitting a proxy bearing a later
date or by attending and voting at the Meeting.
The cost of the solicitation, including the printing and mailing of
proxy materials, will be borne by the Adviser. In addition to solicitations
through the mails, proxies may be solicited by officers, employees and agents
of the Trust and the Adviser at no additional cost to the Trust. Such
solicitations may be by telephone. The Adviser will reimburse custodians,
nominees and fiduciaries for the reasonable costs incurred by them in
connection with forwarding solicitation materials to the beneficial owners of
shares held of record by such persons.
Outstanding Shares and Voting Requirements
The Board of Trustees has fixed the close of business on March 6,
1995 as the record date for the determination of shareholders entitled to
notice of, and to vote at, the Special Meeting of Shareholders and any
adjournment thereof. As of the record date, there were ____ shares of Prime
Obligations Fund outstanding. Each Prime Obligations Fund share is entitled
to one vote and fractional shares have proportionate voting rights. On the
record date, ___ owned of record ___ shares, or ___% of the Prime Obligations
Fund's outstanding shares and (each) such shareholder will own the same number
of shares of Treasury Fund after the consummation of the Reorganization if no
further purchases or redemptions are made by such shareholder. On such date,
no other person owned of record, or to the knowledge of the Adviser,
beneficially owned, 5% or more of Prime Obligations Fund's outstanding shares.
On the record date, the trustees and officers of the Trust as a group owned
less than 1% of the outstanding shares of Prime Obligations Fund.
The votes of the shareholders of Treasury Fund are not being
solicited, since their approval or consent is not necessary for approval of
the Reorganization. As of the record date, there were ____ shares of Treasury
Fund outstanding. On the record date, ___ owned of record ___ shares, or ___%
of the Treasury Fund's outstanding shares. On such date, no other person
owned of record, or to the knowledge of the Adviser, beneficially owned, 5% or
more of Treasury Fund's outstanding shares.
Approval of the Plan requires the affirmative vote of a majority of
Prime Obligations Fund's outstanding shares. The votes of shareholders of
Treasury Fund are not being solicited since their approval is not required in
order to effect the Reorganization.
A majority of the outstanding shares of Prime Obligations Fund,
represented in person or by proxy, will be required to constitute a quorum at
the Special Meeting for the purpose of voting on the proposed Reorganization.
For purposes of determining the presence of a quorum, shares represented by
abstentions and "broker non-votes" will be counted as present, but not as
votes cast, at the Special Meeting. Under the Declaration of Trust, the
approval of any action submitted to shareholders is determined on the basis of
a majority of votes entitled to be cast at the Special Meeting.
Dissenters' Right of Appraisal
Shareholders of Prime Obligations Fund objecting to the
Reorganization have no appraisal rights under the Declaration of Trust or
Massachusetts law. Under the Plan, if approved by Prime Obligations Fund
shareholders, each Prime Obligations Fund shareholder will become the owner of
Treasury Fund shares having a total net asset value equal to the total net
asset value of his or her holdings in Prime Obligations Fund at the Closing
Date.
Other Matters
Management of Prime Obligations Fund knows of no other matters that
may properly be, or which are likely to be, brought before the meeting.
However, if any other business shall properly come before the meeting, the
persons named in the proxy intend to vote thereon in accordance with their
best judgment.
So far as management is presently informed, there is no litigation
pending or threatened against the Trust.
Whether or not shareholders expect to attend the meeting, all
shareholders are urged to sign, fill in and return the enclosed proxy form
promptly.
Exhibit A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated February 3, 1995 (the "Agreement"),
between STAR TREASURY FUND (hereinafter called the "Acquiring Fund"), and STAR
PRIME OBLIGATIONS FUND (hereinafter called the "Acquired Fund"). Both the
Acquiring Fund and the Acquired Fund are portfolios of STAR FUNDS, a
Massachusetts business trust (the "Trust").
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a)(1)(C) of the United
States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization (the "Reorganization") will consist of the transfer of all of
the assets of the Acquired Fund in exchange solely for shares of beneficial
interest of the Acquiring Fund (the "Acquiring Fund Shares") and the
distribution, after the Closing Date hereinafter referred to, of the Acquiring
Fund Shares to the shareholders of the Acquired Fund in liquidation of the
Acquired Fund as provided herein, all upon the terms and conditions
hereinafter set forth in this Agreement.
WHEREAS, the Acquired Fund and the Acquiring Fund are registered open-end
management investment companies and the Acquired Fund owns securities in which
the Acquiring Fund is permitted to invest;
WHEREAS, both the Acquired Fund and the Acquiring Fund are authorized to issue
their shares of beneficial interest;
WHEREAS, the Board of Trustees, including a majority of the Trustees who are
not "interested persons" (as defined under the Investment Company Act of 1940,
as amended (the "1940 Act")), of the Trust has determined that the exchange of
all of the assets of the Acquired Fund for Acquiring Fund Shares is in the
best interests of the Acquiring Fund shareholders and that the interests of
the existing shareholders of the Acquiring Fund would not be diluted as a
result of this transaction; and
WHEREAS, the Board of Trustees, including a majority of the Trustees who are
not "interested persons" (as defined under the 1940 Act), of the Trust has
determined that the exchange of all of the assets of the Acquired Fund for
Acquiring Fund Shares is in the best interests of the Acquired Fund
shareholders and that the interests of the existing shareholders of the
Acquired Fund would not be diluted as a result of this transaction;
NOW THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties agree as follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE ACQUIRING
FUND SHARES AND LIQUIDATION OF THE ACQUIRED FUND.
1.1 Subject to the terms and conditions contained herein, the Acquired Fund
agrees to assign, transfer and convey to the Acquiring Fund all of the assets
of the Acquired Fund, including all securities and cash, and the Acquiring
Fund agrees in exchange therefor (i) to deliver to the Acquired Fund the
number of Acquiring Fund Shares, including fractional Acquiring Fund Shares,
determined as set forth in paragraph 2.3. Such transaction shall take place
at the closing (the "Closing") on the closing date (the "Closing Date")
provided for in paragraph 3.1 In lieu of delivering certificates for the
Acquiring Fund Shares, the Acquiring Fund shall credit the Acquiring Fund
Shares to the Acquired Fund's account on the stock record books of the
Acquiring Fund and shall deliver a confirmation thereof to the Acquired Fund.
1.2 The Acquired Fund will discharge all of its liabilities and obligations
prior to the Closing Date.
1.3 Delivery of the assets of the Acquired Fund to be transferred shall be
made on the Closing Date and shall be delivered to Star Bank, N.A.,
Cincinnati, Ohio, the Acquiring Fund's custodian (the "Custodian"), for the
account of the Acquiring Fund, together with proper instructions and all
necessary documents to transfer to the account of the Acquiring Fund, free and
clear of all liens, encumbrances, rights, restrictions and claims. All cash
delivered shall be in the form of currency and immediately available funds
payable to the order of the Custodian for the account of the Acquiring Fund.
1.4 The Acquired Fund will pay or cause to be paid to the Acquiring Fund any
dividends or interest received on or after the Closing Date with respect to
assets transferred to the Acquiring Fund hereunder. The Acquired Fund will
transfer to the Acquiring Fund any distributions, rights or other assets
received by the Acquired Fund after the Closing Date as distributions on or
with respect to the securities transferred. Such assets shall be deemed
included in assets transferred to the Acquiring Fund on the Closing Date and
shall not be separately valued.
1.5 As soon after the Closing Date as is conveniently practicable (the
"Liquidation Date"), the Acquired Fund will liquidate and distribute pro rata
to the Acquired Fund's shareholders of record, determined as of the close of
business on the Closing Date (the "Acquired Fund Shareholders"), the Acquiring
Fund Shares received by the Acquired Fund pursuant to paragraph 1.1. Such
liquidation and distribution will be accomplished by the transfer of the
Acquiring Fund Shares then credited to the account of the Acquired Fund on the
books of the Acquiring Fund to open accounts on the share record books of the
Acquiring Fund in the names of the Acquired Fund Shareholders and representing
the respective pro rata number of the Acquiring Fund Shares due such
shareholders. All issued and outstanding shares of the Acquired Fund will
simultaneously be canceled on the books of the Acquired Fund. Share
certificates representing interests in the Acquired Fund will represent a
number of Acquiring Fund Shares after the Closing Date as determined in
accordance with Section 2.3. The Acquiring Fund shall not issue certificates
representing the Acquiring Fund Shares in connection with such exchange.
