(Star Funds Logo)
STOCK FUNDS
COMBINED ANNUAL REPORT
NOVEMBER 30, 1998
THE STELLAR FUND
STAR RELATIVE VALUE FUND
STAR MARKET CAPITALIZATION FUND
STAR GROWTH EQUITY FUND
STAR CAPITAL APPRECIATION FUND
STAR INTERNATIONAL EQUITY FUND
PRESIDENT'S MESSAGE
Dear Shareholder:
On behalf of the Star Funds, I would like to thank you for your continued
support and for giving us the opportunity to help you achieve your financial
goals. As you are aware, the stock market was very volatile but generally
higher in the twelve-month period ended November 30, 1998. The market
continued to be dominated by the large cap securities as investors pumped money
into securities which had the most liquidity.
Following you will find the results for the stock funds along with questions and
answers from our portfolio managers regarding the fund performance. I hope you
will take the time to read this important information.
STAR STELLAR FUND
The Fund seeks to provide total return to investors by combining the securities
of five asset classes in roughly equal weights. These include U.S. stocks,
international stocks*<F1>, real estate stocks, bonds and cash. By using this
combination, the Fund hopes to achieve long term consistent returns. For the
most recently completed fiscal year, the Fund returned 5.74% or 1.00% adjusted
for the sales charge, for A Shares and 6.11% for Y Shares.**<F2> This is a
great option for those who seek growth but with the likelihood of lower
volatility than comes with a pure stock investment.
STAR GROWTH EQUITY FUND
It was a superb year for investors in Growth Equity as total returns for the
twelve month period were 20.76% or 15.76% adjusted for the maximum contingent
deferred sales charge, for B Shares and 20.91% for Y Shares.**<F2> The Fund's
emphasis on large cap securities with above average earnings growth rate proved
to be the place to invest. Quality securities such as Cisco Systems, Lucent,
Ford, and Merck helped to drive the results. This remains a solid choice for
investors who are seeking growth through large cap, growth oriented equity
securities.
STAR RELATIVE VALUE FUND
The Relative Value Fund continues to show good results for its shareholders as
it returned 16.67% or 11.41% adjusted for the sales charge, for A Shares and
16.95% for Y Shares for this fiscal year.**<F2> This Fund emphasizes large cap,
quality securities with a concentration on stocks with lower price/earnings
ratios, lower beta, and higher dividends. Again quality securities can be found
in this portfolio such as Procter & Gamble, IBM, Texaco, and AT&T. Relative
Value remains an attractive investment for those who seek quality securities
with slightly below market valuations.
STAR CAPITAL APPRECIATION FUND
The market's emphasis on large cap stocks resulted in lesser, but still positive
results for the Capital Appreciation Fund as total performance was 4.75% or
0.01% adjusted for the sales charge.**<F2> This Fund concentrates on
appreciation by investing in small and mid-cap sized companies. It is a good
option for investors who are seeking the potential for higher returns through
investing in quality but less well known companies.
STAR INTERNATIONAL EQUITY FUND
The Fund did not yet complete a full year of performance as of the end of the
fiscal year. This is a Fund that seeks capital appreciation by investing in
mutual funds that primarily invest in non-U.S. concerns.*<F1> Thus it offers a
good opportunity for diversification by investors who seek to invest outside of
the United States.
STAR MARKET CAPITALIZATION FUND
The Fund likewise has not yet completed a full year of performance. The Fund
seeks capital appreciation by investing in securities to approximate the return
of the S&P 500 Index.***<F3>
Again thank you for using the Star Funds for your investment needs and we look
forward to providing solid performance and service to you in the future.
Sincerely,
/s/ Daniel B. Benhase
Daniel B. Benhase
President
January 15, 1999
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*<F1> Foreign investing involves special risks including currency risk,
increased volatility of foreign securities, and differences in auditing
and other financial standards.
**<F2> Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate,
so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
***<F3> Standard & Poor's 500 Stock Index, a composite index of 500 common
stocks in industry, transportation, and financial and public utility
companies, can be used to compare to the total returns of funds whose
portfolios are invested primarily in common stocks. This index is
unmanaged and investments cannot be made in an index.
INVESTMENT REVIEWS
STAR STELLAR FUND
Q How did the multi-asset class approach of the Stellar Fund fare during the
market upheaval in 1998?
A The prevailing market conditions in 1998 were ideal for investors in the
Stellar Fund. The Fund insulated shareholders from much of the volatility in
equity prices, while benefiting in performance terms from the rally in bond
prices. The REIT portfolio, in an abrupt about-face from 1997, suffered the
most severe damage during the second and third quarters, due principally to a
change in the tax code and slowing growth for the group. The REIT segment
declined slightly more than 14% during the year. Fears over the impact events
in Russia might have on the European banking community led to a flight to
quality and the rally in U.S. Treasury Bonds. This led to relative under
performance on the order of 11% by the international portfolio*<F4> versus the
S&P 500 Index. One of the major benefits of the Fund's approach to investing is
the ability to select markets and sectors which offer the best prospects for
return. Nowhere was that more evident than in the international segment.
Returns in international equity markets ranged from -39.7% in Venezuela to
+65.6% in Greece during 1998. The domestic equity portfolio was the most
volatile and the most rewarding. The key to success in the U.S. was the
decision to focus on large capitalization growth companies. This subset of the
market moved to higher valuation levels throughout the year, as investors became
more and more concerned about a decline in revenue growth. Thus by year-end we
had positive returns for four of the five segments within the Fund, a
validation of the Fund's underlying strategy.
Q What is the outlook for the components of the Fund for 1999?
A Investor expectations for 1999 are still out of line with reality. As we
have seen in 1998, the market reacts violently to disappointments and tends to
overreact in both the positive and negative. We believe that the market must
adjust expectations for earnings growth in 1999 to reflect slowing manufacturing
activity and rising costs in the services sector, but still positive year over
year growth. That will likely come after a period of leadership rotation and
several months of volatile trading action as investors adjust expectations for
1999. Our decisions to limit exposure to higher risk asset classes, remain
diversified across industries, and closely monitor fundamental trends helped to
limit portfolio volatility. We believe our longer term focus helps to reduce
volatility and leads to competitive long-term results. We look for the
remainder of the bond market to rally during the first half of 1999 as investors
resume their search for yield and recognize the value of corporate bonds. This
search for yield and growth in earnings should boost the REIT portfolio to the
leadership position in the portfolio during the year ahead as investors come to
understand that slow growth is not the enemy of REIT's. The international
portfolio will continue to hold a large concentration in the industrialized
markets of Western Europe as those economies begin to benefit from the reduction
in regulation and the stabilization of the common currency.
STAR RELATIVE VALUE FUND
Q During the past twelve months, the equity market saw significant volatility
due to concerns over Asia, corporate earnings, and the turmoil in the White
House. How did the Relative Value Fund perform versus the average growth and
income fund?
A By adhering to the tenets of the valuation process employed by the Fund,
the securities selected are typically those which exhibit a higher degree of
operating and financial stability. During volatile periods in the market stocks
possessing these attributes command a premium in valuation as a 'flight to
quality' intensifies demand for these stocks. The fact that most of the Fund's
holdings are multinational in their operations did lead to investor concern over
future revenue growth. This in turn negatively impacted price performance for
many of our companies. We believe these sentiments are overly pessimistic and
that the depth of managerial talent and market breadth will continue to produce
solid earnings growth. For the twelve months ended November 30, 1998, the
Relative Value Fund's Y shares generated a total return in excess of 16% on a
no-load, net asset value basis.**<F5> This compares to an 11.61% return for the
average growth and income fund as reported by Lipper Analytical Services, Inc.
- ----------------
*<F4> Foreign investing involves special risks such as currency risk,
increased volatility of foreign securities and differences in auditing
and other financial standards.
**<F5> Performance quoted reflects past performance and is not indicative of
future results. Investment return and principal value will fluctuate,
so that an investor's shares, when redeemed, may be worth more or less
than their original cost. Total return for A shares based on net asset
value and offering price for the period was 16.67% and 11.41%. Total
return for B shares based on net asset value and adjusted for the
maximum contingent deferred sales charge for the period from March 31,
1998 (date of initial public investment) to November 30, 1998 was 1.50%
and (3.50)%. Lipper figures represent the average of the total returns
reported by all of the mutual funds designated by Lipper Analytical
Services, Inc. as falling into the respective categories indicated.
These figures do not reflect sales charges.
Q What specific sectors and stocks made the greatest impact on fund
performance?
A Relative to the Standard & Poor's 500 Index,*<F6> the sectors that produced
the most positive relative performance were technology and healthcare. Lucent
Technologies, Intel Corp. and IBM were the leaders in our technology holdings
with Merck & Co., American Home Products and Bristol Myers Squibb setting the
pace in healthcare. Other outstanding holdings include Vodafone Group PLC, Ford
Motor and Cable & Wireless PLC.
Q As we enter 1999, are there any changes planned for the Fund's "value"
style?
A The Fund's "value" based investment strategy traditionally identifies
companies with below average volatility, lower relative price-to-earnings ratios
and above market dividend yields. This strategy has proven to be a consistent
means of generating superior investment results over multiple market cycles.
Therefore we anticipate making no changes to the Fund's discipline.
As we look to 1999, we forecast a slow growth economic environment where
inflation continues to remain benign and corporate earnings growth slows to
single digit increases. Technology and healthcare will continue to provide
market leadership in the Fund and we will continue to pursue opportunities in
consumer cyclicals, communication, financial services and energy companies.
STAR MARKET CAPITALIZATION FUND
Q The equity market during the past year saw some dramatic rotation and
significant volatility, yet for the fiscal year the Market Capitalization Fund
returned over 18%.**<F7> To what do you attribute the success of the Fund during
this past fiscal year?
A The Market Capitalization Fund seeks to mimic the large cap oriented S&P
500*<F6> equity benchmark. The companies in this index have been the favorite
among investors due to the liquidity and relatively superior predictability for
operating results for these companies.
The large cap weighted stocks, which for the most part drove the market again
this past year, played into the strategy of this Fund. The diversification, by
sector and by security, helps to dampen the volatility of the Fund's unit price,
which can be caused by the internal rotation, and volatility of the overall
market.
Q With all of this volatility, what were some of the better and worse
performing sectors and securities in the Market Capitalization portfolio?
A Clearly the best performing sectors during the past year were, in order of
performance, technology, healthcare and communication services. These were the
sectors that clearly demonstrated either consistently strong earnings or
earnings which were better than the Wall Street analysts were expecting. The
worst performing sectors were the deeply cyclical basic materials and energy.
Q What are your expectations for 1999 for this Fund?
A Earnings growth should be positive despite the marked deceleration that
became apparent during the third quarter of 1998. We believe that this growth
will be concentrated in some select areas such as technology and health care.
We anticipate further consolidation in the financial services, energy and basic
material sectors as companies push for greater efficiency and top line revenue
growth. The slowdown in earnings growth should manifest itself in the form of
more modest price performance for the Fund.
- ------------------
*<F6> Standard & Poor's 500 Stock Index, a composite index of 500 common
stocks in industry, transportation, and financial and public utility
companies, can be used to compare to the total returns of funds whose
portfolios are invested primarily in common stocks. This index is
unmanaged and investments cannot be made in an index.
**<F7> Performance quoted reflects past performance and is not indicative of
future results. Investment return and principal value will fluctuate,
so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
STAR GROWTH EQUITY FUND
Q The equity market during the past year saw some dramatic rotation and
significant volatility, yet for the fiscal year the Growth Equity Fund's Y
shares returned over 20% based on net asset value.**<F9> To what do you
attribute the success of the Fund during this past fiscal year?
A The Growth Equity Fund is primarily a large cap oriented equity fund which
concentrates on owning securities of companies which, as a whole, are expected
to have above average earnings growth when compared to the S&P 500. We also do
take into account the price/earnings ratio which we are paying for these stocks
and have been able to keep the overall portfolio at a P/E ratio close to that of
the S&P 500.*<F8> Therefore, we have built a portfolio which has above average
earnings growth but with average valuations.
This past year the market was again driven by the large cap weighted stocks
which for the most part played into the strategy of this Fund. Our top down
emphasis kept us generally fully invested and kept us invested in areas such as
financials, health care and technology. We continue to emphasize
diversification and usually have over 90 names in the portfolio. This
diversification, by sector and by security, helps to dampen the volatility in
the Fund which can be caused by the rotation and volatility of the overall
market.
We tend not to overemphasize short-term market movements in the portfolio, but
instead concentrate on long-term fundamentals. This again lends stability to
the portfolio. In a rapidly changing market, with tremendous rotation, a
portfolio manager can quickly be whip-sawed by chasing what is "hot". We
believe our longer term focus helps to reduce volatility and leads to
competitive long-term results.
Q With all of this volatility, what were some of the better and worse
performing sectors and securities in the Growth Equity portfolio?
A Clearly the best performing sectors during the past year were healthcare,
technology, and communication services. These were the companies that clearly
showed either consistently strong earnings or earnings which were better than
the Wall Street analysts were expecting. The Fund had a solid weighting in all
three of these strong performing sectors during the year. Some of the best
names included Cisco Systems, Sun Microsystems, Lucent Technologies,
Allegiance, Sofamor Danek Group, and MCI Worldcom.
The worst performing sectors were generally in the energy patch and in the deep
cyclical economically sensitive businesses. The Fund for most of the year was
either market weighted or underweighted in these groups. This again helped
improve the overall performance of the Fund.
Q What are your expectations for 1999 for this Fund?
A We are looking for an economy that continues the general slow growth, low
inflation pattern of the past several years. Earnings growth should be positive
although slow. We believe that this growth will be concentrated in some select
areas such as technology and healthcare. Therefore, we remain committed to our
current portfolio and will look for selective opportunities to improve the
securities in the portfolio as market conditions warrant. We believe that this
will again present the type of environment that should lead to positive returns
for stock investors. The volatility of the market should remain high and we
urge investors to stick with their long-term asset allocation strategies.
STAR CAPITAL APPRECIATION FUND
Q The Capital Appreciation Fund rose dramatically during the first four
months of the year and then surrendered most of that advance. Why?
A The year began with a return by investors to an emphasis on value and
investment fundamentals. As the market advance continued the flow of dollars
into all manner of investment vehicles escalated to such an extent that trading
liquidity supplanted future prospects as the principal determinant of investment
performance. Widely noted during this period was the return of the foreign
investor to the U.S. stock market. These investors gravitate towards the well
known multinational companies with which they are somewhat familiar. It was
this rotation in leadership that initiated the decline in the stock price of
small to medium sized companies.
- -------------------
*<F8> Standard & Poor's 500 Stock Index, a composite index of 500 common
stocks in industry, transportation, and financial and public utility
companies, can be used to compare to the total returns of funds whose
portfolios are invested primarily in common stocks. This index is
unmanaged and investments cannot be made in an index.
**<F9> Performance quoted reflects past performance and is not indicative of
future results. Investment return and principal value will fluctuate,
so that an investor's shares, when redeemed, may be worth more or less
than their original cost. Total return for B Shares based on net asset
value and adjusted for the maximum contingent deferred sales charge
for the period was 20.76% and 15.76%.
Q If a surge in new money coming into the market was merely the catalyst,
what factors exacerbated the decline?
A To correct past abuses in the trading of NASDAQ listed stocks market makers
are now required to execute transactions at the same price, regardless of the
size of the transaction. In many NASDAQ listed equities this produces a large
number of unprofitable transactions for the market makers in those stocks. This
has led many of the market makers to narrow their trading activities to only
those larger, more liquid stocks where the percentage of profitable transactions
justifies the capital commitment.
This decline in trading support led many professional money managers to avoid
the stocks of smaller companies for fear that the lack of trading support would
render their portfolios virtual hostages of those stocks. This net selling
pressure drove down prices on the vast majority of the over-the-counter stocks.
Only the largest, most liquid names witnessed price advances during the summer
months.
Q What worked for the Fund in 1998?
A Several sectors produced surprisingly strong results, among them the
homebuilders, information services providers, communication services and
hardware providers. We continued to benefit from merger related activity as
Sofamor Danek, Comsat, and Boole and Babbage became acquisition targets during
the year. These successes were driven by our focus on macro changes in the
world in which we live as each of these companies are involved in providing
products or services to a maturing population moving into the personal
acceptance and application phase of the information age.
Q Looking in to 1999, what do you anticipate from the Fund?
A The movement toward the greater integration of technology into everyday
life will continue to be our principal focus. We will continue to look for this
type of opportunity in the healthcare, communication, technology and financial
services.
Unfortunately, the surging liquidity backdrop and NASDAQ trading rules continue
to restrain investor interest in these companies. As the investment climate
shifts from the current liquidity bias to one more attuned to investment
fundamentals small to medium sized companies have a chance to outperform.
STAR INTERNATIONAL EQUITY FUND
Q Stock markets outside the United States have generally been generating
lower returns than domestic equity funds. Does international investing still
make sense?*<F10>
A Global diversification still makes a great deal of sense and 1998 has been
a lesson in why investing outside the U.S. still makes good investment sense.
In Europe during the past year we saw returns ranging from a positive 66% in
Greece to double digit negative returns throughout Eastern Europe. In Asia we
witnessed a remarkable rebound in South Korea and Hong Kong, while Indonesia and
the Philippines continue to deteriorate. The same holds true in the western
hemisphere where the U.S. market gyrated widely on its way to posting over a 20%
advance while just over the border in Mexico the Bolsa declined over 30%.
