STOCK AND
BOND FUND
Star Funds
ANNUAL
REPORT
Dated November 30, 1995
Star U.S. Government Income Fund
Star Strategic Income Fund
The Stellar Fund
Star Relative Value Fund
Star Growth Equity Fund
Star Capital Appreciation Fund
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for the Star Stock and
Bond Funds. For greater efficiency, this report combines information about all
Star Funds over the 12-month period ended November 30, 1995.
Each fund's report begins with an interview with the portfolio manager, which
covers economic and market conditions and their impact on fund performance and
strategy. Following the investment review is a complete list of each fund's
investments and the financial statements.
As you can see by the following fund by fund highlights, the 12-month period
proved to be a favorable one for investors.
STAR U.S. GOVERNMENT INCOME FUND
Managed to pursue income through a diversified portfolio consisting primarily of
U.S. government bonds, the fund was invested in U.S. Treasury Notes, U.S.
government agency securities and investment-grade corporate bonds. This
investment combination rewarded shareholders with $0.60 per share in income over
the 12-month period, while share price grew from $9.24 to $9.98. The fund
delivered a total return of 14.90%, for the year ended November 30, 1995, or
10.83% reflecting the 3.5% sales charge.* The fund's net assets grew to reach
$109.7 million at the end of the period.
STAR STRATEGIC INCOME FUND
The fund's diversified portfolio of income-producing securities was invested in
corporate bonds (32.7%), government agency bonds (23.6%), common stocks (17.7%),
preferred stocks (12.7%), and U.S. Treasury bonds (8.1%). From December 12,
1994, when the fund began operation, through November 30, 1995, the fund paid
dividends totaling $0.67 per share and capital gains totaling $0.04 per share.
The fund's share price reached $10.53 on the last day of the period. Income and
growth in share price resulted in a total return of 12.71%, or 7.36% for the
year ended November 30, 1995, taking into account the fund's 5% contingent
deferred sales charge.* At the end of the period, fund assets stood at $47.5
million.
THE STELLAR FUND
To pursue a high level of total return over the long term, the fund invests in
approximately equal weightings in U.S. stocks, U.S. bonds, international
securities, real estate securities, precious metal securities, and money market
securities. This highly diversified approach produced a total return of 15.67%
for the year ended November 30, 1995, or 10.50% taking into account the sales
charge of 4.5% for Investment Shares and a total return of 15.97% for Trust
Shares.* The fund's share price rose 11% to reach $12.17 on the last day of the
period. Shareholders received dividends totaling $0.35 per share for the
Investment Shares and $0.38 per share for Trust Shares. Capital gains totaled
$0.05 per share. Fund assets reached $113.7 million.
STAR RELATIVE VALUE FUND
The fund's portfolio of stocks pursues a high level of total return through a
portfolio of stocks that appear to be undervalued and offer above-average yields
consistent with reasonable risk. Over the period ended November 30, 1995, the
fund delivered a very strong total return of 35.10%, or 28.97% taking into
account 4.5% the sales charge.* The fund's share price rose significantly,
starting the period at $11.36 and ending the period at $15.02. Shareholders
received total dividends of $0.28 per share. Fund assets increased to $132.0
million.
*Performance quoted represents past performance. Investment return and principal
value will fluctuate, so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
STAR GROWTH EQUITY FUND
High-quality stocks including Boeing, Dow, Microsoft, Bristol Myers Squibb,
General Electric, Disney, Procter & Gamble, Exxon, and McDonalds made up the
fund's holdings. From December 12, 1994, when the fund began operation, through
November 30, 1995, Star Growth Equity Fund delivered a strong total return of
29.44%, or 24.34% taking into account the contingent deferred sales charge of
5%.* The share price rose 27% since the fund began operations, to reach $12.70
at the period's end. Shareholders received a total of $0.21 per share in
dividends. Fund assets reached $48.7 million.
STAR CAPITAL APPRECIATION FUND
Managed to pursue growth over time through a diversified portfolio of stocks,
the fund's portfolio of stocks achieved a total return of 17.35%, or 12.05% for
the year ended November 30, 1995 taking into account the 4.5% sales charge.* The
share price rose from $10.07 on the first day of the period to $11.82 at the
period's end. Shareholders received a total of $0.04 per share in dividends and
$0.04 in capital gains. Fund net assets ended the period at $56.4 million.
We appreciate your participation in the Star Stock and Bond Funds, and we hope
you are pleased with the progress of your investment. We will continue to keep
you up-to-date on the details of your investment on a regular basis through the
highest level of service possible.
Sincerely,
Edward C. Gonzales
Edward C. Gonzales
President
January 15, 1996
*Performance quoted represents past performance. Investment return and principal
value will fluctuate, so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
INVESTMENT REVIEWS
- --------------------------------------------------------------------------------
STAR U.S. GOVERNMENT INCOME FUND
Q During 1995, the bond market rebounded well from a dismal 1994, and turned
in strong performance. Can you comment?
A Bond market returns in 1994 were one of the worst in history. In contrast,
1995 became the mirror image as fixed income market returned with a
vengeance to post the third best investment returns since 1926. Corporate
bonds were the best performing sub-group during the year and were slightly
overweighted in the fund. Treasury bonds were the next best performing
class followed by mortgage backed securities (MBS). While MBS lagged the
overall market last year, the Star U.S. Government Income Fund's holdings
were shifted towards more stable, better performing securities. These
securities offer no credit risk+ and currently have substantially better
yields than Treasury securities.
Q In this environment, how has the fund performed?
A For all of 1995, the Star U.S. Government Income Fund achieved a total
return of 14.90% or 10.83% taking into account the sales charge. Emphasis
on corporate bonds helped performance as several issuers' credit ratings
improved during the year. Likewise, our Treasury allocation focused on
undervalued issues in the 20-year sector to help improve returns. Mortgage
related securities subtracted from performance. Overall, shareholders that
were able to remain with the fund after a tough market last year have
enjoyed much success in 1995.
Q Given the current interest rate environment, have you made any significant
changes and why?
A During 1995, mortgage related securities significantly lagged the
performance of Treasury securities. Our outlook of yields remaining in a
narrow range for the balance of 1996 should benefit the mortgage sector
tremendously and for that reason that sector has become a major focus for
the Star U.S. Government Income Fund. We are maintaining our MBS
allocation of 25% of assets to improve the fund's income and investment
return profile. Within the corporate bond holdings (26% of assets), our
allocation has shifted away from cyclical industries towards companies
less tied to the business cycle such as healthcare providers and energy
firms. While we do not anticipate a recession for 1996, corporate earnings
could come under pressure and corporate bonds investors have little
cushion for disappointment. Thus, we are focusing on issuers in less
cyclical businesses with strong debt servicing capabilities.
Q As we enter 1996, do you see a continued positive interest rate environment
for bonds?
A Yes, but more subdued than 1995. The economic outlook has become more mixed
in recent weeks. While some sectors have shown renewed strength such as
automobile and housing sales, others have languished. Slow export growth,
weak retail sales, and an unintended inventory bulge are specific problem
areas. In addition, the economic indicators we analyze have peaked, and
have weakened slightly in the past month. With our economic outlook now
anticipating mixed results and sluggish growth, long bond yields should
remain within a narrow range of 5.75% to 6.25% range for the next six
months.
+These securities are subject to market risk and therefore, fluctuate in value.
STAR STRATEGIC INCOME FUND
Q Compared to the previous year, 1995 was an extremely favorable year for the
bond market. Can you comment?
A Bond market returns in 1994 were one of the worst in history. In contrast,
1995 became the mirror image as fixed income market returned with a
vengeance to post the third best investment returns since 1926. Corporate
bonds were the best performing sub-group and were slightly overweighted in
the fund. In particular, our emphasis focused on the finance, energy,
chemical, and healthcare groups as a source of relatively high yields and
improving credit situations. Treasury bonds were the next best performing
class followed by mortgage backed securities (MBS). While MBS lagged the
overall market last year, the Star Strategic Income Fund's holdings were
shifted towards more stable, better performing securities. These
securities offer no credit risk and currently have substantially better
yields than Treasury securities.+
Q Star Strategic Income Fund is a multi-asset fund. . . . How did this
combination perform for shareholders?
A We are very excited about the fund's results in 1995 as several objectives
were met. The fund has grown nearly five fold since inception. Income
distributions expanded throughout the year, despite falling yields. Risk
levels were kept manageable through a high level of asset diversification
helping to keep risk levels down for shareholders. And perhaps most
importantly, the fund managed to accomplish all of these feats without the
use of high risk strategies such as investments in emerging markets or
"junk" (non-investment grade) bonds.
Q On November 30, 1995, how were the fund's assets allocated among different
incomeproducing investments, and why?
A Being a multi-asset fund, the Star Strategic Income Fund allocates assets
over five broad classifications. Beginning with the "core" holdings of
Treasury and corporate bonds, this group totaled 40.8% of net assets on
November 30, 1995. Emphasis is placed on medium grade corporate bonds with
call option features to enhance yields. Next, mortgage-backed securities
comprised 23.6% as they offer no credit risk and historically attractive
yields. We especially favor securities that have been through several
prepayment opportunities, yet remain stable. The third class, Real Estate
Investment Trusts (REIT's), make-up 17.3% of net assets. The fund strongly
favors apartment and healthcare facilities, with the remaining assets
equally invested in hotel, office, and retail oriented trusts. Not
surprising, we tend to focus on higher yielding REIT's with strong
operations and management. In terms of equity exposure, the fund held
13.2% in a combination of preferred, convertible, and high yielding common
stocks. Lastly, international holdings represent 6.0% of assets. Since
ADR's offer relatively low yields, we focus on dollar-denominated bonds
issued by foreign entities. Together, these five broad asset types
interact in such a way as to pursue high levels of income, while
controlling risk of over exposure to any one investment class.
+These securities are subject to market risk and therefore, fluctuate in value.
THE STELLAR FUND
Q During the period, how did The Stellar Fund's multi-asset approach perform
for shareholders?
A The fund performed very well for shareholders during the last year. The
fund had a total return of 15.67% or 10.50% taking into account the sales
charge of 4.5% for Investment Shares and a total return of 15.97%* for
Trust Shares which was roughly in line with a mix of the S&P 500, the
Lehman Government/Corporate, the EAFE, the NAREIT, and the cash indices.**
The fund has performed positively, yet with relatively low volatility. The
fund's policy is to attempt to minimize overall portfolio risk by limiting
investments in any one security category. Again, by being exposed to a
wide variety of asset classes, the Fund pursues lower volatility rather
than being invested in just one or two classes. Shareholders also
benefited as the fund invested more funds into the very weak international
markets early in the year. By being in The Stellar Fund investors will
not make the knee jerk reactions of selling weak performing assets at the
wrong time. Diversification is the key.
Q The U.S. stock market soared to new heights during the period. How did the
fund's stock holdings perform?
A The domestic equity holdings performed about in line with the market for
the year. Early in the year, the fund was a little conservative and did not
invest as heavily in technology as the market index. This hurt performance
early on. However, as we became more constructive on interest rates, the
fund was moved heavier into technology and particularly into financial
stocks. This proved to be a real positive as financial stocks were one of
the best performing sectors for the year.
Q With 1994's dismal performance behind it, the U.S. bond market recovered
admirably during 1995. Can you comment on the fund's domestic bond
holdings?
A 1994 was one of the worst bond markets in history. 1995 became the mirror
image as fixed income market returned with a vengeance to post the third
best investment returns since 1926. Corporate bonds were the best
performing sub-group during the year and were slightly overweighted in The
Stellar Fund. In particular, our emphasis focused on the finance, energy,
chemical, and healthcare groups as a source of relatively high yields and
improving credit situations. Treasury bonds were the next best performing
class followed by mortgage backed securities (MBS). While MBS lagged the
overall market last year, Stellar's holdings were shifted towards more
stable, better performing securities. These securities offer no credit
risk+ and currently have substantially better yields than Treasury
securities.
Q The international stock and bond markets performed very differently from
one another, with bonds significantly outperforming a very weak stock
market. How did the fund's international stock and bond holdings perform?
A The Stellar Fund did not hold any international fixed income securities
during 1995 but it did, however, hold a wide variety of international
equities. One fifth of The Stellar Fund is devoted to the international
markets and the fund participated in these markets primarily through the
use of ADRs. Within the international equity markets there was wide
divergence in performance. The best performing nation of the developed
economies was the Swiss market which recorded a 42% increase after
adjustment for the strong Swiss currency. The weakest market was the Milan
exchange which fell 2.48%. One interesting situation involved the Mexican
Bolsa which experienced a 15.65% increase for the year. However, due to a
crisis in the peso, the conversion to dollar performance noted a decline
of almost 24% for the year.
*Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
**Indexes are unmanaged and investments may not be made in an index.
+These securities are subject to market risk and therefore, fluctuate in value.
Q Which regions of the world seem to show the most opportunity, and how have
you structured the fund's holdings to respond? Do you anticipate that
international stocks are poised for a recovery in 1996?
A We would expect that the international markets will have greater potential
for gains than the U.S. market in 1996. Economic expansion, reasonable
valuations and some key, notable recovery sectors (Japan, Mexico and
Canada) could pace the international bourses. Indeed, the performance of
the Dow World Index+ this month has already equaled the increase for the
prior 11 months. While we anticipate that the dollar will not collapse
(thus favoring foreign situations) we do not think that it is likely to
experience a dramatic recovery either. We have our major emphasis on
Europe (63% of the portfolio) with a wide range of investment exposure to
many different countries. Great Britain is our largest single country
exposure, with 23%. We have, however, a strong concentration of securities
in the Nordic countries. We have recently been increasing our exposure to
Japan. We are, however, still significantly underweighting the EAFE
standard.
Q How did the fund's real estate holdings perform?
A During a year which witnessed very strong bond and stock markets, REIT
securities underperformed. NAREIT's one year return number was 17.28%. The
underperformance was mainly attributable to the weakness in the retail and
residential sectors. These sectors comprise nearly 60% of the entire REIT
market. The retail sector was especially weak, returning less than 0.5%
for the year. Residential fared much better, but still only managed to
return 5.66%. The real estate portion of The Stellar Fund had a slightly
over-weighted position in both of these areas. This portfolio mix resulted
in weaker performance for the REIT portion of The Stellar Fund.
Q While The Stellar Fund invests approximately equal amounts in five key
financial markets, you have the flexibility to adjust, or "weight," the
fund's holdings according to market conditions. Do you anticipate making
any significant weighting changes in 1996?
A While the prospectus does allow asset categories to vary between 15% and
25% of the fund total, we generally keep the categories very close to the
20% norm. Again, the fund is based upon the theory of total return within
the confines of diversification leading to lower volatility. By making
significant sector moves away from the norm, the volatility theory could be
mitigated. Therefore, we will likely stick close to the norm in each of
the five asset categories.
Q During the past year, the performance of the key financial
markets--particularly with regard to U.S. stock and international
stocks--supports the concept of diversifying one's investments across
different financial markets. As we enter 1996, can you comment on the
advantages of the fund's multi-asset approach?
A As noted earlier, there was a wide divergence in stock market performance
between the various countries of the world. It is exceedingly difficult to
anticipate the events which will create a major market opportunity or
vulnerability in today's economic and political environment. Two countries
which had great promise--Japan with its worldwide marketing and financial
muscle and Mexico with the recent NAFTA trade agreement--had enormous
opportunities for their markets to experience gains. Both, however, had
other problems that surfaced during the year which stifled these
opportunities. Going into 1996, there is a different set of circumstances
that face the world markets. We can be certain that it will be the
unforeseen situations which will have the greatest impact on the creation
of market value from country to country. In uncertainty, diversification
is the most formidable weapon.
+Indexes are unmanaged and investments may not be made in an index.
STAR RELATIVE VALUE FUND
Q The stock market turned in extremely strong performance as it soared to
record levels during 1995. In this positive environment, how did Star
Relative Value Fund perform relative to the overall stock market?
A The Star Relative Value Fund had outstanding investment performance in the
fiscal year ended November 30, 1995 with a no-load, net asset value total
return of +35.10% (+28.97% load basis) compared to the Lipper Growth Index
return of +32.68% and +31.30% for the Lipper Growth and Income Index.* The
Standard and Poors 500 Index+ had a return of +36.98% for the same period.*
Q What particular strategies accounted for such strong performance?
A During the fiscal year ended November 30, 1995 the Star Relative Value Fund
maintained minimal levels of cash allowing the fund to be fully invested in
equities as the stock market rallied to record highs throughout the year.
Strong individual stock performance from A T & T Corporation and ITT
Corporation which both announced restructuring plans in 1995, Intel which
doubled in value, and Eastman Kodak, General Electric, and Bristol-Myers
Squibb all up over 40% in total return, contributed to the strong fund
performance.
Q With such an increase in stock prices, in what sectors of the stock market
do you see opportunities for continued value?
A We continue to see opportunities in 1996 from the capital goods sector with
an emphasis on both defense and technology stocks. We also see the
financial sector, especially insurance and financial services related
companies as an area of the market that will maintain good earnings as the
yield curve steepens and the industry continues its process of
consolidation.
Q What is your outlook for stocks as we leave what has been a spectacular
year?
A Our belief is that the economy will continue to grow but at a much slower
pace in 1996. Low inflation and mid-single digit earnings growth leads us
to believe that the market will be rather flat in the year ahead. Emphasis
will be placed on sector rotation and security selection. Companies will be
attempting to increase shareholder value through increased cash dividends
and/or stock repurchase programs.
*This index is unmanaged and actual investments may not be made in an index.
Performance quoted represents past performance. Investment return and principal
value will fluctuate, so that an investor's shares, when redeemed, may be worth
+more or less than their original cost.
STAR GROWTH EQUITY FUND
Q In an environment that saw stocks soar, how did Star Growth Equity Fund
perform since it began operation on December 12, 1994 through November 30,
1995?
A The fund has moved up nicely since inception, even though the fund was
invested in a fairly conservative manner early in the year. The fund's
total return was 29.44% or 24.34% taking into account the contingent
deferred sales charge of 5% during this period, while the S&P 500 rose
38%.* We envisioned an environment where the economy would continue to
show relatively strong growth with controlled inflation. We believed that
the economic growth would be strong enough that the Federal Reserve (the
"Fed") would tighten rates early in the year before moving to a more
accommodative policy late in the year. Therefore, the fund maintained a
fair amount of cash early in the year and invested in more defensive
groups, such as energy. As spring progressed and the Fed began easing
rates, we slowly worked cash back into the market and became more
aggressive. This helped returns immensely in the last quarter of the year.
Q What were the fund's best performing sectors?
A The market was led early in the year by technology stocks. While this was
an area where we were not overweighted, the securities in the sector did
very well. The other strong area for the market and the fund was in
financial stocks where we were overweighted. The bank and insurance stocks
moved higher during the year as interest rates dropped and more financial
mergers took place.
Q Do you see continued opportunities for growth in these sectors?
A We still like the financial sector of the market. The economic slowdown
that is occurring should lead to stable or declining rates which is a
positive for this group. We also expect some renewed restructuring in the
insurance stocks, which should propel those stocks higher during the year.
Technology will continue to be a mixed bag and will be a group where stock
selection will be very important going forward.
Q As we close a record setting year for stocks, what is your outlook for
1996?
A The market will be faced with slowing earnings growth as 1996 progresses.
Year over year growth rates should slow to the mid single digit levels for
the year. This is substantially below the rates that have been generated
over the past few years. Investors will have to balance this against what
should be flat to lower interest rates which is a positive for the
price/earnings ratio. Further, clouding the picture will be the political
landscape as Americans go to the polls to elect a President and Congress.
Therefore, overall we think the market will move higher but it will be a
year with higher volatility than in the past. It should be a year where
investors will have to be nimble in picking their stocks. Our other thesis
is that as the economy and earnings slow, we should see a rebound by
small stocks. Therefore, we will look to lower our market capitalization's
somewhat.
*This index is unmanaged and investments may not be made in an index.
STAR CAPITAL APPRECIATION FUND
Q How did Star Capital Appreciation Fund perform during the period, in such a
highly favorable environment for stocks?
A The Star Capital Appreciation Fund posted a positive return number of
17.35% or 12.05% taking into account the sales charge for the year ending
November 1995.*
Q What particular strategies accounted for its performance?
A The fund had been underweighted in the technology sector for most of the
first half of 1995. The subsequent portfolio purchases to become market
weighted in technology occurred unfortunately at the top of the technology
market cycle. Going forward, the diversification of the fund and adherence
to sector weights will help to improve performance.
Q Where do you see continued opportunities for growth in such a strong
market?
A Capital Goods, Transportation, Consumer Staples, Health Care and
Miscellaneous sectors are currently the areas we feel we provide the
greatest opportunities for growth in 1996. The areas where we believe that
earnings comparisons will be the toughest are in the Basic Industry and
Consumer Cyclical sectors.
Q What is your outlook for growth stocks as we enter 1996?
A We continue to believe that as the economy slows, earnings growth potential
will become much more pronounced in the mid capitalization sector of the
market. It is this strong performance on the earnings side that will propel
these stocks toward strong relative performance. Therefore, it is our
belief that mid cap stocks will perform very well in 1996.
*Performance quoted represents past performance. Investment return and principal
value will fluctuate, so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
INDEX DEFINITIONS
EAFE (Europe, Australia and Far East Index) is a market capitalization weighted
foreign securities index which is widely used to measure the performance of
European, Australian, New Zealand and Far Eastern stock markets. The index
covers approximately 1,020 companies drawn from 18 countries in the above
regions.
Lipper Growth & Income Fund Index is an index of the net asset value weighted
performance, adjusted for capital gains distributions and income dividends, of
the 30 largest growth & income funds provided by Lipper Analytical Services,
Inc. Lipper calculations do not include sales charges.
Lipper Growth Index is an index of the net asset value weighted performance,
adjusted for capital gains distributions and income dividends, of the 30 largest
growth funds provided by Lipper Analytical Services, Inc. Lipper calculations do
not include sales charges.
Lipper Analytical Services, Inc., ranks funds in various fund categories by
making comparative calculations using total return.
Lehman Brothers Government/Corporate Total Index is comprised of approximately
5,000 issues which include non-convertible bonds publicly issued by the U.S.
government or its agencies; corporate bonds guaranteed by the U.S. government
and quasi-federal corporations; and publicly issued, fixed-rate, non-convertible
domestic bonds of companies in industry, public utilities, and finance.
Standard & Poor's Daily Stock Price Index of 500 Common Stocks is a composite
index of common stocks in industry, transportation, and financial and public
utility companies.
NAREIT (National Association of Real Estate Investment Trusts) is an unmanaged
index of real estate investment trusts denoting general market performance as
monitored by the National Association of Real Estate Investment Trusts.
STAR U.S. GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN STAR U.S. GOVERNMENT INCOME FUND
THE GRAPH BELOW ILLUSTRATES THE HYPOTHETICAL INVESTMENT OF $10,000 IN THE
STAR U.S. GOVERNMENT FUND (THE "FUND") FROM JANUARY 5, 1993 (START OF
PERFORMANCE) TO NOVEMBER 30, 1995 COMPARED TO THE LEHMAN GOVERNMENT CORPORATE
TOTAL INDEX.
[CHART APPEARS HERE]
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund after deducting the
maximum sales charge of 3.50% ($10,000 investment minus $350 sales charge =
$9,650). The Fund's performance assumes the reinvestment of all dividends and
distributions. The Lehman Government Corporate Total Index has been adjusted to
reflect reinvestment of dividends on securities in the index. This index is
unmanaged.
The Lehman Government Corporate Total Index is not adjusted to reflect sales
loads, expenses, or other fees that the SEC requires to be reflected in the
Fund's performance.
STAR STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN STAR STRATEGIC INCOME FUND
THE GRAPH BELOW ILLUSTRATES THE HYPOTHETICAL INVESTMENT OF $10,000 IN THE
STAR STRATEGIC INCOME FUND (THE "FUND") FROM DECEMBER 12, 1994 (START OF
PERFORMANCE) TO NOVEMBER 30, 1995 COMPARED TO THE LEHMAN GOVERNMENT CORPORATE
TOTAL INDEX.
[CHART APPEARS HERE]
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a 5.00% contingent deferred sales charge on any redemption
less than one year from the purchase date. The Fund's performance assumes the
reinvestment of all dividends and distributions. The Lehman Government
Corporate Total Index has been adjusted to reflect reinvestment of dividends on
securities in the index. This index is unmanaged.
The Lehman Government Corporate Total Index is not adjusted to reflect sales
loads, expenses, or other fees that the SEC requires to be reflected in the
Fund's performance.
THE STELLAR FUND--INVESTMENT SHARES
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN THE STELLAR FUND--INVESTMENT SHARES
THE GRAPH BELOW ILLUSTRATES THE HYPOTHETICAL INVESTMENT OF $10,000 IN THE
STELLAR FUND-- INVESTMENT SHARES (THE "FUND") FROM OCTOBER 18, 1991 (START OF
PERFORMANCE) TO NOVEMBER 30, 1995 COMPARED TO THE STANDARD & POOR'S 500/LEHMAN
GOVERNMENT CORPORATE TOTAL INDEX.
[CHART APPEARS HERE]
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund after deducting the
maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge =
$9,550). The Fund's performance assumes the reinvestment of all dividends and
distributions. The Lehman Government Corporate Total Index has been adjusted to
reflect reinvestment of dividends on securities in the index. This index is
unmanaged.
The Standard & Poor's 500/Lehman Government Corporate Total Index is not
adjusted to reflect sales loads, expenses, or other fees that the SEC requires
to be reflected in the Fund's performance.
THE STELLAR FUND--TRUST SHARES
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN THE STELLAR FUND--TRUST SHARES
THE GRAPH BELOW ILLUSTRATES THE HYPOTHETICAL INVESTMENT OF $10,000 IN THE
STELLAR FUND--TRUST SHARES (THE "FUND") FROM APRIL 6, 1994 (START OF
PERFORMANCE) TO NOVEMBER 30, 1995 COMPARED TO THE STANDARD & POOR'S 500/LEHMAN
GOVERNMENT CORPORATE TOTAL INDEX.
[CHART APPEARS HERE]
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*The Fund's performance assumes the reinvestment of all dividends and
distributions. The Standard & Poor's 500/Lehman Government Corporate Total
Index has been adjusted to reflect reinvestment of all dividends on securities
in the index. This index is unmanaged.
