MONEY MARKET FUNDS
Firstar Stellar Treasury Fund
Firstar Stellar Tax-Free Money Market Fund
Firstar Stellar Ohio Tax-Free Money Market Fund
Combined Semi-Annual Report
May 31, 2000
(FIRSTAR STELLAR FUNDS LOGO)
President's Message
Dear Shareholder:
MID-YEAR REVIEW
With the Y2K "bug" vanquished, it was back to "business as usual" for investors
- that is, unexpectedly strong economic growth and unbelievably volatile
financial markets. The U.S. economy continues to confound the pundits,
combining robust growth and low unemployment with modest inflation. However,
the jump in energy prices and a tight labor market have fostered a more
aggressive Federal Reserve interest rate policy. Clearly, the Fed views the
current pace of economic growth as "too fast," creating imbalances likely to
accelerate inflation if left unchecked. Some observers believe the Fed is
behind the curve and the inflation "genie" is already "out of the bottle."
Others contend the Fed is wrongly applying "old" economy metrics to a
fundamentally different "new" economy.
In our opinion, the foundation of our current economic success - robust economic
growth with low inflation - rests on the twin pillars of global competition and
improved productivity. U.S. productivity growth averaged 3.7% over the past
twelve months and has averaged 2.3% per year since the end of the last
recession.*<F1> Although Fed Chairman Alan Greenspan publicly questions the
sustainability of today's productivity gains, the recent upsurge is far from
unprecedented. The Golden Age of U.S. productivity growth, from 1950 to 1973,
saw labor productivity grow at a 2.7% compound annual rate. Improved
productivity tends to mean higher profits. Higher profits lead to more spending
on productivity-enhancing technology. Further productivity gains lead to
further profit improvements and the process repeats. Although final demand is
surging, supply-side investment is growing even faster. Finally, Congressional
approval of permanent normal trade relations with China is a reminder that
global competition will only intensify.
ECONOMIC & MARKET OUTLOOK
Looking ahead, our investment strategy is predicated on the following trends:
o Adjusted for inflation, U.S. final sales rose at a +6.9% annual rate in the
first quarter of this year, representing the fastest growth rate of the
current economic cycle.*<F1>
o Consumer confidence remains near record levels reflecting strong income
gains, low unemployment and the wealth effect from rising asset values.
o Despite higher interest rates, cheap credit is still available to drive
consumer spending.
o Like a tax increase, higher energy prices erode income gains.
o Although much is made of the wealth effect from higher stock prices, the
increase in home values has been the biggest wealth creator for the majority
of Americans.
o Higher mortgage rates are beginning to slow the housing market with
decelerating price gains not far behind.
o We believe the forty percent drop in the NASDAQ and ongoing stock market
volatility will dampen consumer exuberance.
o Fed tightening is raising the dollar's exchange rate, making imports cheaper
(holding down U.S. inflation) and exports less competitive (slowing the U.S.
economy).
o We believe signs of an economic slowdown are likely to emerge by the fall,
allowing the Fed to shift to a neutral policy and bond prices to rally (what
is good for bonds may be even better for stocks).
o In the absence of the Treasury buy back, we believe long-term government
bond yields would be higher and credit spreads (the difference in yield
between a corporate bond and a government bond of equal maturity) narrower.
o Today's high inflation-adjusted bond yields are attractive and we believe
the widening in credit spreads creates opportunities to enhance bond
portfolio returns.
o Corporate profits are better-than-expected, reflecting ongoing gains from
investments in productivity-enhancing technology and efficiencies from
restructuring.
o A "Jekyll and Hyde" stock market has emerged as "old economy" shares vie
with the leading technology names for investor favor.
o We believe the stock market will broaden out as the year progresses making
portfolio diversification, complemented by security selection that
emphasizes high quality companies with strong balance sheets, good earnings
visibility and dominant industry positions, a winning strategy.
*<F1> Source: Department of Labor
In summary, we expect the Federal Reserve will successfully engineer a "soft
landing" for the U.S. economy, extending this unprecedented period of economic
prosperity. We believe slower growth will prevent inflation from accelerating
further, yet corporate profitability should remain strong thanks to ongoing
productivity gains and efficiencies achieved through restructuring and mergers.