Despite the globalization of trade and capital flows economies and markets
continue to move independently. To achieve lower volatility in returns global
investing should be considered.
Q How did the International Fund seek to capitalize on the disparity in
global stock market conditions?
A For much of our international research we rely upon the work of Dr. Arthur
Laffer. His work on the benefits of stable monetary policy and balanced fiscal
policy is incorporated into our top down forecast. Dr. Laffer reviews the
legislative and policy initiatives of governments around the world and from that
forecasts economic trends. We rely upon that comparative advantage data in our
country allocation work.
During 1998 Dr. Laffer's work on the benefits of the impending European Monetary
Union led us to focus on those countries whose economies would benefit the most
from a reduction in trade barriers and freer capital flows. Italy, Ireland and
Spain constituted our primary regional focus in the Fund and generated our best
absolute performance. Dr. Laffer's work continued to warn of ongoing problems
for much of Asia and as a result we continued to underweight those markets.
- -------------------
*<F10> Foreign investing involves special risks such as currency risk,
increased volatility of foreign securities and differences in auditing
and other financial standards.
Q Looking in to 1999, what do you anticipate from the Fund?
A The movement toward monetary union in Europe should continue to drive
growth and greater efficiency in business in the year ahead. We will continue
to look for opportunities in the healthcare, communication, technology and
financial services across Europe. Our favorite markets continue to be Italy,
Spain and Ireland.
We are becoming cautiously optimistic on Japan with the recently announced
reforms in banking and fiscal policy. As we are turning more favorable on Japan
we are growing disenchanted with events and policy changes in Latin America.
Talk of currency devaluation runs counter to our tenets on stable monetary
policy. In addition much of the region's commerce is related to natural
resources which are suffering from global over capacity and declining demand.
THE STELLAR FUND -- A SHARES
GROWTH OF $10,000 INVESTED IN THE STELLAR FUND -- A SHARES
THE GRAPH BELOW ILLUSTRATES THE HYPOTHETICAL INVESTMENT OF $10,000 IN THE
STELLAR FUND -- A SHARES (THE "FUND") FROM OCTOBER 18, 1991 (START OF
PERFORMANCE) TO NOVEMBER 30, 1998 COMPARED TO THE STANDARD & POOR'S 500/LEHMAN
BROTHERS GOVERNMENT/CORPORATE TOTAL INDEX AND THE 5 CLASS INDEX.(A)<F11>
[GRAPH APPEARS HERE-SEE APPENDIX]
AVERAGE ANNUAL TOTAL RETURN (C)<F13> FOR THE PERIOD ENDED NOVEMBER 30, 1998
One Year 1.00%
Five Year 8.55%
Start of Performance (10/18/91) 8.85%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
(a)<F11> The 5 Class Index consists of 20% each of the S&P 500, Lehman Brothers
Government/Corporate Total Index, 90-day U.S. Treasury Bill, Morgan
Stanley Europe, Australia and Far East (EAFE) Index and the National
Association of Real Estate Investment Trusts (NAREIT) Index. The
Standard & Poor's 500/Lehman Brothers Government/Corporate Total Index
and the 5 Class Index are not adjusted to reflect sales charges,
expenses or other fees that the SEC requires to be reflected in the
Fund's performance.
(b)<F12> Represents a hypothetical investment of $10,000 in the Fund after
deducting the maximum sales charge of 4.50% ($10,000 investment minus
$450 sales charge = $9,550). The Fund's performance assumes the
reinvestment of all dividends and distributions. The Standard & Poor's
500/Lehman Brothers Government/Corporate Total Index and the 5 Class
Index have been adjusted to reflect reinvestment of dividends on
securities in the indices. These indices are unmanaged.
(c)<F13> Total return quoted reflects all applicable sales charges.
THE STELLAR FUND -- Y SHARES
GROWTH OF $10,000 INVESTED IN THE STELLAR FUND -- Y SHARES
THE GRAPH BELOW ILLUSTRATES THE HYPOTHETICAL INVESTMENT OF $10,000 IN THE
STELLAR FUND -- Y SHARES (THE "FUND") FROM APRIL 6, 1994 (START OF PERFORMANCE)
TO NOVEMBER 30, 1998 COMPARED TO THE STANDARD & POOR'S 500/LEHMAN BROTHERS
GOVERNMENT/CORPORATE TOTAL INDEX AND THE 5 CLASS INDEX.(A)<F14>
[GRAPH APPEARS HERE-SEE APPENDIX]
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED NOVEMBER 30, 1998
One Year 6.11%
Start of Performance (4/6/94) 10.43%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
(a)<F14> The 5 Class Index consists of 20% each of the S&P 500, Lehman Brothers
Government/Corporate Total Index, 90-day U.S. Treasury Bill, Morgan
Stanley Europe, Australia and Far East (EAFE) Index and the National
Association of Real Estate Investment Trusts (NAREIT) Index. The
Standard & Poor's 500/Lehman Brothers Government/Corporate Total Index
and the 5 Class Index are not adjusted to reflect sales charges,
expenses or other fees that the SEC requires to be reflected in the
Fund's performance.
(b)<F15> The Fund's performance assumes the reinvestment of all dividends and
distributions. The Standard & Poor's 500/Lehman Brothers
Government/Corporate Trust Index and the 5 Class Index have been
adjusted to reflect reinvestment of dividends on securities in the
indices. These indices are unmanaged.
STAR RELATIVE VALUE FUND -- A SHARES
GROWTH OF $10,000 INVESTED IN STAR RELATIVE VALUE FUND -- A SHARES
THE GRAPH BELOW ILLUSTRATES THE HYPOTHETICAL INVESTMENT OF $10,000 IN THE STAR
RELATIVE VALUE FUND -- A SHARES (THE "FUND") FROM JUNE 4, 1991 (START OF
PERFORMANCE) TO NOVEMBER 30, 1998 COMPARED TO THE STANDARD & POOR'S 500
INDEX(A)<F16> AND THE LIPPER GROWTH AND INCOME AVERAGE.(B)<F17>
[GRAPH APPEARS HERE-SEE APPENDIX]
AVERAGE ANNUAL TOTAL RETURN (D)<F19> FOR THE PERIOD ENDED NOVEMBER 30, 1998
One Year 11.41%
Five Year 19.51%
Start of Performance (6/4/91) 16.20%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
(a)<F16> The Standard & Poor's 500 Index is not adjusted to reflect sales
charges, expenses or other fees that the SEC requires to be reflected
in the Fund's performance.
(b)<F17> The Lipper Growth and Income Average represents the average of the
total returns reported by all of the mutual funds designated by Lipper
Analytical Services, Inc. as falling into the respective category and
is not adjusted to reflect any sales charges. However, these total
returns are reported net of expenses or other fees that the SEC
requires to be reflected in the Fund's performance.
(c)<F18> Represents a hypothetical investment of $10,000 in the Fund after
deducting the maximum sales charge of 4.50% ($10,000 investment minus
$450 sales charge = $9,550). The Fund's performance assumes the
reinvestment of all dividends and distributions. The Standard & Poor's
500 Index and the Lipper Growth and Income Average have been adjusted
to reflect reinvestment of dividends on securities in the index and
average. The index is unmanaged.
(d)<F19> Total return quoted reflects all applicable sales charges.
STAR RELATIVE VALUE FUND -- B SHARES
GROWTH OF $10,000 INVESTED IN STAR RELATIVE VALUE FUND -- B SHARES
THE GRAPH BELOW ILLUSTRATES THE HYPOTHETICAL INVESTMENT OF $10,000 IN THE STAR
RELATIVE VALUE FUND -- B SHARES (THE "FUND") FROM MARCH 31, 1998 (START OF
PERFORMANCE) TO NOVEMBER 30, 1998 COMPARED TO THE STANDARD & POOR'S 500
INDEX(A)<F20> AND THE LIPPER GROWTH AND INCOME AVERAGE.(B)<F21>
[GRAPH APPEARS HERE-SEE APPENDIX]
AVERAGE ANNUAL TOTAL RETURN (D)<F23> FOR THE PERIOD ENDED NOVEMBER 30, 1998
Start of Performance (3/31/98) (cumulative) (3.50%)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
(a)<F20> The Standard & Poor's 500 Index is not adjusted to reflect sales
charges, expenses or other fees that the SEC requires to be reflected
in the Fund's performance.
(b)<F21> The Lipper Growth and Income Average represents the average of the
total returns reported by all of the mutual funds designated by Lipper
Analytical Services, Inc. as falling into the respective category and
is not adjusted to reflect any sales charges. However, these total
returns are reported net of expenses or other fees that the SEC
requires to be reflected in the Fund's performance.
(c)<F22> Represents a hypothetical investment of $10,000 in the Fund. The
ending value of the Fund reflects a 5.00% contingent deferred sales
charge on any redemption less than one year from the purchase date.
The Fund's performance assumes the reinvestment of all dividends and
distributions. The Standard & Poor's 500 Index and the Lipper Growth
and Income Average have been adjusted to reflect reinvestment of
dividends on securities in the index and average. The index is
unmanaged.
(d)<F23> Total return quoted reflects all applicable contingent deferred sales
charges.
STAR RELATIVE VALUE FUND -- Y SHARES
GROWTH OF $10,000 INVESTED IN STAR RELATIVE VALUE FUND -- Y SHARES
THE GRAPH BELOW ILLUSTRATES THE HYPOTHETICAL INVESTMENT OF $10,000 IN THE STAR
RELATIVE VALUE FUND -- Y SHARES (THE "FUND") FROM AUGUST 18, 1997 (START OF
PERFORMANCE) TO NOVEMBER 30, 1998 COMPARED TO THE STANDARD & POOR'S 500
INDEX(A)<F24> AND THE LIPPER GROWTH AND INCOME AVERAGE.(B)<F25>
[GRAPH APPEARS HERE-SEE APPENDIX]
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED NOVEMBER 30, 1998
One Year 16.95%
Start of Performance (8/18/97) 16.36%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
(a)<F24> The Standard & Poor's 500 Index is not adjusted to reflect sales
charges, expenses, or other fees that the SEC requires to be reflected
in the Fund's performance.
(b)<F25> The Lipper Growth and Income Average represents the average of the
total returns reported by all of the mutual funds designated by Lipper
Analytical Services, Inc. as falling into the respective category and
is not adjusted to reflect any sales charges. However, these total
returns are reported net of expenses or other fees that the SEC
requires to be reflected in the Fund's performance.
(c)<F26> Represents a hypothetical investment of $10,000 in the Fund. The
Fund's performance assumes the reinvestment of all dividends and
distributions. The Standard & Poor's 500 Index and the Lipper Growth
and Income Average have been adjusted to reflect reinvestment of
dividends on securities in the index and average. The index is
unmanaged.
STAR MARKET CAPITALIZATION FUND
GROWTH OF $10,000 INVESTED IN STAR MARKET CAPITALIZATION FUND
THE GRAPH BELOW ILLUSTRATES THE HYPOTHETICAL INVESTMENT OF $10,000 IN THE STAR
MARKET CAPITALIZATION FUND (THE "FUND") FROM DECEMBER 8, 1997 (START OF
PERFORMANCE) TO NOVEMBER 30, 1998 COMPARED TO THE STANDARD & POOR'S 500
INDEX.(A)<F27>
[GRAPH APPEARS HERE-SEE APPENDIX]
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED NOVEMBER 30, 1998
Start of Performance (12/8/97) (cumulative) 18.94%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
(a)<F27> The Standard & Poor's 500 Index is not adjusted to reflect sales
charges, expenses or other fees that the SEC requires to be reflected
in the Fund's performance.
(b)<F28> Represents a hypothetical investment of $10,000 in the Fund. The
Fund's performance assumes the reinvestment of all dividends and
distributions. The Standard & Poor's 500 Index has been adjusted to
reflect reinvestment of dividends on securities in the index. This
index is unmanaged.
STAR GROWTH EQUITY FUND -- B SHARES
GROWTH OF $10,000 INVESTED IN STAR GROWTH EQUITY FUND -- B SHARES
THE GRAPH BELOW ILLUSTRATES THE HYPOTHETICAL INVESTMENT OF $10,000 IN THE STAR
GROWTH EQUITY FUND -- B SHARES (THE "FUND") FROM DECEMBER 12, 1994 (START OF
PERFORMANCE) TO NOVEMBER 30, 1998 COMPARED TO THE STANDARD & POOR'S 500
INDEX.(A)<F29>
[GRAPH APPEARS HERE-SEE APPENDIX]
AVERAGE ANNUAL TOTAL RETURN(C)<F31> FOR THE PERIOD ENDED NOVEMBER 30, 1998
One Year 15.76%
Start of Performance (12/12/94) 24.93%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
(a)<F29> The Standard & Poor's 500 Index is not adjusted to reflect sales
charges, expenses, or other fees that the SEC requires to be reflected
in the Fund's performance.
(b)<F30> Represents a hypothetical investment of $10,000 in the Fund. The
ending value of the Fund reflects a 2.00% contingent deferred sales
charge on any redemption less than four years from the purchase date.
The maximum contingent deferred sales charge is 5.00% on any
redemption less than one year from the purchase date. The Fund's
performance assumes the reinvestment of all dividends and
distributions. The Standard & Poor's 500 Index has been adjusted to
reflect reinvestment of dividends on securities in the index. This
index is unmanaged.
(c)<F31> Total return quoted reflects all applicable contingent deferred sales
charges.
STAR GROWTH EQUITY FUND -- Y SHARES
GROWTH OF $10,000 INVESTED IN STAR GROWTH EQUITY FUND -- Y SHARES
THE GRAPH BELOW ILLUSTRATES THE HYPOTHETICAL INVESTMENT OF $10,000 IN THE STAR
GROWTH EQUITY FUND -- Y SHARES (THE "FUND") FROM AUGUST 18, 1997 (START OF
PERFORMANCE) TO NOVEMBER 30, 1998 COMPARED TO THE STANDARD & POOR'S 500
INDEX.(A)<F32>
[GRAPH APPEARS HERE-SEE APPENDIX]
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED NOVEMBER 30, 1998
One Year 20.91%
Start of Performance (8/18/97) 20.00%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
(a)<F32> The Standard & Poor's 500 Index is not adjusted to reflect sales
charges, expenses, or other fees that the SEC requires to be reflected
in the Fund's performance.
(b)<F33> Represents a hypothetical investment of $10,000 in the Fund. The
Fund's performance assumes the reinvestment of all dividends and
distributions. The Standard & Poor's 500 Index has been adjusted to
reflect reinvestment of dividends on securities in the index. This
index is unmanaged.
STAR CAPITAL APPRECIATION FUND
GROWTH OF $10,000 INVESTED IN STAR CAPITAL APPRECIATION FUND
THE GRAPH BELOW ILLUSTRATES THE HYPOTHETICAL INVESTMENT OF $10,000 IN THE STAR
CAPITAL APPRECIATION FUND (THE "FUND") FROM JUNE 13, 1994 (START OF PERFORMANCE)
TO NOVEMBER 30, 1998 COMPARED TO THE S&P MIDCAP 400 INDEX.(A)<F34>
[GRAPH APPEARS HERE-SEE APPENDIX]
AVERAGE ANNUAL TOTAL RETURN(C)<F36> FOR THE PERIOD ENDED NOVEMBER 30, 1998
One Year 0.01%
Start of Performance (6/13/94) 9.22%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
(a)<F34> The S&P Midcap 400 Index is not adjusted to reflect sales charges,
expenses, or other fees that the SEC requires to be reflected in the
Fund's performance.
(b)<F35> Represents a hypothetical investment of $10,000 in the Fund after
deducting the maximum sales charge of 4.50% ($10,000 investment minus
$450 sales charge = $9,550). The Fund's performance assumes the
reinvestment of all dividends and distributions. The S&P Midcap 400
Index has been adjusted to reflect reinvestment of dividends on
securities in the index. This index is unmanaged.
(c)<F36> Total return quoted reflects all applicable sales charges.
STAR INTERNATIONAL EQUITY FUND
GROWTH OF $10,000 INVESTED IN STAR INTERNATIONAL EQUITY FUND
THE GRAPH BELOW ILLUSTRATES THE HYPOTHETICAL INVESTMENT OF $10,000 IN THE STAR
INTERNATIONAL EQUITY FUND (THE "FUND") FROM DECEMBER 3, 1997 (START OF
PERFORMANCE) TO NOVEMBER 30, 1998 COMPARED TO THE MORGAN STANLEY EUROPE,
AUSTRALIA AND FAR EAST (EAFE) INDEX.(A)<F37>
[GRAPH APPEARS HERE-SEE APPENDIX]
AVERAGE ANNUAL TOTAL RETURN(C)<F39> FOR THE PERIOD ENDED NOVEMBER 30, 1998
Start of Performance (12/3/97) (cumulative) 2.41%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
(a)<F37> The EAFE Index is not adjusted to reflect sales charges, expenses
or other fees that the SEC requires to be reflected in the Fund's
performance.
(b)<F38> Represents a hypothetical investment of $10,000 in the Fund after
deducting the maximum sales charge of 1.50% ($10,000 investment
minus $150 sales charge = $9,850). The Fund's performance assumes
the reinvestment of all dividends and distributions. The EAFE
Index is unmanaged.