1.6 Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent. Shares of the Acquiring Fund will be issued
in the manner described in the Acquiring Fund's current prospectus and
statement of additional information.
1.7 Any transfer taxes payable upon issuance of the Acquiring Fund Shares in
a name other than the registered holder of the Acquired Fund shares on the
books of the Acquired Fund as of that time shall, as a condition of such
issuance and transfer, be paid by the person to whom such Acquiring Fund
Shares are to be issued and transferred.
1.8 Any reporting responsibility of the Acquired Fund is and shall remain
the responsibility of the Acquired Fund up to and including the Closing Date
and such later dates, with respect to liquidation and termination of the
Acquired Fund, on which the Acquired Fund is liquidated and terminated.
2. VALUATION
2.1 The value of the Acquired Fund's net assets to be acquired by the
Acquiring Fund hereunder shall be the value of such assets computed as of 1:00
p.m. (Eastern time) on the Closing Date (such time and date being hereinafter
called the "Valuation Date"), using the valuation procedures set forth in the
Acquiring Fund's then-current prospectus or statement of additional
information.
2.2 The net asset value of an Acquiring Fund Share shall be the net asset
value per share computed as of 1:00 p.m. (Eastern time) on the Valuation
Date, using the valuation procedures set forth in the Acquiring Fund's then-
current prospectus or statement of additional information.
2.3 The number of the Acquiring Fund Shares to be issued (including
fractional shares, if any) in exchange for the Acquired Fund's net assets
shall be determined by dividing the value of the net assets of the Acquired
Fund determined using the same valuation procedures referred to in paragraph
2.1 by the net asset value of one Acquiring Fund Share determined in
accordance with paragraph 2.2.
2.4 All computations of value shall be made in accordance with the regular
practices of the Acquiring Fund.
3. CLOSING AND CLOSING DATE.
3.1 The Closing Date shall be April 20, 1995 or such later date as the
parties may mutually agree. All acts taking place at the Closing Date shall
be deemed to take place simultaneously as of the close of business on the
Closing Date unless otherwise provided. The Closing shall be held at 1:00
p.m. (Eastern time) at the offices of the Acquiring Fund, Federated Investors
Tower, Pittsburgh, PA 15222-3779, or such other time and/or place as the
parties may mutually agree.
3.2 If on the Valuation Date (a) the primary trading market for portfolio
securities of the Acquiring Fund or the Acquired Fund shall be closed to
trading or trading thereon shall be restricted; or (b) trading or the
reporting of trading shall be disrupted so that accurate appraisal of the
value of the net assets of the Acquiring Fund or the Acquired Fund is
impracticable, the Closing Date shall be postponed until the first business
day after the day when trading shall have been fully resumed and reporting
shall have been restored.
3.3 Federated Services Company, as transfer agent for each of the Acquired
Fund and Acquiring Fund, shall deliver at the Closing a certificate of an
authorized officer stating that its records contain the names and addresses of
the Acquired Fund Shareholders and the number and percentage ownership of
outstanding shares owned by each such shareholder immediately prior to the
Closing. The Acquiring Fund shall issue and deliver a confirmation evidencing
the Acquiring Fund Shares to be credited on the Closing Date to the Secretary
of the Acquired Fund, or provide evidence satisfactory to the Acquired Fund
that such Acquiring Fund Shares have been credited to the Acquired Fund's
account on the books of the Acquiring Fund. At the Closing, each party shall
deliver to the other such bills of sale, checks, assignments, assumption
agreements, share certificates, if any, receipts or other documents as such
other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES.
4.1 The Acquired Fund represents and warrants to the Acquiring Fund as
follows:
(a) The Trust is a business trust duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts and has
power to own all of its properties and assets and to carry out this Agreement.
(b) The Trust is registered under the 1940 Act, as an open-end management
investment company, and such registration has not been revoked or rescinded
and is in full force and effect.
(c) The Acquired Fund is not, and the execution, delivery and performance of
this Agreement will not result, in material violation of the Trust's
Declaration of Trust or By-Laws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which the Acquired Fund is a party or
by which it is bound.
(d) The Acquired Fund has no material contracts or other commitments
outstanding (other than this Agreement) which will result in liability to it
after the Closing Date.
(e) No litigation or administrative proceeding or investigation of or before
any court or governmental body is currently pending or to its knowledge
threatened against the Acquired Fund or any of its properties or assets which,
if adversely determined, would materially and adversely affect its financial
condition or the conduct of its business. The Acquired Fund knows of no facts
which might form the basis for the institution of such proceedings, and is not
a party to or subject to the provisions of any order, decree or judgment of
any court or governmental body which materially and adversely affects its
business or its ability to consummate the transactions herein contemplated.
(f) The current prospectus and statement of additional information of the
Acquired Fund conform in all material respects to the applicable requirements
of the Securities Act of 1933, as amended (the "1933 Act"), and the 1940 Act
and the rules and regulations of the Securities and Exchange Commission (the
"Commission") thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein as
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(g) The Statements of Assets and Liabilities of the Acquired Fund at
November 30, 1994 have been audited by Arthur Anderson & Co. LLP, independent
auditors, and have been prepared in accordance with generally accepted
accounting principles, consistently applied, and such statements (copies of
which have been furnished to the Acquiring Fund) fairly reflect the financial
condition of the Acquired Fund as of such dates, and there are no known
contingent liabilities of the Acquired Fund as of such dates not disclosed
therein.
(h) Since November 30, 1994, there has not been any material adverse change
in the Acquired Fund's financial condition, assets, liabilities or business
other than changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Acquiring Fund.
(i) At the Closing Date, all Federal and other tax returns and reports of
the Acquired Fund required by law to have been filed by such dates shall have
been filed, and all Federal and other taxes shall have been paid so far as
due, or provision shall have been made for the payment thereof, and to the
best of the Acquired Fund's knowledge no such return is currently under audit
and no assessment has been asserted with respect to such returns.
(j) For each fiscal year of its operation, the Acquired Fund has met the
requirements of Subchapter M of the Code for qualification and treatment as a
regulated investment company.
(k) All issued and outstanding shares of the Acquired Fund are, and at the
Closing Date will be, duly and validly issued and outstanding, fully paid and
non-assessable. All of the issued and outstanding shares of the Acquired Fund
will, at the time of the Closing, be held by the persons and in the amounts
set forth in the records of the transfer agent as provided in paragraph 3.3.
The Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of the Acquired Fund shares, nor is
there outstanding any security convertible into any of the Acquired Fund
shares.
(l) On the Closing Date, the Acquired Fund will have full right, power and
authority to sell, assign, transfer and deliver the assets to be transferred
by it hereunder.
(m) The execution, delivery and performance of this Agreement will have been
duly authorized prior to the Closing Date by all necessary action on the part
of the Acquired Fund's Trustees and, subject to the approval of the Acquired
Fund Shareholders, this Agreement will constitute the valid and legally
binding obligation of the Acquired Fund enforceable in accordance with its
terms, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar laws relating to or
affecting creditors' rights generally and court decisions with respect
thereto, and to general principles of equity and the discretion of the court
(regardless of whether the enforceability is considered in a proceeding in
equity or at law).
(n) The prospectus/proxy statement of the Acquired Fund (the
"Prospectus/Proxy Statement") to be included in the Registration Statement
referred to in paragraph 5.5 (other than information therein that relates to
the Acquiring Fund) will, on the effective date of the Registration Statement
and on the Closing Date, not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which such
statements were made, not misleading.
(o) The Acquired Fund has entered into an agreement under which Star Bank,
N.A. will assume the expense of the reorganization including accountants'
fees, legal fees, registration fees, transfer taxes (if any), the fees of
banks and transfer agents and the costs of preparing, printing, copying and
mailing proxy solicitation materials to the Acquiring Fund's shareholders and
the costs of holding the Special Meeting of Shareholders.
4.2 The Acquiring Fund represents and warrants to the Acquired Fund as
follows:
(a) The Trust is a business trust duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts and the
Acquiring Fund has the power to carry on its business as it is now being
conducted and to carry out this Agreement.
(b) The Trust is registered under the 1940 Act as an open-end management
investment company, and such registration has not been revoked or rescinded
and is in full force and effect.
(c) The current prospectus and statement of additional information of the
Acquiring Fund conform in all material respects to the applicable requirements
of the 1933 Act and the 1940 Act and the rules and regulations of the
Commission thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(d) The Acquiring Fund is not, and the execution, delivery and performance
of this Agreement will not result, in material violation of the Trust's
Declaration of Trust or By-Laws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which the Acquiring Fund is a party or
by which it is bound.
