STAR FUNDS, 485APOS, 1997-11-24

STAR FUNDS
485APOS, 1997-11-24

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1933 Act File No. 33-26915
1940 Act File No. 811-5762

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
---

Pre-Effective Amendment No. .................... _
-------- ------

Post-Effective Amendment No. 37 .................... X
------- ---

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No. 38 ................................... X
------- ---

STAR FUNDS

(Exact Name of Registrant as Specified in Charter)

Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)

(412) 288-1900
(Registrant's Telephone Number)

C. Grant Anderson, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)

It is proposed that this filing will become effective:

immediately upon filing pursuant to paragraph (b)
_ on_______________, pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i) X on January 31, 1997
pursuant to paragraph (a) (i).
_ 75 days after filing pursuant to paragraph (a)(ii) on _________________
pursuant to paragraph (a)(ii) of Rule 485.

Copies to: Matthew G. Maloney, Esq.
Dickstein Shapiro Morin & Oshinsky
2101 L. Street, N.W.
Washington, D.C. 20037

<PAGE>

CROSS-REFERENCE SHEET

This Amendment to the Registration Statement of the Star Funds, which is
comprised of twelve portfolios: (1) Star Tax-Free Money Market Fund, (2) Star
Treasury Fund (a) Investment Shares and (b) Trust Shares, (3) Star Relative
Value Fund (a) Investment Shares and (b) Trust Shares, (4) The Stellar Fund (a)
Investment Shares and (b) Trust Shares, (5) Star U.S. Government Income Fund,
(6) Star Capital Appreciation Fund, (7) Star Strategic Income Fund, (8) Star
Growth Equity Fund (a) Investment Shares and (b) Trust Shares, (9) The Stellar
Insured Tax-Free Bond Fund (10) Star International Equity Fund, (11) Star Equity
Index Fund, and (12) Star Ohio Tax-Free Money Market Fund. This filing relates
only to the Stellar Fund, Star Relative Value Fund, Star Growth Equity Fund,
Star Capital Appreciation Fund, The Stellar Insured Tax-Free Bond Fund, Star
U.S. Government Income Fund, and Star Strategic Income Fund. (The remaining
references to other portfolios have been kept for easier cross reference, with
the exception of Item 23.):

PART A. INFORMATION REQUIRED IN A PROSPECTUS.

<S> <C> <C>
Prospectus Heading
(Rule 404(c) Cross Reference)

Item 1. Cover Page....................(1-12) Cover Page;

Item 2. Synopsis......................(1-9) Synopsis; (10-12) General Information; (1-9) Summary of
Fund Expenses.
--------

Item 3. Condensed Financial
Information...................(1-9) Financial Highlights; (1-9) Performance Information.

Item 4. General Description of
Registrant....................(1,2) Objective and Investment
Policies of Each Fund; (3-9)
Investment Information; (10)
Investment Objective and Policies;
(3-9, 11, 12) Investment Objective;
(3-9, 11, 12) Investment Policies;
(1-2) Common Investment Techniques of
the Funds; (10-12) Portfolio
Investments and Strategies; (10)
Diversification; (10,11) Additional
Considerations of Investing In Other
Investment Companies; (12) Investment
Risks; (1-12) Investment Limitations.

Item 5. Management of the Trust.......(1-12) Star Funds Information; (1-12) Management of the Trust;
(1-12) Distribution of Fund
-----------------------
Shares; (1, 2(a), 3(a), 4(a), 5-7,8(a),9, 10,11,12) Distribution
Plan; (1-9) Administration
of the Funds; (10-12) Administration of the Fund); (2(b))
Expenses of the Treasury Fund and
Trust Shares; (10-12) Expenses of the Fund.

<PAGE>

Item 6. Capital Stock and Other
Securities....................(1-2,12) Dividends; (1-2,12) Capital
Gains; (3-11) Dividends and Capital
Gains; (1-9) Shareholder Information;
(1-12) Voting Rights; (1-12) Effect of
Banking Laws; (1-12) Tax Information;
(1-12) Federal Income Tax;(1) Tax-Free
Money Market Fund - Additional Tax
Information;.(9) The Stellar Bond
Fund-Additional Federal Income Tax
Information; (1-12) State and Local
Taxes.

Item 7. Purchase of Securities
Being Offered.................(1-12) Net
Asset Value; (1-9) Investing in the
Funds; (10-12) Investing in the Fund;
(1-12) Share Purchases; (1-12) Minimum
Investment Required; (1-12) What
Shares Cost; (3-11) Systematic
Investment Plan;
(3(a),4(a),5,6,9,10,11) Reducing the
Sales Charge; (1-12) Exchanging
Securities for Fund Shares; (1-12)
Certificates and Confirmations;
(1,2,12) Shareholder Service
Organizations; (3-11) Frequent
Investor Program; (1-12) Exchange
Privilege.

Item 8. Redemption or Repurchase......(1-12) Redeeming Shares; (1,2,12) Checkwriting Privilege; (3-11)
Systematic Withdrawal Plan;
------------------------
(7,8(a)) Contingent Deferred Sales Charge; (7,8(a)) Elimination
of Contingent Deferred Sales
Charge; (1-12) Accounts with Low Balances.

Item 9. Pending Legal Proceedings None.

<PAGE>

PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.

Item 10. Cover Page....................(1-12) Cover Page.

Item 11. Table of Contents (1-12) Table of Contents.

Item 12. General Information and
History.......................(1-12) General Information About the Fund; (1-12) Investment
Limitations.

Item 13. Investment Objectives and
Policies......................(1-12) Investment Objective(s) and Policies.

Item 14. Management of the Fund (1-12) Star Funds Management.

Item 15. Control Persons and Principal
Holders of Securities (1-9) Fund Ownership.

Item 16. Investment Advisory and Other
Services......................(1-12) Investment Advisory Services; (1-12) Administrative
Services; (9) Other Services;
(1-8,10-12) Custodian.

Item 17. Brokerage Allocation (1-12) Brokerage Transactions.

Item 18. Capital Stock and Other
Securities Not applicable.

Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered.................(1-12) Purchasing Shares; (1-12) Exchange Privilege; (1-12)
Determining Net Asset Value;
(1-12) Redeeming Shares; (1-12) Redemption in Kind.

Item 20. Tax Status....................(1-12) Tax Status; (1-12) Yield; (1-2,12) Effective Yield;
(1,9,12) Tax-Equivalent Yield;
----------
(1-12) Total Return.

Item 21. Underwriters..................(1-8,10-12) Administrative Arrangements; (1,2,3(a),4(a),5,6,7,8(a),9,10-12)
Distribution Plan.

Item 22. Calculation of Performance
Data..........................(1-12) Performance Comparisons.

Item 23. Financial Statements..........(2-9) To be filed by Amendment.
</TABLE>

Star Funds
Stock Funds
Prospectus

The shares offered by this prospectus represent interests in the Stock Funds
(individually referred to as a "Fund" or collectively as the "Funds") of the
Star Funds (the "Trust"), an open-end management investment company (a mutual
fund). The Trust consists of twelve separate diversified investment portfolios
and one non-diversified investment portfolio, each having a distinct investment
objective and policies. This prospectus relates only to the following Stock
Funds of the Trust:

o The Stellar Fund
o Star Relative Value Fund
o Star Growth Equity Fund
o Star Capital Appreciation Fund
This prospectus contains the information you should read and know before you
invest in any of the Stock Funds of the Trust. Keep this prospectus for future
reference.

The shares offered by this prospectus are not deposits or obligations of Star
Bank, N.A., or its affiliates, are not endorsed or guaranteed by Star Bank,
N.A., or its affiliates, and are not insured by the Federal Deposit Insurance
Corporation ("FDIC"), the Federal Reserve Board, or any other government agency.
Investment in these shares involves investment risks, including the possible
loss of principal and may involve sales charges and other fees.

The Trust has also filed a separate Statement of Additional Information ("SAI")
for each Fund dated January 31, 1998, with the Securities and Exchange
Commission ("SEC"). The information contained in each SAI is incorporated by
reference into this prospectus. You may request a copy of the SAI or a paper
copy of this prospectus, if you have received your prospectus electronically,
free of charge, or obtain other information or make inquiries about a Fund by
writing to the Fund or by calling 1-800-677-FUND. The SAI, material incorporated
by reference into this document, and other information regarding each Fund are
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

Prospectus dated January 31, 1998

<PAGE>

Table of Contents

To be added when document is complete.

<PAGE>

Synopsis

The Trust, an open-end, management investment company, was established as a
Massachusetts business trust under a Declaration of Trust dated January 23,
1989. The Declaration of Trust permits the Trust to offer separate series of
shares of beneficial interest representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate
classes.

This prospectus relates only to the shares of the Stock Funds of the Trust. The
Stock Funds are designed primarily for customers, correspondents, or affiliates
of Star Bank, N.A., the investment adviser to the Funds.

As of the date of this prospectus, shares of the Stock Funds are offered in the
following four Funds:

o The Stellar Fund--seeks to maximize total return, a combination of
dividend income and capital appreciation. The Stellar Fund pursues this
objective by investing in the following security categories: domestic
equity securities, domestic fixed income securities, international
securities (equity and fixed income), real estate securities, precious
metal securities, and money market securities. Shares of The Stellar
Fund are offered in two separate classes: Investment Shares and Trust
Shares.

o Star Relative Value Fund ("Relative Value Fund")--seeks to obtain the
highest total return, a combination of income and capital appreciation,
as is consistent with reasonable risk. Relative Value Fund pursues this
objective by investing primarily in equity securities. Shares of
Relative Value Fund are offered in two separate classes: Investment
Shares and Trust Shares.

o Star Growth Equity Fund ("Growth Equity Fund")--seeks to maximize
capital appreciation. Growth Equity Fund pursues this objective by
investing primarily in growth-oriented equity securities of U.S.
companies. Shares of Growth Equity Fund are offered in two separate
classes: Investment shares and Trust Shares.

o Star Capital Appreciation Fund ("Capital Appreciation Fund")--seeks to
maximize capital appreciation. Capital Appreciation Fund pursues this
objective by investing primarily in equity securities of small to
medium sized U.S. companies.

For information on how to purchase shares of any of the Stock Funds, please
refer to "Investing in the Funds." A minimum initial investment of $1,000 ($25
for Star Bank Connections Group Banking customers and Star Bank employees and
members of their immediate family) is required for each Fund. Trust Shares of
The Stellar Fund, Relative Value Fund and Growth Equity Fund are sold and
redeemed at net asset value. Shares Capital Appreciation Fund and Investment
Shares of The Stellar Fund and Relative Value Fund are sold at net asset value
plus an applicable sales charge and redeemed at net asset value. Investment
Shares of Growth Equity Fund are sold at net asset value and are redeemed at net
asset value less an applicable contingent deferred sales charge. Information on
redeeming shares may be found under "Redeeming Shares."

Risk Factors

Investors should be aware of the following general considerations: market values
of fixed-income securities, which may constitute a part of the investments of
several Funds, may vary inversely in response to change in prevailing interest
rates. The foreign securities in which some Funds may invest may be subject to
certain risks in addition to those inherent in U.S. investments. One or more
Funds may make certain investments and employ certain investment techniques that
involve other risks, including entering into repurchase agreements, lending
portfolio securities, and entering into futures contracts and related options,
entering into foreign currency transactions and forward foreign currency
exchange contracts, and borrowing money for investment purposes. These risks and
those associated with investing in mortgage-backed securities, foreign
securities, when-issued securities, variable rate securities, and equity
securities are described as applicable under "Investment Information" of each
respective Fund.

The Stellar Fund-
Summary of Fund Expenses
To come
The Stellar Fund-
Financial Highlights

To come

The Stellar Fund-
Investment Information

Investment Objective

The investment objective of the Fund is to maximize total return, a combination
of dividend income and capital appreciation. The investment objective of the
Fund cannot be changed without the approval of holders of a majority of the
Fund's shares. While there is no assurance that the Fund will achieve its
investment objective, it endeavors to do so by following the investment policies
described in this prospectus. Unless indicated otherwise, the investment
policies of the Fund may be changed by the Trustees without approval of
shareholders. Shareholders will be notified before any material change in these
policies becomes effective.

Investment Policies

The Fund pursues its investment objective by investing in the following
securities categories: domestic equity securities, domestic fixed income
securities (including structured fixed income securities), international
securities (equity and fixed income), real estate securities, precious metal
securities, and money market securities. As a non-fundamental policy, the Fund
will attempt to minimize overall portfolio risk by limiting investments in any
one securities category (as defined in this prospectus) to not more than 25% of
net assets. The Fund's investment adviser also believes that by spreading the
investment portfolio across multiple securities categories, the Fund can reduce
the impact of drastic market movements affecting any one securities type. The
Fund's investment adviser further attempts to reduce risk within each securities
category through careful investment analysis including, but not limited to, the
following: the employment of disciplined value measures (such as price/earnings
ratios) when selecting equity securities; use of ratings assigned by nationally
recognized statistical rating organizations ("NRSROs") (where applicable);
credit research; review of issuer's historical performance; examination of
issuer's dividend growth record; and consideration of market trends.

The Fund pursues its investment objective by investing approximately 20% of its
assets, in roughly equal weightings, in each of the following securities
categories: domestic equity securities, domestic fixed income securities
(including structured fixed income securities), international securities, and
real estate securities. The remaining 20% of its assets will be invested in
money market instruments and/or precious metal securities. Positions in these
categories of securities may vary from as high as 25% of its assets to as low as
15% of its assets depending on market factors.

Acceptable Investments

Consistent with the above, the Fund expects to invest primarily in domestic
equity securities, domestic fixed income securities, international securities,
real estate securities, precious metal securities, and money market securities.
Each category allocation will be made based on the definitions described
below.

Domestic Equity Securities. The equity portion of the Fund will consist of U.S.
common and preferred stocks. The stocks chosen will, in the opinion of the
Fund's investment adviser, be undervalued relative to stocks contained in the
Standard & Poor's 500 Composite Stock Price Index ("S&P 500"). Real estate and
precious metal securities of domestic issuers will not be considered domestic
equity securities for purposes of the asset allocation policy described above.

Domestic Fixed Income Securities. The fixed income portion of the Fund will
include domestic corporate debt obligations, obligations of the United States,
and notes, bonds, and discount notes of U.S. government agencies or
instrumentalities. Bonds are selected based on the outlook for interest rates
and their yield in relation to other bonds of similar quality and maturity. The
Fund will only invest in bonds, including convertible bonds, which are rated Baa
or higher by Moody's Investors Service, Inc. ("Moody's") or BBB or higher by
Standard & Poor's Ratings Group ("S&P"), or Fitch Investors Service, Inc.
("Fitch"), or which, if unrated, are deemed to be of comparable quality by the
investment adviser. The fixed income portion of the Fund will also include
mortgage-backed securities, adjustable rate mortgage securities ("ARMS"),
collateralized mortgage obligations ("CMOs"), and asset-backed securities.

International Securities. The international portion of the Fund will include
equity securities of non-U.S. companies and corporate and government fixed
income securities denominated in currencies other than U.S. dollars. The
international equity securities in which the Fund invests include international
stocks traded domestically or abroad through various stock exchanges, American
Depositary Receipts, or International Depositary Receipts ("ADRs" and "IDRs,"
respectively). The international fixed income securities will include ADRs,
IDRs, and government securities of other nations and will be rated
investment-grade (i.e., Baa or better by Moody's or BBB or better by S&P) or
deemed by the investment adviser to be of an equivalent quality. The Fund may
also invest in shares of open-end and closed-end management investment companies
which invest primarily in international equity securities described above.

Real Estate Securities. The real estate portion of the Fund will include equity
securities, including convertible debt securities, of real estate related
companies, and real estate investment trusts. All real estate securities will be
publicly traded, primarily on an exchange. Real estate securities are not
considered domestic equity securities for purposes of the Fund's asset
allocation limitation.

Precious Metal Securities. The precious metal securities in which the Fund
invests include domestic and international equity securities of companies that
explore for, extract, process, or deal in precious metals, such as gold, silver,
palladium, and platinum. The Fund may also invest up to 5% of its net assets in
domestic and international asset-based securities, including debt securities,
preferred stock, or convertible securities for which the principal amount,
redemption terms, or conversion terms are related to the market price of some
precious metals, such as gold bullion. The Fund may purchase only asset-based
securities that are rated Baa or better by Moody's or BBB or better by S&P, or,
if unrated, are of equal quality in the determination of the investment adviser.
Precious metal securities of foreign issuers will not be aggregated with other
international securities for purposes of calculating the Fund's investment in
international securities under the allocation policy described above.

Money Market Securities. The Fund may invest in U.S. and foreign short-term
money market instruments, including:

commercial paper rated A-1 or A-2 by S&P, Prime-1 or Prime-2 by
Moody's, or F-1 or F-2 by Fitch, and Europaper (dollar-denominated
commercial paper issued outside the United States) rated A-1, A-2,
Prime-1, or Prime-2. In the case where commercial paper or Europaper has
received different ratings from different rating services, such
commercial paper or Europaper is an acceptable temporary investment so
long as at least one rating is in the two highest rating categories of
the NRSROs described above;

instruments of domestic and foreign banks and savings associations
(such as certificates of deposit, demand and time deposits, savings
shares, and bankers' acceptances) if they have capital, surplus, and
undivided profits of over $100,000,000, or if the principal amount of
the instrument is insured by Bank Insurance Fund ("BIF") or the Savings
Association Insurance Fund ("SAIF"). These instruments may include
Eurodollar Certificates of Deposit ("ECDs"), Yankee Certificates of
Deposit ("Yankee CDs"), and Eurodollar Time Deposits ("ETDs");

obligations of the U.S. government or its agencies orobligations of the
U.S. government or its agencies or instrumentalities;

repurchase agreements; and

other short-term instruments which are not rated but are determined by
the investment adviser to be of comparable quality to the other
temporary obligations in which the Fund may invest.

U.S. Government Obligations. The types of government securities in which the
Fund may invest generally include direct obligations of the U.S. Treasury (such
as U.S. Treasury bills, notes, and bonds) and obligations issued or guaranteed
by U.S. government agencies or instrumentalities. These securities are backed
by:

o the full faith and credit of the U.S. Treasury;

o the issuer's right to borrow from the U.S. Treasury;

o the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or

o the credit of the agency or instrumentality issuing the obligations.

Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:

o Federal Home Loan Banks;

o Federal Home Loan Mortgage Corporation ("FHLMC");

o Federal Farm Credit Banks;

o Student Loan Marketing Association; and

o Federal National Mortgage Association ("FNMA").

Convertible Securities. The Fund may invest in convertible securities.
Convertible securities are fixed income securities which may be exchanged or
converted into a predetermined number of the issuer's underlying common stock at
the option of the holder during a specified time period. Convertible securities
may take the form of convertible preferred stock, convertible bonds or
debentures, units consisting of "usable" bonds and warrants or a combination of
the features of several of these securities.

Zero Coupon Securities. The Fund may invest in zero coupon bonds and zero coupon
convertible securities. The Fund may invest in zero coupon bonds in order to
receive the rate of return through the appreciation of the bond. This
application is extremely attractive in a falling rate environment as the price
of the bond rises rapidly in value as opposed to regular coupon bonds. A zero
coupon bond makes no periodic interest payments and the entire obligation
becomes due only upon maturity.

Zero coupon convertible securities are debt securities which are issued at a
discount to their face amount and do not entitle the holder to any periodic
payments of interest prior to maturity. Rather, interest earned on zero coupon
convertible securities accretes at a stated yield until the security reaches its
face amount at maturity. Zero coupon convertible securities are convertible into
a specific number of shares of the issuer's common stock. In addition, zero
coupon convertible securities usually have put features that provide the holder
with the opportunity to sell the bonds back to the issuer at a stated price
before maturity.

Generally, the price of zero coupon securities are more sensitive to
fluctuations in interest than are conventional bonds and convertible securities.
In addition, federal tax law requires the holder of a zero coupon security to
recognize income from the security prior to the receipt of cash payments. To
maintain its qualification as a regulated investment company and to avoid
liability of federal income taxes, the Fund will be required to distribute
income accrued from zero coupon securities which it owns, and may have to sell
portfolio securities (perhaps at disadvantageous times) in order to generate
cash to satisfy these distribution requirements.

Mortgage-Backed Securities. The Fund may invest in mortgage-backed securities.
Mortgage-backed securities are securities that directly or indirectly represent
a participation in, or are secured by and payable from, mortgage loans on real
property. There are currently three basic types of mortgage-backed securities:
(i) those issued or guaranteed by the U.S. government or one of its agencies or
instrumentalities, such as the Government National Mortgage Association
("GNMA"), FNMA, and the FHLMC; (ii) those issued by private issuers that
represent an interest in or are collateralized by mortgage-backed securities
issued or guaranteed by the U.S. government or one of its agencies or
instrumentalities; and (iii) those issued by private issuers that represent an
interest in or are collateralized by whole loans or mortgage-backed securities
without a government guarantee but usually having some form of private credit
enhancement.

ARMS. The Fund may invest in ARMS. ARMS are actively traded, mortgage-backed
securities representing interests in adjustable rather than fixed interest rate
mortgages. The Fund invests in ARMS issued by GNMA, FNMA, and FHLMC. The
underlying mortgages which collateralize ARMS issued by GNMA are fully
guaranteed by the Federal Housing Administration or Veterans Administration,
while those collateralizing ARMS issued by FHLMC or FNMA are typically
conventional residential mortgages conforming to strict underwriting size and
maturity constraints.

Unlike conventional bonds, ARMS pay back principal over the life of the ARMS
rather than at maturity. Thus, a holder of the ARMS, such as the Fund, would
receive monthly scheduled payments of principal and interest, and may receive
unscheduled principal payments representing payments on the underlying
mortgages. At the time that a holder of the ARMS reinvests the payments and any
unscheduled prepayments of principal that it receives, the holder may receive a
rate of interest which is actually lower than the rate of interest paid on the
existing ARMS. As a consequence, ARMS may be a less effective means of "locking
in" long-term interest rates than other types of U.S. government securities.

Not unlike other U.S. government securities, the market value of ARMS will
generally vary inversely with changes in market interest rates. Thus, the market
value of ARMS generally declines when interest rates rise and generally rises
when interest rates decline.

CMOs. The Fund may invest in CMOs. CMOs are debt obligations collateralized by
mortgage loans or mortgage-backed securities. Typically, CMOs are collateralized
by GNMA, FNMA, or FHLMC certificates, but may be collateralized by whole loans
or private mortgage-backed securities.

The Fund will invest only in CMOs which are rated AAA by a nationally recognized
statistical rating organization and which may be: (a) collateralized by pools of
mortgages in which each mortgage is guaranteed as to payment of principal and
interest by an agency or instrumentality of the U.S. government; (b)
collateralized by pools of mortgages in which payment of principal and interest
is guaranteed by the issuer and such guarantee is collateralized by U.S.
government securities; or (c) privately issued securities in which the proceeds
of the issuance are invested in mortgage securities and payment of the principal
and interest are supported by the credit of an agency or instrumentality of the
U.S.
government.

Asset-Backed Securities. The Fund may invest in asset-backed securities.
Asset-backed securities have structural characteristics similar to
mortgage-backed securities but have underlying assets that generally are not
mortgage loans or interests in mortgage loans. The Fund may invest in
asset-backed securities rated AAA by a nationally recognized statistical rating
organization including, but not limited to, interests in pools of receivables,
such as motor vehicle installment purchase obligations and credit card
receivables, equipment leases, manufactured housing (mobile home) leases, or
home equity loans. These securities may be in the form of pass-through
instruments or asset-backed bonds. The securities are issued by non-governmental
entities and carry no direct or indirect government guarantee.

Investment Risks of Mortgage-Backed and Asset-Backed Securities. Mortgage-backed
and asset-backed securities generally pay back principal and interest over the
life of the security. At the time the Fund reinvests the payments and any
unscheduled prepayments of principal received, the Fund may receive a rate of
interest which is actually lower than the rate of interest paid on these
securities ("prepayment risks"). Mortgage-backed and asset-backed securities are
subject to higher prepayment risks than most other types of debt instruments
with prepayment risks because the underlying mortgage loans or the collateral
supporting asset-backed securities may be prepaid without penalty or premium.
Prepayment risks on mortgage-backed securities tend to increase during periods
of declining mortgage interest rates because many borrowers refinance their
mortgages to take advantage of the more favorable rates. Prepayments on
mortgage-backed securities are also affected by other factors, such as the
frequency with which people sell their homes or elect to make unscheduled
payments on their mortgages. Although asset-backed securities generally are less
likely to experience substantial prepayments than are mortgage-backed
securities, certain of the factors that affect the rate of prepayments on
mortgage-backed securities also affect the rate of prepayments on asset-backed
securities.

While mortgage-backed securities generally entail less risk of a decline during
periods of rapidly rising interest rates, mortgage-backed securities may also
have less potential for capital appreciation than other similar investments
(e.g., investments with comparable maturities) because as interest rates
decline, the likelihood increases that mortgages will be prepaid. Furthermore,
if mortgage-backed securities are purchased at a premium, mortgage foreclosures
and unscheduled principal payments may result in some loss of a holder's
principal investment to the extent of the premium paid. Conversely, if
mortgage-backed securities are purchased at a discount, both a scheduled payment
of principal and an unscheduled prepayment of principal would increase current
and total returns and would accelerate the recognition of income, which would be
taxed as ordinary income when distributed to shareholders.

Asset-backed securities present certain risks that are not presented by
mortgage-backed securities. Primarily, these securities do not have the benefit
of the same security interest in the related collateral. Credit card receivables
are generally unsecured and the debtors are entitled to the protection of a
number of state and federal consumer credit laws, many of which give such
debtors the right to set off certain amounts owed on the credit cards, thereby
reducing the balance due. Most issuers of asset-backed securities backed by
motor vehicle installment purchase obligations permit the servicer of such
receivables to retain possession of the underlying obligations. If the servicer
sells these obligations to another party, there is a risk that the purchaser
would acquire an interest superior to that of the holders of the related
asset-backed securities. Further, if a vehicle is registered in one state and is
then re-registered because the owner and obligor moves to another state, such
re-registration could defeat the original security interest in the vehicle in
certain cases. In addition, because of the large number of vehicles involved in
a typical issuance and technical requirements under state laws, the trustee for
the holders of asset-backed securities backed by automobile receivables may not
have a proper security interest in all of the obligations backing such
receivables. Therefore, there is the possibility that recoveries on repossessed
collateral may not, in some cases, be available to support payments on these
securities.

Options Transactions. The Fund may engage in options transactions. The Fund may
purchase and sell options both to increase total return and to hedge against the
effect of changes in the value of portfolio securities.