(c)<F39> Total return quoted reflects all applicable sales charges.
PORTFOLIOS OF INVESTMENTS
------------------------------------------
The Stellar Fund November 30, 1998
- ------------------------------------------------------------------------
PRINCIPAL AMOUNT OR SHARES VALUE
- ------------------------------------------------------------------------
U.S. EQUITIES - 22.4%
- ------------------------------------------------------------------------
BASIC INDUSTRY - 0.8%
- ------------------------------------------------------------------------
CHEMICALS - 0.3%
3,000 Dow Chemical Co. $292,125
- ------------------------------------------------------------------------
MANUFACTURING - 0.3%
7,000 Caterpillar, Inc. 346,063
- ------------------------------------------------------------------------
METALS & MINING - 0.2%
2,600 Aluminum Co. of America 192,726
- ------------------------------------------------------------------------
TOTAL BASIC INDUSTRY 830,914
- ------------------------------------------------------------------------
CAPITAL GOODS - 3.3%
- ------------------------------------------------------------------------
AUTOMOBILE - 0.3%
6,000 Ford Motor Co. 331,500
- ------------------------------------------------------------------------
COMPUTERS & SOFTWARE - 1.6%
7,400 Lucent Technologies, Inc. 636,863
4,800 Network Associates, Inc.*<F40> 244,200
11,300 Oracle Corp.*<F40> 387,025
5,400 Sun Microsystems, Inc.*<F40> 399,938
- ------------------------------------------------------------------------
Total 1,668,026
- ------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.6%
5,400 Emerson Electric Co. 351,000
2,700 General Electric Co. 244,350
- ------------------------------------------------------------------------
Total 595,350
- ------------------------------------------------------------------------
ELECTRONICS - 0.8%
8,000 Intel Corp. 861,000
- ------------------------------------------------------------------------
TOTAL CAPITAL GOODS 3,455,876
- ------------------------------------------------------------------------
CONSUMER CYCLICAL - 3.3%
- ------------------------------------------------------------------------
PUBLISHING - 0.4%
6,500 Gannett Co., Inc. 419,656
- ------------------------------------------------------------------------
RETAILING & APPAREL - 2.7%
10,000 Dayton Hudson Corp. 450,000
8,000 Gap (The), Inc. 588,500
10,000 Kroger Co. (The) 530,625
12,000 Safeway, Inc.*<F40> 633,750
8,400 Wal-Mart Stores, Inc. 632,625
- ------------------------------------------------------------------------
Total 2,835,500
- ------------------------------------------------------------------------
TRANSPORTATION - 0.2%
6,000 Comair Holdings, Inc. 183,750
- ------------------------------------------------------------------------
TOTAL CONSUMER CYCLICAL 3,438,906
- ------------------------------------------------------------------------
CONSUMER STAPLES - 1.7%
- ------------------------------------------------------------------------
FOOD & BEVERAGE - 0.8%
3,000 BestFoods 174,375
3,500 Sara Lee Corp. 204,312
18,000 Sysco Corp. 484,875
- ------------------------------------------------------------------------
Total 863,562
- ------------------------------------------------------------------------
HOUSEHOLD PRODUCTS - 0.6%
7,000 Procter & Gamble Co. 613,375
- ------------------------------------------------------------------------
TOBACCO - 0.3%
5,000 Philip Morris Cos., Inc. 279,688
- ------------------------------------------------------------------------
TOTAL CONSUMER STAPLES 1,756,625
- ------------------------------------------------------------------------
DIVERSIFIED - 0.3%
7,000 Allied-Signal, Inc. 308,000
- ------------------------------------------------------------------------
ENERGY - 1.9%
- ------------------------------------------------------------------------
DOMESTIC OIL - 0.1%
3,000 Tosco Corp. 78,375
- ------------------------------------------------------------------------
ENERGY - 0.5%
14,000 Cinergy Corp. 483,875
- ------------------------------------------------------------------------
ENERGY SERVICE & EQUIPMENT - 0.2%
4,500 Halliburton Co. 132,187
2,400 Schlumberger Ltd. 107,250
- ------------------------------------------------------------------------
Total 239,437
- ------------------------------------------------------------------------
INTERNATIONAL OIL - 0.8%
5,200 Chevron Corp. 434,850
7,000 Texaco, Inc. 402,938
- ------------------------------------------------------------------------
Total 837,788
- ------------------------------------------------------------------------
NATURAL GAS - 0.3%
8,500 Coastal Corp. 296,437
- ------------------------------------------------------------------------
TOTAL ENERGY 1,935,912
- ------------------------------------------------------------------------
FINANCE - 3.6%
- ------------------------------------------------------------------------
BANKS & SAVINGS INSTITUTIONS - 1.1%
6,000 BankBoston Corp. 249,750
5,800 Bank One Corp. 297,612
5,100 First Union Corp. 309,825
10,000 Popular, Inc. 297,500
- ------------------------------------------------------------------------
Total 1,154,687
- ------------------------------------------------------------------------
INSURANCE - 0.9%
10,400 Allstate Corp. 423,800
6,000 American International Group, Inc. 564,000
- ------------------------------------------------------------------------
Total 987,800
- ------------------------------------------------------------------------
OTHER FINANCE - 1.6%
6,645 Citigroup Inc. 333,496
7,200 Fannie Mae 523,800
6,000 Merrill Lynch & Co., Inc. 450,000
6,000 Morgan Stanley, Dean Witter & Co. 418,500
- ------------------------------------------------------------------------
Total 1,725,796
- ------------------------------------------------------------------------
TOTAL FINANCE 3,868,283
- ------------------------------------------------------------------------
HEALTH CARE - 2.4%
- ------------------------------------------------------------------------
MEDICAL DEVICES - 0.8%
6,500 Guidant Corp. 557,781
3,000 Sofamor Danek Group, Inc.*<F40> 335,438
- ------------------------------------------------------------------------
Total 893,219
- ------------------------------------------------------------------------
PHARMACEUTICALS - 1.6%
5,500 American Home Products Corp. 292,875
4,000 Bristol-Myers Squibb Co. 490,250
3,500 Pfizer Inc. 390,687
10,000 Watson Pharmaceuticals, Inc.*<F40> 538,750
- ------------------------------------------------------------------------
Total 1,712,562
- ------------------------------------------------------------------------
TOTAL HEALTH CARE 2,605,781
- ------------------------------------------------------------------------
MUTUAL FUND - 1.9%
100,000 Gateway Cincinnati Fund 1,982,000
- ------------------------------------------------------------------------
REAL ESTATE - 0.8%
30,000 Cadillac Fairview Corp.*<F40> 568,125
20,000 Catellus Development Corp.*<F40> 281,250
2,350 LTC Healthcare Inc.*<F40> 6,756
1,100 Merry Land Properties, Inc.*<F40> 4,538
2,880 Reckson Service Industries 8,460
1,200 Vornado Operating Inc.*<F40> 7,650
- ------------------------------------------------------------------------
TOTAL REAL ESTATE 876,779
- ------------------------------------------------------------------------
UTILITIES - 2.4%
- ------------------------------------------------------------------------
ELECTRIC - 0.5%
11,500 GPU, Inc. 503,843
- ------------------------------------------------------------------------
TELECOMMUNICATIONS - 1.9%
9,000 Cincinnati Bell, Inc. 283,500
5,600 GTE Corp. 347,200
8,000 MCI Worldcom, Inc.*<F40> 472,000
8,044 SBC Communications, Inc. 385,609
9,000 U S West, Inc. 560,250
- ------------------------------------------------------------------------
Total 2,048,559
- ------------------------------------------------------------------------
TOTAL UTILITIES 2,552,402
- ------------------------------------------------------------------------
TOTAL U.S. EQUITIES (IDENTIFIED COST $15,549,855) 23,611,478
- ------------------------------------------------------------------------
INTERNATIONAL SECURITIES - 19.8%
- ------------------------------------------------------------------------
INTERNATIONAL EQUITIES - 18.1%
- ------------------------------------------------------------------------
ARGENTINA - 0.1%
4,200 YPF Sociedad Anonima, ADR 123,900
- ------------------------------------------------------------------------
AUSTRALIA - 0.7%
3,200 National Australia Bank, Ltd., Melbourne, ADR 238,800
11,900 News Corp., Ltd., ADR 333,200
6,700 News Corp., Ltd., ADR, Pfd. 168,756
- ------------------------------------------------------------------------
Total 740,756
- ------------------------------------------------------------------------
BRAZIL - 0.1%
1,300 Telecomunicacoes Brasileiras SA, ADR*<F40> 123,256
- ------------------------------------------------------------------------
CANADA - 0.9%
4,300 Alcan Aluminum, Ltd. 114,488
8,200 Bank of Montreal Que 347,475
5,200 Northern Telecom Ltd. 242,775
7,100 Seagram Co. Ltd. 243,619
- ------------------------------------------------------------------------
Total 948,357
- ------------------------------------------------------------------------
DENMARK - 0.3%
5,300 Novo-Nordisk, ADR 306,075
- ------------------------------------------------------------------------
FINLAND - 0.4%
4,600 OY Nokia AB, Class A, ADR 450,800
- ------------------------------------------------------------------------
FRANCE - 1.5%
14,100 Alcatel Alsthom, ADR 364,837
8,700 AXA-UAP, ADR 557,888
4,100 Danone, ADR 240,362
1,900 Elf Aquitaine SA, ADR 118,275
6,700 Rhone-Poulenc, ADR 335,000
- ------------------------------------------------------------------------
Total 1,616,362
- ------------------------------------------------------------------------
GERMANY, FEDERAL REPUBLIC OF - 2.9%
4,200 BASF AG, ADR 162,085
3,800 Bayer AG, ADR 162,718
4,000 Commerzbank AG, Frankfurt, ADR 133,666
6,030 DaimlerChrysler AG*<F40> 552,876
2,000 Deutsche Bank AG, ADR 129,762
5,200 Hoechst AG, ADR 218,400
2,300 Mannesmann AG, ADR 257,100
4,700 RWE AG, ADR 250,737
10,900 SAP AG, ADR 461,206
3,500 Siemens AG, ADR 248,613
4,500 Veba AG, ADR*<F40> 252,000
10,100 Volkswagen AG, ADR 170,127
- ------------------------------------------------------------------------
Total 2,999,290
- ------------------------------------------------------------------------
HONG KONG - 0.1%
22,000 Sun Hung Kai Properties Ltd., ADR 157,692
- ------------------------------------------------------------------------
IRELAND - 0.3%
4,800 Elan Corp. Plc, ADR*<F40> 327,000
- ------------------------------------------------------------------------
ITALY - 0.5%
30,000 Luxottica Group S.p.A., ADR 311,250
3,100 Telecom Italia S.p.A., ADR 250,325
- ------------------------------------------------------------------------
Total 561,575
- ------------------------------------------------------------------------
JAPAN - 0.6%
500 Bridgestone Corp., ADR 117,149
7,300 Canon, Inc., ADR 161,969
4,500 Fuji Photo Film Co., ADR 170,437
3,100 Nippon Telegraph & Telephone Corp., ADR 117,413
6,600 Pioneer Electronic Corp., ADR 107,662
- ------------------------------------------------------------------------
Total 674,630
- ------------------------------------------------------------------------
LUXEMBOURG - 0.2%
8,600 Espirito Santo Financial Group SA, ADR 158,563
- ------------------------------------------------------------------------
MEXICO - 0.1%
2,300 Telefonos de Mexico, Class L, ADR 107,094
- ------------------------------------------------------------------------
NETHERLANDS - 2.5%
24,101 ABN-AMRO Holdings NV, ADR 497,076
4,700 Fortis Amev NV, ADR 346,354
4,500 Heineken NV, ADR 229,180
8,500 ING Groep, NV, ADR 479,187
9,200 Koninklijke Ahold NV, ADR 319,125
3,500 Philips Electronics NV, ADR 221,594
6,400 Unilever NV, ADR 494,800
- ------------------------------------------------------------------------
Total 2,587,316
- ------------------------------------------------------------------------
SPAIN - 0.5%
6,500 Banco Santander SA, ADR 130,000
4,400 Endesa SA, ADR 114,400
2,200 Repsol SA, ADR 123,475
1,200 Telefonica SA, ADR 167,250
- ------------------------------------------------------------------------
Total 535,125
- ------------------------------------------------------------------------
SWEDEN - 0.6%
12,200 Telefonaktiebolaget LM Ericsson, Class B, ADR 337,025
14,300 Volvo AB, ADR 330,688
- ------------------------------------------------------------------------
Total 667,713
- ------------------------------------------------------------------------
SWITZERLAND - 1.9%
7,400 Holderbank Financiere Glaris AG, ADR 171,879
2,100 Nestle SA, ADR 218,830
5,000 Novartis AG, ADR 470,719
2,700 Roche Holding AG, ADR 318,220
16,500 UBS AG, ADR*<F40> 249,013
800 Zurich Allied AG*<F40> 573,194
- ------------------------------------------------------------------------
Total 2,001,855
- ------------------------------------------------------------------------
UNITED KINGDOM - 3.9%
5,000 Barclays Bank PLC, London, ADR 464,687
2,300 British Airways, ADR 160,137
5,400 British Petroleum Co. PLC, ADR 497,475
5,000 British Sky Broadcasting Group plc, ADR 251,563
13,800 Cable & Wireless Communications PLC, ADR 520,950
2,700 Diageo plc, ADR 123,356
5,100 Glaxo Wellcome PLC, ADR 323,850
1,400 HSBC Holdings plc, ADR 358,905
5,300 Reuters Holdings PLC, ADR 304,750
19,200 Siebe plc, ADR 138,017
5,100 Smithkline Beecham Corp., ADR 310,781
3,500 Vodafone Group PLC, ADR 516,906
- ------------------------------------------------------------------------
Total 3,971,377
- ------------------------------------------------------------------------
TOTAL INTERNATIONAL EQUITIES 19,058,736
- ------------------------------------------------------------------------
CLOSED-END INVESTMENT COMPANIES - 1.7%
12,400 Irish Investment Fund, Inc. 237,150
11,200 Italy Fund, Inc. 163,800
62,500 Kleinwort Benson Australian Income Fund 445,313
13,500 Mexico Fund 148,500
33,200 Morgan Stanley Asia-Pacific Fund 238,625
8,600 Spain Fund, Inc. 162,325
26,900 Templeton Dragon Fund, Inc. 238,738
6,500 WEBS Italy Index Fund, Inc. 167,375
- ------------------------------------------------------------------------
TOTAL CLOSED-END INVESTMENT COMPANIES 1,801,826
- ------------------------------------------------------------------------
TOTAL INTERNATIONAL SECURITIES(IDENTIFIED COST $17,175,264) 20,860,562
- ------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 11.9%
29,071 Archstone Communities Trust 606,857
23,756 Avalonbay Communities, Inc. 804,734
8,000 Bedford Property Investors, Inc. 142,000
30,000 BRE Properties, Inc., Class A 723,750
12,300 CenterPoint Properties Corp. 418,200
25,000 Developers Diversified Realty 482,813
18,875 Equity Office Properties Trust 474,234
10,000 Healthcare Realty Trust, Inc. 230,000
11,000 Hospitality Properties Trust 286,000
10,000 HRPT Properties Trust 149,375
14,000 Irvine Apartment Communities, Inc. 375,375
36,000 JDN Realty Corp. 744,750
11,000 Kilroy Realty Corp. 246,125
22,250 Kimco Realty Corp. 860,796
5,000 Lexington Corporate Properties Trust 65,625
13,000 Liberty Property Trust 320,125
23,500 LTC Properties, Inc. 393,625
25,000 Mack-Cali Realty Corp. 742,188
12,500 Manufactured Home Communities, Inc. 306,250
20,000 New Plan Realty Trust 437,500
10,000 Pacific Gulf Properties, Inc. 192,500
12,000 Prentiss Properties Trust 261,000
18,000 Reckson Associates Realty Corp. 415,125
30,000 RFS Hotel Investors, Inc. 429,375
18,080 Simon DeBartolo Group, Inc. 535,620
12,500 Starwood Lodging Trust 379,688
16,800 Summit Properties, Inc. 294,000
10,000 U.S. Restaurant Properties, Inc. 242,500
24,000 Vornado Realty Trust 912,000
- ------------------------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(IDENTIFIED COST $11,355,669) 12,472,130
- ------------------------------------------------------------------------
FIXED INCOME OBLIGATIONS - 28.2%
- ------------------------------------------------------------------------
AUTOMOTIVE & RELATED - 0.2%
$200,000 Ford Motor Credit Corp.,
Unsecd. Note, 6.11%, 12/28/2001 204,302
- ------------------------------------------------------------------------
BANKING - 0.4%
430,000 Societe Generale, Sub. Note, 7.40%, 6/1/2006 460,712
- ------------------------------------------------------------------------
CLOSED-END INVESTMENT COMPANY - 0.5%
50,000 First Commonwealth Fund Inc. 543,750
- ------------------------------------------------------------------------
ENERGY - 0.3%
250,000 Ashland, Inc., Unsecd. Note,
Series F, 7.90%, 8/5/2006 274,253
- ------------------------------------------------------------------------
FINANCE - 5.5%
500,000 Citicorp, Sub. Note, 8.625%, 12/1/2002 554,330
2,000,000 Citigroup Inc., Note, 9.50%, 3/1/2002 2,241,046
250,000 International Lease Finance Corp.,
Unsecd. Note, 6.25%, 10/15/2000 252,805
250,000 International Lease Finance Corp.,
Unsecd. Note, 8.375%, 12/15/2004 282,033
1,000,000 Lehman Brothers Holdings, Inc.,
Note, 6.50%, 10/1/2002 994,314
400,000 Meditrust Corp., Note, 7.82%, 9/10/2026 379,570
500,000 United Dominion Realty Trust, Inc.,
Note, 7.95%, 7/12/2006 535,368
435,000 Zurich Capital Trust, Company
Guarantee, Series 144A, 8.376%,
6/1/2037 502,019
- ------------------------------------------------------------------------
Total 5,741,485
- ------------------------------------------------------------------------
FOOD & BEVERAGE - 0.0%
21,000 PepsiCo, Inc., Deb., 7.625%, 12/18/1998 21,356
- ------------------------------------------------------------------------
FOREIGN - 1.3%
200,000 TransCanada PipeLines Ltd., Deb.,
9.875%, 1/1/2021 257,144
1,000,000 TransCanada PipeLines Ltd., Sub. Deb.,
9.125%, 4/20/2006 1,158,530
- ------------------------------------------------------------------------
Total 1,415,674
- ------------------------------------------------------------------------
INDUSTRIAL - 0.4%
250,000 Chevron Capital USA, Inc., 7.45%, 8/15/2004 264,594
159,458 Dow Chemical Co., Series 1992-A1,
7.60%, 1/2/2002 164,654
- ------------------------------------------------------------------------
Total 429,248
- ------------------------------------------------------------------------
RETAILING & APPAREL - 0.5%
500,000 Sears Roebuck Acceptance Corp.,
Unsecd. Note, 7.00%, 6/15/2007 537,614
- ------------------------------------------------------------------------
SPECIAL PURPOSE - 0.5%
20,000 ABN-AMRO Capital Funding Trust, Pfd. $1.88 513,750
- ------------------------------------------------------------------------
TOBACCO - 1.0%
1,029,000 Philip Morris Cos., Inc., Deb., 8.625%,
3/1/1999 1,036,864
- ------------------------------------------------------------------------
TRANSPORTATION - 1.0%
900,000 Norfolk Southern Corp., 7.70%, 5/15/2017 1,035,809
- ------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES - 11.8%
$1,000,000 Fannie Mae, 5.49%, 8/18/2000 1,009,439
1,275,000 Fannie Mae, 5.36%, 2/16/2001 1,287,285
250,000 Fannie Mae, 6.85%, 8/22/2005 275,289
250,000 Fannie Mae, 6.82%, 8/23/2005 274,880
500,000 Fannie Mae, 6.14%, 11/25/2005 532,415
332,600 Fannie Mae, 6.00%, 2/25/2011 330,739
250,000 Fannie Mae, 6.93%, 9/17/2012 275,161
370,868 Fannie Mae, 7.50%, 9/25/2019 372,694
455,840 Fannie Mae, 9.50%, 6/25/2020 481,839
851,000 Fannie Mae, 7.25%, 1/17/2021 869,984
750,000 Fannie Mae, 6.50%, 4/25/2023 770,657
1,000,000 Federal Home Loan Bank, 5.60%, 7/30/1999 1,000,238
872,162 Freddie Mac, 6.25%, 7/15/2005 875,602
1,500,000 Freddie Mac, 6.50%, 2/15/2023 1,547,973
436,369 Ginnie Mae, 7.50%, 6/15/2027 451,482
1,000,000 Sallie Mae, 4.161%, 8/2/1999 997,732
1,000,000 Sallie Mae, 4.201%, 3/7/2001 990,738
- ------------------------------------------------------------------------
Total 12,344,147
- ------------------------------------------------------------------------
U.S. TREASURY SECURITIES - 4.3%
1,300,000 United States Treasury Bond, 7.50%,
11/15/2016 1,628,657
250,000 United States Treasury Bond, 9.00%,
11/15/2018 362,344
250,000 United States Treasury Bond, 8.125%,
8/15/2019 336,406
1,850,000 United States Treasury Bond, 6.75%,
8/15/2026 2,232,719
- ------------------------------------------------------------------------
Total 4,560,126
- ------------------------------------------------------------------------
UTILITIES - 0.5%
500,000 Georgia Power Co., 1st Mtg. Bond,
6.625%, 4/1/2003 507,372
- ------------------------------------------------------------------------
TOTAL FIXED INCOME OBLIGATIONS
(IDENTIFIED COST $28,731,205) 29,626,462
- ------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 17.4%
- ------------------------------------------------------------------------
MUTUAL FUNDS - 3.8%
2,957,691 Flex Funds 2,957,691
1,000,000 Government Money Market Fund 1,000,000
- ------------------------------------------------------------------------
Total 3,957,691
- ------------------------------------------------------------------------
REPURCHASE AGREEMENT - 13.6%
14,347,000 Donaldson, Lufkin and Jenrette
Securities Corp., 5.32%, dated
11/30/1998, due 12/1/1998,
repurchase price $14,349,120
(Collateralized By U.S.