(e) No litigation or administrative proceeding or investigation of or before
any court or governmental body is currently pending or to its knowledge
threatened against the Acquiring Fund or any of its properties or assets
which, if adversely determined, would materially and adversely affect its
financial condition or the conduct of its business. The Acquiring Fund knows
of no facts which might form the basis for the institution of such
proceedings, and is not a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body which materially and
adversely affects its business or its ability to consummate the transactions
contemplated herein.
(f) The Statement of Assets and Liabilities of the Acquiring Fund at
November 30, 1994, have been audited by Arthur Andersen & Co. LLP, independent
auditors, and have been prepared in accordance with generally accepted
accounting principles, consistently applied, and such statements (copies of
which have been furnished to the Acquired Fund) fairly reflect the financial
condition of the Acquiring Fund as of such date.
(g) Since November 30, 1994, there has not been any material adverse change
in the Acquiring Fund's financial condition, assets, liabilities or business
other than changes occurring in the ordinary course of business, or any
incurrence by the Acquiring Fund of any indebtedness, except as otherwise
disclosed to and accepted by the Acquired Fund.
(h) At the Closing Date, all Federal and other tax returns and reports of
the Acquiring Fund required by law then to be filed shall have been filed, and
all Federal and other taxes shown as due on said returns and reports shall
have been paid or provision shall have been made for the payment thereof.
(i) For each fiscal year of its operation, the Acquiring Fund has met the
requirements of Subchapter M of the Code for qualification and treatment as a
regulated investment company.
(j) All issued and outstanding shares of the Acquiring Fund are, and at the
Closing Date will be, duly and validly issued and outstanding, fully paid and
non-assessable. The Acquiring Fund does not have outstanding any options,
warrants or other right to subscribe for or purchase any of the Acquiring Fund
Shares, nor is there outstanding any security convertible into any Acquiring
Fund Shares.
(k) The execution, delivery and performance of this Agreement will have been
duly authorized prior to the Closing Date by all necessary action, if any, on
the part of the Acquiring Fund's Trustees, and this Agreement will constitute
the valid and legally binding obligation of the Acquiring Fund enforceable in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws
relating to or affecting creditors' rights generally and court decisions with
respect thereto, and to general principles of equity and the discretion of the
court (regardless of whether the enforceability is considered in a proceeding
in equity or at law).
(l) The Prospectus/Proxy Statement to be included in the Registration
Statement (only insofar as it relates to the Acquiring Fund) will, on the
effective date of the Registration Statement and on the Closing Date, not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which such statements were made,
not misleading.
(m) The Acquiring Fund has entered into an agreement under which Star Bank
will assume the expenses of the reorganization including accountants' fees,
legal fees, registration fees, transfer taxes (if any), the fees of banks and
transfer agents and the costs of preparing, printing, copying and mailing
proxy solicitation materials to the Acquired Fund's shareholders and the costs
of holding the Special Meeting of Shareholders.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND.
5.1 The Acquiring Fund and the Acquired Fund each will operate its business
in the ordinary course between the date hereof and the Closing Date, it being
understood that such ordinary course of business will include customary
dividends and distributions.
5.2 The Acquired Fund will call a meeting of the Acquired Fund Shareholders
to consider and act upon this Agreement and to take all other action necessary
to obtain approval of the transactions contemplated herein.
5.3 Subject to the provisions of this Agreement, the Acquiring Fund and the
Acquired Fund will each take, or cause to be taken, all action, and do or
cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.4 As promptly as practicable, but in any case within sixty days after the
Closing Date, the Acquired Fund shall furnish the Acquiring Fund, in such form
as is reasonably satisfactory to the Acquiring Fund, a statement of the
earnings and profits of the Acquired Fund for Federal income tax purposes
which will be carried over to the Acquiring Fund as a result of Section 381 of
the Code and which will be certified by the Acquired Fund's President and its
Treasurer.
5.5 The Acquired Fund will provide the Acquiring Fund with information
reasonably necessary for the preparation of a prospectus (the "Prospectus")
which will include the Proxy Statement, referred to in paragraph 4.1(n), all
to be included in a Registration Statement on Form N-14 of the Acquiring Fund
(the "Registration Statement"), in compliance with the 1933 Act, the
Securities Exchange Act of 1934, as amended, and the 1940 Act in connection
with the meeting of the Acquired Fund Shareholders to consider approval of
this Agreement and the transactions contemplated herein.
5.6 The Acquiring Fund agrees to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act and such
of the state Blue Sky or securities laws as it may deem appropriate in order
to continue its operations after the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND.
The obligations of the Acquiring Fund to complete the transactions provided
for herein shall be subject, at its election, to the performance by the
Acquired Fund of all the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following conditions:
6.1 All representations and warranties of the Acquired Fund contained in
this Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.
6.2 The Acquired Fund shall have delivered to the Acquiring Fund a statement
of the Acquired Fund's assets, together with a list of the Acquired Fund's
portfolio securities showing the tax costs of such securities by lot and the
holding periods of such securities, as of the Closing Date, certified by the
Treasurer or Assistant Treasurer of the Acquired Fund.
6.3 The Acquired Fund shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed in its name by its President or Vice
President and its Treasurer or Assistant Treasurer, in form and substance
satisfactory to the Acquiring Fund, to the effect that the representations and
warranties of the Acquired Fund made in this Agreement are true and correct at
and as of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as the Acquiring
Fund shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND.
The obligations of the Acquired Fund to consummate the transactions provided
herein shall be subject, at its election, to the performance by the Acquiring
Fund of all the obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of the Acquiring Fund contained in
this Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.
7.2 The Acquiring Fund shall have delivered to the Acquired Fund on the
Closing Date a certificate executed in its name by its President or Vice
President and its Treasurer or Assistant Treasurer, in form and substance
reasonably satisfactory to the Acquired Fund, to the effect that the
representations and warranties of the Acquiring Fund made in this Agreement
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement, and as to such
other matters as the Acquired Fund shall reasonably request.
8. FURTHER CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE ACQUIRING FUND
AND THE ACQUIRED FUND.
If any of the conditions set forth below do not exist on or before the Closing
Date with respect to the Acquired Fund or the Acquiring Fund, the other party
to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement.
8.1 The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares of the
Acquired Fund in accordance with the provisions of the Acquired Fund's
Declaration of Trust.
8.2 On the Closing Date no action, suit or other proceeding shall be pending
before any court or governmental agency in which it is sought to restrain or
prohibit, or obtain damages or other relief in connection with, this Agreement
or the transactions contemplated herein.
8.3 All consents of other parties and all other consents, orders and permits
of Federal, state and local regulatory authorities (including those of the
Commission and of state Blue Sky and securities authorities) deemed necessary
by the Acquiring Fund or the Acquired Fund to permit consummation, in all
material respects, of the transactions contemplated hereby shall have been
obtained, except where failure to obtain any such consent, order or permit
would not involve a risk of a material adverse effect on the assets or
properties of the Acquiring Fund or the Acquired Fund, provided that either
party hereto may for itself waive any of such conditions.
8.4 The Registration Statement shall have become effective under the 1933
Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending,
threatened or contemplated under the 1933 Act.
8.5 The Trust shall have received an opinion of Dickstein, Shapiro & Morin,
L.L.P., substantially to the effect that for Federal income tax purposes:
(a) The transfer of all or substantially all of the Acquired Fund assets in
exchange for the Acquiring Fund Shares and the distribution of the Acquiring
Fund Shares to the shareholders of the Acquired Fund in liquidation of the
Acquired Fund will constitute a "reorganization" within the meaning of Section
368(a)(1)(C) of the Code; (b) No gain or loss will be recognized by the
Acquiring Fund upon the receipt of the assets of the Acquired Fund solely in
exchange for the Acquiring Fund Shares; (c) No gain or loss will be recognized
by the Acquired Fund upon the transfer of the Acquired Fund assets to the
Acquiring Fund in exchange for the Acquiring Fund Shares or upon the
distribution (whether actual or constructive) of the Acquiring Fund Shares to
Acquired Fund Shareholders in exchange for their shares of the Acquired Fund;
(d) No gain or loss will be recognized by the Acquired Fund Shareholders upon
the exchange of their Acquired Fund shares for the Acquiring Fund Shares;
(e) The tax basis of the Acquired Fund assets acquired by the Acquiring Fund
will be the same as the tax basis of such assets to the Acquired Fund
immediately prior to the Reorganization; (f) The tax basis of the Acquiring
Fund Shares received by each of the Acquired Fund Shareholders pursuant to the
Reorganization will be the same as the tax basis of the Acquired Fund shares
held by such shareholder immediately prior to the Reorganization; (g) The
holding period of the assets of the Acquired Fund in the hands of the
Acquiring Fund will include the period during which those assets were held by
the Acquired Fund; and (h) The holding period of the Acquiring Fund Shares to
be received by each Acquired Fund Shareholder will include the period during
which the Acquired Fund shares exchanged therefor were held by such
shareholder (provided the Acquired Fund shares were held as capital assets on
the date of the Reorganization).