The Fund may write (i.e., sell) covered call options and covered put options. By
writing a call option, the Fund becomes obligated during the term of the option
to deliver the securities underlying the option upon payment of the exercise
price. By writing a put option, the Fund becomes obligated during the term of
the option to purchase the securities underlying the option at the exercise
price if the option is exercised.

All options written by the Fund must be "covered" options. This means that, so
long as the Fund is obligated as the writer of a call option, it will own the
underlying securities subject to the option (or in the case of call options on
U.S. Treasury bills, substantially similar securities) or have the right to
obtain such securities without payment of further consideration (or have
segregated cash in the amount of any additional consideration).

The Fund will be considered "covered" with respect to a put option it writes if,
so long as it is obligated as the writer of the put option, it deposits and
maintains with its custodian in a segregated account liquid assets having a
value equal to or greater than the exercise price of the option. In the case of
the Fund, the aggregate value of the obligations underlying the puts will not
exceed 50% of the Fund's net assets.

The principal reason for writing call or put options is to manage price
volatility (or risk). In addition, the Fund will attempt to obtain, through a
receipt of premiums, a greater current return than would be realized on the
underlying securities alone. The Fund receives a premium from writing a call or
put option which it retains whether or not the option is exercised. By writing a
call option, the Fund might lose the potential for gain on the underlying
security while the option is open, and by writing a put option, the Fund might
become obligated to purchase the underlying security for more than its current
market price upon exercise. The Fund will write put options only on securities
which the Fund wishes to have in its portfolio and where the Fund has
determined, as an investment consideration, that it is willing to pay the
exercise price of the option.

The Fund, may purchase put options and call options. Such investments in put and
call options may not exceed 5% of the Fund's assets, represented by the premium
paid, and will only relate to specific securities (or groups of specific
securities) in which the Fund may invest. The Fund may purchase put and call
options for the purpose of offsetting previously written put and call options of
the same series. If the Fund is unable to effect a closing purchase transaction
with respect to covered options it has written, the Fund will not be able to
sell the underlying securities or dispose of assets held in a segregated account
until the options expire or are exercised. Put options may also be purchased to
protect against price movements in particular securities in the Fund's
portfolio. A put option gives the Fund, in return for a premium, the right to
sell the underlying security to the writer (seller) at a specified price during
the term of the option. The Fund will purchase options only to the extent
permitted by the policies of state securities authorities in states where shares
of the Fund are qualified for offer and sale.

The Fund may purchase and write over-the-counter options on portfolio securities
in negotiated transactions with the buyers or writers of the options when
options on the portfolio securities held by the Fund are not traded on an
exchange. The Fund purchases and writes options only with investment dealers and
other financial institutions (such as commercial banks or savings associations)
deemed creditworthy by the Fund's investment adviser.

Over-the-counter options are two-party contracts with price and terms negotiated
between buyer and seller. In contrast, exchange-traded options are third-party
contracts with standardized strike prices and expiration dates and are purchased
from a clearing corporation. Exchange-traded options have a continuous liquid
market while over-the-counter options may not.

Repurchase Agreements. The securities in which the Fund invests may be purchased
pursuant to repurchase agreements. Repurchase agreements are arrangements in
which banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them at a
mutually agreed upon time and price. To the extent that the original seller does
not repurchase the securities from the Fund, that Fund could receive less than
the repurchase price on any sale of such securities.

When-Issued and Delayed Delivery Transactions. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.

The Fund may dispose of a commitment prior to settlement if the Fund's
investment adviser deems it appropriate to do so. In addition, the Fund may
enter in transactions to sell its purchase commitments to third parties at
current market values and simultaneously acquire other commitments to purchase
similar securities at later dates. The Fund may realize short-term profits or
losses upon the sale of such commitments.

<PAGE>

Under criteria established by the Trustees, certain restricted securities are
considered to be liquid. To the extent that restricted securities are not
determined to be liquid, the Fund will limit its purchase together with other
illiquid securities, including restricted securities not determined by the
Trustees to be liquid, non-negotiable time deposits, over-the-counter options,
and repurchase agreements providing for settlement in more than seven days after
notice, to 15% of net assets. Investing in Securities of Other Investment
Companies. The Fund may invest its assets in securities of other investment
companies as an efficient means of carrying out its investment policies. It
should be noted that investment companies incur certain expenses, such as
management fees, and, therefore, any investment by the Fund in shares of other
investment companies may be subject to such duplicate expenses.

Investment Risks of Foreign Securities. Although considered separate securities
categories for purposes of the Fund's investment policies, the Fund's investment
in money market securities issued by foreign banks and international securities
could result in up to 50% of the Fund's net assets being invested in securities
of foreign issuers. In addition, the Fund's investment in precious metals
securities of foreign issuers, when aggregated with the above, could result in
greater than 50% of the Fund's net assets being invested in securities of
foreign issuers. Investing in foreign securities can carry higher returns and
risks than those associated with domestic investments. Foreign securities may be
denominated in foreign currencies. Therefore, the value in U.S. dollars of the
Fund's assets and income may be affected by changes in exchange rates and
regulations.

Although the Fund values its assets daily in U.S. dollars, it will not convert
its holding of foreign currencies to U.S. dollars daily. When the Fund converts
its holdings to another currency, it may incur currency conversion costs.
Foreign exchange dealers realize a profit on the difference between the prices
at which they buy and sell currencies.

Investment Risks of Foreign Companies. Other differences between investing in
foreign and U.S. companies include:

o less publicly available information about foreign companies;

o the lack of uniform financial accounting standards applicable to
foreign companies;

o less readily available market quotations on foreign companies;

o differences in government regulation and supervision of foreign
securities exchanges, brokers, listed companies, and banks;

o generally lower foreign securities market volume;

o the likelihood that foreign securities may be less liquid or more
volatile;

o generally higher foreign brokerage commissions;

o possible difficulty in enforcing contractual obligations or obtaining
court judgments abroad because of differences in the legal systems;

o unreliable mail service between countries; and

o political or financial changes which adversely affect investments in
some countries.

Investment Risks of U.S. Government Policies Regarding Investments Abroad. In
the past, U.S. government policies have discouraged or restricted certain
investments abroad. Although the Fund is unaware of any current restrictions
which would materially adversely affect its ability to meet its investment
objective and policies, investors are advised that these U.S. government
policies could be reinstituted.

Investment Risks of Fixed Income Securities. The Fund may invest in fixed income
securities. The prices of fixed income securities fluctuate inversely in
relation to the direction of interest rates. The prices of longer-term fixed
income securities fluctuate more widely in response to market interest rate
changes. Fixed income securities rated BBB by S&P or Fitch or Baa by Moody's
have more speculative characteristics. Changes in economic conditions or other
circumstances are more likely to lead to weakened capacity to make principal and
interest payments than higher-rated fixed income securities. In the event that a
fixed income security which had an eligible rating when purchased is downgraded
below the eligible rating, the Fund's investment adviser will promptly re-assess
whether continued holding of the security is consistent with the Fund's
objective.

Investment Risks of Real Estate Investment Trusts. The Fund may purchase
interests in real estate investment trusts. Risks associated with real estate
investments include the fact that equity and mortgage real estate investment
trusts are dependent upon management skill and are not diversified, and are,
therefore, subject to the risk of financing single projects or unlimited number
of projects. They are also subject to heavy cash flow dependency, defaults by
borrowers, and self-liquidation. Additionally, equity real estate investment
trusts may be affected by any changes in the value of the underlying property
owned by the trusts, and mortgage real estate investment trusts may be affected
by the quality of any credit extended. The investment adviser seeks to mitigate
these risks by selecting real estate investment trusts diversified by sector
(shopping malls, apartment building complexes, and health care facilities) and
geographic location.

Investment Risks of Precious Metal Securities and Precious Metals. The prices of
precious metal securities and precious metals have historically been subject to
high volatility. The earnings and financial condition of precious metal
companies may be adversely affected by volatile precious metal prices.

Investment Limitations

The Fund will not:

o borrow money or pledge securities except, under certain circumstances, the
Fund may borrow money up to one-third of the value of its total assets and
pledge up to 10% of the value of those assets to secure such borrowings.

o with respect to 75% of the value of total assets, invest more than 5% in
securities of one issuer except cash and cash items, U.S. government
securities, and repurchase agreements. Additionally, the Fund will not
acquire more than 10% of the voting securities of any one issuer.

o invest more than 5% of its in securities of issuers that have records of
less than three years of continuous operations.

The above investment limitations cannot be changed without shareholder approval.

<PAGE>

Star Relative Value Fund-
Summary of Fund Expenses
To come
Star Relative Value Fund-
Financial Highlights

To come

Star Relative Value Fund-
Investment Information

Investment Objective

The investment objective of the Fund is to obtain the highest total return, a
combination of income and capital appreciation, as is consistent with reasonable
risk. The investment objective of the Fund cannot be changed without the
approval of holders of a majority of the Fund's shares. While there is no
assurance that the Fund will achieve its investment objective, it endeavors to
do so by following the investment policies described in this prospectus. Unless
indicated otherwise, the investment policies of the Fund may be changed by the
Trustees without approval of shareholders. Shareholders will be notified before
any material change in these policies becomes effective.

Investment Policies

The Fund pursues its investment objective by investing primarily in equity
securities. The equity securities ("stocks") in which the Fund may invest
include, but are not limited to, stocks which, in the opinion of the Fund's
investment adviser, represent characteristics consistent with low volatility,
and above-average yields, and are undervalued relative to the stocks comprising
the S&P 500. At least 70% of the Fund's portfolio will be invested in common
stocks, unless it is in a defensive position. The Fund will also invest a
portion of its assets in fixed income securities.

Acceptable Investments

Consistent with the above, the Fund expects to invest primarily in common stocks
and fixed income securities (i.e., notes and bonds) of companies selected by the
Fund's investment adviser on the basis of traditional research techniques,
including assessment of earnings and dividend growth prospects and of the risk
and volatility of the company's industry. These securities will include:

Common Stocks. Ordinarily, these companies will be in the top 25% of their
industries with regard to revenues. However, other factors, such as product
position or market share, will be considered by the Fund's investment adviser
and may outweigh revenues;

o convertible securities;

o domestic issues of corporate debt obligations (rated Aaa, Aa, or A by
Moody's; AAA, AA, or A by S&P; or AAA, AA, or A by Fitch);

o government securities which generally include direct obligations of
the U.S. Treasury (such as U.S. Treasury bills, notes, and bonds) and
obligations issued or guaranteed by U.S. government agencies or
instrumentalities. These securities are backed by:

o the full faith and credit of the U.S. Treasury;

o the issuer's right to borrow from the U.S. Treasury;

o the discretionary authority of the U.S. government to purchase
certain obligations of agencies or instrumentalities;

o the credit of the agency or instrumentality issuing the
obligations; or

o investments in ADRs of foreign companies traded on the New York
Stock Exchange or in the over-the-counter market.

Examples of agencies and instrumentalities which may not always
receive financial support from the U.S. government are:

o Federal Home Loan Banks;

o FHLMC;

o Farm Credit Banks;

o Student Loan Marketing Association; and

o FNMA.

o notes, bonds, and discount notes of the following U.S. government
agencies or instrumentalities: Federal Home Loan Banks, FNMA, GNMA,
National Bank for Cooperatives, Banks for Cooperatives, Tennessee Valley
Authority, Export-Import Bank of the United States, Commodity Credit
Corporation, Federal Financing Bank, The Student Loan Marketing
Association, FHLMC, or National Credit Union Administration.

Securities of Foreign Issuers. The Fund may invest in the securities of foreign
issuers which are freely traded on United States securities exchanges or in the
over-the-counter market in the form of depositary receipts. As a matter of
practice, the Fund will not invest in the securities of a foreign issuer if any
such risk appears to the investment adviser to be substantial.

Temporary Investments. In such proportions as, in the judgment of its investment
adviser, prevailing market conditions warrant, the Fund may, for temporary
defensive purposes, invest in:

o short-term money market instruments;

o securities issued and/or guaranteed as to payment of principal and

o interest by the U.S. government, its agencies or instrumentalities; and

o repurchase agreements.

Repurchase Agreements. The securities in which the Fund invests may be purchased
pursuant to repurchase agreements. Repurchase agreements are arrangements in
which banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them at a
mutually agreed upon time and price. To the extent that the original seller does
not repurchase the securities from the Fund, the Fund could receive less than
the repurchase price on any sale of such securities.

Restricted and Illiquid Securities. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
invest pursuant to its investment objective and policies but which are subject
to restrictions on resale under federal securities laws. As a matter of
fundamental investment policy which may not be changed without shareholder
approval, the Fund may not invest more than 10% of the value of its net assets
in restricted securities. Under criteria established by the Trustees,
certain restricted securities are considered to be liquid. To the extent that
restricted securities are not determined to be liquid, the Fund will limit its
purchase together with other illiquid securities, including restricted
securities not determined by the Trustees to be liquid, non-negotiable time
deposits, over-the-counter options, and repurchase agreements providing for
settlement in more than seven days after notice, to 15% of net assets.
Investment Risks of Foreign Securities. The Fund may invest in foreign
securities. Investing in foreign securities can carry higher returns and risks
than those associated with domestic investments. Foreign securities may be
denominated in foreign currencies. Therefore, the value in U.S. dollars of the
Fund's assets and income may be affected by changes in exchange rates and
regulations.

Investment Risks of Foreign Companies. Other differences between investing in
foreign and U.S. companies include:

o less publicly available information about foreign companies;

o the lack of uniform financial accounting standards applicable to
foreign companies;

o less readily available market quotations on foreign companies;

o differences in government regulation and supervision of foreign
securities exchanges, brokers, listed companies, and banks;

o generally lower foreign securities market volume;

o the likelihood that foreign securities may be less liquid or more
volatile;

o generally higher foreign brokerage commissions;

o possible difficulty in enforcing contractual obligations or obtaining
court judgments abroad because of differences in the legal systems;

o unreliable mail service between countries; and

o political or financial changes which adversely affect investments in
some countries.

Investment Limitations

The Fund will not:

o borrow money or pledge securities except, under certain circumstances, the
Fund may borrow money directly or through reverse repurchase agreements in
amounts up to one-third of the value of its total assets and pledge up to 10%
of the value of those assets to secure such borrowings.

o with respect to 100% of the value of total assets, invest more than 5% in
securities of one issuer except cash and cash items, U.S. government
securities, and repurchase agreements.

o invest more than 5% of its in securities of issuers that have records of
less than three years of continuous operations.

o purchase more than 10% of the outstanding voting securities of any one issuer.

The above investment limitations cannot be changed without shareholder approval.

Star Growth Equity Fund-
Summary of Fund Expenses
To come
Star Growth Equity Fund-
Financial Highlights

To come

Star Growth Equity Fund-
Investment Information

Investment Objective

The investment objective of the Fund is to maximize capital appreciation. The
investment objective of the Fund cannot be changed without the approval of
holders of a majority of the Fund's shares. While there is no assurance that the
Fund will achieve its investment objective, it endeavors to do so by following
the investment policies described in this prospectus. Unless indicated
otherwise, the investment policies of the Fund may be changed by the Trustees
without approval of shareholders. Shareholders will be notified before any
material change in these policies becomes effective.

Investment Policies

The Fund pursues its investment objective by investing at least 65% of the value
of its total assets in growth-oriented equity securities. The Fund defines
growth-oriented equity securities as securities of U.S. companies with market
capitalization's of $1.5 billion or greater that are projected by the Fund's
investment adviser, based upon traditional research techniques, to show earnings
growth potential superior to the S&P 500. The Fund may also invest in domestic
debt securities, international securities, U.S. government securities,
structured fixed income securities, and money market instruments. The Fund's
investment adviser selects securities and attempts to maintain an acceptable
level of risk largely through the use of automated quantitative measurement
techniques. The data considered by the quantitative model includes, but is not
limited to, price/earnings ratios, historical and projected earnings growth
rates, historical sales growth rates, historical return on equity, market
capitalization, average daily trading volume, and credit rankings based on
NRSROs (where applicable). The quantitative model is used in conjunction with
the investment adviser's economic forecast and assessment of the risk and
volatility of the company's industry. Acceptable Investments

The securities in which the Fund may invest may include the following:

Domestic Equity Securities. The domestic equity securities in the Fund will
usually consist of U.S. common and preferred stocks of companies with market
capitalizations of $1.5 billion or greater and which are listed on the New York
or American Stock Exchanges or traded in the over-the-counter market and
warrants of such companies.

Real Estate Investment Trusts. This category will include equity or mortgage
real estate investment trusts integrated to capture income. A real estate
investment trust is a managed portfolio of real estate investments. Real estate
of domestic issuers will not be considered domestic equity securities for
purposes of the asset allocation policy described above. Real estate investment
trust holdings will be diversified by sector (shopping malls, apartment building
complexes, and health care facilities) and geographic location. An equity real
estate investment trust holds equity positions in real estate, and it seeks to
provide its shareholders with income from the leasing of its properties and with
capital gains from any sales of properties. A mortgage real estate investment
trust specializes in lending money to developers of properties, and passes any
interest income it may earn to its shareholders.

Domestic Debt Securities. The Fund may also invest in notes, zero coupon bonds,
and convertible securities of the U.S. companies described above, all of which
are rated investment grade, i.e., Baa or better by Moody's, or BBB or better by
S&P or Fitch (or, if unrated, are deemed to be of comparable quality by the
Fund's investment adviser). The Fund may also invest in securities issued and/or
guaranteed as to the payment of principal and interest by the U.S. government or
its agencies or instrumentalities. The types of government securities in which
the Fund may invest generally include direct obligations of the U.S. Treasury
(such as U.S. Treasury bills, notes, and bonds) and obligations issued or
guaranteed by U.S. government agencies or instrumentalities. These securities
are backed by:

o the full faith and credit of the U.S. Treasury;
o the issuer's right to borrow from the U.S. Treasury;
o the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
o the credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:
o Federal Home Loan Banks;
o FHLMC;
o Farm Credit Banks;
o Student Loan Marketing Association; and
o FNMA.

Structured Fixed Income Securities. The Fund many invest in mortgage-backed
securities, ARMS, CMOs, and asset-backed securities.

International Securities. The Fund may invest in international securities
(including investment companies which invest primarily in international
securities) The international portion of the Fund will include equity securities
of non-U.S. companies and corporate and government fixed income securities
denominated in currencies other than U.S. dollars. The international equity
securities in which the Fund invests include international stocks traded
domestically or abroad through various stock exchanges, ADRs or IDRs. The
international fixed income securities will include ADRs, IDRs, and government
securities of other nations and will be rated investment-grade (i.e., Baa or
better by Moody's or BBB or better by S&P) or deemed by the investment adviser
to be of an equivalent quality. The Fund will not invest more than 10% of its
assets in international securities.

Money Market Instruments. For temporary defensive purposes (up to 100% of total
assets) and to maintain liquidity (up to 35% of total assets), the Fund may
invest in U.S. and foreign short-term money market instruments including:

instruments of domestic and foreign banks and savings and loans (such
as certificates of deposit, demand and time deposits, savings shares,
and bankers' acceptances) if they have capital, surplus, and undivided
profits of over $100,000,000, or if the principal amount of the
instrument is insured by BIF or the SAIF. These instruments may include
ECDs, Yankee CDs, and ETDs;

obligations of the U.S. government or its agencies or instrumentalities;

repurchase agreements; and

other short-term instruments which are not rated but are determined by
the investment adviser to be of comparable quality to the other
temporary obligations in which the Fund may invest.

Mortgage-Backed Securities. The Fund may invest in mortgage-backed securities.
Mortgage-backed securities are securities that directly or indirectly represent
a participation in, or are secured by and payable from, mortgage loans on real
property. There are currently three basic types of mortgage-backed securities:
(i) those issued or guaranteed by the U.S. government or one of its agencies or
instrumentalities, such as the GNMA, the FNMA, and the FHLMC; (ii) those issued
by private issuers that represent an interest in or are collateralized by
mortgage-backed securities issued or guaranteed by the U.S. government or one of
its agencies or instrumentalities; and (iii) those issued by private issuers
that represent an interest in or are collateralized by whole loans or
mortgage-backed securities without a government guarantee but usually having
some form of private credit enhancement.

Futures and Options on Futures. The Fund may purchase and sell futures contracts
to hedge against the effect of changes in the value of portfolio securities due
to anticipated changes in interest rates and market conditions. Futures
contracts call for the delivery of particular debt instruments at a certain time
in the future. The seller of the contract agrees to make delivery of the type of
instrument called for in the contract, and the buyer agrees to take delivery of
the instrument at the specified future time. Stock index futures contracts are
based on indices that reflect the market value of common stock of the firms
included in the indices. An index future contract is an agreement to which two
parties agree to take or make delivery of an amount of cash equal to the
difference between the value of the index at the close of the last trading day
of the contract and the price at which the index contract was originally
written.

The Fund may also write call options and purchase put options on futures
contracts as a hedge to attempt to protect securities in its portfolio against
decreases in value. When the Fund writes a call option on a futures contract, it
is undertaking the obligation of selling a futures contract at a fixed price at
any time during a specified period if the option is exercised. Conversely, as
purchaser of a put option on a futures contract, the Fund is entitled (but not
obligated) to sell a futures contract at the fixed price during the life of the
option.

The Fund may also write put options and purchase call options on futures
contracts as hedges against rising purchase prices of portfolio securities. The
Fund will use these transactions to attempt to protect its ability to purchase
portfolio securities in the future at price levels existing at the time it
enters into the transactions. When the Fund writes a put option on a futures
contract, it is undertaking to buy a particular futures contract at a fixed
price at any time during a specified period if the option is exercised. As a
purchaser of a call option on a futures contract, the Fund is entitled (but not
obligated) to purchase a futures contract at a fixed price at any time during
the life of the option.

The Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the Fund's
existing futures positions and premiums paid for related options would exceed 5%
of the market value of the Fund's total assets. When the Fund purchases futures
contracts, an amount of cash and cash equivalents, equal to the underlying
commodity value of the futures contracts (less any related margin deposits),
will be deposited in a segregated account with the Fund's custodian (or the
broker, if legally permitted) to collateralize the position and thereby insure
that the use of such futures contract is unleveraged. When the Fund sells
futures contracts, it will either own or have the right to receive the
underlying future or security, or will make deposits to collateralize the
position as discussed above.

It is not certain that a secondary market for positions in futures contracts or
for options will exist at all times. Although the investment adviser will
consider liquidity before entering into these transactions, there is no
assurance that a liquid secondary market on an exchange or otherwise will exist
for any particular futures contract or option at any particular time. The Fund's
ability to establish and close out futures and options positions depends on this
secondary market.

Lending of Portfolio Securities. Pursuant to a fundamental policy, in order to
generate additional income the Fund may lend portfolio securities up to
one-third of the value of its total assets, on a short-term or long-term basis,
to broker/dealers, banks, or other institutional borrowers of securities.

The Fund will only enter into loan arrangements with broker/dealers, banks, or
other institutions which the investment adviser has determined are creditworthy
under guidelines established by the Trustees and where the Fund will receive
collateral in the form of cash or U.S. government securities equal to at least
100% of the value of the securities loaned at all times.

Restricted and Illiquid Securities. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
invest pursuant to its investment objective and policies but which are subject
to restrictions on resale under federal securities laws. Under criteria
established by the Trustees, certain restricted securities are considered to be
liquid. To the extent that restricted securities are not determined to be
liquid, the Fund will limit its purchase together with other illiquid
securities, including restricted securities not determined by the Trustees to be
liquid, non-negotiable time deposits, over-the-counter options, and repurchase
agreements providing for settlement in more than seven days after notice, to 15%
of net assets. Investing in Securities of Other Investment Companies. The Fund
may invest its assets in securities of other investment companies as an
efficient means of carrying out its investment policies. It should be noted that
investment companies incur certain expenses, such as management fees, and,
therefore, any investment by the Fund in shares of other investment companies
may be subject to such duplicate expenses.

Investment Risks of Foreign Securities. The Fund may invest in foreign
securities. Investing in foreign securities can carry higher returns and risks
than those associated with domestic investments. Foreign securities may be
denominated in foreign currencies. Therefore, the value in U.S.
dollars of the Fund's assets and income may be affected by changes in exchange
rates and regulations.

Investment Risks of Foreign Companies. Other differences between investing in
foreign and U.S. companies include:

o less publicly available information about foreign companies;

o the lack of uniform financial accounting standards applicable to foreign
companies;

o less readily available market quotations on foreign companies;

o differences in government regulation and supervision of foreign
securities exchanges, brokers, listed companies, and banks;

o generally lower foreign securities market volume;

o the likelihood that foreign securities may be less liquid or more
volatile;

o generally higher foreign brokerage commissions;

o possible difficulty in enforcing contractual obligations or obtaining
court judgments abroad because of differences in the legal systems;

o unreliable mail service between countries; and

o political or financial changes which adversely affect investments in
some countries.

Investment Limitations

The Fund will not:
o borrow money or pledge securities except, under certain circumstances, the
Fund may borrow money directly or through reverse repurchase agreements in
amounts up to one-third of the value of its total assets and pledge up to 10%
of the value of those assets to secure such borrowings.

o with respect to 75% of the value of total assets, invest more than 5% in
securities of one issuer except cash and cash items, U.S. government
securities, and repurchase agreements.

The above investment limitations cannot be changed without shareholder approval.

Star Capital Appreciation Fund-
Summary of Fund Expenses
To come
Star Capital Appreciation Fund-
Financial Highlights

To come

Star Capital Appreciation Fund-
Investment Information

Investment Objective

The investment of the Fund is to maximize capital appreciation. The investment
objective of the Fund cannot be changed without the approval of holders of a
majority of the Fund's shares. While there is no assurance that the Fund will
achieve its investment objective, it endeavors to do so by following the
investment policies described in this prospectus. Unless indicated otherwise,
the investment policies of the Fund may be changed by the Trustees without
approval of shareholders. Shareholders will be notified before any material
change in these policies becomes effective.

Investment Policies

The Fund pursues its investment objective by investing at least 65% of the value
of its total assets in equity securities of U.S. companies. The Fund may also
invest in domestic debt securities, international securities, U.S. government
securities, and money market instruments. The Fund's investment adviser selects
securities and attempts to maintain an acceptable level of risk largely through
the use of automated quantitative measurement techniques. This quantitative
model includes, but is not limited to, price/earnings ratios, historical and
projected earnings growth rates, historical sales growth rates, historical
return on equity, market capitalization, average daily trading volume, and
credit rankings based on NRSROs (where applicable). The quantitative model is
used in conjunction with the investment adviser's economic forecast and
assessment of the risk and volatility of the company's industry.

Acceptable Investments

The securities in which the Fund invests include the following:

Domestic Equity Securities. The domestic equity securities of the Fund will
usually consist of U.S. common and preferred stocks of companies with between
$200 million and $10 billion in equity and which are listed on the New York or
American Stock Exchanges or traded in the over-the-counter market and warrants
of such companies.