In short, we anticipate the advent of a more favorable environment for financial
assets later in the year. As you peruse the following pages of this report, you
will find a broad range of equity and fixed income products to help meet a wide
variety of investment objectives. As always, we encourage you to contact us
with your comments regarding portfolio performance or our investment strategy.
Thank you for your continued confidence in Firstar Stellar Funds.
Sincerely yours,
Firstar Investment Research & Management Company, LLC (FIRMCO)
Investment Policy Committee
John Blixen
Executive Vice President
Richard Burling
Senior Vice President, Director of Credit Research
Walter Dewey
Senior Vice President, Senior Portfolio Manager
Donald Keller
Senior Vice President, Senior Portfolio Manager
George Schupp
Senior Vice President, Director of Fixed Income
Marian Zentmyer, Committee Chairperson
Executive Vice President, Chief Equity Investment Officer
July 24, 2000
Investment Reviews
FIRSTAR STELLAR TREASURY FUND
Q What is the objective of this Portfolio?
A The Firstar Stellar Treasury Fund seeks to provide stability of principal
and current income consistent with stability of principal. An investment in
money market funds is neither insured nor guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although money market
funds seek to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in these funds. The Fund invests in
obligations that are issued by the U.S. Treasury.
Q What were the conditions in the money markets during the six months ended
May 31, 2000?
A The Federal Reserve, in an attempt to slow down sustained economic growth,
raised short-term interest rates in February, March and May. The Fed Funds
rate started the year at 5.50% and was 6.50% on May 31, 2000.
Q How did you position the Portfolio to address these conditions?
A The Fund maintained its strategy of laddering holdings to take advantage of
various points along the short-term yield curve. The Fund maintained an
average maturity in the 30-45 day range throughout the period. We shortened
the average maturity in the later months of the period to take advantage of
increased short-term rates. The Fund holds the highest possible rating from
Standard & Poor's (AAAm). An AAAm rating by Standard & Poor's is obtained
after S&P evaluates a number of factors, including credit quality, market
price exposure and management. S&P monitors the portfolio weekly for
developments that could cause changes in the ratings. Ratings are subject
to change, and do not remove market risks.
Q How did you allocate the Portfolio's assets among various types of Treasury
securities?
A The Portfolio held a large portion of repurchase agreements to maintain
liquidity. In order to take advantage of the higher yields in Treasury
notes, we increased our weighting in notes versus bills at the end of the
period.
Q How will you manage the Portfolio during the coming months?
A We will continue to purchase Treasury obligations that we believe will
provide the highest level of liquidity and security of principal. We focus
on the activities of the Federal Reserve and monitor the growth rate of the
economy. We will shorten or lengthen the Fund's average maturity in
response to Fed activities to seek yield advantages along the short-term
curve.
FIRSTAR STELLAR TAX-FREE MONEY MARKET FUND
Q What is the objective of this Portfolio?
A The Firstar Stellar Tax-Free Money Market Fund seeks to provide current
income exempt from federal regular income taxes consistent with stability of
principal. An investment in money market funds is neither insured nor
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the value
of your investment at $1.00 per share, it is possible to lose money by
investing in these funds. Income may be subject to the federal alternative
minimum tax and state and local taxes. The Fund invests primarily in short-
term debt obligations issued by state and local governments.
Q What were the conditions in the money markets during the six months ended
May 31, 2000?
A Short-term tax-exempt variable rate demand notes rose to 6.00% levels by the
end of April, 2000 and then fell back to the 4.50% level by the end of May,
2000.
Q How did you position the Portfolio to address these conditions?
A The Portfolio maintained a relatively short average maturity. We were
heavily weighted in tax-exempt variable rate demand notes as their yields
were very attractive.
Q How did you allocate the Portfolio's assets among various types of
securities?
A In general, we favored daily and weekly floating rate securities due to
their attractive yields. These securities comprised most of the Portfolio.
Q How will you manage the Portfolio during the coming months?
A We expect continued fluctuations in short-term tax-exempt rates. We will
maintain an average maturity comparable to industry benchmarks. Emphasis
will continue to be placed on maintaining a high-quality profile of
securities that are not subject to the alternative minimum tax.
FIRSTAR STELLAR OHIO TAX-FREE MONEY MARKET FUND
Q What is the objective of this Portfolio?