9. TERMINATION OF AGREEMENT.
9.1 This Agreement and the transactions contemplated hereby may be
terminated and abandoned by resolution of the Board of Trustees of the Trust
at any time prior to the Closing Date if circumstances should develop that, in
their opinion, make proceeding with the Agreement inadvisable.
9.2 If this Agreement is terminated and the exchange contemplated hereby is
abandoned pursuant to the provisions of this Section 9, this Agreement shall
become void and have no effect, without any liability on the part of any party
hereto or the trustees, officers or shareholders of the Acquiring Fund or of
the Acquired Fund, in respect of this Agreement.
10. WAIVER.
At any time prior to the Closing Date, any of the foregoing conditions may be
waived by the Board of Trustees of the Trust, if, in their judgment, such
waiver will not have a material adverse effect on the benefits intended under
this Agreement to the shareholders of the Acquiring Fund or of the Acquired
Fund, as the case may be.
11. MISCELLANEOUS.
11.1 None of the representations and warranties included or provided for
herein shall survive consummation of the transactions contemplated hereby.
11.2 This Agreement contains the entire agreement and understanding between
the parties hereto with respect to the subject matter hereof, and merges and
supersedes all prior discussions, agreements, and understandings of every kind
and nature between them relating to the subject matter hereof. Neither party
shall be bound by any condition, definition, warranty or representation, other
than as set forth or provided in this Agreement or as may be set forth in a
later writing signed by the party to be bound thereby.
11.3 This Agreement shall be governed and construed in accordance with the
internal laws of the Commonwealth of Massachusetts, without giving effect to
principles of conflict of laws.
11.4 This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
11.5 This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns, but no assignment or transfer
hereof of any rights or obligations hereunder shall be made by any party
without the written consent of the other party. Nothing herein expressed or
implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
11.6 The Acquired Fund is hereby expressly put on notice of the limitation of
liability as set forth in Article XI of the Declaration of Trust of the
Acquiring Fund and agrees that the obligations assumed by the Acquiring Fund
pursuant to this Agreement shall be limited in any case to the Acquiring Fund
and its assets and the Acquired Fund shall not seek satisfaction of any such
obligation from the shareholders of the Acquiring Fund, the trustees,
officers, employees or agents of the Acquiring Fund or any of them.
11.7 The Acquiring Fund is hereby expressly put on notice of the limitation
of liability as set forth in Article XI of the Declaration of Trust of the
Acquired Fund and agrees that the obligations assumed by the Acquired Fund
pursuant to this Agreement shall be limited in any case to the Acquired Fund
and its assets and the Acquiring Fund shall not seek satisfaction of any such
obligation from the shareholders of the Acquired Fund, the trustees, officers,
employees or agents of the Acquired Fund or any of them.
IN WITNESS WHEREOF, the Acquired Fund and the Acquiring Fund have caused this
Agreement and Plan of Reorganization to be executed and attested on its behalf
by its duly authorized representatives as of the date first above written.
Acquired Fund:
STAR FUNDS, on behalf of its Portfolio,
STAR PRIME OBLIGATIONS FUND
By:/s/ Joseph A. Machi
Name:Joseph A. Machi
Title:Vice President
Attest:
/s/ C. Grant Anderson
C. Grant Anderson
Assistant Secretary
Acquiring Fund:
STAR FUNDS, on behalf of its Portfolio,
STAR TREASURY FUND
By:/s/ Joseph A. Machi
Name:Joseph A. Machi
Title:Vice President
Attest:
/s/ C. Grant Anderson
C. Grant Anderson
Assistant Secretary
STATEMENT OF ADDITIONAL INFORMATION
March 17, 1995
Acquisition of the assets of
STAR PRIME OBLIGATIONS FUND
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Telephone Number: 1-800-245-5000
By and in exchange for shares of
STAR TREASURY FUND
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Telephone Number: 1-800-245-5000
This Statement of Additional Information dated March 17, 1995 is not a
prospectus. A Prospectus/Proxy Statement dated March 17, 1995 related to the
above-referenced matter may be obtained from Star Funds, on behalf of its
portfolio, Star Treasury Fund, Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779. This Statement of Additional Information should be
read in conjunction with such Prospectus/Proxy Statement.
TABLE OF CONTENTS
1. Statement of Additional Information of Star Treasury Fund, dated
January 31, 1994
2. Statement of Additional Information of Star Prime Obligations Fund,
dated January 31, 1994
3. Financial Statements of Star Treasury Fund, dated November 30, 1994
4. Financial Statements of Star Prime Obligations Fund dated November 30,
1994
5. Star Treasury Fund and Star Prime Obligations Fund Pro Forma Financial
Statements dated November 30, 1994
The Statement of Additional Information of Star Treasury Fund dated
January 31, 1994, is incorporated herein by reference to Post-Effective
Amendment No. 20 to the Star Fund's Registration Statement on Form N-1A (File
No. 33-26915) which was filed with the Securities and Exchange Commission on
or about January 31, 1994.
The Statement of Additional Information of Star Prime Obligations
Fund dated January 31, 1994, is incorporated herein by reference to Post-
Effective Amendment No. 20 to the Star Fund's Registration Statement on Form N-
1A (File No. 33-26915) which was filed with the Securities and Exchange
Commission on or about January 31, 1994. A copy may be obtained from Star
Funds at Federated Investors Tower, Pittsburgh, PA 15222-3279. Telephone
Number: 1-800-235-4669.
The financial statements of Star Treasury Fund and Star Prime
Obligations Fund dated November 30, 1994 are incorporated herein by reference
to the Combined Annual Report to shareholders dated November 30, 1994 of Star
Treasury Fund and Star Prime Obligations Fund, and filed with the Securities
and Exchange Commission on or about January 31, 1995.
Shareholders may obtain, without charge, a copy of the most recent
annual reports of the Funds which contain, audited financial statements of the
Funds by writing the address shown above or calling the Trust at 1-800-245-
5000.
The following pro forma financial statements give effect to the proposed
acquisition of all of the assets of Star Prime Obligations Fund, by Star
Treasury Fund accounted for by the method of accounting for tax-free
reorganizations of investment companies. These pro forma financial statements
should be read in conjunction with the historical financial statements of Star
Prime Obligations Fund and Star Treasury Fund appearing in the Combined Annual
Report to Shareholders of Treasury Fund and Prime Obligations Fund
incorporated by reference herein.
The following pro forma statements assume that the transaction was consummated
on November 30, 1994. The acquisition would be accomplished by an exchange of
shares of Star Treasury Fund for Star Prime Obligations Fund at net asset
value.
The pro forma financial statements are required by rules of the Securities and
Exchange Commission and are provided for comparative purposes only. The pro
forma combining schedule of portfolio investments does not purport to be
indicative of the actual investments which will be owned by the Star Treasury
Fund upon consummation of the acquisition of the assets of Star Prime
Obligations Fund.
STAR TREASURY FUND
STAR PRIME OBLIGATIONS FUND
Introduction to Proposed Fund Merger
November 30, 1994 (unaudited)
The accompanying unaudited Pro Forma Combining Portfolio of Investments,
Statement of Assets and Liabilities and the Statement of Operations reflect
the accounts of Star Prime Obligations Fund and Star Treasury Fund (the
"Funds") at and for the year ended November 30, 1994. These statements have
been derived from the Funds' books and records utilized in calculating daily
net asset value at November 30, 1994.