The Standard & Poor's 500/Lehman Government Corporate Total Index is not
adjusted to reflect sales loads, expenses, or other fees that the SEC requires
to be reflected in the Fund's performance.
STAR RELATIVE VALUE FUND
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN STAR RELATIVE FUND
THE GRAPH BELOW ILLUSTRATES THE HYPOTHETICAL INVESTMENT OF $10,000 IN THE
STAR RELATIVE VALUE FUND (THE "FUND") FROM JUNE 4, 1991 (START OF PERFORMANCE)
TO NOVEMBER 30, 1995 COMPARED TO THE STANDARD & POOR'S 500 INDEX.
[CHART APPEARS HERE]
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund after deducting the
maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge =
$9,550). The Fund's performance assumes the reinvestment of all dividends and
distributions. The Standard & Poor's 500 Index has been adjusted to reflect
reinvestment of dividends on securities in the index. This index is unmanaged.
The Standard & Poor's 500 Index is not adjusted to reflect sales loads,
expenses, or other fees that the SEC requires to be reflected in the Fund's
performance.
STAR GROWTH EQUITY FUND
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN STAR GROWTH EQUITY FUND
THE GRAPH BELOW ILLUSTRATES THE HYPOTHETICAL INVESTMENT OF $10,000 IN THE
STAR GROWTH EQUITY FUND (THE "FUND") FROM DECEMBER 12, 1994 (START OF
PERFORMANCE) TO NOVEMBER 30, 1995 COMPARED TO THE STANDARD & POOR'S 500 INDEX.
[CHART APPEARS HERE]
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a 5.00% contingent deferred sales charge on any redemption
less than one year from the purchase date. The Fund's performance assumes the
reinvestment of all dividends and distributions. The Standard & Poor's 500
Index has been adjusted to reflect reinvestment of dividends on securities in
the index. This index is unmanaged.
The Standard & Poor's 500 Index is not adjusted to reflect sales loads,
expenses, or other fees that the SEC requires to be reflected in the Fund's
performance.
STAR CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN STAR CAPITAL APPRECIATION FUND
THE GRAPH BELOW ILLUSTRATES THE HYPOTHETICAL INVESTMENT OF $10,000 IN THE
STAR CAPITAL APPRECIATION FUND (THE "FUND") FROM JUNE 13, 1994 (START OF
PERFORMANCE) TO NOVEMBER 30, 1995 COMPARED TO THE S&P MIDCAP 400 INDEX.
[CHART APPEARS HERE]
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY
BE WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment $10,000 in the Fund after deducting the
maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge =
$9,550). The Fund's performance assumes the reinvestment of all dividends and
distributions. The S&P Midcap 400 Index has been adjusted to reflect
reinvestment of dividends on securities in the index.
The S&P Midcap 400 Index is not adjusted to reflect sales loads, expenses, or
other fees that the SEC requires to be reflected in the Fund's performance.
STAR U.S. GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- --------------
CORPORATE BONDS--26.1%
- -------------------------------------------------------------------------------------------------
BEVERAGE & TOBACCO--1.1%
----------------------------------------------------------------------------------
$ 1,100,000 Philip Morris Cos, Inc., 9.75%, 5/1/1997 $ 1,157,739
---------------------------------------------------------------------------------- --------------
CHEMICALS--1.7%
----------------------------------------------------------------------------------
1,750,000 Dow Chemical Co., 7.60%, 1/2/2002 1,850,555
---------------------------------------------------------------------------------- --------------
ELECTRONIC TECHNOLOGY--0.5%
----------------------------------------------------------------------------------
500,000 Philips Electric, 6.75%, 8/15/2003 511,475
---------------------------------------------------------------------------------- --------------
ENERGY--3.1%
----------------------------------------------------------------------------------
3,250,000 Enron Corp., 7.125%, 5/15/2007 3,381,690
---------------------------------------------------------------------------------- --------------
FINANCE--5.2%
----------------------------------------------------------------------------------
750,000 Citicorp, 8.625%, 12/1/2002 847,935
----------------------------------------------------------------------------------
150,000 Ford Motor Credit Corp., 6.1875%, 7/19/1996, LIBOR Floater 149,987
----------------------------------------------------------------------------------
2,300,000 General Electric Capital Corp., 7.98%, 12/15/2007 2,346,644
----------------------------------------------------------------------------------
250,000 General Electric Capital Corp., 8.75%, 11/26/1996 257,113
----------------------------------------------------------------------------------
1,750,000 International Lease Financing Co., 6.25%, 10/15/2000 1,771,053
----------------------------------------------------------------------------------
250,000 International Lease Financing Co., 8.375%, 12/15/2004 281,480
---------------------------------------------------------------------------------- --------------
Total 5,654,212
---------------------------------------------------------------------------------- --------------
FOOD & BEVERAGE--0.5%
----------------------------------------------------------------------------------
500,000 McDonalds Corp., 8.375%, 10/29/1999 544,290
---------------------------------------------------------------------------------- --------------
HEALTHCARE--1.9%
----------------------------------------------------------------------------------
500,000 Columbia HCA Healthcare Co., 6.91%, 6/15/2005 516,825
----------------------------------------------------------------------------------
500,000 Columbia Healthcare Corp., 6.125%, 12/15/2000 501,630
----------------------------------------------------------------------------------
1,000,000 Johnson & Johnson Co., 8.00%, 9/1/1998 1,016,340
---------------------------------------------------------------------------------- --------------
Total 2,034,795
---------------------------------------------------------------------------------- --------------
HOUSEHOLD PRODUCTS--1.0%
----------------------------------------------------------------------------------
1,000,000 Procter & Gamble Co., 7.375%, 3/1/2023 1,058,910
---------------------------------------------------------------------------------- --------------
INSURANCE--1.3%
----------------------------------------------------------------------------------
1,250,000 Ohio National Life Insurance Co., 8.875%, 7/15/2004 1,407,538
---------------------------------------------------------------------------------- --------------
OIL--2.1%
----------------------------------------------------------------------------------
1,000,000 Ashland Oil, Inc., 7.90%, 8/5/2006 1,097,450
----------------------------------------------------------------------------------
1,100,000 Chevron Capital U S A, Inc., 7.45%, 8/15/2004 1,178,375
---------------------------------------------------------------------------------- --------------
Total 2,275,825
---------------------------------------------------------------------------------- --------------
PRODUCER MANUFACTURING--1.3%
----------------------------------------------------------------------------------
1,000,000 Alcan Aluminum Corp., 7.25%, 12/15/1999 1,044,410
----------------------------------------------------------------------------------
400,000 Alcan Aluminum Ltd., 9.20%, 3/15/2001 425,992
---------------------------------------------------------------------------------- --------------
Total 1,470,402
---------------------------------------------------------------------------------- --------------
TELECOMMUNICATIONS--1.0%
----------------------------------------------------------------------------------
300,000 Pacific Telephone & Telegraph Co., 7.25%, 2/1/2008 304,662
----------------------------------------------------------------------------------
</TABLE>
STAR U.S. GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- --------------
CORPORATE BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--CONTINUED
----------------------------------------------------------------------------------
$ 750,000 Pacific Telephone & Telegraph Co., 7.80%, 3/1/2007 $ 765,413
---------------------------------------------------------------------------------- --------------
Total 1,070,075
---------------------------------------------------------------------------------- --------------
UTILITIES-ELECTRIC--5.7%
----------------------------------------------------------------------------------
100,000 Alabama Power Co., 8.75%, 12/1/2021 106,646
----------------------------------------------------------------------------------
1,000,000 Cincinnati Gas & Electric Co., 8.95%, 12/15/2021 1,083,200
----------------------------------------------------------------------------------
2,000,000 Duke Power Co., 7.41% Medium Term Note, 2/10/2004, 2,077,880
----------------------------------------------------------------------------------
3,000,000 Georgia Power Co., 6.625%, 4/1/2003 2,982,570
---------------------------------------------------------------------------------- --------------
Total 6,250,296
---------------------------------------------------------------------------------- --------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $28,112,894) 28,667,802
---------------------------------------------------------------------------------- --------------
GOVERNMENT AGENCIES--25.8%
- -------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--3.4%
----------------------------------------------------------------------------------
447,255 6.00%, 8/1/2013 435,655
----------------------------------------------------------------------------------
2,738,847 8.50%, 6/1/2024 2,862,917
----------------------------------------------------------------------------------
435,079 9.00%, 5/1/2021 457,507
---------------------------------------------------------------------------------- --------------
Total 3,756,079
---------------------------------------------------------------------------------- --------------
FEDERAL HOME LOAN MORTGAGE CORPORATION--8.6%
----------------------------------------------------------------------------------
2,000,000 4.48%, 10/4/1996 1,996,900
----------------------------------------------------------------------------------
2,500,000 7.00%, 9/17/2031 2,478,125
----------------------------------------------------------------------------------
1,000,000 7.83%, 8/11/2004 1,029,060
----------------------------------------------------------------------------------
2,000,000 PC Gtd., 7.00%, 12/15/2019 2,048,740
----------------------------------------------------------------------------------
1,000,000 PC Gtd., 7.00%, 5/15/2019 1,003,160
----------------------------------------------------------------------------------
354,558 PC Gtd., 7.50%, 8/15/2016 355,362
----------------------------------------------------------------------------------
500,000 PC Gtd., 8.00%, 7/15/2020 513,425
---------------------------------------------------------------------------------- --------------
Total 9,424,772
---------------------------------------------------------------------------------- --------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--10.6%
----------------------------------------------------------------------------------
428,840 5.00%, 11/25/2006, REMIC 426,409
----------------------------------------------------------------------------------
1,750,000 7.00%, 3/17/2035, REMIC 1,751,400
----------------------------------------------------------------------------------
3,000,000 7.00%, 7/25/2007, REMIC 3,069,930
----------------------------------------------------------------------------------
1,500,000 7.25%, 1/25/2019, REMIC 1,508,985
----------------------------------------------------------------------------------
4,042,000 7.25%, 1/17/2021, REMIC 4,234,965
----------------------------------------------------------------------------------
500,000 8.40%, 8/25/2019, REMIC 537,795
---------------------------------------------------------------------------------- --------------
Total 11,529,484
---------------------------------------------------------------------------------- --------------
GOVERNMENT NATIONAL MORTGAGE ASSOC.--2.3%
----------------------------------------------------------------------------------
2,500,000 Government National Mortgage Association Gtd, 7.00%, 6/16/2017, REMIC 2,574,450
---------------------------------------------------------------------------------- --------------
STUDENT LOAN MARKETING ASSOCIATION--0.9%
----------------------------------------------------------------------------------
1,000,000 5.70%, 8/2/1999 994,440
---------------------------------------------------------------------------------- --------------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $27,706,851) 28,279,225
---------------------------------------------------------------------------------- --------------
</TABLE>
STAR U.S. GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- --------------
U.S. TREASURY--44.7%
- -------------------------------------------------------------------------------------------------
TREASURY BONDS--21.3%
----------------------------------------------------------------------------------
$ 1,250,000 6.875%, 8/15/2025 $ 1,376,113
----------------------------------------------------------------------------------
3,000,000 7.25%, 5/15/2016 3,357,360
----------------------------------------------------------------------------------
1,250,000 7.625%, 2/15/2007 1,364,675
----------------------------------------------------------------------------------
400,000 7.625%, 2/15/2025 476,164
----------------------------------------------------------------------------------
250,000 7.875%, 2/15/2021 300,693
----------------------------------------------------------------------------------
11,800,000 8.125%, 8/15/2019 14,509,630
----------------------------------------------------------------------------------
500,000 8.75%, 5/15/2020 654,850
----------------------------------------------------------------------------------
1,000,000 8.75%, 8/15/2020 1,310,840
---------------------------------------------------------------------------------- --------------
Total 23,350,325
---------------------------------------------------------------------------------- --------------
TREASURY NOTES--23.4%
----------------------------------------------------------------------------------
5,500,000 6.25%, 5/31/2000 5,656,310
----------------------------------------------------------------------------------
1,000,000 6.25%, 8/31/2000 1,028,760
----------------------------------------------------------------------------------
1,500,000 6.375%, 8/15/2002 1,561,485
----------------------------------------------------------------------------------
4,400,000 6.75%, 5/31/1999 4,574,812
----------------------------------------------------------------------------------
1,000,000 6.875%, 3/31/1997 1,019,130
----------------------------------------------------------------------------------
3,500,000 7.375%, 5/15/1996 3,529,890
----------------------------------------------------------------------------------
3,000,000 7.50%, 12/31/1996 3,066,660
----------------------------------------------------------------------------------
4,900,000 7.75%, 11/30/1999 5,287,247
---------------------------------------------------------------------------------- --------------
Total 25,724,294
---------------------------------------------------------------------------------- --------------
TOTAL U.S. TREASURY (IDENTIFIED COST $47,096,689) 49,074,619
---------------------------------------------------------------------------------- --------------
(A) REPURCHASE AGREEMENT--4.3%
- -------------------------------------------------------------------------------------------------
4,707,000 Donaldson, Lufkin, & Jenrette Securities Corp., 5.875% dated
11/30/1995, due 12/1/1995 (at amortized cost) 4,707,000
---------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $107,623,434) (B) $ 110,728,646
---------------------------------------------------------------------------------- --------------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $107,750,254.
The net unrealized appreciation of investments on a federal tax basis
amounts to $2,978,392 which is comprised of $3,232,150 appreciation and
$253,758 depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($109,666,445) at November 30, 1995.
The following acronyms are used throughout this portfolio:
GTD--Guaranty
LIBOR--London Interbank Offered Rate
PC--Participation Certificate
REMIC--Real Estate Mortgage Investment Conduit
(See Notes which are an integral part of the Financial Statements)
STAR U.S. GOVERNMENT INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Total investments in securities, at value
(identified cost $107,623,434 and tax cost $107,750,254) $ 110,728,646
- -------------------------------------------------------------------------------------------------
Cash 1,246
- -------------------------------------------------------------------------------------------------
Income receivable 1,334,185
- -------------------------------------------------------------------------------------------------
Receivable for shares sold 276,923
- -------------------------------------------------------------------------------------------------
Deferred expenses 15,042
- ------------------------------------------------------------------------------------------------- --------------
Total assets 112,356,042
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable for investments purchased $ 2,199,343
- -----------------------------------------------------------------------------------
Payable for shares redeemed 335,237
- -----------------------------------------------------------------------------------
Income distribution payable 131,866
- -----------------------------------------------------------------------------------
Accrued expenses 23,151
- ----------------------------------------------------------------------------------- ------------
Total liabilities 2,689,597
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 10,986,487 shares outstanding $ 109,666,445
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS CONSISTS OF:
- -------------------------------------------------------------------------------------------------
Paid in capital $ 108,120,296
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 3,105,212
- -------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (1,559,063)
- ------------------------------------------------------------------------------------------------- --------------
Total Net Assets $ 109,666,445
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE AND REDEMPTION PROCEEDS PER SHARE:
($109,666,445 / 10,986,487 shares outstanding) $9.98
- ------------------------------------------------------------------------------------------------- --------------
Offering Price Per Share: (100/96.50 of $9.98)* $10.34
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
*See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
]STAR U.S. GOVERNMENT INCOME FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest $ 7,079,778
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee $ 594,238
- ---------------------------------------------------------------------------------------
Administrative personnel and services fee 109,087
- ---------------------------------------------------------------------------------------
Custodian fees 26,312
- ---------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 33,583
- ---------------------------------------------------------------------------------------
Directors'/Trustees' fees 2,482
- ---------------------------------------------------------------------------------------
Auditing fees 16,741
- ---------------------------------------------------------------------------------------
Legal fees 980
- ---------------------------------------------------------------------------------------
Portfolio accounting fees 51,548
- ---------------------------------------------------------------------------------------
Shareholder services fee 20,885
- ---------------------------------------------------------------------------------------
Share registration costs 23,974
- ---------------------------------------------------------------------------------------
Printing and postage 18,212
- ---------------------------------------------------------------------------------------
Insurance premiums 2,492
- ---------------------------------------------------------------------------------------
Miscellaneous 8,816
- --------------------------------------------------------------------------------------- ----------
Total expenses 909,350
- --------------------------------------------------------------------------------------------------- -------------
Net investment income 6,170,428
- --------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------------------------
Net realized gain on investments includes $42,222 net gain on options 48,883
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 7,371,857
- --------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain on investments and options 7,420,740
- --------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ 13,591,168
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR U.S. GOVERNMENT INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1995 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------------------------
Net investment income $ 6,170,428 $ 3,611,329
- --------------------------------------------------------------------------------
Net realized gain (loss) on investments and options ($173,123 net gain and
$1,455,104 net loss respectively, as computed for federal tax purposes) 48,883 (1,609,209)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 7,371,857 (3,895,379)
- -------------------------------------------------------------------------------- -------------- --------------
Change in net assets resulting from operations 13,591,168 (1,893,259)
- -------------------------------------------------------------------------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------------------------
Distributions from net investment income (6,170,428) (3,611,329)
- --------------------------------------------------------------------------------
Distributions from net realized gains -- (461,372)
- -------------------------------------------------------------------------------- -------------- --------------
Change in net assets resulting from distributions to shareholders (6,170,428) (4,072,701)
- -------------------------------------------------------------------------------- -------------- --------------
SHARE TRANSACTIONS--
- --------------------------------------------------------------------------------
Proceeds from sale of shares 46,528,164 66,524,387
- --------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions
declared 2,992,672 1,313,490
- --------------------------------------------------------------------------------
Cost of shares redeemed (35,199,263) (18,135,243)
- -------------------------------------------------------------------------------- -------------- --------------
Change in net assets resulting from share transactions 14,321,573 49,702,634
- -------------------------------------------------------------------------------- -------------- --------------
Change in net assets 21,742,313 43,736,674
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Beginning of period 87,924,132 44,187,458
- -------------------------------------------------------------------------------- -------------- --------------
End of period (including undistributed net investment income of $0 and $0,
respectively) $ 109,666,445 $ 87,924,132
- -------------------------------------------------------------------------------- -------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR U.S. GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
1995 1994 1993(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.24 $ 10.25 $ 10.00
- ----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------
Net investment income 0.60 0.55 0.51
- ----------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.74 (0.90) 0.25
- ---------------------------------------------------------------------------------- --------- --------- ---------
Total from investment operations 1.34 (0.35) 0.76
- ---------------------------------------------------------------------------------- --------- --------- ---------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------------
Distributions from net investment income (0.60) (0.55) (0.51)
- ----------------------------------------------------------------------------------
Distributions from net realized gain on investments 0.00 (0.11) 0.00
- ---------------------------------------------------------------------------------- --------- --------- ---------
Total distributions (0.60) (0.66) (0.51)
- ---------------------------------------------------------------------------------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 9.98 $ 9.24 $ 10.25
- ---------------------------------------------------------------------------------- --------- --------- ---------
TOTAL RETURN (B) 14.90% (3.53)% 7.63%
- ----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------
Expenses 0.92% 0.97% 1.12%*
- ----------------------------------------------------------------------------------
Net investment income 6.23% 5.87% 5.55%*
- ----------------------------------------------------------------------------------
Expense waiver/reimbursement (c) -- 0.03% 0.30%*
- ----------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 109,666 $ 87,924 $ 44,187
- ----------------------------------------------------------------------------------
Portfolio turnover 236% 148% 105%
- ----------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from January 5, 1993 (date of initial
public investment) to
November 30, 1993. For the period from November 23, 1992 (start of business)
to January 4, 1993, all income was distributed to the Administrator.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
STAR STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINICPAL
AMOUNT
OR SHARES VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--17.7%
- ---------------------------------------------------------------------------------------------------
FOOD & BEVERAGE--0.3%
-------------------------------------------------------------------------------------
5,000 Sara Lee Corp. $ 161,250
------------------------------------------------------------------------------------- -------------
FOREST PRODUCTS & PAPER--1.0%
-------------------------------------------------------------------------------------
11,000 Weyerhaeuser Co. 497,750
------------------------------------------------------------------------------------- -------------
REAL ESTATE--15.2%
-------------------------------------------------------------------------------------
25,300 Avalon Properties, Inc. 493,350
-------------------------------------------------------------------------------------
15,900 Camden Property Trust 327,938
-------------------------------------------------------------------------------------
10,000 Centerpoint Properties Corp. 222,500
-------------------------------------------------------------------------------------
40,000 Glimcher Realty Trust 700,000
-------------------------------------------------------------------------------------
69,000 LTC Properties 1,026,375
-------------------------------------------------------------------------------------
21,800 Liberty Property 425,100
-------------------------------------------------------------------------------------
50,000 Manufactured Home Communities, Inc. 875,000
-------------------------------------------------------------------------------------
35,600 Omega Healthcare Investors 867,750
-------------------------------------------------------------------------------------
66,000 Sizeler Property Investments, Inc. 569,250
-------------------------------------------------------------------------------------
54,750 South West Property Trust, Inc. 684,375
-------------------------------------------------------------------------------------
37,000 Summit Properties, Inc. 703,000
-------------------------------------------------------------------------------------
25,000 Winston Hotels 296,875
------------------------------------------------------------------------------------- -------------
Total 7,191,513
------------------------------------------------------------------------------------- -------------
UTILITIES--1.2%
-------------------------------------------------------------------------------------
2,833 Cinergy Corp. 83,573
-------------------------------------------------------------------------------------
20,000 Southern Co. 457,500
------------------------------------------------------------------------------------- -------------
Total 541,073
------------------------------------------------------------------------------------- -------------
TOTAL COMMON STOCKS (IDENTIFIED COST $8,318,892) 8,391,586
------------------------------------------------------------------------------------- -------------
CORPORATE BONDS--32.7%
- ---------------------------------------------------------------------------------------------------
BANKING--3.2%
-------------------------------------------------------------------------------------
$ 250,000 Citicorp, 8.625%, 12/01/2002 282,645
-------------------------------------------------------------------------------------
250,000 Morgan (J. P.) & Co. Inc., 8.00%, 5/30/2005 259,453
-------------------------------------------------------------------------------------
100,000 Morgan (J. P.) & Co. Inc., 9.625%, 12/15/1998 100,331
-------------------------------------------------------------------------------------
353,000 NCNB Corp., 10.50%, 3/15/1999 357,511
-------------------------------------------------------------------------------------
500,000 Nationsbank Corp., 7.625%, 4/15/2005 539,865
------------------------------------------------------------------------------------- -------------
Total 1,539,805
------------------------------------------------------------------------------------- -------------
CHEMICALS--2.3%
-------------------------------------------------------------------------------------
500,000 Dow Chemical Co., 8.625%, 4/1/2006 572,500
-------------------------------------------------------------------------------------
458,000 Dow Chemical Co., 9.35%, 3/15/2002 507,597
------------------------------------------------------------------------------------- -------------
Total 1,080,097
------------------------------------------------------------------------------------- -------------
</TABLE>
STAR STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
CORPORATE BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
CONSUMER DURABLES--2.2%
-------------------------------------------------------------------------------------
$ 1,030,000 General Motors Corp., 9.75%, 5/15/1999 $ 1,046,799
------------------------------------------------------------------------------------- -------------
CONSUMER STAPLES--3.3%
-------------------------------------------------------------------------------------
1,117,000 Philip Morris Cos, Inc., 7.125%, 8/15/2002 1,161,926
-------------------------------------------------------------------------------------
400,000 Philip Morris Cos, Inc., 9.25%, 12/1/1997 425,248
------------------------------------------------------------------------------------- -------------
Total 1,587,174
------------------------------------------------------------------------------------- -------------
ELECTRONIC TECHNOLOGY--2.6%
-------------------------------------------------------------------------------------
1,100,000 Philips Electronics NV, 8.375%, 9/15/2006 1,259,016
------------------------------------------------------------------------------------- -------------
ENERGY--1.7%
-------------------------------------------------------------------------------------
500,000 Chevron Capital U S A, Inc., 7.45%, 8/15/2004 535,625
-------------------------------------------------------------------------------------
250,000 Consolidated Natural Gas Co., 7.25%, 12/15/2015 264,813
------------------------------------------------------------------------------------- -------------
Total 800,438
------------------------------------------------------------------------------------- -------------
FINANCE--2.9%
-------------------------------------------------------------------------------------
255,000 General Electric Capital Corp., 7.98%, 12/15/2007 260,171
-------------------------------------------------------------------------------------
1,000,000 International Lease Finance Co., 8.375%, 12/15/2004 1,125,920
------------------------------------------------------------------------------------- -------------
Total 1,386,091
------------------------------------------------------------------------------------- -------------
HEALTHCARE--2.2%
-------------------------------------------------------------------------------------
1,000,000 Columbia HCA Healthcare Co., 6.91%, 6/15/2005 1,033,650
------------------------------------------------------------------------------------- -------------
INSURANCE--2.4%
-------------------------------------------------------------------------------------
1,000,000 Ohio National Life Insurance Co., 8.875%, 7/15/2004 1,126,030
------------------------------------------------------------------------------------- -------------
MANUFACTURING--0.6%
-------------------------------------------------------------------------------------
250,000 Eastman Kodak Co., 9.875%, 11/1/2004 276,378
------------------------------------------------------------------------------------- -------------
METALS & MINING--3.4%
-------------------------------------------------------------------------------------
1,500,000 Alcan Aluminum Ltd., 9.20%, 3/15/2001 1,597,470
------------------------------------------------------------------------------------- -------------
PHARMACEUTICALS--1.8%
-------------------------------------------------------------------------------------
850,000 Johnson & Johnson Co., 8.00%, 9/1/1998 863,889
------------------------------------------------------------------------------------- -------------
UTILITIES--4.1%
-------------------------------------------------------------------------------------
185,000 Alabama Power Co., 9.00%, 12/1/2024 208,347
-------------------------------------------------------------------------------------
500,000 Cincinnati Gas & Electric Co., 8.95%, 12/15/2021 541,600
-------------------------------------------------------------------------------------
389,000 Duke Power Co., 7.875%, 5/1/2024 411,185
-------------------------------------------------------------------------------------
700,000 Pacific Telephone & Telegraph Co., 7.25%, 2/1/2008 710,878
-------------------------------------------------------------------------------------
62,000 Southern California Edison Co., 8.375%, 12/1/2017 63,775
------------------------------------------------------------------------------------- -------------
Total 1,935,785
------------------------------------------------------------------------------------- -------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $15,016,860) 15,532,622
------------------------------------------------------------------------------------- -------------
GOVERNMENT AGENCIES--23.6%
- ---------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--1.1%
-------------------------------------------------------------------------------------
500,000 9.02%, 1/19/2005 502,040
------------------------------------------------------------------------------------- -------------
</TABLE>
STAR STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
GOVERNMENT AGENCIES--CONTINUED
- ---------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION--9.0%
-------------------------------------------------------------------------------------
$ 1,000,000 10.00%, 1/15/2021 $ 1,115,710
-------------------------------------------------------------------------------------
1,000,000 7.00%, 12/15/2019 1,024,370
-------------------------------------------------------------------------------------
670,000 10.00% 12/15/2020 747,914
-------------------------------------------------------------------------------------
935,621 9.00%, 5/1/2021 983,852
-------------------------------------------------------------------------------------
394,267 11.00%, 4/1/2003 416,445
------------------------------------------------------------------------------------- -------------
Total 4,288,291
------------------------------------------------------------------------------------- -------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--10.1%
-------------------------------------------------------------------------------------
1,000,000 4.00%, REMIC, 6/25/2020 838,110
-------------------------------------------------------------------------------------
658,599 8.20%, REMIC, 4/25/2006 666,587
-------------------------------------------------------------------------------------
1,000,000 9.00%, REMIC, 11/25/2019 1,102,470
-------------------------------------------------------------------------------------
1,100,000 9.50%, REMIC, 6/25/2020 1,222,749
-------------------------------------------------------------------------------------
701,547 9.40%, REMIC, 6/25/2019 726,326
-------------------------------------------------------------------------------------
225,000 10.00%, REMIC, 12/25/2018 241,601
------------------------------------------------------------------------------------- -------------
Total 4,797,843
------------------------------------------------------------------------------------- -------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--3.4%
-------------------------------------------------------------------------------------
117,011 10.00%, 11/15/2009 128,052
-------------------------------------------------------------------------------------
334,473 9.00%, 7/15/2016 355,685
-------------------------------------------------------------------------------------
139,327 10.00%, 11/15/2009 152,474
-------------------------------------------------------------------------------------
799,014 9.00%, 1/15/2022 845,692
-------------------------------------------------------------------------------------
155,739 9.00%, 1/15/2022 164,837
------------------------------------------------------------------------------------- -------------
Total 1,646,740
------------------------------------------------------------------------------------- -------------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $11,068,525) 11,234,914
------------------------------------------------------------------------------------- -------------
PREFERRED STOCKS--12.7%
- ---------------------------------------------------------------------------------------------------
ENERGY--2.5%
-------------------------------------------------------------------------------------
44,500 Enron Capital Resources, Series A, 9.00% 1,190,375
------------------------------------------------------------------------------------- -------------
FINANCE--3.6%
-------------------------------------------------------------------------------------
65,000 Providian LLC, 8.875% 1,722,500
------------------------------------------------------------------------------------- -------------
OIL--2.8%
-------------------------------------------------------------------------------------
53,000 Atlantic Richfield Co., 9.00% 1,325,000
------------------------------------------------------------------------------------- -------------
REAL ESTATE--2.1%
-------------------------------------------------------------------------------------
40,000 Kimco Realty Corp., 8.50% 990,000
------------------------------------------------------------------------------------- -------------
UTILITIES--1.7%
-------------------------------------------------------------------------------------
31,000 Cincinnati Gas & Electric Co., 8.28% 794,375
------------------------------------------------------------------------------------- -------------
TOTAL PREFERRED STOCKS (IDENTIFIED COST $6,031,964) 6,022,250
------------------------------------------------------------------------------------- -------------
</TABLE>
STAR STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
U.S. TREASURY--8.1%
- ---------------------------------------------------------------------------------------------------
$ 500,000 United States Treasury Bonds, 11.75%, 11/15/2014 $ 765,060
-------------------------------------------------------------------------------------
2,750,000 United States Treasury Bonds, 7.25%, 5/15/2016 3,077,580
------------------------------------------------------------------------------------- -------------
TOTAL U.S. TREASURY (IDENTIFIED COST $3,782,422) 3,842,640
------------------------------------------------------------------------------------- -------------
(A) REPURCHASE AGREEMENT--1.9%
- ---------------------------------------------------------------------------------------------------
902,000 Donaldson, Lufkin & Jenrette Securities Corp., 5.875%, dated
11/30/1995, due 12/1/1995 (at amortized cost) 902,000
------------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $45,120,663)(B) $ 45,926,012
------------------------------------------------------------------------------------- -------------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. Treasury and/or
government agency obligations based on market prices at the date of the
portfolio.