A The Firstar Stellar Ohio Tax-Free Money Market Fund seeks to provide current
income exempt from federal income taxes and the personal income taxes
imposed by the state of Ohio and Ohio municipalities consistent with
stability of principal. An investment in money market funds is neither
insured nor guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose money by
investing in these funds. Income may be subject to the federal alternative
minimum tax.
Q What were the conditions in the money markets during the six months ended
May 31, 2000?
A Short-term tax-exempt variable rate demand notes rose to 6.00% levels by the
end of April, 2000 and then fell back to the 4.50% level by the end of May,
2000.
Q How did you position the Portfolio to address these conditions?
A The Portfolio maintained a relatively short average maturity. We were
heavily weighted in tax-exempt variable rate demand notes as their yields
were very attractive.
Q How did you allocate the Portfolio's assets among various types of
securities?
A In general, we favored daily and weekly floating rate securities due to
their attractive yields. These securities comprised most of the Portfolio.
Q How will you manage the Portfolio during the coming months?
A We expect continued fluctuations in short-term tax-exempt rates. We will
maintain an average maturity comparable to industry benchmarks. Emphasis
will continue to be placed on maintaining a high-quality profile of
securities that are not subject to the alternative minimum tax.
Portfolios of Investments
Firstar Stellar Treasury Fund May 31, 2000 (Unaudited)
PRINCIPAL AMOUNT
OR SHARES AMORTIZED COST
---------------- --------------
U.S. TREASURIES - 40.9%
U.S. TREASURY BILLS - 2.9%
$100,000,000 5.91%, 10/19/2000 $97,684,167
--------------
U.S. TREASURY BONDS - 10.4%
150,000,000 4.50%, 9/30/2000 149,177,808
200,000,000 5.75%, 11/15/2000 199,590,353
--------------
Total 348,768,161
--------------
U.S. TREASURY NOTES - 27.6%
50,000,000 5.375%, 7/31/2000 49,961,311
120,000,000 6.125%, 7/31/2000 120,056,897
250,000,000 6.00%, 8/15/2000 249,985,171
125,000,000 5.125%, 8/31/2000 124,744,137
125,000,000 6.25%, 8/31/2000 125,071,494
155,000,000 4.00%, 10/31/2000 153,624,610
100,000,000 5.75%, 10/31/2000 99,840,302
--------------
Total 923,283,922
--------------
TOTAL U.S. TREASURIES 1,369,736,250
--------------
REPURCHASE AGREEMENTS - 49.2%
825,000,000 Donaldson, Lufkin and Jenrette
Securities Corp., 6.38%,
dated 5/31/2000, due 6/1/2000,
repurchase price $825,146,094
(Collateralized by U.S.
Government Securities) 825,000,000
825,000,000 Warburg Dillon Read, LLC, 6.36%,
dated 5/31/2000, due 6/1/2000,
repurchase price $825,145,750
(Collateralized by U.S.
Government Securities) 825,000,000
--------------
TOTAL REPURCHASE AGREEMENTS 1,650,000,000
--------------
MUTUAL FUNDS - 9.9%
165,128,968 Financial Square Treasury
Obligation Fund 165,128,968
167,104,215 Short-Term Investments Co.
Liquid Assets Portfolio 167,104,215
--------------
TOTAL MUTUAL FUNDS 332,233,183
--------------
TOTAL INVESTMENTS - 100.0% 3,351,969,433
--------------
LIABILITIES, LESS OTHER ASSETS - 0.0% (606,121)
--------------
TOTAL NET ASSETS - 100.0% $3,351,363,312
--------------
--------------
(See Notes to Financial Statements.)
