PROSPECTUS
TREASURY FUND
March 31, 2000
AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED ANY SHARES OF THIS FUND OR DETERMINED IF THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A CRIMINAL
OFFENSE.
TABLE OF CONTENTS
OVERVIEW.......................................................................3
TREASURY FUND..................................................................4
MANAGEMENT OF THE FUND.........................................................6
DISTRIBUTION OF SHARES.........................................................7
CLASS DESCRIPTION..............................................................7
PRICE OF SHARES................................................................8
PURCHASING SHARES..............................................................8
SELLING SHARES.................................................................9
DISTRIBUTIONS AND TAXES.......................................................10
FINANCIAL HIGHLIGHTS..........................................................11
OVERVIEW
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GOAL OF THE TREASURY FUND
The goal of the TREASURY FUND is to provide current
income while preserving capital.
STRATEGY OF THE FUND
The TREASURY FUND invests exclusively in short-term
U.S. Treasury obligations. The fund strives to
maintain a share price of $1.00.
PRINCIPAL RISKS OF THIS FUND
The main risks of investing in the fund are:
|X| INTEREST RISKS: The rate of income will vary from
day to day depending on short-term interest
rates. It is possible that a major change in
interest rates could cause the value of your
investment to decline.
|X| CREDIT RISKS: The fund can also be affected by
changes in the credit quality rating or changes
in the issuer's financial condition. A default on
a security or a repurchase agreement held by the
fund could cause the value of your investment to
decline.
|X| Although the fund seeks to preserve the value of
your investment at $1.00 per share, it is
possible to lose money by investing in the fund.
AN INVESTMENT IN THE FUND WHO MAY WANT TO INVEST
IS NOT A DEPOSIT OF FIRSTAR The fund may be appropriate for investors that:
BANK AND IS NOT INSURED OR |X| want to save money rather than "invest"
GUARANTEED BY THE FEDERAL |X| require stability of principal
DEPOSIT INSURANCE |X| prefer to receive income with relatively fewer
CORPORATION OR ANY OTHER risks
GOVERNMENT AGENCY. |X| are risk adverse
The Statement of Additional Information contains more
information about the fund and the types of
securities in which it may invest.
TREASURY FUND
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INVESTMENT OBJECTIVE
The TREASURY FUND seeks to achieve stability of principal and current income
consistent with stability of principal.
INVESTMENT POLICIES AND PORTFOLIO SECURITIES
The fund intends to achieve its investment goal by investing exclusively in
short-term U.S. Treasury obligations that have a maturity of 397 days or less
from the date of purchase. The fund may purchase repurchase agreements
collateralized by U.S. Treasury obligations. The fund intends to invest in the
agreements that provide for repurchase within 397 days from the date of
acquisition. The average maturity of these securities is 120 days or less. The
average maturity, however, of all the securities in the fund's portfolio will be
90 days or less on a dollar-weighted basis. Securities subject to repurchase
agreements are marked to market on a daily basis. U.S. Treasury obligations are
issued by the U.S. government and are fully guaranteed as to principal and
interest by the United States government. The fund may also retain assets in
cash and may purchase U.S. Treasury obligations on a when-issued or delayed
delivery basis.
INVESTMENT RISKS
The following risks are specific to this fund in addition to the risks mentioned
in the Overview section.
REPURCHASE AGREEMENTS
Arrangements in which banks, broker/dealers and other financial institutions
sell securities to the fund and agree to repurchase them at a certain time and
price within one year.
REPURCHASE AGREEMENT RISKS One of the risks of investing in repurchase
agreements is that the seller may not repurchase the securities from the fund,
which may result in the fund selling the security for less than the agreed upon
price. Another risk of repurchase agreements is that the seller may default or
file for bankruptcy. That could mean the fund might have to wait through lengthy
court actions before selling the securities.