Government Securities) 14,347,000
- ------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $18,304,691) 18,304,691
- ------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.7%
(IDENTIFIED COST $91,116,684) 104,875,323
- ------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES - 0.3% 309,209
- ------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $105,184,532
- ------------------------------------------------------------------------
*<F40> Non-income producing
ADR -- American Depository Receipt
PLC -- Public Limited Company
(See Notes to Financial Statements.)
------------------------------------------
Star Relative Value Fund November 30, 1998
- ------------------------------------------------------------------------
SHARES OR PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------
COMMON STOCKS - 99.2%
- ------------------------------------------------------------------------
AEROSPACE - 4.2%
75,000 Honeywell, Inc. $5,995,313
97,000 Lockheed Martin Corp. 10,063,750
50,000 Raytheon Co. - Class B 2,768,750
- ------------------------------------------------------------------------
Total 18,827,813
- ------------------------------------------------------------------------
APPLIANCES - 1.3%
100,000 Whirlpool Corp. 5,600,000
- ------------------------------------------------------------------------
AUTOMOBILE - 2.6%
130,000 Ford Motor Co. 7,182,500
65,000 General Motors Corp. 4,550,000
- ------------------------------------------------------------------------
Total 11,732,500
- ------------------------------------------------------------------------
AUTOMOTIVE & RELATED - 2.3%
130,000 Goodyear Tire & Rubber Co. 7,377,500
50,000 Johnson Controls, Inc. 2,893,750
- ------------------------------------------------------------------------
Total 10,271,250
- ------------------------------------------------------------------------
BANKS & SAVINGS INSTITUTIONS - 13.0%
200,000 Bank One Corp. 10,262,500
100,000 BankAmerica Corp. 6,518,750
300,000 Bank of New York Co., Inc. 10,275,000
215,000 Citigroup Inc. 10,790,313
125,000 First Financial Bancorp 4,195,312
100,000 Mellon Bank Corp. 6,293,750
25,000 National Australia Bank, Ltd.,
Melbourne, ADR 1,865,625
100,000 PNC Bank Corp. 5,156,250
100,000 TCF Financial Corp. 2,418,750
- ------------------------------------------------------------------------
Total 57,776,250
- ------------------------------------------------------------------------
DIVERSIFIED - 1.0%
100,000 Allied-Signal, Inc. 4,400,000
- ------------------------------------------------------------------------
DRUGS - 12.9%
200,000 American Home Products Corp. 10,650,000
130,000 Bristol-Myers Squibb Co. 15,933,125
103,500 Merck & Co., Inc. 16,029,562
240,000 Smithkline Beecham Corp., ADR 14,625,000
- ------------------------------------------------------------------------
Total 57,237,687
- ------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 2.5%
124,000 General Electric Co. 11,222,000
- ------------------------------------------------------------------------
ELECTRONICS - 6.5%
270,000 Intel Corp. 29,058,750
- ------------------------------------------------------------------------
HOUSEHOLD PRODUCTS - 7.1%
194,000 Gillette Co. 8,911,875
260,000 Procter & Gamble Co. 22,782,500
- ------------------------------------------------------------------------
Total 31,694,375
- ------------------------------------------------------------------------
INSURANCE - 4.2%
170,000 Cincinnati Financial Corp. 6,640,625
300,000 Ohio Casualty Corp. 12,150,000
- ------------------------------------------------------------------------
Total 18,790,625
- ------------------------------------------------------------------------
INTERNATIONAL OIL - 8.4%
148,000 Mobil Corp. 12,755,750
156,000 Royal Dutch Petroleum Co., ADR 7,332,000
300,000 Texaco, Inc. 17,268,750
- ------------------------------------------------------------------------
Total 37,356,500
- ------------------------------------------------------------------------
MANUFACTURING - 1.5%
80,000 Lucent Technologies, Inc. 6,885,000
- ------------------------------------------------------------------------
MISC. FINANCIAL SERVICES - 1.7%
75,000 American Express Co. 7,504,688
- ------------------------------------------------------------------------
OFFICE & BUSINESS EQUIPMENT - 7.1%
190,000 International Business Machines Corp. 31,350,000
- ------------------------------------------------------------------------
RETAILING & APPAREL - 4.6%
200,000 Federated Department Stores, Inc.*<F41> 8,337,500
260,000 Sears, Roebuck & Co. 12,333,750
- ------------------------------------------------------------------------
Total 20,671,250
- ------------------------------------------------------------------------
TELECOMMUNICATIONS - 11.3%
169,000 AT&T Corp. 10,530,813
67,000 Cable & Wireless Communications PLC, ADR 2,529,250
700,000 Cincinnati Bell, Inc. 22,050,000
152,000 GTE Corp. 9,424,000
39,000 Vodafone Group PLC, ADR 5,759,812
- ------------------------------------------------------------------------
Total 50,293,875
- ------------------------------------------------------------------------
TOBACCO - 3.4%
270,000 Philip Morris Cos., Inc. 15,103,125
- ------------------------------------------------------------------------
UTILITIES - ELECTRIC - 3.6%
225,000 Cinergy Corp. 7,776,562
190,000 GPU, Inc. 8,324,375
- ------------------------------------------------------------------------
Total 16,100,937
- ------------------------------------------------------------------------
TOTAL COMMON STOCKS (IDENTIFIED COST $244,470,258) 441,876,625
- ------------------------------------------------------------------------
SHORT-TERM INVESTMENT - 0.7%
- ------------------------------------------------------------------------
REPURCHASE AGREEMENT - 0.7%
$2,897,000 Donaldson, Lufkin and Jenrette
Securities Corp., 5.32%, dated
11/30/98, due 12/1/98, repurchase
price $2,897,428 (Collateralized
by U.S. Government Securities) 2,897,000
- ------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(IDENTIFIED COST $2,897,000) 2,897,000
- ------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.9%
(IDENTIFIED COST $247,367,258) 444,773,625
- ------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES - 0.1% 403,636
- ------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $445,177,261
- ------------------------------------------------------------------------
*<F41> Non-income producing
ADR -- American Depository Receipt
PLC -- Public Limited Company
(See Notes to Financial Statements.)
--------------------------------
Star Market Capitalization Fund November 30, 1998
- ------------------------------------------------------------------------
SHARES OR PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------
COMMON STOCKS - 99.9%
366,829 Standard & Poor's Depository
Receipts Trust, (identified
cost $39,818,935) $42,598,018
- ------------------------------------------------------------------------
REPURCHASE AGREEMENT - 0.2%
$118,000 Donaldson, Lufkin and Jenrette
Securities Corp., 5.32%,
dated 11/30/1998, due
12/1/1998, repurchase price
$118,017 (Collateralized by
U.S. Government Securities) 118,000
- ------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.1%
(IDENTIFIED COST $39,936,936) $42,716,018
- ------------------------------------------------------------------------
LIABILITIES, LESS OTHER ASSETS - (0.1)% (66,637)
- ------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $42,649,381
- ------------------------------------------------------------------------
(See Notes to Financial Statements.)
------------------------------------------
Star Growth Equity Fund November 30, 1998
- ------------------------------------------------------------------------
CONTRACTS, SHARES OR PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------
COMMON STOCKS - 95.7%
- ------------------------------------------------------------------------
AEROSPACE - 1.0%
20,000 Boeing Co. $812,500
10,000 Lockheed Martin Corp. 1,037,500
- ------------------------------------------------------------------------
Total 1,850,000
- ------------------------------------------------------------------------
AIRLINE - 0.4%
10,000 AMR Corp.*<F42> 659,375
- ------------------------------------------------------------------------
AUTOMOBILE - 0.7%
25,000 Ford Motor Co. 1,381,250
- ------------------------------------------------------------------------
BANKING - 3.3%
4,279 Amsouth Bancorporation 180,788
5,094 BB&T Corp. 188,160
11,812 BankAmerica Corp. 769,995
20,000 Bank One Corp. 1,026,250
35,000 Citigroup Inc. 1,756,562
2,870 Crestar Financial Corp. 190,496
19,360 First Financial Bancorp 649,770
3,225 First Virginia Bank, Inc. 144,722
8,480 Hibernia Corp., Class A 143,100
10,100 J.P. Morgan & Co., Inc. 1,079,438
4,026 SouthTrust Corp. 147,956
- ------------------------------------------------------------------------
Total 6,277,237
- ------------------------------------------------------------------------
BEVERAGE & TOBACCO - 0.4%
20,000 Fortune Brands, Inc. 681,250
- ------------------------------------------------------------------------
BROADCASTING - 1.3%
52,000 Clear Channel Communications, Inc.*<F42> 2,431,000
- ------------------------------------------------------------------------
BROKERAGE SERVICES - 2.0%
22,000 Merrill Lynch & Co., Inc. 1,650,000
30,000 Morgan Stanley, Dean Witter & Co. 2,092,500
- ------------------------------------------------------------------------
Total 3,742,500
- ------------------------------------------------------------------------
CHEMICALS - 1.1%
110,000 Lyondell Chemical Co. 2,048,750
- ------------------------------------------------------------------------
COMPUTER SERVICES - 12.1%
109,350 Cisco Systems, Inc.*<F42> 8,242,256
25,000 Computer Sciences Corp.*<F42> 1,428,125
33,140 Hewlett-Packard Co. 2,079,535
50,500 Microsoft Corp.*<F42> 6,161,000
30,000 Networks Associates, Inc.*<F42> 1,526,250
90,000 Oracle Corp.*<F42> 3,082,500
- ------------------------------------------------------------------------
Total 22,519,666
- ------------------------------------------------------------------------
DATA PROCESSING - 0.2%
10,000 Fiserv, Inc.*<F42> 441,875
- ------------------------------------------------------------------------
DRUGS - 9.0%
40,000 American Home Products Corp. 2,130,000
26,000 Bristol-Myers Squibb Co. 3,186,625
28,000 Merck & Co., Inc. 4,336,500
26,000 Pfizer, Inc. 2,902,250
80,000 Watson Pharmaceuticals, Inc.*<F42> 4,310,000
- ------------------------------------------------------------------------
Total 16,865,375
- ------------------------------------------------------------------------
DRUG STORES - 0.7%
26,000 CVS Corp. 1,283,750
- ------------------------------------------------------------------------
ELECTRIC - 0.9%
40,000 GPU, Inc. 1,752,500
- ------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 2.0%
42,000 General Electric Co. 3,801,000
- ------------------------------------------------------------------------
ELECTRONIC TECHNOLOGY - 6.3%
41,340 Intel Corp. 4,449,218
37,546 Lucent Technologies, Inc. 3,231,304
30,000 Sun Microsystems, Inc.*<F42> 2,221,875
73,000 Telefonaktiebolaget LM Ericsson,
Class B, ADR 2,016,625
- ------------------------------------------------------------------------
Total 11,919,022
- ------------------------------------------------------------------------
ENERGY SERVICES - 0.6%
25,000 Halliburton Co. 734,375
25,000 BJ Services Co.*<F42> 345,312
- ------------------------------------------------------------------------
Total 1,079,687
- ------------------------------------------------------------------------
ENTERTAINMENT - 0.7%
43,441 Disney (Walt) Co. 1,398,257
- ------------------------------------------------------------------------
FOOD & BEVERAGE - 3.6%
40,000 Campbell Soup Co. 2,285,000
30,000 Interstate Bakeries Corp. 787,500
48,000 PepsiCo, Inc. 1,857,000
40,000 U.S. Foodservice, Inc.*<F42> 1,837,500
- ------------------------------------------------------------------------
Total 6,767,000
- ------------------------------------------------------------------------
GOVERNMENT AGENCY - 3.3%
50,000 Fannie Mae 3,637,500
59,500 SLM Holding Corp. 2,618,000
- ------------------------------------------------------------------------
Total 6,255,500
- ------------------------------------------------------------------------
HEALTH TECHNOLOGY - 3.9%
100,000 Allegiance Corp. 4,031,250
25,000 Guidant Corp. 2,145,313
10,000 Sofamor Danek Group, Inc.*<F42> 1,118,125
- ------------------------------------------------------------------------
Total 7,294,688
- ------------------------------------------------------------------------
HOUSEHOLD PRODUCTS - 5.8%
40,000 Clorox Co. 4,442,500
20,000 Gillette Co. 918,750
63,658 Procter & Gamble Co. 5,578,032
- ------------------------------------------------------------------------
Total 10,939,282
- ------------------------------------------------------------------------
INSURANCE - 6.6%
85,000 Allstate Corp. 3,463,750
17,511 American International Group, Inc. 1,646,034
30,000 Conseco, Inc. 993,750
40,000 Ohio Casualty Corp. 1,620,000
60,000 SunAmerica, Inc. 4,755,000
- ------------------------------------------------------------------------
Total 12,478,534
- ------------------------------------------------------------------------
METALS & MINING - 1.2%
30,000 Aluminum Co. of America 2,223,750
- ------------------------------------------------------------------------
MULTI-INDUSTRY - 0.5%
21,058 Allied-Signal, Inc. 926,552
- ------------------------------------------------------------------------
NATURAL GAS - 1.3%
72,300 Coastal Corp. 2,521,463
- ------------------------------------------------------------------------
OFFICE EQUIPMENT - 1.1%
12,000 International Business Machines Corp. 1,980,000
- ------------------------------------------------------------------------
OIL - 3.7%
20,000 Amoco Corp. 1,178,750
17,500 Ashland, Inc. 850,938
12,000 Atlantic Richfield Co. 798,000
25,000 Chevron Corp. 2,090,625
22,600 Mobil Corp. 1,947,838
- ------------------------------------------------------------------------
Total 6,866,151
- ------------------------------------------------------------------------
PRODUCER MANUFACTURING - 5.5%
29,800 Caterpillar, Inc. 1,473,237
90,000 Masco Corp. 2,598,750
30,000 PACCAR, Inc. 1,365,000
72,500 Parker-Hannifin Corp. 2,519,375
30,000 Textron, Inc. 2,330,625
- ------------------------------------------------------------------------
Total 10,286,987
- ------------------------------------------------------------------------
RESTAURANTS - 0.2%
25,000 Ruby Tuesday, Inc. 465,625
- ------------------------------------------------------------------------
RETAIL TRADE - 7.4%
65,000 Federated Department Stores, Inc.*<F42> 2,709,687
61,600 Kohl's Corp.*<F42> 3,029,950
91,526 Premark International, Inc. 3,071,841