Firstar Stellar Tax-Free Money Market Fund May 31, 2000 (Unaudited)
PRINCIPAL AMOUNT
OR SHARES AMORTIZED COST
---------------- --------------
SHORT-TERM MUNICIPALS - 96.0%
ARIZONA - 4.2%
$5,000,000 Central Arizona Water Conservation
District Contract, Revenue Bonds,
Arizona Project, 7.125%, 11/1/2011,
Prerefunded 11/1/2000 $5,165,782
2,000,000 Maricopa County, AZ Community
College District Project 1994 Series C,
GO UT, 5.25%, 7/1/2000 2,002,016
------------
Total 7,167,798
------------
COLORADO - 2.7%
4,600,000 Smith Creek Metropolitan District of
Colorado, Revenue Bonds Weekly VRDNs,
(NationsBank, Fort Worth LOC),
4.39%, 10/1/2035 4,600,000
------------
DELAWARE - 0.7%
1,210,000 Dover, DE Electric Revenue Bonds,
7.00%, 7/1/2015, Prerefunded 7/1/2000 1,237,171
------------
FLORIDA - 2.0%
1,210,000 Putnam County, FL Development
Authority Pollution Control, H-2,
Revenue Bonds Weekly VRDNs,
Seminole Electric, (CFC Guaranteed
LOC), 4.34%, 3/15/2014 1,210,000
2,180,000 Sarasota County, FL School Board
Funding Corp. Lease, Revenue Bonds,
(MBIA INS), 7.25%, 7/1/2010,
Prerefunded 7/1/2000 2,207,771
------------
Total 3,417,771
------------
HAWAII - 1.3%
2,225,000 Hawaii Department Budget & Finance,
Special Purpose Revenue Bonds Weekly
VRDNs, Kuakini Medical Center Project,
(Bank of Hawaii LOC), 4.29%, 7/1/2005 2,225,000
------------
ILLINOIS - 14.2%
1,000,000 Chicago, IL Motor Fuel Tax, Revenue
Bonds, (AMBAC INS), 7.05%, 1/1/2007 1,035,032
2,105,000 Illinois Development Finance Authority,
Revenue Bonds Weekly VRDNs,
Xavier University, (American National
Bank & Trust LOC), 4.19%, 10/1/2012 2,105,000
3,700,000 Illinois Development Finance Authority,
Revenue Bonds Weekly VRDNs, Aurora
Central Catholic High School, (Northern
Trust Corp. LOC), 4.19%, 4/1/2024 3,700,000
1,055,000 Illinois Development Finance Authority,
Revenue Bonds Weekly VRDNs, Lake
Forest Academy, (Northern Trust Corp.
LOC), 4.19%, 12/1/2024 1,055,000
1,515,000 Illinois Development Finance Authority,
Revenue Bonds Weekly VRDNs, St. Paul's
House Project, (LaSalle National Bank
LOC), 4.19%, 2/1/2025 1,515,000
3,000,000 Illinois Development Finance Authority
Series 1993A, Weekly VRDNs, Loyola
Academy, (Northern Trust Corp. LOC),
4.24%, 10/1/2027 3,000,000
4,500,000 Illinois Development Finance Authority
Series 1996, Revenue Bonds Weekly
VRDNs, Chicago Symphony Orchestra
Project, (Bank of America Illinois LOC),
4.24%, 6/1/2031 4,500,000
2,000,000 Illinois Development Finance Authority
Series A, Revenue Bonds Weekly VRDNs,
Presbyterian Home, (FSA INS),
4.19%, 9/1/2031 2,000,000
2,500,000 Illinois Educational Facilities Authority,
Revenue Bonds Weekly VRDNs,
Newberry Library Project, (Northern
Trust Corp. LOC), 4.24%, 3/1/2028 2,500,000
2,900,000 Illinois Health Facilities Authority,
Revenue Bonds Weekly VRDNs,
Gottlieb Health Resources, Inc.,
(Harris Trust & Savings Bank,
Chicago LOC), 4.24%, 11/15/2025 2,900,000
------------
Total 24,310,032
------------
INDIANA - 4.3%
5,000,000 Indiana Health Facilities Funding
Authority, Revenue Bonds Weekly
VRDNs, Capital Access, (Comerica
Bank LOC), 4.24%, 1/1/2012 5,000,000
2,400,000 Indiana State Development Finance
Authority, Revenue Bonds Weekly
VRDNs, Indiana Historical Society,