(b) The cost of investments for federal tax purposes amounts to $45,120,663. The
net unrealized appreciation of investments on a federal tax basis amounts to
$805,349 which is comprised of $1,199,447 appreciation and $394,098
depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($47,512,661) at November 30, 1995.
The following acronyms are used throughout this portfolio:
REMIC--Real Estate Mortgage Investment Conduit
(See Notes which are an integral part of the Financial Statements)
STAR STRATEGIC INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified and tax cost $45,120,663) $ 45,926,012
- ---------------------------------------------------------------------------------------------------
Cash 27,014
- ---------------------------------------------------------------------------------------------------
Income receivable 538,891
- ---------------------------------------------------------------------------------------------------
Receivable for investments sold 992,658
- ---------------------------------------------------------------------------------------------------
Receivable for shares sold 718,235
- ---------------------------------------------------------------------------------------------------
Deferred expenses 23,587
- --------------------------------------------------------------------------------------------------- -------------
Total assets 48,226,397
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------------------
Payable for investments purchased $ 579,177
- ---------------------------------------------------------------------------------------
Payable for shares redeemed 70,768
- ---------------------------------------------------------------------------------------
Options written, at value (premium received $33,236) 33,750
- ---------------------------------------------------------------------------------------
Accrued expenses 30,041
- --------------------------------------------------------------------------------------- ----------
Total liabilities 713,736
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 4,513,598 shares outstanding $ 47,512,661
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSISTS OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 46,630,743
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and options 804,835
- ---------------------------------------------------------------------------------------------------
Distributions in excess of net realized gains (8,026)
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income 85,109
- --------------------------------------------------------------------------------------------------- -------------
TOTAL NET ASSETS $ 47,512,661
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE AND OFFERING PRICE PER SHARE:
($47,512,661 / 4,513,598 shares outstanding) $10.53
- --------------------------------------------------------------------------------------------------- -------------
Redemption Proceeds Per Share: (95/100 of $10.53)* $10.00
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
*See "Contingent Deferred Sales Charge" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
STAR STRATEGIC INCOME FUND
STATEMENT OF OPERATIONS
PERIOD ENDED NOVEMBER 30, 1995*
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Dividends $ 899,103
- ----------------------------------------------------------------------------------------------------
Interest 1,429,327
- ---------------------------------------------------------------------------------------------------- ------------
Total income 2,328,430
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Investment advisory fee $ 248,983
- ----------------------------------------------------------------------------------------
Administrative personnel and services fee 48,356
- ----------------------------------------------------------------------------------------
Custodian fees 6,552
- ----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 16,821
- ----------------------------------------------------------------------------------------
Legal fees 931
- ----------------------------------------------------------------------------------------
Portfolio accounting fees 50,495
- ----------------------------------------------------------------------------------------
Shareholder services fee 6,545
- ----------------------------------------------------------------------------------------
Printing and postage 20,548
- ----------------------------------------------------------------------------------------
Insurance premiums 5,552
- ----------------------------------------------------------------------------------------
Miscellaneous 6,553
- ---------------------------------------------------------------------------------------- ----------
Total expenses 411,336
- ----------------------------------------------------------------------------------------
Waiver--
- ----------------------------------------------------------------------------------------
Waiver of administrative personnel and services fee (24,912)
- ---------------------------------------------------------------------------------------- ----------
Net expenses 386,424
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income 1,942,006
- ---------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain on investments (includes $39,766 net gain on options) 76,916
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments and options 804,835
- ---------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain on investments and options 881,751
- ---------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 2,823,757
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
*For the period from December 12, 1994 (date of initial public investment) to
November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
STAR STRATEGIC INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
NOVEMBER 30,
1995*
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------------------------
Net investment income $ 1,942,006
- -----------------------------------------------------------------------------------------------
Net realized gain on investments and options ($76,916 as computed for federal tax purposes) 76,916
- -----------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments and options 804,835
- ----------------------------------------------------------------------------------------------- -----------------
Change in net assets resulting from operations 2,823,757
- ----------------------------------------------------------------------------------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------------------------------------
Distributions from net investment income (1,856,897)
- -----------------------------------------------------------------------------------------------
Distributions from net realized gains (76,916)
- -----------------------------------------------------------------------------------------------
Distributions in excess of net realized gains (8,026)
- ----------------------------------------------------------------------------------------------- -----------------
Change in net assets resulting from distributions to shareholders (1,941,839)
- ----------------------------------------------------------------------------------------------- -----------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------------------------------------
Proceeds from sale of shares 48,423,382
- -----------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions declared 756,172
- -----------------------------------------------------------------------------------------------
Cost of shares redeemed (2,548,811)
- ----------------------------------------------------------------------------------------------- -----------------
Change in net assets resulting from share transactions 46,630,743
- ----------------------------------------------------------------------------------------------- -----------------
Change in net assets 47,512,661
- -----------------------------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------------------------
Beginning of period --
- ----------------------------------------------------------------------------------------------- -----------------
End of period (including undistributed net investment income of $85,109) $ 47,512,661
- ----------------------------------------------------------------------------------------------- -----------------
</TABLE>
*For the period from December 12, 1994 (date of initial public investment) to
November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
STAR STRATEGIC INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
NOVEMBER 30,
1995(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- -----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------
Net investment income 0.69
- -----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.55
- ----------------------------------------------------------------------------------------------- -------
Total from investment operations 1.24
- ----------------------------------------------------------------------------------------------- -------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------------------------------
Distributions from net investment income (0.67)
- -----------------------------------------------------------------------------------------------
Distributions from net realized gain on investments (0.04)
- -----------------------------------------------------------------------------------------------
Distributions in excess of net realized gain on investments (0.00)**
- ----------------------------------------------------------------------------------------------- -------
Total distributions (0.71)
- ----------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 10.53
- ----------------------------------------------------------------------------------------------- -------
TOTAL RETURN (B) 12.71%
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------------
Expenses 1.47%*
- -----------------------------------------------------------------------------------------------
Net investment income 7.41%*
- -----------------------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.10%*
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 47,513
- -----------------------------------------------------------------------------------------------
Portfolio turnover 258%
- -----------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
** Distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. These
distributions did not represent a return of capital for federal income tax
purposes for the year ended November 30, 1995.
(a) Reflects operations for the period from December 12, 1994 (date of initial
public investment) to November 30, 1995.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
THE STELLAR FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
U.S. EQUITIES--20.7%
- ------------------------------------------------------------------------------------------------
BASIC INDUSTRY--1.4%
- ------------------------------------------------------------------------------------------------
CHEMICALS--0.6%
---------------------------------------------------------------------------------
10,000 Dow Chemical Co. $ 708,750
--------------------------------------------------------------------------------- --------------
METALS & MINING--0.5%
---------------------------------------------------------------------------------
9,000 Aluminum Co. of America 526,500
--------------------------------------------------------------------------------- --------------
PAPER--0.3%
---------------------------------------------------------------------------------
5,000 Kimberly Clark Corp. 384,375
--------------------------------------------------------------------------------- --------------
TOTAL BASIC INDUSTRY 1,619,625
--------------------------------------------------------------------------------- --------------
CAPITAL GOODS--5.1%
- ------------------------------------------------------------------------------------------------
AEROSPACE--1.1%
---------------------------------------------------------------------------------
10,000 Boeing Co. 728,750
---------------------------------------------------------------------------------
10,000 Honeywell, Inc. 476,250
--------------------------------------------------------------------------------- --------------
Total 1,205,000
--------------------------------------------------------------------------------- --------------
ELECTRONICS--1.0%
---------------------------------------------------------------------------------
12,000 Intel Corp. 730,500
---------------------------------------------------------------------------------
6,000 Motorola Inc. 367,500
--------------------------------------------------------------------------------- --------------
Total 1,098,000
--------------------------------------------------------------------------------- --------------
INDUSTRIAL PRODUCTS--0.4%
---------------------------------------------------------------------------------
10,000 Agco Corp. 431,250
--------------------------------------------------------------------------------- --------------
OFFICE & BUSINESS EQUIPMENT--2.6%
---------------------------------------------------------------------------------
10,000 *Cisco Systems 841,250
---------------------------------------------------------------------------------
9,800 Hewlett Packard Co. 812,175
---------------------------------------------------------------------------------
5,000 International Business Machines 483,125
---------------------------------------------------------------------------------
10,000 *Microsoft Corp. 871,250
--------------------------------------------------------------------------------- --------------
Total 3,007,800
--------------------------------------------------------------------------------- --------------
TOTAL CAPITAL GOODS 5,742,050
--------------------------------------------------------------------------------- --------------
CONSUMER CYCLICAL--1.8%
- ------------------------------------------------------------------------------------------------
AUTOMOTIVE & RELATED--0.6%
---------------------------------------------------------------------------------
10,000 Johnson Controls, Inc. 692,500
--------------------------------------------------------------------------------- --------------
ENTERTAINMENT & LEISURE--0.8%
---------------------------------------------------------------------------------
12,000 Callaway Golf Co. 238,500
---------------------------------------------------------------------------------
5,000 Capital Cities ABC Inc. 618,125
--------------------------------------------------------------------------------- --------------
Total 856,625
--------------------------------------------------------------------------------- --------------
RETAILING--0.4%
---------------------------------------------------------------------------------
10,000 *Safeway, Inc. 465,000
--------------------------------------------------------------------------------- --------------
TOTAL CONSUMER CYCLICAL 2,014,125
--------------------------------------------------------------------------------- --------------
</TABLE>
THE STELLAR FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
U.S. EQUITIES--CONTINUED
<CAPTION>
- ------------------------------------------------------------------------------------------------
<C> <S> <C>
CONSUMER STAPLES--3.0%
- ------------------------------------------------------------------------------------------------
HOUSEHOLD--0.8%
---------------------------------------------------------------------------------
10,000 Procter & Gamble Co. $ 863,750
--------------------------------------------------------------------------------- --------------
FOOD & BEVERAGE--1.5%
---------------------------------------------------------------------------------
10,000 CPC International, Inc. 687,500
---------------------------------------------------------------------------------
20,000 Premark International, Inc. 1,020,000
--------------------------------------------------------------------------------- --------------
Total 1,707,500
---------------------------------------------------------------------------------
TOBACCO--0.7%
---------------------------------------------------------------------------------
9,000 Philip Morris Companies Inc. 789,750
--------------------------------------------------------------------------------- --------------
TOTAL CONSUMER STAPLES 3,361,000
--------------------------------------------------------------------------------- --------------
ENERGY--1.7%
- ------------------------------------------------------------------------------------------------
DOMESTIC OIL--0.1%
---------------------------------------------------------------------------------
2,500 Ashland , Inc. 87,188
--------------------------------------------------------------------------------- --------------
INTERNATIONAL OIL--1.2%
---------------------------------------------------------------------------------
14,000 Mobil Corp. 1,461,250
--------------------------------------------------------------------------------- --------------
NATURAL GAS--0.4%
---------------------------------------------------------------------------------
13,000 Coastal Corp. 432,250
--------------------------------------------------------------------------------- --------------
TOTAL ENERGY 1,980,688
--------------------------------------------------------------------------------- --------------
MUTUAL FUND SHARES--1.2%
- ------------------------------------------------------------------------------------------------
100,000 Gateway Trust (at net asset value) 1,317,000
--------------------------------------------------------------------------------- --------------
FINANCE--2.8%
- ------------------------------------------------------------------------------------------------
BANKS & SAVINGS INSTITUTIONS--1.1%
---------------------------------------------------------------------------------
4,000 Citicorp 770,984
---------------------------------------------------------------------------------
11,000 Corestates Financial Corp. 426,250
--------------------------------------------------------------------------------- --------------
Total 1,197,234
---------------------------------------------------------------------------------
INSURANCE--1.3%
---------------------------------------------------------------------------------
17,000 American International Group, Inc. 1,525,750
--------------------------------------------------------------------------------- --------------
OTHER FINANCE--0.4%
---------------------------------------------------------------------------------
10,000 Dean Witter Discover & Co. 510,000
--------------------------------------------------------------------------------- --------------
TOTAL FINANCE 3,232,984
--------------------------------------------------------------------------------- --------------
HEALTH CARE--2.2%
- ------------------------------------------------------------------------------------------------
HOSPITAL MANAGEMENT--0.8%
---------------------------------------------------------------------------------
18,000 Columbia/HCA Healthcare Corp. 929,250
--------------------------------------------------------------------------------- --------------
HOSPITAL SUPPLIES--0.6%
---------------------------------------------------------------------------------
8,000 Johnson & Johnson 693,000
--------------------------------------------------------------------------------- --------------
PHARMACEUTICALS--0.8%
---------------------------------------------------------------------------------
15,000 Merck & Co. 928,125
--------------------------------------------------------------------------------- --------------
TOTAL HEALTH CARE 2,550,375
--------------------------------------------------------------------------------- --------------
</TABLE>
THE STELLAR FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
U.S. EQUITIES--CONTINUED
<CAPTION>
- ------------------------------------------------------------------------------------------------
<C> <S> <C>
UTILITIES--1.5%
- ------------------------------------------------------------------------------------------------
ELECTRIC--1.1%
---------------------------------------------------------------------------------
15,000 Duke Power Co. $ 673,125
---------------------------------------------------------------------------------
25,000 Southern Co. 571,875
--------------------------------------------------------------------------------- --------------
Total 1,245,000
---------------------------------------------------------------------------------
TELECOMMUNICATIONS--0.4%
---------------------------------------------------------------------------------
10,000 GTE Corp. 426,250
--------------------------------------------------------------------------------- --------------
TOTAL UTILITIES 1,671,250
--------------------------------------------------------------------------------- --------------
TOTAL U.S. EQUITIES (IDENTIFIED COST, $19,341,907) 23,489,097
--------------------------------------------------------------------------------- --------------
INTERNATIONAL SECURITIES--20.7%
- ------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITIES--18.0%
- ------------------------------------------------------------------------------------------------
AUSTRALIA--2.8%
---------------------------------------------------------------------------------
30,000 National Australia Bank Ltd. 1,323,750
---------------------------------------------------------------------------------
80,000 News Corp. Ltd. 1,680,000
---------------------------------------------------------------------------------
10,000 **News Corp. Ltd. 188,750
--------------------------------------------------------------------------------- --------------
TOTAL AUSTRALIA 3,192,500
--------------------------------------------------------------------------------- --------------
CANADA--1.8%
---------------------------------------------------------------------------------
20,000 Alcan Aluminum Ltd. 662,500
---------------------------------------------------------------------------------
31,000 Canadian Pacific Ltd. 565,750
---------------------------------------------------------------------------------
20,000 Rio Algom Ltd. 392,500
---------------------------------------------------------------------------------
12,500 Seagram Ltd. 456,250
--------------------------------------------------------------------------------- --------------
TOTAL CANADA 2,077,000
--------------------------------------------------------------------------------- --------------
DENMARK--1.4%
---------------------------------------------------------------------------------
50,000 Novo Nordisk A S 1,550,000
--------------------------------------------------------------------------------- --------------
FRANCE--0.7%
---------------------------------------------------------------------------------
35,000 Thomson CSF 770,000
--------------------------------------------------------------------------------- --------------
GERMANY--0.7%
---------------------------------------------------------------------------------
15,000 Daimler Benz A.G. 742,500
--------------------------------------------------------------------------------- --------------
GREAT BRITAIN--4.7%
---------------------------------------------------------------------------------
10,000 British Petroleum PLC 956,250
---------------------------------------------------------------------------------
60,000 Cable & Wireless Ltd. 1,237,500
---------------------------------------------------------------------------------
18,000 Reuters Holdings PLC 1,014,750
---------------------------------------------------------------------------------
30,600 SmithKline Beecham PLC 1,629,450
---------------------------------------------------------------------------------
15,000 **Vodaphone Group PLC 541,875
--------------------------------------------------------------------------------- --------------
TOTAL GREAT BRITAIN 5,379,825
--------------------------------------------------------------------------------- --------------
</TABLE>
THE STELLAR FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
INTERNATIONAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITIES--CONTINUED
- ------------------------------------------------------------------------------------------------
HOLLAND--1.5%
---------------------------------------------------------------------------------
18,300 *Philips Electronics N.V. $ 715,987
---------------------------------------------------------------------------------
4,400 PolyGram N.V. 264,000
---------------------------------------------------------------------------------
5,500 Royal Dutch Petroleum Co. 706,063
--------------------------------------------------------------------------------- --------------
TOTAL HOLLAND 1,686,050
--------------------------------------------------------------------------------- --------------
ITALY--0.4%
---------------------------------------------------------------------------------
8,000 Luxottica Group SPA 426,000
--------------------------------------------------------------------------------- --------------
JAPAN--1.4%
---------------------------------------------------------------------------------
10,000 Hitachi Ltd. 1,022,500
---------------------------------------------------------------------------------
35,000 Pioneer Electric Corp. 599,375
--------------------------------------------------------------------------------- --------------
TOTAL JAPAN 1,621,875
--------------------------------------------------------------------------------- --------------
NORWAY--1.3%
---------------------------------------------------------------------------------
35,000 Norsk Hydro AS 1,421,875
--------------------------------------------------------------------------------- --------------
PORTUGAL--0.3%
---------------------------------------------------------------------------------
40,000 Espirito Santo Financial Holdings SA 395,000
--------------------------------------------------------------------------------- --------------
SPAIN--0.6%
---------------------------------------------------------------------------------
21,200 Repsol SA 670,450
--------------------------------------------------------------------------------- --------------
SWEDEN--0.4%
---------------------------------------------------------------------------------
20,000 Volvo Aktiebolaget 420,000
--------------------------------------------------------------------------------- --------------
TOTAL INTERNATIONAL EQUITIES 20,353,075
--------------------------------------------------------------------------------- --------------
CLOSED-END INVESTMENT COMPANIES--2.8%
- ------------------------------------------------------------------------------------------------
60,000 Chile Fund, Inc. 1,455,000
---------------------------------------------------------------------------------
38,010 Mexico Fund, Inc. 517,886
---------------------------------------------------------------------------------
54,000 Swiss Helvetia Fund, Inc. 1,154,250
--------------------------------------------------------------------------------- --------------
Total 3,127,136
--------------------------------------------------------------------------------- --------------
TOTAL INTERNATIONAL SECURITIES (IDENTIFIED COST, $20,252,353) 23,480,211
--------------------------------------------------------------------------------- --------------
REAL ESTATE--20.5%
- ------------------------------------------------------------------------------------------------
38,000 Avalon Properties, Inc. 741,000
---------------------------------------------------------------------------------
30,500 Camden Property Trust 629,063
---------------------------------------------------------------------------------
39,300 Centerpoint Properties Corp. 874,424
---------------------------------------------------------------------------------
38,000 Chateau Properties, Inc. 826,500
---------------------------------------------------------------------------------
38,000 DeBartolo Realty Corp. 489,250
---------------------------------------------------------------------------------
23,500 Developers Diversified Realty 663,875
---------------------------------------------------------------------------------
75,000 Equity Inns, Inc. 862,500
---------------------------------------------------------------------------------
34,400 Federal Realty Investment Trust $ 756,800
---------------------------------------------------------------------------------
34,000 Glimcher Realty Trust 595,000
---------------------------------------------------------------------------------
23,000 Health Care Properties Investments, Inc. 770,500
---------------------------------------------------------------------------------
36,400 Highwoods Properties, Inc. 960,050
---------------------------------------------------------------------------------
23,500 Kimco Realty Corp. 940,000
---------------------------------------------------------------------------------
</TABLE>
THE STELLAR FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
REAL ESTATE--CONTINUED
- ------------------------------------------------------------------------------------------------
26,600 Liberty Property 518,700
---------------------------------------------------------------------------------
51,500 LTC Properties 766,063
---------------------------------------------------------------------------------
50,000 Manufactured Home Communities, Inc. 875,000
---------------------------------------------------------------------------------
15,000 Meditrust 495,000
---------------------------------------------------------------------------------
12,000 New Plan Realty Trust 252,000
---------------------------------------------------------------------------------
32,100 Omega Healthcare Investors 782,438
---------------------------------------------------------------------------------
25,000 Post Properties, Inc. 756,250
---------------------------------------------------------------------------------
45,000 Security Capital Pacific Trust 866,250
---------------------------------------------------------------------------------
21,000 Simon Property Group, Inc. 488,250
---------------------------------------------------------------------------------
71,500 Sizeler Property Investments, Inc. 616,687
---------------------------------------------------------------------------------
67,000 Southwestern Property Trust, Inc. 837,500
---------------------------------------------------------------------------------
24,000 Starwood Lodging Trust 663,000
---------------------------------------------------------------------------------
19,840 Storage USA, Inc. 602,640
---------------------------------------------------------------------------------
40,000 Storage Trust Realty 805,000
---------------------------------------------------------------------------------
31,800 Summit Properties, Inc. 604,200
---------------------------------------------------------------------------------
37,000 Sun Communities, Inc. 925,000
---------------------------------------------------------------------------------
30,000 Tanger Factory Outlet Centers, Inc. 697,500
---------------------------------------------------------------------------------
65,700 United Dominion Realty Trust, Inc. 928,013
---------------------------------------------------------------------------------
22,500 Weingarten Realty Investment 770,625
---------------------------------------------------------------------------------
76,800 Winston Hotels 912,000
--------------------------------------------------------------------------------- --------------
TOTAL REAL ESTATE (IDENTIFIED COST, $21,739,692) 23,271,078
--------------------------------------------------------------------------------- --------------
FIXED INCOME OBLIGATIONS--20.0%
- ------------------------------------------------------------------------------------------------
ENERGY--0.5%
---------------------------------------------------------------------------------
$ 250,000 Ashland Oil, Inc., 7.90%, 8/5/2006 274,363
---------------------------------------------------------------------------------
250,000 Enron Corp., 7.125%, 5/15/2007 260,130
--------------------------------------------------------------------------------- --------------
Total 534,493
---------------------------------------------------------------------------------
FINANCE--1.2%
---------------------------------------------------------------------------------
500,000 Citicorp, 8.625%, 12/01/2002 565,290
---------------------------------------------------------------------------------
250,000 General Electric Capital Corp., 8.75%, 11/26/1996 257,113
---------------------------------------------------------------------------------
250,000 International Lease Finance Corp., 6.25%, 10/15/2000 253,007
---------------------------------------------------------------------------------
250,000 International Lease Finance Corp., 8.375%, 12/15/2004 281,480
--------------------------------------------------------------------------------- --------------
Total 1,356,890
---------------------------------------------------------------------------------
</TABLE>
THE STELLAR FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
FIXED INCOME OBLIGATIONS--CONTINUED
- ------------------------------------------------------------------------------------------------
FOREIGN--0.5%
---------------------------------------------------------------------------------
$ 500,000 Alcan Aluminum Ltd., 9.20%, 3/15/2001 $ 532,490
--------------------------------------------------------------------------------- --------------
HEALTHCARE--0.7%
---------------------------------------------------------------------------------
500,000 Columbia/HCA Healthcare, 6.910%, 6/15/2005 516,825
---------------------------------------------------------------------------------
250,000 Columbia Healthcare, 6.125%, 12/15/2000 250,815
--------------------------------------------------------------------------------- --------------
Total 767,640
---------------------------------------------------------------------------------
INDUSTRIAL--0.6%
---------------------------------------------------------------------------------
250,000 Dow Chemical Co., 7.60%, 1/02/2002 264,365
---------------------------------------------------------------------------------
400,000 Philip Morris Cos., Inc., 9.75%, 5/1/1997 420,996
--------------------------------------------------------------------------------- --------------
Total 685,361
---------------------------------------------------------------------------------
PAPER--0.6%
---------------------------------------------------------------------------------
630,000 International Paper Co., 7.625%, 1/15/2007 690,638
--------------------------------------------------------------------------------- --------------
TELECOMMUNICATIONS--0.2%
---------------------------------------------------------------------------------
250,000 Pacific Telephone & Telegram Co., 7.80%, 3/1/2007 255,138
--------------------------------------------------------------------------------- --------------
U.S. GOVERNMENT AGENCIES--5.3%
---------------------------------------------------------------------------------
500,000 Federal Home Loan Banks, 7.00%, 5/15/2019 501,580
---------------------------------------------------------------------------------
75,000 Federal Home Loan Banks, 7.81%, 7/17/1996 76,086
---------------------------------------------------------------------------------
1,000,000 Federal Home Loan Banks, 8.36%, 2/28/2000 1,005,660
---------------------------------------------------------------------------------
488,885 Federal Home Loan Banks, 8.50%, 7/01/2024 511,031
---------------------------------------------------------------------------------
200,000 Federal Home Loan Banks, 9.02%, 1/19/2005 200,816
---------------------------------------------------------------------------------
118,186 Federal Home Loan Mortgage Corp., 7.50%, 8/15/2016 118,454
---------------------------------------------------------------------------------
500,000 Federal National Mortgage Association, 7.00%, 7/25/2007 511,655
---------------------------------------------------------------------------------
750,000 Federal National Mortgage Association, 7.00%, 3/17/2035 743,555
---------------------------------------------------------------------------------
500,000 Federal National Mortgage Association, 7.25%, 1/25/2019 502,995
---------------------------------------------------------------------------------
500,000 Federal National Mortgage Association, 7.25%, 1/17/2021 523,870
---------------------------------------------------------------------------------