WHEN ISSUED/DELAYED DELIVERY
Securities with payment and delivery scheduled for a future time.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTION RISKS One of the risks of investing
in when-issued or delayed delivery transactions is if the seller chooses not to
complete the transaction, the fund could miss an advantageous price or yield.
Another risk is that because settlement dates may be a month or more after
entering into the transactions, the market value of the securities may have
dropped from the agreed upon purchase price. However, the fund may cancel a
commitment to purchase securities prior to settlement if the fund's investment
adviser believes it is appropriate.
The fund may enter into transactions to sell its purchase commitments to third
parties at current market rates and simultaneously acquire other commitments to
purchase similar securities at later dates. The fund may realize short-term
profits or losses on the sale of these kinds of commitments.
PAST PERFORMANCE
The bar chart and table below illustrate the variability of the TREASURY FUND'S
returns. The bar chart indicates the risks of investing in the fund by showing
the changes in the fund's performance from year to year (on a calendar year
basis). The table shows the fund's average annual returns for one, five,
ten-years and since the fund's inception ended December 31, 1999. THE FUND'S
PAST PERFORMANCE DOES NOT PREDICT FUTURE PERFORMANCE.
Treasury Fund - C Shares
Calendar Year Returns as of 12/31
1990 7.64%
1991 5.49%
1992 3.26%
1993 2.54%
1994 3.51%
1995 5.26%
1996 4.77%
1997 4.86%
1998 4.61%
1999 4.06%
BEST QUARTER: Q3 1990 1.89%
WORST QUARTER: Q4 1993 0.62%
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AVERAGE ANNUAL TOTAL RETURN 1 Year 5 Years 10 Years Since
THROUGH 12/31/99 inception
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Treasury Fund C Shares1 4.06% 4.71% 4.59% 4.85%
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FOR UP-TO-DATE YIELD INFORMATION, PLEASE CALL 1-800-677-FUND.
1 C Shares commenced operations April 15, 1989.
FUND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
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SHAREHOLDER FEES CLASS C
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
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MAXIMUM SALES CHARGE (LOAD) IMPOSED ON None
PURCHASES (as a percentage of offering price)
MAXIMUM DEFERRED SALES CHARGE (LOAD) None
(as a percentage of offering price)
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON None
REINVESTED DIVIDENDS
REDEMPTION FEE None
EXCHANGE FEE None
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ANNUAL FUND OPERATING EXPENSES CLASS C
(EXPENSES DEDUCTED FROM FUND ASSETS)
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MANAGEMENT FEES 0.50%
DISTRIBUTION AND SERVICE (12B-1) FEES1 0.25%
OTHER EXPENSES2 0.43%
TOTAL ANNUAL FUND OPERATING EXPENSES 1.18%
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1 C shares of the TREASURY FUND can pay up to 0.25% of average daily net assets
for 12b-1 fees. However, the investment adviser has chosen to waive a portion of
this fee so that the actual amount imposed is 0.15% of average daily net assets.
The adviser can reduce the waiver at anytime.
2 "Other Expenses" includes (1) administration fees, transfer agency fees and
all other ordinary operating expenses of the fund not listed above which are
estimated to total 0.18% of average daily net assets, plus (2) an annual
shareholder servicing fee of 0.25% of average daily net assets. The fund plans
to limit the shareholder servicing fee to an annual rate of 0.16% of average
daily net assets although this waiver can be modified or terminated at anytime.
EXAMPLE The example below is intended to help you compare the cost of investing
in the fund with the cost of investing in other mutual funds. This example
assumes that:
1. You invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of those periods,
2. You reinvested all dividends and capital gain distributions,
3. Your investment has a 5% return each year, and
4. The fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
- ------------- -------- --------- ---------- -----------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
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CLASS C $120 $375 $649 $1,432
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CLASS DESCRIPTION IS ON PAGE 7.