Domestic Debt Securities. The Fund may also invest in notes, zero coupon bonds,
and convertible securities of the U.S. companies described above, all of which
are rated investment grade, i.e., Baa or better by Moody's, or BBB or better by
S&P or Fitch (or, if unrated, are deemed to be of comparable quality by the
Fund's investment adviser). The Fund may also invest in securities issued and/or
guaranteed as to the payment of principal and interest by the U.S. government or
its agencies or instrumentalities which generally include direct obligations of
the U.S. Treasury (such as U.S. Treasury bills, notes, and bonds) and
obligations issued or guaranteed by U.S. government agencies or
instrumentalities. These securities are backed by:

o the full faith and credit of the U.S. Treasury;

o the issuer's right to borrow from the U.S. Treasury;

o the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or

o the credit of the agency or instrumentality issuing the obligations.

Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:

o Federal Home Loan Banks;

o FHLMC;

o Farm Credit Banks;

o Student Loan Marketing Association; and

o FNMA.

International Securities. The Fund may invest in international securities
(including investment companies which invest primarily in international
securities) of the type more fully described under The international portion of
the Fund will include equity securities of non-U.S. companies and corporate and
government fixed income securities denominated in currencies other than U.S.
dollars. The international equity securities in which the Fund invests include
international stocks traded domestically or abroad through various stock
exchanges, ADRs or IDRs. The international fixed income securities will include
ADRs, IDRs, and government securities of other nations and will be rated
investment-grade (i.e., Baa or better by Moody's or BBB or better by S&P) or
deemed by the investment adviser to be of an equivalent quality. The Fund will
not invest more than 10% of its assets in international securities.

obligations of the U.S. government or its agencies or
instrumentalities;

repurchase agreements; and

other short-term instruments which are not rated but are determined by
the investment adviser to be of comparable quality to the other
temporary obligations in which the Fund may invest.

The Fund may purchase and write over-the-counter options on portfolio securities
in negotiated transactions with the buyers or writers of the options when
options on the portfolio securities held by the Fund are not traded on an
exchange. The Fund purchases and writes options only with investment dealers and
other financial institutions (such as commercial banks or savings and loan
associations) deemed creditworthy by the Fund's investment adviser.

Stock index futures contracts are based on indices that reflect the market value
of common stock of the firms included in the indices. An index future contract
is an agreement to which two parties agree to take or make delivery of an amount
of cash equal to the difference between the value of the index at the close of
the last trading day of the contract and the price at which the index contract
was originally written.

Repurchase Agreements. The securities in which the Fund invests may be purchased
pursuant to repurchase agreements. Repurchase agreements are arrangements in
which banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them at a
mutually agreed upon time and price. To the extent that the original seller does
not repurchase the securities from the Fund, the Fund could receive less than
the repurchase price on any sale of such securities.

Lending of Portfolio Securities. Pursuant to a fundamental policy, in order to
generate additional income, the Fund may lend portfolio securities up to
one-third of the value of its total assets, on a short-term or long-term basis,
to broker/dealers, banks, or other institutional borrowers of securities.

Restricted and Illiquid Securities. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
invest pursuant to its investment objective and policies but which are subject
to restrictions on resale under federal securities laws. Under criteria
established by the Trustees, certain restricted securities are considered to be
liquid. To the extent that restricted securities are not determined to be
liquid, the Fund will limit its purchase together with other illiquid
securities, including restricted securities not determined by the Trustees to be
liquid, non-negotiable time deposits, over-the-counter options, and repurchase
agreements providing for settlement in more than seven days after notice, to 15%
of net assets. Investing in Securities of Other Investment Companies. The Fund
may invest its assets in securities of other investment companies as an
efficient means of carrying out its investment policies. It should be noted that
investment companies incur certain expenses, such as management fees, and,
therefore, any investment by the Fund in shares of other investment companies
may be subject to such duplicate expenses.

In addition, the Fund may purchase shares of closed-end investment companies
which invest in securities which approximate the composition of a stock index.

<PAGE>

Investment Risks of Foreign Companies. Other differences between investing in
foreign and U.S. companies include:

o less publicly available information about foreign companies;

o the lack of uniform financial accounting standards applicable to
foreign companies;

o less readily available market quotations on foreign companies;

o differences in government regulation and supervision of foreign
securities exchanges, brokers, listed companies, and banks;

o generally lower foreign securities market volume;

o the likelihood that foreign securities may be less liquid or more
volatile;

o generally higher foreign brokerage commissions;

o possible difficulty in enforcing contractual obligations or obtaining
court judgments abroad because of differences in the legal systems;

o unreliable mail service between countries; and

o political or financial changes which adversely affect investments in
some countries.

Investment Limitations

The above investment limitations cannot be changed without shareholder approval.

Star Funds Information

Management of the Trust

Board of Trustees. The Trust is managed by a Board of Trustees. The Trustees are
responsible for managing the Trust's business affairs and for exercising all the
Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.

Investment Adviser. Investment decisions for the Funds are made by Star Bank,
N.A., the Funds' investment adviser (the "Adviser" or "Star Bank"), subject to
direction by the Trustees. The Adviser continually conducts investment research
and supervision for the Funds and is responsible for the purchase or sale of
portfolio instruments, for which it receives an annual fee from the Funds.

Advisory Fees. The Adviser is entitled to receive an annual investment
advisory fee equal to a percentage of each Fund's average daily net
assets as follows: 0.75% of Relative Value Fund and Growth Equity Fund;
and 0.95% of The Stellar Fund and Capital Appreciation Fund. The Adviser
may voluntarily choose to waive a portion of its fee or reimburse the
Funds for certain operating expenses. The Adviser can terminate this
voluntary waiver of its advisory fees at any time at its sole
discretion.

Adviser's Background. Star Bank, a national bank, was founded in 1863
and is the largest bank and trust organization of StarBanc Corporation.
As of December 31, 1997, Star Bank had an asset base of $____ billion.

Star Bank's expertise in trust administration, investments, and estate
planning ranks it among the most predominant trust institutions in Ohio,
with assets of $____ billion as of December 31, 1997.

As part of its regular banking operations, Star Bank may make loans to
public companies. Thus, it may be possible, from time to time, for the
Funds to hold or acquire the securities of issuers which are also
lending clients of Star Bank. The lending relationship will not be a
factor in the selection of securities.

B. Randolph Bateman has been Senior Vice President and Chief Investment
Officer of Star Bank's Trust Financial Services Group and Manager of its
Capital Asset Management Division since 1988. Mr. Bateman has managed
the international securities component of The Stellar Fund since May
1993. Mr. Bateman earned a Bachelor of Arts degree in Economics from
North Carolina State University and earned the Chartered Financial
Analyst designation.

Joseph P. Belew, a Vice President and Trust Officer and Manager of the
Trust Financial Services division at Star Bank, N.A., Butler County,
since 1979, has been employed by Star Bank in various capacities since
1979. Mr. Belew has been Relative Value Fund's portfolio manager since
its inception in June 1991. He earned a Bachelor of Business
Administration degree in Business Management from Belmont College.

Carolyn A. Baril has been a Trust Investment Officer for the Capital
Management Division of Star Bank since January 1997. In July 1997, Ms.
Baril assumed responsibility as Fund Manager for the REIT component of
The Stellar Fund. Prior to joining Star Bank, Ms. Baril was a Research
Analyst with Fifth Third Investment Advisers from June 1993 to December
1996, and was a Financial Analyst with Beth Israel Hospital in Boston,
Massachusetts from May 1992, to June 1993. Ms. Baril earned a Bachelor
of Business Administration degree from Simmons College and is currently
enrolled in the Masters of Business Administration program at Xavier
University.

B. Randolph Bateman has been Senior Vice President and Chief Investment
Officer of Star Bank's Trust Financial Services Group and Manager of its
Capital Asset Management Division since 1988. Mr. Bateman assumed
responsiblity as Fund Manager for Capital Appreciation Fund in November,
1997. Mr. Bateman earned a Bachelor of Arts degree in Economics from
North Carolina State University and earned the Chartered Financial
Analyst designation.

Donald L. Keller, a Senior Vice President Investment Manager for the
Charitable Trust and Retirement Plan Services Division of Star Bank
since 1993, has been employed by Star Bank in various capacities since
1982. Mr. Keller has managed the Growth Equity Fund since its inception.
He managed the domestic equity securities components of The Stellar Fund
from its inception through December 1995. He also supported the domestic
and international equity and fixed income components of Capital
Appreciation Fund from its inception through December 1995. Mr. Keller
earned a Bachelor of Business Administration Degree in Finance and
Accounting from the University of Cincinnati.
He also earned his Masters in Finance from Xavier University.

Kirk F. Mentzer, Senior Trust Officer and Director of Fixed Income
Research for the Capital Management Division of Star Bank since 1992,
has been employed by Star Bank in various capacities since 1989. Mr.
Mentzer has managed the domestic fixed income component of The Stellar
Fund since its inception. Mr. Mentzer earned a Bachelor of Business
Administration degree in Finance from the University of Cincinnati and a
Masters degree in Finance from Xavier University.

Kenneth D. Lamson is a Fund Manager and Investment Analyst for the
Capital Management Division of Star Bank. He is responsible for the
management of the cash equivalent components of the Star Funds. Mr.
Lamson joined Star Bank in 1993 as the portfolio assistant and
mortgage-backed securities specialist for the Bank's Treasury Division.
Prior to joining Star Bank, Mr. Lamson served as an Assistant Examiner
for the FDIC since August 1990. He earned his Bachelor of Science in
Business Management from Jacksonville State University, and is currently
pursuing his Chartered Financial Analyst designation and Masters of
Business Administration. He has been a mentor and tutor for the
Cincinnati Youth Collaborative and is an advisor for the Explorers
program of the Boy Scouts of America.

Peter Sorrentino is Vice President and Director of Portfolio Management and
Research for the Capital Management Division of Star Bank. Mr. Sorrentino
has managed the domestic equity component of The Stellar Fund since January
1996. Prior to joining Star Bank in 1996, Mr. Sorrentino served as Regional
Director of Portfolio Management for Banc One Investment Advisors since
1987. Mr. Sorrentino earned a Bachelor of Business Administration degree in
Finance and Accounting from the University of Cincinnati. He also earned
the Chartered Financial Analyst designation.

Distribution of Fund Shares

Federated Securities Corp. is the distributor for shares of the Funds. It is a
Pennsylvania corporation organized on November 14, 1969, and is the distributor
for a number of investment companies. Federated Securities Corp. is a subsidiary
of Federated Investors.

Distribution Plan. Pursuant to the provisions of a distribution plan adopted in
accordance with the Investment Company Act Rule 12b-1 (the "Plan"), The Stellar
Fund (Investment Shares), Relative Value Fund (Investment Shares), Growth Equity
Fund (Investment Shares), and Capital Appreciation Fund may pay to the
distributor an amount computed at an annual rate of up to 0.25% of the average
daily net assets, in each case to finance any activity which is principally
intended to result in the sale of shares subject to the Plan.

Federated Securities Corp. may from time to time, and for such periods as it
deems appropriate, voluntarily reduce its compensation under the Plan to the
extent the expenses attributable to the shares exceed such lower expense
limitation as the distributor may, by notice to the Trust, voluntarily declare
to be effective.

The distributor may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers, and broker/dealers to provide
sales and/or administrative support services as agents for their clients or
customers who beneficially own shares of the Funds.

Financial institutions will receive fees from the distributor based upon shares
owned by their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time by the
distributor.

The Funds' Plan is a compensation type plan. As such, the Funds make no payments
to the distributor except as described above. Therefore, the Funds do not pay
for unreimbursed expenses of the distributor, including amounts expended by the
distributor in excess of amounts received by it from the Funds, interest,
carrying or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover such amounts or may earn a profit from future payments made by the Funds
under the Plan.

The Glass-Steagall Act limits the ability of a depository institution (such as a
commercial bank or a savings and loan association) to become an underwriter or
distributor of securities. In the event the Glass-Steagall Act is deemed to
prohibit depository institutions from acting in the capacities described above
or should Congress relax current restrictions on depository institutions, the
Trustees will consider appropriate changes in the services.

Additional Distribution Payments. The distributor will, periodically, uniformly
offer to pay additional amounts in the form of cash or promotional incentives
consisting of trips to sales seminars at luxury resorts, tickets or other items,
to all dealers selling shares of the Funds. Such payments will be predicated
upon the amount of shares of a Fund that are sold by the dealer. Any such
payments will be made from the assets of the distributor (including any portion
of any sales charge returned by the distributor) and will not result in a charge
to a Fund. In addition, the distributor will pay dealers an amount equal to 2.2%
of the Investment Shares of the Growth Equity Fund, purchased by their clients
or customers. These payments will be made directly by the distributor from its
assets, and will not be made from assets of the Fund.

Administrative Arrangements. The distributor may select brokers and dealers to
provide distribution and administrative services. The distributor may also
select administrators (including depository institutions such as commercial
banks and savings and loan associations) to provide administrative services.
These administrative services include distributing prospectuses and other
information, providing accounting assistance, and communicating or facilitating
purchases and redemptions of each of the Fund's shares.

Brokers, dealers, and administrators will receive fees from the distributor
based upon shares of a Fund owned by their clients or customers. The fees are
calculated as a percentage of the average aggregate net asset value of
shareholder accounts during the period for which the brokers, dealers, and
administrators provide services. The current annual rate of such fees is up to
0.30% of average net assets of a Fund. Any fees paid for these services by the
distributor will be reimbursed by the Adviser. Payments made pursuant to these
arrangements are in addition to any payments made under a Fund's Rule 12b-1
Distribution Plan or a Fund's Shareholder Services Plan.

Shareholder Services Plan. 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 its
average daily net assets for the period. For the foreseeable future, the Funds
plan to limit the Shareholder Servicing Fee to 0.05% of average daily net
assets. This fee is to obtain certain services for shareholders and to maintain
shareholder accounts.

Administration of the Funds

Administrative Services. Federated Administrative Services, Pittsburgh,
Pennsylvania, a subsidiary of Federated Investors, provides the Funds with
certain administrative personnel and services necessary to operate the Funds,
and the separate classes, as applicable, such as legal and accounting services.
Federated Administrative Services provides these at an annual rate as specified
below:

Maximum Average Aggregate Daily Net
Administrative Fee Assets of the Trust
0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million

The administrative fee received during any fiscal year shall be at least $50,000
per Fund. Federated Administrative Services may choose to voluntarily waive a
portion of its fee at any time.

Custodian. Star Bank, N.A., is the Funds' custodian for which it receives a fee
of 0.025% of the average daily net assets. The fee is based on the level of each
Funds' average net assets for the period, plus out-of-pocket expenses.

Transfer Agent, Dividend Disbursing Agent, and Portfolio Accounting Services.
Federated Shareholder Services Company, Pittsburgh, Pennsylvania, a subsidiary
of Federated Investors, is transfer agent and dividend disbursing agent for the
Funds. It also provides certain accounting and recordkeeping services with
respect to each Fund's portfolio investments.

Independent Public Accountants. The independent public accountants for the Funds
are Arthur Andersen LLP, Pittsburgh, Pennsylvania.

Brokerage Transactions

When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the Adviser will generally utilize those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the Adviser may give consideration to those
firms which have sold or are selling shares of the Funds and other funds
distributed by Federated Securities Corp. The Adviser makes decisions on
portfolio transactions and selects brokers and dealers subject to review by the
Trustees.

Net Asset Value

Each Fund's net asset value per share fluctuates. It is determined by
dividing the sum of the market value of all securities and other assets, less
liabilities, by the number of shares outstanding. With respect to The Stellar
Fund, Relative Value Fund and Growth Equity Fund, the net asset value for Trust
Shares will differ from that of Investment Shares due to the variance in net
income realized by each class. Such variance will reflect only accrued net
income to which the shareholders of a particular class are entitled.

Investing in the Funds

Minimum Investment Required

The minimum initial investment in any of the Funds by an investor is $1,000 ($25
for Star Bank Connections Group banking customers, Star Bank employees and
members of their immediate family and participants in the systematic investment
plan). Subsequent investments may be in any amounts. For customers of Star Bank,
an institutional investor's minimum investment will be calculated by combining
all mutual fund accounts it maintains with Star Bank and invests with the
Funds.

What Shares Cost

Shares of Capital Appreciation Fund and Investment Shares of The Stellar Fund
and Relative Value Fund are sold at their net asset value next determined after
an order is received, plus a sales charge, as follows:
Sales Charge as a Sales Charge as
Percentage of a Percentage of
Amount of Transaction Public Offering Price Net Amount Invested
Less than $100,000 4.50% 4.71%
$100,000 but less than $250,000 3.75% 3.90%
$250,000 but less than $500,000 2.50% 2.56%
$500,000 but less than $750,000 2.00% 2.04%
$750,000 but less than $1 million 1.00% 1.01%
$1 million or more 0.25% 0.25%

The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on: (i) days on which there are not sufficient changes in the value of
the Fund's portfolio securities that its net asset value might be materially
affected; (ii) days during which no shares are tendered for redemption and no
orders to purchase shares are received; or (iii) the following holidays: New
Year's Day, Martin Luther King Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.

Purchases at Net Asset Value. Shares of Growth Equity Fund, and Trust Shares of
The Stellar Fund, and Relative Value Fund, are sold at their net asset value
next determined after an order is received. There is no sales charge imposed by
such Funds at the time of purchase. Under certain circumstances described under
"Redeeming Shares," shareholders may be charged a contingent deferred sales
charge by the distributor at the time shares of Strategic Income Fund and
Investment Shares of Growth Equity Fund are redeemed.

In addition, the following persons may purchase shares of Capital Appreciation
Fund and Investment Shares of The Stellar Fund and Relative Value Fund, at net
asset value, without a sales charge: (a) employees and retired employees of Star
Bank, Federated Securities Corp., or their affiliates, or of any bank or
investment dealer who has a sales agreement with Federated Securities Corp. with
regard to the Funds, and members of their families (including parents,
grandparents, siblings, spouses, children, and in-laws) of such employees or
retired employees; (b) trust customers of StarBanc Corporation and its
subsidiaries; (c) and non-trust customers of financial advisers.

Sales Charge Reallowance. For sales of shares of Capital Appreciation Fund and
Investment Shares of The Stellar Fund and Relative Value Fund, Star Bank or any
authorized dealer will normally receive up to 89% of the applicable sales
charge. Any portion of the sales charge which is not paid to Star Bank or a
dealer will be retained by the distributor.

The sales charge for shares sold other than through Star Bank or registered
broker/dealers will be retained by the distributor. The distributor may pay fees
to banks out of the sales charge in exchange for sales and/or administrative
services performed on behalf of the bank's customers in connection with the
initiation of customer accounts and purchases of Fund shares.

Reducing the Sales Charge

The sales charge can be reduced on the purchase of shares through:

o quantity discounts and accumulated purchases;

o signing a 13-month letter of intent;

o using the reinvestment privilege; or

o concurrent purchases.

Quantity Discounts and Accumulated Purchases. As shown in the previous table,
larger purchases reduce the sales charge paid. Capital Appreciation Fund and
Investment Shares of The Stellar Fund and Relative Value Fund will combine
purchases made on the same day by the investor, his spouse, and his children
under age 21 when it calculates the sales charge.

If an additional purchase of Fund shares is made, the Funds will consider the
previous purchases still invested in the Funds. For example, if a shareholder
already owns shares having a current value at the net asset value of $90,000 and
he purchases $10,000 more at the current net asset value, the sales charge on
the additional purchase according to the schedule now in effect would be 3.75%,
not 4.50% for Capital Appreciation Fund and Investment Shares of The Stellar
Fund and Relative Value Fund.

To receive the sales charge reduction, Star Bank or the distributor must be
notified by the shareholder in writing at the time the purchase is made that
Fund shares are already owned or that purchases are being combined. The Funds
will reduce the sales charge after it confirms the purchases.

Concurrent Purchases. For purposes of qualifying for a sales charge reduction, a
shareholder has the privilege of combining concurrent purchases of two or more
funds in the Trust, the purchase price of which includes a sales charge. For
example, if a shareholder concurrently invested $30,000 in one of the other
funds in the Trust with a sales charge and $70,000 in Capital Appreciation Fund
or Investment Shares of The Stellar Fund or Relative Value Fund, the sales
charge would be reduced.

To receive this sales charge reduction, Star Bank or the distributor must be
notified by the shareholder in writing at the time the concurrent purchases are
made. The Fund will reduce the sales charge after it confirms the purchases.

Letter of Intent. If a shareholder intends to purchase at least $100,000 of
shares in the funds in the Funds (excluding money market funds) over the next 13
months, the sales charge may be reduced by signing a letter of intent to that
effect. This Letter of Intent includes a provision for a sales charge adjustment
depending on the amount actually purchased within the 13-month period and a
provision for the custodian to hold up to 4.50% of the total price of shares of
Capital Appreciation Fund and Investment Shares of The Stellar Fund and Relative
Value Fund, as the case may be, intended to be purchased in escrow (in shares)
until such purchase is completed. The shares held in escrow in the shareholder's
account will be released at the fulfillment of the Letter of Intent or the end
of the 13-month period, whichever comes first. If the amount specified in the
Letter of Intent is not purchased, an appropriate number of escrowed shares may
be redeemed in order to realize the difference in the sales charge.

This Letter of Intent will not obligate the shareholder to purchase shares, but
if he does, each purchase during the period will be at the sales charge
applicable to the total amount intended to be purchased. At the time a Letter of
Intent is established, current balances in accounts in shares of any of the
Funds, excluding money market accounts, will be aggregated to provide a purchase
credit towards fulfillment of the Letter of Intent. Prior trade prices will not
be adjusted.

Reinvestment Privilege. If shares in Capital Appreciation Fund or Investment
Shares of The Stellar Fund or Relative Value Fund have been redeemed, the
shareholder has a one-time right, within 30 days, to reinvest the redemption
proceeds at the next-determined net asset value without any sales charge. Star
Bank or the distributor must be notified by the shareholder in writing or by his
financial institution of the reinvestment in order to eliminate a sales charge.
If the shareholder redeems his shares in any of these Funds, there may be tax
consequences. Shareholders contemplating such transactions should consult their
own tax advisers.

Systematic Investment Plan

Once a Fund account has been opened, shareholders may add to their investment on
a regular basis in a minimum amount of $25. Under this plan, funds may be
withdrawn periodically from the shareholder's checking account and invested in
shares of the Funds at the net asset value next determined after an order is
received by Star Bank, plus the applicable sales charge. A shareholder may apply
for participation in this plan through Star Bank.

Share Purchases

Shares are sold on days on which the New York Stock Exchange and the Federal
Reserve wire system are open for business.

A customer of Star Bank may purchase shares of the Funds through Star Bank.
Texas residents must purchase shares through Federated Securities Corp. at
1-800-356-2805. In connection with the sale of shares of the Funds, the
distributor may from time to time offer certain items of nominal value to any
shareholder or investor. The Funds reserve the right to reject any purchase
request. If you have any questions regarding the purchasing of shares in the
Star Funds, please contact a Client Service Representative by calling
1-800-677-FUND.

Purchasing Through Star Bank

To place an order to purchase shares of a Fund, a customer of Star Bank may
telephone Star Bank at 1-800-677-FUND or place the order in person. Purchase
orders given by telephone may be electronically recorded.

Shares of the Funds are offered continuously. Orders received in good form prior
to 3:30 p.m. (Eastern time), the time at which the Fund values its shares, will
be processed based on that day's closing net asset value plus any applicable
initial sales charges.

Payment may be made to Star Bank either by check or federal funds. When payment
is made with federal funds, the order is considered received when federal funds
are received by Star Bank.

For purchases through registered broker/dealers, requests must be received by
Star Bank by 3:30 p.m. (Eastern time) and payment is required in three business
days.

Shares cannot be purchased on days on which the New York Stock Exchange is
closed or on federal holidays restricting wire transfers.

New Account Additional Investments

Complete and sign the enclosed New Account Form. Additional investments should
include your Please include the amount of your initial investment account number
and the name of the Fund. and make your check payable to Star Funds. Please make
the check payable to Star Please mail the New Account Form and the Funds and
mail to: investment check to:

Star Funds
Client Services
Star Bank, N.A.
425 Walnut Street, ML 7135
Cincinnati, OH 45202

Purchasing By Wire

You may also purchase shares of each fund by wiring Federal Funds from your
bank, which may charge you a fee for doing so. If money is to be wired, you must
call a Star Funds Client Service Representative at 1-800-677-FUND and inform the
representative of the incoming wire. When sending the Federal Funds wire, please
verify that the wire includes the following information:

Star Bank, N.A.
ABA 042000013
Attention: Star Funds
DDA# 56789
Name of Mutual Fund
(Write in name of Star Mutual Fund)

Your Account Number
(Write in shareholder's account number)

Account Registration
(Write in shareholder's name)

Wire purchases will be accepted only when the Fund and Custodian Bank are open
for business. A wire purchase will not be considered made until the wired money
is received and the purchase is accepted by the Funds. Any delays which may
occur in wiring money, including delays which may occur in processing by the
banks, are not the responsibility of the Funds or the transfer agent. Funds must
be received at the Federal Reserve Bank by 3:00 p.m. (Eastern time) in order to
receive that day's trade date.

Exchange Privilege

Exchanges may occur between Star Funds having the same sales charge schedules,
and with the Star Money Market Funds, at net asset value but exchanges may not
be made between Funds having front-end sales charges and those having back-end
sales charges (i.e. contingent deferred sales charges). Shareholders who
exercise the exchange privilege, must exchange shares having a total net asset
value of at least $1,000. Prior to the exchange, the shareholder must receive a
copy of the current prospectus of the fund into which an exchange is to be
effected.

Funds with front-end sales charges Funds with back-end sales charges Funds with
no sales charges

Stellar Insured Tax-Free Bond Fund Star Growth Equity Fund
Star Tax-Free Money Market Fund Star U.S. Government Income Fund
Star Strategic Income Fund Star Ohio Tax-Free Money Market Fund
The Stellar Fund Star Treasury Fund
Star Relative Value Fund Star Market Capitalization Fund
Star Capital Appreciation Fund Star International Equity Fund

In cases of exchanges into Funds with a higher front-end sales charge, shares
may be exchanged at net asset value, plus the difference between the Funds'
sales charge (if any) already paid and any sales charge of the fund into which
shares are to be exchanged. When an exchange is made from a fund with a
front-end sales charge to a fund with no sales charge, the shares exchanged, and
additional shares, which have been purchased by reinvesting dividends on such
shares, retain the charge of the exchanged shares for purposes of exercising
further exchange privileges; thus, an exchange of such shares for shares of a
fund with a sales charge would be at net asset value.