(NBD Bank LOC), 4.29%, 8/1/2031 2,400,000
------------
Total 7,400,000
------------
KANSAS - 1.2%
2,000,000 Wyandotte County/Kansas City, KS, GO
UT, (AMBAC INS), 4.50%, 9/1/2000 2,002,900
------------
MASSACHUSETTS - 2.3%
2,225,000 Boston, MA, Revenue Bonds, Boston City
Hospital, 7.65%, 8/15/2000 2,276,980
1,585,000 Massachusetts State Health &
Educational Facilities Authority
Series A, Revenue Bonds, Fairview
Extended Care, 10.125%, 1/1/2011 1,679,861
------------
Total 3,956,841
------------
MICHIGAN - 0.9%
1,500,000 Michigan State Hospital Finance
Authority Series A, Revenue Bonds
Weekly VRDNs, Hospital Equipment
Program, (First of America Bank LOC),
3.99%, 12/1/2023 1,500,000
------------
MINNESOTA - 4.7%
8,080,000 University of Minnesota Series A,
Revenue Bonds Weekly VRDNs,
4.24%, 1/1/2034 8,080,000
------------
NEW JERSEY - 3.4%
5,585,000 New Jersey Health Care Facilities
Financing Authority, Revenue Bonds,
Barnert Hospital, 6.80%, 8/1/2019 5,772,656
------------
NEW YORK - 2.8%
4,655,000 Cattaraugus County, NY Industrial
Development Agency Civic Facility,
Revenue Bonds, St. Bonaventure
University, 8.30%, 12/1/2010 4,839,371
------------
NORTH CAROLINA - 1.7%
2,950,000 University of North Carolina Chapel Hill
Foundation, Certificate Participation,
Weekly VRDNs, (Bank of America,
N.A. LOC), 4.14%, 10/1/2009 2,950,000
------------
OHIO - 22.1%
5,255,000 Cleveland, OH Income Tax Revenue
Bonds Weekly VRDNs, (Toronto-Dominion
Bank LOC), 3.84%, 5/15/2024 5,255,000
3,000,000 Cuyahoga County, OH Hospital Authority
Series A Weekly VRDNs, Cleveland Clinic,
4.14%, 1/1/2024 3,000,000
7,445,000 Cuyahoga County, OH Hospital Authority
Series B Weekly VRDNs, Cleveland Clinic,
4.14%, 1/1/2025 7,445,000
5,500,000 Hamilton County, OH Hospital Facilities
Authority Series A, Revenue Bonds
Weekly VRDNs, Health Alliance of
Greater Cincinnati, (MBIA INS),
3.89%, 1/1/2018 5,500,000
5,050,000 Hamilton County, OH Hospital Facilities
Authority Series B, Revenue Bonds
Weekly VRDNs, Health Alliance of
Greater Cincinnati, (MBIA INS),
3.89%, 1/1/2018 5,050,000
5,000,000 Ohio State University General Receipts
Series B, Revenue Bonds Weekly VRDNs,
3.89%, 12/1/2014 5,000,000
1,000,000 Ohio State University General Receipts
Series B, Revenue Bonds Weekly VRDNs,
3.89%, 12/1/2029 1,000,000
975,000 Warren County, OH Health Care
Facilities Series A, Revenue Bonds
Weekly VRDNs, Otterbein Homes,
(Fifth Third Bank LOC), 4.34%, 7/1/2021 975,000
4,500,000 Warren County, OH Health Care
Facilities Series B, Revenue Bonds
Weekly VRDNs,Otterbein Homes,
(Fifth Third Bank LOC),
4.34%, 7/1/2023 4,500,000
------------
Total 37,725,000
------------
OKLAHOMA - 1.8%
2,000,000 Oklahoma County, OK Finance Authority
IDR Bonds Monthly VRDNs, Hutto-
Carbon Office, (FGIC INS),
5.24%, 12/1/2014 2,000,000
1,000,000 Oklahoma County, OK Finance Authority
IDR Bonds Monthly VRDNs, Perrine
Office Project, (FGIC INS),
5.24%, 12/1/2014 1,000,000
------------
Total 3,000,000
------------
PENNSYLVANIA - 7.6%
9,000,000 Berks County, PA IDA, Revenue Bonds
Monthly VRDNs, 4.49%, 7/1/2016 9,000,000
4,025,000 Philadelphia, PA Hospital & Higher
Education Facilities Authority, Revenue
Bonds, Children's Seashore House,
(AMBAC INS), 7.75%, 8/15/2017 4,036,264