66,244 Safeway, Inc.*<F42> 3,498,511
20,000 Wal-Mart Stores, Inc. 1,506,250
- ------------------------------------------------------------------------
Total 13,816,239
- ------------------------------------------------------------------------
TELECOMMUNICATIONS - 7.3%
75,000 Alcatel SA ADR 1,940,625
25,000 AT&T Corp. 1,557,812
23,040 Bell Atlantic Corp. 1,281,600
53,000 BellSouth Corp. 4,624,250
25,000 GTE Corp. 1,550,000
35,000 MCI Worldcom, Inc.*<F42> 2,065,000
5,200 Vodafone Group PLC, ADR 767,975
- ------------------------------------------------------------------------
Total 13,787,262
- ------------------------------------------------------------------------
UTILITIES - ELECTRIC - 1.6%
30,000 Central and South West Corp. 825,000
50,000 DTE Energy Co. 2,181,250
- ------------------------------------------------------------------------
Total 3,006,250
- ------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $115,272,460) 179,747,777
- ------------------------------------------------------------------------
MUTUAL FUND - 0.1%
18,783 Dean Large Cap Value Fund, Class A 205,676
- ------------------------------------------------------------------------
TOTAL MUTUAL FUND
(IDENTIFIED COST $200,244) 205,676
- ------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST - 0.4%
50,000 RFS Hotel Investors, Inc. 715,625
- ------------------------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUST
(IDENTIFIED COST $596,095) 715,625
- ------------------------------------------------------------------------
OPTIONS PURCHASED - 0.0%
5,000 Put Option on Clorox,
expires 1/16/1999, strike @ 85 3,437
27,000 Put Option on Coca-Cola,
expires 1/16/1999, strike @ 40 3,375
50,000 Put Option on Dow Jones Index,
expires 12/19/1998, strike @ 88 37,500
12,000 Put Option on Exxon,
expires 1/16/1999, strike @ 35 2,250
24,000 Put Option on General Electric,
expires 1/16/1999, strike @ 40 6,000
4,000 Put Option on Merck,
expires 1/16/1999, strike @ 60 1,000
- ------------------------------------------------------------------------
TOTAL OPTIONS PURCHASED (IDENTIFIED COST $232,902) 53,562
- ------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 3.8%
- ------------------------------------------------------------------------
MUTUAL FUND - 0.9%
1,751,986 Government Money Market Fund 1,751,986
- ------------------------------------------------------------------------
REPURCHASE AGREEMENT - 2.9%
$5,476,000 Donaldson, Lufkin and Jenrette
Securities Corp., 5.32%, dated
11/30/98, due 12/1/98, repurchase
price $5,476,809 (Collateralized by
U.S. Government Securities) 5,476,000
- ------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (IDENTIFIED COST $7,227,986) 7,227,986
- ------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.0% (IDENTIFIED COST $122,733,348) 187,950,626
- ------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES - 0.0% 2,181
- ------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $187,952,807
- ------------------------------------------------------------------------
SCHEDULE OF CALL OPTIONS WRITTEN
100 GTE Corp., expires 3/20/1999,
exercise price $55.00 $92,500
100 GTE Corp., expires 3/20/1999,
exercise price $60.00 48,125
- ------------------------------------------------------------------------
TOTAL CALL OPTIONS WRITTEN (PREMIUMS RECEIVED $41,700) $140,625
- ------------------------------------------------------------------------
*<F42> Non-income producing
ADR -- American Depository Receipt
PLC -- Public Limited Company
(See Notes to Financial Statements.)
--------------------------------
Star Capital Appreciation Fund November 30, 1998
- ------------------------------------------------------------------------
SHARES OR PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------
COMMON STOCKS - 98.3%
- ------------------------------------------------------------------------
AIRLINES - 1.7%
14,000 ASA Holdings Ltd. $475,125
12,000 Alaska Air Group, Inc.*<F43> 449,250
16,000 Comair Holdings, Inc. 490,000
- ------------------------------------------------------------------------
Total 1,414,375
- ------------------------------------------------------------------------
AEROSPACE & DEFENSE - 3.2%
12,000 Alliant Techsystems, Inc.*<F43> 914,250
22,300 Gulfstream Aerospace Corp.*<F43> 1,145,663
30,000 Kaman Corp. 487,500
- ------------------------------------------------------------------------
Total 2,547,413
- ------------------------------------------------------------------------
APPLIANCES - 1.3%
19,000 Maytag Corp. 1,028,375
- ------------------------------------------------------------------------
AUTOMOTIVE & RELATED - 2.0%
13,000 Arvin Industries, Inc. 546,000
13,000 Federal-Mogul Corp. 737,750
18,500 Meritor Automotive, Inc. 327,219
- ------------------------------------------------------------------------
Total 1,610,969
- ------------------------------------------------------------------------
BANKING - 6.0%
11,550 Amsouth Bancorporation 487,987
25,000 City National Corp. 934,375
10,000 Comerica, Inc. 645,000
26,000 First Tennessee National Corp. 871,000
35,000 Hibernia Corp. 590,625
20,000 Popular, Inc. 595,000
25,000 Texas Regional Bancshares, Inc., Class A 684,375
- ------------------------------------------------------------------------
Total 4,808,362
- ------------------------------------------------------------------------
BUILDING & CONSTRUCTION - 4.6%
17,200 Astec Industries, Inc.*<F43> 892,250
16,000 Granite Construction Inc. 517,000
15,000 Martin Marietta Materials 727,500
20,000 Ryland Group, Inc. (The) 531,250
6,000 Southdown, Inc. 349,500
13,000 U.S.G. Corp.*<F43> 642,688
- ------------------------------------------------------------------------
Total 3,660,188
- ------------------------------------------------------------------------
COMPUTER SERVICES - 8.5%
35,000 American Management System, Inc.*<F43> 1,032,500
22,000 Boole & Babbage, Inc.*<F43> 695,750
22,000 Electronic Arts, Inc.*<F43> 926,750
12,500 Intuit, Inc.*<F43> 723,438
45,000 MAPICS, Inc.*<F43> 874,688
18,000 Network Associates, Inc.*<F43> 915,750
33,000 Progress Software Corp.*<F43> 837,375
32,000 Sterling Software, Inc.*<F43> 824,000
- ------------------------------------------------------------------------
Total 6,830,251
- ------------------------------------------------------------------------
COMPUTER PERIPHERAL - 2.8%
20,000 Lexmark Intl. Group, Class A*<F43> 1,527,500
20,000 Storage Technology Corp.*<F43> 700,000
- ------------------------------------------------------------------------
Total 2,227,500
- ------------------------------------------------------------------------
CONSUMER NON-DURABLES - 0.7%
11,000 Cintas Corp. 605,000
- ------------------------------------------------------------------------
DATA PROCESSING - 0.7%
16,000 Sterling Commerce, Inc.*<F43> 580,000
- ------------------------------------------------------------------------
DISTRIBUTION - 0.6%
18,000 United Stationers, Inc.*<F43> 477,000
- ------------------------------------------------------------------------
DIVERSIFIED - 0.4%
20,000 Grace (W.R.) & Co.*<F43> 330,000
- ------------------------------------------------------------------------
DRUGS - 3.9%
17,866 Bindley Western Industries, Inc. 690,074
20,000 Mylan Laboratories, Inc. 663,750
12,000 Omnicare, Inc. 343,500
26,000 Watson Pharmaceuticals, Inc.*<F43> 1,400,750
- ------------------------------------------------------------------------
Total 3,098,074
- ------------------------------------------------------------------------
ELECTRONICS - 0.6%
26,000 Recoton Corp.*<F43> 485,875
- ------------------------------------------------------------------------
FINANCE - 9.1%
14,000 Capital Re Corp. 276,500
15,000 Countrywide Credit Industries, Inc. 742,500
18,000 Eaton Vance Corp. 437,625
17,000 Edwards (AG), Inc. 626,875
24,000 Finova Group, Inc. 1,267,500
11,000 Jefferies Group, Inc. 510,125
16,500 Keyspan Energy Corp. 489,844
17,000 Morgan Keegan, Inc. 340,000
30,000 Pinnacle West Capital Corp. 1,366,875
32,000 Raymond James Financial, Inc. 792,000
11,088 Washington Mutual, Inc. 429,660
- ------------------------------------------------------------------------
Total 7,279,504
- ------------------------------------------------------------------------
FOOD & BEVERAGE - 2.6%
30,800 Earthgrains Co. 989,450
18,200 Michael Foods, Inc. 457,275
26,000 Universal Foods Corp. 645,125
- ------------------------------------------------------------------------
Total 2,091,850
- ------------------------------------------------------------------------
INDUSTRIAL PRODUCTS - 0.7%
18,000 C&D Technologies, Inc. 522,000
- ------------------------------------------------------------------------
INSURANCE - 3.7%
15,000 Enhance Financial Services Group Inc. 440,625
9,000 Lincoln National Corp. 753,188
8,800 NAC Re Corp. 420,200
9,000 PacificCare Health Systems, Inc.,
Class B*<F43> 677,813
5,000 Transatlantic Holdings, Inc. 380,000
5,000 UNUM Corp. 269,375
- ------------------------------------------------------------------------
Total 2,941,201
- ------------------------------------------------------------------------
HOMEBUILDING - 4.5%
21,000 Centex Corp. 749,438
15,000 D.R. Horton, Inc. 283,125
28,000 Kaufman & Broad Homes Corp. 705,250
43,000 M/I Schottenstein Homes, Inc. 937,938
23,300 NVR, Inc.*<F43> 917,437
- ------------------------------------------------------------------------
Total 3,593,188
- ------------------------------------------------------------------------
MANUFACTURING - 4.8%
10,000 Carlisle Cos., Inc. 443,125
16,000 HON Industries, Inc. 380,000
23,000 Kaydon Corp. 812,188
15,000 Miller Herman, Inc. 318,750
32,000 RPC Energy Services, Inc. 248,000
11,700 SPS Technologies, Inc.*<F43> 669,825
17,600 Sonoco Products Co. 526,900
13,500 VWR Scientific Products Corp.*<F43> 421,875
- ------------------------------------------------------------------------
Total 3,820,663
- ------------------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES - 8.6%
18,000 Biomet, Inc. 688,500
20,600 CONMED Corp.*<F43> 561,350
17,500 Genzyme Corp.*<F43> 736,094
1,891 Genzyme Molecular Oncology*<F43> 6,618
26,700 Hanger Orthopedic Group, Inc.*<F43> 640,800
17,300 Maxxim Medical, Inc.*<F43> 471,425
19,300 Osteotech, Inc.*<F43> 646,550
37,600 Owens & Minor, Inc. 643,900
11,625 RLI Corp. 420,680
31,200 Trigon Healthcare, Inc.*<F43> 1,156,350
47,700 Veterinary Centers of America*<F43> 876,487
- ------------------------------------------------------------------------
Total 6,848,754
- ------------------------------------------------------------------------
METALS - 1.0%
10,005 Aluminum Co. of America 741,620
5,000 Easco, Inc. 43,750
- ------------------------------------------------------------------------
Total 785,370
- ------------------------------------------------------------------------
NATURAL GAS - 1.3%
29,100 Coastal Corp. 1,014,862
- ------------------------------------------------------------------------
OFFICE & BUSINESS EQUIPMENT - 0.3%
11,500 CORT Business Services Corp.*<F43> 260,906
- ------------------------------------------------------------------------
OIL & GAS - 2.1%
16,000 BJ Services Co.*<F43> 221,000
10,000 Nabors Industries, Inc.*<F43> 132,500
37,000 R&B Falcon Corp.*<F43> 339,937
30,000 Tosco Corp. 783,750
9,000 Transocean Offshore, Inc. 222,188
- ------------------------------------------------------------------------
Total 1,699,375
- ------------------------------------------------------------------------
PLASTICS - 1.4%
21,000 Schulman (A.), Inc. 448,875
34,000 Spartech Corp. 677,875
- ------------------------------------------------------------------------
Total 1,126,750
- ------------------------------------------------------------------------
PUBLISHING - 0.6%
9,000 Knight-Ridder, Inc. 462,937
- ------------------------------------------------------------------------
RESTAURANTS - 0.5%
22,050 Sonic Corp.*<F43> 432,731
- ------------------------------------------------------------------------
RETAILING & APPAREL - 8.0%
20,000 Best Buy Co., Inc.*<F43> 1,152,500
12,700 Department 56, Inc.*<F43> 437,356
19,500 Jo-Ann Stores, Inc., Class A 307,125
20,000 Lowe's Cos., Inc. 845,000
20,350 Mens Wearhouse, Inc.*<F43> 515,109
35,000 Micro Warehouse, Inc.*<F43> 958,125
48,000 Musicland Stores, Inc. 813,000
11,500 S&K Famous Brands, Inc.*<F43> 113,562
19,100 Shopko Stores, Inc. 615,975
18,000 Staples, Inc.*<F43> 628,875
- ------------------------------------------------------------------------
Total 6,386,627
- ------------------------------------------------------------------------
TECHNOLOGY SERVICES - 0.5%
10,000 Harris Corp. 379,375
- ------------------------------------------------------------------------
TELECOMMUNICATIONS & EQUIPMENT - 7.5%
18,000 Century Telephone Enterprises, Inc. 1,026,000
50,000 Comsat Corp. 1,781,250
18,000 Dycom Industries, Inc.*<F43> 707,625
22,000 ECI Telecommunications Ltd. 786,500
17,400 Norstan, Inc.*<F43> 266,438
40,000 Tekelec*<F43> 620,000
15,500 Tele Danmark A/S 859,281
- ------------------------------------------------------------------------
Total 6,047,094
- ------------------------------------------------------------------------
TRANSPORTATION - 0.5%
14,800 Airborne Freight Corp. 394,975
- ------------------------------------------------------------------------
UTILITIES - 3.6%
28,000 CMP Group, Inc. 502,250
22,100 Energy East Corp. 1,172,681
14,000 Montana Power Co. (The) 709,625
30,000 Northeast Utilities*<F43> 472,500
- ------------------------------------------------------------------------
Total 2,857,056
- ------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $69,647,906) 78,648,600
- ------------------------------------------------------------------------
MUTUAL FUND - 0.8%
67,130 Dean Small Cap Value Fund 681,373
- ------------------------------------------------------------------------
TOTAL MUTUAL FUND
(IDENTIFIED COST $750,815) 681,373
- ------------------------------------------------------------------------
SHORT-TERM INVESTMENT - 0.9%
- ------------------------------------------------------------------------
REPURCHASE AGREEMENT - 0.9%
$688,000 Donaldson, Lufkin and Jenrette
Securities Corp., 5.32%, dated
11/30/98, due 12/1/98, repurchase
price $688,102 (Collateralized by
U.S. Government Securities) 688,000
- ------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(IDENTIFIED COST $688,000) 688,000
- ------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.0%
(IDENTIFIED COST $71,086,721) 80,017,973
- ------------------------------------------------------------------------
LIABILITIES, LESS OTHER ASSETS - 0.0% (37,124)
- ------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $79,980,849
- ------------------------------------------------------------------------
*<F43> Non-income producing
(See Notes to Financial Statements.)