In cases of exchanges of Funds having a contingent deferred sales charge, no
sales charges are assessed at the time of the exchange, but if the shareholder
redeems shares within five years of the original purchase, a contingent deferred
sales charge will be imposed in an amount determined by the date the shareholder
purchased the original shares.

The telephone exchange privilege may be modified or terminated at any time.
Shareholders will be notified of such modifications or termination.

Exchange by Telephone

Instructions for exchanges between Star Funds may be given over the telephone,
by calling a client service representative at 1-800-677-FUND. Shares may be
exchanged by telephone only between accounts with identical registrations.
Exchanges placed by telephone may be electronically recorded.

Telephone exchange instructions must be received before 3:30 p.m. (Eastern time)
in order for shares to be exchanged the same day. Shareholders of the Fund may
have difficulty in making exchanges by telephone through brokers, banks, or
other financial institutions during times of drastic economic or market changes.
If a shareholder cannot contact his broker, bank, or financial institution by
telephone, it is recommended that an exchange request be made in writing and
sent by overnight mail.

If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.

Exchange in Writing

Instructions to exchange shares of the Star Funds may be given in writing. The
letter of instruction must be signed by all shareholders on the account and must
provide the fund and account number for each of the funds involved in the
exchange. The written instructions can be mailed to:

Star Funds
Client Services
Star Bank, N.A.
425 Walnut Street, ML 7135
Cincinnati, OH 45202

Written exchange instructions may require a signature guarantee. For more
information on how to exchange shares of the Star Funds, please call a client
service representative at 1-800-677-FUND.

Tax Consequences

Exercising the exchange privilege is treated as a sale for federal income tax
purposes and depending on the circumstances, a short or long-term capital gain
or loss may be realized.

Frequent Investor Program

Under the Frequent Investor Program ("Program"), eligible persons who purchase
shares ("Program Shares") of any Star Fund (other than Star Tax-Free Money
Market Fund and Star Treasury Fund) on or after August 12, 1996 will receive
points ("Points") which, upon accumulation of 50,000 Points, may be used to
purchase a round trip airline ticket to any of the 50 states on any U.S.
carrier.

The following terms and conditions apply with respect to the Program: (a) one
Point will be awarded per dollar invested (gross of sales charges) in Program
Shares: (b) Program Shares purchased may be redeemed at any time without loss of
Points; (c) a maximum of 100,000 Points may be earned in any 12-month period;
(d) all unused Points will expire one year from the latest purchase of Program
Shares of $100 or more; and (e) Points are not transferable.

All airline tickets are subject to the following stipulations and restrictions:
(i) the ticket will be non-refundable and for a coach seat; (ii) the price of
the ticket may not exceed $500 inclusive of taxes and destinations charges,
although the shareholder may elect to pay any overage; (iii) all travel must be
within the 50 United States; (iv) interim stopovers may not exceed four hours;
(v) tickets will be mailed to the shareholder account address (overnight
shipping is available at the shareholder's expense); (vi) there are no
"blackout" dates; (vii) 21-day advance purchase and Saturday night stay-over are
required; and (viii) tickets may be purchased in any individual's name

The Program does not apply with respect to: (i) shares which are purchased
without a front-end sales charge or a contingent deferred sales charge including
shares which are acquired through reinvestment of dividend or capital gain
distributions; (ii) shares acquired in exchange for shares in another Star Fund;
and (iii) shares owned prior to August 12, 1996.

The Program is subject to modification or termination on 90-days notice at the
option of Star Bank, N.A. Star Bank may from time-to-time create special
offering periods featuring bonus points or other temporary enhancements to the
Program. Existing and prospective shareholders will be given notice of such
special offering periods.

Certificates and Confirmations

As transfer agent for the Funds, Federated Shareholder Services Company
maintains a share account for each shareholder of record. Share certificates are
not issued.

Detailed confirmations of each purchase or redemption are sent to each
shareholder and dividend confirmations are sent to each shareholder to report
dividends paid.

Dividends and Capital Gains

Each Fund's dividends are declared and paid quarterly. Dividends and capital
gains will be automatically reinvested in additional shares of one of the Funds
on payment dates at the ex-dividend date at net asset value, unless cash
payments are requested by writing to a Fund or Star Bank.

Capital gains realized by the Funds, if any, will be distributed once every
twelve months.

Redeeming Shares

The Stellar Fund, Relative Value Fund, and Capital Appreciation Fund redeem
shares at their net asset value next determined after Star Bank received the
redemption request. Strategic Income Fund and Investment shares of the Growth
Equity Fund redeem shares at their net asset value, less any applicable
contingent deferred sales charge, next determined after Star Bank receives the
redemption request (See "Contingent Deferred Sales Charge.")

Redemption of shares will be made on days on which the Fund computes its net
asset value. Redemption requests cannot be executed on days on which the New
York Stock Exchange is closed or on federal holidays restricting wire transfers.
Requests for redemption for a Fund can be made in person, by telephone, or by
mail.

Redemption by Telephone

A shareholder can request a redemption of shares by telephone by calling a
client service representative at 1-800-677-FUND. Redemption requests given by
telephone may be electronically recorded.

For redemption requests received by Star Bank before 3:30 p.m. (Eastern time),
proceeds will normally be wired the following day to the shareholder's bank
account or a check will be sent to the address of record. In no event will
proceeds be wired or a check mailed more than seven days after a proper request
for redemption has been received. If at any time, the Fund shall determine it
necessary to terminate or modify this method of redemption, the shareholders
would be promptly notified. Authorization forms and information on this service
are available at Star Bank branches or by calling a client service
representative at 1-800-677-FUND.

In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a chase should occur, another
method of redemption should be considered.

If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.

Redemption in Writing

Shareholders may also redeem shares by sending a written request to:

Star Funds
Client Services
Star bank, N.A.
425 Walnut Street, ML 7135
Cincinnati, OH 45202

The written letter of instructions must include: the shareholder's name, the
Fund name, the account number and the share or dollar amount to be redeemed. The
letter must be signed by all shareholders on the account. The proceeds will be
wired to the bank account of record or sent to the address of record within
seven days.

Shareholders request a redemption of any amount to be sent to an address other
than that on record with the Fund or a redemption payable other than to the
shareholder(s) of record must have signatures on written redemption requests,
guaranteed by:

o a trust company or commercial bank whose deposits are insured by the
BIF, which is administered by the FDIC;

o a member of the New York, Boston, American, Midwest, or Pacific Stock
Exchange;

o a savings bank or savings association whose deposits are insured by
the SAIF, which is administered by the FDIC; or

o any other "eligible guarantor institution" as defined in the
Securities Exchange Act of 1934.

The Funds do not accept signatures guaranteed by a notary public.

The Trust and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Trust may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Trust and its transfer agent reserve the right
to amend these standards at any time without notice.

<PAGE>

Contingent Deferred Sales Charge

Shareholders redeeming shares from Investment Shares of the Growth Equity Fund
within five full years of the purchase date will be charged a contingent
deferred sales charge ("CDSC") by the Funds' distributor. Any applicable CDSC
will be imposed on the lesser of the net asset value of the redeemed shares at
the time of purchase or the net asset value of the redeemed shares at the time
of redemption in accordance with the following schedule:

Year of Redemption Contingent Deferred
After Purchase Sales Charge
Year 1 5.00%
Year 2 4.00%
Year 3 3.00%
Year 4 2.00%
Year 5 1.00%
Year 6 0.00%

The CDSC will not be charged for redemption in connection with the Fund's
Systematic Withdrawal Plan not in excess of 10% of the initial balance of the
account calculated annually. The CDSC will not be charged with respect to: (1)
shares acquired through the reinvestment of dividends or distributions of
short-term or long-term capital gains and (2) shares held for more than five
full years from the date of purchase. Redemptions will be processed in a manner
intended to maximize the amount of redemption which will not be subject to a
CDSC. In computing the amount of CDSC, redemptions are deemed to have occurred
in the following order: (1) shares of a Fund acquired through the reinvestment
of dividends and long-term capital gains; (2) shares of a Fund held for more
than five full years from the date of purchase; and (3) shares of a Fund held
for fewer than five full years on a first-in, first-out basis. A CDSC is not
assessed in connection with an exchange of shares of a Fund for shares of
certain other Star Funds that are also subject to CDSC's as described in this
prospectus under the section entitled "Exchanging Shares." Moreover, the CDSC
will be eliminated with respect to certain redemptions. (See "Elimination of
Contingent Deferred Sales Charge.")

Elimination of Contingent Deferred Sales Charge

The CDSC will be eliminated with respect to the following redemptions: (1)
redemptions following the death or disability, as defined in Section 72(m)(7) of
the Internal Revenue Code of 1986, as amended, of a shareholder*; (2)
redemptions representing minimum required distributions from an Individual
Retirement Account or other retirement plan to a shareholder who has attained
the age of 70 1/2; and (3) involuntary redemptions by shares of a Fund in
shareholder accounts that do not comply with the minimum balance requirements.
The exemption from the CDSC for Individual Retirement Accounts or other
retirement plans does not extend to account transfers, rollovers, and other
redemptions made for purposes of reinvestment.

Shares of a Fund purchased by the following entities are not subject to the CDSC
to the extent that no payment was advanced for purchases made by such entities:
(a) employees and retired employees of Star Bank, Federated Securities Corp., or
their affiliates, or of any bank or investment dealer who has a sales agreement
with Federated Securities Corp. with regard to Investment Shares of the Growth
Equity Fund, and members of their families (including parents, grandparents,
siblings, spouses, children, and in-laws) of such employees or retired
employees; (b) trust customers of StarBanc Corporation and its subsidiaries; and
(c) non-trust customers of financial advisers.

* To receive the CDSC exemption with respect to death or disability, Star Bank
or the distributor must be notified in writing at the time of the redemption
that the shareholder, or the shareholder's executor/executrix, requests the
exemption.

Investment Shares of the Growth Equity Fund reserve the right to discontinue
elimination of the CDSC. Shareholders will be notified of such elimination. Any
shares of the Fund purchased prior to the termination of such waiver would have
the CDSC eliminated as provided in the Fund's prospectus at the time of purchase
of Fund shares. If a shareholder making a redemption qualified for an
elimination of the CDSC, the shareholder must notify Federated Securities Corp.
or the transfer agent in writing that the shareholder is entitled to such
elimination.

Systematic Withdrawal Plan

Shareholders invested in shares of the Funds may engage in a Systematic
Withdrawal Plan. Under this plan, accounts may arrange for regular monthly or
quarterly fixed withdrawal payments. Each payment must be at least $25 and may
be as much as 1.50% per month or 4.50% per quarter of the total net asset value
of the shares in the account when the Systematic Withdrawal Plan is opened.
Depending upon the amount of the withdrawal payments and the amount of dividends
paid with respect to shares of a Fund, redemptions may reduce, and eventually
deplete, the shareholder's investment in a Fund. For this reason, payments under
this plan should not be considered as yield or income on the shareholder's
investment in a Fund. Due to the fact that shares are sold with a sales charge,
it is not advisable for shareholders to be purchasing shares of a Fund while
participating in this plan.

Accounts with Low Balances

Due to the high cost of maintaining accounts with low balances, a Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below the required minimum value of $1,000 due to
shareholder redemptions. Before shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to purchase additional
shares to meet the minimum requirement.

Shareholder Information

Voting Rights

Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of each Fund or
class in the Trust have equal voting rights, except that only shares of a
particular Fund or class are entitled to vote on matters affecting only that
Fund or class. As a Massachusetts business trust, the Trust is not required to
hold annual shareholder meetings. Shareholder approval will be sought only for
certain changes in the operation of the Trust or a Fund and for the election of
Trustees under certain circumstances. As of November 10, 1997, Firstcinco,
Cincinnati, Ohio, acting in various capacities for numerous accounts, was the
owner of record of approximately 2,270,238 shares (50.74%) of The Stellar
Fund-Trust Shares; and 4,041,141 shares (69.61%) of Capital Appreciation Fund,
and therefore, may, for certain purposes be deemed to control these Funds and be
able to affect the outcome of certain matters presented for a vote of
shareholders.

Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of shareholders shall be called by the Trustees upon the
written request of shareholders owning at least 10% of the Trust's outstanding
shares of all series entitled to vote.

Effect of Banking Laws

The Glass-Steagall Act and other banking laws and regulations presently prohibit
a bank holding company registered under the Bank Holding Company Act of 1956 or
any affiliate thereof from sponsoring, organizing, or controlling a registered,
open-end investment company continuously engaged in the issuance of its shares,
and from issuing, underwriting, selling, or distributing securities in general.
Such laws and regulations do not prohibit such a holding company or affiliate
from acting as investment adviser, transfer agent, or custodian to such an
investment company or from purchasing shares of such a company as agent for and
upon the order of their customers. Some entities providing services to the Trust
are subject to such banking laws and regulations. They believe that they may
perform those services for the Funds contemplated by any agreement entered into
with the Trust without violating those laws or regulations. Changes in either
federal or state statutes and regulations relating to the permissible activities
of banks and their subsidiaries or affiliates, as well as further judicial or
administrative decisions or interpretations of present or future statutes and
regulations, could prevent these entities from continuing to perform all or a
part of the above services for their customers and/or the Funds. If this
happens, the Trustees would consider alternative means of continuing available
services. It is not expected that the Funds' shareholders would suffer any
adverse financial consequences as a result of any of these occurrences. Tax
Information

Federal Income Tax

The Funds will pay no federal income tax because each Fund expects to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.

Each Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by a Fund
will not be combined for tax purposes with those realized by any of the other
Funds.

Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions, including capital gains distributions,
received. This applies whether dividends and distributions are received in cash
or as additional shares. Each Fund will provide detailed tax information for
reporting purposes.

Performance Information

From time to time, each Fund may advertise its total return and yield.

Total return represents the change, over a specified period of time, in the
value of an investment in a Fund or class after reinvesting all income and
capital gain distributions. It is calculated by dividing that change by the
initial investment and is expressed as a percentage.

With respect Capital Appreciation Fund, Investment Shares of The Stellar Fund,
and Relative Value Fund, the performance information normally reflects the
effect of the maximum sales charge which, if excluded, would increase the total
return and yield. Occasionally, performance information which does not reflect
the effect of the sales charge may be quoted in advertising. With respect to
Investment Shares of the Growth Equity Fund, the performance information
normally reflects the effect of non-recurring charges, such as the CDSC, which,
if excluded, would increase the total return and yield.

With respect to The Stellar Fund, Relative Value Fund and Growth Equity Fund,
total return and yield will be calculated separately for Trust Shares and
Investment Shares. Because Investment Shares are subject to a Rule 12b-1 fee,
the total return and yield for Trust Shares, for the same period, will exceed
that of Investment Shares.

From time to time, advertisements for a Fund may refer to ratings, rankings, and
other information in certain financial publications and/or compare a Fund's
performance to certain indices.

<PAGE>

Addresses
<TABLE>
<CAPTION>

The Stellar Fund
Star Relative Value Fund
Star Growth Equity Fund
Star Capital Appreciation Fund
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Investment Adviser
Star Bank, N.A. 425 Walnut Street
Cincinnati, Ohio 45202

Custodian
Star Bank, N.A. 425 Walnut Street
Cincinnati, Ohio 45202

Transfer Agent, Dividend Disbursing Agent,
and Portfolio Accounting Services
Federated Shareholder Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222

</TABLE>

<PAGE>

Star Bank, N.A.

Investment Adviser

Federated Securities Corp.

CUSIP 854911708
CUSIP 854911401
CUSIP 854911864
CUSIP 854911807
G00522-05 (1/98)
4806TR
Distributor

Star Funds
Bond Funds
Prospectus

The shares offered by this prospectus represent interests in the Bond Funds
(individually referred to as a "Fund" or collectively as the "Funds") of the
Star Funds (the "Trust"), an open-end management investment company (a mutual
fund). The Trust consists of twelve separate diversified investment portfolios
and one non-diversified investment portfolio, each having a distinct investment
objective and policies. This prospectus relates only to the following Bond Funds
of the Trust:

o The Stellar Insured Tax-Free Bond Fund
o Star U.S. Government Income Fund
o Star Strategic Income Fund

This prospectus contains the information you should read and know before you
invest in any of the Bond Funds of the Trust. Keep this prospectus for future
reference.

Prospectus dated January 31, 1998

<PAGE>

Table of Contents

To be added when document is complete.

<PAGE>

Synopsis

This prospectus relates only to the shares of the Bond Funds of the Trust.
The Bond Funds are designed primarily for customers, correspondents, or
affiliates of Star Bank, N.A., the investment adviser to the Funds.

As of the date of this prospectus, shares of the Bond Funds are offered in the
following three Funds:

o The Stellar Insured Tax-Free Bond Fund ("The Stellar Tax-Free Bond
Fund")--seeks to provide current income which is exempt from federal
income tax. The Stellar Tax-Free Bond Fund pursues this investment
objective by investing its assets in municipal securities so that at
least 80% of its annual interest income is exempt from federal income
tax including the federal alternative minimum tax.

o Star U.S. Government Income Fund ("U.S. Government Income
Fund")--seeks to provide current income. Capital appreciation is a
secondary objective. U.S. Government Income Fund pursues these
objectives by investing primarily in securities issued or guaranteed
as to payment of principal and interest by the U.S. government, its
agencies or instrumentalities.

o Star Strategic Income Fund ("Strategic Income Fund")--seeks to generate
high current income. Strategic Income Fund pursues this objective by
investing approximately 40% of the Fund's assets in a core asset group
of U.S. government and corporate fixed income securities, and the
remainder of the Fund's assets in international bonds, real estate
investment trusts, domestic equity securities, money market securities,
and the following structured fixed income securities: mortgage-backed
securities, collateralized mortgage obligations ("CMOs"), adjustable
rate mortgage securities ("ARMS"), and asset-backed securities.

For information on how to purchase shares of any of the Bond Funds, please refer
to "Investing in the Funds." A minimum initial investment of $1,000 ($25 for
Star Bank Connections Group Banking customers and Star Bank employees and
members of their immediate family) is required for each Fund. Shares of The
Stellar Tax-Free Bond Fund and U.S. Government Income Fund, are sold at net
asset value plus an applicable sales charge and redeemed at net asset value.
Shares of Strategic Income Fund are sold at net asset value and are redeemed at
net asset value less an applicable contingent deferred sales charge. Information
on redeeming shares may be found under "Redeeming Shares."

Risk Factors

Investors should be aware of the following general considerations: market values
of fixed-income securities, which may constitute a major part of the investments
of the Funds, may vary inversely in response to change in prevailing interest
rates. The foreign securities in which U.S. Government Income Fund and Strategic
Income Fund may invest may be subject to certain risks in addition to those
inherent in U.S. investments. One or more Funds may make certain investments and
employ certain investment techniques that involve other risks, including
entering into repurchase agreements, lending portfolio securities, and entering
into futures contracts and related options, entering into foreign currency
transactions and forward foreign currency exchange contracts, borrowing money
for investment purposes, and engaging in short-selling. These risks and those
associated with investing in mortgage-backed securities, foreign securities,
when-issued securities, variable rate securities, and equity securities are
described as applicable under "Investment Information" of each respective
Fund.

<PAGE>

The Stellar Insured Tax-Free Bond Fund-
Summary of Fund Expenses

To come

The Stellar Insured Tax-Free Bond Fund-
Financial Highlights

To come

The Stellar Insured Tax-Free Bond Fund-
Investment Information

Investment Objective

The investment objective of the Fund is to provide current income which is
exempt from federal income tax. The investment objective of the Fund cannot be
changed without the approval of holders of a majority of the Fund's shares.
While there is no assurance that the Fund will achieve its investment objective,
it endeavors to do so by following the investment policies described below.
Unless indicated otherwise, the investment policies of the Fund may be changed
by the Trustees without approval of shareholders. Shareholders will be notified
before any material change in these policies becomes effective.

Investment Policies

As a matter of fundamental investment policy, the Fund will normally invest its
assets so that at least 80% of its annual interest income is exempt from federal
income tax including the federal alternative minimum tax. Under normal
circumstances, at least 65% of the value of the Fund's total assets will be
invested in municipal securities that are insured as to timely payment. Interest
income of the Fund that is exempt from federal income taxes retains its tax-free
status when distributed to the Fund's shareholders.

Acceptable Investments

The Fund pursues its investment objective by investing primarily in a portfolio
of municipal securities that are covered by insurance guaranteeing the timely
payment of principal and interest. Insurance will not guarantee the market value
of the municipal securities or the value of shares of the Fund.

Municipal Securities. Municipal securities are debt obligations issued by or on
behalf of states, territories, and possessions of the United States, including
the District of Columbia, and their political subdivisions, agencies, and
instrumentalities, the interest from which is exempt from federal income tax.
Shareholders who are subject to alternative minimum tax may be required to
include interest from a portion of the municipal securities owned by the Fund in
calculating the federal individual alternative minimum tax or the federal
alternative minimum tax for corporations, to the extent that the Fund invests in
securities subject to the alternative minimum tax. No more than 20% of the
Fund's income will be subject to the federal alternative minimum tax.

Municipal securities are generally issued to finance public works, such as
airports, bridges, highways, housing, hospitals, mass transportation projects,
schools, streets, and water and sewer works. They are also issued to repay
outstanding obligations, to raise funds for general operating expenses, and to
make loans to other public institutions and facilities. Municipal securities
include industrial development bonds issued by or on behalf of public
authorities to provide financing aid to acquire sites or construct and equip
facilities for privately or publicly owned corporations. The availability of
this financing encourages these corporations to locate within the sponsoring
communities and thereby increases local employment.

The two principal classifications of municipal securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. Interest on and principal of revenue bonds, however, are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority.
Industrial development bonds are typically classified as revenue bonds.

Examples of municipal securities include, but are not limited to:

otax and revenue anticipation ("TRANs") notes issued to finance working
capital needs in anticipation of receiving taxes or other revenues;
obond anticipation notes ("BANs") that are intended to be refinanced
through a later issuance of longer-term bonds; omunicipal commercial
paper and other short-term notes; ovariable rate demand notes;
omunicipal bonds (including bonds having serial maturities and
pre-refunded bonds) and leases; oconstruction loan notes insured by the
Federal Housing Administration and financed by the FNMA or GNMA; and
oparticipation, trust and partnership interests in any of the foregoing
obligations.

Characteristics. The municipal securities which the Fund buys are subject
to the following quality standards:
o rated, at the time of purchase, investment grade (within the four
highest rating categories for municipal securities) by a nationally
recognized statistical rating organization ("NRSRO") [such as Aaa, As,
A, or Baa by Moody's Investors Service, Inc. ("Moody's"), or AAA, AA,
A, or BBB by Standard and Poor's Ratings Group ("S&P"), Fitch Investors
Service, Inc. ("Fitch") or Duff & Phelps Credit Rating Co.
];
o insured by a municipal bond insurance company which is rated in the
top rating category by a NRSRO;
o guaranteed at the time of purchase by the U.S. government as to the
payment of principal and interest;
o fully collateralized by an escrow of U.S. government securities; or
o unrated if determined to be of comparable quality to one of the
foregoing rating categories by the Fund's investment adviser.

Securities rated Baa or BBB by a NRSRO have speculative characteristics. Changes
in economic conditions or other circumstances are more likely to lead to
weakened capacity to make principal and interest payments than higher rated
bonds. If any security invested in by the Fund loses its rating or has its
rating reduced after the Fund has purchased it, the Fund is not required to sell
or otherwise dispose of the security, but may consider doing so.

There are no restrictions on the maturity of municipal securities in which the
Fund may invest. The Fund will seek to invest in municipal securities of such
maturities as the Fund's investment adviser believes will produce current income
consistent with prudent investment. The Fund's investment adviser will also
consider current market conditions and the cost of the insurance obtainable on
such securities.

Participation Interests. The Fund may purchase participation interests from
financial institutions such as commercial banks, savings associations and
insurance companies. These participation interests would give the Fund an
undivided interest in one or more underlying municipal securities. The financial
institutions from which the Fund purchases participation interests frequently
provide or obtain irrevocable letters of credit or guarantees to assure that the
participation interests are of high quality. The Trustees will determine that
participation interests meet the prescribed quality standards for the Fund.

Variable Rate Municipal Securities. Some of the municipal securities which the
Fund purchases may have variable interest rates. Variable interest rates are
ordinarily stated as a percentage of the prime rate of a bank or some similar
standard, such as the 91-day U.S. Treasury bill rate. Variable interest rates
are adjusted on a periodic basis, e.g., every 30 days. Many variable rate
municipal securities are subject to payment of principal on demand by the Fund,
usually in not more than seven days. If a variable rate municipal security does
not have this demand feature, or the demand feature extends beyond seven days
and the Fund's investment adviser believes the security cannot be sold within
seven days, the Fund's investment adviser may consider the security to be
illiquid. However, the Fund's investment limitations provide that it will not
invest more than 15% of its net assets in illiquid securities. All variable rate
municipal securities will meet the quality standards for the Fund. The Fund's
investment adviser has been instructed by the Trustees to monitor the pricing,
quality and liquidity of the variable rate municipal securities, including
participation interests held by the Fund, on the basis of published financial
information and reports of NRSROs and other analytical services.

Industrial Development Bonds. Industrial development bonds are generally issued
to provide financing aid to acquire sites or construct and equip facilities for
use by privately or publicly owned entities. Most state and local governments
have the power to permit the issuance of industrial development bonds to provide
financing for such entities in order to encourage the corporations to locate
within their communities. Industrial development bonds, which are in most cases
revenue bonds, do not represent a pledge of credit or create any debt of a
municipality or a public authority, and no taxes may be levied for the payment
of principal or interest on these bonds. The principal and interest is payable
solely out of monies generated by the entities using or purchasing the sites or
facilities. These bonds will be considered municipal securities eligible for
purchase by the Fund if the interest paid on them, in the opinion of bond
counsel or in the opinion of the officers of the Fund and/or the Fund's
investment adviser, is exempt from federal income tax. The Fund may invest more
than 25% of its total assets in industrial development bonds (including
pollution control revenue bonds) as long as they are not from the same facility
or similar types of facilities or projects.

Municipal Leases. Municipal leases are obligations issued by state and local
governments or authorities to finance the acquisition of equipment and
facilities and may be considered to be illiquid. They may take the form of a
lease, an installment purchase contract, a conditional sales contract, or a
participation interest in any of the above. In determining the liquidity of
municipal lease securities, the Fund's investment adviser, under the authority
delegated by the Trustees, will base its determination on the following factors:
(a) whether the lease can be terminated by the lessee; (b) the potential
recovery, if any, from a sale of the leased property upon termination of the
lease; (c) the lessee's general credit strength (e.g., its debt, administrative,
economic and financial characteristics, and prospects); (d) the likelihood that
the lessee will discontinue appropriating funding for the leased property
because the property is no longer deemed essential to its operations (e.g., the
potential for an "event of nonappropriation"); and (e) any credit enhancement or
legal recourse provided upon an event of nonappropriation or other termination
of the lease.