MANAGEMENT OF THE FUND
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INVESTMENT ADVISER
Firstar Investment Research & Management Company, LLC (FIRMCO), a wholly owned
subsidiary of Firstar Corporation, is the investment adviser for the fund. Prior
to April 1, 2000, the fund was managed by the Capital Management Division of
Firstar Bank, N.A., which is also a wholly owned subsidiary of Firstar
Corporation. As part of an internal restructuring of the investment advisory
function within Firstar Corporation, the investment management resources of the
Capital Management Division of Firstar Bank, N.A. have been consolidated with
those of FIRMCO. Management of the fund was not affected by this consolidation.
The investment decisions made by FIRMCO are subject to direction of the fund's
board of trustees. (The Statement of Additional Information contains more
information regarding the board of trustees.) The adviser conducts investment
research and supervision for the fund and is responsible for the purchase and
sale of securities for the fund's portfolios. The adviser receives an annual fee
from the fund for its services of 0.50% of average daily net assets.
FIRMCO, located at the Firstar Center, 777 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202, has provided investment advisory services since 1986. FIRMCO
currently has $50 billion in assets under management.
FUND ADMINISTRATION, FUND ACCOUNTING, DIVIDEND DISBURSEMENT AND CUSTODY SERVICES
Firstar Mutual Fund Services, LLC, an affiliate of the fund's investment
adviser, provides administrative, accounting and dividend disbursement services
to the fund and is located in Milwaukee, Wisconsin. Firstar Bank, N.A. serves as
custodian for the fund.
DISTRIBUTION OF SHARES
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DISTRIBUTOR
Edgewood Services, Inc. is the distributor for shares of the fund. Edgewood is
based in Pittsburgh, Pennsylvania and is the distributor for a number of
investment companies around the country.
RULE 12B-1 PLAN
The fund has adopted a Rule 12b-1 Plan under the Investment Company Act of 1940.
Under the 12b-1 Plan, class C shares may pay up to an annual rate of 0.25% of
the average daily net asset value of shares to Edgewood. Edgewood uses this fee
to finance activities that promote the sale of the fund's shares. Such
activities include, but are not necessarily limited to, advertising, printing
and mailing prospectuses to persons other than current shareholders, printing
and mailing sales literature, and compensating underwriters, dealers and sales
personnel.
Whenever Edgewood deems it appropriate, Edgewood may, from time to time,
voluntarily reduce its compensation under the Rule 12b-1 Plan to the extent
expenses of the shares exceed a certain limit. Rule 12b-1 fees are paid out of
the fund's assets on an on-going basis. Over time, these fees will increase the
cost of your investment and may cost you more than paying other types of sales
charges.
Edgewood may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers and broker/dealers as agents to
provide sales or administrative services for their clients or customers who
beneficially own shares of the fund. Financial institutions will receive fees
from the distributor based upon shares owned by their clients or customers.
Edgewood will determine the schedule of such fees and the basis upon which such
fees will be paid.
CLASS DESCRIPTION
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CLASS C SHARES
Class C shares are regular retail shares and may be purchased by individuals or
IRAs. With class C shares, you pay no sales charge when you invest. In the case
of the fund, an annual Rule 12b-1 fee (as discussed previously) is assessed
against the shares of the class.
PRICE OF SHARES
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WHAT SHARES COST
Shares of the fund are sold at their net asset value (NAV) next determined after
an order is received. The fund attempts to stabilize the net asset value of
shares at $1.00 by valuing the portfolio securities using the amortized cost
method. The net asset value is calculated by subtracting the total liabilities
of the fund from the fund's total assets. The difference is divided by the
number of fund shares outstanding. There is no sales charge imposed by the fund.
NAV =
ASSETS - LIABILITIES
--------------------
# outstanding shares
The fund will utilize the amortized cost method in valuing its portfolio
securities. This method involves valuing a security at its cost adjusted by a
constant amortization to maturity of any discount or premium, regardless of the
impact of fluctuating interest rates on the market value of the instrument. The
purpose of this method of calculation is to facilitate the maintenance of a
consistent net asset value per share for the fund of $1.00. However, there is no
assurance that the $1.00 net asset value per share will be maintained.
