UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-17f-2
Certificate of Accounting of Securities and Similar
Investments in the Custody of
Management Investment Companies
Pursuant to Rule 17f-2 [17 CFR 270.17f-2]
1. Investment Company Act File Number: 811-5762
Date examination completed: November 30, 1997
2. State identification Number:
AL AK AZ AR CA CO
CT DE DC FL GA HI
ID IL IN IA KS KY
LA ME MD MA MI MN
MS MO MT NE NV NH
NJ NM NY NC ND OH
OK OR PA RI SC SD
TN TX UT VT VA WA
WV WI WY PUERTO RICO
Other (specify):
3. Exact name of investment company as specified in registration statement:
Star Funds
4. Address of principal executive office (number, street, city, state,
zip code):
Federated Investors Tower, Pittsburgh, PA 15222-3779
INSTRUCTIONS
This From must be completed by investment companies that have custody
of securities or similar investments.
Investment Company
1. All items must be completed by the investment company.
2. Give this Form to the independent public accountant who, in
compliance with Rule 17f-2 under the Act and applicable state law,
examines securities and similar investments in the custody of the
investment company.
Accountant
3. Submit this Form to the Securities and Exchange Commission and
appropriate state securities administrators when filing the
certificate of accounting required by Rule 17f-2 under the Act
and applicable state law. File the original and one copy with the
Securities and Exchange Commission's principal office in Washington,
D.C., one copy with the regional office for the region in
which the investment company's principal business operations
are conducted, and one copy with the appropriate state of
administrator(s), if applicable.
THIS FROM MUST BE GIVEN TO YOUR INDEPENDENT PUBLIC ACCOUNTANT
SEC 2198 (11-91)
Management Statement Regarding Compliance with
Certain Provisions of the Investment Company Act of 1940
We, as members of management of the Star Funds (the "Funds"),
the investment company, and Star Bank, N.A., the custodian,
are responsible for complying with the requirements of
subsections (b) and (c) of Rule 17f-2, "Custody of Investments
by Registered Management Investment Companies," of the Investment
Company Act of 1940. We are also responsible for establishing
and maintaining an effective internal control structure over
compliance with those requirements. We have performed an evaluation
of the Funds' compliance with the requirements of subsections (b)
and (c) of Rule 17f-2 as of November 30, 1997 and from
September 30, 1997 (date of the last examination) through November 30, 1997.
Based on this evaluation, we assert that the Funds were in compliance
with those requirements of Rule 17f-2 of the Investment Company Act
of 1940 as of November 30, 1997 and from September 30, 1997 through
November 30, 1997, with respect to securities reflected in the
investment account of the Funds.
Star Funds Star Bank, N.A.
By: /s/ Joseph S. Machi By: /s/ Daniel B. Benhase
Joseph S. Machi Daniel B. Benhase
Vice President and Assistant Treasurer Executive Vice President
December 31, 1997
ARTHUR ANDERSEN LLP
Report of Independent Public Accountants
To the Board of Trustees of
the Star Funds:
We have examined management's assertion about the Star Funds'
(the "Funds") compliance with the requirements of subsections
(b) and (c) of Rule 17f-2 under the Investment Company Act of
1940 (the "Act") as of November 30, 1997 included in the
accompanying Management Statement Regarding Compliance with
Certain Provisions of the Investment Company Act of 1940. The
Funds represents a Massachusetts business trust and includes
the Star Treasury Fund, Star Tax-Free Money Market Fund, Star
Relative Value Fund, The Stellar Fund, Star U.S. Government
Income Fund, Star Capital Appreciation Fund, Star Growth Equity
Fund, Star Strategic Income Fund and Star Stellar Insured Tax
Free Bond Fund. Management is responsible for the Funds'
compliance with the requirements of the Act. Our responsibility
is to express an opinion on management's assertion about the
Funds' compliance based on our examination.
Our examination was made in accordance with standards established
by the American Institute of Certified Public Accountants and,
accordingly, included examining, on a test basis, evidence
about the Funds' compliance with those requirements and performing
such other procedures as we considered necessary in the circumstances.
Included among our procedures were the following tests performed
as of November 30, 1997, and with respect to agreement of security
purchases and sales, for the period from September 30, 1997 (date
of the last examination) through November 30, 1997:
Confirmation of all securities held by institutions in book entry
form (the Federal Reserve Bank of Cleveland, Bankers Trust New
York Corporation and The Depository Trust Company);
Confirmation of all securities hypothecated, pledged, placed in
escrow, or out for transfer with brokers, pledgees, transfer
agents, and/or remarketing agents;
Reconciliation of all such securities to the books and records
of the Funds and Star Bank, N.A., the custodian;
Confirmation of all repurchase agreements with brokers/banks
and agreement of underlying collateral with Star Bank, N.A. records; and
Agreement of two (2) security purchases and two (2) security
sales or maturities for each fund identified above since our
last report from the books and records of the Funds to broker
confirmations.
We believe that our examination provides a reasonable basis
for our opinion. Our examination does not provide a legal
determination on the Funds' compliance with specified requirements.
In our opinion, management's assertion that the Star Funds was
in compliance with the requirements of subsections (b) and (c)
of Rule 17f-2 of the Investment Company Act of 1940 as of
November 30, 1997 is fairly stated, in all material respects.
This report is intended solely for the information and use of
management of the Star Funds and the Securities and Exchange
Commission and should not be used for any other purpose.
/s/ Arthur Andersen LLP
Cincinnati, Ohio
December 31, 1997