<TABLE>
<CAPTION>
STAR TREASURY FUND
STAR PRIME OBLIGATIONS FUND
PRO FORMA COMBINING STATEMENT
OF ASSETS AND LIABILITIES
NOVEMBER 30, 1994 (UNAUDITED)
<S> <C> <C> <C> <C>
Star Prime Star
Obligations Treasury Pro Forma Pro Forma
Fund Fund Adjustments Combined
Assets:
Investments in other securities $52,806,548 $ 92,395,448 $145,201,996
Investments in repurchase agreements 33,420,000 267,054,000 300,474,000
Total investments, at amortized cost 86,226,548 359,449,448 445,675,996
Interest receivable 456,081 659,405 1,115,486
Cash 398 721 78,110 A 79,229
Deferred expenses 309 -- (309) B ----
Total assets 86,683,336 360,109,574 77,801 446,870,711
Liabilities:
Dividends payable 299,509 1,297,328 151,974 A 1,748,811
Payable for Fund shares redeemed 12,507 -- 12,507
Accrued expenses 27,898 46,275 (74,173) A ----
Total liabilities 339,914 1,343,603 77,801 1,761,318
Total Net Assets $86,343,422 $358,765,971 $445,109,393
Shares Outstanding 86,343,422 358,765,971 445,109,393
Net Asset Value, Offering Price and
Redemption Proceeds Per Share: $1.00 $1.00 $1.00
A) Adjustment to reflect the cumulative
effect of the adjustments on the Pro Forma
Combining Statement of Operations.
B) Adjustment to write off deferred
organizational cost of Star Prime
Obligations Fund.
(See Notes to Pro Forma Financial Statements)
</TABLE>
<TABLE>
<CAPTION>
STAR TREASURY FUND
STAR PRIME OBLIGATIONS FUND
PRO FORMA COMBINING PORTFOLIO OF INVESTMENTS
November 30, 1994 (unaudited)
<S> <C> <C> <C> <C> <C> <C>
Principal Amount Value
Star Prime Star Star Prime Star
Obligations Treasury Pro Forma Obligations Treasury Pro Forma
Fund Fund Combined Fund Fund Combined
*Commercial Paper - 2.5%
Finance - Commercial
$3,000,000 $3,000,000 Chevron Oil Finance Co., 5.65%, 1/17/95 $2,977,871 $2,977,871
3,000,000 3,000,000 Exxon Credit Corp., 5.50%, 1/3/95 2,984,875 2,984,875
2,000,000 2,000,000 Ford Motor Credit Corp., 5.95%, 2/13/95 1,975,539 1,975,539
3,000,000 3,000,000 General Electric Capital Corp., 5.02%, 12/23/94 2,990,797 2,990,797
Total Commercial Paper 10,929,082 10,929,082
U.S. Government Obligations - 28.5%
2,900,000 2,900,000 Federal Farm Credit Bank, 5.375% - 5.60%, 2,905,922 2,905,922
2/14/95 - 8/1/95
6,500,000 6,500,000 Federal Home Loan Bank, 3.81% - 8.875%, 6,471,781 6,471,781
1/18/95 - 6/26/95
2,000,000 2,000,000 Federal Home Loan Mortgage Assoc., 4.73%, 12/27/94 1,993,168 1,993,168
1,000,000 1,000,000 Student Loan Marketing Assoc., 5.315%, 6/30/95 1,000,000 1,000,000
19,000,000 19,000,000 Student Loan Marketing Assoc., 19,013,181 19,013,181
Variable Rate Notes, 12/6/94
24,000,000 24,000,000 U.S. Treasury Bills, 1/5/95 - 2/16/95 23,779,024 23,779,024
5,000,000 5,000,000 U.S. Treasury Bond, 7.875%, 2/15/95 5,024,899 5,024,899
64,000,000 64,000,000 U.S. Treasury Notes, 3.875% - 4.625%, 63,591,525 63,591,525
12/31/94 - 10/31/95
3,000,000 3,000,000 U.S. Treasury Notes, 4.125%, 5/31/95 2,970,631 2,970,631
Total U.S. Government Obligations 34,354,683 92,395,448 126,750,131
Short-Term Corporate Bonds - 1.2%
1,000,000 1,000,000 American Express Credit Co., 5.95%, 1/27/95 1,003,204 1,003,204
1,000,000 1,000,000 Associates Corp. North America, 6.375%, 4/15/95 1,003,992 1,003,992
1,000,000 1,000,000 Citizens Southern Corp., 11.70%, 2/1/95 1,013,177 1,013,177
1,000,000 1,000,000 Ford Motor Co., 9.65%, 12/9/94 1,001,235 1,001,235
1,500,000 1,500,000 Pepsico, Inc., 5.875%, 12/15/94 1,501,175 1,501,175
Total Short-Term Corporate Bonds 5,522,783 5,522,783
**Variable Rate Instruments - 0.4%
2,000,000 2,000,000 Pepsico, Inc., 5.715%, 12/7/94 2,000,000 2,000,000
Principal Amount Value
Star Prime Star Star Prime Star
Obligations Treasury Pro Forma Obligations Treasury Pro Forma
Fund Fund Combined Fund Fund Combined
***Repurchase Agreements - 67.5%
$15,500,000 $15,500,000 HSBC Securities, Inc., 5.55%, dated 11/30/94, $15,500,000 $15,500,000
due 12/1/94
87,000,000 87,000,000 Donaldson, Lufkin & Jenrette Securities ]
Corp., 5.70%, dated 11/30/94, due 12/1/94 87,000,000 87,000,000
20,000,000 20,000,000 Donaldson, Lufkin & Jenrette Securities
Corp., 5.72%, dated 11/30/94, due 12/1/94 20,000,000 20,000,000
16,500,000 16,500,000 First Boston Corp., 5.65%, dated 11/30/94,
due 12/1/94 16,500,000 16,500,000
17,000,000 17,000,000 Fuji Securities, 5.70%, dated 11/30/94,
due 12/1/94 17,000,000 17,000,000
4,000,000 4,000,000 HSBC Securities, Inc., 5.60%, dated 11/30/94, 4,000,000 4,000,000
due 12/1/94
16,500,000 16,500,000 Kidder, Peabody & Co., Inc., 5.65%, dated 11/30/94, 16,500,000 16,500,000
due 12/1/94
16,500,000 16,500,000 Morgan Stanley & Co., Inc., 5.65%, dated 11/30/94,
due 12/1/94 16,500,000 16,500,000
3,000,000 3,000,000 Morgan Stanley & Co., Inc., 5.68%, dated 11/30/94,
due 12/1/94 3,000,000 3,000,000
82,554,000 82,554,000 National Westminster Securities, 5.65%,
dated 11/30/94, due 12/1/94 82,554,000 82,554,000
2,420,000 2,420,000 National Westminster Securities, 5.66%,
dated 11/30/94, due 12/1/94 2,420,000 2,420,000
15,500,000 15,500,000 Sanwa Bank, 5.55%, dated 11/30/94, due 12/1/94 15,500,000 15,500,000
4,000,000 4,000,000 Sanwa Bank, 5.70%, dated 11/30/94, due 12/1/94 4,000,000 4,000,000
Total Repurchase Agreements 33,420,000 267,054,000 300,474,000
Total Investments (at amortized cost) $86,226,548+ $359,449,448+ $445,675,996+
</TABLE>
+ Also represents cost for federal tax purposes.
* Each issue shows the rate of discount at time of purchase.
** Current date and next demand date shown.
***Repurchase agreements are fully collateralized
by U.S. government and/or agency obligations
based on market prices at the date of the portfolio.
Note: The categories of investments are shown as a
percentage of net assets ($445,109,393) at
November 30, 1994.
<TABLE>
<CAPTION>
STAR PRIME OBLIGATIONS FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1994 (UNAUDITED)
<S> <C> <C> <C> <C>
Star Prime Star
Obligations Treasury Pro Forma Pro Forma
Fund Fund Adjustments Combined
Investment Income:
Interest income $3,425,718 $13,166,763 $ --- $16,592,481
Expenses:
Investment advisory fee 469,874 1,672,434 (42,716) A 2,099,592
Trustees' fees 2,426 6,166 (2,092) B 6,500
Administrative personnel and services fees 104,792 409,841 --- 514,633
Custodian fees 17,504 82,649 --- 100,153
Transfer and dividend disbursing 31,114 33,704 (24,000) C 40,818
agent fees and expense
Fund share registration fees 17,624 18,764 (13,972) D 22,416
Auditing fees 18,232 18,250 (18,082) E 18,400
Legal fees 2,947 4,300 (1,247) F 6,000
Printing and postage 9,716 9,506 (9,222) G 10,000
Portfolio accounting fees 42,627 66,046 (30,457) H 78,216
Insurance premiums 8,954 10,275 (6,729) I 12,500
Amortization of deferred organizational cost --- --- 309 J 309
Miscellaneous 4,036 4,730 (3,766) K 5,000
Total expenses 729,846 2,336,665 (151,974) 2,914,537
Net investment income $2,695,872 $10,830,098 $151,974 $13,677,944
</TABLE>
(See legend on following page)
(See Notes to Pro Forma Financial Statements)
STAR TREASURY FUND
STAR PRIME OBLIGATIONS FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS (CONTINUED)
YEAR ENDED NOVEMBER 30, 1994 (UNAUDITED)
A) Star Bank, N.A., Star Funds' investment adviser (the
"Adviser"), receives for its services an annual investment
advisory fee equal to .50 of 1% of the Star Treasury Fund's
average daily net assets. 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.