------------
Total 13,036,264
------------
TENNESSEE - 1.8%
3,100,000 Rutherford County, TN IDB Weekly
VRDNs, Square D Co., (Societe Generale,
Chicago, IL LOC), 4.24%, 4/1/2017 3,100,000
------------
TEXAS - 3.8%
2,030,000 Bexar County, TX Health Facilities
Development Authority, Revenue
Bonds Weekly VRDNs, Army
Retirement Resources Foundation,
(Rabobank Nederland, Utrecht LOC),
4.24%, 7/1/2011 2,030,000
4,415,000 Bexar County, TX Health Facilities
Development Authority Series B,
Revenue Bonds Weekly VRDNs, Army
Retirement Resources Foundation,
(Rabobank Nederland, Utrecht LOC),
4.24%, 7/1/2011 4,415,000
------------
Total 6,445,000
------------
WASHINGTON - 3.0%
2,370,000 Chelan County, WA Public Utility District
No. 1 Series A, Revenue Bonds Weekly
VRDNs, (MBIA INS), 4.29%, 6/1/2015 2,370,000
2,740,000 Washington State Housing Finance
Community Multifamily Mortgage,
Revenue Bonds Weekly VRDNs,
Pacific First, (Federal Home
Loan Bank LOC), 4.29%, 10/1/2020 2,740,000
------------
Total 5,110,000
------------
WASHINGTON D.C. - 1.8%
3,000,000 District of Columbia Series A, GO UT,
7.25%, 6/1/2005, Prerefunded 6/1/2000 3,060,000
------------
WISCONSIN - 7.7%
6,000,000 Eau Claire, WI Area School District
Series A, BANs, 4.00%, 11/15/2000 5,998,630
4,000,000 Milwaukee, WI Sewer District
Series A, GO UT, 6.70%, 10/1/2000,
Escrowed to maturity 4,037,565
3,000,000 Wisconsin State HEFA Series B,
Revenue Bonds Weekly VRDNs,
Marshfield Clinic Project, (Morgan
Guaranty Trust LOC), 4.19%, 6/1/2010 3,000,000
------------
Total 13,036,195
------------
TOTAL SHORT-TERM MUNICIPALS 163,971,999
------------
MUTUAL FUNDS - 3.5%
843,420 AIM Tax-Free Investments Co. $843,420
5,188,819 SEI Tax Exempt Money Market Fund 5,188,819
------------
TOTAL MUTUAL FUNDS 6,032,239
------------
TOTAL INVESTMENTS - 99.5% 170,004,238
------------
OTHER ASSETS, LESS LIABILITIES - 0.5% 905,700
------------
TOTAL NET ASSETS - 100.0% $170,909,938
------------
------------
(See Notes to Financial Statements.)
Firstar Stellar Ohio Tax-Free Money Market Fund May 31, 2000 (Unaudited)
PRINCIPAL AMOUNT
OR SHARES AMORTIZED COST
---------------- --------------
OHIO SHORT-TERM INVESTMENTS - 99.5%
OHIO SHORT-TERM MUNICIPALS - 96.3%
$200,000 Centerville, OH Weekly VRDNs, Bethany
Lutheran Village, (PNC Bank Ohio N.A.
LOC), 4.24%, 5/1/2008 $200,000
460,000 Centerville, OH Weekly VRDNs, Bethany
Lutheran Village, (PNC Bank Ohio N.A.
LOC), 4.24%, 11/1/2013 460,000
2,000,000 Cincinnati, OH, GO UT,
4.10%, 12/1/2000 2,000,926
1,000,000 Clermont County, OH, GO LT, 7.125%,
9/1/2011, Prerefunded 9/1/2000 1,027,812
3,361,000 Cleveland, OH Income Tax Revenue Bonds
Weekly VRDNs, (Toronto-Dominion
Bank LOC), 3.84%, 5/15/2024 3,361,000
1,900,000 Columbus, OH, GO UT Weekly VRDNs,
4.14%, 6/1/2016 1,900,000
100,000 Columbus, OH Electrical Systems
Revenue Bonds Monthly VRDNs,
(Union Bank of Switzerland, Zurich
LOC), 4.19%, 9/1/2009 100,124
2,200,000 Columbus, OH Sewer System, Revenue
Bonds Weekly VRDNs, 4.24%, 6/1/2011 2,200,000
3,550,000 Cuyahoga County, OH Hospital
Revenue Bonds Weekly VRDNs, Cleveland
Clinic, (Chase Manhattan Bank LOC),
4.09%, 1/1/2026 3,550,000
2,305,000 Franklin County, OH Hospital Facility
Authority Series A, Weekly VRDNs, U.S.