Leverage Through Borrowing. The Fund may borrow for investment purposes. This
borrowing, which is known as leveraging, generally will be unsecured, except to
the extent the Fund enters into reverse repurchase agreements. The Investment
Company Act of 1940 requires the Fund to maintain continuous asset coverage
(that is, total assets including borrowings, less liabilities exclusive of
borrowings) of 300% of the amount borrowed. If the 300% asset coverage should
decline as a result of market fluctuations or other reasons, the Fund may be
required to sell some of its portfolio holdings within three days to reduce the
debt and restore the 300% asset coverage, even though it may be disadvantageous
from an investment standpoint to sell securities at that time.

Investment Risks of Leveraging. Borrowing by the Fund creates an opportunity for
increased net income but, at the same time, creates special risk considerations.
For example, leveraging may exaggerate the effect on net asset value of any
increase or decrease in the market value of the Fund's portfolio. To the extent
the income derived from securities purchased with borrowed funds exceeds the
interest the Fund will have to pay, the Fund's net income will be greater than
if borrowing were not used. Conversely, if the income from the assets retained
with borrowed funds is not sufficient to cover the cost of borrowing, the net
income of the Fund will be less than if borrowing were not used, and, therefore,
the amount available for distribution to shareholders as dividends will be
reduced. The Fund also may be required to maintain minimum average balances in
connection with such borrowing or to pay a commitment or other fee to maintain a
line of credit; either of these requirements would increase the cost of
borrowing over the stated interest rate.

Portfolio Turnover. The Fund trades portfolio securities in order to achieve its
investment objective while anticipating movements of interest rates. It is free
to trade or dispose of portfolio securities as considered necessary to meet its
investment objective. It is not anticipated that the portfolio trading engaged
in by the Fund will result in its annual rate of turnover exceeding 50%.

Municipal Bond Insurance
The Fund may purchase municipal securities covered by insurance which guarantees
the timely payment of principal at maturity and interest on such securities.
These insured municipal securities are either (1) covered by an insurance policy
applicable to a particular security, whether obtained by the issuer of the
security or by a third party ("Issuer-Obtained Insurance"), or (2) insured under
master insurance policies issued by municipal bond insurers, which may be
purchased by the Fund (the "Policies").

The Fund will require or obtain municipal bond insurance when purchasing
municipal securities which would not otherwise meet the Fund's quality
standards. The Fund may also require or obtain municipal bond insurance when
purchasing or holding specific municipal securities when, in the opinion of the
Fund's investment adviser, such insurance would benefit the Fund, for example,
through improvement of portfolio quality or increased liquidity of certain
securities. The Fund's investment adviser anticipates that at least 65% of the
Fund's total assets will be invested in municipal securities which are insured.

Issuer-Obtained Insurance Policies are noncancellable and continue in force as
long as the municipal securities are outstanding and their respective insurers
remain in business. If a municipal security is covered by Issuer-Obtained
Insurance, then such security need not be insured by the Policies purchased by
the Fund.

The Fund may purchase two types of Policies issued by municipal bond insurers.
One type of Policy covers certain municipal securities only during the period in
which they are in the Fund's portfolio. In the event that a municipal security
covered by such a Policy is sold from the Fund, the insurer of the relevant
Policy will be liable only for those payments of interest and principal which
are then due and owing at the time of sale.

The other type of policy covers municipal securities not only while they remain
in the Fund's portfolio but also until their final maturity even if they are
sold out of the Fund's portfolio, so that the coverage may benefit all
subsequent holders of those municipal securities. The Fund will obtain insurance
which covers municipal securities until final maturity even after they are sold
out of the Fund's portfolio only if, in the judgment of the Fund's investment
adviser, the Fund would receive net proceeds from the sale of those securities,
after deducting the cost of such permanent insurance and related fees,
significantly in excess of the proceeds it would receive if such municipal
securities were sold without insurance. Payments received from municipal bond
insurers may not be tax-exempt income to shareholders of the Fund.

The premiums for the Policies are paid by the Fund and the yield on the Fund's
portfolio is reduced thereby. Premiums for the Policies are paid by the Fund
monthly, and are adjusted for purchases and sales of municipal securities during
the month. Depending upon the characteristics of the municipal security held by
the Fund, the annual premiums for the Policies are estimated to range from 0.10%
to 0.25% of the value of the municipal securities covered under the Policies,
with an average annual premium rate of approximately 0.175%.

The Fund may purchase Policies from MBIA Corp. ("MBIA"), AMBAC Indemnity
Corporation ("AMBAC"), Financial Guaranty Insurance Company ("FGIC"), Financial
Security Assurance ("FSA") or any other municipal bond insurer which is rated in
the highest rating category by a NRSRO. Each Policy will obligate the insurer to
provide insurance payments pursuant to valid claims under the Policy equal to
the payment of principal and interest on those municipal securities it insures.
The Policies will have the same general characteristics and features. A
municipal security will be eligible for coverage if it meets certain
requirements set forth in a Policy. In the event interest or principal on an
insured municipal security is not paid when due, the insurer covering the
security will be obligated under its Policy to make such payment not later than
30 days after it has been notified by the Fund that such non-payment has
occurred. The insurance feature is intended to reduce financial risk, but the
cost thereof and compliance with the investment restrictions imposed by the
guidelines in the Policies will reduce the yield to shareholders of the Fund.

MBIA, AMBAC, FGIC, and FSA will not have the right to withdraw coverage on
securities insured by their Policies so long as such securities remain in the
Fund's portfolio, nor may MBIA, AMBAC, FGIC, or FSA cancel their Policies for
any reason except failure to pay premiums when due. MBIA, AMBAC, FGIC, and FSA
will reserve the right at any time upon 90 days' written notice to the Fund to
refuse to insure any additional municipal securities purchased by the Fund after
the effective date of such notice. The Trustees will reserve the right to
terminate any of the Policies if they determine that the benefits to the Fund of
having its portfolio insured under such Policy are not justified by the expense
involved.

Additionally, the Trustees reserve the right to enter into contracts with
insurance carriers other than MBIA, AMBAC, FGIC, or FSA if such carriers are
rated in the highest rating category by an NRSRO.

Under the Policies, municipal bond insurers unconditionally guarantee to the
Fund the timely payment of principal and interest on the insured municipal
securities when and as such payments shall become due but shall not be paid by
the issuer, except that in the event of any acceleration of the due date of the
principal by reason of mandatory or optional redemption (other than acceleration
by reason of mandatory sinking fund payments), default or otherwise, the
payments guaranteed will be made in such amounts and at such times as payments
of principal would have been due had there not been such acceleration. The
municipal bond insurers will be responsible for such payments less any amounts
received by the Fund from any trustee for the municipal bond holders or from any
other source. The Policies do not guarantee payment on an accelerated basis, the
payment of any redemption premium, the value for the shares of the Fund, or
payments of any tender purchase price upon the tender of the municipal
securities. The Policies also do not insure against nonpayment of principal of
or interest on the securities resulting from the insolvency, negligence or any
other act or omission of the trustee or other paying agent for the securities.
However, with respect to small issue industrial development municipal bonds and
pollution control revenue municipal bonds covered by the Policies, the municipal
bond insurers guarantee the full and complete payments required to be made by or
on behalf of an issuer of such municipal securities if there occurs any change
in the tax-exempt status of interest on such municipal securities, including
principal, interest or premium payments, if any, as and when required to be made
by or on behalf of the issuer pursuant to the terms of such municipal
securities. A "when-issued" municipal security will be covered under the
Policies upon the settlement date of the original issue of such "when-issued"
municipal security. In determining whether to insure municipal securities held
by the Fund, each municipal bond insurer will apply its own standard, which
corresponds generally to the standards it has established for determining the
insurability of new issues of municipal securities.

If a Policy terminates as to municipal securities sold by the Fund on the date
of sale, in which event municipal bond insurers will be liable only for those
payments of principal and interest that are then due and owing, the provision
for insurance will not enhance the marketability of securities held by the Fund,
whether or not the securities are in default or subject to significant risk of
default, unless the option to obtain permanent insurance is exercised. On the
other hand, since Issuer-Obtained Insurance will remain in effect as long as the
insured municipal securities are outstanding, such insurance may enhance the
marketability of municipal securities covered thereby, but the exact effect, if
any, on marketability cannot be estimated. The Fund generally intends to retain
any securities that are in default or subject to significant risk of default and
to place a value on the insurance, which ordinarily will be the difference
between the market value of the defaulted security and the market value of
similar securities of minimum high grade (i.e., rated in the highest rating
category by an NRSRO) that are not in default. To the extent that the Fund holds
defaulted securities, it may be limited in its ability to manage its investment
and to purchase other municipal securities. Except as described above with
respect to securities that are in default or subject to significant risk of
default, the Fund will not place any value on the insurance in valuing the
municipal securities that it holds.

Investment Risks of Municipal Securities. The value of the Fund's shares will
fluctuate. The amount of this fluctuation is dependent upon the quality and
maturity of the municipal securities in the Fund's portfolio, as well as on
market conditions. Municipal securities prices are interest rate sensitive,
which means that their value varies inversely with market interest rates. Thus,
if market interest rates have increased from the time a security was purchased,
the security, if sold, might be sold at a price less than its cost. Similarly,
if market interest rates have declined from the time a security was purchased,
the security, if sold, might be sold at a price greater than its cost. (In
either instance, if the security was held to maturity, no loss or gain normally
would be realized as a result of interim market fluctuations.)

Yields on municipal securities depend on a variety of factors, including: the
general conditions of the money market and the taxable and municipal securities
markets; the size of the particular offering; the maturity of the obligations;
and the credit quality of the issue. The ability of the Fund to achieve its
investment objective also depends on the continuing ability of the issuers of
municipal securities to meet their obligations for the payment of interest and
principal when due.

Further, any adverse economic conditions or developments affecting the states or
municipalities could impact the Fund's portfolio. Investing in municipal
securities which meet the Fund's quality standards may not be possible if the
states and municipalities do not maintain their current credit ratings.

Non-Diversification. The Fund is a non-diversified investment portfolio. As
such, there is no limit on the percentage of assets which can be invested in any
single issuer. An investment in the Fund, therefore, will entail greater risk
than would exist in a diversified portfolio of securities because the higher
percentage of investments among fewer issuers may result in greater fluctuation
in the total market value of the Fund's portfolio. Any economic, political, or
regulatory developments affecting the value of the securities in the Fund's
portfolio will have a greater impact on the total value of the portfolio than
would be the case if the portfolio were diversified among more issuers.

Temporary Investments. The Fund invests its assets so that at least 80% of its
annual interest income is exempt from federal income tax including the federal
alternative minimum tax. However, from time to time, on a temporary basis, or
when the Fund's investment adviser determines that market conditions call for a
temporary defensive posture, the Fund may invest up to 100% of its assets in
short-term, tax-exempt or taxable temporary investments. These temporary
investments include, but are not limited to: tax-exempt variable and floating
rate demand notes; temporary municipal securities; obligations issued by or on
behalf of municipal issuers; obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities; certificates of deposit issued by
banks; shares of other investment companies; and repurchase agreements
(arrangements in which the organization selling the Fund a bond or temporary
investment agrees at the time of sale to repurchase it at a mutually agreed upon
time and price). There are no rating requirements applicable to temporary
investments, with the exception of temporary municipal securities, which are
subject to the same rating requirements as all other municipal securities in
which the Fund invests. For other temporary investments, the Fund's investment
adviser will limit temporary investments to those it considers to be of
comparable quality to the acceptable investments of the Fund. Although the Fund
is permitted to make taxable, temporary investments, there is no current
intention of generating income subject to federal income tax. Repurchase
Agreements. The securities in which the Fund invests may be purchased pursuant
to repurchase agreements. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell securities to
the Fund and agree at the time of sale to repurchase them at a mutually agreed
upon time and price. To the extent that the original seller does not repurchase
the securities from the Fund, the Fund could receive less than the repurchase
price on any sale of such securities.

The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter in transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.

Restricted and Illiquid Securities. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
invest pursuant to its investment objective and policies but which are subject
to restrictions on resale under federal securities laws. As a matter of
fundamental investment policy which may not be changed without shareholder
approval the Fund may not invest more than 15% of the value of its net assets in
restricted securities. Under criteria established by the Trustees, certain
restricted securities are considered to be liquid. The Fund will limit its
purchase of illiquid securities to 15% of its net assets, including certain
restricted securities or municipal leases not determined by the Trustees to be
liquid, repurchase agreements providing for settlement in more than seven days
after notice, participation interests and variable rate municipal securities
without a demand feature or with a demand feature of longer than seven days and
which the Fund's investments adviser believes cannot be sold within seven days.
Investing in Securities of Other Investment Companies. The Fund may invest its
assets in securities of other investment companies as an efficient means of
carrying out its investment policies. It should be noted that investment
companies incur certain expenses, such as management fees, and, therefore, any
investment by the Fund in shares of other investment companies may be subject to
such duplicate expenses.

Investment Limitations

The Fund will not:

The above investment limitations cannot be changed without shareholder approval.

Star U.S. Government Income Fund-
Summary of Fund Expenses
To come

Star U.S. Government Income Fund-
Financial Highlights
To come

Star U.S. Government Income Fund-
Investment Information

Investment Objective

The primary investment objective of the Fund is current income. Capital
appreciation is a secondary objective. The investment objective of the Fund
cannot be changed without the approval of holders of a majority of the Fund's
shares. While there is no assurance that the Fund will achieve its investment
objective, it endeavors to do so by following the investment policies described
below. Unless indicated otherwise, the investment policies of the Fund may be
changed by the Trustees without approval of shareholders. Shareholders will be
notified before any material change in these policies becomes effective.

Investment Policies

The Fund pursues its investment objectives by investing at least 65% of the
value of its total assets in securities issued or guaranteed as to payment of
principal and interest by the U.S. government, its agencies or
instrumentalities. For purposes of this 65% statement, the Fund will consider
CMOs issued by U.S. government agencies or instrumentalities to be U.S.
government securities. Additionally, up to 35% of the value of the Fund's total
assets may be invested in investment-grade corporate debt obligations,
commercial paper, time and savings deposits, debt securities of foreign issuers
and mortgage-backed securities including ARMS and non-governmental CMOs, and
asset-backed securities.

Acceptable Investments

Consistent with the above, the Fund may invest in:

Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:
o Federal Home Loan Banks;
o Federal Home Loan Mortgage Corporation ("FHLMC");
o Farm Credit Banks;
o Student Loan Marketing Association; and
o Federal National Mortgage Association (`FNMA").

Structured Fixed Income Securities. The Fund may invest in mortgage-backed
securities, including ARMS, CMOs , and asset-backed securities.

Domestic Debt Securities. The Fund may also invest in domestic issues of
corporate debt obligations having floating or fixed rates of interest and rated
at the time of purchase in one of the four highest categories by a NRSRO [rated
Baa or better by Moody's , or BBB or better by S&P or Fitch] or, if unrated, are
of comparable quality in the judgment of the Fund's investment adviser. U.S.
Money Market Instruments. The Fund may also invest in money market instruments
including commercial paper which matures in 270 days or less and is rated
Prime-1 or Prime-2 by Moody's, A-1 or A-2 by S&P, or F-1 or F-2 by Fitch; and
time and savings deposits (including certificates of deposit) in commercial or
savings banks whose accounts are insured by the Bank Insurance Fund ("BIF")
which is administered by the FDIC, or the Savings Association Insurance Fund
("SAIF"), which is also administered by the FDIC. These may include certificates
of deposit and other time deposits issued by foreign branches of FDIC insured
banks, and banker's acceptances. Foreign Debt Securities. The Fund may also
invest in debt securities of foreign governments, foreign governmental agencies
or supranational institutions. In addition, the Fund will also invest in
investment quality debt securities issued by foreign corporations. These
securities will be rated in one of the four highest rating categories by the
above-mentioned NRSROs, or, if unrated, will be of comparable quality in the
judgment of the adviser. (The Fund may not invest more than 5% of its assets in
foreign debt securities). Zero Coupon Securities. The Fund may invest in
zero coupon bonds and zero coupon convertible securities. The Fund may invest in
zero coupon bonds in order to receive the rate of return through the
appreciation of the bond. This application is extremely attractive in a falling
rate environment as the price of the bond rises rapidly in value as opposed to
regular coupon bonds. A zero coupon bond makes no periodic interest payments and
the entire obligation becomes due only upon maturity.

Mortgage-Backed Securities. The Fund may invest in mortgage-backed securities.
Mortgage-backed securities are securities that directly or indirectly represent
a participation in, or are secured by and payable from, mortgage loans on real
property. There are currently three basic types of mortgage-backed securities:
(i) those issued or guaranteed by the U.S. government or one of its agencies or
instrumentalities, such as Government National Mortgage Association ("GNMA"),
FNMA, and FHLMC; (ii) those issued by private issuers that represent an interest
in or are collateralized by mortgage-backed securities issued or guaranteed by
the U.S. government or one of its agencies or instrumentalities; and (iii) those
issued by private issuers that represent an interest in or are collateralized by
whole loans or mortgage-backed securities without a government guarantee but
usually having some form of private credit enhancement.

The Fund will invest only in CMOs which are rated AAA by a NRSRO and which may
be: (a) collateralized by pools of mortgages in which each mortgage is
guaranteed as to payment of principal and interest by an agency or
instrumentality of the U.S. government; (b) collateralized by pools of mortgages
in which payment of principal and interest is guaranteed by the issuer and such
guarantee is collateralized by U.S. government securities; or (c) privately
issued securities in which the proceeds of the issuance are invested in mortgage
securities and payment of the principal and interest are supported by the credit
of an agency or instrumentality of the U.S. government.

Asset-Backed Securities. The Fund may invest in asset-backed securities.
Asset-backed securities have structural characteristics similar to
mortgage-backed securities but have underlying assets that generally are not
mortgage loans or interests in mortgage loans. The Fund may invest in
asset-backed securities rated AAA by a NRSRO including, but not limited to,
interests in pools of receivables, such as motor vehicle installment purchase
obligations and credit card receivables, equipment leases, manufactured housing
(mobile home) leases, or home equity loans. These securities may be in the form
of pass-through instruments or asset-backed bonds. The securities are issued by
non-governmental entities and carry no direct or indirect government guarantee.

The Fund may write (i.e., sell) covered call options. By writing a call option,
the Fund becomes obligated during the term of the option to deliver the
securities underlying the option upon payment of the exercise price.

The principal reason for writing call options is to manage price volatility (or
risk). In addition, the Fund will attempt to obtain, through a receipt of
premiums, a greater current return than would be realized on the underlying
securities alone. The Fund receives a premium from writing a call option which
it retains whether or not the option is exercised. By writing a call option, the
Fund might lose the potential for gain on the underlying security while the
option is open.

The Fund, may purchase put options. Such investments in put options may not
exceed 5% of the Fund's assets, represented by the premium paid, and will only
relate to specific securities (or groups of specific securities) in which the
Fund may invest. The Fund may purchase put options for the purpose of offsetting
previously written put options of the same series. If the Fund is unable to
effect a closing purchase transaction with respect to covered options it has
written, the Fund will not be able to sell the underlying securities or dispose
of assets held in a segregated account until the options expire or are
exercised. Put options may also be purchased to protect against price movements
in particular securities in the Fund's portfolio. A put option gives the Fund,
in return for a premium, the right to sell the underlying security to the writer
(seller) at a specified price during the term of the option.

Investment Risks of Futures and Options on Futures. When the Fund uses futures
and options on futures as hedging devices, there is a risk that the prices of
the securities subject to the futures contracts may not correlate perfectly with
the prices of the securities in the Fund's portfolio. This may cause the futures
contract and any related options to react differently than the portfolio
securities to market changes. In addition, the Fund's investment adviser could
be incorrect in its expectations about the direction or extent of market factors
such as stock price movements. In these events, a Fund may lose money on the
futures contract or option. It is not certain that a secondary market for
positions in futures contracts or for options will exist at all times. Although
the investment adviser will consider liquidity before entering into these
transactions, there is no assurance that a liquid secondary market on an
exchange or otherwise will exist for any particular futures contract or option
at any particular time. The Fund's ability to establish and close out futures
and options positions depends on this secondary market. Repurchase Agreements.
The securities in which the Fund invests may be purchased pursuant to repurchase
agreements. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell securities to
the Fund and agree at the time of sale to repurchase them at a mutually agreed
upon time and price. To the extent that the original seller does not repurchase
the securities from the Fund, the Fund could receive less than the repurchase
price on any sale of such securities.

When-Issued and Delayed Delivery Transactions. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which a Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.

Restricted and Illiquid Securities. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
invest pursuant to its investment objective and policies but which are subject
to restrictions on resale under federal securities laws. Under criteria
established by the Trustees, certain restricted securities are considered to be
liquid, the Fund will limit its purchase together with other illiquid
securities, including restricted securities not determined by the Trustees to be
liquid, non-negotiable time deposits, over-the-counter options, and repurchase
agreements providing for settlement in more than seven days after notice, to 15%
of net assets. Investing in Securities of Other Investment Companies. The Fund
may invest its assets in securities of other investment companies as an
efficient means of carrying out its investment policies. It should be noted that
investment companies incur certain expenses, such as management fees, and,
therefore, any investment by the Fund in shares of other investment companies
may be subject to such duplicate expenses.

Investment Risks of Foreign Securities. The Fund may invest in foreign
securities. Investments in foreign securities can carry higher returns and risks
than those associated with domestic investments. Foreign securities may be
denominated in foreign currencies. Therefore, the value in U.S.
dollars of the Fund's assets and income may be affected by changes in exchange
rates and regulations.

Investment Risks of Foreign Companies. Other differences between investing in
foreign and U.S. companies include:

o less publicly available information about foreign companies;

o the lack of uniform financial accounting standards applicable to
foreign companies;

o less readily available market quotations on foreign companies;

o differences in government regulation and supervision of foreign
securities exchanges, brokers, listed companies, and banks;

o generally lower foreign securities market volume;

o the likelihood that foreign securities may be less liquid or more
volatile;

o generally higher foreign brokerage commissions;

o possible difficulty in enforcing contractual obligations or obtaining
court judgments abroad because of differences in the legal systems;

o unreliable mail service between countries; and

o political or financial changes which adversely affect investments in
some countries.

Investment Limitations

The Fund will not:

o with respect to 75% of the value of total assets, invest more than 5% in
securities of one issuer except cash and cash items, U.S. government
securities, and repurchase agreements. Additionally, the Fund will not
purchase more than 10% of the voting securities of any one issuer.

The above investment limitations cannot be changed without shareholder approval.

Star Strategic Income Fund-
Summary of Fund Expenses

To come

Star Strategic Income Fund-
Financial Highlights

To come

Star Strategic Income Fund-
Investment Information

Investment Objective

The investment objective of the Fund is to generate high current income. The
investment objective of the Fund cannot be changed without the approval of
holders of a majority of the Fund's shares. While there is no assurance that the
Fund will achieve its investment objective, it endeavors to do so by following
the investment policies described below. Unless indicated otherwise, the
investment policies of the Fund may be changed by the Trustees without approval
of shareholders. Shareholders will be notified before any material change in
these policies becomes effective.

Investment Policies

The Fund pursues this investment objective by investing in a core asset group of
U.S. government and corporate fixed income securities, and the following
satellite categories: international securities, real estate investment trusts,
domestic equity securities, money market securities, and the following
structured fixed income securities: mortgage-backed securities, CMOs, ARMS, and
asset-backed securities.

The Fund pursues its investment objective by investing approximately 40% of its
assets in U.S. government and corporate fixed income securities, and 0%-20% of
its assets in each of the satellite categories listed above. Overall, the Fund
will invest at least 65% of its assets in income producing securities. The
Fund's adviser believes (but can give no assurance) that by spreading the
investment portfolio across multiple securities categories, the Fund can reduce
the impact of drastic market movements affecting any one securities type. Other
techniques include, but are not limited to, the following: the employment of
fundamental and quantitative analysis when selecting equity securities; use of
ratings assigned by NRSROs (where applicable); credit research; review of
issuer's historical performance; examination of issuer's dividend growth record;
consideration of market trends; and hedging through the use of options and
futures.

Acceptable Investments

Consistent with the above, the Fund may invest in:

Domestic Fixed Income Securities. The core asset group of the Fund will include
domestic corporate debt obligations, obligations of the United States, and
notes, bonds, and discount notes of U.S. government agencies or
instrumentalities. Bonds are selected based on the outlook for interest rates
and their yield in relation to other bonds of similar quality and maturity. The
Fund will only invest in bonds which are rated Baa or higher by Moody's, or BBB
or higher by S&P or Fitch, or which, if unrated, are deemed to be of comparable
quality by the investment adviser.

o the full faith and credit of the U.S. Treasury;

o the issuer's right to borrow from the U.S. Treasury;

o the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or

o the credit of the agency or instrumentality issuing the obligations.

Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:

o Federal Home Loan Banks;

o FHLMC;

o Farm Credit Banks;

o Student Loan Marketing Association; and

o FNMA.

International Securities. The international portion of the Fund will include
equity securities of non-U.S. companies and corporate and government fixed
income securities. The international equity securities in which the Fund invests
include international stocks traded domestically or abroad through various stock
exchanges, American Depositary Receipts, or International Depositary Receipts
("ADRs" and "IDRs," respectively). The international fixed income securities
will include ADRs, IDRs, and government securities of other nations and will be
rated investment-grade (i.e., Baa or better by Moody's or BBB or better by S&P)
or, if unrated, deemed by the investment adviser to be of an equivalent quality.
In the event that an international security which had an eligible rating is
downgraded below Baa or BBB, the Fund's investment adviser will promptly
reassess whether continued holding of the security is consistent with the Fund's
objective. The Fund may also invest in shares of open-end and closed-end
management investment companies which invest primarily in international
securities described above.

Domestic Equity Securities. The equity category will consist of high-dividend
common and preferred stocks of U.S. companies which are listed on the New York
or American Stock Exchanges or traded in the over-the-counter market and have a
history of stable earnings and/or growing dividends. As part of the equity
category, the Fund may also invest in warrants and securities convertible into
common stocks of these U.S. companies.