B) Adjustment to reflect Trustees fees for Star Treasury Fund
only.
C) Federated Services Company ("FServ") serves as transfer and
dividend disbursing agent for the Funds. The FServ fee is
based on the size, type, and number of accounts and
transactions made by shareholders. This adjustment reflects
the $2,000 minimum per month for Star Treasury Fund only.
D) Adjustment to reflect state registration costs for Star
Treasury Fund only.
E) Adjustment to reflect audit charge for one portfolio only.
F) Pro forma combined legal fees are adjusted to include legal
retainers, plus estimated out-of-pocket charges, for one
portfolio only. This adjustment reflects the legal costs
associated with Star Treasury Fund.
G) Printing and postage expenses are adjusted to reflect estimated
savings to be realized by combining two portfolios into a singe
portfolio.
H) FServ also maintains the Funds' accounting records. The FServ
fee is based on the level of each Fund's average net assets for
the period, plus out-of-pocket expenses. This adjustment
reflects additional asset based charges associated with Star
Treasury Fund and to reflect the decrease of the minimum charge
associated with Star Prime Obligations Fund.
I) Insurance premiums are allocated from a group coverage, the
allocation is comprised of a base amount, plus a portion based
on average net assets. The pro forma combined insurance
premium equals the base premium of a single portfolio, plus an
allocation based on combined assets.
J) Adjustment to write off deferred organizational cost of Star
Prime Obligations Fund.
K) Pro forma combined miscellaneous expenses are adjusted to
reflect estimated savings to be realized by combining two
portfolios into a single portfolio.
(See Notes to Pro Forma Financial Statements)
Star Treasury Fund
Star Prime Obligations Fund
Notes to Pro Forma Financial Statements (Unaudited)
1. Basis of Combination
The unaudited Pro Forma Combining Portfolio of Investments, Statement of
Assets and Liabilities and Statement of Operations reflect the accounts
of Star Prime Obligations ("Prime Obligations") and Star Treasury Fund
("Treasury"), two of nine portfolios offered by the Star Funds (the
"Funds") for the year ended November 30, 1994. These statements have
been derived from the books and records utilized in calculating daily
net asset value at November 30, 1994.
The Pro Forma Combining Portfolio of Investments, Statement of Assets
and Liabilities and Statement of Operations should be read in
conjunction with the historical financial statements of the Funds
incorporated by reference in the Statement of Additional Information.
The Funds follow generally accepted accounting principles applicable to
management investment companies which are disclosed in the historical
financial statements dated November 30, 1994.
The Pro Forma statements give effect to the proposed transfer of the
assets of Star Prime Obligations Fund in exchange for shares of Star
Treasury Fund. Under generally accepted accounting principles, Star
Treasury Fund will be the surviving entity for accounting purposes with
its historical cost of investment securities and results of operations
being carried forward.
The Pro Forma financial statements have been adjusted to reflect the
anticipated advisory and administration fee arrangements for the
surviving entity. Certain other operating costs have also been adjusted
to reflect anticipated expenses of he combined entity. Other costs
which may change as a result of the reorganization are currently
undeterminable.
For the fiscal year ended November 30, 1994, the Star Prime Obligations
Fund and Star Treasury Fund paid investment advisory fees computed at
the annual rate of 0.55% and 0.50%,espectively, of average daily net
assets.
The advisor and administrator may voluntarily choose to waive a portion
of their fees and eimburse certain operating expenses of Star Prime
Obligations Fund and Star Treasury Fund.
2. Shares of Beneficial Interest
The Pro Forma net asset value per share assumes the issuance of
445,109,393 shares of Star Treasury Fund (86,343,422 shares from Star
Prime Obligations Fund) which would have been issued at November 30,
1994, in connection with the proposed reorganization.
PART C - OTHER INFORMATION
Item 15. Indemnification
Indemnification is provided to trustees and officers of the Registrant
pursuant to the Registrant's Declaration of Trust, except where such
indemnification is not permitted by law. However, the Declaration of Trust does
not protect the trustees or officers from liability based on willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of their office.
Trustees and officers of the Registrant are insured against certain
liabilities, including liabilities arising under the Securities Act of 1933 (the
"Act").
Insofar as indemnification for liabilities arising under the Act may
be permitted to trustees, officers, and controlling persons of the Registrant by
the Registrant pursuant to the Declaration of Trust or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by trustees, officers, or controlling persons of the Registrant in
connection with the successful defense of any act, suit, or proceeding) is
asserted by such trustees, officers, or controlling persons in connection with
the shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Insofar as indemnification for liabilities may be permitted pursuant
to Section 17 of the Investment Company Act of 1940 for trustees, officers, or
controlling persons of the Registrant by the Registrant pursuant to the
Declaration of Trust or otherwise, the Registrant is aware of the position of
the Securities and Exchange Commission as set forth in Investment Company Act
Release No. IC-11330. Therefore, the Registrant undertakes that in addition to
complying with the applicable provisions of the Declaration of Trust or
otherwise, in the absence of a final decision on the merits by a court or other
body before which the proceeding was brought, that an indemnification payment
will not be made unless in the absence of such a decision, a reasonable
determination based upon factual review has been made (i) by a majority vote of
a quorum of non-party trustees who are not interested persons of the Registrant
or (ii) by independent legal counsel in a written opinion that the indemnitee
was not liable for an act of willful misfeasance, bad faith, gross negligence,
or reckless disregard of duties. The Registrant further undertakes that
advancement of expenses incurred in the defense of a proceeding (upon
undertaking for repayment unless it is ultimately determined that
indemnification is appropriate) against an officer, trustee, or controlling
person of the Registrant will not be made absent the fulfillment of at least one
of the following conditions: (i) the indemnitee provides security for his
undertaking; (ii) the Registrant is insured against losses arising by reason of
any lawful advances; or (iii) a majority of a quorum of disinterested non-party
trustees or independent legal counsel in a written opinion makes a factual
determination that there is reason to believe the indemnitee will be entitled to
indemnification.
Item 16. Exhibits
1. Conformed copy of Declaration of Trust of the Registrant (7);
(i) Conformed copy of Amendment No. 1 to Declaration of Trust (2);
(ii) Conformed copy of Amendment No. 2 to Declaration of Trust (2);
(iii) Conformed copy of Amendment No. 3 to Declaration of Trust (2);
(iv) Conformed copy of Amendment No. 4 to Declaration of Trust (3);
(v) Conformed copy of Amendment No. 5 to Declaration of Trust (5);
(vi) Conformed copy of Amendment No. 6 to Declaration of Trust (5);
(vii) Conformed copy of Amendment No. 7 to Declaration of Trust (5);
(viii) Conformed copy of Amendment No. 8 to Declaration of Trust (7);
(ix) Conformed copy of Amendment No. 9 to Declaration of Trust (7);
(x) Conformed copy of Amendment No. 10 to Declaration of Trust (7);
(xi) Conformed copy of Amendment No. 11 to Declaration of Trust (7);
(xii) Conformed copy of Amendment No. 12 to Declaration of Trust (9);
(xiii) Conformed copy of Amendment No. 13 to Declaration of Trust (10);
(xiv) Conformed copy of Amendment No. 14 to Declaration of Trust (11);
2. Copy of By-Laws of the Registrant (1);
3. Not applicable;
4. Agreement and Plan of Reorganization dated May 6, 1994 between Star
Treasury Fund and Star Prime Obligations Fund, portfolios of Star Funds; *
5. Copy of Specimen Certificate for Shares of Beneficial Interest of the
Registrant (2);
6. Conformed copy of Investment Advisory Contract between Losantiville
Funds and Star Bank, N.A. (6);
7. Conformed copy of Distributor's Contract of the Registrant (6);
8. Not applicable;
9. Conformed copy of Custodian Contract of the Registrant (7);
10. Conformed copy of Rule 12b-1 Agreement (4);
11. Opinion and Consent of Counsel as to Legality of Shares being Issued; *
12. Opinion of Dickstein, Shapiro & Morin, L.L.P. regarding tax consequences
of Reorganization; *
13. (i) Conformed copy of Fund Accounting, Shareholder Recordkeeping, and
Custody Services Procurement Agreement; (12)
(ii) Conformed copy of Shareholder Services Plan of the Registrant (10);
(iii) Copy of Shareholder Services Agreement of the Registrant, including
Exhibit A (11);
(iv) Conformed copy of Administrative Services Agreement (8);
14. (i) Conformed copy of Consent of Independent Public Accountants; *
(ii) Conformed copy of Consent of Independent Public Accountants; *
15. Not applicable;
16. Conformed copy of Power of Attorney; *
17. (i) Declaration under Rule 24f-2; *
(ii) Form of Proxy; *
+ Exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's
Initial Registration Statement on Form N-1A filed February 3, 1989.