The net asset value for the fund is determined as of 2:00 p.m. (Eastern time).
PURCHASING SHARES
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OPENING AN ACCOUNT
To open an account, contact your financial institution (such as your bank or
broker/dealer). Through your financial institution, you can open an account by
check or federal funds wire. Your financial institution should have an agreement
with the Distributor. The minimum initial investment amount is $1,000.
Additional investments may be made in any amount. Please note, your financial
institution will be the record owner of the shares.
TIMING OF PURCHASE REQUESTS
The price per share will be the net asset value next computed after the time
your request is received in good order and accepted by the fund or by the fund's
authorized agent. Telephone orders and federal funds wire requests received in
good order by the fund by 2:00 p.m. (Eastern time), will be executed on the same
day. Requests received after 2:00 p.m. (Eastern time), including all purchases
by checks, will be executed the next business day.
RECEIPT OF ORDERS
Shares may only be purchased on days the New York Stock Exchange and the Federal
Reserve wire system are open for business. Your order will be considered
received after your check is converted into federal funds and received by
Firstar Bank (usually the next business day). If you are paying with federal
funds (wire), your order will be considered received when Firstar Bank receives
the federal funds.
METHOD OF BUYING
You may purchase shares through a financial institution. Contact your bank or
broker/dealer to open an account. NOTE: The financial institution is responsible
for promptly transmitting your orders. The financial institution may charge you
additional fees for its services. You may contact your financial institution to
add to your account.
SELLING SHARES
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METHOD OF SELLING
To sell some or all of your shares you will have to contact your financial
institution. Your proceeds will be sent to you or your financial institution by
check or wire. NOTE: Financial institutions are responsible for promptly
submitting your requests in good order. They may charge you fees and
commissions.
TIMING OF REQUESTS
All requests received in good order by the fund Bank before 2:00 p.m. (Eastern
time) will be executed on the same day. Requests received after 2:00 p.m.
(Eastern time) will be executed the next business day.
WHEN REDEMPTION PROCEEDS ARE MAILED
If your redemption request is in good order, the fund will normally send your
redemption proceeds on the next business day and no later than 7 calendar days
after receipt of your proper redemption request.
If you purchase shares using a check and soon after request a redemption, the
fund will honor the redemption request, but will not mail the proceeds until
your purchase check has cleared (usually within 12 days).
DISTRIBUTIONS AND TAXES
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DIVIDENDS
The fund declares dividends on a daily basis and pays them to you on a monthly
basis. Unless you provide a written request to receive payments in cash, your
dividends will automatically be reinvested in additional shares of the fund.
Dividends paid in cash will be mailed to you via the U.S. Postal Service. Keep
in mind that undeliverable checks or checks not deposited within six months will
be reinvested in additional shares of the fund at the then current net asset
value. Dividends are earned on the day shares of the fund are purchased. If you
are investing through a shareholder service organization, consult your account
agreement for dividend payment information. Dividends paid in cash or in
additional shares are treated the same for tax purposes.
CAPITAL GAINS
If the fund realizes capital gains, you could earn more dividends. Capital
losses could result in a decrease in dividends for you. If the fund realizes net
long-term capital gains (not very common), the fund would distribute them every
12 months.
TAX INFORMATION
The fund will pay no federal income tax because it expects to meet certain
Internal Revenue Code requirements. The fund will be treated as a single,
separate entity for federal income tax purposes. The fund expects its
distributions to consist primarily of ordinary income. The fund will provide you
with detailed tax information for reporting purposes. You should consult your
own tax adviser regarding tax consequences under your state and local laws.
An exchange is not a tax-free transaction. An exchange of shares pursuant to the
fund's exchange privilege is treated the same as an ordinary sale and purchase
for federal income tax purposes and you will realize a capital gain or loss.