219,533 Federal National Mortgage Association, 8.20%, 4/25/2006 222,196
---------------------------------------------------------------------------------
500,000 Federal National Mortgage Association, 9.50%, 6/25/2020 555,795
---------------------------------------------------------------------------------
500,000 Government National Mortgage Association, 7.00%, 6/16/2017 514,890
--------------------------------------------------------------------------------- --------------
Total 5,988,583
---------------------------------------------------------------------------------
U.S. TREASURY SECURITIES--9.5%
---------------------------------------------------------------------------------
250,000 U.S. Treasury Bonds, 6.875%, 8/15/2025 275,223
---------------------------------------------------------------------------------
300,000 U.S. Treasury Bonds, 7.25%, 5/15/2016 335,736
---------------------------------------------------------------------------------
500,000 U.S. Treasury Bonds, 7.625%, 2/15/2007 545,870
---------------------------------------------------------------------------------
375,000 U.S. Treasury Bonds, 7.875%, 2/15/2021 451,038
---------------------------------------------------------------------------------
1,700,000 U.S. Treasury Bonds, 8.125%, 8/15/2019 2,090,370
---------------------------------------------------------------------------------
750,000 U.S. Treasury Bonds, 8.75%, 8/15/2020 983,130
---------------------------------------------------------------------------------
500,000 U.S. Treasury Bonds, 8.75%, 5/15/2020 654,850
---------------------------------------------------------------------------------
250,000 U.S. Treasury Bonds, 11.75%, 11/15/2014 382,530
---------------------------------------------------------------------------------
1,900,000 U.S. Treasury Note, 6.25%, 5/31/2000 1,953,997
---------------------------------------------------------------------------------
</TABLE>
THE STELLAR FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
FIXED INCOME OBLIGATIONS--CONTINUED
- ------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES--CONTINUED
---------------------------------------------------------------------------------
$ 600,000 U.S. Treasury Notes, 6.75%, 5/31/1999 $ 623,838
---------------------------------------------------------------------------------
250,000 U.S. Treasury Note, 6.875%, 8/15/2025 254,783
---------------------------------------------------------------------------------
1,000,000 U.S. Treasury Notes, 7.5%, 12/31/1996 1,022,220
---------------------------------------------------------------------------------
1,250,000 U.S. Treasury Notes, 7.75%, 11/30/1999 1,348,788
--------------------------------------------------------------------------------- --------------
Total 10,922,373
---------------------------------------------------------------------------------
UTILITY--0.9%
---------------------------------------------------------------------------------
500,000 Cincinnati Gas & Electric Co., 8.95%, 12/15/2021 541,600
---------------------------------------------------------------------------------
500,000 Georgia Power Co., 6.625%, 4/1/2003 497,094
--------------------------------------------------------------------------------- --------------
Total 1,038,694
--------------------------------------------------------------------------------- --------------
TOTAL FIXED OBLIGATIONS (IDENTIFIED COST, $22,126,491) 22,772,300
--------------------------------------------------------------------------------- --------------
SHORT-TERM SECURITIES--18.5%
- ------------------------------------------------------------------------------------------------
CASH EQUIVALENTS--5.4%
---------------------------------------------------------------------------------
1,000,000 Federal Home Loan Mortgage Corp., Floating Rate Note 998,450
---------------------------------------------------------------------------------
5,000,000 Student Loan Marketing Assoc., Floating Rate Notes 4,995,900
---------------------------------------------------------------------------------
50,000 U.S. Treasury Bill, 1/18/1996 49,665
---------------------------------------------------------------------------------
50,000 U.S. Treasury Bill, 4/18/1996 49,005
--------------------------------------------------------------------------------- --------------
Total 6,093,020
--------------------------------------------------------------------------------- --------------
(A) REPURCHASE AGREEMENT--13.1%
---------------------------------------------------------------------------------
14,903,000 Donaldson, Lufkin & Jenrette Securities Corp., 5.875%,
dated 11/30/1995, due 12/1/1995 (at amortized cost) 14,903,000
--------------------------------------------------------------------------------- --------------
TOTAL SHORT-TERM SECURITIES (IDENTIFIED COST, $20,978,137) 20,996,020
--------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST, $104,438,580) (B) $ 114,008,706
--------------------------------------------------------------------------------- --------------
</TABLE>
* Non-income producing.
** American Depository Receipts.
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $104,621,613.
The net unrealized appreciation of investments on a federal tax basis
amounts to $9,387,093, which is comprised of $11,057,549 appreciation and
$1,670,456 depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($113,656,040) at November 30, 1995.
The following acronym is used throughout this portfolio:
PLC--Public Limited Company
(See Notes which are an integral part of the Financial Statements)
THE STELLAR FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------------------
Investments in repurchase agreements $ 14,903,000
- ----------------------------------------------------------------------------------
Investments in securities 99,105,706
- ---------------------------------------------------------------------------------- -------------
Total investments in securities, at amortized cost and value
(identified cost $104,438,580, and tax cost $104,621,613) $ 114,008,706
- -------------------------------------------------------------------------------------------------
Cash 1,273
- -------------------------------------------------------------------------------------------------
Income receivable 455,277
- -------------------------------------------------------------------------------------------------
Receivable for investments sold 746,956
- -------------------------------------------------------------------------------------------------
Receivable for shares sold 54,200
- -------------------------------------------------------------------------------------------------
Deferred expenses 599
- ------------------------------------------------------------------------------------------------- --------------
Total assets 115,267,011
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable for investments purchased 1,437,386
- ----------------------------------------------------------------------------------
Payable for shares redeemed 110,594
- ----------------------------------------------------------------------------------
Accrued expenses 62,991
- ---------------------------------------------------------------------------------- -------------
Total liabilities 1,610,971
- ------------------------------------------------------------------------------------------------- --------------
Net Assets for 9,339,190 shares outstanding $ 113,656,040
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------------
Paid in capital $ 101,939,262
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 9,570,126
- -------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and options 1,885,796
- -------------------------------------------------------------------------------------------------
Undistributed net investment income 260,856
- ------------------------------------------------------------------------------------------------- --------------
Total Net Assets $ 113,656,040
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE and Redemption Proceeds Per Share:
- -------------------------------------------------------------------------------------------------
Trust Shares ($64,754,403 / 5,320,673 shares outstanding) $12.17
- -------------------------------------------------------------------------------------------------
Investment Shares ($48,901,637 / 4,018,517 shares outstanding) $12.17
- -------------------------------------------------------------------------------------------------
OFFERING PRICE PER SHARE:
- -------------------------------------------------------------------------------------------------
Trust Shares $12.17
- -------------------------------------------------------------------------------------------------
Investment Shares (100/95.50 of $12.17) $12.74*
- -------------------------------------------------------------------------------------------------
</TABLE>
*See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
THE STELLAR FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------
Dividends $ 2,321,491
- --------------------------------------------------------------------------------------------------
Interest 2,964,732
- -------------------------------------------------------------------------------------------------- -------------
Total income 5,286,223
- --------------------------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------
Investment advisory fee $ 1,082,338
- -----------------------------------------------------------------------------------
Administrative personnel and services fee 125,852
- -----------------------------------------------------------------------------------
Custodian fees 33,858
- -----------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 138,221
- -----------------------------------------------------------------------------------
Directors'/Trustees' fees 1,896
- -----------------------------------------------------------------------------------
Auditing fees 19,618
- -----------------------------------------------------------------------------------
Legal fees 5,240
- -----------------------------------------------------------------------------------
Portfolio accounting fees 68,565
- -----------------------------------------------------------------------------------
Distribution services fee--Investment Shares 125,005
- -----------------------------------------------------------------------------------
Shareholder services fee--Trust Shares 13,003
- -----------------------------------------------------------------------------------
Shareholder services fee--Investment Shares 10,062
- -----------------------------------------------------------------------------------
Share registration costs 51,431
- -----------------------------------------------------------------------------------
Printing and postage 32,226
- -----------------------------------------------------------------------------------
Insurance premiums 6,016
- -----------------------------------------------------------------------------------
Taxes 274
- -----------------------------------------------------------------------------------
Miscellaneous 8,740
- ----------------------------------------------------------------------------------- -------------
Total expenses 1,722,345
- -------------------------------------------------------------------------------------------------- -------------
Net investment income 3,563,878
- -------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- --------------------------------------------------------------------------------------------------
Net realized gain on investments (includes $100,430 gain on options written) 1,796,991
- --------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 11,343,033
- -------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain on investments and options 13,140,024
- -------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ 16,703,902
- -------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
THE STELLAR FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1995 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------------
Net investment income $ 3,563,878 $ 2,681,306
- -------------------------------------------------------------------------------
Net realized gain (loss) on investments and options ($1,866,344 and $548,306,
respectively, as computed for federal tax purposes) 1,796,991 429,048
- -------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 11,343,033 (5,262,792)
- ------------------------------------------------------------------------------- -------------- --------------
Change in net assets resulting from operations 16,703,902 (2,152,438)
- ------------------------------------------------------------------------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------------------------
Distributions from net investment income
- -------------------------------------------------------------------------------
Trust Shares (2,114,360) (820,750)
- -------------------------------------------------------------------------------
Investment Shares (1,523,578) (1,311,297)
- -------------------------------------------------------------------------------
Distributions from net realized gains
- -------------------------------------------------------------------------------
Trust Shares (127,314) --
- -------------------------------------------------------------------------------
Investment Shares (421,368) (510,297)
- ------------------------------------------------------------------------------- -------------- --------------
Change in net assets resulting from distributions to shareholders (4,186,620) (2,642,344)
- ------------------------------------------------------------------------------- -------------- --------------
SHARE TRANSACTIONS--
Proceeds from sale of shares 19,312,791 110,084,241
- -------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions
declared 3,556,086 2,379,550
- -------------------------------------------------------------------------------
Cost of shares redeemed (33,200,109) (69,395,903)
- ------------------------------------------------------------------------------- -------------- --------------
Change in net assets resulting from share transactions (10,331,232) 43,067,888
- ------------------------------------------------------------------------------- -------------- --------------
Change in net assets 2,186,050 38,273,106
- -------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------
Beginning of period 111,469,990 73,196,884
- ------------------------------------------------------------------------------- -------------- --------------
End of period (including undistributed net investment income of $260,856 and
$334,916, respectively) $ 113,656,040 $ 111,469,990
- ------------------------------------------------------------------------------- -------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
THE STELLAR FUND
FINANCIAL HIGHLIGHTS--TRUST SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
1995 1994(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.90 $ 11.34
- ----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------
Net investment income 0.38 0.21
- ----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.32 (0.48)
- ---------------------------------------------------------------------------------------------- --------- -----------
Total from investment operations 1.70 (0.27)
- ----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------------------------
Distributions from net investment income (0.38) (0.17)
- ----------------------------------------------------------------------------------------------
Distributions from net realized gain on investment transactions (0.05) --
- ---------------------------------------------------------------------------------------------- --------- -----------
Total distributions (0.43) (0.17)
- ---------------------------------------------------------------------------------------------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 12.17 $ 10.90
- ---------------------------------------------------------------------------------------------- --------- -----------
TOTAL RETURN (B) 15.97% (1.81%)
- ----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------------
Expenses 1.40% 1.43%*
- ----------------------------------------------------------------------------------------------
Net investment income 3.23% 3.57%*
- ----------------------------------------------------------------------------------------------
Expense waiver/reimbursement -- --*
- ----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 64,754 $ 60,822
- ----------------------------------------------------------------------------------------------
Portfolio turnover rate 104% 79%
- ----------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from April 11, 1994 (date of initial
public investment) to November 30, 1994. For the period from April 5, 1994
(start of business) to April 10, 1994, all income was distributed to the
administrator.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(See Notes which are an integral part of the Financial Statements)
THE STELLAR FUND
FINANCIAL HIGHLIGHTS--INVESTMENT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1995 1994 1993 1992 1991(A)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.90 $ 11.34 $ 10.52 $ 9.80 $ 10.00
- ---------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------
Net investment income 0.34 0.29 0.24 0.29 0.05
- ---------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.33 (0.41) 0.99 0.74 (0.25)
- --------------------------------------------------------------- --------- --------- --------- --------- -----------
Total from investment operations 1.67 (0.12) 1.23 1.03 (0.20)
- ---------------------------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------------------------
Distributions from net investment income (0.35) (0.24) (0.28) (0.31) --
- ---------------------------------------------------------------
Distributions from net realized gain on investment
transactions (0.05) (0.08) (0.10) (0.00) --
- ---------------------------------------------------------------
Distributions in excess of net investment income -- -- (0.03)** -- --
- --------------------------------------------------------------- --------- --------- --------- --------- -----------
Total distributions (0.40) (0.32) (0.41) (0.31) --
- --------------------------------------------------------------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 12.17 $ 10.90 $ 11.34 $ 10.52 $ 9.80
- --------------------------------------------------------------- --------- --------- --------- --------- -----------
TOTAL RETURN (B) 15.67% (1.22%) 11.99% 10.68% (2.00%)
- ---------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------
Expenses 1.65% 1.55% 1.45% 1.53% 1.44%*
- ---------------------------------------------------------------
Net investment income 2.98% 2.32% 1.87% 3.03% 5.32%*
- ---------------------------------------------------------------
Expense waiver/reimbursement (c) -- 0.12% 0.25% 0.33% 0.29%*
- ---------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------
Net assets, end of period (000 omitted) $ 48,902 $50,648 $73,197 $35,544 $13,942
- ---------------------------------------------------------------
Portfolio turnover rate 104% 79% 87% 98% 18 %
- ---------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
** Distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. These
distributions did not represent a return of capital for federal income tax
purposes for the year ended November 30, 1995.
(a) Reflects operations for the period from October 18, 1991 (date of initial
public investment) to November 30, 1991. For the period from July 30, 1991
(start of business) to October 17, 1991, all income was distributed to the
administrator.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
STAR RELATIVE VALUE FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- --------------
COMMON STOCKS--98.6%
- -------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--7.2%
-----------------------------------------------------------------------------------
80,000 Lockheed Martin Corp. $ 5,870,000
-----------------------------------------------------------------------------------
81,000 Raytheon Co. 3,604,500
----------------------------------------------------------------------------------- --------------
Total 9,474,500
----------------------------------------------------------------------------------- --------------
APPLIANCES--1.3%
-----------------------------------------------------------------------------------
30,000 Whirlpool Corp. 1,665,000
----------------------------------------------------------------------------------- --------------
AUTOMOBILE--4.2%
-----------------------------------------------------------------------------------
105,000 Goodyear Tire and Rubber Company 4,449,375
-----------------------------------------------------------------------------------
14,900 Johnson Controls, Inc. 1,031,825
----------------------------------------------------------------------------------- --------------
Total 5,481,200
----------------------------------------------------------------------------------- --------------
BANKING--6.1%
-----------------------------------------------------------------------------------
20,000 Citicorp 1,415,000
-----------------------------------------------------------------------------------
22,500 Mellon Bank Corp. 1,203,750
-----------------------------------------------------------------------------------
45,000 NationsBank Corp. 3,211,875
-----------------------------------------------------------------------------------
90,000 Signet Banking Corp. 2,193,750
----------------------------------------------------------------------------------- --------------
Total 8,024,375
----------------------------------------------------------------------------------- --------------
CHEMICALS--5.7%
-----------------------------------------------------------------------------------
76,000 Dow Chemical Company 5,386,500
-----------------------------------------------------------------------------------
85,000 Lyondell Petrochemical Co. 2,082,500
----------------------------------------------------------------------------------- --------------
Total 7,469,000
----------------------------------------------------------------------------------- --------------
COMPUTERS--4.4%
-----------------------------------------------------------------------------------
60,000 International Business Machines 5,797,500
----------------------------------------------------------------------------------- --------------
DOMESTIC OIL--0.9%
-----------------------------------------------------------------------------------
35,000 Ashland, Inc. 1,220,625
----------------------------------------------------------------------------------- --------------
DRUGS--9.5%
-----------------------------------------------------------------------------------
10,000 American Home Products Corp. 912,500
-----------------------------------------------------------------------------------
80,000 Bristol Myers Squibb Co. 6,420,000
-----------------------------------------------------------------------------------
85,000 Merck & Co., Inc. 5,259,375
----------------------------------------------------------------------------------- --------------
Total 12,591,875
----------------------------------------------------------------------------------- --------------
ELECTRICAL EQUIPMENT--2.6%
-----------------------------------------------------------------------------------
52,000 General Electric Company 3,497,000
----------------------------------------------------------------------------------- --------------
ELECTRONIC TECHNOLOGY--6.7%
-----------------------------------------------------------------------------------
90,000 Intel Corp. 5,478,750
-----------------------------------------------------------------------------------
55,000 Motorola, Inc. 3,368,750
----------------------------------------------------------------------------------- --------------
Total 8,847,500
----------------------------------------------------------------------------------- --------------
ENTERTAINMENT--1.8%
-----------------------------------------------------------------------------------
35,500 Eastman Kodak Co. 2,414,000
----------------------------------------------------------------------------------- --------------
</TABLE>
STAR RELATIVE VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FINANCIAL SERVICES--1.9%
-----------------------------------------------------------------------------------
60,000 American Express Co. $ 2,550,000
----------------------------------------------------------------------------------- --------------
HOUSEHOLD PRODUCTS--8.4%
-----------------------------------------------------------------------------------
76,000 Gillette Co. 3,942,500
-----------------------------------------------------------------------------------
20,000 Premark International, Inc. 1,020,000
-----------------------------------------------------------------------------------
70,000 Procter & Gamble Co. 6,046,250
----------------------------------------------------------------------------------- --------------
Total 11,008,750
----------------------------------------------------------------------------------- --------------
INSURANCE--3.9%
-----------------------------------------------------------------------------------
50,000 American Bankers Insurance Group 1,806,250
-----------------------------------------------------------------------------------
30,000 Cincinnati Financial Corp. 1,860,000
-----------------------------------------------------------------------------------
40,000 Ohio Casualty Corp. 1,520,000
----------------------------------------------------------------------------------- --------------
Total 5,186,250
----------------------------------------------------------------------------------- --------------
INTERNATIONAL OIL--7.2%
-----------------------------------------------------------------------------------
30,000 Mobil Corp. 3,131,250
-----------------------------------------------------------------------------------
40,000 Royal Dutch Petroleum Co. 5,135,000
-----------------------------------------------------------------------------------
17,000 Texaco, Inc. 1,258,000
----------------------------------------------------------------------------------- --------------
Total 9,524,250
----------------------------------------------------------------------------------- --------------
METALS & MINING--2.2%
-----------------------------------------------------------------------------------
50,000 Aluminum Company of America 2,925,000
----------------------------------------------------------------------------------- --------------
MULTI-DIVERSIFIED--4.9%
-----------------------------------------------------------------------------------
32,000 Allied Signal, Inc. 1,512,000
-----------------------------------------------------------------------------------
40,000 ITT Corp. 4,905,000
----------------------------------------------------------------------------------- --------------
Total 6,417,000
----------------------------------------------------------------------------------- --------------
NATURAL GAS--1.3%
-----------------------------------------------------------------------------------
66,000 Nicor, Inc. 1,674,750
----------------------------------------------------------------------------------- --------------
RAILROADS--1.6%
-----------------------------------------------------------------------------------
13,000 Burlington Northern Santa Fe 1,048,125
-----------------------------------------------------------------------------------
16,000 Conrail, Inc. 1,118,000
----------------------------------------------------------------------------------- --------------
Total 2,166,125
----------------------------------------------------------------------------------- --------------
RETAIL TRADE--2.6%
-----------------------------------------------------------------------------------
72,000 Penney (J.C.), Inc. 3,375,000
----------------------------------------------------------------------------------- --------------
TELECOMMUNICATIONS--7.8%
-----------------------------------------------------------------------------------
90,000 AT & T Corp. 5,940,000
-----------------------------------------------------------------------------------
103,000 GTE Corp. 4,390,375
----------------------------------------------------------------------------------- --------------
Total 10,330,375
----------------------------------------------------------------------------------- --------------
TOBACCO --3.3%
-----------------------------------------------------------------------------------
50,000 Philip Morris Cos., Inc. 4,387,500
----------------------------------------------------------------------------------- --------------
</TABLE>
STAR RELATIVE VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
UTILITIES-ELECTRIC--3.1%
-----------------------------------------------------------------------------------
130,000 General Public Utilities Corp. $ 4,111,250
----------------------------------------------------------------------------------- --------------
TOTAL COMMON STOCKS (IDENTIFIED COST $98,633,518)) 130,138,825
----------------------------------------------------------------------------------- --------------
(A) REPURCHASE AGREEMENT--1.0%
- -------------------------------------------------------------------------------------------------
$ 1,277,000 Donaldson, Lufkin & Jenrette Securities Corp., 5.875%,
dated 11/10/95, due 12/1/95 (at amortized cost) 1,277,000
----------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $99,910,518)(B) $ 131,415,825
----------------------------------------------------------------------------------- --------------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $99,910,518. The
net unrealized appreciation of investments on a federal tax basis amounts to
$31,505,307 which is comprised of $31,505,307 appreciation and $0
depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($131,979,148) at November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
STAR RELATIVE VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------------------------
Total investments in securities, at value
(identified and tax cost $99,910,518) $ 131,415,825
- --------------------------------------------------------------------------------------------------
Cash 1,503
- --------------------------------------------------------------------------------------------------
Income receivable 324,408
- --------------------------------------------------------------------------------------------------
Receivable for shares sold 272,039
- -------------------------------------------------------------------------------------------------- --------------
Total assets 132,013,775
- --------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------
Payable for shares redeemed $ 12,577
- ---------------------------------------------------------------------------------------
Accrued expenses 22,050
- --------------------------------------------------------------------------------------- ---------
Total liabilities 34,627
- -------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 8,787,015 shares outstanding $ 131,979,148
- -------------------------------------------------------------------------------------------------- --------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------------------------
Paid in capital $ 100,056,760
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 31,505,308
- --------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 82,221
- --------------------------------------------------------------------------------------------------
Undistributed net investment income 334,859
- -------------------------------------------------------------------------------------------------- --------------
Total Net Assets $ 131,979,148
- -------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE and Redemption Proceeds Per Share:
($131,979,148 / 8,787,015 shares outstanding) $15.02
- -------------------------------------------------------------------------------------------------- --------------
Offering Price Per Share: (100/95.50 of $15.02)* $15.73
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
*See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
STAR RELATIVE VALUE FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Dividends $ 2,773,444
- ---------------------------------------------------------------------------------------------------
Interest 519,153
- --------------------------------------------------------------------------------------------------- -------------
Total income 3,292,597
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee $ 757,591
- ---------------------------------------------------------------------------------------
Administrative personnel and services fee 110,983
- ---------------------------------------------------------------------------------------
Custodian fees 25,632
- ---------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 47,062
- ---------------------------------------------------------------------------------------
Directors'/Trustees' fees 1,533
- ---------------------------------------------------------------------------------------
Auditing fees 16,201
- ---------------------------------------------------------------------------------------
Legal fees 3,478
- ---------------------------------------------------------------------------------------
Portfolio accounting fees 45,582
- ---------------------------------------------------------------------------------------
Shareholder services fee 22,108
- ---------------------------------------------------------------------------------------
Share registration costs 24,369
- ---------------------------------------------------------------------------------------
Printing and postage 18,958
- ---------------------------------------------------------------------------------------
Insurance premiums 2,856
- ---------------------------------------------------------------------------------------
Miscellaneous 6,224
- --------------------------------------------------------------------------------------- ----------
Total expenses 1,082,577
- --------------------------------------------------------------------------------------------------- -------------
Net investment income 2,210,020
- --------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------------------------
Net realized gain on investments 813,382
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 27,231,330
- --------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain on investments 28,044,712
- --------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ 30,254,732
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR RELATIVE VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1995 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------------
Net investment income $ 2,210,020 $ 1,270,860
- ---------------------------------------------------------------------------------
Net realized gain (loss) on investments ($813,382 net gain and $731,359 net loss,
respectively, as computed for federal tax purposes) 813,382 (731,359)
- ---------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 27,231,330 (1,941,545)
- --------------------------------------------------------------------------------- -------------- -------------
Change in net assets resulting from operations 30,254,732 (1,402,044)
- --------------------------------------------------------------------------------- -------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------------------------
Distributions from net investment income (2,082,202) (1,198,281)
- ---------------------------------------------------------------------------------
Distributions from net realized gains -- (158,063)
- --------------------------------------------------------------------------------- -------------- -------------
Change in net assets resulting from distributions to shareholders (2,082,202) (1,356,344)
- --------------------------------------------------------------------------------- -------------- -------------
SHARE TRANSACTIONS--
- ---------------------------------------------------------------------------------
Proceeds from sale of shares 42,825,305 35,499,767
- ---------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions
declared 528,705 239,448
- ---------------------------------------------------------------------------------
Cost of shares redeemed (13,641,288) (8,587,617)
- --------------------------------------------------------------------------------- -------------- -------------
Change in net assets resulting from share transactions 29,712,722 27,151,598