(File Nos. 33-26915 and 811-5762)
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A filed
April 10, 1989. (File Nos. 33-26915 and 811-5762)
3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 2 to the Registration Statement on Form N-1A filed
December 6, 1989. (File Nos. 33-26915 and 811-5762)
4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 to the Registration Statement on Form N-1A filed
December 4, 1990. (File Nos. 33-26915 and 811-5762)
5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 to the Registration Statement on Form N-1A filed
January 29, 1992. (File Nos. 33-26915 and 811-5762)
6. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 16 to the Registration Statement on Form
N-1A filed November 20, 1992. (File Nos. 33-26915 and 811-5762)
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 19 to the Registration Statement on Form N-1A filed
July 2, 1993. (File Nos. 33-26915 and 811-5762)
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 21 to the Registration Statement on Form N-1A filed
February 4, 1994. (File Nos. 33-26915 and 811-5762)
9. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 22 to the Registration Statement on Form
N-1A filed March 17, 1994. (File Nos. 33-26915 and 811-5762)
10. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 23 to the Registration Statement on Form
N-1A filed May 13, 1994. (File Nos. 33-26915 and 811-5762)
11. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 24 to the Registration Statement on Form
N-1A filed September 15, 1994. (File Nos. 33-26915 and 811-5762)
12. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 25 to the Registration Statement on Form
N-1A filed January 31, 1995. (File Nos. 33-26915 and 811-5762)
Item 17. Undertakings
(1) The undersigned Registrant agrees that prior to any public
reofferring of the securities registered through the use of a prospectus which
is a part of this Registration Statement by any person or party who is deemed to
be an underwriter within the meaning of Rule 145(c) of the Securities Act of
1933, the reofferring prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2) The undersigned Registrant agrees that every prospectus that
is filed under paragraph (1) above will be filed as a part of an amendment to
the Registration Statement and will not be used until the amendment is
effective, and that, in determining any liability under the Securities Act of
1933, each post-effective amendment shall be deemed to be a new Registration
Statement for the securities offered therein, and the offering of the securities
at that time shall be deemed to be the initial bona fide offering of them.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Star Funds, has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Pittsburgh, Commonwealth of Pennsylvania, on February 3, 1995.
NAME TITLE DATE
By: /s/C. Grant Anderson
C. Grant Anderson Attorney In Fact February 3, 1995
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Edward C. Gonzales* President, Treasurer, and
Trustee
(Principal Financial and
Accounting Officer)
Thomas G. Bigley* Trustee
John T. Conroy, Jr.* Trustee
William J. Copeland* Trustee
James E. Dowd* Trustee
Lawrence D. Ellis, M.D.* Trustee
Edward L. Flaherty, Jr.* Trustee
Peter E. Madden* Trustee
Gregor F. Meyer* Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
STAR PRIME OBLIGATIONS FUND
FEDERATED INVESTORS TOWER
PITTSBURGH PA 15222-3779
STAR PRIME OBLIGATIONS FUND
CUSIP NO. 854911203 FOR SPECIAL MEETING OF SHAREHOLDERS APRIL 20, 1995
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned shareholders of Star
Prime Obligations Fund hereby appoint C. Grant Anderson, Steven Newcamp, Mason
Douglas and Patricia Conner, or any of them true and lawful attorneys, with
power of substitution of each, to vote all shares of Prime Obligations Fund,
which the undersigned is entitled to vote, at the Special Meeting of
Shareholders to be held on April 20, 1995, at Federated Investors Tower,
Pittsburgh, Pennsylvania, at 1:00 p.m. (Eastern Time) and at any adjournment
thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. The attorneys named
will vote the shares represented by this proxy in accordance with the choices
made on this card. IF NO CHOICE IS INDICATED AS TO ANY ITEM, THIS PROXY WILL BE
VOTED AFFIRMATIVELY ON THAT MATTER.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Special Meeting.
PROPOSAL
1. TO APPROVE OR DISAPPROVE AN AGREEMENT AND PLAN OF REORGANIZATION. PLEASE
RETURN BOTTOM PORTION WITH YOUR VOTE IN THE ENCLOSED ENVELOPE AND RETAIN
THE TOP PORTION.
STAR PRIME OBLIGATIONS FUND PROXY VOTING MAIL-IN STUB
RECORD DATE SHARES
PROPOSAL 1: TO APPROVE OR DISAPPROVE AN AGREEMENT
AND PLAN OF REORGANIZATION
o FOR the Agreement and Plan of
Reorganization
o AGAINST the Agreement and Plan of
Reorganization
o ABSTAIN
Please sign EXACTLY as your name(s) appear above. When signing as attorney,
executor, administrator, guardian, trustee, custodian, etc., please give your
full title as such. If a corporation or partnership, please sign the full name
by an authorized officer or partner. If stock is owned jointly, all owners
should sign.
_______________________________________________________
_______________________________________________________
Signature(s) of Shareholder(s)
Date:___________________________________________________
FEDERATED ADMINISTRATIVE SERVICES
Federated Investors Tower
Pittsburgh, PA 15222-3779
412-288-1900
February 3, 1995
The Trustees of
Star Funds
Federated Investors Tower
Pittsburgh, PA 15222-3779
Gentlemen:
The Star Funds ("Trust") proposes to issue shares of beneficial interest
representing interests in a separate portfolio of securities known as Star
Treasury Fund (such shares of beneficial interest being herein referred to as
"Shares") in connection with the acquisition of the assets of Star Prime
Obligations Fund, a separate portfolio of the Trust, pursuant to the Agreement
and Plan of Reorganization dated February 3, 1995 ("Agreement"), filed as an
exhibit to the registration statement of the Trust filed on Form N-14 (File
No. ) under the Securities Act of 1933 as amended ("N-14
Registration").
As counsel I have participated in the organization of the Trust, its
registration under the Investment Company Act of 1940, the registration of its
securities on Form N-1A under the Securities Act of 1933 and its N-14
Registration. I have examined and am familiar with the written Declaration of
Trust dated January 23, 1989 ("Declaration of Trust"), the Bylaws of the
Trust, the Agreement and such other documents and records deemed relevant. I
have also reviewed questions of law and consulted with counsel thereon as
deemed necessary or appropriate for the purposes of this opinion.
Based upon the foregoing, it is my opinion that:
1. The Trust is duly organized and validly existing pursuant to the
Declaration of Trust.
2. The Shares which are currently being registered by the N-14
Registration may be legally and validly issued in accordance with the
provisions of the Agreement and the Declaration of Trust upon receipt of
consideration sufficient to comply with the provisions in Article III, Section
3, of the Declaration of Trust and subject to compliance with the Securities
Act of 1933, as amended, the Investment Company Act of 1940, as amended, and
applicable state laws regulating the sale of securities. Such Shares, when so
issued, will be fully paid and non-assessable.
The Trustees of
Star Funds
February 3, 1995
Page 2
I consent to your filing this opinion as an exhibit to the N-14
Registration referred to above and to any application or registration
statement filed under the securities laws of any of the state of the United
States.
Very truly yours,
FEDERATED ADMINISTRATIVE SERVICES
By: /s/ C. Grant Anderson
Fund Attorney
/daj
Star Funds
February 3, 1995
1
PC DOCS #
DICKSTEIN, SHAPIRO & MORIN, L.L.P.