Money Market Securities. The Fund may invest in U.S. and foreign short-term
money market instruments, including:

o commercial paper rated A-1 or A-2 by S&P, Prime-1 or Prime-2 by Moody's,
or F-1 or F-2 by Fitch, and Europaper (dollar-denominated commercial
paper issued outside the United States) rated A-1, A-2, Prime-1, or
Prime-2. In the case where commercial paper of Europaper has received
different ratings from different rating services, such commercial paper
or Europaper is acceptable so long as at least one rating is in the two
highest categories of the NRSROs described above;

o instruments of domestic and foreign banks and savings associations (such
as certificates of deposit, demand and time deposits, savings shares,
and bankers' acceptances) if they have capital, surplus, and undivided
profits of over $100,000,000, or if the principal amount of the
instrument is insured by BIF or SAIF. These instruments may include
Eurodollar Certificates of Deposit ("ECDs"), Yankee Certificates of
Deposit ("Yankee CDs"), and Eurodollar Time Deposits ("ETDs");

o obligations of the U.S. government or its agencies or instrumentalities;

o repurchase agreements; and

o other short-term instruments which are not rated but are determined by
the Fund's investment adviser to be of comparable quality to the other
obligations in which the Fund may invest.

Foreign Currency Transactions. The Fund will enter into foreign currency
transactions to obtain the necessary currencies to settle transactions. Currency
transactions may be conducted either on a spot or cash basis at prevailing rates
or through forward foreign currency exchange contracts.

The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although,
foreign currency exchanges may be used by the Fund to protect against a decline
in the value of one or more currencies and might, in certain cases, result in
losses to the Fund.

Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange
contract ("forward contract") is an obligation to purchase or sell an amount of
a particular currency at a specific price and on a future date agreed upon by
the parties.

Generally, no commission charges or deposits are involved. At the time the Fund
enters into a forward contract, Fund assets with a value equal to the Fund's
obligation under the forward contract are segregated on the Fund's records and
are maintained until the contract has been settled. The Fund will not enter into
a forward contract with a term of more than one year. The Fund will generally
enter into a forward contract to provide the proper currency to settle a
securities transaction at the time the transaction occurs ("trade date"). The
period between the trade date and settlement date will vary between 24 hours and
30 days, depending upon local custom.

The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although the adviser
will consider the likelihood of changes in currency values when making
investment decisions, the adviser believes that it is important to be able to
enter into forward contracts when it believes the interests of the Fund will be
served. The Fund will not enter into forward contracts for hedging purposes in a
particular currency in an amount in excess of the Fund's assets denominated in
that currency.

Leverage through Borrowing. The Fund may borrow for investment purposes pursuant
to a fundamental policy. This borrowing, which is known as leveraging, generally
will be unsecured, except to the extent the Fund enters into the reverse
repurchase agreements described below. The Investment Company Act of 1940
requires the Fund to maintain continuous asset coverage (that is, total assets
including borrowings, less liabilities exclusive of borrowings) of 300% of the
amount borrowed. If the 300% asset coverage should decline as a result of market
fluctuations or other reasons, the Fund may be required to sell some of its
portfolio holdings within three days to reduce the debt and restore the 300%
asset coverage, even though it may be disadvantageous from an investment
standpoint to sell securities at that time.

Among the forms of borrowing in which the Fund may engage is the entry into
reverse repurchase agreements with banks, brokers or dealers. These transactions
involve the transfer by the Fund of an underlying debt instrument in return for
cash proceeds based on a percentage of the value of the security. The Fund
retains the right to receive interest and principal payments on the security. At
an agreed upon future date, the Fund repurchases the security at an agreed-upon
price. In certain types of agreements, there is no agreed upon repurchase date,
and interest payments are calculated daily, often based on the prevailing U.S.
government securities or other high-quality liquid debt securities at least
equal to the aggregate amount of its reverse repurchase obligations, plus
accrued interest, in certain cases, in accordance with releases promulgated by
the SEC. The SEC views reverse repurchase transactions as collateralized
borrowings by the Fund. These agreements, which are treated as if reestablished
each day, are expected to provide the Fund with a flexible borrowing tool.

Conversely, if the income from the assets retained with borrowed funds is not
sufficient to cover the cost of borrowing, the net income of the Fund will be
less than if borrowing were not used, and, therefore, the amount available for
distribution to shareholders as dividends will be reduced. The Fund also may be
required to maintain minimum average balances in connection with such borrowing
or to pay a commitment or other fee to maintain a line of credit; either of
these requirements would increase the cost of borrowing over the stated interest
rate.

Short-Selling. The Fund may make short sales pursuant to a fundamental policy.
Short sales are transactions in which the Fund sells a security it does not own
in anticipation of a decline in the market value of that security. To complete
such a transaction, the Fund must borrow the security to make delivery to the
buyer. The Fund then is obligated to replace the security borrowed by purchasing
it at the market price at the time of replacement. The price at such time may be
more or less than the price at which the security was sold by the Fund. Until
the security is replaced, the Fund is required to pay to the lender amounts
equal to any dividends or interest which accrue during the period of the loan.
To borrow the security, the Fund also may be required to pay a premium, which
would increase the cost of the security sold. The proceeds of the short sale
will be retained by the broker, to the extent necessary to meet margin
requirements, until the short position is closed out.

Until the Fund replaces a borrowed security in connection with a short sale, the
Fund will be required to maintain daily a segregated account, containing cash or
U.S. government securities, at such a level that (i) the amount deposited in the
account plus the amount deposited with the broker as collateral will at all
times equal to at least 100% of the current value of the security sold short and
(ii) the amount deposited in the segregated account plus the amount deposited
with the broker as collateral will not be less than the market value of the
security at the time it was sold short.

The Fund may purchase call options to provide a hedge against an increase in the
price of a security sold short by the Fund. When the Fund purchases a call
option, it has to pay a premium to the person writing the option and a
commission to the broker selling the option. If the option is exercised by the
Fund, the premium and the commission paid may be more than the amount of the
brokerage commission charged if the security were to be purchased directly. See
"Options Transactions."

The Fund anticipates that the frequency of short sales will vary substantially
under different market conditions, and it does not intend that any specified
portion of its assets, as a matter of practice, will be in short sales. However,
as an operating policy which may be changed without shareholder approval, no
securities will be sold short if, after effect is given to any such short sale,
the total market value of all securities sold short would exceed 25% of the
value of the Fund's net assets. The Fund may not sell short the securities of
any single issuer listed on a national securities exchange to the extent of more
than 2% of the value of the Fund's net assets. The Fund may not sell short the
securities of any class of an issuer to the extent, at the time of the
transaction, of more than 2% of the outstanding securities of that class.

In addition to the short sales discussed above, the Fund also may make short
sales "against the box," a transaction in which the Fund enters into a short
sale of a security which the Fund owns. The proceeds of the short sale are held
by a broker until the settlement date, at which time the Fund delivers the
security to close the short position. The Fund receives the net proceeds from
the short sale. The Fund at no time will have more than 15% of the value of its
net assets in deposits on short sales against the box.

Investment Risks of Short Selling. The Fund will incur a loss as a result of the
short sale if the price of the security increases between the date of the short
sale and the date on which the Fund replaces the borrowed security; conversely,
the Fund will realize a gain if the security declines in price between those
dates. This result is the opposite of what one would expect from a cash purchase
of a long position in a security. The amount of any gain will be decreased, and
the amount of any loss increased, by the amount of any premium or amounts in
lieu of interest the Fund may be required to pay in connection with a short
sale.

Portfolio Turnover. The Fund will from time-to-time engage in the purchase and
sale of a security for the purpose of "capturing" dividends on that security.
Under this practice, the Fund will purchase the security close to its
ex-dividend date, thereby entitling the Fund to receive the anticipated
dividend, and then sell the security after the ex-dividend date. To the extent
that the sum of the sale price of the security plus the amount the dividend
received by the Fund, exceeds the purchase price of the security plus brokerage
commissions incurred in the purchase and sale transactions, the Fund will
receive a profit. The practice of capturing dividends could result in the Fund
experiencing an annual turnover rate of up to 250%. A high portfolio turnover
rate may lead to increased costs and may also result in higher taxes paid by the
Fund's shareholders.

Mortgage-Backed Securities. The Fund may invest in mortgage-backed securities.
Mortgage-backed securities are securities that directly or indirectly represent
a participation in, or are secured by and payable from, mortgage loans on real
property. There are currently three basic types of mortgage-backed securities:
(i) those issued or guaranteed by the U.S. government or one of its agencies or
instrumentalities, such as GNMA, FNMA, and FHLMC; (ii) those issued by private
issuers that represent an interest in or are collateralized by mortgage-backed
securities issued or guaranteed by the U.S. government or one of its agencies or
instrumentalities; and (iii) those issued by private issuers that represent an
interest in or are collateralized by whole loans or mortgage-backed securities
without a government guarantee but usually having some form of private credit
enhancement.

ARMS. The Fund may invest in ARMS. ARMS are actively traded, mortgage-backed
securities representing interests in adjustable rather than fixed interest rate
mortgages. The Fund invests in ARMS issued by GNMA, FNMA, and FHLMC. The may
also invest in ARMS issued by non-government and private entities. The
underlying mortgages which collateralize ARMS issued by GNMA are fully
guaranteed by the Federal Housing Administration or Veterans Administration,
while those collateralizing ARMS issued by FHLMC or FNMA are typically
conventional residential mortgages conforming to strict underwriting size and
maturity constraints.

Asset-Backed Securities. The Fund may invest in asset-backed securities.
Asset-backed securities have structural characteristics similar to
mortgage-backed securities but have underlying assets that generally are not
mortgage loans or interests in mortgage loans. The Fund may invest in
asset-backed securities rated AAA by a NRSRO including, but not limited to,
interests in pools of receivables, such as motor vehicle installment purchase
obligations and credit card receivables, equipment leases, manufactured housing
(mobile home) leases, or home equity loans. These securities may be in the form
of pass-through instruments or asset-backed bonds. The securities are issued by
non-governmental entities and carry no direct or indirect government guarantee.

The Fund may write (i.e., sell) covered call options, and may also write covered
put options. The Fund may only write covered call and put options to the extent
of 20% of the value of its net assets at the time such option contracts are
written. By writing a call option, the Fund becomes obligated during the term of
the option to deliver the securities underlying the option upon payment of the
exercise price. By writing a put option, the Fund becomes obligated during the
term of the option to purchase the securities underlying the option at the
exercise price if the option is exercised.

The Fund may purchase put options and call options. Such investments in put and
call options may not exceed 5% of the Fund's assets, represented by the premium
paid, and will only relate to specific securities (or groups of specific
securities) in which the Fund may invest. The Fund may purchase put and call
options for the purpose of offsetting previously written put and call options of
the same series. If the Fund is unable to effect a closing purchase transaction
with respect to covered options it has written, the Fund will not be able to
sell the underlying securities or dispose of assets held in a segregated account
until the options expire or are exercised. Put options may also be purchased to
protect against price movements in particular securities in the Fund's
portfolio. A put option gives the Fund, in return for a premium, the right to
sell the underlying security to the writer (seller) at a specified price during
the term of the option. The Fund will purchase options only to the extent
permitted by the policies of state securities authorities in states where shares
of the Fund are qualified for offer and sale.

Stock index futures contracts are based on indices that reflect the market value
of common stock of the firms included in the indices. An index futures contract
is an agreement to which two parties agree to take or make delivery of an amount
of cash equal to the difference between the value of the index at the close of
the last trading day of the contract and the price at which the index contract
was originally written.

Repurchase Agreements. The securities in which the Fund invests may be purchased
pursuant to repurchase agreements. Repurchase agreements are arrangements in
which banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them at a
mutually agreed upon time and price. To the extent that the original seller does
not repurchase the securities from the Fund, the Fund could receive less than
the repurchase price on any sale of such securities.

Restricted and Illiquid Securities. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
invest pursuant to its investment objective and policies but which are subject
to restrictions on resale under federal securities laws. Under criteria
established by the Trustees, certain restricted securities are considered to be
liquid. To the extent that restricted securities are not determined to be
liquid, the Fund will limit its purchase together with other illiquid
securities, including restricted securities not determined by the Trustees to be
liquid, non-negotiable time deposits, over-the-counter options, and repurchase
agreements providing for settlement in more than seven days after notice, to 15%
of net assets. Investing in Securities of Other Investment Companies. The Fund
may invest its assets in securities of other investment companies as an
efficient means of carrying out its investment policies. It should be noted that
investment companies incur certain expenses, such as management fees, and,
therefore, any investment by the Fund in shares of other investment companies
may be subject to such duplicate expenses.

Investment Risks of Foreign Companies. Other differences between investing in
foreign and U.S. companies include:

o less publicly available information about foreign companies;

o the lack of uniform financial accounting standards applicable to
foreign companies;

o less readily available market quotations on foreign companies;

o differences in government regulation and supervision of foreign
securities exchanges, brokers, listed companies, and banks;

o generally lower foreign securities market volume;

o the likelihood that foreign securities may be less liquid or more
volatile;

o generally higher foreign brokerage commissions;
o possible difficulty in enforcing contractual obligations or obtaining
court judgments abroad because of differences in the legal systems;

o unreliable mail service between countries; and

o political or financial changes which adversely affect investments in
some countries.

Investment Limitations

The Fund will not:

o borrow money or pledge securities except, under circumstances, the Fund may
borrow money directly or through reverse repurchase agreements in amounts up
to one-third of the value of its total assets.

o with respect to 75% of the value of total assets, invest more than 5% in
securities of one issuer except cash and cash items, U.S. government
securities, and repurchase agreements. Additionally, the Fund will not
purchase more than 10% of the voting securities of any one issuer.

The above investment limitations cannot be changed without shareholder approval.

Star Funds Information

Management of the Trust

Advisory Fees. The Adviser is entitled to receive an annual investment
advisory fee equal to a percentage of each Fund's average daily net
assets as follows: 0.75% of The Stellar Tax-Free Bond Fund; 0.60% of
U.S. Government Income Fund; and 0.95% of Strategic Income Fund. The
Adviser may voluntarily choose to waive a portion of its fee or
reimburse the Funds for certain operating expenses. The Adviser can
terminate this voluntary waiver of its advisory fees at any time at its
sole discretion.

Star Bank's expertise in trust administration, investments, and estate
planning ranks it among the most predominant trust institutions in Ohio,
with assets of $____ billion as of December 31, 1997.

B. Randolph Bateman has been Senior Vice President and Chief Investment
Officer of Star Bank's Trust Financial Services Group and Manager of its
Capital Asset Management Division since 1988. Mr. Bateman has managed
the international bonds component of Strategic Income Fund since its
inception. Mr. Bateman earned a Bachelor of Arts degree in Economics
from North Carolina State University and earned the Chartered Financial
Analyst designation.

Kirk F. Mentzer, Senior Trust Officer and Director of Fixed Income
Research for the Capital Management Division of Star Bank since 1992,
has been employed by Star Bank in various capacities since 1989. Mr.
Mentzer has managed the U.S. Government Income Fund since its inception.
He has also managed the domestic and structured fixed income components
of Strategic Income Fund since such Fund's inception. Mr. Mentzer earned
a Bachelor of Business Administration degree in Finance from the
University of Cincinnati and a Masters degree in Finance from Xavier
University.

Peter Sorrentino is Vice President and Director of Portfolio Management and
Research for the Capital Management Division of Star Bank. Mr. Sorrentino
has managed the domestic equity component of Strategic Income Fund since
January 1996. Prior to joining Star Bank in 1996, Mr. Sorrentino served as
Regional Director of Portfolio Management for Banc One Investment Advisors
since 1987. Mr. Sorrentino earned a Bachelor of Business Administration
degree in Finance and Accounting from the University of Cincinnati. He also
earned the Chartered Financial Analyst designation.

Mary Jo McGeorge is the Municipal Fund Manager for the Capital
Management Division of Star Bank. She has overseen all municipal fund
management and credit analysis for The Stellar Tax-Free Bond Fund since
its inception. In addition to the management of The Stellar Tax-Free
Bond Fund, Ms. McGeorge is responsible for all tax-exempt fixed income
investing within the Trust Department of Star Bank. Ms. McGeorge joined
Star Bank in 1976 and has extensive trading, credit and funds management
experience.

Kenneth D. Lamson is a Fund Manager and Investment Analyst for the
Capital Management Division of Star Bank. He has been responsible for
the management of the cash equivalent components of the Star Funds since
1996. Mr. Lamson joined Star Bank in 1993 as the portfolio assistant and
mortgage-backed securities specialist for the Bank's Treasury Division.
Prior to joining Star Bank, Mr. Lamson served as an Assistant Examiner
for the FDIC. He earned his Bachelor of Science in Business Management
from Jacksonville State University, and is currently pursuing his
Chartered Financial Analyst designation and Masters of Business
Administration.

Dwight L. Riley is a Municipal Fund Manager and Credit Analyst for the
Capital Management Division of StarTrust. He words on the credit
analysis and municipal management of the Star Ohio Tax-Free Money Market
Fund.

Mr. Riley has been with Star Bank, N.A. since 1996. Prior to joining Star
Bank, Mr. Riley was an Executive Assistant Manager with Walgreens Drug
Stores. Mr. Riley graduated from Ohio State in 1990 with an Economics
degree. He has been with Star Bank, N.A. since 1996.

Distribution of Fund Shares

Distribution Plan. Pursuant to the provisions of a distribution plan adopted in
accordance with the Investment Company Act Rule 12b-1 (the "Plan"), the Funds
may pay to the distributor an amount computed at an annual rate of up to 0.25%
of the average daily net assets, in each case to finance any activity which is
principally intended to result in the sale of shares subject to the Plan.

The Glass-Steagall Act limits the ability of a depository institution (such as a
commercial bank or a savings association) to become an underwriter or
distributor of securities. In the event the Glass-Steagall Act is deemed to
prohibit depository institutions from acting in the capacities described above
or should Congress relax current restrictions on depository institutions, the
Trustees will consider appropriate changes in the services.

Additional Distribution Payments. The distributor will, periodically, uniformly
offer to pay additional amounts in the form of cash or promotional incentives
consisting of trips to sales seminars at luxury resorts, tickets or other items,
to all dealers selling shares of the Funds. Such payments will be predicated
upon the amount of shares of a Fund that are sold by the dealer. Any such
payments will be made from the assets of the distributor (including any portion
of any sales charge returned by the distributor) and will not result in a charge
to a Fund. In addition, the distributor will pay dealers an amount equal to 2.2%
of the net asset value of all shares of Strategic Income Fund, purchased by
their clients or customers. These payments will be made directly by the
distributor from its assets, and will not be made from assets of the Fund.

Administrative Arrangements. The distributor may select brokers and dealers to
provide distribution and administrative services. The distributor may also
select administrators (including depository institutions such as commercial
banks and savings associations) to provide administrative services. These
administrative services include distributing prospectuses and other information,
providing accounting assistance, and communicating or facilitating purchases and
redemptions of each of the Fund's shares.

Administration of the Funds

The administrative fee received during any fiscal year shall be at least $50,000
per Fund. Federated Administrative Services may choose to voluntarily waive a
portion of its fee at any time.

Independent Public Accountants. The independent public accountants for the Funds
are Arthur Andersen LLP, Pittsburgh, Pennsylvania.

Net Asset Value

Each Fund's net asset value per share fluctuates. It is determined by dividing
the sum of the market value of all securities and other assets, less
liabilities, by the number of shares outstanding.

Investing in the Funds

Minimum Investment Required

The minimum initial investment in any of the Funds by an investor is $1,000 ($25
for Star Bank Connections Group banking customers, Star Bank employees and
members of their immediate family and participants in the systematic investment
program). Subsequent investments may be in any amounts. For customers of Star
Bank, an institutional investor's minimum investment will be calculated by
combining all mutual fund accounts it maintains with Star Bank and invests with
the Funds.

What Shares Cost

Shares of The Stellar Tax-Free Bond Fund are sold at their net asset value next
determined after an order is received, plus a sales charge, as follows:

Sales Charge as a Sales Charge as
Percentage of a Percentage of
Amount of Transaction Public Offering Price Net Amount Invested
Less than $100,000 4.50% 4.71%
$100,000 but less than $250,000 3.75% 3.90%
$250,000 but less than $500,000 2.50% 2.56%
$500,000 but less than $750,000 2.00% 2.04%
$750,000 but less than $1 million 1.00% 1.01%
$1 million or more 0.25% 0.25%

Shares of U.S. Government Income Fund are sold at their net asset value next
determined after an order is received, plus a sales charge as follows:

Sales Charge as a Sales Charge as
Percentage of Public a Percentage of
Amount of Transaction Offering Price Net Amount Invested
- --------------------- -------------- -------------------
Less than $100,000 3.50% 3.62%
$100,000 but less than $250,000 3.00% 3.09%
$250,000 but less than $500,000 2.00% 2.04%
$500,000 but less than $1,000,000 1.50% 1.52%
$1,000,000 or more 0.00% 0.00%

Purchases at Net Asset Value. Shares of Strategic Income Fund are sold at their
net asset value next determined after an order is received. There is no sales
charge imposed by such Fund at the time of purchase. Under certain circumstances
described under "Redeeming Shares," shareholders may be charged a contingent
deferred sales charge by the distributor at the time shares of the Strategic
Income Fund are redeemed.

In addition, the following persons may purchase shares of The Stellar Tax-Free
Bond Fund and U.S. Government Income Fund at net asset value, without a sales
charge: (a) employees and retired employees of Star Bank, Federated Securities
Corp., or their affiliates, or of any bank or investment dealer who has a sales
agreement with Federated Securities Corp. with regard to the Funds, and members
of their families (including parents, grandparents, siblings, spouses, children,
and in-laws) of such employees or retired employees; (b) trust customers of
StarBanc Corporation and its subsidiaries; (c) and non-trust customers of
financial advisers.

Sales Charge Reallowance. For sales of shares of The Stellar Tax-Free Bond Fund
and U.S. Government Income Fund, Star Bank or any authorized dealer will
normally receive up to 89% of the applicable sales charge. Any portion of the
sales charge which is not paid to Star Bank or a dealer will be retained by the
distributor.

Reducing the Sales Charge

The sales charge can be reduced on the purchase of shares through:

o quantity discounts and accumulated purchases;

o signing a 13-month letter of intent;

o using the reinvestment privilege; or

o concurrent purchases.

Quantity Discounts and Accumulated Purchases. As shown in the previous table,
larger purchases reduce the sales charge paid. The Stellar Tax-Free Bond Fund
and U.S. Government Income Fund will combine purchases made on the same day by
the investor, his spouse, and his children under age 21 when it calculates the
sales charge.

If an additional purchase of Fund shares is made, the Funds will consider the
previous purchases still invested in the Funds. For example, if a shareholder
already owns shares having a current value at the net asset value of $90,000 and
he purchases $10,000 more at the current net asset value, the sales charge on
the additional purchase according to the schedule now in effect would be 3.75%,
not 4.50% for The Stellar Tax-Free Bond Fund and 3.00%, not 3.50% for U.S.
Government Income Fund.

Concurrent Purchases. For purposes of qualifying for a sales charge reduction, a
shareholder has the privilege of combining concurrent purchases of two or more
funds in the Trust, the purchase price of which includes a sales charge. For
example, if a shareholder concurrently invested $30,000 in one of the other
funds in the Trust with a sales charge and $70,000 in The Stellar Tax-Free Bond
Fund, or U.S. Government Income Fund the sales charge would be reduced.

Letter of Intent. If a shareholder intends to purchase at least $100,000 of
shares in the Funds (excluding money market funds) over the next 13 months, the
sales charge may be reduced by signing a letter of intent to that effect. This
Letter of Intent includes a provision for a sales charge adjustment depending on
the amount actually purchased within the 13-month period and a provision for the
custodian to hold up to 4.50% of the total price of shares of The Stellar
Tax-Free Bond Fund or 3.50% of the total price of the shares of U.S. Government
Income Fund as the case may be, intended to be purchased in escrow (in shares)
until such purchase is completed. The shares held in escrow in the shareholder's
account will be released at the fulfillment of the Letter of Intent or the end
of the 13-month period, whichever comes first. If the amount specified in the
Letter of Intent is not purchased, an appropriate number of escrowed shares may
be redeemed in order to realize the difference in the sales charge.

Reinvestment Privilege. If shares in The Stellar Tax-Free Bond Fund or U.S.
Government Income Fund have been redeemed, the shareholder has a one-time right,
within 30 days, to reinvest the redemption proceeds at the next-determined net
asset value without any sales charge. Star Bank or the distributor must be
notified by the shareholder in writing or by his financial institution of the
reinvestment in order to eliminate a sales charge. If the shareholder redeems
his shares in any of these Funds, there may be tax consequences. Shareholders
contemplating such transactions should consult their own tax advisers.

Systematic Investment Plan

Share Purchases

Shares are sold on days on which the New York Stock Exchange and the Federal
Reserve wire system are open for business.

Purchasing Through Star Bank

Payment may be made to Star Bank either by check or federal funds. When payment
is made with federal funds, the order is considered received when federal funds
are received by Star Bank, N.A.

For purchases through registered broker/dealers, requests must be received by
Star Bank by 3:30 p.m. (Eastern time) and payment is required in three business
days.

Shares cannot be purchased on days on which the New York Stock Exchange is
closed or on federal holidays restricting wire transfers.

Purchasing By Mail

Orders by mail are considered received after payment by check is converted by
Star Bank into federal funds. This is normally the next business day after Star
Bank receives the check.

New Account Additional Investments

Star Funds
Client Services
Star Bank, N.A.
425 Walnut Street, ML 7135
Cincinnati, OH 45202

Purchasing By Wire

Star Bank, N.A.
ABA 042000013
Attention: Star Funds
DDA# 56789
Name of Mutual Fund
(Write in name of Star Mutual Fund)

Your Account Number
(Write in shareholder's account number)

Account Registration
(Write in shareholder's name)

Exchange Privilege

Exchanges may occur between Star Funds having the same sales charge schedules,
and with the Star Money Market Funds, at net asset value but exchanges may not
be made between Funds having front-end sales charges and those having back-end
sales charges (i.e. contingent deferred sales charges). Shareholders who
exercise the exchange privilege must exchange shares having a total net asset
value of at least $1,000. Prior to the exchange, the shareholder must receive a
copy of the current prospectus of the fund into which an exchange is to be
effected.

<PAGE>

Funds with front-end sales charges Funds with back-end sales charges Funds with
no sales charges

Stellar Insured Tax-Free Bond Fund Star Strategic Income Fund
Star Ohio Tax-Free Money Market Fund Star U.S. Government Income Fund
Star Growth Equity Fund Star Tax-Free Money Market Fund
The Stellar Fund Star Treasury Fund
Star Relative Value Fund Star Market Capitalization Fund
Star Capital Appreciation Fund Star International Equity Fund

In cases of exchanges into Funds with a higher front-end sales charge, shares
may be exchanged at net asset value, plus the difference between the Funds'
sales charge (if any) already paid and any sales charge of the fund into which
shares are to be exchanged. When an exchange is made from a fund with a
front-end sales charge to a fund with no sales charge, the shares exchanged and
additional shares, which have been purchased by reinvesting dividends on such
shares, retain the charge of the exchanged shares for purposes of exercising
further exchange privileges; thus, an exchange of such shares for shares of a
fund with a sales charge would be at net asset value.