If you are a shareholder of the fund, unless you are exempt from having to pay
federal income taxes, you are required to pay federal income taxes on any
dividends and other distributions (including capital gain distributions) you
receive.
FINANCIAL HIGHLIGHTS
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The financial highlights table set forth below is intended to help you
understand the fund's financial performance for the past 5 years. Most of the
information reflects financial results with respect to the fund. The total
returns in the table represent the rates that an investor would have earned (or
lost) on an investment in the fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Arthur Andersen LLP, whose
report, along with the fund's financial statements, are included in the fund's
annual report, which is available upon request.
<TABLE>
<CAPTION>
TREASURY FUND
(Class C Shares1) Year ended November 30,
- ---------------------------------------------- ------------- ------------ ----------- ----------- -----------
1999 1998 1997 1996 1995
- ---------------------------------------------- ------------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------- ------------- ------------ ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.04 0.05 0.05 0.05 0.05
Net gains or losses on securities (both - - - - -
realized and unrealized)
Total from investment operations 0.04 0.05 0.05 0.05 0.05
LESS DISTRIBUTIONS
Dividends (from net investment income) (0.04) (0.05) (0.05) (0.05) (0.05)
Distributions (from capital gains) - - - - -
Total distributions (0.04) (0.05) (0.05) (0.05) (0.05)
- ---------------------------------------------- ------------- ------------ ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------- ------------- ------------ ----------- ----------- -----------
TOTAL RETURN2 4.02% 4.69% 4.85% 4.80% 5.23%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period $1,049,641 $542,430 $469,400 $829,259 $654,963
(000's omitted)
Gross ratio of expenses to average net 1.08% 1.08% 0.93% 0.90% 0.91%
assets3
Net ratio of expenses to average net 0.92% 0.88% 0.73% 0.70% 0.71%
assets4
Gross ratio of net income to average net 3.82% 4.38% 4.53% 4.49% 4.94%
assets3
Net ratio of net income to average net 3.98% 4.58% 4.73% 4.69% 5.14%
assets4
</TABLE>
1 The C class of the Treasury Fund has been operating since April 15, 1989.
2 Based on net asset value.
3 Before waivers.
4 After waivers.
FOR MORE INFORMATION
YOU MAY OBTAIN THE FOLLOWING AND OTHER
INFORMATION ON THE FUND FREE OF CHARGE:
ANNUAL AND SEMI-ANNUAL REPORTS TO
SHAREHOLDERS
The annual and semi-annual reports
provide the fund's most recent
financial statements and portfolio
listings. The annual report contains a
discussion of the market conditions and
investment strategies that affected the
fund's performance during the last
fiscal year.
STATEMENT OF ADDITIONAL INFORMATION
(SAI) DATED MARCH 31, 2000
The SAI is incorporated into this
prospectus by reference (i.e., legally
made a part of this prospectus). The
SAI provides more details about the
fund's policies and management.
TO RECEIVE ANY OF THESE DOCUMENTS ON
THE FUND:
BY TELEPHONE:
1-800-677-FUND
BY MAIL:
Firstar Stellar Funds
c/o Firstar Mutual Fund Services, LLC
P.O. Box 3011
Milwaukee, Wisconsin 53201-3011
ON THE INTERNET:
Text only versions of fund documents
can be viewed online or downloaded
from: HTTP://WWW.SEC.GOV and
HTTP://WWW.FIRSTARSTELLARFUNDS.COM
You may review and obtain copies of
fund information (including the SAI) at
the SEC Public Reference Room in
Washington, D.C. Please call
1-202-942-8090 for information relating
to the operation of the Public
Reference Room. Copies of the
information may be obtained for a fee
by writing the Public Reference
Section, Securities and Exchange
Commission, Washington, D.C. 20549-0102
or by sending an electronic request to
the SEC at the following e-mail
address: [email protected].
Investment Company Act File # 811-05762