2101 L STREET, N.W.
WASHINGTON, D.C. 20037-1526
(202) 785-9700
February 3, 1995
Star Funds, on behalf of its portfolios,
Star Treasury Fund and
Star Prime Obligations Fund
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Dear Ladies and Gentlemen:
We have acted as special counsel in connection with, and you
have requested our opinion concerning the federal income tax consequences of,
a transaction (the "Reorganization") in which all of the assets of Star Prime
Obligations Fund (the "Acquired Fund"), a portfolio of Star Funds, a
Massachusetts business trust (the "Trust"), will be acquired by the Trust, on
behalf of its portfolio, Star Treasury Fund (the "Acquiring Fund"), in
exchange solely for shares of beneficial interest of the Acquiring Fund (the
"Acquiring Fund Shares"). The terms and conditions of this transaction are
set forth in an Agreement and Plan of Reorganization dated February 3, 1995
between the Acquiring Fund and the Acquired Fund (the "Reorganization
Agreement"). This opinion is rendered to you pursuant to paragraph 8.5 of the
Reorganization Agreement, and all terms used herein have the meanings assigned
to them in the Reorganization Agreement.
The Trust is an open-end, management investment company which
qualifies as a regulated investment company described in Section 851(a) of the
Internal Revenue Code of 1986, as amended (the "Code"). Both the Acquiring
Fund and the Acquired Fund are engaged in the business of investing in a
professionally managed portfolio of money market instruments.
On the Closing Date under the Reorganization Agreement, the Acquired
Fund will transfer its entire investment portfolio to the Acquiring Fund. In
exchange, the Acquiring Fund will transfer, to the Acquired Fund, Acquiring
Fund Shares in an amount equal in value to the assets transferred by the
Acquired Fund to the Acquiring Fund. The Acquired Fund will thereupon
liquidate and distribute its Acquiring Fund Shares pro rata to its
shareholders ("Acquired Fund Shareholders").
We have reviewed and relied upon the representations contained in
the Reorganization Agreement and in such other documents and instruments as we
have deemed necessary for the purposes of this opinion, and have reviewed the
applicable provisions of the Code, current regulations and administrative
rules thereunder and pertinent case law.
Based upon the foregoing, and assuming that the Reorganization and
related transactions will take place as described in the Reorganization
Agreement, we are of the opinion that, for federal income tax purposes:
The transfer of all of the Acquired Fund assets in exchange
for the Acquiring Fund Shares and the distribution of the Acquiring Fund
Shares to the Acquired Fund Shareholders in liquidation of the Acquired Fund
will constitute a "reorganization" within the meaning of Section 368(a)(1)(C)
of the Code;
No gain or loss will be recognized by the Acquiring Fund
upon the receipt of the assets of the Acquired Fund solely in exchange for the
Acquiring Fund Shares;
No gain or loss will be recognized by the Acquired Fund
upon the transfer of the Acquired Fund assets to the Acquiring Fund in
exchange for the Acquiring Fund Shares or upon the distribution (whether
actual or constructive) of the Acquiring Fund Shares to Acquired Fund
Shareholders in exchange for their shares of the Acquired Fund;
No gain or loss will be recognized by the Acquired Fund
Shareholders upon the exchange of their Acquired Fund shares for the Acquiring
Fund Shares;
The tax basis of the Acquired Fund assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to the
Acquired Fund immediately prior to the Reorganization;
The tax basis of the Acquiring Fund Shares received by each
of the Acquired Fund Shareholders pursuant to the Reorganization will be the
same as the tax basis of the Acquired Fund shares held by such shareholder
immediately prior to the Reorganization;
The holding period of the assets of the Acquired Fund in
the hands of the Acquiring Fund will include the period during which those
assets were held by the Acquired Fund; and
The holding period of the Acquiring Fund Shares received by
each Acquired Fund Shareholder will include the period during which the
Acquired Fund shares exchanged therefor were held by such shareholder
(provided the Acquired Fund shares were held as capital assets on the date of
the Reorganization).
We hereby consent to the filing of a copy of this opinion with the
Securities and Exchange Commission as an exhibit to the Registration Statement
on Form N-14 filed by the Trust in connection with the Reorganization, and to
the references to this firm and this opinion in the Prospectus/Proxy Statement
which is contained in such Registration Statement.
Very truly yours,
/s/ Dickstein, Shapiro & Morin, L.L.P.
Exhibit 14 (i)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in Form N-14
Registration Statement of the Star Treasury Fund and Star Prime Obligations Fund
of our report dated January 14, 1994, on the financial statements as of November
30, 1993, of the Star Treasury Fund and Star Prime Obligations Fund, included in
or made a part of this registration statement.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
February 3, 1995
Exhibit 14 (ii)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in Form N-14
Registration Statement of the Star Treasury Fund and Star Prime Obligations Fund
of our report dated January 13, 1995, on the financial statements as of November
30, 1994, of the Star Treasury Fund and Star Prime Obligations Fund, included in
or made a part of this registration statement.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
February 3, 1995
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretary of Stary Funds and the
Assistant General Counsel of Federated Investors, and each of them, their
true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for them and in their names, place and
stead, in any and all capacities, to sign any and all documents to be filed
with the Securities and Exchange Commission pursuant to the Securities Act
of 1933, the Securities Exchange Act of 1934 and the Investment Company Act
of 1940, by means of the Securities and Exchange Commission's electronic
disclosure system known as EDGAR; and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to sign and perform each and
every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as each of them might or
could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
SIGNATURES TITLE DATE
/s/ _John F. Donahue_____________ Chairman and Trustee January 16,
1995
John F. Donahue (Chief Executive Officer)
/s/ _Edward C. Gonzales__________ President and Treasurer and Trustee
January 16, 1995
Edward C. Gonzales (Principal Financial and
Accounting Officer)
/s/_Thomas G. Bigley___________ Trustee January 16,
1995
Thomas G. Bigley
/s/ _John T. Conroy, Jr.___________ Trustee
January 16, 1995
John T. Conroy, Jr.
/s/ _William J. Copeland_________ Trustee
January 16, 1995
William J. Copeland
/s/ _James E. Dowd______________ Trustee January 16,
1995
James E. Dowd
SIGNATURES TITLE DATE
/s/ _Lawrence D. Ellis, M.D._________ Trustee
January 16, 1995
Lawrence D. Ellis, M.D.
/s/ _Edward L. Flaherty, Jr._________ Trustee
January 16, 1995
Edward L. Flaherty, Jr.
/s/ _Peter E. Madden__ ____________ Trustee
January 16, 1995
Peter E. Madden
/s/ _Gregor F. Meyer_______________ Trustee
January 16, 1995
Gregor F. Meyer
/s/ _Wesley W. Posvar_____________ Trustee January 16,
1995
Wesley W. Posvar
/s/ _Marjorie P. Smuts______________ Trustee
January 16, 1995
Marjorie P. Smuts
Sworn to and subscribed before me this 16th day of January, 1995
/s/ Marie M. Hamm
Notary Public
Notarial Seal
Marie M. Hamm, Notary Public
Plum Boro, Allegheny County
My Commission Expires September 16, 1996
Member, Pennsylvania Association of Notaries
Rule 24f-2 Notice
STAR FUNDS
(Fund Name)
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
1933 Act No. 33-26915
(i) fiscal period for which notice is filed November 30, 1994
(ii) The number or amount of securities of the
same class or series, if any, which had
been registered under the Securities Act
of 1933, other than pursuant to Rule 24f-2
but which remained unsold at December 1, 1993
the beginning of the Registrant's fiscal
period -0-
(iii) The number or amount of securities, if
any, registered during the fiscal period
of this notice other than pursuant to
Rule 24f-2 -0- -0-
(iv) The number or amount of securities
sold during the fiscal period of this
notice 5,367,796,460
(v) The number or amount of securities sold
during the fiscal period of this notice
in reliance upon registration pursuant
to Rule 24f-2 (see attached Computation
of Fee) 5,367,796,460
WITNESS the due execution hereof this 16th day of January, 1995.
By: /s/C. Grant Anderson
C. Grant Anderson
Assistant Secretary
COMPUTATION OF FEE
1. Actual aggregate sale price of Registrant's
securities sold pursuant to Rule 24f-2 during
the fiscal period for which the 24f-2 notice
is filed (see Section v)................................... $5,591,238,086
2. Reduced by the difference between:
(a) actual aggregate redemption price
of such securities redeemed by the
issuer during the fiscal period for
which the 24f-2 notice is filed........ $5,474,650,951
(b) actual aggregate redemption price
of such redeemed securities
previously applied by the issuer
pursuant to Section 24e(2)(a) for
the fiscal period for which the
24f-2 notice is filed.................. -0- 5,474,650,951
Total amount upon which the fee calculation specified
in Section 6(b) of the Securities Act of 1933 is
based....................................................... $116,587,135
FEE SUBMITTED (1/29 of 1% of Total amount)............... $ 40,203