The telephone exchange privilege may be modified or terminated at any time.
Shareholders will be notified of such modifications or termination.

Exchange by Telephone

Instructions for exchanges between Star Funds may be given over the telephone,
by calling a Client Service Representative at 1-800-677-FUND. Shares may be
exchanged by telephone only between accounts with identical registrations.
Exchanges placed by telephone may be electronically recorded.

If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.

Exchange in Writing

Instructions to exchange shares of the Star Funds may be given in writing. The
letter of instruction must be signed by all shareholders on the account and must
provide the Fund and account number for each of the Funds involved in the
exchange. The written instructions can be mailed to:

Star Funds
Client Services
Star Bank, N.A.
425 Walnut Street, ML 7135
Cincinnati, OH 45202

Written exchange instructions may require a signature guarantee. For more
information on how to exchange shares of the Star Funds, please call a client
service representative at 1-800-677-FUND.

Tax Consequences

Exercising the exchange privilege is treated as a sale for federal income tax
purposes and depending on the circumstances, a short or long-term capital gain
or loss may be realized.

Frequent Investor Program

Certificates and Confirmations

As transfer agent for the Funds, Federated Shareholder Services Company
maintains a share account for each shareholder of record. Share certificates are
not issued.

Detailed confirmations of each purchase or redemption are sent to each
shareholder and dividend confirmations are sent to each shareholder to report
dividends paid.

Dividends and Capital Gains

With respect to The Stellar Tax-Free Bond Fund and Strategic Income Fund,
dividends are declared and paid monthly. With respect to U.S. Government Income
Fund, dividends are declared daily and paid monthly. Dividends and capital gains
will be automatically reinvested in additional shares of one of these Funds on
payment dates at net asset value, unless cash payments are requested by writing
to the Fund or Star Bank.

Capital gains realized by the Funds, if any, will be distributed once every
twelve months.

Redeeming Shares

The Stellar Tax-Free Bond Fund and U.S. Government Income Fund redeem shares at
their net asset value next determined after Star Bank receives the redemption
request.

Redemption by Telephone

A shareholder can request a redemption of shares by telephone by calling a
Client Service Representative at 1-800-677-FUND. Redemption requests given by
telephone may be electronically recorded.

In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a chase should occur, another
method of redemption should be considered.

If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.

Redemption in Writing

Shareholders may also redeem shares by sending a written request to:

Star Funds
Client Services
Star bank, N.A.
425 Walnut Street, ML 7135
Cincinnati, OH 45202

o a trust company or commercial bank whose deposits are insured by the
BIF, which is administered by the FDIC;

o a member of the New York, Boston, American, Midwest, or Pacific Stock
Exchange;

o a savings bank or savings association whose deposits are insured by
the SAIF, which is administered by the FDIC; or

o any other "eligible guarantor institution" as defined in the
Securities Exchange Act of 1934.

The Funds do not accept signatures guaranteed by a notary public.

<PAGE>

Contingent Deferred Sales Charge

Shareholders redeeming shares from Strategic Income Fund within five full years
of the purchase date will be charged a contingent deferred sales charge ("CDSC")
by the Funds' distributor. Any applicable CDSC will be imposed on the lesser of
the net asset value of the redeemed shares at the time of purchase or the net
asset value of the redeemed shares at the time of redemption in accordance with
the following schedule:

Year of Redemption Contingent Deferred
After Purchase Sales Charge
Year 1 5.00%
Year 2 4.00%
Year 3 3.00%
Year 4 2.00%
Year 5 1.00%
Year 6 0.00%

Elimination of Contingent Deferred Sales Charge

Shares of a Fund purchased by the following entities are not subject to the CDSC
to the extent that no payment was advanced for purchases made by such entities:
(a) employees and retired employees of Star Bank, Federated Securities Corp., or
their affiliates, or of any bank or investment dealer who has a sales agreement
with Federated Securities Corp. with regard to Strategic Income Fund and members
of their families (including parents, grandparents, siblings, spouses, children,
and in-laws) of such employees or retired employees; (b) trust customers of
StarBanc Corporation and its subsidiaries; and (c) non-trust customers of
financial advisers.

Strategic Income Fund reserves the right to discontinue elimination of the CDSC.
Shareholders will be notified of such elimination. Any shares of a Fund
purchased prior to the termination of such waiver would have the CDSC eliminated
as provided in the Funds' prospectus at the time of purchase of Fund shares. If
a shareholder making a redemption qualified for an elimination of the CDSC, the
shareholder must notify Federated Securities Corp. or the transfer agent in
writing that the shareholder is entitled to such elimination.

Systematic Withdrawal Plan

Accounts with Low Balances

Shareholder Information

Voting Rights

Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of each Fund or
class in the Trust have equal voting rights, except that only shares of a
particular Fund or class are entitled to vote on matters affecting only that
Fund or class. As a Massachusetts business trust, the Trust is not required to
hold annual shareholder meetings. Shareholder approval will be sought only for
certain changes in the operation of the Trust or a Fund and for the election of
Trustees under certain circumstances. As of November 10, 1997, Firstcinco,
Cincinnati, Ohio, acting in various capacities for numerous accounts, was the
owner of record of approximately 10,986,979 shares (87.75%) of The Stellar
Tax-Free Bond Fund; 8,549,832 shares (61.53%) of U.S. Government Income Fund;
and 5,48,458 shares (30.55%) of the Strategic Income Fund, and therefore, may,
for certain purposes be deemed to control these Funds and be able to affect the
outcome of certain matters presented for a vote of shareholders.

Effect of Banking Laws

Federal Income Tax

The Stellar Tax-Free Bond Fund--Additional Federal Income Tax Information

Interest on some municipal securities may be subject to the federal alternative
minimum tax.
Shareholders are not required to pay federal income tax on any dividends
received from the Fund that represent net interest on tax-exempt municipal
bonds. However, under the Tax Reform Act of 1986, dividends representing net
interest earned on certain "private activity" bonds issued after August 7, 1986,
may be included in calculating the federal individual alternative minimum tax or
the federal alternative minimum tax for corporations. The Fund may purchase all
types of municipal securities including private activity bonds. The alternative
minimum tax applies when it exceeds the regular tax for the taxable year.
Alternative minimum taxable income is equal to the regular taxable income of the
taxpayer increased by certain "tax preference" items not included in regular
taxable income and reduced by only a portion of the deductions allowed in the
calculation of the regular tax. Dividends of the Fund representing net income
earned on some temporary investments and any realized net short-term gains are
taxed as ordinary income. These tax consequences apply whether dividends are
received in cash or as additional shares. Information on the tax status of
dividends and distributions is provided annually. State and Local Taxes

With respect to The Stellar Tax-Free Bond Fund, income from the Fund is not
necessarily free from income taxes of any state or local taxing authority. State
laws differ on this issue and shareholders are urged to consult their own tax
advisers regarding the status of their accounts under state and local tax
laws.

Performance Information

From time to time, each Fund may advertise its total return and yield. In
addition, The Stellar Tax-Free Bond Fund may advertise tax-equivalent yield.

The yield of a Fund or class is calculated by dividing the net investment income
per share (as defined by the SEC) earned by a Fund or class over a thirty-day
period by the maximum offering price per share of a Fund or class on the last
day of the period. This number is then annualized using semi-annual compounding.
The tax-equivalent yield of The Stellar Tax-Free Bond Fund is calculated
similarly to the yield, but is adjusted to reflect the taxable yield that The
Stellar Tax-Free Bond Fund would have had to earn to equal its actual yield,
assuming a specific tax rate. The yield and tax equivalent yield do not
necessarily reflect income actually earned by a Fund or class and, therefore,
may not correlate to the dividends or other distributions paid to shareholders.

With respect to The Stellar Tax-Free Bond Fund and U.S. Government Income Fund,
the performance information normally reflects the effect of the maximum sales
charge which, if excluded, would increase the total return and yield, and with
respect to The Stellar Tax-Free Bond Fund, the tax-equivalent yield.
Occasionally, performance information which does not reflect the effect of the
sales charge may be quoted in advertising. With respect to Strategic Income
Fund, the performance information normally reflects the effect of non-recurring
charges, such as the CDSC, which, if excluded, would increase the total return
and yield.

From time to time, advertisements for a Fund may refer to ratings, rankings, and
other information in certain financial publications and/or compare a Fund's
performance to certain indices.

<PAGE>

Addresses

The Stellar Insured Tax-Free Bond Fund
Star U.S. Government Income Fund
Star Strategic Income Fund

Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Investment Adviser
Star Bank, N.A. 425 Walnut Street
Cincinnati, Ohio 45202

Custodian
Star Bank, N.A. 425 Walnut Street
Cincinnati, Ohio 45202

Transfer Agent, Dividend Disbursing Agent,
and Portfolio Accounting Services
Federated Shareholder Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222

<PAGE>

Star Bank, N.A.

Investment Adviser

Federated Securities Corp.

<PAGE>

CUSIP 854911500
CUSIP 854911880
CUSIP 854911609
G00522-05 (1/98)
4806TR

Distributor

PART C. OTHER INFORMATION.

Item 24. Financial Statements and Exhibits:

(a) To be filed by Amendment.
(b) Exhibits:
(1) Conformed copy of Declaration of Trust of the Registrant; (15)
(i) Conformed copy of Amendment No. 1 to Declaration of Trust; (2)
(ii) Conformed copy of Amendment No. 2 to Declaration of Trust (2)
(iii) Conformed copy of Amendment No. 3 to Declaration of Trust; (2)
(iv) Conformed copy of Amendment No. 4 to Declaration of Trust; (4)
(v) Conformed copy of Amendment No. 5 to Declaration of Trust; (12)
(vi) Conformed copy of Amendment No. 6 to Declaration of Trust; (12)
(vii) Conformed copy of Amendment No. 7 to Declaration of Trust; (12)
(viii) Conformed copy of Amendment No. 8 to Declaration of Trust (15)
(ix) Conformed copy of Amendment No. 9 to Declaration of Trust; (15)
(x) Conformed copy of Amendment No. 10 to Declaration of Trust; (15)
(xi) Conformed copy of Amendment No. 11 to Declaration of Trust; (15)
(xii) Conformed copy of Amendment No. 12 to Declaration of Trust; (18)
(xiii) Conformed copy of Amendment No. 13 to Declaration of Trust; (19)
(xiv) Conformed copy of Amendment No. 14 to Declaration of Trust; (19)
(xv) Conformed Copy of Amendment No. 15 to Declaration of Trust; (25)
(xiv) Conformed Copy of Amendment No. 16 to Declaration of Trust; (25)

+ All exhibits have been filed electronically.
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A filed
April 10, 1989. (File Nos. 33-26915 and 811-5762)
4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 2 to the Registration Statement on Form N-1A filed
December 6, 1989. (File Nos. 33-26915 and 811-5762)
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 to the Registration Statement on Form N-1A filed
January 29, 1992. (File Nos. 33-26915 and 811-5762)
15. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 19 to the Registration Statement on Form N-1A filed
July 2, 1993. (File Nos. 33-26915 and 811-5762)
18. Response is incorporated by reference to Registrant's Post-Amendment
No. 22 to the Registration Statement on Form N-1A filed March 17,
1994. (File Nos. 33-26915 and 811-5762)
19. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 23 to the Registration Statement on Form N-1A filed
May 13, 1994. (File Nos. 33-26915 and 811-5762)
25. Response is incorporated by reference to Registrant's Post- Effective
Amendment No. 32 to the Registration Statement on Form N-1A filed
January 24, 1996. (File Nos. 33-26915 and 811-5762)

<PAGE>

(2) Copy of By-Laws of the Registrant; (1)
(3) Not applicable;
(4) Not applicable;
(5) Conformed copy of Investment Advisory Contract between Losantiville Funds
and Star Bank, N.A. through and including Exhibit G; (13)
(i) Conformed copy of Exhibit H to Investment Advisory Contract of the
Registrant; (19)
(ii) Conformed copy of Exhibit I to Investment Advisory Contract of the
Registrant; (20)
(iii) Conformed copy of Exhibit J to Investment Advisory Contract of the
Registrant; (21)
(iv) Conformed copy of Exhibit K to Investment Advisory Contract of the
Registrant (27);
(v) Conformed copy of Exhibit L to Investment Advisory Contract of the
Registrant; +
(vi) Conformed Copy of Exhibit M to Investment Advisory Contract of the
Registrant; +
(vii) Conformed copy of Exhibit N to Investment Advisory Contract of the
Registrant; +
(6) (i) Conformed copy of Distributor's Contract of the Registrant through
and including Exhibit E; (13)
(ii) Conformed copy of Exhibit F to Distributor's Contract of the
Registrant; (17)
(iii) Conformed copy of Exhibit G to Distributor's Contract of the
Registrant; (19)
(iv) Conformed copy of Exhibit H to Distributor's Contract of the
Registrant; (19)
(v) Conformed copy of Exhibit I to Distributor's Contract of the
Registrant; (20)
(vi) Conformed copy of Exhibit J to Distributor's Contract of the
Registrant to add Star Growth Equity Fund; (21)
(vii) Conformed copy of Exhibit K to Distributor's Contract of the
Registrant to add The Stellar Insured Tax-Free Bond
Fund (27);
......
+ All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed February 3, 1989. (File Nos.
33-26915 and 811-5762)
13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 to the Registration Statement on Form N-1A filed
November 20, 1992. (File Nos. 33-26915 and 811-5762)
17. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 21 to the Registration Statement on Form N-1A filed
February 4, 1994. (File Nos. 33-26915 and 811-5762)
19. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 23 to the Registration Statement on Form N-1A filed
May 13, 1994. (File Nos. 33-26915 and 811-5762)
20. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 24 to the Registration Statement on Form N-1A filed
September 15, 1994. (File Nos. 33-26915 and 811-5762)
21. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 25 to the Registration Statement on Form N-1A filed
January 26, 1995. (File Nos. 33-26915 and 811-5762)
27. Response is incorporated by reference to Registrant's Post- Effective
Amendment No. 33 on Form N-1A filed March 25, 1997.
(File Nos. 33-26915 and 811-5762)

<PAGE>

(viii) Conformed copy of Exhibit L to Distributor's
Contract of the Registrant to add Star Treasury Fund,
Trust Shares; (28) (ix) Conformed copy of Exhibit M to
Distributor's Contract of the Registrant to add Star
Growth Equity Fund Trust Shares; + (x) Conformed copy of
Exhibit N to Distributor's Contract of the Registrant to
add Star Relative Value Fund Trust Shares; + (xi)
Conformed copy of Exhibit O to Distributor's Contract of
the Registrant to add Star International Equity Fund; +
(xii) Conformed copy of Exhibit P to Distributor's
Contract of the Registrant to add Star Equity Index
Fund; + (xiii) Conformed copy of Exhibit Q to
Distributor's Contract of the Registrant to add Star
Ohio Tax-Free Money Market Fund; +
(7) Not applicable;
(8) Conformed copy of Custodian Contract of the Registrant;
(15) Copy of Fee Schedules of Custodian Contract of the
Registrant; +
(9) (i) Conformed copy of Fund Accounting, Shareholder
Recordkeeping, and Custody Services Procurement
Agreement; (21) (ii) Conformed copy of Amendment #1 to
fees and Expenses for Shareholder Recordkeeping pursuant
to the Fund Accounting,
Shareholder Recordkeeping, and Custody Services
Procurement Agreement; (28) (iii) Conformed copy of
Administrative Services Agreement; (17) (iv) Conformed
copy of Shareholder Services Plan of the Registrant
through and including Exhibit A; (19)
(v) Conformed copy of Exhibit B to Shareholder Services
Plan of the Registrant to add Star Strategic Income
Fund; (20) (vi) Conformed copy of Exhibit C to
Shareholder Services Plan of the Registrant to add Star
Growth Equity Fund (21);

+ All exhibits have been filed electronically.
15. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 19 to the Registration Statement on Form N-1A filed
July 2, 1993. (File Nos. 33-26915 and 811-5762)
17. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 21 to the Registration Statement on Form N-1A filed
February 4, 1994. (File Nos. 33-26915 and 811-5762)
19. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 23 to the Registration Statement on Form N-1A filed
May 13, 1994. (File Nos. 33-26915 and 811-5762)
20. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 24 to the Registration Statement on Form N-1A filed
September 15, 1994. (File Nos. 33-26915 and 811-5762)
21. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 25 to the Registration Statement on Form N-1A filed
January 26, 1995. (File Nos. 33-26915 and 811-5762)
28. Response is incorporated by reference to Registrant's Post- Effective
Amendment No. 35 on Form N-1A filed June 30, 1997.
(File Nos. 33-26915 and 811-5762)

<PAGE>

(vii) Conformed copy of Exhibit D to Shareholder Services Plan of the
Registrant to add The Stellar Fund (Trust Shares); (22)
(viii) Conformed copy of Exhibit E to Shareholder Services Plan of the
Registrant to add The Stellar Fund (Investment Shares); (22)
(ix) Conformed copy of Exhibit F to Shareholder Services Plan of the
Registrant to add Star Tax-Free Money Market Fund; (22)
(x) Conformed copy of Exhibit G to Shareholder Services Plan of the
Registrant to add Star Treasury Fund; (22)
(xi) Conformed copy of Exhibit H to Shareholder Services Plan of the
Registrant to add Star U.S. Government Income Fund; (22)
(xii) Conformed copy of Exhibit I to Shareholder
Services Plan of the Registrant to add Star Relative
Value Fund; (22) (xiii) Conformed copy of Exhibit J to
Shareholder Services Plan of the Registrant to add Star
Prime Obligations Fund; (22) (xiv) Conformed copy of
Exhibit K to Shareholder Services Plan of the Registrant
to add The Stellar Insured Tax-Free Bond
Fund; (27)
(xv) Conformed copy of Exhibit L to Shareholder Services Plan of the
Registrant to add Star Treasury Fund, Trust Shares;
(28)
(xvi) Conformed copy of Shareholder Services Agreement including Exhibits 1
and 2; (27)
(xvii) Conformed copy of Exhibit M to Shareholder Services Plan of the
Registrant to add Star Growth Equity Fund Trust
Shares; +
(xviii)Conformed copy of Exhibit N to Shareholder Services Plan of the
Registrant to add Star Relative Value Fund Trust
Shares; +
(xix) Conformed copy of Exhibit O to Shareholder
Services Plan of the Registrant to add Star International Equity Fund; +

+ All exhibits have been filed electronically.
21. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 25 to the Registration Statement on Form N-1A filed
January 26, 1995. (File Nos. 33-26915 and 811-5762)
22. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 26 on Form N-1A filed March 28, 1995. (File Nos. 33-26915
and 811-5762)
27. Response is incorporated by reference to Registrant's Post- Effective
Amendment No. 33 on Form N-1A filed March 25, 1997. (File Nos. 33-26915
and 811-5762)
28. Response is incorporated by reference to Registrant's Post- Effective
Amendment No. 35 on Form N-1A filed June 30, 1997.(File Nos. 33-26915
and 811-5762)

<PAGE>

(xx) Conformed copy of Exhibit P to Shareholder Services
Plan of the Registrant to add Star Equity Index Fund; +
(xxi) Conformed copy of Exhibit Q to Shareholder
Services Plan of the Registrant to add Star Ohio
Tax-Free Money Market
Fund; +
(xxii) Copy of Amendment #1 to Exhibit 2 of Shareholder
Services Agreement; +
(xxiii)Conformed copy of Amendment #2 to Fund Accounting
and Shareholder Recordkeeping Agreement; + (10) Conformed copy
of Opinion and Consent of Counsel as to Legality of Shares
being Issued; (24) (11) (i) Not Applicable;
(ii) Conformed Copy of Opinion and Consent of
Special Counsel; (9)
(12) Not applicable;
(13) Conformed copy of Initial Capital Understanding; (2)
(14) Not applicable;
(15) (i) Conformed copy of Distribution Plan; (13)
(ii) Copy of Rule 12b-1 Agreement through and
including Amendment No. 1 to Exhibit A; (7)
(iii) Copy of Amendment No. 2 to Exhibit A to 12b-1
Agreement; (11)
(iv) Copy of Amendment No. 3 to Exhibit A to 12b-1
Agreement; (11)
(v) Copy of Amendment No. 4 to Exhibit A to 12b-1
Agreement; (13)
(vi) Conformed copy of Exhibit E to the Distribution
Plan; (17)
(vii) Copy of Amendment No. 5 to Exhibit A to 12b-1
Agreement; (18)

+ All exhibits have been filed electronically.
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment NO. 1 to the Registration statement on Form N-1A filed April
10,1989. (File Nos. 33-26915 and 811-5762)
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 to the Registration Statement on Form N-1A filed
December 4, 1990. (File Nos. 33-26915 and 811-5762)
9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 9 to the Registration Statement on Form N-1A filed
March 12, 1991. (File Nos. 33-26915 and 811-5762)
11. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 to the Registration Statement on Form N-1A filed
August 29, 1991. (File Nos. 33-26915 and 811-5762)
13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 to the Registration Statement on Form N-1A filed
November 20, 1992. (File Nos. 33-26915 and 811-5762)
17. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 21 to the Registration Statement on Form N-1A filed
February 4, 1994. (File Nos. 33-26915 and 811-5762)
18. Response is incorporated by reference to Registrant's Post-Amendment No.
22 to the Registration Statement on Form N-1A filed March 17,
1994. (File Nos. 33-26915 and 811-5762)
24. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 30 on Form N-1A filed October 10, 1996. (File Nos. 33-26915
and 811-5762)

<PAGE>

(viii) Conformed copy of Exhibit F to Distribution Plan
of the Registrant to add Star Growth Equity Fund
(now known as Star Capital Appreciation Fund);
(19)
(ix) Conformed copy of Exhibit G to Distribution Plan of the Registrant; (20)
(x) Conformed copy of Exhibit H to Distribution Plan of the Registrant; (21)
(xi) Copy of Amendment No. 6 to Exhibit A to 12b-1 Agreement; (20)
(xii) Conformed copy of Exhibit I to Distribution Plan of the Registrant; (27)
(xiii) Copy of Exhibit to 12b-1 Agreement; +
(xiv) Conformed copy of Exhibit J to Rule 12b-1 Plan to add Star International
Equity Fund; +
(xv) Conformed copy of Exhibit K to Rule 12b-1 Plan to add Star Equity Index
Fund; +
(xvi) Conformed copy of Exhibit L to Rule 12b-1 Plan to add Star Ohio Tax-Free
Money Market Fund; +
(16) (i) Copy of Schedule for Computation of Fund Performance Data, Star
Relative Value Fund; (24)
(ii) Copy of Schedule for Computation of Fund Performance Data, The Stellar
Fund (12);
(iii) Copy of Schedule for Computation of Fund Performance Data, Star U.S.
Government Income Fund; (15)
(iv) Copy of Schedule for Computation of Fund Performance Data, Star Capital
Appreciation Fund (21);
(v) Copy of Schedule for Computation of Fund Performance Data, Star
Strategic Income Fund; (22)
(vi) Copy of Schedule for Computation of Fund Performance Data, Star Growth
Equity Fund; (22)

+ All exhibits have been filed electronically.
15. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 19 to the Registration Statement on Form N-1A filed
July 2, 1993. (File Nos. 33-26915 and 811-5762)
19. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 23 to the Registration Statement on Form N-1A filed May
23, 1994. (File Nos. 33-26915 and 811-5762)
20. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 24 to the Registration Statement on Form N-1A filed
September 15, 1994. (File Nos. 33-26915 and 811-5762)
21. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 25 to the Registration Statement on Form N-1A filed
January 26, 1995. (File Nos. 33-26915 and 811-5762)
27. Response is incorporated by reference to Registrant's Post- Effective
Amendment No. 33 on Form N-1A filed March 25, 1997.(File Nos. 33-26915
and 811-5762)
24. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 30 on Form N-1A filed October 10, 1996. (File Nos.
33-26915 and 811-5762)

<PAGE>

(vii) Copy of Schedule for Computation of Fund Performance Data,
The Stellar Insured Tax-Free Bond Fund; (28)
(17) Not Applicable;
(18) Conformed copy of Amended and Restated Multiple Class Plan
including Exhibit A; (28)
(i) Exhibit B to Multiple Class Plan; +
(19) Conformed copy of Power of Attorney; (28)

Item 25.....Persons Controlled by or Under Common Control with Registrant:

None.

Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of November 10, 1997
-------------- -------------------------

Shares of beneficial interest
(no par value)
Star Treasury Fund
Investment Shares 226
Trust Shares 13
Star Relative Value Fund
Investment Shares 3,327
Trust Shares 0
Star Tax-Free Money Market Fund 14
The Stellar Fund
Investment Shares 4,913
Trust Shares 44
Star U.S. Government Income Fund 279
Star Capital Appreciation Fund 488
Star Strategic Income Fund 1,815
Star Growth Equity Fund
Investment Shares 3,312
Trust Shares 0
The Stellar Insured Tax-Free Bond Fund 34
Star International Equity Fund 0
Star Equity Index Fund 0
Star Ohio Tax-Free Money Market Fund 0

Item 27. Indemnification: (3)

......
+ All exhibits have been filed electronically.

3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 to the Registration Statement on Form N-1A filed
July 26, 1989. (File Nos. 33-26915 and 811-5762)
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 to the Registration Statement on Form N-1A filed
January 29, 1992. (File Nos. 33-26915 and 811-5762)
21. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 25 to the Registration Statement on Form N-1A filed
January 26, 1995. (File Nos. 33-26915 and 811-5762)
22. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 26 on Form N-1A filed March 28, 1995. (File Nos. 33-26915
and 811-5762)
28. Response is incorporated by reference to Registrant's Post- Effective
Amendment No. 35 on Form N-1A filed June 30, 1997. (File Nos. 33-26915
and 811-5762)

<PAGE>

Item 28. Business and Other Connections of Investment Adviser:

(a) Star Bank, N.A. ("Star Bank"), a national bank, was founded in
1863 and is the largest bank and trust organization of StarBanc
Corporation. Star Bank had an asset base of $10.09 billion as
of December 31, 1996.

Star Bank's expertise in trust administration, investments, and
estate planning ranks it among the most predominant trust
institutions in Ohio, with assets of $30.24 billion as of
December 31, 1996.

Star Bank has managed commingled funds since 1957. As of
December 31, 1996, it manages three common trust funds and
collective investment funds having a market value in excess of
$65.9 million.