- --------------------------------------------------------------------------------- -------------- -------------
Change in net assets 57,885,252 24,393,210
- ---------------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------------
Beginning of period 74,093,896 49,700,686
- --------------------------------------------------------------------------------- -------------- -------------
End of period (including undistributed net investment income of $334,859 and
$207,041, respectively) $ 131,979,148 $ 74,093,896
- --------------------------------------------------------------------------------- -------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR RELATIVE VALUE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1995 1994 1993 1992 1991(A)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.36 $ 11.80 $ 10.52 $ 9.43 $ 10.00
- ------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------
Net investment income 0.29 0.23 0.20 0.30 0.22
- ------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 3.65 (0.40) 1.30 1.12 (0.66)
- ------------------------------------------------------------ --------- --------- --------- --------- -----------
Total from investment operations 3.94 (0.17) 1.50 1.42 (0.44)
- ------------------------------------------------------------ --------- --------- --------- --------- -----------
LESS DISTRIBUTIONS
- ------------------------------------------------------------
Distributions from net investment income (0.28) (0.23) (0.22) (0.33) (0.13)
- ------------------------------------------------------------
Distributions from net realized gain on investment -- (0.04) -- -- --
- ------------------------------------------------------------ --------- --------- --------- --------- -----------
Total distributions (0.28) (0.27) (0.22) (0.33) (0.13)
- ------------------------------------------------------------ --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 15.02 $ 11.36 $ 11.80 $ 10.52 $ 9.43
- ------------------------------------------------------------ --------- --------- --------- --------- -----------
TOTAL RETURN (B) 35.10% (1.54%) 14.47% 15.39% (4.31%)
- ------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------
Expenses 1.06% 1.15% 1.19% 0.47% 0.40%*
- ------------------------------------------------------------
Net investment income 2.17% 2.02% 1.79% 3.01% 4.75%*
- ------------------------------------------------------------
Expense waiver/reimbursement (c) -- -- 0.31% 1.00% 0.93%*
- ------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------
Net assets, end of period (000 omitted) $131,979 $ 74,094 $ 49,701 $ 38,154 $ 33,015
- ------------------------------------------------------------
Portfolio turnover rate 24% 30% 59% 45% 38 %
- ------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from June 5, 1991 (date of initial
public investment) to November 30, 1991. For the period from January 31,
1989 (start of business) to June 4, 1991, all income was distributed to the
Administrator.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
STAR GROWTH EQUITY FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- -------------
COMMON STOCKS--93.5%
- -------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--2.4%
-----------------------------------------------------------------------------------
16,000 Boeing Co. $ 1,166,000
----------------------------------------------------------------------------------- -------------
AUTOMOBILE--2.3%
-----------------------------------------------------------------------------------
16,000 Johnson Controls, Inc. 1,108,000
----------------------------------------------------------------------------------- -------------
BANKING--4.6%
-----------------------------------------------------------------------------------
11,636 Citicorp 823,247
-----------------------------------------------------------------------------------
12,400 Corestates Financial Corp. 480,500
-----------------------------------------------------------------------------------
12,000 Morgan J P + Co. Inc. 942,000
----------------------------------------------------------------------------------- -------------
Total 2,245,747
----------------------------------------------------------------------------------- -------------
BROADCASTING--2.5%
-----------------------------------------------------------------------------------
3,500 Capital Cities ABC, Inc. 432,687
-----------------------------------------------------------------------------------
10,000 (a)Clear Channel Communications 788,750
----------------------------------------------------------------------------------- -------------
Total 1,221,437
----------------------------------------------------------------------------------- -------------
CHEMICALS--2.7%
-----------------------------------------------------------------------------------
10,000 Dow Chemical Co. 708,750
-----------------------------------------------------------------------------------
5,219 Monsanto Co. 597,576
----------------------------------------------------------------------------------- -------------
Total 1,306,326
----------------------------------------------------------------------------------- -------------
COMPUTERS--8.5%
-----------------------------------------------------------------------------------
15,000 (a)Cisco Systems, Inc. 1,261,875
-----------------------------------------------------------------------------------
17,070 Hewlett Packard Co. 1,414,676
-----------------------------------------------------------------------------------
9,970 International Business Machines Corp. 963,351
-----------------------------------------------------------------------------------
6,681 (a)Microsoft Corp. 582,082
----------------------------------------------------------------------------------- -------------
Total 4,221,984
----------------------------------------------------------------------------------- -------------
DRUGS--6.3%
-----------------------------------------------------------------------------------
7,000 Bristol Myers Squibb Co. 561,750
-----------------------------------------------------------------------------------
25,849 Merck + Co., Inc. 1,599,407
-----------------------------------------------------------------------------------
16,000 Schering Plough Corp. 918,000
----------------------------------------------------------------------------------- -------------
Total 3,079,157
----------------------------------------------------------------------------------- -------------
ELECTRICAL EQUIPMENT--2.6%
-----------------------------------------------------------------------------------
10,000 General Electric Co. 672,500
-----------------------------------------------------------------------------------
12,500 Honeywell, Inc. 595,312
----------------------------------------------------------------------------------- -------------
Total 1,267,812
----------------------------------------------------------------------------------- -------------
ELECTRONIC TECHNOLOGY--2.5%
-----------------------------------------------------------------------------------
16,170 Intel Corp. 984,349
-----------------------------------------------------------------------------------
4,162 Motorola, Inc. 254,923
----------------------------------------------------------------------------------- -------------
Total 1,239,272
----------------------------------------------------------------------------------- -------------
ENTERTAINMENT--1.3%
-----------------------------------------------------------------------------------
10,175 Disney (Walt) Co. 611,772
----------------------------------------------------------------------------------- -------------
</TABLE>
STAR GROWTH EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FINANCE--1.0%
-----------------------------------------------------------------------------------
9,155 Dean Witter Discover + Co. $ 466,905
----------------------------------------------------------------------------------- -------------
FOOD & BEVERAGE--6.7%
-----------------------------------------------------------------------------------
12,000 CPC International, Inc. 825,000
-----------------------------------------------------------------------------------
24,000 Pepsico, Inc. 1,326,000
-----------------------------------------------------------------------------------
21,526 Premark International, Inc. 1,097,826
----------------------------------------------------------------------------------- -------------
Total 3,248,826
----------------------------------------------------------------------------------- -------------
FOREST PRODUCTS & PAPER--0.8%
-----------------------------------------------------------------------------------
5,000 Kimberly Clark Corp. 384,375
----------------------------------------------------------------------------------- -------------
HEALTHCARE--1.0%
-----------------------------------------------------------------------------------
9,717 Columbia / HCA Healthcare 501,640
----------------------------------------------------------------------------------- -------------
HOSPITAL SUPPLIES--2.7%
-----------------------------------------------------------------------------------
15,385 Johnson + Johnson 1,332,726
----------------------------------------------------------------------------------- -------------
HOUSEHOLD PRODUCTS--3.0%
-----------------------------------------------------------------------------------
6,908 Gillete Co. 358,353
-----------------------------------------------------------------------------------
12,829 Procter + Gamble Co. 1,108,105
----------------------------------------------------------------------------------- -------------
Total 1,466,458
----------------------------------------------------------------------------------- -------------
INSURANCE--7.2%
-----------------------------------------------------------------------------------
21,000 American Bankers Insurance Group 758,625
-----------------------------------------------------------------------------------
13,561 American International Group, Inc. 1,217,100
-----------------------------------------------------------------------------------
14,000 Aon Corp. 659,750
-----------------------------------------------------------------------------------
15,000 Travelers Group, Inc. 892,500
----------------------------------------------------------------------------------- -------------
Total 3,527,975
----------------------------------------------------------------------------------- -------------
MACHINERY & EQUIPMENT--1.5%
-----------------------------------------------------------------------------------
10,000 Agco Corp. 431,250
-----------------------------------------------------------------------------------
4,925 Illinois Tool Works, Inc. 312,122
----------------------------------------------------------------------------------- -------------
Total 743,372
----------------------------------------------------------------------------------- -------------
MANUFACTURING--1.7%
-----------------------------------------------------------------------------------
22,000 Parker Hannifin Corp. 808,500
----------------------------------------------------------------------------------- -------------
METALS & MINING--1.8%
-----------------------------------------------------------------------------------
14,795 Aluminum Co. America 865,507
----------------------------------------------------------------------------------- -------------
MULTI-DIVERSIFIED--1.4%
-----------------------------------------------------------------------------------
14,529 Allied Signal, Inc. 686,495
----------------------------------------------------------------------------------- -------------
NATURAL GAS--3.5%
-----------------------------------------------------------------------------------
28,650 Coastal Corp. 952,612
-----------------------------------------------------------------------------------
20,000 Enron Corp. 750,000
----------------------------------------------------------------------------------- -------------
Total 1,702,612
----------------------------------------------------------------------------------- -------------
OIL-DOMESTIC--0.2%
-----------------------------------------------------------------------------------
2,500 Ashland, Inc. 87,187
----------------------------------------------------------------------------------- -------------
</TABLE>
STAR GROWTH EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
OIL-INTERNATIONAL--4.8%
-----------------------------------------------------------------------------------
9,000 Exxon Corp. $ 696,375
-----------------------------------------------------------------------------------
15,500 Mobil Corp. 1,617,812
----------------------------------------------------------------------------------- -------------
Total 2,314,187
----------------------------------------------------------------------------------- -------------
REAL ESTATE--1.6%
-----------------------------------------------------------------------------------
15,000 Camden Property Trust 309,375
-----------------------------------------------------------------------------------
38,799 South West Property Trust, Inc. 484,988
----------------------------------------------------------------------------------- -------------
Total 794,363
----------------------------------------------------------------------------------- -------------
RESTAURANT--1.2%
-----------------------------------------------------------------------------------
13,000 McDonalds Corp. 580,125
----------------------------------------------------------------------------------- -------------
RETAIL TRADE--3.8%
-----------------------------------------------------------------------------------
10,000 May Department Stores Co. 436,250
-----------------------------------------------------------------------------------
30,000 (a)Safeway, Inc. 1,395,000
----------------------------------------------------------------------------------- -------------
Total 1,831,250
----------------------------------------------------------------------------------- -------------
STEEL--1.2%
-----------------------------------------------------------------------------------
30,000 Worthington Industries, Inc. 588,750
----------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS--5.5%
-----------------------------------------------------------------------------------
12,644 AT + T Corp. 834,504
-----------------------------------------------------------------------------------
43,000 GTE Corp. 1,832,875
----------------------------------------------------------------------------------- -------------
Total 2,667,379
----------------------------------------------------------------------------------- -------------
TRANSPORTATION-RAILROAD--2.2%
-----------------------------------------------------------------------------------
15,000 Conrail, Inc. 1,048,125
----------------------------------------------------------------------------------- -------------
UTILITIES-ELECTRIC--3.8%
-----------------------------------------------------------------------------------
16,639 Duke Power Co. 746,675
-----------------------------------------------------------------------------------
35,000 General Public Utilities Corp. 1,106,875
----------------------------------------------------------------------------------- -------------
Total 1,853,550
----------------------------------------------------------------------------------- -------------
UTILITIES-TELEPHONE--1.2%
-----------------------------------------------------------------------------------
15,000 Bellsouth Corp. 583,125
----------------------------------------------------------------------------------- -------------
TOTAL COMMON STOCKS (IDENTIFIED COST $39,856,367) 45,550,939
----------------------------------------------------------------------------------- -------------
GOVERNMENT AGENCIES--5.1%
- -------------------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK--1.0%
-----------------------------------------------------------------------------------
$ 500,000 5.50%, 12/8/1995 500,225
----------------------------------------------------------------------------------- -------------
FEDERAL HOME LOAN BANK--2.0%
-----------------------------------------------------------------------------------
500,000 4.125%, 1/26/1996 498,935
-----------------------------------------------------------------------------------
500,000 6.20%, 4/10/1997 502,470
----------------------------------------------------------------------------------- -------------
Total 1,001,405
----------------------------------------------------------------------------------- -------------
</TABLE>
STAR GROWTH EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- -------------
GOVERNMENT AGENCIES--CONTINUED
- -------------------------------------------------------------------------------------------------
STUDENT LOAN MARKETING ASSOCIATION--2.1%
-----------------------------------------------------------------------------------
$ 1,000,000 6.18%, 4/21/1997 $ 1,005,000
----------------------------------------------------------------------------------- -------------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $2,496,875) 2,506,630
----------------------------------------------------------------------------------- -------------
(B) REPURCHASE AGREEMENT--2.3%
- -------------------------------------------------------------------------------------------------
1,097,000 Donaldson, Lufkin, & Jenrette Securities Corp., 5.875%,
dated 11/30/1995, due 12/1/1995 (at amortized cost) 1,097,000
----------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $43,450,242)(C) $ 49,154,569
----------------------------------------------------------------------------------- -------------
</TABLE>
(a) Non-income producing security.
(b) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(c) The cost of investments for federal tax purposes amounts to $43,450,242.
The net unrealized appreciation of investments on a federal tax basis
amounts to $5,704,327 which is comprised of $5,757,194 appreciation and
$52,867 depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($48,698,994) at November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
STAR GROWTH EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at amortized cost and value
(identified and tax cost $43,450,242) $ 49,154,569
- ---------------------------------------------------------------------------------------------------
Cash 1,701
- ---------------------------------------------------------------------------------------------------
Income receivable 134,389
- ---------------------------------------------------------------------------------------------------
Receivable for investments sold 199,010
- ---------------------------------------------------------------------------------------------------
Receivable for shares sold 208,034
- ---------------------------------------------------------------------------------------------------
Deferred expenses 23,185
- --------------------------------------------------------------------------------------------------- -------------
Total assets 49,720,888
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------------------
Payable for investments purchased $ 993,544
- ---------------------------------------------------------------------------------------
Accrued expenses 28,350
- --------------------------------------------------------------------------------------- ----------
Total liabilities 1,021,894
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 3,834,979 shares outstanding $ 48,698,994
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 40,355,449
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 5,704,327
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and options 2,544,290
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income 94,928
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 48,698,994
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE AND OFFERING PRICE PER SHARE:
($48,698,994 / 3,834,979 shares outstanding) $12.70
- --------------------------------------------------------------------------------------------------- -------------
Redemption Proceeds Per Share: (95/100 of $12.70)* $12.07
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
*See "Contingent Deferred Sales Charge" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
STAR GROWTH EQUITY FUND
STATEMENT OF OPERATIONS
PERIOD ENDED NOVEMBER 30, 1995*
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Dividends $ 848,657
- ----------------------------------------------------------------------------------------------------
Interest 251,225
- ---------------------------------------------------------------------------------------------------- ------------
Total income 1,099,882
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Investment advisory fee $ 260,092
- ----------------------------------------------------------------------------------------
Administrative personnel and services fee 48,359
- ----------------------------------------------------------------------------------------
Custodian fees 8,670
- ----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 16,912
- ----------------------------------------------------------------------------------------
Legal fees 2,508
- ----------------------------------------------------------------------------------------
Portfolio accounting fees 46,615
- ----------------------------------------------------------------------------------------
Shareholder services fee 8,347
- ----------------------------------------------------------------------------------------
Printing and postage 17,339
- ----------------------------------------------------------------------------------------
Insurance premiums 4,895
- ----------------------------------------------------------------------------------------
Miscellaneous 3,629
- ---------------------------------------------------------------------------------------- ----------
Total expenses 417,366
- ----------------------------------------------------------------------------------------
Waiver--
- ----------------------------------------------------------------------------------------
Waiver of administrative personnel and services fee (10,470)
- ---------------------------------------------------------------------------------------- ----------
Net expenses 406,896
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income 692,986
- ---------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain on investments (includes $169,735 net loss on options) 2,544,290
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 5,704,327
- ---------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain on investments on options 8,248,617
- ---------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 8,941,603
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
*Reflects operations for the period from December 12, 1994 (date of initial
public investment) to November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
STAR GROWTH EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
NOVEMBER 30,
1995*
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------------------------
Net investment income $ 692,986
- -----------------------------------------------------------------------------------------------
Net realized gain on investments ($2,544,290 net gain,
as computed for federal tax purposes) 2,544,290
- -----------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments and options 5,704,327
- ----------------------------------------------------------------------------------------------- -----------------
Change in net assets resulting from operations 8,941,603
- ----------------------------------------------------------------------------------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------------------------------------
Distributions from net investment income (598,058)
- ----------------------------------------------------------------------------------------------- -----------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------------------------------------
Proceeds from sale of shares 47,289,797
- -----------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 473,063
- -----------------------------------------------------------------------------------------------
Cost of shares redeemed (7,407,411)
- ----------------------------------------------------------------------------------------------- -----------------
Change in net assets resulting from share transactions 40,355,449
- ----------------------------------------------------------------------------------------------- -----------------
Change in net assets 48,698,994
- -----------------------------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------------------------
Beginning of period --
- ----------------------------------------------------------------------------------------------- -----------------
End of period (including undistributed net investment income of $94,928) $ 48,698,994
- ----------------------------------------------------------------------------------------------- -----------------
</TABLE>
*For the period from December 12, 1994 (date of initial public investment) to
November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
STAR GROWTH EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
NOVEMBER 30,
1995(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- -----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------
Net investment income 0.24
- -----------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 2.67
- ----------------------------------------------------------------------------------------------- -------
Total from investment operations 2.91
- ----------------------------------------------------------------------------------------------- -------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------------------------------
Distributions from net investment income (0.21)
- ----------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 12.70
- ----------------------------------------------------------------------------------------------- -------
TOTAL RETURN (B) 29.44%
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------------
Expenses 1.17%*
- -----------------------------------------------------------------------------------------------
Net investment income 2.00%*
- -----------------------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.03%*
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 48,699
- -----------------------------------------------------------------------------------------------
Portfolio turnover 171%
- -----------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from December 12, 1994 (date of initial
public investment) to November 30, 1995.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
STAR CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- -------------
COMMON STOCKS--93.3%
- -------------------------------------------------------------------------------------------------
APPLIANCE & FURNITURE--2.6%
-----------------------------------------------------------------------------------
60,000 Leggett & Platt, Inc. $ 1,447,500
----------------------------------------------------------------------------------- -------------
AUTOMOBILE--3.1%
-----------------------------------------------------------------------------------
160,000 (b)Navistar International Corp, Inc. 1,740,000
----------------------------------------------------------------------------------- -------------
BANKING--2.4%
-----------------------------------------------------------------------------------
16,000 Baybanks, Inc. 1,328,000
----------------------------------------------------------------------------------- -------------
COMPUTERS--6.6%
-----------------------------------------------------------------------------------
20,000 (b)Dell Computer Corp. 885,000
-----------------------------------------------------------------------------------
56,000 (b)In Focus Systems, Inc. 1,904,000
-----------------------------------------------------------------------------------
25,000 (b)Sybase, Inc. 878,125
----------------------------------------------------------------------------------- -------------
Total 3,667,125
----------------------------------------------------------------------------------- -------------
ELECTRICAL EQUIPMENT--1.7%
-----------------------------------------------------------------------------------
45,000 (b)Exar Corp. 967,500
----------------------------------------------------------------------------------- -------------
ELECTRONICS--13.7%
-----------------------------------------------------------------------------------
65,000 (b)Amphenol Corp. 1,462,500
-----------------------------------------------------------------------------------
35,000 (b)Arrow Electronics, Inc. 1,631,875
-----------------------------------------------------------------------------------
15,000 Avnet, Inc. 705,000
-----------------------------------------------------------------------------------
90,000 (b)Cypress Semiconductor Corp. 1,406,250
-----------------------------------------------------------------------------------
70,200 (b)Integrated Device Technology 1,193,400
-----------------------------------------------------------------------------------
39,000 (b)KLA Instruments Corp. 1,345,500
----------------------------------------------------------------------------------- -------------
Total 7,744,525
----------------------------------------------------------------------------------- -------------
ENERGY--1.5%
-----------------------------------------------------------------------------------
45,000 (b)California Energy, Inc. 866,250
----------------------------------------------------------------------------------- -------------
ENTERTAINMENT & LEISURE--3.4%
-----------------------------------------------------------------------------------
97,000 Callaway Golf Co. 1,927,875
----------------------------------------------------------------------------------- -------------
FINANCIAL SERVICES--9.2%
-----------------------------------------------------------------------------------
80,000 Bear Stearns Companies, Inc. 1,740,000
-----------------------------------------------------------------------------------
60,000 Green Tree Financial Corp. 1,695,000
-----------------------------------------------------------------------------------
200,000 Reliance Group Holdings, Inc. 1,775,000
----------------------------------------------------------------------------------- -------------
Total 5,210,000
----------------------------------------------------------------------------------- -------------
FOOD & BEVERAGE--4.5%
-----------------------------------------------------------------------------------
102,000 Hudson Foods, Inc. 1,632,000
-----------------------------------------------------------------------------------
80,000 Michaels Foods, Inc. 920,000
----------------------------------------------------------------------------------- -------------
Total 2,552,000
----------------------------------------------------------------------------------- -------------
FOREST PRODUCTS & PAPER--2.7%
-----------------------------------------------------------------------------------
39,000 Bowater, Inc. 1,550,250
----------------------------------------------------------------------------------- -------------
HEALTH MANAGEMENT--7.5%
-----------------------------------------------------------------------------------
42,000 Integrated Health Services, Inc. 929,250
-----------------------------------------------------------------------------------
</TABLE>
STAR CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
HEALTH MANAGEMENT--CONTINUED
-----------------------------------------------------------------------------------
80,000 (b)Ornda HealthCorp. $ 1,570,000
-----------------------------------------------------------------------------------
56,050 (b)Vencor, Inc. 1,737,550
----------------------------------------------------------------------------------- -------------
Total 4,236,800
----------------------------------------------------------------------------------- -------------
INDUSTRIAL PRODUCTS--4.4%
-----------------------------------------------------------------------------------
10,000 AGCO Corp. 431,250
-----------------------------------------------------------------------------------
20,000 Kennametal, Inc. 615,000
-----------------------------------------------------------------------------------
38,000 (b)Varity Corp. 1,472,500
----------------------------------------------------------------------------------- -------------
Total 2,518,750
----------------------------------------------------------------------------------- -------------
INSURANCE--3.4%
-----------------------------------------------------------------------------------
6,600 Alexander & Alexander Services, Inc. 144,375
-----------------------------------------------------------------------------------
40,000 Reliastar Financial Corp. 1,730,000
----------------------------------------------------------------------------------- -------------
Total 1,874,375
----------------------------------------------------------------------------------- -------------
METALS--3.1%
-----------------------------------------------------------------------------------
56,200 Lukens, Inc. 1,721,125
----------------------------------------------------------------------------------- -------------
OIL--5.0%
-----------------------------------------------------------------------------------
42,000 Diamond Shamrock, Inc. 1,055,250
-----------------------------------------------------------------------------------
91,000 Union Texas Petroleum Holdings, Inc. 1,751,750
----------------------------------------------------------------------------------- -------------
Total 2,807,000
----------------------------------------------------------------------------------- -------------
RETAIL & APPAREL--2.2%
-----------------------------------------------------------------------------------
46,400 (b)Proffitt's, Inc. 1,252,800
----------------------------------------------------------------------------------- -------------
SERVICES & MISCELLANEOUS--4.2%
-----------------------------------------------------------------------------------
32,000 (b)C D I Corp. 592,000
-----------------------------------------------------------------------------------
70,000 Wellman, Inc. 1,793,750
----------------------------------------------------------------------------------- -------------
Total 2,385,750
----------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS--8.9%
-----------------------------------------------------------------------------------
72,000 (b)Aspect Telecommunications 2,448,000
-----------------------------------------------------------------------------------
57,400 Century Telephone Enterprises Inc. 1,793,750
-----------------------------------------------------------------------------------
37,500 ECI Telecommunications Ltd. 796,875
----------------------------------------------------------------------------------- -------------
Total 5,038,625
----------------------------------------------------------------------------------- -------------
TRUCKING & SHIPPING--3.2%
-----------------------------------------------------------------------------------
39,000 Expeditores International of Washington, Inc. 994,500
-----------------------------------------------------------------------------------
20,000 Illinois Central Corp. 810,000
----------------------------------------------------------------------------------- -------------
Total 1,804,500
----------------------------------------------------------------------------------- -------------
TOTAL COMMON STOCKS (IDENTIFIED COST $48,047,969) 52,640,750
----------------------------------------------------------------------------------- -------------
GOVERNMENT AGENCY--0.4%
- -------------------------------------------------------------------------------------------------
$ 250,000 Federal Home Loan Bank, 4.125%, due 1/26/1996 (identified cost $249,468) 249,468
----------------------------------------------------------------------------------- -------------
</TABLE>
STAR CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- -------------
(A) REPURCHASE AGREEMENT--3.3%
- -------------------------------------------------------------------------------------------------
$ 1,864,000 Donaldson, Lufkin & Jenrette Securities Corp., 5.875%,
dated 11/30/1995, due 12/1/1995 $ 1,864,000
----------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $50,161,437) (C) $ 54,754,218
----------------------------------------------------------------------------------- -------------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(b) Non-income producing security.