--------------------------------
Star International Equity Fund November 30, 1998
- ------------------------------------------------------------------------
SHARES OR PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------
MUTUAL FUNDS - 99.6%
267,361 Bartlett Value International Fund,
Class A $3,013,154
75,000 Brazil Fund, Inc. 1,157,813
5,000 (The) Central European Equity Fund 63,750
5,000 (The) Central European Value Fund 52,188
75,000 Chile Fund, Inc. 820,313
287,037 Federated International Equity Fund,
Class A 5,614,438
24,590 Flex Partners International Equity Fund 343,033
157,565 Founders Worldwide Growth Fund 3,468,013
100,000 France Growth Fund, Inc. 1,406,250
100,000 Irish Investment Fund, Inc. 1,912,500
111,100 Italy Fund, Inc. 1,624,837
166,681 Janus Worldwide Fund 7,358,945
5,000 Latin America Investment Fund 48,438
135,456 Lexington Global Fund 1,613,281
10,808 Lindner International Fund 71,332
70,000 Mexico Fund 770,000
232,927 Morgan Stanley Global Equity
Allocation Fund 4,775,004
41,616 One Fund, Inc. 484,415
153,412 Scudder Global Fund 4,769,589
100,000 Swiss Helvetia Fund 1,600,000
50,000 Templeton Emerging Markets
Growth Fund 518,750
100,000 United Kingdom Fund, Inc. 1,475,000
241,916 USAA World Growth Fund 3,921,462
15,000 WEBS - France Index Series 309,375
12,000 WEBS - Italy Index Series 309,000
15,000 WEBS - Spain Index Series 433,125
16,000 WEBS - United Kingdom Series 320,000
- ------------------------------------------------------------------------
TOTAL MUTUAL FUNDS (IDENTIFIED COST $48,686,603) 48,254,005
- ------------------------------------------------------------------------
SHORT-TERM INVESTMENT -- 0.5%
- ------------------------------------------------------------------------
REPURCHASE AGREEMENT - 0.5%
$244,000 Donaldson, Lufkin and Jenrette
Securities Corp., 5.32%, dated
11/30/98, due 12/1/98, repurchase
price $244,036 (Collateralized
by U.S. Government Securities) 244,000
- ------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(IDENTIFIED COST $244,000) 244,000
- ------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.1%
(IDENTIFIED COST $48,930,603) 48,498,005
- ------------------------------------------------------------------------
LIABILITIES, LESS OTHER ASSETS - (0.1%) (39,274)
- ------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $48,458,731
- ------------------------------------------------------------------------
(See Notes to Financial Statements.)
STATEMENTS OF ASSETS AND LIABILITIES
November 30, 1998
<TABLE>
STAR STAR STAR STAR STAR
THE RELATIVE MARKET GROWTH CAPITAL INTERNATIONAL
STELLAR VALUE CAPITALIZATION EQUITY APPRECIATION EQUITY
FUND FUND FUND FUND FUND FUND
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Total investments in securities,
at value $104,875,323 $444,773,625 $42,716,018 $187,950,626 $80,017,973 $48,498,005
Cash 1,334 83,976 600 167,772 286 449,348
Income receivable 532,937 975,596 45 207,021 60,945 45,890
Receivable for investments sold -- -- -- -- 28,463 --
Receivable for Fund shares sold 22,494 53,685 18,127 51,773 2,677 --
Other assets -- -- -- 62,204 14,032 --
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets 105,432,088 445,886,882 42,734,790 188,439,396 80,124,376 48,993,243
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable to affiliates 148,000 420,835 46,570 194,323 91,445 55,881
Payable for Fund shares redeemed 57,863 235,171 25,606 151,641 36,306 4,109
Accrued expenses 41,693 53,615 13,233 -- 15,776 28,797
Payable for investments purchased -- -- -- -- -- 445,725
Options written, at value -- -- -- 140,625 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total liabilities 247,556 709,621 85,409 486,589 143,527 534,512
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $105,184,532 $445,177,261 $42,649,381 $187,952,807 $79,980,849 $48,458,731
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid in capital $81,786,652 $245,102,986 $39,843,400 $118,419,597 $73,540,833 $47,992,208
Undistributed net investment income 659,683 886,500 47,314 142,335 -- 63,407
Accumulated net realized gain (loss)
on investments and options 8,979,558 1,781,408 (20,415) 4,272,522 (2,491,236) 835,714
Net unrealized appreciation (depreciation)
on investments and options 13,758,639 197,406,367 2,779,082 65,118,353 8,931,252 (432,598)
- ---------------------------------------------------------------------------------------------------------------------------------
Total net assets $105,184,532 $445,177,261 $42,649,381 $187,952,807 $79,980,849 $48,458,731
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
A Shares $46,612,896 $50,925,324 -- -- $79,980,849 $48,458,731
B Shares -- 7,846,616 -- $66,477,700 -- --
C Shares -- -- $42,649,381 -- -- --
Y Shares 58,571,636 386,405,321 -- 121,475,107 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total net assets $105,184,532 $445,177,261 $42,649,381 $187,952,807 $79,980,849 $48,458,731
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING:
A Shares 3,490,713 1,939,184 -- -- 6,805,884 4,682,550
B Shares -- 298,599 -- 3,405,483 -- --
C Shares -- -- 3,589,628 -- -- --
Y Shares 4,384,998 14,708,712 -- 6,225,535 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total shares outstanding 7,875,711 16,946,495 3,589,628 9,631,018 6,805,884 4,682,550
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE:
A Shares $13.35 $26.26 -- -- $11.75 $10.35
B Shares -- $26.28 -- $19.52 -- --
C Shares -- -- $11.88 -- -- --
Y Shares $13.36 $26.27 -- $19.51 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
OFFERING PRICE PER SHARE:
A Shares $13.98(a)<F44> $27.50(a)<F44> -- -- $12.30(a)<F44> $10.51(b)<F45>
B Shares -- $26.28 -- $19.52 -- --
C Shares -- -- $11.88 -- -- --
Y Shares $13.36 $26.27 -- $19.51 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
REDEMPTION PROCEEDS PER SHARE:
A Shares $13.35 $26.26 -- -- $11.75 $10.35
B Shares -- $24.97(c)<F46> -- $18.54(c)<F46> -- --
C Shares -- -- $11.88 -- -- --
Y Shares $13.36 $26.27 -- $19.51 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Investments, at identified cost $91,116,684 $247,367,258 $39,936,936 $122,733,348 $71,086,721 $48,930,603
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Investments, at tax cost $91,150,847 $247,367,258 $39,957,351 $122,769,770 $71,086,721 $48,930,603
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
(a)<F44> Computation of Offering price: 100/95.5 of net asset value.
(b)<F45> Computation of Offering price: 100/98.5 of net asset value.
(c)<F46> Computation of Redemption Proceeds: 95/100 of net asset value.
</TABLE>
(See Notes to Financial Statements.)
STATEMENTS OF OPERATIONS
Period Ended November 30, 1998
<TABLE>
STAR STAR STAR STAR STAR
THE RELATIVE MARKET GROWTH CAPITAL INTERNATIONAL
STELLAR VALUE CAPITALIZATION EQUITY APPRECIATION EQUITY
FUND FUND FUND(A)<F47> FUND FUND FUND(B)<F48>
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $2,780,099 $406,669 $47,698 $319,638 $66,596 $200,015
Dividend income 2,081,902 7,737,644 262,479 2,158,952 646,203 509,153
- ---------------------------------------------------------------------------------------------------------------------------------
Total income 4,862,001 8,144,313 310,177 2,478,590 712,799 709,168
- ---------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 1,057,960 3,061,795 72,234 1,269,745 767,140 313,728
Shareholder services fees 278,425 1,021,993 60,516 423,693 202,099 104,136
Transfer and dividend disbursing
agent fees and expenses 130,624 159,069 16,278 95,085 29,815 20,343
Administration fees 129,936 480,815 48,628 197,859 94,244 55,030
Distribution services fees-A Shares 123,182 115,177 -- -- -- --
Distribution services fees-B Shares -- -- -- 143,649 -- --
Portfolio accounting fees 71,227 110,992 38,999 64,766 47,302 54,065
Auditing fees 34,599 34,283 11,500 12,656 27,511 11,582
Custodian fees 27,841 102,060 14,120 42,325 20,188 10,458
Federal and state registration fees 23,715 38,686 34,887 51,097 17,696 38,407
Printing and postage 10,921 23,521 13,525 15,388 17,279 15,802
Legal fees 3,919 7,929 2,910 2,577 843 2,745
Trustees' fees 2,995 8,237 2,642 2,967 2,240 2,949
Miscellaneous 11,798 17,252 6,572 13,244 1,759 7,628
- ---------------------------------------------------------------------------------------------------------------------------------
Total expenses 1,907,142 5,181,809 322,811 2,335,051 1,228,116 636,873
- ---------------------------------------------------------------------------------------------------------------------------------
WAIVER --
- ---------------------------------------------------------------------------------------------------------------------------------
Waiver of investment advisory fees -- -- (17,060) -- -- --
Waiver of shareholder services fees (222,743) (817,873) (48,477) (339,043) (161,723) (84,082)
- ---------------------------------------------------------------------------------------------------------------------------------
Total waivers (222,743) (817,873) (65,537) (339,043) (161,723) (84,082)
- ---------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,684,399 4,363,936 257,274 1,996,008 1,066,393 552,791
- ---------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 3,177,602 3,780,377 52,903 482,582 (353,594) 156,377
- ---------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments,
options and underlying funds 8,965,626 1,782,713 (20,415) 4,357,637 (2,489,161) 835,714
Net change in unrealized appreciation
(depreciation) on investments, options
and underlying funds (5,745,284) 57,735,300 2,779,082 27,811,716 6,381,385 (432,598)
- ---------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN 3,220,342 59,518,013 2,758,667 32,169,353 3,892,224 403,116
- ---------------------------------------------------------------------------------------------------------------------------------
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS $6,397,944 $63,298,390 $2,811,570 $32,651,935 $3,538,630 $559,493
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
(a)<F47> Reflects operations for the period from December 8, 1997 (date of initial public investment) to November 30, 1998.
(b)<F48> Reflects operations for the period from December 3, 1997 (date of initial public investment) to November 30, 1998.
</TABLE>
(See Notes to Financial Statements.)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
STAR STAR
THE RELATIVE MARKET
STELLAR VALUE CAPITALIZATION
FUND FUND FUND
--------------------------- --------------------------- --------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1998 1997 1998 1997 1998(A)<F49>
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS--
Net investment income (net operating loss) $3,177,602 $3,257,201 $3,780,377 $4,111,958 $52,903
Net realized gain (loss) on investments, options and
underlying funds 8,965,626 10,472,803 1,782,713 12,351,845 (20,415)
Net change in net unrealized appreciation/depreciation
on investments, options and underlying funds (5,745,284) (266,167) 57,735,300 69,992,342 2,779,082
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 6,397,944 13,463,837 63,298,390 86,456,145 2,811,570
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
A Shares (1,272,062) (1,325,460) (314,887) (2,940,841) --
B Shares -- -- (23,565) -- --
C Shares -- -- -- -- (5,589)
Y Shares (1,768,243) (1,933,469) (3,346,134) (918,577) --
Distributions from net realized gain on
investments and options
A Shares (4,564,730) (1,845,065) (1,335,755) (4,395,625) --
B Shares -- -- -- -- --
Y Shares (5,845,323) (2,461,154) (11,016,756) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from distributions
to shareholders (13,450,358) (7,565,148) (16,037,097) (8,255,043) (5,589)
- ---------------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS--
Proceeds from sales of shares 14,934,333 15,147,571 105,570,306 382,346,269 41,686,976
Net asset value of shares issued to shareholders
in payment of distributions declared 11,882,476 6,507,375 12,183,187 3,231,015 3,084
Cost of shares redeemed (28,719,192) (30,556,221) (69,641,417) (329,817,737) (1,846,660)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from share transactions (1,902,383) (8,901,275) 48,112,076 55,759,547 39,843,400
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets (8,954,797) (3,002,586) 95,373,369 133,960,649 42,649,381
NET ASSETS:
Beginning of period 114,139,329 117,141,915 349,803,892 215,843,243 --
- ---------------------------------------------------------------------------------------------------------------------------------
End of period $105,184,532 $114,139,329 $445,177,261 $349,803,892 $42,649,381
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income included in
net assets at end of period $659,683 $216,008 $886,500 $790,512 $47,314
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
STAR STAR STAR
GROWTH CAPITAL INTERNATIONAL
EQUITY APPRECIATION EQUITY
FUND FUND FUND
--------------------------- ---------------------------- ------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1998 1997 1998 1997 1998(B)<F50>
- -------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$482,582 $1,040,010 $(353,594) $124,077 $156,377
4,357,637 8,585,979 (2,489,161) 18,507,772 835,714
27,811,716 22,147,767 6,381,385 (8,746,048) (432,598)
- -------------------------------------------------------------------------------
32,651,935 31,773,756 3,538,630 9,885,801 559,493
- -------------------------------------------------------------------------------
-- -- (133,033) -- (92,970)
(80,332) (830,336) -- -- --
-- -- -- -- --
(438,513) (220,127) -- -- --
-- -- (17,824,043) -- --
(2,579,168) (5,807,116) -- -- --
(6,040,139) -- -- -- --
- -------------------------------------------------------------------------------
(9,138,152) (6,857,579) (17,957,076) -- (92,970)
- -------------------------------------------------------------------------------
47,696,699 160,959,446 13,112,471 13,656,375 51,706,328
6,393,320 4,941,932 11,194,078 -- 50,831
(43,763,249) (122,016,691) (13,025,508) (19,586,731) (3,764,951)
- -------------------------------------------------------------------------------
10,326,770 43,884,687 11,281,041 (5,930,356) 47,992,208
- -------------------------------------------------------------------------------
33,840,553 68,800,864 (3,137,405) 3,955,445 48,458,731
154,112,254 85,311,390 83,118,254 79,162,809 --
- -------------------------------------------------------------------------------
$187,952,807 $154,112,254 $79,980,849 $83,118,254 $48,458,731
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$142,335 $178,611 -- $124,077 $63,407
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(a)<F49> Reflects operations for the period from December 8, 1997 (date of initial public investment) to November 30, 1998.
(b)<F50> Reflects operations for the period from December 3, 1997 (date of initial public investment) to November 30, 1998.
</TABLE>
(See Notes to Financial Statements.)