Health Corp. of Columbus, (Morgan
Guaranty Trust Co., New York LOC),
4.31%, 12/1/2021 2,305,000
3,145,000 Franklin County, OH Hospital Revenue
Bonds Weekly VRDNs, U.S. Health Corp.
of Columbus, 4.31%, 12/1/2011 3,145,000
1,500,000 Hamilton, OH Multifamily Series A,
Revenue Bonds Weekly VRDNs,
Knollwood Village, (Bank One Indiana
N.A. LOC), 4.38%, 1/1/2030 1,500,000
3,700,000 Lake Ohio Local School District,
Stark County, GO UT BANs,
4.50%, 6/15/2000 3,700,832
515,000 Marion County, OH Hospital Authority
Series 1991, Weekly VRDNs, Marion
County, OH Pooled Hospital Program,
(Bank One Ohio N.A. LOC),
4.43%, 11/1/2021 515,000
2,800,000 Middleburg Heights, OH, Hospital
Improvement Revenue Bonds Weekly
VRDNs, (KeyBank N.A. LOC),
4.39%, 8/15/2022 2,800,000
450,000 Ohio State IDR Weekly VRDNs, Cincinnati
Riverfront Coliseum, Inc., (PNC Bank
Ohio N.A. LOC), 4.39%, 6/1/2002 450,000
485,000 Ohio State IDR Weekly VRDNs, Cincinnati
Riverfront Coliseum, Inc., (PNC Bank
Ohio N.A. LOC), 4.39%, 6/1/2003 485,000
1,000,000 Ohio State Liquor Profits Revenue
Bonds, 6.85%, 9/1/2000 1,008,053
2,000,000 Ohio State Public Facilities Community
Series IIB, 4.50%, 11/1/2000 2,006,448
2,000,000 Ohio State Public Facilities Community
Series IIB, 5.00%, 11/1/2000 2,009,552
3,000,000 Ohio State University General Receipts,
Revenue Bonds Weekly VRDNs,
4.29%, 12/1/2007 3,000,000
500,000 Ohio State University General Receipts
Series B, Revenue Bonds Weekly VRDNs,
3.89%, 12/1/2014 500,000
1,000,000 Ohio State University General Receipts,
Revenue Bonds Weekly VRDNs,
3.64%, 12/1/2017 1,000,000
800,000 Ohio State Water Development Authority,
Revenue Bonds, 8.00%, 12/1/2018 808,000
2,500,000 Teays Valley, OH Local School District,
GO UT BANs, 4.50%, 6/15/2000 2,500,469
1,100,000 Tiffin, OH, Revenue Bonds,
3.70%, 7/6/2000 1,100,254
2,000,000 University of Cincinnati, OH General
Receipts Series AJ BANs,
4.50%, 3/1/2001 2,005,026
1,000,000 University of Toledo, OH, Revenue
Bonds, (MBIA INS), 7.10%, 6/1/2010 1,020,000
-----------
TOTAL OHIO SHORT-TERM MUNICIPALS 46,658,496
-----------
OHIO MONEY MARKET MUTUAL FUND - 3.2%
1,538,353 Touchstone Ohio Tax-Free Money Fund 1,538,353
-----------
TOTAL OHIO MONEY MARKET MUTUAL FUND 1,538,353
-----------
TOTAL INVESTMENTS - 99.5% 48,196,849
-----------
OTHER ASSETS, LESS LIABILITIES - 0.5% 251,386
-----------
TOTAL NET ASSETS - 100.0% $48,448,235
-----------
-----------
(See Notes to Financial Statements.)