(c) The cost of investments for federal tax purposes amounts to $50,184,844.
The net unrealized appreciation/depreciation of investments on a federal
tax basis amounts to $4,569,374 which is comprised of $5,530,552
appreciation and $961,178 depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($56,429,644) at November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
STAR CAPITAL APPRECIATION FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at value
(identified cost $50,161,437, and tax cost $50,184,844) $ 54,754,218
- ---------------------------------------------------------------------------------------------------
Cash 1,714
- ---------------------------------------------------------------------------------------------------
Income receivable 56,164
- ---------------------------------------------------------------------------------------------------
Receivable for investments sold 2,468,006
- ---------------------------------------------------------------------------------------------------
Receivable for shares sold 64,335
- ---------------------------------------------------------------------------------------------------
Deferred expenses 6,844
- --------------------------------------------------------------------------------------------------- -------------
Total assets 57,351,281
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------------------
Payable for investments purchased $ 838,876
- ---------------------------------------------------------------------------------------
Payable for shares redeemed 24,430
- ---------------------------------------------------------------------------------------
Options written, at value (Premium received $14,827) 7,312
- ---------------------------------------------------------------------------------------
Accrued expenses 51,019
- --------------------------------------------------------------------------------------- ----------
Total liabilities 921,637
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 4,773,324 shares outstanding $ 56,429,644
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 50,449,257
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and options 4,600,296
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and options 1,400,590
- ---------------------------------------------------------------------------------------------------
Distributions in excess of net investment income (20,499)
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 56,429,644
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE AND REDEMPTION PROCEEDS PER SHARE:
($56,429,644/4,773,324 shares outstanding) $11.82
- --------------------------------------------------------------------------------------------------- -------------
Offering Price Per Share: (100/95.50 of $11.82)* $12.38
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
*See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
STAR CAPITAL APPRECIATION FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Dividends $ 409,267
- ----------------------------------------------------------------------------------------------------
Interest 343,638
- ---------------------------------------------------------------------------------------------------- ------------
Total income 752,905
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Investment advisory fee $ 408,302
- ----------------------------------------------------------------------------------------
Administrative personnel and services fee 52,388
- ----------------------------------------------------------------------------------------
Custodian fees 11,045
- ----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 31,516
- ----------------------------------------------------------------------------------------
Directors'/Trustees' fees 3,817
- ----------------------------------------------------------------------------------------
Auditing fees 13,964
- ----------------------------------------------------------------------------------------
Legal fees 5,259
- ----------------------------------------------------------------------------------------
Portfolio accounting fees 54,523
- ----------------------------------------------------------------------------------------
Shareholder services fee 9,570
- ----------------------------------------------------------------------------------------
Share registration costs 23,994
- ----------------------------------------------------------------------------------------
Printing and postage 14,290
- ----------------------------------------------------------------------------------------
Insurance premiums 4,694
- ----------------------------------------------------------------------------------------
Miscellaneous 5,657
- ---------------------------------------------------------------------------------------- ----------
Total expenses 639,019
- ----------------------------------------------------------------------------------------
Waiver--
- ----------------------------------------------------------------------------------------
Waiver of administrative personnel and services fee (5,242)
- ---------------------------------------------------------------------------------------- ----------
Net expenses 633,777
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income 119,128
- ---------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain on investments (includes $235,437 net loss on options) 1,403,382
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments and options written 4,508,753
- ---------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain on investments and options 5,912,135
- ---------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 6,031,263
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR CAPITAL APPRECIATION FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
1995 1994*
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------------
Net investment income $ 119,128 $ 7,982
- -----------------------------------------------------------------------------------
Net realized gain (loss) on investments ($1,426,788 and $114,045, respectively, as
computed for federal tax purposes) 1,403,382 111,347
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 4,508,753 91,542
- ----------------------------------------------------------------------------------- ------------- -------------
Change in net assets resulting from operations 6,031,263 210,871
- ----------------------------------------------------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------------------------
Distributions from net investment income (127,110) --
- -----------------------------------------------------------------------------------
Distributions in excess of net investment income (20,499) --
- -----------------------------------------------------------------------------------
Distributions from net realized gains (114,139) --
- ----------------------------------------------------------------------------------- ------------- -------------
Change in net assets resulting from distributions to shareholders (261,748) --
- ----------------------------------------------------------------------------------- ------------- -------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------------------------
Proceeds from sale of shares 26,008,819 30,230,908
- -----------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions
declared 122,124 --
- -----------------------------------------------------------------------------------
Cost of shares redeemed (5,483,762) (428,831)
- ----------------------------------------------------------------------------------- ------------- -------------
Change in net assets resulting from share transactions 20,647,181 29,802,077
- ----------------------------------------------------------------------------------- ------------- -------------
Change in net assets 26,416,696 30,012,948
- -----------------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------------
Beginning of period 30,012,948 --
- ----------------------------------------------------------------------------------- ------------- -------------
End of period (including undistributed net investment income of ($20,499) and
$7,982, respectively) $ 56,429,644 $ 30,012,948
- ----------------------------------------------------------------------------------- ------------- -------------
</TABLE>
*For the period from June 13, 1994 (date of initial public investment) to
November 30, 1994.
(See Notes which are an integral part of the Financial Statements)
STAR CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
1995 1994(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.15 $ 10.00
- ------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------
Net investment income 0.03 0.00
- ------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.72 0.15
- ------------------------------------------------------------------------------------------ --------- -----------
Total from investment operations 1.75 0.15
- ------------------------------------------------------------------------------------------ --------- -----------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------------------------
Distributions from net investment income (0.04) --
- ------------------------------------------------------------------------------------------
Distributions in excess of net investment income (0.00)** --
- ------------------------------------------------------------------------------------------
Distributions from net realized gain on investment (0.04) --
- ------------------------------------------------------------------------------------------ --------- -----------
Total distributions (0.08) --
- ------------------------------------------------------------------------------------------ --------- -----------
NET ASSET VALUE, END OF PERIOD $ 11.82 $ 10.15
- ------------------------------------------------------------------------------------------ --------- -----------
TOTAL RETURN (B) 17.35% 1.50 %
- ------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------------------------
Expenses 1.47% 1.58 %*
- ------------------------------------------------------------------------------------------
Net investment income 0.28% 0.08 %*
- ------------------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.01% 0.10 %*
- ------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 56,430 $ 30,013
- ------------------------------------------------------------------------------------------
Portfolio Turnover 144% 36 %
- ------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
** Distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. These
distributions did not represent a return of capital for federal income tax
purposes for the year ended November 30, 1995.
(a) Reflects operations for the period from June 13, 1994 (date of initial
public investment) to November 30, 1994. For the period from May 16, 1994
(start of business) to June 12, 1994, all income was distributed to the
administrator.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
STAR FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Star Funds (the "Trust"), is registered under the Investment Company Act of
1940, as amended
(the "Act"), as an open-end management investment company. The Trust consists of
eight diversified portfolios (individually referred to as the "Fund"). The
following portfolios comprise the Trust:
PORTFOLIO NAME
Star Capital Appreciation Fund ("Capital Appreciation Fund")
Star Growth Equity Fund ("Growth Equity Fund")
Star Relative Value Fund ("Relative Value Fund")
The Stellar Fund ("Stellar Fund")
Star Strategic Income Fund ("Strategic Income Fund")
Star Tax-Free Money Market Fund ("Tax-Free Money Market Fund")
Star Treasury Fund ("Treasury Fund")
Star U.S. Government Income Fund ("U.S. Government Income Fund")
The financial statements of the following portfolios (individually referred to
as the "Fund", or collectively as the "Funds") are presented herein:
PORTFOLIO NAME
Star Capital Appreciation Fund
Star Growth Equity Fund
Star Relative Value Fund
The Stellar Fund
Star Strategic Income Fund
Star U.S. Government Income Fund
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
Star Funds, except Stellar Fund, are offered without class designation. Shares
of Stellar Fund are offered in two classes: Investment shares and Trust shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--Equity securities traded on a securities exchange
and securities traded in the over-the-counter market are valued at the last
reported sales price on the day of valuation; other securities for which no
sale was reported on that date, are valued at the last quoted bid price.
Corporate and municipal bonds, asset backed securities and U.S. government
securities are valued using the last quoted bid price as furnished by an
independent pricing service. Short-term securities with remaining
maturities of sixty days or less at the time of purchase may be valued at
amortized cost, which approximates fair market value.
B. REPURCHASE AGREEMENTS--It is the policy of the Funds to require a custodian
bank to take possession, to have legally segregated in the Federal Reserve
Book Entry System, or to have segregated within the custodian bank's vault,
all securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Funds to monitor, on
a daily basis, the market value of each repurchase agreement's collateral
to ensure that the value of collateral at least equals the repurchase price
to be paid under the repurchase agreement transaction.
STAR FUNDS
- --------------------------------------------------------------------------------
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Funds' adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Funds
could receive less than the repurchase price on the sale of collateral
securities.
C. INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS--Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
Interest income and expenses are accrued daily. Bond premium and discount,
if applicable, are amortized as required by the Internal Revenue Code, as
amended (the "Code").
D. FEDERAL TAXES--It is each Fund's policy to comply with the provisions of
the Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal taxes are necessary. Withholding taxes on foreign
dividends have been provided for in accordance with the Trust's
understanding of the applicable country's tax rules and rates.
At November 30, 1995, U.S. Government Income Fund for federal tax purposes,
had a capital loss carryforward, as noted below, which will reduce the
Fund's taxable income arising from future net realized gains on
investments, if any, to the extent permitted by the Code, and thus will
reduce the amount of the distributions to shareholders which would
otherwise be necessary to relieve the Fund of any liability for federal
tax.
<TABLE>
<CAPTION>
FUND TOTAL TAX-LOSS CARRYFORWARD
<S> <C>
U.S. Government Income Fund $1,278,486
</TABLE>
Pursuant to the Code, such capital loss carryforwards will expire as
follows:
<TABLE>
<CAPTION>
FUND EXPIRATION YEAR EXPIRATION AMOUNT
<S> <C> <C>
U.S. Government Income Fund 11/30/2002 $1,278,486
</TABLE>
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES--The costs incurred by each Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from each Fund's commencement date.
G. OPTION CONTRACTS WRITTEN--The Capital Appreciation Fund, Growth Equity
Fund, Stellar Fund, Strategic Income Fund and U.S. Government Income Fund
may write "covered" call option contracts. All of the preceding Funds,
except U.S. Government Income Fund may also write "covered" put options. A
written option obligates the Funds to deliver (a call), or to receive (a
put), the contract amount upon exercise by the holder of the option. The
principal reason for writing call or put options is to obtain, through
receipt of premiums, a greater current return than would be realized on
underlying securities alone. By writing call options, the Funds' may forego
potential gains on the underlying security. By writing a put option, the
Fund risks becoming obligated to purchase the underlying security for more
than its current market price upon exercise. Premiums received from writing
options are recorded as a liability and an unrealized gain or loss is
measured by the difference between the current value and the premium
received. For the fiscal year ended November 30, 1995, Capital Appreciation
Fund, Growth Equity Fund, Stellar Fund, Strategic Income Fund and U.S.
Government Income Fund had realized gain (loss) on options contracts of
($235,437), ($169,735), $100,430, $39,766, and $42,422, respectively.
STAR FUNDS
- --------------------------------------------------------------------------------
At November 30, 1995, Capital Appreciation Fund and Strategic Income Fund
had the following outstanding options:
<TABLE>
<CAPTION>
CAPITAL APPRECIATION FUND
NUMBER UNREALIZED
EXPIRATION EXERCISE OF APPRECIATION MARKET
ISSUER TYPE DATE PRICE CONTRACTS (DEPRECIATION) VALUE
<S> <C> <C> <C> <C> <C> <C>
Aspect Telecom Call 12/16/95 $ 35 80 $ 6,680 $ 6,500
- -----------------------------
Aspect Telecom Call 12/16/95 35 10 835 812
- ----------------------------- -------- -----------
Total $ 7,515 $ 7,312
- ----------------------------- -------- -----------
</TABLE>
<TABLE>
<CAPTION>
STRATEGIC INCOME FUND
NUMBER UNREALIZED
EXPIRATION EXERCISE OF APPRECIATION MARKET
ISSUER TYPE DATE PRICE CONTRACTS (DEPRECIATION) VALUE
<S> <C> <C> <C> <C> <C> <C>
Dow Chemical Put 12/16/95 $ 70 30 $ 2,189 $ 1,500
- -------------------------
Weyerhauser Call 12/16/95 45 110 (440) 11,000
- -------------------------
Philip Morris Co. Put 1/20/96 85 50 (1,763) 7,500
- -------------------------
Lyondell Call 6/22/96 30 200 (500) 13,750
- ------------------------- ----------------- -----------
Total ($ 514) $ 33,750
- ------------------------- ----------------- -----------
</TABLE>
The following is a summary of the Capital Appreciation Fund, Growth Equity
Fund, Stellar Fund, Strategic Income Fund and U.S. Government Income Fund
written options activity:
<TABLE>
<CAPTION>
CAPITAL
APPRECIATION FUND
NUMBER OF
CONTRACTS PROCEEDS*
<S> <C> <C>
Outstanding at December 1, 1994 -0- $ -0-
- -----------------------------------------------------------------------------
Contracts opened 2,297 303,281
- -----------------------------------------------------------------------------
Contracts expired (738) (15,022)
- -----------------------------------------------------------------------------
Contracts exercised (1,268) (230,137)
- -----------------------------------------------------------------------------
Contracts closed (201) (43,295)
- ----------------------------------------------------------------------------- ------- ------------
Outstanding at November 30, 1995 90 $ 14,827
- ----------------------------------------------------------------------------- ------- ------------
</TABLE>
<TABLE>
<CAPTION>
GROWTH EQUITY FUND
NUMBER OF
CONTRACTS PROCEEDS*
<S> <C> <C>
Outstanding at December 1, 1994 -0- $ -0-
- -----------------------------------------------------------------------------
Contracts opened 2,810 707,485
- -----------------------------------------------------------------------------
Contracts expired (630) (50,523)
- -----------------------------------------------------------------------------
Contracts exercised (1,185) (252,004)
- -----------------------------------------------------------------------------
Contracts closed (995) (404,958)
- ----------------------------------------------------------------------------- ------- ------------
Outstanding at November 30, 1995 -0- $ -0-
- ----------------------------------------------------------------------------- ------- ------------
</TABLE>
STAR FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STELLAR FUND
NUMBER OF
CONTRACTS PROCEEDS*
<S> <C> <C>
Outstanding at December 1, 1994 911 $ 88,269
- -----------------------------------------------------------------------------
Contracts opened 9,885 263,201
- -----------------------------------------------------------------------------
Contracts expired (4,346) (132,312)
- -----------------------------------------------------------------------------
Contracts exercised (6,045) (117,919)
- -----------------------------------------------------------------------------
Contracts closed (405) (101,239)
- ----------------------------------------------------------------------------- ------------- ------------
Outstanding at November 30, 1995 -0- $ -0-
- ----------------------------------------------------------------------------- ------------- ------------
</TABLE>
<TABLE>
<CAPTION>
STRATEGIC INCOME FUND
NUMBER OF
CONTRACTS PROCEEDS*
<S> <C> <C>
Outstanding at December 1, 1994 -0- $ -0-
- -----------------------------------------------------------------------------
Contracts opened 18,920 414,660
- -----------------------------------------------------------------------------
Contracts expired (1,735) (69,584)
- -----------------------------------------------------------------------------
Contracts exercised (15,811) (160,213)
- -----------------------------------------------------------------------------
Contracts closed (984) (151,627)
- ----------------------------------------------------------------------------- ------------- ------------
Outstanding at November 30, 1995 390 $ 33,236
- ----------------------------------------------------------------------------- ------------- ------------
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT
INCOME FUND
NUMBER OF
CONTRACTS PROCEEDS*
<S> <C> <C>
Outstanding at December 1, 1994 1,500 $ 10,547
- -----------------------------------------------------------------------------
Contracts opened 27,650 120,430
- -----------------------------------------------------------------------------
Contracts expired (4,000) (26,250)
- -----------------------------------------------------------------------------
Contracts exercised (25,150) (104,727)
- -----------------------------------------------------------------------------
Contracts closed -0- -0-
- ----------------------------------------------------------------------------- ------------- ------------
Outstanding at November 31, 1995 -0- $ -0-
- ----------------------------------------------------------------------------- ------------- ------------
</TABLE>
*Represents premium received less commissions paid.
H. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
STAR FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL
APPRECIATION FUND
YEAR ENDED
NOVEMBER 30,
1995 1994*
<S> <C> <C>
Shares sold 2,294,518 2,999,416
- --------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 11,825 --
- --------------------------------------------------------------------------------------
Shares redeemed (490,433) (42,002)
- -------------------------------------------------------------------------------------- ---------- ----------
Net change resulting from Fund share transactions 1,815,910 2,957,414
- -------------------------------------------------------------------------------------- ---------- ----------
</TABLE>
*Reflects operations for the period from May 16, 1994 (start of business) to
November 30, 1994.
<TABLE>
<CAPTION>
RELATIVE VALUE FUND
YEAR ENDED
NOVEMBER 30,
1995 1994
<S> <C> <C>
Shares sold 3,270,703 3,021,454
- --------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 40,596 20,475
- --------------------------------------------------------------------------------------
Shares redeemed (1,044,452) (734,612)
- -------------------------------------------------------------------------------------- ----------- ----------
Net change resulting from Fund share transactions 2,266,847 2,307,317
- -------------------------------------------------------------------------------------- ----------- ----------
</TABLE>
<TABLE>
<CAPTION>
STELLAR FUND
YEAR ENDED NOVEMBER 30,
<CAPTION>
1995 1994
INVESTMENT SHARES SHARES DOLLARS SHARES DOLLARS
<S> <C> <C> <C> <C>
- ------------------------------------------------------ ----------- -------------- ----------- --------------
Shares sold 316,665 $ 3,633,111 3,150,588 $ 36,158,470
- ------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 151,838 1,724,929 151,340 1,726,229
- ------------------------------------------------------
Shares redeemed (1,097,558) (12,603,176) (5,111,420) (58,040,284)
- ------------------------------------------------------ ----------- -------------- ----------- --------------
Net change resulting from Investment share
transactions (629,055) ($ 7,245,136) (1,809,492) ($ 20,155,585)
- ------------------------------------------------------ ----------- -------------- ----------- --------------
</TABLE>
<TABLE>
<CAPTION>
STELLAR FUND
YEAR ENDED NOVEMBER 30,
<CAPTION>
1995 1994*
TRUST SHARES SHARES DOLLARS SHARES DOLLARS
<S> <C> <C> <C> <C>
- ------------------------------------------------------ ----------- -------------- ----------- --------------
Shares sold 1,362,547 $ 15,679,680 6,530,935 $ 73,925,771
- ------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 161,056 1,831,157 58,141 653,321
- ------------------------------------------------------
Shares redeemed (1,783,611) (20,596,933) (1,008,394) (11,355,619)
- ------------------------------------------------------ ----------- -------------- ----------- --------------
Net change resulting from Trust share
transactions (260,008) ($ 3,086,096) 5,580,682 $ 63,223,473
- ------------------------------------------------------ ----------- -------------- ----------- --------------
Net change resulting from Fund share
transactions (889,063) ($ 10,331,232) 3,771,190 $ 43,067,888
- ------------------------------------------------------ ----------- -------------- ----------- --------------
*For the period from April 5, 1994 (start of business) to November 30, 1994.
</TABLE>
STAR FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH STRATEGIC
EQUITY FUND INCOME FUND
<CAPTION>
PERIOD ENDED
NOVEMBER 30, 1995**
<S> <C> <C>
Shares sold 4,433,979 4,687,046
- -------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 41,831 72,542
- -------------------------------------------------------------------------------
Shares redeemed (640,831) (245,990)
- ------------------------------------------------------------------------------- --------------- ----------------
Net change resulting from Fund share transactions 3,834,979 4,513,598
- ------------------------------------------------------------------------------- --------------- ----------------
**For the period from December 12, 1994 (date of initial public investment) to November 30, 1995.
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT
INCOME FUND
<CAPTION>
YEAR ENDED
NOVEMBER 30,
1995 1994
<S> <C> <C>
Shares sold 4,813,482 6,950,021
- -------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 310,088 138,234
- -------------------------------------------------------------------------------------
Shares redeemed (3,651,974) (1,885,603)
- ------------------------------------------------------------------------------------- ----------- -----------
Net change resulting from Fund share transactions 1,471,596 5,202,652
- ------------------------------------------------------------------------------------- ----------- -----------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Star Bank, N.A., the Trust's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee based on
a percentage of each Fund's average daily net assets (see below). The Adviser
may voluntarily choose to waive a portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
<TABLE>
<CAPTION>
FUND ANNUAL RATE
<S> <C>
Capital Appreciation Fund 0.95%
Growth Equity Fund 0.75%
Relative Value Fund 0.75%
Stellar Fund 0.95%
Strategic Income Fund 0.95%
U.S. Government Income Fund 0.60%
</TABLE>
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides each Fund
with certain administrative personnel and services for which it receives a fee.
The FAS fee is based on the level of average aggregate net assets of the Trust
for the period. FAS may voluntarily choose to waive a portion of its fee.
DISTRIBUTION SERVICES FEE--The Trust has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the
Funds will compensate Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Funds to finance activities intended to
result in the sale of the Funds' investment shares. The Plan provides that the
Funds may incur distribution expenses up to 0.25 of 1% of the average daily net
assets of the investment shares annually, to compensate FSC. Currently, only the
Stellar Fund is accruing and paying 12b-1 fees. The other Star Funds will not
accrue or pay any distribution expenses pursuant to the Plan until a second
class of shares has been registered with the Securities and Exchange Commission.
SHAREHOLDER SERVICES FEE--Under the terms of the Shareholder Services Agreement
with Star Bank, N.A., each Fund will pay Star Bank, N.A. up to 0.25 of 1% of its
average daily net assets for the period. For the foreseeable future, the Funds
plan to limit the Shareholder Servicing fee to 0.04% of
STAR FUNDS
- --------------------------------------------------------------------------------
average daily net assets. This fee is to obtain certain services for
shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Funds for
which it receives a fee. The fee is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Funds' accounting records
for which it receives a fee. The fee is based on the level of each Fund's
average net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Star Bank, N.A., is the Funds' custodian for which it receives a
fee. The fee is based on the level of each Funds' average net assets for the
period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses were initially borne by FAS.
The Funds have agreed to reimburse FAS for the organizational expenses during
the five year period following the Funds' effective date.
<TABLE>
<CAPTION>
EXPENSES OF AMOUNTS REIMBURSED TO
ORGANIZING FAS FOR THE YEAR ENDED
EFFECTIVE DATE THE FUND NOVEMBER 30, 1995
<S> <C> <C> <C>
Capital Appreciation Fund May 16, 1994 $ 25,801 $ 2,413
Growth Equity Fund November 14, 1994 32,925 2,000
Relative Value Fund December 5, 1990 33,500 4,843
Stellar Fund July 31, 1991 23,641 5,670
Strategic Income Fund November 14, 1994 29,810 2,000
U.S. Government Income Fund November 23, 1992 25,000 6,630
</TABLE>
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
year ended November 30, 1995, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
<S> <C> <C>
Capital Appreciation $ 77,024,180 $ 54,326,722
Growth Equity Fund 96,045,547 56,185,604
Relative Value Fund 64,538,986 22,602,373
Stellar Fund 100,933,820 105,132,395
Strategic Income Fund 109,150,851 64,842,227
U.S. Government Fund 230,141,224 217,182,726
</TABLE>
(6) CONCENTRATION OF CREDIT RISK
Stellar invests in equity and fixed income securities of non-U.S. issuers.
Although, Stellar maintains a diversified investment portfolio, the political or
economic developments within a particular country or region may have an adverse
effect on the ability of domiciled issuers to meet their obligations.
Additionally, political or economic developments may have an effect on the
liquidity and volatility of portfolio securities and currency holdings.