FINANCIAL HIGHLIGHTS
<TABLE>
STAR FUNDS
(For a share outstanding throughout each period)
NET REALIZED
AND
NET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS
NET ASSET INVESTMENT GAIN (LOSS) ON DISTRIBUTIONS IN EXCESS OF FROM NET
VALUE, INCOME (NET INVESTMENTS, TOTAL FROM FROM NET NET REALIZED GAIN
PERIOD ENDED BEGINNING OPERATING OPTIONS AND INVESTMENT INVESTMENT INVESTMENT ON INVESTMENTS
NOVEMBER 30, OF PERIOD LOSS) UNDERLYING FUNDS OPERATIONS INCOME INCOME(I)<F59> AND OPTIONS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
THE STELLAR FUND
Y SHARES (FORMERLY, TRUST SHARES)
1994(a)<F51> $11.34 0.21 (0.48) (0.27) (0.17) -- --
1995 $10.90 0.38 1.32 1.70 (0.38) -- (0.05)
1996 $12.17 0.37 1.62 1.99 (0.37) -- (0.20)
1997 $13.59 0.40 1.18 1.58 (0.40) -- (0.50)
1998 $14.27 0.42 0.36 0.78 (0.39) -- (1.30)
A SHARES (FORMERLY, INVESTMENT SHARES)
1994 $11.34 0.29 (0.41) (0.12) (0.24) -- (0.08)
1995 $10.90 0.34 1.33 1.67 (0.35) -- (0.05)
1996 $12.17 0.34 1.62 1.96 (0.34) -- (0.20)
1997 $13.59 0.36 1.18 1.54 (0.36) -- (0.50)
1998 $14.27 0.38 0.35 0.73 (0.35) -- (1.30)
STAR RELATIVE VALUE FUND
Y SHARES (FORMERLY, TRUST SHARES)
1997(b)<F52> $22.67 0.08 0.81 0.89 (0.07) -- --
1998 $23.49 0.18 3.65 3.83 (0.23) -- (0.82)
A SHARES (FORMERLY, INVESTMENT SHARES)
1994 $11.80 0.23 (0.40) (0.17) (0.23) -- (0.04)
1995 $11.36 0.29 3.65 3.94 (0.28) -- --
1996 $15.02 0.27 4.01 4.28 (0.26) -- (0.01)
1997 $19.03 0.67 4.45 5.12 (0.28) -- (0.39)
1998 $23.48 0.11 3.66 3.77 (0.17) -- (0.82)
B SHARES
1998(c)<F53> $26.01 0.14 0.24 0.38 (0.11) -- --
STAR MARKET CAPITALIZATION FUND
C SHARES
1998(d)<F54> $10.00 0.02 1.87 1.89 (0.01) -- --
STAR GROWTH EQUITY FUND
Y SHARES (FORMERLY, TRUST SHARES)
1997(e)<F55> $16.46 0.03 0.73 0.76 (0.04) -- --
1998 $17.18 0.06 3.30 3.36 (0.07) -- (0.96)
B SHARES (FORMERLY, INVESTMENT SHARES)
1995(f)<F56> $10.00 0.24 2.67 2.91 (0.21) -- --
1996 $12.70 0.17 3.12 3.29 (0.16) -- (0.66)
1997 $15.17 0.19 2.97 3.16 (0.14) -- (1.02)
1998 $17.17 0.02 3.32 3.34 (0.03) -- (0.96)
STAR CAPITAL APPRECIATION FUND
A SHARES
1994(g)<F57> $10.00 -- 0.15 0.15 -- -- --
1995 $10.15 0.03 1.72 1.75 (0.04) (0.00)(l)<F62> (0.04)
1996 $11.82 (0.03) 1.05 1.02 -- -- (0.29)
1997 $12.55 0.02 1.77 1.79 -- -- --
1998 $14.34 (0.05) 0.56 0.51 (0.02) -- (3.08)
STAR INTERNATIONAL EQUITY FUND
A SHARES
1998(h)<F58> $10.00 0.05 0.34 0.39 (0.04) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
--------------------------------------- NET ASSETS,
NET ASSET NET EXPENSE END PORTFOLIO
TOTAL VALUE, END TOTAL INVESTMENT WAIVER/ OF PERIOD TURNOVER
DISTRIBUTIONS OF PERIOD RETURN(J)<F60> EXPENSES INCOME REIMBURSEMENT(K)<F61> (000 OMITTED) RATE
- ---------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
(0.17) $10.90 (1.81%) 1.43%(m)<F63>3.57%(m)<F63> 0.20%(m)<F63> $60,822 79%
(0.43) $12.17 15.97% 1.40% 3.23% 0.20% $64,754 104%
(0.57) $13.59 16.94% 1.39% 2.85% 0.20% $67,047 65%
(0.90) $14.27 12.22% 1.31% 2.89% 0.20% $63,742 64%
(1.69) $13.36 6.11% 1.40% 2.96% 0.20% $58,572 77%
(0.32) $10.90 (1.22%) 1.55% 2.32% 0.32% $50,648 79%
(0.40) $12.17 15.67% 1.65% 2.98% 0.20% $48,902 104%
(0.54) $13.59 16.64% 1.66% 2.76% 0.20% $50,094 65%
(0.86) $14.27 11.94% 1.56% 2.63% 0.20% $50,398 64%
(1.65) $13.35 5.74% 1.65% 2.71% 0.20% $46,613 77%
(0.07) $23.49 3.93% 1.00%(m)<F63>1.35%(m)<F63> 0.20%(m)<F63> $312,056 18%
(1.05) $26.27 16.95% 1.04% 0.95% 0.20% $386,405 26%
(0.27) $11.36 (1.54%) 1.15% 2.02% 0.20% $74,094 30%
(0.28) $15.02 35.10% 1.06% 2.17% 0.20% $131,979 24%
(0.27) $19.03 28.86% 1.04% 1.71% 0.20% $215,843 16%
(0.67) $23.48 27.69% 1.01% 1.40% 0.20% $37,748 18%
(0.99) $26.26 16.67% 1.29% 0.70% 0.20% $50,925 26%
(0.11) $26.28 1.50% 1.04%(m)<F63>0.95%(m)<F63> 0.20%(m)<F63> $7,847 26%
(0.01) $11.88 18.94% 1.06%(m)<F63>0.22%(m)<F63> 0.27%(m)<F63> $42,649 2%
(0.04) $17.18 4.59% 1.06%(m)<F63>0.68%(m)<F63> 0.20%(m)<F63> $109,087 60%
(1.03) $19.51 20.91% 1.09% 0.37% 0.20% $121,475 48%
(0.21) $12.70 29.44% 1.17%(m)<F63>2.00%(m)<F63> 0.23%(m)<F63> $48,699 171%
(0.82) $15.17 27.34% 1.19% 1.31% 0.20% $85,311 96%
(1.16) $17.17 22.65% 1.09% 0.86% 0.20% $45,025 60%
(0.99) $19.52 20.76% 1.34% 0.12% 0.20% $66,478 48%
-- $10.15 1.50% 1.58%(m)<F63>0.08%(m)<F63> 0.30%(m)<F63> $30,013 36%
(0.08) $11.82 17.35% 1.47% 0.28% 0.21% $56,430 144%
(0.29) $12.55 8.95% 1.32% (0.24%) 0.20% $79,163 174%
-- $14.34 14.26% 1.29% 0.16% 0.20% $83,118 262%
(3.10) $11.75 4.75% 1.32% (0.44%) 0.20% $79,981 94%
(0.04) $10.35 3.95% 1.31%(m)<F63>0.37%(m)<F63> 0.20%(m)<F63> $48,459 3%
- ---------------------------------------------------------------------------------------------------------------------------------
(a)<F51> Reflects operations for the period from April 11, 1994 (date of initial public investment) to November 30, 1994. For the
period from April 5, 1994 (start of business) to April 10, 1994, all income was distributed to the Administrator.
(b)<F52> Reflects operations for the period from August 18, 1997 (date of initial public investment) to November 30, 1997.
(c)<F53> Reflects operations for the period from March 13, 1998 (date of initial public investment) to November 30, 1998.
(d)<F54> Reflects operations for the period from December 8, 1997 (date of initial public investment) to November 30, 1998.
(e)<F55> Reflects operations for the period from August 18, 1997 (date of initial public investment) to November 30, 1997.
(f)<F56> Reflects operations for the period from December 12, 1994 (date of initial public investment) to November 30, 1995.
(g)<F57> Reflects operations for the period from June 13, 1994 (date of initial public investment) to November 30, 1994.
(h)<F58> Reflects operations for the period from December 3, 1997 (date of initial public investment) to November 30, 1998.
(i)<F59> Distributions are determined in accordance with federal income tax regulations which may differ from generally accepted
accounting principles. These distributions did not represent a return of capital for federal income tax purposes.
(j)<F60> Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
(k)<F61> This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above.
(l)<F62> Less than one cent per share.
(m)<F63> Computed on an annualized basis.
</TABLE>
(See Notes to Financial Statements.)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998
(1) ORGANIZATION
Star Funds (the "Trust") is registered under the Investment Company Act of 1940,
as amended (the "Act"), as an open-end management investment company. The Trust
consists of eleven diversified portfolios and one non-diversified portfolio. The
financial statements of the following portfolios (individually referred to as
the "Fund", or collectively as the "Funds") are presented herein along with each
Fund's investment objective:
PORTFOLIO NAME INVESTMENT OBJECTIVE
- ---------------------------------------------------------------------------
The Stellar Fund Maximize total return, a combination
("Stellar Fund") of dividend income and capital
appreciation.
Star Relative Value Fund Maximize total return, a combination
("Relative Value Fund") of income and capital appreciation.
Star Market Capitalization Fund Seeks to provide total return that
("Market Capitalization Fund") approximates the total return of the
Standard and Poor's 500 Composite Stock
Price Index.
Star Growth Equity Fund Maximize capital appreciation.
("Growth Equity Fund")
Star Capital Appreciation Fund Maximize capital appreciation.
("Capital Appreciation Fund")
Star International Equity Fund Long-term capital appreciation.
("International Equity Fund")
The financial statements of the Bond Funds and Money Market Funds are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held.
The Stellar Fund offers two classes of shares, A Shares and Y Shares (formerly,
Investment shares and Trust shares, respectively); Relative Value Fund offers
three classes of shares. A Shares, Y Shares (formerly, Investment shares and
Trust shares, respectively) and B Shares; Market Capitalization Fund offers one
class of shares (C Shares); Growth Equity Fund offers two classes of shares, B
Shares and Y Shares (formerly, Investment shares and Trust shares,
respectively); Capital Appreciation Fund offers one class of shares (A Shares);
and the International Equity Fund offers one class of shares (A Shares).
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS
Equity securities traded on a securities exchange and securities traded in the
over-the-counter market are valued at the last reported sales price on the day
of valuation; other securities for which no sale was reported on that date, are
valued at the last quoted bid price. Corporate and municipal bonds, asset backed
securities and U.S. government securities are valued using the last quoted bid
price as furnished by an independent pricing service. Short-term securities with
remaining maturities of sixty days or less at the time of purchase may be valued
at amortized cost, which approximates fair market value. Investments in other
open-end regulated investment companies are valued at net asset value.
B. REPURCHASE AGREEMENTS
It is the policy of the Funds to require a custodian bank to take possession, to
have legally segregated in the Federal Reserve Book Entry System, or to have
segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been
established by the Funds to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement
transaction.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Funds' adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the "Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Funds could receive less
than the repurchase price on the sale of collateral securities.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Net investment income other than
class specific expenses, and realized and unrealized gains and losses are
allocated daily to each class of shares based upon the relative net asset value
of outstanding shares (or the value of dividend-eligible shares, as appropriate)
of each class of shares at the beginning of the day (after adjusting for the
current day's capital share activity of the respective class). Distributions to
shareholders are recorded on the ex-dividend date.
D. FEDERAL TAXES
It is each Fund's policy to comply with the provisions of the Internal Revenue
Code, as amended (the "Code") applicable to regulated investment companies and
to distribute to shareholders each year substantially all of its income.
Accordingly, no provisions for federal taxes are necessary.
At November 30, 1998, the Capital Appreciation Fund for federal tax purposes,
had capital loss carryforwards, as noted below, which will reduce the Fund's
taxable income arising from future net realized gains on investments, if any, to
the extent permitted by the Code, and thus will reduce the amount of the
distributions to shareholders which would otherwise be necessary to relieve the
Fund of any liability for federal tax.
TOTAL TAX-LOSS
FUND CARRYFORWARD
- ------------------------------------------------------------
Capital Appreciation Fund $2,491,236
- ------------------------------------------------------------
Pursuant to the Code, the capital loss carryforward for the Capital Appreciation
Fund of $2,491,236 will expire in the year 2006.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Funds may engage in when-issued or delayed delivery transactions. The Funds
record when-issued securities on the trade date and maintain security positions
such that sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed delivery
basis are marked to market daily and begin earning interest on the settlement
date.
F. OPTION CONTRACTS WRITTEN
The Stellar Fund, Growth Equity Fund and Capital Appreciation Fund may write
"covered" call option contracts. All of the Funds may also write "covered" put
options. A written option obligates the Funds to deliver (a call), or to receive
(a put), the contract amount upon exercise by the holder of the option. The
principal reason for writing call or put options is to obtain, through receipt
of premiums, a greater current return than would be realized on underlying
securities alone. By writing call options, the Fund may forego potential gains
on the underlying security. By writing a put option, the Fund risks becoming
obligated to purchase the underlying security for more than its current market
price upon exercise. Premiums received from writing options are recorded as a
liability and an unrealized gain or loss is measured by the difference between
the current value and the premium received. For the year ended November 30,
1998, the Stellar Fund, Growth Equity Fund and Capital Appreciation Fund had net
realized gain (loss) on options contracts, written and purchased, of $(23,599),
$116,699, and $0, respectively.
At November 30, 1998, the Stellar Fund and the Capital Appreciation Fund had no
outstanding options.
The Capital Appreciation Fund had no written option activity during the year.
The following is a summary of the Stellar Fund and Growth Equity Fund options
activity:
STELLAR FUND
------------------------------
NUMBER OF
CONTRACTS PROCEEDS*<F63>
------------------------------
Outstanding at November 30, 1997 -- $ --
Contracts opened 235 201,072
Contracts expired -- --
Contracts exercised -- --
Contracts closed (235) (201,072)
------------------------------
Outstanding at November 30, 1998 -- $ --
------------------------------
GROWTH EQUITY FUND
------------------------------
NUMBER OF
CONTRACTS PROCEEDS*<F64>
------------------------------
Outstanding at November 30, 1997 -- $ --
Contracts opened 2,310 888,347
Contracts expired (1,000) (266,964)
Contracts exercised -- --
Contracts closed (1,110) (579,683)
------------------------------
Outstanding at November 30, 1998 200 $41,700
------------------------------
*<F64>Represents premium received less commissions paid.
G. USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, revenues and expenses reported in the
financial statements. Actual results could differ from those estimated.
H. OTHER
Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
STELLAR FUND
--------------------------------------------------------
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1998 NOVEMBER 30, 1997
------------------------- -------------------------
A SHARES (FORMERLY, INVESTMENT SHARES) SHARES DOLLARS SHARES DOLLARS
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Shares sold 330,173 $4,415,487 229,880 $3,158,813
Shares issued to shareholders in payment of distributions declared 445,681 5,756,750 234,369 3,116,031
Shares redeemed (817,090) (10,869,740) (618,771) (8,513,615)
--------------------------------------------------------
Net change resulting from A Share transactions (41,236) $(697,503) (154,522) $(2,238,771)
--------------------------------------------------------
</TABLE>
<TABLE>
STELLAR FUND
--------------------------------------------------------
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1998 NOVEMBER 30, 1997
------------------------- -------------------------
Y SHARES (FORMERLY, TRUST SHARES) SHARES DOLLARS SHARES DOLLARS
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Shares sold 772,860 $10,518,846 875,937 $11,988,758
Shares issued to shareholders in payment of distributions declared 474,049 6,125,726 254,884 3,391,344
Shares redeemed (1,328,445) (17,849,452) (1,598,328) (22,042,606)
--------------------------------------------------------
Net change resulting from Y Share transactions (81,536) $(1,204,880) (467,507) $(6,662,504)
--------------------------------------------------------
Net change resulting from Fund share transactions (122,772) $(1,902,383) (622,029) $(8,901,275)
--------------------------------------------------------
--------------------------------------------------------
</TABLE>
<TABLE>
RELATIVE VALUE FUND
--------------------------------------------------------
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1998 NOVEMBER 30, 1997
------------------------- -------------------------
A SHARES (FORMERLY, INVESTMENT SHARES) SHARES DOLLARS SHARES DOLLARS
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Shares sold 526,877 $13,142,463 4,467,573 $74,577,199
Shares issued to shareholders in payment of distributions declared 70,261 1,618,422 154,522 2,938,215
Shares redeemed (265,353) (6,497,280) (14,355,524) (319,674,245)
--------------------------------------------------------
Net change resulting from A Share transactions 331,785 $8,263,605 (9,733,429) $(242,158,831)
--------------------------------------------------------
</TABLE>
<TABLE>
RELATIVE
VALUE FUND
-------------------------
PERIOD ENDED
NOVEMBER 30, 1998(A)<F65>
-------------------------
B SHARES SHARES DOLLARS
- ------------------------------------------------------------------ ------------ ------------
<S> <C> <C>
Shares sold 310,540 $7,699,898
Shares issued to shareholders in payment of distributions declared 990 23,405
Shares redeemed (12,931) (302,580)
-------------------------
Net change resulting from B Share transactions 298,599 $7,420,723
-------------------------
(a)<F65> For the period from March 31, 1998 (date of initial public investment)to November 30, 1998.
</TABLE>
<TABLE>
RELATIVE VALUE FUND
--------------------------------------------------------
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1998 NOVEMBER 30, 1997(B)<F66>
------------------------- -------------------------
Y SHARES (FORMERLY, TRUST SHARES) SHARES DOLLARS SHARES DOLLARS
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Shares sold 3,478,155 $84,727,945 13,707,273 $307,769,070
Shares issued to shareholders in payment of distributions declared 456,629 10,541,360 12,454 292,800
Shares redeemed (2,508,119) (62,841,557) (437,680) (10,143,492)
--------------------------------------------------------
Net change resulting from Y Share transactions 1,426,665 $32,427,748 13,282,047 $297,918,378
--------------------------------------------------------
Net change resulting from Fund share transactions 2,057,049 $48,112,076 3,548,618 $55,759,547
--------------------------------------------------------
--------------------------------------------------------
(b)<F66> For the period from August 18, 1997 (date of initial public investment) to November 30, 1997.
</TABLE>
<TABLE>
MARKET
CAPITALIZATION
FUND
-------------------------
PERIOD ENDED
C SHARES NOVEMBER 30, 1998(C)<F67>
- --------------------------------------------------------------- -------------------------
<S> <C>
Shares sold 3,752,831
Shares issued to shareholders in payment of distributions declared 312
Shares redeemed (163,515)
-------------------------
Net change resulting from C Share transactions 3,589,628
-------------------------
(c)<F67> For the period from December 8, 1997 (date of initial public investment) to November 30, 1998.
</TABLE>
<TABLE>
GROWTH EQUITY FUND
--------------------------------------------------------
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1998 NOVEMBER 30, 1997
------------------------- -------------------------
B SHARES (FORMERLY, INVESTMENT SHARES) SHARES DOLLARS SHARES DOLLARS
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Shares sold 1,070,690 $18,962,995 4,005,011 $53,886,404
Shares issued to shareholders in payment of distributions declared 166,534 2,653,076 346,216 4,838,986
Shares redeemed (454,025) (8,038,756) (7,354,386) (118,965,391)
--------------------------------------------------------
Net change resulting from B Share transactions 783,199 $13,577,315 (3,003,159) $(60,240,001)
--------------------------------------------------------
</TABLE>
<TABLE>
GROWTH EQUITY FUND
--------------------------------------------------------
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1998 NOVEMBER 30, 1997(D)<F68>
------------------------- -------------------------
Y SHARES (FORMERLY, TRUST SHARES) SHARES DOLLARS SHARES DOLLARS
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Shares sold 1,616,539 $28,733,704 6,523,027 $107,073,043
Shares issued to shareholders in payment of distributions declared 234,170 3,740,244 5,992 102,945
Shares redeemed (1,975,403) (35,724,493) (178,790) (3,051,300)
--------------------------------------------------------
Net change resulting from Y Share transactions (124,694) $(3,250,545) 6,350,229 $104,124,688
--------------------------------------------------------
Net change resulting from Fund share transactions 658,505 $10,326,770 3,347,070 $43,884,687
--------------------------------------------------------
--------------------------------------------------------
(d)<F68> For the period from August 18, 1997 (date of initial public investment)to November 30, 1997.