The officers and directors of the Star Bank any other business,
profession, vocation, or employment of a substantial nature in
which each such officer and director is or has been engaged
during the past two years, is set forth below. Unless otherwise
noted, the position listed under "Other Business, Profession,
Vocation or Employment" is with Star Bank.

(b)
<TABLE>
<CAPTION>

Other Substantial
Position with Business, Profession,
Name the Adviser Vocation or Employment
<S> <C> <C>

Jerry A. Grundhofer Chairman, President and Traditional
Chief Executive Officer Interiors

David M. Moffett Executive Vice President N/A

Richard K. Davis Executive Vice President N/A

Joseph A. Campanella Executive Vice President N/A

Thomas J. Lakin Executive Vice President N/A

Timothy J. Fogarty Executive Vice President N/A

Wayne J. Shircliff Executive Vice President N/A

Daniel B. Benhase Executive Vice President N/A

Daniel R. Noe Executive Vice President N/A

Jerome C. Kohlhepp Executive Vice President N/A

Stephen E. Smith Executive Vice President S. E. Smith
and Company

S. Kay Geiger Executive Vice President Global Access
Marketing, Inc.

Andrew E. Randall Executive Vice President N/A

J. R. Bridgeland, Jr. Director Taft, Stetinius & Hollister

L. L. Browning, Jr. Director N/A

V. B. Buyniski Director United Medical Resources, Inc.
Mt. Auburn Partnership, American Operations
Management, NCG and Schmidt
Marble

Samuel M. Cassidy Director Cassidy and Cassidy, Ltd. d/b/a Cave Spring Farm

Raymond R. Clark Director .. N/A

V. Anderson Coombe Director Wm. Powell Company

John C. Dannemiller Director Bearings, Inc.

Jerry A. Grundhofer Director Traditional Interiors

Other Substantial
Position with Business, Profession,
Name the Adviser Vocation or Employment

J. P. Harrington, S.C. Director N/A

J. P. Hayden, Jr. Director The Midland Company, American Family Home Insurance Co.,
American Modern Home Insurance Co.

Roger L. Howe Director U.S. Precision Lens, Inc.

T. J. Klinedinst, Jr. Director Thomas E. Wood, Inc., Ohio Cap Insurance Co., Ltd.,
The Tomba Co., Ltd.

Chares S. Mechem, Jr. Director N/A

Daniel J. Meyer Director Cincinnati Milacron, Inc.

David B. O'Maley Director Ohio National Life Insurance Co.

O. M. Owens, M.D., Director O'dell M. Owens, M.D., Inc., Moreno Food, MKO Investment,
Seven Hills Lab, Graphi Action.

Thomas E. Petry Director Eagle-Picher Industries, Inc.

William C. Portman Director Portman Equipment Company

Oliver W. Waddell Director N/A
</TABLE>

Item 29. Principal Underwriters:

(a) Federated Securities Corp. the Distributor for shares of the
Registrant, acts as principal underwriter for the following
open-end investment companies, including the Registrant:

111 Corcoran Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; Federated
Adjustable Rate U.S. Government Fund, Inc.; Federated American Leaders Fund,
Inc.; Federated ARMs Fund; Federated Equity Funds; Federated Equity Income Fund,
Inc.; Federated Fund for U.S. Government Securities, Inc.; Federated GNMA Trust;
Federated Government Income Securities, Inc.; Federated Government Trust;
Federated High Income Bond Fund, Inc.; Federated High Yield Trust; Federated
Income Securities Trust; Federated Income Trust; Federated Index Trust;
Federated Institutional Trust; Federated Insurance Series; Federated Investment
Portfolios; Federated Investment Trust; Federated Master Trust; Federated
Municipal Opportunities Fund, Inc.; Federated Municipal Securities Fund, Inc.;
Federated Municipal Trust; Federated Short-Term Municipal Trust; Federated
Short-Term U.S. Government Trust; Federated Stock and Bond Fund, Inc.; Federated
Stock Trust; Federated Tax-Free Trust; Federated Total Return Series, Inc.;
Federated U.S. Government Bond Fund; Federated U.S. Government Securities Fund:
1-3 Years; Federated U.S. Government Securities Fund: 2-5 Years; Federated U.S.
Government Securities Fund: 5-10 Years; Federated Utility Fund, Inc.; First
Priority Funds; Fixed Income Securities, Inc.; High Yield Cash Trust;
Independence One Mutual Funds; Intermediate Municipal Trust; International
Series, Inc.; Investment Series Funds, Inc.; Investment Series Trust; Liberty
U.S. Government Money Market Trust; Liquid Cash Trust; Managed Series Trust;
Marshall Funds, Inc.; Money Market Management, Inc.; Money Market Obligations
Trust; Money Market Obligations Trust II; Money Market Trust; Municipal
Securities Income Trust; Newpoint Funds; Peachtree Funds; RIMCO Monument Funds;
SouthTrust Vulcan Funds; Star Funds; Targeted Duration Trust; Tax-Free
Instruments Trust; The Planters Funds; The Virtus Funds; The Wachovia Funds; The
Wachovia Municipal Funds; Tower Mutual Funds; Trust for Financial Institutions;
Trust for Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; Vision Group of Funds, Inc.;
and World Investment Series, Inc.

Federated Securities Corp. also acts as principal underwriter for the following
closed-end investment company: Liberty Term Trust, Inc.- 1999.

<PAGE>

(b)

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant

Richard B. Fisher Director, Chairman, Chief
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, Asst.
Secretary and Asst.
Treasurer, Federated
Securities Corp.

Edward C. Gonzales Director, Executive Vice President, Treasurer
Federated Investors Tower President, Federated, and Trustee
Pittsburgh, PA 15222-3779 Securities Corp. (Principal Accounting
Officer)

Thomas R. Donahue Director, Assistant Secretary
Federated Investors Tower and Assistant Treasurer
Pittsburgh, PA 15222-3779 Federated Securities Corp.

James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

David M. Taylor Executive Vice President --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

<PAGE>

James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Byron F. Bowman Vice President, Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

<PAGE>

Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Beth A. Hetzel Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Brian G. Kelly Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Thomas A. Peters III Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

George D. Riedel Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard Suder Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

<PAGE>

John F. Wallin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Terri E. Bush Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Charlene H. Jennings Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Leslie K. Platt Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

<PAGE>

Item 30. Location of Accounts and Records:

All accounts and records required to be maintained by Section 31(a)
of the Investment Company Act of 1940 and Rules 31a-1 through 31a-3
promulgated thereunder are maintained at one of the following
locations:

Star Funds Federated Investors Tower
Pittsburgh, PA 15222-3779

Federated Shareholder Services Federated Investors Tower
Company("Transfer Agent, Pittsburgh, PA 15222-3779
Dividend Disbursing Agent
and Portfolio Recordkeeper")

Federated Administrative Federated Investors Tower
Services Pittsburgh, PA 15222-3779
("Administrator")

Star Bank, N.A. 425 Walnut Street
("Adviser") Cincinnati, OH 45202

Star Bank, N.A. 425 Walnut Street
("Custodian") Cincinnati, OH 45202

Item 31. Management Services: Not applicable.

Item 32. Undertakings:

Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.

Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.

Registrant hereby undertakes to file a post-effective amendment
using financial statements, which need not be certified, within four
to six months from the effective date of Registrant's Post-Effective
Amendment No. 36.

<PAGE>

SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, STAR FUNDS, has duly caused this
Amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Pittsburgh and Commonwealth
of Pennsylvania, on the 24th day of November, 1997.

STAR FUNDS

BY: /s/ C. Grant Anderson
C. Grant Anderson, Secretary
Attorney in Fact for Edward C. Gonzales
November 24, 1997

Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:

NAME TITLE DATE

By: /s/C. Grant Anderson
C. Grant Anderson Attorney In Fact November 24, 1997
SECRETARY For the Persons
Listed Below

NAME TITLE

Edward C. Gonzales* President, Treasurer and Trustee
(Principal Financial and
Accounting Officer)

Thomas L. Conlan, Jr.* Trustee

Dr. Alfred Gottschalk* Trustee

Dr. Robert J. Hill* Trustee

William H. Zimmer, III* Trustee

Dawn M. Hornback* Trustee

Lawrence M. Turner* Trustee

* By Power of Attorney

Exhibit 5(v) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

EXHIBIT L
to the
Investment Advisory Contract

Star International Equity Fund

For all services rendered by Adviser hereunder, the above-named Fund of
the Trust shall pay to Adviser and Adviser agrees to accept as full compensation
for all services rendered hereunder, an annual investment advisory fee equal to
0.75 of 1% of the average daily net assets of the Fund.

The portion of the fee based upon the average daily net assets of the Fund
shall be accrued daily at the rate of 1/365th of 0.75 of 1% applied to the daily
net assets of the Fund.

The advisory fee so accrued shall be paid to Adviser daily.

Witness the due execution hereof this 1st day of September, 1997.

Attest: STAR BANK, N.A.

/s/ Kirk Mentzer By: /s/ B. Randolph Bateman
Assistant Secretary Vice President

Attest: STAR FUNDS

/s/ C. Grant Anderson By: /s/ William Zimmer III
Secretary Trustee

<PAGE>

Exhibit 5(vi) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

EXHIBIT M
to the
Investment Advisory Contract

Star Equity Index Fund

For all services rendered by Adviser hereunder, the above-named Fund of
the Trust shall pay to Adviser and Adviser agrees to accept as full compensation
for all services rendered hereunder, an annual investment advisory fee equal to
0.30 of 1% of the average daily net assets of the Fund.

The portion of the fee based upon the average daily net assets of the Fund
shall be accrued daily at the rate of 1/365th of 0.30 of 1% applied to the daily
net assets of the Fund.

The advisory fee so accrued shall be paid to Adviser daily.

Witness the due execution hereof this 1st day of September, 1997.

Attest: STAR BANK, N.A.

/s/ Kirk Mentzer By: /s/ B. Randolph Bateman
Assistant Secretary Vice President

Attest: STAR FUNDS

/s/ C. Grant Anderson By: /s/ William Zimmer III
Secretary Trustee

Exhibit 5(vii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

EXHIBIT N
to the
Investment Advisory Contract

Star Ohio Tax-Free Money Market Fund

For all services rendered by Adviser hereunder, the above-named Fund of
the Trust shall pay to Adviser and Adviser agrees to accept as full compensation
for all services rendered hereunder, an annual investment advisory fee equal to
0.55 of 1% of the average daily net assets of the Fund.

The portion of the fee based upon the average daily net assets of the Fund
shall be accrued daily at the rate of 1/365th of 0.55 of 1% applied to the daily
net assets of the Fund.

The advisory fee so accrued shall be paid to Adviser daily.

Witness the due execution hereof this 1st day of September, 1997.

Attest: STAR BANK, N.A.

/s/ Kirk Mentzer By: /s/ B. Randolph Bateman
Assistant Secretary Vice President

Attest: STAR FUNDS

/s/ C. Grant Anderson By: /s/ William Zimmer III
Secretary Trustee

Exhibit 6(ix) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K

Exhibit M
to the
Distributor's Contract

STAR FUNDS

Star Growth Equity Fund
Trust Shares

In consideration of the mutual covenants set forth in the Distributor's
Contract dated November 15, 1990 between Star Funds and Federated Securities
Corp., Star Funds executes and delivers this Exhibit on behalf of the Funds, and
with respect to the separate Class of Shares thereof, first set forth in this
Exhibit.

Witness the due execution hereof this 18th day of August, 1997.

ATTEST: STAR FUNDS

/s/ C. Grant Anderson By: /s/ William H. Zimmer, III
Secretary Trustee

ATTEST: FEDERATED SECURITIES CORP.

/s/ Byron F. Bowman By: /s/ Edward C. Gonzales
Secretary Executive Vice President

<PAGE>

Exhibit 6(x) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K

Exhibit N
to the
Distributor's Contract

STAR FUNDS

Star Relative Value Fund
Trust Shares

Witness the due execution hereof this 18th day of August, 1997.

ATTEST: STAR FUNDS

/s/ C. Grant Anderson By: /s/ William H. Zimmer, III
Secretary Trustee

ATTEST: FEDERATED SECURITIES CORP.

/s/ Byron F. Bowman By: /s/ Edward C. Gonzales
Secretary Executive Vice President

<PAGE>

Exhibit 6(xi) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K

Exhibit O
to the
Distributor's Contract

STAR FUNDS

Star International Equity Fund

The following provisions are hereby incorporated and made part of the
Distributor's Contract dated the 15th day of November, 1990, between Star Funds
and Federated Securities Corp. with respect to Classes of the Funds set forth
above.

1. The Trust hereby appoints FSC to engage in activities principally
intended to result in the sale of shares of the above-listed Portfolio
("Shares"). Pursuant to this appointment, FSC is authorized to select a group of
brokers ("Brokers") to sell Shares at the current offering price thereof as
described and set forth in the respective prospectuses of the Trust, and to
render administrative support services to the Trust and its shareholders. In
addition, FSC is authorized to select a group of administrators
("Administrators") to render administrative support services to the Trust and
its shareholders.

2. Administrative support services may include, but are not limited to,
the following functions: 1) account openings: the Broker or Administrator
communicates account openings via computer terminals located on the Broker's or
Administrator's premises; 2) account closings: the Broker or Administrator
communicates account closings via computer terminals; 3) enter purchase
transactions: purchase transactions are entered through the Broker's or
Administrator's own personal computer or through the use of a toll-free
telephone number; 4) enter redemption transactions: Broker or Administrator
enters redemption transactions in the same manner as purchases; 5) account
maintenance: Broker or Administrator provides or arranges to provide accounting
support for all transactions. Broker or Administrator also wires funds and
receives funds for Trust share purchases and redemptions, confirms and
reconciles all transactions, reviews the activity in the Trust's accounts, and
provides training and supervision of its personnel; 6) interest posting: Broker
or Administrator posts and reinvests dividends to the Trust's accounts; 7)
prospectus and shareholder reports: Broker or Administrator maintains and
distributes current copies of prospectuses and shareholder reports; 8)
advertisements: the Broker or Administrator continuously advertises the
availability of its services and products; 9) customer lists: the Broker or
Administrator continuously provides names of potential customers; 10) design
services: the Broker or Administrator continuously designs material to send to
customers and develops methods of making such materials accessible to customers;
and 11) consultation services: the Broker or Administrator continuously provides
information about the product needs of customers.

3. During the term of this Agreement, the Trust will pay FSC for services
pursuant to this Agreement, a monthly fee computed at the annual rate of .25% of
the average aggregate net asset value of the Shares held during the month. For
the month in which this Agreement becomes effective or terminates, there shall
be an appropriate proration of any fee payable on the basis of the number of
days that the Agreement is in effect during the month.

4. FSC may from time-to-time and for such periods as it deems appropriate
reduce its compensation to the extent any Classes' expenses exceed such lower
expense limitation as FSC may, by notice to the Trust, voluntarily declare to be
effective.

5. FSC will enter into separate written agreements with various firms to
provide certain of the services set forth in Paragraph 1 herein. FSC, in its
sole discretion, may pay Brokers and Administrators a periodic fee in respect of
Shares owned from time to time by their clients or customers. The schedules of
such fees and the basis upon which such fees will be paid shall be determined
from time to time by FSC in its sole discretion.

6. FSC will prepare reports to the Board of Trustees of the Trust on a
quarterly basis showing amounts expended hereunder including amounts paid to
Brokers and Administrators and the purpose for such payments.

In consideration of the mutual covenants set forth in the Distributor's
Contract dated November 15, 1990 between Star Funds and Federated Securities
Corp., Star Funds executes and delivers this Exhibit on behalf of the Funds, and
with respect to the separate Classes of Shares thereof, first set forth in this
Exhibit.

Witness the due execution hereof this 1st day of September, 1997.

ATTEST: STAR FUNDS

/s/ C. Grant Anderson By: /s/ William H. Zimmer, III
Secretary Trustee

ATTEST: FEDERATED SECURITIES CORP.

/s/ Byron F. Bowman By: /s/ Edward C. Gonzales
Secretary Executive Vice President

<PAGE>

Exhibit 6(xii) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K

Exhibit P
to the
Distributor's Contract

STAR FUNDS

Star Equity Index Fund

In consideration of the mutual covenants set forth in the Distributor's
Contract dated November 15, 1990 between Star Funds and Federated Securities
Corp., Star Funds executes and delivers this Exhibit on behalf of the Funds, and
with respect to the separate Classes of Shares thereof, first set forth in this
Exhibit.

Witness the due execution hereof this 1st day of September, 1997.

ATTEST: STAR FUNDS

/s/ C. Grant Anderson By: /s/ William H. Zimmer, III
Secretary Trustee

ATTEST: FEDERATED SECURITIES CORP.

/s/ Byron F. Bowman By: /s/ Edward C. Gonzales
Secretary Executive Vice President

<PAGE>

Exhibit 6(xiii) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K

Exhibit Q
to the
Distributor's Contract

STAR FUNDS

Star Ohio Tax-Free Money Market Fund

<PAGE>

In consideration of the mutual covenants set forth in the Distributor's
Contract dated November 15, 1990 between Star Funds and Federated Securities
Corp., Star Funds executes and delivers this Exhibit on behalf of the Funds, and
with respect to the separate Classes of Shares thereof, first set forth in this
Exhibit.

Witness the due execution hereof this 1st day of September, 1997.

ATTEST: STAR FUNDS

/s/ C. Grant Anderson By: /s/ William H. Zimmer, III
Secretary Trustee

ATTEST: FEDERATED SECURITIES CORP.

/s/ Byron F. Bowman By: /s/ Edward C. Gonzales
Secretary Executive Vice President

Exhibit 8(i) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

Star Bank, N.A.
Domestic Custody Fee Schedule
for the STAR FUNDS

Star Bank, N.A., as Custodian, will receive monthly compensation for services
according to the terms of the following Schedule:

I. Market Value Fee
Based upon an annual rate of:
Million
.00025 (2.5 Basis Points) on Fund Balance

<PAGE>

Exhibit 8(i) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
Cash Management Fees
Star Funds

Services Unit Cost ($) Monthly Cost ($)
- -------- ------------- ----------------
D.D.A. Account Maintenance 14.00
Deposits .399
Deposited Items .109
Checks Paid .159
Balance Reporting - P.C. Access 50.00
ACH Transaction .095
ACH Monthly Maintenance 40.00
Controlled Disbursement (1st account) 110.00
Each additional account 25.00
Deposited Items Returned 6.00
International Items Returned 10.00
NSF Returned Checks 25.00
Stop Payments 22.00
Data Transmission per account 110.00
Data Capture* .10
Drafts Cleared .179
Lockbox Maintenance** 55.00
Lockbox Items Processed
-with copy of check .32
-without copy of check .26
Checks Printed .20
Positive Pay .06
Issued Items .015
Wires Incoming
-Domestic 10.00
-International 10.00
Wires Outgoing
-Domestic
-Repetitive 12.00
-Non-repetitive 13.00
-International
-Repetitive 35.00
-Non-repetitive 40.00
PC - Initiated Wires:
-Domestic
-Repetitive 9.00
-Non-repetitive 9.00
-International
-Repetitive 25.00
-Non-repetitive 25.00
Invoicing for Serv Charge 15.00

***Uncollected Charge Star Bank Prime Rate as of first of month plus 4% * Price
can vary depending upon what information needs to be captured.
** With the use of lockbox, the collected balance in the demand deposit account
will be significantly increased and therefore earnings to offset such cash
management service fees will be maximized.
***Fees for uncollected balances are figured on the monthly average of all
combined accounts.
****Other available cash management services are priced separately.

Exhibit 9(xvii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

EXHIBIT M
to the
Shareholder Services Plan

Star Funds

Star Growth Equity Fund
Trust Shares

This Plan is adopted by Star Funds with respect to the Class of Shares of
the portfolio of the Trust set forth above.

In compensation for the services provided pursuant to this Plan, Providers
will be paid a monthly fee computed at the annual rate of 0.25 of 1% of the
average aggregate net asset value of the Trust Shares of Star Growth Equity Fund
held during the month.

Witness the due execution hereof this 18th day of August,1997.

Star Funds

By: /s/ William H. Zimmer, III
Trustee

<PAGE>

Exhibit 9(xviii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

EXHIBIT N
to the
Shareholder Services Plan

Star Funds

Star Relative Value Fund
Trust Shares

This Plan is adopted by Star Funds with respect to the Class of Shares of
the portfolio of the Trust set forth above.

Witness the due execution hereof this 18th day of August, 1997.

Star Funds

By: /s/ William H. Zimmer, III
Trustee

<PAGE>

Exhibit 9(xix) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

EXHIBIT O
to the
Shareholder Services Plan

Star Funds

Star International Equity Fund

This Plan is adopted by Star Funds with respect to the Class of Shares of
the portfolio of the Trust set forth above.

In compensation for the services provided pursuant to this Plan, Providers
will be paid a monthly fee computed at the annual rate of 0.25 of 1% of the
average aggregate net asset value of the Star International Equity Fund held
during the month.

Witness the due execution hereof this 1st day of September, 1997.

Star Funds

By: /s/ William H. Zimmer, III
Trustee

<PAGE>

Exhibit 9(xx) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

EXHIBIT P
to the
Shareholder Services Plan

Star Funds

Star Equity Index Fund

This Plan is adopted by Star Funds with respect to the Class of Shares of
the portfolio of the Trust set forth above.

Witness the due execution hereof this 1st day of September, 1997.

Star Funds

By: /s/ William H. Zimmer, III
Trustee

<PAGE>

Exhibit 9(xxi) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

EXHIBIT Q
to the
Shareholder Services Plan

Star Funds

Star Ohio Tax-Free Money Market Fund

This Plan is adopted by Star Funds with respect to the Class of Shares of
the portfolio of the Trust set forth above.

In compensation for the services provided pursuant to this Plan, Providers
will be paid a monthly fee computed at the annual rate of 0.25 of 1% of the
average aggregate net asset value of the Star Ohio Tax-Free Money Market Fund
held during the month.

Witness the due execution hereof this 1st day of September, 1997.

Star Funds

By: /s/ William H. Zimmer, III
Trustee

Exhibit 9(xxii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

Amendment #1 to Exhibit 2
Shareholder Services Agreement

STAR FUNDS

Maximum Contractual Fees:
Star Capital Appreciation Fund 0.25% of ADNA
Star Growth Equity Fund 0.25% of ADNA
Trust Shares 0.25% of ADNA
Investment Shares 0.25% of ADNA
Star Relative Value Fund
Trust Shares 0.25% of ADNA
Investment Shares 0.25% of ADNA
Star Strategic Income Fund 0.25% of ADNA
Star Tax-Free Money Market Fund 0.25% of ADNA
Star Treasury Fund
Investment Shares 0.25% of ADNA
Trust Shares 0.25% of ADNA
Star U.S. Government Income Fund 0.25% of ADNA
The Stellar Fund
Investment Shares 0.25% of ADNA
Trust Shares 0.25% of ADNA
The Stellar Insured Tax-Free Bond Fund 0.25% of ADNA
Star International Equity Fund 0.25% of ADNA
Star Equity Index Fund 0.25% of ADNA
Star Ohio Tax-Free Money Market Fund 0.25% of ADNA

As revised: 9/1/97

Exhibit 9(xxiii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

Amendment #2 to EXHIBIT I
to the
FUND ACCOUNTING
AND
SHAREHOLDER RECORDKEEPING AGREEMENT

CONTRACT
DATE INVESTMENT COMPANY
Portfolios
Classes

12/1/94 Star Funds
Star Treasurey Fund
The Stellar Fund
Star Relative Value Fund
Star Tax-Free Money Market Fund
Star U.S. Government Income Fund
Star Capital Appreciation Fund
Star Strategic Income Fund
Star Growth Equity Fund
12/1/96 The Stellar Insured Tax-Free Bond Fund
9/1/97 Star International Equity Fund
9/1/97 Star Equity Index Fund
9/1/97 Star Ohio Tax-Free Money Market Fund

Exhibit 15(xiii) under Form N-1A
Exhibit 1 under Item601/Reg. S-K

Exhibit to
Rule 12b-1 Agreement

Maximum Contractual Fees:
Star Capital Appreciation Fund 0.25% of ADNA
Star Growth Equity Fund
Investment Shares 0.25% of ADNA
Star Relative Value Fund
Investment Shares 0.25% of ADNA
Star Strategic Income Fund 0.25% of ADNA
Star Tax-Free Money Market Fund 0.25% of ADNA
Star Treasury Fund
Investment Shares 0.25% of ADNA
Star U.S. Government Income Fund 0.25% of ADNA
The Stellar Fund
Investment Shares 0.25% of ADNA
The Stellar Insured Tax-Free Bond Fund 0.25% of ADNA
Star International Equity Fund 0.25% of ADNA
Star Equity Index Fund 0.25% of ADNA
Star Ohio Tax-Free Money Market Fund 0.25% of ADNA

Dated: September 1, 1997

Exhibit15(xiv) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K

EXHIBIT J
to the
Rule 12b-1 Plan

STAR FUNDS

Star International Equity Fund

The Plan is adopted by Star Funds with respect to the Class of Shares of
the portfolio of the Trust set forth above.

In compensation for the services provided pursuant to this Plan, FSC will
be paid a monthly fee computed at the annual rate of 0.25 of 1% of the average
aggregate net asset value of Star International Equity Fund held during the
month.

Witness the due execution hereof this 1st day of September, 1997.

STAR FUNDS

By: /s/ William H. Zimmer, III
Trustee

<PAGE>

Exhibit15(xv) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K

EXHIBIT K
to the
Rule 12b-1 Plan

STAR FUNDS

Star Equity Index Fund

The Plan is adopted by Star Funds with respect to the Class of Shares of
the portfolio of the Trust set forth above.

Witness the due execution hereof this 1st day of September, 1997.

STAR FUNDS

By: /s/ William H. Zimmer, III
Trustee

<PAGE>

Exhibit15(xvi) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K

EXHIBIT L
to the
Rule 12b-1 Plan

STAR FUNDS

Star Ohio Tax-Free Money Market Fund

The Plan is adopted by Star Funds with respect to the Class of Shares of
the portfolio of the Trust set forth above.

Witness the due execution hereof this 1st day of September, 1997.

STAR FUNDS

By: /s/ William H. Zimmer, III
Trustee

Exhibit 18(i) under Form N-1A
Exhibit 99 under Item 601/Reg. S-K

EXHIBIT B
to the
Multiple Class Plan
STAR FUNDS

Star Growth Equity Fund
Star Relative Value Fund
Investment Shares
Trust Shares

This Multiple Class Plan is adopted by Star Funds with respect to the
Class(es) of Shares of the portfolio of Star Funds set forth above.

Witness the due execution hereof this 18th day of August, 1997.

Star Funds

By: /s/ William H. Zimmer, III
Title: Trustee
Date: August 18, 1997