STAR FUNDS
- --------------------------------------------------------------------------------
At November 30, 1995, the International Securities held in the Portfolio were
diversified within the following Industries:
<TABLE>
<S> <C>
Basic Industry 0.93%
Capital Goods 4.75%
Closed-End Investment Companies 2.80%
Consumer Cylicals 3.51%
Consumer Staples 0.40%
Energy 2.05%
Finance 1.51%
Health Care 1.43%
Miscellaneous 1.70%
Utilities 1.57%
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
STAR FUNDS
(Star Capital Appreciation Fund, Star Growth Equity Fund, Star Relative Value
Fund, The Stellar Fund, Star Strategic Income Fund and Star U.S. Government
Income Fund):
We have audited the accompanying statements of assets and liabilities of Star
Capital Appreciation Fund, Star Growth Equity Fund, Star Relative Value Fund,
The Stellar Fund, Star Strategic Income Fund and Star U.S. Government Income
Fund (investment portfolios of Star Funds, a Massachusetts business trust),
including the schedules of portfolio investments, as of November 30, 1995, and
the related statements of operations for the year then ended, and the statements
of changes in net assets and the financial highlights for the periods presented.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Star
Capital Appreciation Fund, Star Growth Equity Fund, Star Relative Value Fund,
The Stellar Fund, Star Strategic Income Fund and Star U.S. Government Income
Fund (investment portfolios of Star Funds) as of November 30, 1995, the results
of their operations for the year then ended, and the changes in their net assets
and their financial highlights for the periods presented, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
January 12, 1996
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Edward C. Gonzales
William J. Copeland President and Treasurer
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. John W. McGonigle
Edward C. Gonzales Executive Vice President and Secretary
Peter E. Madden Richard B. Fisher
Gregor F. Meyer Vice President
John E. Murray, Jr. Joseph S. Machi
Wesley W. Posvar Vice President and Assistant Treasurer
Marjorie P. Smuts David M. Taylor
Assistant Treasurer
C. Grant Anderson
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risks,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Trust's prospectus which contains facts concerning its
objective and policies, management fees, expenses and other information.
Cusip 854911500
Cusip 854911880
Cusip 854911708
Cusip 854911609
Cusip 854911401 -------------------------
Cusip 854911864 Star Bank, N.A.
Cusip 854911807 Investment Adviser
G00299-08 (1/96) -------------------------
4289TR Federated Securities Corp.
Distributor
-------------------------
MONEY
MARKET FUNDS
Star Funds
ANNUAL
REPORT
Dated November 30, 1995
Star Tax-Free Money Market Fund
Star Treasury Fund
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for the Star Money
Market Funds: Star Tax-Free Money Market Fund and Star Treasury Fund. The Report
covers activity over the 12-month period ended November 30, 1995.
We begin with an interview with your fund's portfolio manager about the interest
rate environment during the period, fund yields and strategy. Next, you will
find a list of fund holdings and the financial statements.
Each fund is a practical way to put your money to work pursuing daily income,
while giving you the additional advantages of easy access to your money and
relative stability.* Let's review each fund's highlights during the 12 months
covered by this report.
STAR TAX-FREE MONEY MARKET FUND
On behalf of its tax-sensitive investors, the fund's portfolio was diversified
across high-quality money market securities issued by municipalities in 21
states. The fund paid tax-free dividends of $0.03 per share during the 12-month
period.* The fund's assets grew to reach $167.4 million.
STAR TREASURY FUND
As a highly conservative way to pursue daily money market income, the fund's
portfolio of U.S. Treasury money market securities paid dividends of $0.05 per
share during the 12-month period. The fund's assets soared by more than 80% to
reach $655.0 million.
Thank you for turning your hard-earned cash into hard-working cash through these
Star Money Market Funds. We look forward to keeping you up to date on your
investment through the highest level of service possible.
Sincerely,
Edward C. Gonzales
Edward C. Gonzales
President
January 15, 1996
*Income may be subject to the federal alternative minimum tax and state and
local taxes.
While money market funds seek to maintain a share value of $1.00, there is no
guarantee that they will be able to do so.
INVESTMENT REVIEWS
- --------------------------------------------------------------------------------
Star Tax-Free Money Market Fund
Q Can you comment on the interest rate environment?
A Yields have fallen precipitously over the past year. The combination of
slowing economic growth, falling inflation, and progress towards a balanced
budget agreement have all contributed to an environment conducive to lower
interest rates.
As for the municipal securities specifically, legislator discussions of tax
reform have caused investors to favor shorter maturity issues. However,
municipal note issuance has been light, resulting in significantly lower yields
on notes already outstanding.
Q How did the fund's yield respond?
A The fund's yield has fallen, but not as quickly as short-term rates thanks
to purchases of fixed rate notes. Currently, the Star Tax-Free Money Market
fund has about one-third of its assets invested in fixed rate tax-exempt
securities. The remainder of the fund is invested in short-term variable
rate demand notes for liquidity and their current higher yields.
Q What is your outlook for short-term rates for the near future?
A Looking ahead to 1996, we expect the federal funds rate will fall to 5.25%
in the first quarter and 5.00% in the second quarter reflecting slower
economic growth and what we see as benign inflation pressures. Recent
comments from the Federal Reserve (the "Fed") suggest that policymakers
are hesitant to reduce rates further until the Congressional budget and
deficit reduction plans are finalized. In addition, Chairman Greenspan
continues to voice concern that inflation might still emerge. For these
reasons, we believe the Fed will be slow to reduce interest rates more
meaningfully. Q Do you anticipate making any changes to the fund's
portfolio based on your outlook?
A No major changes. The fund is already in a "neutral" portfolio stance which
means the fund's average maturity equals the overall market. If interest
rates were to reverse and rise for non-fundamental reasons, we would be
inclined to "lock-in" yields and extend the average maturity.
- --------------------------------------------------------------------------------
Star Treasury Fund
Q Can you comment on the interest rate environment?
A Yields have fallen precipitously over the past year. The combination of
slowing economic growth, falling inflation, and progress towards a balanced
budget agreement have all contributed to an environment conducive to lower
interest rates.
Q How did the fund's yield respond?
A The fund's yield has fallen, but not as quickly as short-term rates thanks
to purchases of Treasury bills and notes. Currently, the Star Treasury fund
has about one-third of its assets invested in fixed rate Treasury
securities. The remainder of the fund is invested in short-term repurchase
agreements for liquidity and their current higher yields. Repurchase
agreements are currently the highest yielding asset available for
purchase by the fund.
Q What is your outlook for short-term rates for the near future?
A Looking ahead to 1996, we expect the federal funds rate will fall to 5.25%
in the first quarter and 5.00% in the second quarter reflecting slower
economic growth and what we see as benign inflation pressures. Recent
comments from the Federal Reserve (the "Fed") suggest that policymakers are
hesitant to reduce rates further until the Congressional budget and deficit
reduction plans are finalized. In addition, Chairman Greenspan continues to
voice concern that inflation might still emerge. For these reasons, we
believe the Fed will be slow to reduce interest rates more meaningfully.
Q Do you anticipate making any changes to the fund's portfolio based on your
outlook?
A No major changes. The fund is already in a "neutral" portfolio stance which
means the fund's average maturity equals the overall market. If interest
rates were to reverse and rise for non-fundamental reasons, we would be
inclined to "lock-in" yields and extend the average maturity.
Q As we enter 1996, do you see a continued positive interest rate environment
for bonds?
A Yes, but more subdued than 1995. The economic outlook has become more mixed
in recent weeks. While some sectors have shown renewed strength such as
automobile and housing sales, others have languished. Slow export growth,
weak retail sales, and an unintended inventory bulge are specific problem
areas. In addition, the economic indicators we analyze have peaked, and
have weakened slightly in the past month. With our economic outlook now
anticipating mixed results and sluggish growth, long bond yields should
remain within a narrow range of 5.75% to 6.25% range for the next six
months.
STAR TAX-FREE MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ----------------------------------------------------------------- ---------------- --------------
SHORT-TERM MUNICIPALS--102.8%
- -------------------------------------------------------------------------------
ALABAMA--0.7%
-----------------------------------------------------------------
$ 1,200,000 Montgomery, AL, BMC Special Care Facilities Financing Authority,
Weekly VRDNs Revenue Refunding Bonds (VHA of Alabama, Inc.
Capital Asset Financing Program)/(Series G)/(First National Bank
of Chicago SPA)/(AMBAC Insured) Aaa/A-1 $ 1,200,000
----------------------------------------------------------------- --------------
COLORADO--2.2%
-----------------------------------------------------------------
720,000 Loveland, CO, IDR, 3.95% Revenue Bonds (Safeway Inc.)/(Bankers
Trust Co. LOC), 12/1/1995 A-1+ 720,000
-----------------------------------------------------------------
3,000,000 Smith Creek, CO, Weekly VRDNs Metropolitan District Revenue Bonds
(NationsBank, TX LOC) A-1 3,000,000
----------------------------------------------------------------- --------------
Total 3,720,000
----------------------------------------------------------------- --------------
FLORIDA--1.3%
-----------------------------------------------------------------
2,000,000 Escambia County, FL, IDA Weekly VRDNs Revenue Bonds (Pacer
Industries, Inc.)/(Series 1991)/(Trust Co. Bank LOC) Aa3 2,000,000
-----------------------------------------------------------------
100,000 University Athletic Association, Inc., FL, Capital Improvement
Weekly VRDNs Revenue Bonds (University of Florida Stadium)/(Sun
Bank, Orlando, FL LOC) VMIG1 100,000
----------------------------------------------------------------- --------------
Total 2,100,000
----------------------------------------------------------------- --------------
GEORGIA--1.3%
-----------------------------------------------------------------
2,150,000 Fulton County, GA, Development Authority Weekly VRDNs Revenue
Bonds (Georgia Tech Athletic Assn., Inc.)/(Trust Co. Bank,
Atlanta, GA LOC) Aa3 2,150,000
----------------------------------------------------------------- --------------
ILLINOIS--23.8%
-----------------------------------------------------------------
1,600,000 Chicago, IL, 3.75% GO Tender Notes (Series B)/ (Morgan Guaranty
Trust LOC), 5/1/1996 VMIG1/Sp1+ 1,600,000
-----------------------------------------------------------------
2,200,000 Cook County, IL, Weekly VRDNs Revenue Bonds (Catholic Charities
Housing Development Corp.)/ (Series 1988A-1)/(National
Westminster LOC) VMIG1 2,200,000
-----------------------------------------------------------------
1,500,000 Illinois Development Finance Authority, 3.75% Pollution Control
Revenue Bonds (Illinois Power Co.)/ (Series C)/(Canadian Imperial
Bank LOC) 2/14/1996 VMIG1/A-1+ 1,500,000
-----------------------------------------------------------------
1,055,000 Illinois Development Finance Authority, Weekly VRDNs Revenue
Bonds (Lake Forest Academy)/ (Northern Trust Co. LOC) A-1+ 1,055,000
-----------------------------------------------------------------
2,000,000 Illinois Development Finance Authority, Weekly VRDNs Revenue
Bonds (Roosevelt University Project)/ (American National Bank
LOC) A-1+ 2,000,000
-----------------------------------------------------------------
</TABLE>
STAR TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ----------------------------------------------------------------- ---------------- --------------
SHORT-TERM MUNICIPALS--CONTINUED
- -------------------------------------------------------------------------------
ILLINOIS--CONTINUED
-----------------------------------------------------------------
$ 3,000,000 Illinois Development Finance Authority, Weekly VRDNs Revenue
Bonds (St. Ignatius College)/ (Northern Trust Co. LOC) A-1+ $ 3,000,000
-----------------------------------------------------------------
4,200,000 Illinois Educational Facilities Authority, Weekly VRDNs Revenue
Bonds (Newberry Library)/(Northern Trust Co. LOC) VMIG1 4,200,000
-----------------------------------------------------------------
3,000,000 Illinois Health Facilities Authority Weekly VRDNs Revenue Bonds
(Gottlieb Health Resources, Inc.)/ (Harris Trust & Savings Bank
LOC) VMIG1 3,000,000
-----------------------------------------------------------------
4,100,000 Illinois Health Facilities Authority, Weekly VRDNs Revenue Bonds
(West Suburban Hospital Medical Center)/(First National Bank of
Chicago LOC) VMIG1 4,100,000
-----------------------------------------------------------------
4,000,000 Illinois Health Facilities Authority, 3.80% Revenue Bonds
(Victory Health Services Project)/(Series C)/ (First National
Bank of Chicago LOC), 2/8/1996 VMIG1/A 4,000,000
-----------------------------------------------------------------
1,600,000 Illinois Health Facilities Authority, Weekly VRDNs Revenue Bonds
(Evangelical Hospital Corp.)/(Series A)/(First National Bank of
Chicago LOC) VMIG1 1,600,000
-----------------------------------------------------------------
6,500,000 Illinois Health Facilities Authority, Weekly VRDNs Revenue Bonds
(Gottlieb Health Resources, Inc.)/ (Harris Trust & Savings Bank,
IL LOC) VMIG1 6,500,000
-----------------------------------------------------------------
3,000,000 Illinois State, 4.50% Revenue Anticipation Certificates,
5/10/1996 MIG1/Sp1+ 3,009,642
-----------------------------------------------------------------
1,630,000 Schaumburg, IL, IDR Weekly VRDNs (LaQuinta Motor
Inns)/(NationsBank of Fort Worth, TX LOC) Aa3 1,630,000
-----------------------------------------------------------------
400,000 Springfield, IL, Community Improvement Weekly VRDNs Revenue
Refunding Bonds (Kent Family, Inc. Project)/(PNC Bank, PA LOC) A1 400,000
----------------------------------------------------------------- --------------
Total 39,794,642
----------------------------------------------------------------- --------------
INDIANA--9.6%
-----------------------------------------------------------------
2,000,000 Indiana Bond Bank, 5.75%, (Series A-2) 1/10/1996 MIG1/Sp1+ 2,001,467
-----------------------------------------------------------------
4,000,000 Indianapolis, IN, EDR, Weekly VRDNs (Rand McNally Project)/(First
Union National Bank, NC LOC) A-1 4,000,000
-----------------------------------------------------------------
3,195,000 Logansport, IN, Weekly VRDNs (MMMs Investment Project)/(Bank One,
Indianapolis, IN LOC) NR(B) 3,195,000
-----------------------------------------------------------------
5,100,000 Purdue University, IN, Weekly VRDNs University Revenue Bonds
(Student Fee)/(Series K) VMIG1/A-1+ 5,100,000
-----------------------------------------------------------------
1,800,000 Purdue University, IN, Weekly VRDNs University Revenue Bonds
(Student Fee)/(Series H) VMIG1/A-1+ 1,800,000
----------------------------------------------------------------- --------------
Total 16,096,467
----------------------------------------------------------------- --------------
</TABLE>
STAR TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ----------------------------------------------------------------- ---------------- --------------
SHORT-TERM MUNICIPALS--CONTINUED
- -------------------------------------------------------------------------------
KENTUCKY--2.8%
-----------------------------------------------------------------
$ 1,000,000 Boone County, KY, IDR Weekly VRDNs (Square D Co.)/(Series
A)/(Societe Generale LOC) A-1+ $ 1,000,000
-----------------------------------------------------------------
2,000,000 Fulton, KY, IDA Weekly VRDNs Revenue Bonds (United Health Care of
Kentucky, Inc.)/(First Union National Bank, Charlotte, NC LOC) VMIG1 2,000,000
-----------------------------------------------------------------
1,700,000 Louisville, KY, IDA Weekly VRDNs (222 Project)/(PNC Bank, KY LOC) A-1 1,700,000
----------------------------------------------------------------- --------------
Total 4,700,000
----------------------------------------------------------------- --------------
MAINE--1.8%
-----------------------------------------------------------------
3,000,000 Maine State, 4.50% GO TANs, 6/28/1996 MIG1 3,012,453
----------------------------------------------------------------- --------------
MARYLAND--0.5%
-----------------------------------------------------------------
850,000 Maryland State, IDA EDR Weekly VRDNs (Maryland Academy of
Sciences)/(NationsBank, NC LOC) VMIG1 850,000
----------------------------------------------------------------- --------------
MICHIGAN--0.4%
-----------------------------------------------------------------
705,000 Lenawee County, MI, Economic Development Corp. Weekly VRDNs
(Hardwoods of Michigan, Inc.)/(Series 1989)/(National City Bank
LOC) VMIG1 705,000
----------------------------------------------------------------- --------------
MISSISSIPPI--1.2%
-----------------------------------------------------------------
2,000,000 Forest, MS, IDR Weekly VRDNs Revenue Bonds (Sara Lee Corp.) AA- 2,000,000
----------------------------------------------------------------- --------------
MISSOURI--13.1%
-----------------------------------------------------------------
2,100,000 Independence, MO, 3.55% Water Utility Revenue Bonds (National
Westminster LOC) 12/7/1995 VMIG1 2,100,000
-----------------------------------------------------------------
2,000,000 Independence, MO, 3.55% Water Utility Revenue Bonds (National
Westminster LOC) 12/8/1995 VMIG1 2,000,000
-----------------------------------------------------------------
800,000 Independence, MO, IDA Weekly VRDNs (Shoney's Inn)/(Wachovia Bank,
NC LOC) NR(B) 800,000
-----------------------------------------------------------------
2,366,000 Missouri State, Environmental Improvement & Energy Resources
Authority 3.70% Revenue Bonds (Kansas City Power & Light Co.)
12/5/1995 VMIG1/A-1 2,366,000
-----------------------------------------------------------------
7,000,000 Missouri State, Environmental Improvement & Energy Resources
Authority, Weekly VRDNs Revenue Bonds (Kansas City Power & Light
Co.) VMIG1/A-1 7,000,000
-----------------------------------------------------------------
500,000 Missouri State, HEFA, Daily VRDNs Revenue Bonds (Washington
University)/(Series A) VMIG1/A-1+ 500,000
-----------------------------------------------------------------
7,200,000 Missouri State, HEFA, Weekly VRDNs Revenue Bonds (Washington
University)/(Series A) VMIG1/A-1+ 7,200,000
----------------------------------------------------------------- --------------
Total 21,966,000
----------------------------------------------------------------- --------------
NEW MEXICO--1.2%
-----------------------------------------------------------------
2,000,000 Belen, NM, IDA Weekly VRDNs Revenue Bonds (United Desiccants,
Inc.)/(National City Bank, KY LOC) NR(B) 2,000,000
----------------------------------------------------------------- --------------
</TABLE>
STAR TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ----------------------------------------------------------------- ---------------- --------------
SHORT-TERM MUNICIPALS--CONTINUED
- -------------------------------------------------------------------------------
NORTH CAROLINA--0.5%
-----------------------------------------------------------------
$ 900,000 North Carolina Educational Facilities Financing Agency, Daily
VRDNs Revenue Bonds (Guilford College)/(Wachovia Bank,
Winston-Salem, NC LOC) VMIG1/A-1+ $ 900,000
----------------------------------------------------------------- --------------
OHIO--13.4%
-----------------------------------------------------------------
600,000 Butler County, OH, 4.10% BANs, (Series B) 4/19/1996 NR(C) 600,890
-----------------------------------------------------------------
1,000,000 Butler County, OH, 4.27% BANs (Series D), 3/15/1996 NR(C) 1,001,384
-----------------------------------------------------------------
950,000 Butler County, OH, 4.28% BANs, 11/1/1996 NR(C) 953,604
-----------------------------------------------------------------
1,000,000 Butler County, OH, 4.74% BANs, 4/19/1996 NR(C) 1,001,617
-----------------------------------------------------------------
1,000,000 Butler County, OH, 4.86% BANs (Series B), 3/15/1996 NR(C) 1,001,269
-----------------------------------------------------------------
350,000 Butler County, OH, 5.07% BANs, 3/15/1996 NR(C) 350,451
-----------------------------------------------------------------
500,000 Centerville, OH, Weekly VRDNs Health Care Revenue Bonds (Bethany
Lutheran Village Continuing Care Facility)/(PNC Bank, OH LOC) VMIG1 500,000
-----------------------------------------------------------------
1,700,000 Columbus, OH, Weekly VRDNs Sewer Revenue Bonds VMIG1/A-1+ 1,700,000
-----------------------------------------------------------------
1,365,000 Marion County, OH, Weekly VRDNs Hospital Revenue Bonds (Pooled
Lease Program)/(Bank One Columbus, OH LOC) A-1+ 1,365,000
-----------------------------------------------------------------
45,000 Marion County, OH, Weekly VRDNs Hospital Revenue Bonds (Pooled
Lease Program)/(Bank One, Columbus, OH LOC) VMIG1 45,000
-----------------------------------------------------------------
600,000 Mason, OH, 4.33% BANs, 12/19/1995 NR(C) 600,182
-----------------------------------------------------------------
550,000 Ohio State University, Weekly VRDNs (General Receipts)/(Series
1992B) VMIG1/A-1+ 550,000
-----------------------------------------------------------------
2,000,000 Ohio State, 4.52% RANs (School District Cash Flow)
6/28/1996 MIG1 2,006,879
-----------------------------------------------------------------
1,965,000 Ohio State, IDR Weekly VRDNs Revenue Bonds (Cincinnati Riverfront
Coliseum, Inc.)/(PNC Bank, Cincinnati, OH LOC) A1 1,965,000
-----------------------------------------------------------------
2,000,000 Perry, OH, 3.65% GO (Lake County Local School District)/(Bank
One, Cleveland, OH LOC) 6/1/1996 Aa2 2,000,000
-----------------------------------------------------------------
600,000 Perry, OH, 3.75% GO (Lake County Local School District)/(Bank
One, Cleveland, OH LOC) 12/1/1996 Aa2 600,000
-----------------------------------------------------------------
4,000,000 University of Cincinnati, OH, 4.25% General Receipts Anticipation
Revenue Notes, 8/28/1996 MIG1/Sp1+ 4,007,117
-----------------------------------------------------------------
2,000,000 University of Cincinnati, OH, 5.00% BANs (Series S-1) 3/21/1996 MIG1/Sp1+ 2,002,025
----------------------------------------------------------------- --------------
Total 22,250,418
----------------------------------------------------------------- --------------
PENNSYLVANIA--6.7%
-----------------------------------------------------------------
3,000,000 Allegheny County, PA, 3.875% Grant Anticipation Notes (Port
Authority)/(Series A)/(PNC Bank, Pittsburgh, PA LOC) 6/28/1996 MIG1 3,000,000
-----------------------------------------------------------------
</TABLE>
STAR TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ----------------------------------------------------------------- ---------------- --------------
SHORT-TERM MUNICIPALS--CONTINUED
- -------------------------------------------------------------------------------
PENNSYLVANIA--CONTINUED
-----------------------------------------------------------------
$ 370,000 Allegheny County, PA, Hospital Development Authority, Weekly
VRDNs (Presbyterian University Hospital)/(Series B)/(PNC Bank, PA
LOC) VMIG1 $ 370,000
-----------------------------------------------------------------
100,000 Allegheny County, PA, Hospital Development Authority Weekly VRDNs
Revenue Bonds (Presbyterian University Hospital)/(Series
D)/(Credit Suisse SPA) VMIG1/A-1+ 100,000
-----------------------------------------------------------------
500,000 Allegheny County, PA, Hospital Development Authority Weekly VRDNs
Revenue Bonds (Presbyterian University Hospital)/(Series
A)/(Credit Suisse SPA) VMIG1/A-1+ 500,000
-----------------------------------------------------------------
200,000 Allegheny County, PA, Hospital Development Authority Weekly VRDNs
Revenue Bonds (Presbyterian University Hospital)/(Series
B)/(Credit Suisse SPA) VMIG1/A-1+ 200,000
-----------------------------------------------------------------
6,000,000 Allegheny County, PA, IDR 3.75% Revenue Bonds (Duquesne Light
Co.)/(Series A)/(Canadian Imperial Bank LOC), 11/7/1996 P-1/A-1+ 6,000,000
-----------------------------------------------------------------
1,000,000 East Penn, PA, Industrial & Commercial Development Authority,
Weekly VRDNs Revenue Bonds (Electric Data System Corp.)/(Wachovia
Bank, GA LOC) Aa2 1,000,000
----------------------------------------------------------------- --------------
Total 11,170,000
----------------------------------------------------------------- --------------
TENNESSEE--7.6%
-----------------------------------------------------------------
1,000,000 Chattanooga-Hamilton County, TN, Hospital Authority Daily VRDNs
Revenue Bonds (Erlanger)/(Morgan Guaranty, NY SPA) A-1 1,000,000
-----------------------------------------------------------------
1,000,000 Greenville, TN, IDR Weekly VRDNs Revenue Bonds (Ball Corp.
Project)/(Wachovia Bank, GA LOC) A-1+ 1,000,000
-----------------------------------------------------------------
3,900,000 Sullivan County, TN, Health, Education & Housing Facilities
Revenue Bonds Weekly VRDNs (Ashbury Center Residential Care
Facility)/(NationsBank, NC LOC) NR(C) 3,900,000
-----------------------------------------------------------------
500,000 Tennessee State, Weekly VRDNs (Series A) VMIG1/A-1+ 500,000
-----------------------------------------------------------------
4,400,000 Tennessee State, Weekly VRDNs BANs (Series B) VMIG1/A-1+ 4,400,000
-----------------------------------------------------------------
2,000,000 Tennessee State, Weekly VRDNs GO BANs (Series A) VMIG1/A-1+ 2,000,000
----------------------------------------------------------------- --------------
Total 12,800,000
----------------------------------------------------------------- --------------
</TABLE>
STAR TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ----------------------------------------------------------------- ---------------- --------------
SHORT-TERM MUNICIPALS--CONTINUED
- -------------------------------------------------------------------------------
TEXAS--9.3%
-----------------------------------------------------------------
$ 2,480,000 Bexar County, TX, HFDC, Weekly VRDNs (Army Retirement-Residence
Foundation)/(Rabobank, Nederland LOC) A-1+ $ 2,480,000
-----------------------------------------------------------------
3,500,000 Greater East, TX, Higher Education Authority, Weekly VRDNs
Student Loan Revenue Bonds (Series A)/ (SLMA LOC) VMIG1/A-1+ 3,500,000
-----------------------------------------------------------------
400,000 Harris County, TX, HFDC, Daily VRDNs Revenue Bonds (St. Luke's
Episcopal Hospital)/(Series C)/ (Morgan Guaranty Trust SPA,
Expires 12/31/1995) A-1+ 400,000
-----------------------------------------------------------------
2,000,000 Lone Star, TX, Airport Improvement Authority Daily VRDNs Revenue
Bonds (Series B-1)/(Royal Bank of Canada LOC) VMIG1 2,000,000
-----------------------------------------------------------------
2,200,000 Lone Star, TX, Airport Improvement Authority Daily VRDNs Revenue
Bonds (Series B-3)/(Royal Bank of Canada LOC) VMIG1 2,200,000
-----------------------------------------------------------------
1,900,000 San Antonio, TX, IDA IDR Weekly VRDNs (Rivercenter
Association)/(PNC Bank, PA LOC) A1 1,900,000
-----------------------------------------------------------------
3,000,000 Texas State, 4.75% TRANs (Series A) 8/30/1996 MIG1/Sp1+ 3,014,625
----------------------------------------------------------------- --------------
Total 15,494,625
----------------------------------------------------------------- --------------
UTAH--0.9%
-----------------------------------------------------------------
1,550,000 Castle Dale, UT, IDR 3.80% Revenue Bonds (Safeway, Inc.)/(Bankers
Trust Co. LOC) 2/1/1996 A-1+ 1,550,000
----------------------------------------------------------------- --------------
VIRGINIA--2.2%
-----------------------------------------------------------------
1,840,000 Charlottesville, VA, IDA IDR 3.95% Revenue Bonds (Safeway,
Inc.)/(Bankers Trust Co. LOC) 12/1/1995 A-1+ 1,840,000
-----------------------------------------------------------------
1,840,000 Charlottesville, VA, IDA IDR 3.75% Revenue Bonds (Safeway,
Inc.)/(Bankers Trust Co. LOC) 6/3/1996 A-1+ 1,840,000
----------------------------------------------------------------- --------------
Total 3,680,000
----------------------------------------------------------------- --------------
WYOMING--2.3%
-----------------------------------------------------------------
2,675,000 Douglas, WY, IDR 3.75% Revenue Bonds (Safeway, Inc.)/(Bankers
Trust Co. LOC) 6/3/1996 A-1+ 2,675,000
-----------------------------------------------------------------
1,200,000 Gillette, WY, 3.60% Pollution Control Revenue Bonds
(PacificCorp.)/(Deutsche Bank, A.G. LOC) 12/15/1995 P-1/A-1+ 1,200,000
----------------------------------------------------------------- --------------
Total 3,875,000
----------------------------------------------------------------- --------------
TOTAL SHORT-TERM MUNICIPALS 172,014,605
----------------------------------------------------------------- --------------
</TABLE>
STAR TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S
SHARES OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ----------------------------------------------------------------- ---------------- --------------
MUTUAL FUND SHARES--0.1%
- -------------------------------------------------------------------------------
67,724 SEI Tax Exempt Trust (at net asset value) $ 67,724
----------------------------------------------------------------- --------------
TOTAL INVESTMENTS (AT AMORTIZED COST) (A) $ 172,082,329
----------------------------------------------------------------- --------------
</TABLE>
(a) Also represents cost for federal tax purposes.
* Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings. Current credit ratings are unaudited.
Note: The categories of investments are shown as a percentage of net assets
($167,356,172) at
November 30, 1995.
The following acronyms are used throughout this portfolio:
AMBAC--American Municipal Bond Assurance Corporation
BANs--Bond Anticipation Notes
EDR--Economic Development Revenue
GO--General Obligation
HEFA--Health and Education Facilities Authority
HFDC--Health Facility Development Corporation
IDA--Industrial Development Authority
IDR--Industrial Development Revenue
LOC--Letter of Credit
MMMs--Money Market Municipals
RANs--Revenue Anticipation Notes
SLMA--Student Loan Marketing Association
SPA--Standby Purchase Agreement
TANs--Tax Anticipation Notes
TRANs--Tax and Revenue Anticipation Notes
UT--Unlimited Tax
VHA--Veterans Housing Administration
VRDNs--Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements)
STAR TAX-FREE MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Total investments in securities, at amortized cost and value $ 172,082,329
- -------------------------------------------------------------------------------------------------
Income receivable 1,096,953
- -------------------------------------------------------------------------------------------------
Receivable for investments sold 1,805,373
- -------------------------------------------------------------------------------------------------
Deferred expenses 1,958
- ------------------------------------------------------------------------------------------------- --------------
Total assets 174,986,613
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable for investments purchased $ 7,122,958
- -----------------------------------------------------------------------------------
Income distribution payable 462,632
- -----------------------------------------------------------------------------------
Accrued expenses 44,851
- ----------------------------------------------------------------------------------- ------------
Total liabilities 7,630,441
- ------------------------------------------------------------------------------------------------- --------------
Net Assets for 167,356,172 shares outstanding $ 167,356,172
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
$167,356,172 / 167,356,172 shares outstanding $1.00
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR TAX-FREE MONEY MARKET FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest $ 6,155,272
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Investment advisory fee $ 862,867
- --------------------------------------------------------------------------------------
Administrative personnel and services fee 172,949
- --------------------------------------------------------------------------------------
Custodian fees 38,704
- --------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 31,002
- --------------------------------------------------------------------------------------
Directors'/Trustees' fees 2,608
- --------------------------------------------------------------------------------------
Auditing fees 17,237
- --------------------------------------------------------------------------------------
Legal fees 5,282
- --------------------------------------------------------------------------------------
Portfolio accounting fees 43,570
- --------------------------------------------------------------------------------------
Shareholder services fee 32,564
- --------------------------------------------------------------------------------------
Share registration costs 36,837
- --------------------------------------------------------------------------------------
Printing and postage 15,920
- --------------------------------------------------------------------------------------
Insurance premiums 5,987
- --------------------------------------------------------------------------------------
Miscellaneous 3,656
- -------------------------------------------------------------------------------------- ------------
Total expenses 1,269,183
- --------------------------------------------------------------------------------------
Waiver--
- --------------------------------------------------------------------------------------
Waiver of investment advisory fee (235,327)
- -------------------------------------------------------------------------------------- ------------
Net expenses 1,033,856
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income $ 5,121,416
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR TAX-FREE MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------
Net investment income $ 5,121,416 $ 2,912,754
- ----------------------------------------------------------------- ---------------------- ----------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------
Distributions from net
investment income (5,121,416) (2,912,754)
- ----------------------------------------------------------------- ---------------------- ----------------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------
Proceeds from sale of shares 512,575,789 431,948,243
- -----------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 771 42
- -----------------------------------------------------------------
Cost of shares redeemed (480,647,041) (431,543,978)
- ----------------------------------------------------------------- ---------------------- ----------------------
Change in net assets resulting from share transactions 31,929,519 404,307
- ----------------------------------------------------------------- ---------------------- ----------------------
Change in net assets 31,929,519 404,307
- -----------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------
Beginning of period 135,426,653 135,022,346
- ----------------------------------------------------------------- ---------------------- ----------------------
End of period $ 167,356,172 $ 135,426,653
- ----------------------------------------------------------------- ---------------------- ----------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR TAX-FREE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1995 1994 1993 1992 1991(A)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------
Net investment income 0.03 0.02 0.02 0.03 0.03
- ---------------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------------
Distributions from net
investment income (0.03) (0.02) (0.02) (0.03) (0.03)
- --------------------------------------------------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------- --------- --------- --------- --------- -----------
TOTAL RETURN (B) 3.32% 2.15% 1.91% 2.59% 2.84%
- ---------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------
Expenses 0.66% 0.65% 0.65% 0.66% 0.55%*
- ---------------------------------------------------
Net investment income 3.26% 2.12% 1.90% 2.54% 3.95%*
- ---------------------------------------------------
Expense waiver /reimbursement (c) 0.15% 0.15% 0.40% 0.40% 0.48%*
- ---------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------
Net assets, end of period (000 omitted) $167,356 $135,427 $135,022 $144,487 $113,731
- ---------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from March 15, 1991 (date of initial
public investment) to November 30, 1991.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
STAR TREASURY FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- --------------
U. S. TREASURY--35.1%
- -------------------------------------------------------------------------------------------------
$ 93,000,000 U.S. Treasury Bills, 12/14/1995-11/14/1996 $ 92,199,419
---------------------------------------------------------------------------------
137,000,000 U.S. Treasury Notes, 4.00%-9.375%, 1/31/1996-11/30/1996 137,717,820
--------------------------------------------------------------------------------- --------------
TOTAL U.S. TREASURY 229,917,239
--------------------------------------------------------------------------------- --------------
(A) REPURCHASE AGREEMENTS--65.7%
- -------------------------------------------------------------------------------------------------
140,000,000 Bear Stearns & Co., Inc., 5.90%, dated 11/30/1995, due 12/1/1995 140,000,000
---------------------------------------------------------------------------------
25,000,000 Dean Witter Reynolds, Inc., 5.80%, dated 11/30/1995, due 12/1/1995 25,000,000
---------------------------------------------------------------------------------
27,000,000 Donaldson, Lufkin & Jenrette Securities Corp., 5.875%,
dated 11/30/1995, due 12/1/1995 27,000,000
---------------------------------------------------------------------------------
27,000,000 Fuji Securities, Inc., 5.85%, dated 11/30/1995, due 12/1/1995 27,000,000
---------------------------------------------------------------------------------
27,000,000 HSBC Securities, Inc., 5.88%, dated 11/30/1995, due 12/1/1995 27,000,000
---------------------------------------------------------------------------------
25,000,000 Merrill Lynch Government Securities, Inc., 5.72%,
dated 11/30/1995, due 12/29/1995 25,000,000
---------------------------------------------------------------------------------
25,000,000 National Westminster Securites, 5.875%,
dated 11/30/1995, due 12/1/1995 25,000,000
---------------------------------------------------------------------------------
134,320,000 Swiss Bank Corp., 5.90%, dated 11/30/1995, due 12/1/1995 134,320,000
--------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 430,320,000
--------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $ 660,237,239
--------------------------------------------------------------------------------- --------------
</TABLE>
(a) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($654,962,931) at
November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
STAR TREASURY FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Investments in repurchase agreements $ 430,320,000
- ---------------------------------------------------------------------------------
Investments in securities 229,917,239
- --------------------------------------------------------------------------------- --------------
Total investments in securities, at amortized cost and value $ 660,237,239
- -------------------------------------------------------------------------------------------------
Cash 2,115
- -------------------------------------------------------------------------------------------------
Income receivable 2,230,174
- ------------------------------------------------------------------------------------------------- --------------
Total assets 662,469,528
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable for investments purchased 4,888,438
- ---------------------------------------------------------------------------------
Payable for shares redeemed 1,463
- ---------------------------------------------------------------------------------
Income distribution payable 2,512,515
- ---------------------------------------------------------------------------------
Accrued expenses 104,181
- --------------------------------------------------------------------------------- --------------
Total liabilities 7,506,597
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 654,962,931 shares outstanding $ 654,962,931
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
$654,962,931 / 654,962,931 shares outstanding $1.00
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR TREASURY FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest $ 26,835,520
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee $ 2,293,566
- -------------------------------------------------------------------------------------
Administrative personnel and services fee 503,167
- -------------------------------------------------------------------------------------
Custodian fees 115,825
- -------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 35,786
- -------------------------------------------------------------------------------------
Directors'/Trustees' fees 4,215
- -------------------------------------------------------------------------------------
Auditing fees 18,904
- -------------------------------------------------------------------------------------
Legal fees 6,464
- -------------------------------------------------------------------------------------
Portfolio accounting fees 86,001
- -------------------------------------------------------------------------------------
Shareholder services fee 103,125
- -------------------------------------------------------------------------------------
Share registration costs 83,392
- -------------------------------------------------------------------------------------
Printing and postage 16,928
- -------------------------------------------------------------------------------------
Insurance premiums 7,789
- -------------------------------------------------------------------------------------
Miscellaneous 4,379
- ------------------------------------------------------------------------------------- ------------
Total expenses 3,279,541
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 23,555,979
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR TREASURY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------
Net investment income $ 23,555,979 $ 10,830,098
- ----------------------------------------------------------------- ---------------------- ----------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------
Distributions from net investment income (23,555,979) (10,830,098)
- ----------------------------------------------------------------- ---------------------- ----------------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------
Proceeds from sale of shares 4,733,626,896 4,438,594,909
- -----------------------------------------------------------------
Net asset value of shares issued in connection with acquisition
of Prime Obligations Fund 86,272,662 --
- -----------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 102,122 2,753
- -----------------------------------------------------------------
Cost of shares redeemed (4,523,804,720) (4,465,851,804)
- ----------------------------------------------------------------- ---------------------- ----------------------
Change in net assets resulting from share transactions 296,196,960 (27,254,142)
- ----------------------------------------------------------------- ---------------------- ----------------------
Change in net assets 296,196,960 (27,254,142)
- -----------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------
Beginning of period 358,765,971 386,020,113
- ----------------------------------------------------------------- ---------------------- ----------------------
End of period $ 654,962,931 $ 358,765,971
- ----------------------------------------------------------------- ---------------------- ----------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STAR TREASURY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1995 1994 1993 1992 1991 1990 1989(A)
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------
Net investment income 0.05 0.03 0.03 0.03 0.06 0.07 0.05
- ------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------
Distributions from net investment
income (0.05) (0.03) (0.03) (0.03) (0.06) (0.07) (0.05)
- ------------------------------------ --------- --------- --------- --------- --------- --------- -----------
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------ --------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (B) 5.23% 3.30% 2.56% 3.41% 5.72% 7.72% 5.36%
- ------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------
Expenses 0.71% 0.70% 0.70% 0.71% 0.71% 0.73% 0.77%*
- ------------------------------------
Net investment income 5.14% 3.24% 2.53% 3.33% 5.51% 7.44% 8.28%*
- ------------------------------------
Expense waiver/ reimbursement (c) -- -- 0.25% 0.25% 0.10% 0.03% 0.01%*
- ------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------
Net assets, end of period (000
omitted) $654,963 $358,766 $386,020 $346,508 $307,278 $226,519 $174,062
- ------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from April 14, 1989 (date of initial
public investment) to November 30, 1989.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
STAR FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Star Funds (the "Trust"), is registered under the Investment Company Act of
1940, as amended
(the "Act"), as an open-end management investment company. The Trust consists of
eight diversified portfolios (individually referred to as the "Fund"). The
following portfolios comprise the Trust:
PORTFOLIO NAME
Star Capital Appreciation Fund ("Capital Appreciation Fund")
Star Growth Equity Fund ("Growth Equity Fund")
Star Relative Value Fund ("Relative Value Fund")
The Stellar Fund ("Stellar Fund")
Star Strategic Income Fund ("Strategic Income Fund")
Star Tax-Free Money Market Fund ("Tax-Free Money Market Fund")
Star Treasury Fund ("Treasury Fund")
Star U.S. Government Income Fund ("U.S. Government Income Fund")
The financial statements of the following portfolios (individually referred to
as the "Fund", or collectively as the "Funds") are presented herein:
PORTFOLIO NAME
Star Tax-Free Money Market Fund
Star Treasury Fund
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
Star Funds, except Stellar Fund, are offered without class designation. Shares
of Stellar Fund are offered in two classes: Investment shares and Trust shares.
On April 24, 1995, the Treasury Fund acquired all the net assets of Star Prime
Obligations Fund ("Prime Obligations Fund") pursuant to a plan of reorganization
approved by Prime Obligations Fund shareholders on April 20, 1995. The
acquisition was accomplished by a tax-free exchange between the Prime
Obligations Fund and the Treasury Fund on April 24, 1995. The net assets of the
Prime Obligations Fund were combined with those of the Treasury Fund. The
aggregate net assets of the Treasury Fund and the Prime Obligations Fund
immediately before acquisition were $392,462,023 and $86,272,662, respectively.
Immediately after the acquisition, the combined aggregate net assets of the
Treasury Fund were $478,734,685.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Funds' use of the amortized cost method to value
their portfolio securities is in accordance with Rule 2a-7 under the Act.
Investments in other open-end investment companies are valued at net asset
value.
B. REPURCHASE AGREEMENTS--It is the policy of the Funds to require a custodian
bank to take possession, to have legally segregated in the Federal Reserve
Book Entry System, or to have segregated within the custodian bank's vault,
all securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Funds to monitor, on
a daily basis, the market value of each repurchase agreement's collateral
to ensure the value of collateral at least equals the repurchase price to
be paid under the repurchase agreement transaction.
STAR FUNDS
- --------------------------------------------------------------------------------
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Funds' adviser to be creditworthy pursuant to guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Funds
could receive less than the repurchase price on the sale of collateral
securities.
C. INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS--Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue Code, as amended (the
"Code"). Distributions to shareholders are recorded on the ex-dividend
date.
D. FEDERAL TAXES--It is each Fund's policy to comply with the provisions of
the Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal taxes are necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES--The costs incurred by each Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from each Fund's commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At
November 30, 1995, capital paid-in for Tax-Free Money Market Fund and Treasury
Fund aggregated $167,356,172 and $654,962,931, respectively. Transactions in
Fund shares were as follows:
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994
<S> <C> <C>
Shares sold 512,575,789 431,948,243
- --------------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 771 42
- --------------------------------------------------------------
Shares redeemed (480,647,041) (431,543,978)
- -------------------------------------------------------------- ---------------------- ----------------------
Net change resulting from Fund share transactions 31,929,519 404,307
- -------------------------------------------------------------- ---------------------- ----------------------
</TABLE>
STAR FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY FUND
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994
<S> <C> <C>
Shares sold 4,733,626,896 4,438,594,909
- --------------------------------------------------------------
Shares issued in connection with acquisition of Prime
Obligations Fund 86,272,662 --
- --------------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 102,122 2,753
- --------------------------------------------------------------
Shares redeemed (4,523,804,720) (4,465,851,804)
- -------------------------------------------------------------- ---------------------- ----------------------
Net change resulting from Fund share transactions 296,196,960 (27,254,142)
- -------------------------------------------------------------- ---------------------- ----------------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Star Bank, N.A., the Trust's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee based on
a percentage of each Fund's average daily net assets (see below). The Adviser
may voluntarily choose to waive a portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
<TABLE>
<CAPTION>
ANNUAL
FUND RATE
<S> <C>
Tax-Free Money Market Fund 0.55%
- -------------------------------------------------------------------------------------------------------
Treasury Fund 0.50%
- -------------------------------------------------------------------------------------------------------
</TABLE>
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides each Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust for the period. FAS may
voluntarily choose to waive a portion of its fee.
SHAREHOLDER SERVICES FEE--Under the terms of the Shareholder Services Agreement
with Star Bank, N.A. each Fund will pay Star Bank, N.A. up to 0.25 of 1% of
average daily net assets for the period. For the foreseeable future, the Funds
plan to limit the Shareholder Servicing fee to 0.04% of average daily net
assets. This fee is to obtain certain services for shareholder and to maintain
shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Funds for
which it receives a fee. The fee is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Funds' accounting records
for which it receives a fee. The fee is based on the level of each Fund's
average net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Star Bank, N.A., is the Funds' custodian for which it receives a
fee. The fee is based on the level of each Fund's average net assets for the
period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses were initially borne by FAS.
The Funds have agreed to reimburse FAS for the organizational expenses during
the five year period following the Funds' effective date.
<TABLE>
<CAPTION>
EXPENSES OF AMOUNTS REIMBURSED TO
EFFECTIVE ORGANIZING FAS FOR THE YEAR ENDED
DATE THE FUND NOVEMBER 30, 1995
<S> <C> <C> <C>
Tax-Free Money Market Fund March 14, 1991 $ 17,739 $ 1,054
- -----------------------------------------------
</TABLE>
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
STAR FUNDS
(Star Tax-Free Money Market Fund and Star Treasury Fund):
We have audited the accompanying statement of assets and liabilities of Star
Tax-Free Money Market Fund and Star Treasury Fund (investment portfolios of Star
Funds, a Massachusetts business trust), including the schedules of portfolio
investments, as of November 30, 1995, the related statements of operations for
the year then ended, and the statements of changes in net assets and the
financial highlights for the periods presented. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Star
Tax-Free Money Market Fund and Star Treasury Fund (investment portfolios of Star
Funds) as of November 30, 1995, and the results of their operations for the year
then ended, and the changes in their net assets and their financial highlights
for the periods presented, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania,
January 19, 1996
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Edward C. Gonzales
William J. Copeland President and Treasurer
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. John W. McGonigle
Edward C. Gonzales Executive Vice President and Secretary
Peter E. Madden Richard B. Fisher
Gregor F. Meyer Vice President
John E. Murray, Jr. Joseph S. Machi
Wesley W. Posvar Vice President and Assistant Treasurer
Marjorie P. Smuts David M. Taylor
Assistant Treasurer
C. Grant Anderson
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not
insured or guaranteed by the U.S. government, the Federal Deposit Insurance
Corporation, the
Federal Reserve Board, or any other government agency. Investment in mutual
funds involves
investment risks, including the possible loss of principal. Although money
market funds seek to maintain a stable net asset value of $1.00 per share, there
is no assurance that they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Trust's prospectus which contains facts concerning its
objective and policies, management fees, expenses and other information.
---------------------------------------
Star Bank, N.A.
Investment Adviser
---------------------------------------
Federated Securities Corp.
Distributor
---------------------------------------
G00299-08 (1/96)
4289TR
A. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left
corner. The Star U.S. Government Income Fund is represented by a solid line,
whereas the Lehman Government Corporate Index is represented by a broken line.
The line graph is a visual representation of a comparison of change in the
value of a hypothetical investment of $10,000 in the Fund and Lehman
Government Corporate Index for the period from January 5, 1993 (start of
performance) to November 30, 1995. The "y" axis reflects the cost of the
investment. The "x" axis reflects computation periods from the ending value of
the hypothetical investment in the Fund as compared to Lehman Government
Corporate Index; the ending values are $11,524; and $12,593, respectively.
Beneath the line graph are the following total return data for the Fund:
total return figures for the one-year period, and start of performance date
average annual total return are as follows: 10.83%; and 5.02%; respectively.
The performance disclaimer and footnotes are listed directly under the graphic
presentation.
B. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left
corner. The Star Strategic Fund- is represented by a solid line, whereas the
Lehman Government Corporate Index is represented by a broken line. The line
graph is a visual representation of a comparison of change in the value of a
hypothetical investment of $10,000 in the Fund and Lehman Government Corporate
Index for the period from December 12, 1994 (start of performance) to November
30, 1995. The "y" axis reflects the cost of the investment. The "x" axis
reflects computation periods from the ending value of the hypothetical
investment in the Fund as compared to Lehman Brothers Intermediate Government
Bond Index; the ending values are $10,707; and $11,829, respectively. Beneath
the line graph are the following total return data for the Fund: start of
performance date cumulative total return is as follows: 7.36%. The
performance disclaimer and footnotes are listed directly under the graphic
presentation.
C. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left
corner. The Stellar Fund-Investment Shares is represented by a solid line,
whereas the Standard & Poor's 500/Lehman Government Corporate Total Index is
represented by a broken line. The line graph is a visual representation of a
comparison of change in the value of a hypothetical investment of $10,000 in
the Fund and Standard & Poor's 500/Lehman Government Corporate Index for the
period from October 18, 1991 (start of performance) to November 30, 1995. The
"y" axis reflects the cost of the investment. The "x" axis reflects
computation periods from the ending value of the hypothetical investment in
the Fund as compared to Standard & Poor's 500/Lehman Government Corporate
Index; the ending values are $13,255; and $15,877, respectively. Beneath the
line graph is the following total return data for the Fund: start of
performance date total return is as follows: 7.08%; average annual total
return after 1 year is 10.50%, and 3 year is 6.90%. The performance disclaimer
and footnotes are listed directly under the graphic presentation.
D. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left
corner. The Stellar Fund- Trust Shares is represented by a solid line, whereas
Standard & Poor's 500/Lehman Government Corporate Index is represented by a
broken line. The line graph is a visual representation of a comparison of
change in the value of a hypothetical investment of $10,000 in the Fund and
Standard & Poor's 500/Lehman Government Corporate Index for the period from
april 6, 1994 (start of performance) to November 30, 1995. The "y" axis
reflects the cost of the investment. The "x" axis reflects computation periods
from the ending value of the hypothetical investment in the Fund as compared
to Standard & Poor's 500/Lehman Government Corporate Index; the ending values
are $11,387; and $12,915, respectively. Beneath the line graph are the
following total return data for the Fund: total return figures for the one-
year period, and start of performance date total return are as follows:
15.97%; and 8.18%; respectively. The performance disclaimer and footnotes are
listed directly under the graphic presentation.
E. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left
corner. The Star Relative Value Fund is represented by a solid line, whereas
Standard & Poor's 500 Index is represented by a broken line. The line graph is
a visual representation of a comparison of change in the value of a
hypothetical investment of $10,000 in the Fund and Standard & Poor's 500 Index
for the period from June 4, 1991 (start of performance) to November 30, 1995.
The "y" axis reflects the cost of the investment. The "x" axis reflects
computation periods from the ending value of the hypothetical investment in
the Fund as compared to Standard & Poor's 500 Index; the ending values are
$16,055; and $17,644, respectively. Beneath the line graph are the following
total return data for the Fund: total return figures for the one-year period,
and start of performance date total return are as follows: 28.97%; and
11.13%; respectively. The performance disclaimer and footnotes are listed
directly under the graphic presentation.
F. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left
corner. The Star Growth Equity Fund is represented by a solid line, whereas
the Lehman Brothers 10 Year Municipal Bond Index is represented by a broken
line. The line graph is a visual representation of a comparison of change in
the value of a hypothetical investment of $10,000 in the Fund and the Standard
& Poor's 500 Index for the period from December 12, 1994 (start of
performance) to November 30, 1995. The "y" axis reflects the cost of the
investment. The "x" axis reflects computation periods from the ending value of
the hypothetical investment in the Fund as compared to the Standard & Poor's
500 Index; the ending values are $12,297; and $13,698, respectively. Beneath
the line graph are the following total return data for the Fund: total return
figures for start of performance date cumulative total return are is as
follows: 24.34%. The performance disclaimer and footnotes are listed directly
under the graphic presentation.
G. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left
corner. The Star Capital Appreciation Fund is represented by a solid line,
whereas the S&P Midcap 400 Index is represented by a broken line. The line
graph is a visual representation of a comparison of change in the value of a
hypothetical investment of $10,000 in the Fund and the S&P Midcap 400 Index
for the period from June 13, 1994 (start of performance) to November 30, 1995.
The "y" axis reflects the cost of the investment. The "x" axis reflects
computation periods from the ending value of the hypothetical investment in
the Fund as compared to the S&P Midcap 400 Index; the ending values are
$11,375; and $13,185, respectively. Beneath the line graph are the following
total return data for the Fund: total return figures for the one-year period,
and start of performance date total return are as follows: 12.05%; and 9.20%;
respectively. The performance disclaimer and footnotes are listed directly