</TABLE>
<TABLE>
CAPITAL APPRECIATION FUND
---------------------------------
YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
A SHARES (FORMERLY, INVESTMENT SHARES) 1998 1997
- ------------------------------------------------------------------------ ------------- ----------------
<S> <C> <C>
Shares sold 1,081,889 991,069
Shares issued to shareholders in payment of distributions declared 1,003,938 --
Shares redeemed (1,075,802) (1,501,409)
---------------------------------
Net change resulting from A Share transactions 1,010,025 (510,340)
---------------------------------
</TABLE>
<TABLE>
INTERNATIONAL
EQUITY FUND
--------------------------
PERIOD ENDED
A SHARES NOVEMBER 30, 1998(E)<F69>
- -------------------------------------------------------------------- --------------------------
<S> <C>
Shares sold 5,056,920
Shares issued to shareholders in payment of distributions declared 5,114
Shares redeemed (379,484)
--------------------------
Net change resulting from A Share transactions 4,682,550
--------------------------
(e)<F69> For the period from December 3, 1997 (date of initial public investment) to November 30, 1998.
</TABLE
(4) INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A. GENERAL
Certain officers, directors or trustees of Star Bank, N.A., Firstar Mutual Fund
Services, LLC, Federated Administrative Services and Federated Services Company
serve or did serve as officers and trustees of the Trust. Star Bank, N.A. and
Firstar Mutual Fund Services, LLC are related by virtue of each being a
subsidiary of Firstar Corporation.
B. INVESTMENT ADVISORY FEES
Star Bank, N.A., the Trust's investment adviser (the "Adviser"), receives for
its services an annual investment advisory fee based on a percentage of each
Fund's average daily net assets as follows:
FUND ANNUAL RATE
- -----------------------------------------
Stellar Fund 0.95%
Relative Value Fund 0.75%
Market Capitalization Fund 0.30%
Growth Equity Fund 0.75%
Capital Appreciation Fund O.95%
International Equity Fund 0.75%
C. ADMINISTRATIVE FEES
Effective October 1, 1998, Firstar Mutual Fund Services, LLC ("Firstar")
provides the Funds with certain administrative personnel and services. Firstar
receives a fee at an annual rate of 0.11% of the average daily net assets of
each Fund for the period.
Prior to October 1, 1998, Federated Administrative Services ("FAS") provided the
Funds with certain administrative personnel and services. FAS received a fee at
an annual rate of 0.12% of the average daily net assets of the Trust for the
period. The administrative fee received by FAS during any fiscal year was at
least $50,000 per fund. Prior to January 1, 1998, the FAS fee was based on the
level of average aggregate net assets of the Trust for the period.
D. DISTRIBUTION SERVICES FEES
Pursuant to the provisions of a distribution plan adopted in accordance with the
Investment Company Act Rule 12b-1 (the "Plan"), A Shares, B Shares, and C Shares
of the Trust 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. Effective October 1, 1998, B.C. Ziegler and Company became the
distributor of the Funds. Prior to that date, Federated Securities Corp. served
as the distributor of the Funds.
Currently, the Stellar Fund, Relative Value Fund and Growth Equity Fund are
accruing and paying 12b-1 fees. The Market Capitalization Fund, Capital
Appreciation Fund and International Equity Fund will not accrue or pay any
distribution expenses pursuant to the Plan until a "Y" class of shares has been
registered with the Securities and Exchange Commission.
E. SHAREHOLDER SERVICES FEES
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 average daily net assets for the
period. Star Bank, N.A. limited the Shareholder Servicing fee to 0.05% of
average daily net assets. This fee is to obtain certain services for shareholder
and to maintain shareholder accounts. Star Bank, N.A. can modify or terminate
this limitation at any time at its sole discretion.
F. TRANSFER AND DIVIDEND DISBURSING AGENT FEES
Effective March 9, 1998, Star Bank, N.A. serves as transfer agent and dividend
disbursing agent for the Funds. The fee paid to Star Bank, N.A. is based on the
size, type, and number of accounts and transactions made by shareholders.
Prior to March 9, 1998, Federated Services Company ("FServ") served as the
Fund's transfer and dividend disbursing agent and received for its services a
fee based on the size, type, and number of accounts and transactions made by
shareholders.
G. PORTFOLIO ACCOUNTING FEES
Effective October 1, 1998, Firstar became the Funds' accounting services agent.
Firstar is responsible for maintaining the Funds' accounting records for which
it receives a fee. The fee is based on the level of each Fund's average daily
net assets for the period, subject to an annual minimum of $39,000 per Fund,
plus out-of-pocket expenses.
Prior to October 1, 1998, Fserv was the Fund's accounting services agent.
H. CUSTODIAN FEES
Star Bank, N.A. is the Funds' custodian for which it receives a fee. The fee is
based on the level of each Fund's average net assets for the period, plus out-
of-pocket expenses.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
year ended November 30, 1998, were as follows:
PURCHASES SALES
-----------------------------------------------------------
Stellar Fund $74,353,242 $94,659,589
Relative Value Fund 139,290,059 104,581,343
Market Capitalization Fund 40,336,782 497,431
Growth Equity Fund 79,217,803 78,456,559
Capital Appreciation Fund 74,465,664 74,161,882
International Equity Fund 49,681,150 1,253,939
-----------------------------------------------------------
</TABLE>
<TABLE>
NET UNREALIZED GROSS GROSS
COST OF APPRECIATION UNREALIZED UNREALIZED
INVESTMENTS (DEPRECIATION) APPRECIATION DEPRECIATION
FOR FEDERAL FOR FEDERAL FOR FEDERAL FOR FEDERAL
STAR FUNDS TAX PURPOSES TAX PURPOSES TAX PURPOSES TAX PURPOSES
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stellar Fund $91,150,847 $13,724,476 $14,981,129 $1,256,653
Relative Value Fund 247,367,258 197,406,367 199,692,284 2,285,917
Market Capitalization Fund 39,957,351 2,758,667 2,788,303 29,636
Growth Equity Fund 122,769,770 65,081,931 67,891,941 2,810,010
Capital Appreciation Fund 71,086,721 8,931,252 13,467,539 4,536,287
International Equity Fund 48,930,603 (432,598) 2,422,407 2,855,005
- ----------------------------------------------------------------------------------------------
</TABLE>
(6) CONCENTRATION OF CREDIT RISK
The Stellar Fund invests in equity and fixed income securities of non-U.S.
issuers. Although, the Stellar Fund maintains a diversified investment
portfolio, the political or economic developments within a particular country or
region may have an adverse effect on the ability of domiciled issuers to meet
their obligations. Additionally, political or economic developments may have an
effect on the liquidity and volatility of portfolio securities and currency
holdings.
At November 30, 1998, the diversification of industries was as follows:
PERCENT OF
INDUSTRY NET ASSETS
- -----------------------------------------
Basic Industry 3.0%
Capital Goods 4.2
Consumer Cyclic 15.1
Consumer Staple 12.0
Energy 4.7
Finance 27.8
Health Care 12.6
Miscellaneous 5.6
Technology 12.4
Transportation 0.5
Utilities 2.1
- -----------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees
of the Star Funds:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of The Stellar Fund, Star Relative Value Fund,
Star Market Capitalization Fund, Star Growth Equity Fund, Star Capital
Appreciation Fund, and Star International Equity Fund (six of the portfolios
constituting the Star Funds, a Massachusetts business trust) as of November 30,
1998, the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for the periods presented. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1998, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Stellar Fund, Star Relative Value Fund, Star Market Capitalization Fund, Star
Growth Equity Fund, Star Capital Appreciation Fund, and Star International
Equity Fund of the Star Funds as of November 30, 1998, and the results of their
operations for the year then ended, the changes in their net assets for the two
years in the period then ended, and their financial highlights for the periods
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
January 8, 1999.
TRUSTEES OFFICERS
Thomas L. Conlan Jr. Daniel B. Benhase
PRESIDENT
Dr. Alfred Gottschalk Joseph C. Neuberger
VICE PRESIDENT
Dr. Robert J. Hill Michael T. Karbouski
TREASURER
Dawn M. Hornback Elaine E. Richards
SECRETARY
Lawrence M. Turner
William H. Zimmer III
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government or the
Federal Deposit Insurance Corporation.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Trust's prospectus which contains facts
concerning its objectives and policies, management fees, expenses and other
information.
---------------------------
STAR BANK, N.A.
Investment Adviser
---------------------------
B.C. ZIEGLER AND COMPANY
Distributor
---------------------------
Cusip 854911609
Cusip 854911708
Cusip 854911401
Cusip 854911773
Cusip 854911831
Cusip 854911799
Cusip 854911864
Cusip 854911823
Cusip 854911807
Cusip 854911815
APPENDIX
THE STELLAR FUND -- A SHARES
The graphic representation here displayed consists of a legend in the upper left
quadrant indicating the components of the corresponding line graph. The solid
line represents the value of a hypothetical investment of $10,000 in The Stellar
Fund (the "Fund"). The dashed line represents the Standard & Poor's 500/Lehman
Brothers Government/Corporate Total Index ("S&PLBGCTI") and the dotted line
represents the 5 Class Index. The line graph shows that an initial investment of
$10,000 in the Fund on 10/18/91, would have a reinvested total worth of $18,300
on 11/30/98 as compared to $25,457 and $21,289 for the S&PLBGCTI and the 5 Class
Index for the same period. The "x" axis reflects annual computation periods from
10/18/91 to 11/30/98. The right margin of the chart reflects the ending values
of a hypothetical investment of $10,000 in the Fund measured in increments of
$1,000 ranging from $9,000 to $26,000.
THE STELLAR FUND -- Y SHARES
The graphic representation here displayed consists of a legend in the upper left
quadrant indicating the components of the corresponding line graph. The solid
line represents the value of a hypothetical investment of $10,000 in The Stellar
Fund (the "Fund"). The dashed line represents the Standard & Poor's 500/Lehman
Brothers Government/Corporate Total Index ("S&PLBGCTI") and the dotted line
represents the 5 Class Index. The line graph shows that an initial investment of
$10,000 in the Fund on 4/6/94, would have a reinvested total worth of $15,855 on
11/30/98 as compared to $20,709 and $16,790 for the S&PLBGCTI and the 5 Class
Index for the same period. The "x" axis reflects annual computation periods from
4/6/94 to 11/30/98. The right margin of the chart reflects the ending values of
a hypothetical investment of $10,000 in the Fund measured in increments of
$1,000 ranging from $9,000 to $21,000.
STAR RELATIVE VALUE FUND -- A SHARES
The graphic representation here displayed consists of a legend in the upper left
quadrant indicating the components of the corresponding line graph. The solid
line represents the value of a hypothetical investment of $10,000 in the Star
Relative Value Fund -- A Shares (the "Fund"). The dotted line represents the
Standard & Poor's 500 ("S&P 500") and the dashed line represents the Lipper
Gorwth and Income Average ("LGIA"). The line graph shows that an initial
investment of $10,000 in the Fund on 6/4/91, would have a reinvested total worth
of $39,822 on 11/30/98 as compared to $35,855 and $30,970 for the S&P 500 and
LGIA, respectively for the same period. The "x" axis reflects annual computation
periods from 6/4/91 to 11/30/98. The right margin of the chart reflects the
ending values of a hypothetical investment of $10,000 in the Fund measured in
increments of $1,000 ranging from $9,000 to $37,000.
STAR RELATIVE VALUE FUND -- B SHARES
The graphic representation here displayed consists of a legend in the upper left
quadrant indicating the components of the corresponding line graph. The solid
line represents the value of a hypothetical investment of $10,000 in the
Star Relative Value Fund -- B Shares (the "Fund"). The dotted line represents
the Standard & Poor's 500 Index ("S&P 500") and the dashed line represents the
Lipper Growth and Income Average ("LGIA"). The line graph shows that an initial
investment of $10,000 in the Fund on 3/31/98, would have a reinvested total
worth of $9,650 on 11/30/98 as compared to $10,749 and $9,879 for the S&P 500
and LGIA, respectively for the same period. The "x" axis reflects annual
computation periods from 3/31/98 to 11/30/98. The right margin of the chart
reflects the ending values of a hypothetical investment of $10,000 in the Fund
measured in increments of $1,000 ranging from $9,000 to $14,000.
STAR RELATIVE VALUE FUND -- Y SHARES
The graphic representation here displayed consists of a legend in the upper left
quadrant indicating the components of the corresponding line graph. The solid
line represents the value of a hypothetical investment of $10,000 in the Star
Relative Value Fund - Y Shares (the "Fund"). The dotted line represents the
Standard & Poor's 500 Index ("S&P 500") and the dashed line represents the
Lipper Growth and Income Average ("LGIA"). The line graph shows that an initial
investment of $10,000 in the Fund on 8/19/97, would have a reinvested total
worth of $12,154 on 11/30/98 as compared to $12,820 and $11,092 for the S&P
500 and LGIA, respectively for the same period. The "x" axis reflects annual
computation periods from 8/19/97 to 11/30/98. The right margin of the chart
reflects the ending values of a hypothetical investment of $10,000 in the
Fund measured in increments of $1,000 ranging from $9,000 to $13,000.
STAR MARKET CAPITALIZATION FUND
The graphic representation here displayed consists of a legend in the upper left
quadrant indicating the components of the corresponding line graph. The solid
line represents the value of a hypothetical investment of $10,000 in the Star
Market Capitalization Fund (the "Fund"). The dashed line represents the Standard
& Poor's 500 Index ("S&P 500"). The line graph shows that an initial investment
of $10,000 in the Fund on 12/8/97, would have a reinvested total worth of
$11,894 on 11/30/98 as compared to $12,005 for the S&P 500 for the same period.
The "x" axis reflects annual computation periods from 12/8/97 to 11/30/98. The
right margin of the chart reflects the ending values of a hypothetical
investment of $10,000 in the Fund measured in increments of $1,000 ranging from
$9,000 to $13,000.
STAR GROWTH EQUITY FUND -- B SHARES
The graphic representation here displayed consists of a legend in the upper left
quadrant indicating the components of the corresponding line graph. The solid
line represents the value of a hypothetical investment of $10,000 in the Star
Growth Equity Fund - B Shares (the "Fund"). The dashed line represents the
Standard & Poor's 500 Index ("S&P 500"). The line graph shows that an initial
investment of $10,000 in the Fund on 12/12/94, would have a reinvested total
worth of $24,009 on 11/30/98 as compared to $27,838 for the S&P 500 for the
same period. The "x" axis reflects annual computation periods from 12/12/94 to
11/30/98. The right margin of the chart reflects the ending values of a
hypothetical investment of $10,000 in the Fund measured in increments of $1,000
ranging from $9,000 to $28,000.
STAR GROWTH EQUITY FUND -- Y SHARES
The graphic representation here displayed consists of a legend in the upper left
quadrant indicating the components of the corresponding line graph. The solid
line represents the value of a hypothetical investment of $10,000 in the Star
Growth Equity Fund - Y Shares (the "Fund"). The dashed line represents the
Standard & Poor's 500 Index ("S&P 500"). The line graph shows that an initial
investment of $10,000 in the Fund on 8/18/97, would have a reinvested total
worth of $12,646 on 11/30/98 as compared to $12,820 for the S&P 500 for the same
period. The "x" axis reflects annual computation periods from 8/18/97 to
11/30/98. The right margin of the chart reflects the ending values of a
hypothetical investment of $10,000 in the Fund measured in increments of $1,000
ranging from $9,000 to $13,000.
STAR CAPITAL APPRECIATION FUND
The graphic representation here displayed consists of a legend in the upper left
quadrant indicating the components of the corresponding line graph. The solid
line represents the value of a hypothetical investment of $10,000 in the Star
Capital Appreciation Fund (the "Fund"). The dashed line represents the S&P
Midcap 400 Index ("S&P 400"). The line graph shows that an initial investment of
$10,000 in the Fund on 6/13/94, would have a reinvested total worth of $14,833
on 11/30/98 as compared to $22,037 for the S&P 400 for the same period. The "x"
axis reflects annual computation periods from 6/13/94 to 11/30/98. The right
margin of the chart reflects the ending values of a hypothetical investment of
$10,000 in the Fund measured in increments of $1,000 ranging from $9,000 to
$23,000.
STAR INTERNATIONAL EQUITY FUND
The graphic representation here displayed consists of a legend in the upper left
quadrant indicating the components of the corresponding line graph. The solid
line represents the value of a hypothetical investment of $10,000 in the Star
International Equity Fund (the "Fund"). The dashed line represents the Morgan
Stanley Europe, Australia and Far East Index ("EAFE"). The line graph shows that
an initial investment on $10,000 in the Fund on 12/3/97, would have a
reinvested total worth of $10,239 on 11/30/98 as compared to $11,474 for the
EAFE for the same period. The "x" axis reflects annual computation periods from
12/3/97 to 11/30/98. The right margin of the chart reflects the ending values of
a hypothetical investment of $10,000 in the Fund measured in increments of
$1,000 ranging from $9,000 to $14,000.