Abbreviations to Portfolios of Investments
The following abbreviations are used in these portfolios:
AMBAC -- American Municipal Bond Assurance Corporation
BANs -- Bond Anticipation Notes
FGIC -- Financial Guaranty Insurance Company
GO -- General Obligation
HEFA -- Health and Education Facilities Authority
IDA -- Industrial Development Authority
IDB -- Industrial Development Bond
IDR -- Industrial Development Revenue
INS -- Insured
LOC -- Letter of Credit
LT -- Limited Tax
MBIA -- Municipal Bond Investors Assurance
UT -- Unlimited Tax
VRDNs -- Variable Rate Demand Notes
Statements of Assets and Liabilities
May 31, 2000 (Unaudited)
<TABLE>
Firstar Stellar Firstar Stellar
Tax-Free Ohio Tax-Free
Firstar Stellar Money Money
Treasury Market Market
Fund Fund Fund
--------------- --------------- ---------------
<S> <C> <C> <C>
ASSETS:
Investments in repurchase agreements $1,650,000,000 -- --
Investments in securities, at amortized cost 1,701,969,433 $170,004,238 $48,196,849
-------------- ------------ -----------
Total investments in securities, at amortized cost 3,351,969,433 170,004,238 48,196,849
-------------- ------------ -----------
Cash 1,099 9,636 --
Income receivable 15,300,436 1,612,812 486,557
Other assets 84,473 13,778 11,760
-------------- ------------ -----------
Total assets 3,367,355,441 171,640,464 48,695,166
-------------- ------------ -----------
LIABILITIES:
Income distribution payable 13,635,170 556,058 176,925
Payable to bank -- -- 339
Payable to affiliates 2,356,959 172,090 47,014
Accrued expenses -- 2,378 22,653
-------------- ------------ -----------
Total liabilities 15,992,129 730,526 246,931
-------------- ------------ -----------
NET ASSETS $3,351,363,312 $170,909,938 $48,448,235
-------------- ------------ -----------
-------------- ------------ -----------
NET ASSETS:
C Shares $1,483,383,996 $170,909,938 $48,448,235
Y Shares 1,867,979,316 -- --
-------------- ------------ -----------
Total net assets $3,351,363,312 $170,909,938 $48,448,235
-------------- ------------ -----------
-------------- ------------ -----------
SHARES OUTSTANDING:
C Shares 1,483,383,996 170,909,938 48,448,235
Y Shares 1,867,979,316 -- --
-------------- ------------ -----------
Total shares outstanding 3,351,363,312 170,909,938 48,448,235
-------------- ------------ -----------
-------------- ------------ -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PROCEEDS PER SHARE:
C Shares $1.00 $1.00 $1.00
Y Shares $1.00 -- --
-------------- ------------ -----------
Investments, at identified cost $3,351,969,433 $170,004,238 $48,196,849
-------------- ------------ -----------
-------------- ------------ -----------
Investments, at tax cost $3,351,969,433 $170,004,238 $48,196,849
-------------- ------------ -----------
-------------- ------------ -----------
</TABLE>
(See Notes to Financial Statements.)
Statements of Operations
Six Months Ended May 31, 2000 (Unaudited)
<TABLE>
Firstar Stellar Firstar Stellar
Tax-Free Ohio Tax-Free
Firstar Stellar Money Money
Treasury Market Market
Fund Fund Fund
--------------- --------------- ---------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $97,109,036 $3,631,256 $1,340,080
EXPENSES:
Investment advisory fees 8,597,050 519,213 192,444
Shareholder services fees 4,298,811 236,046 87,471
Administration fees 1,891,351 103,841 38,489
Distribution services fees -- C Shares 917,118 -- --
Custodian fees 429,853 23,601 8,747
Transfer and dividend disbursing agent fees and expenses 262,886 16,900 6,865
Printing and postage 150,452 2,077 1,044
Federal and state registration fees 133,280 4,468 4,863
Portfolio accounting fees 92,294 21,085 20,313
Auditing fees 6,334 5,817 5,801
Trustees' fees 2,602 2,594 2,618
Legal fees 1,050 1,050 1,050
Miscellaneous 25,077 1,647 732
----------- ---------- ----------
Total expenses 16,808,158 938,339 370,437
----------- ---------- ----------
Waivers--
Waiver of investment advisory fees -- (61,700) (76,206)
Waiver of shareholder services fees (1,871,017) (102,593) (38,948)
----------- ---------- ----------
Total waivers (1,871,017) (164,293) (115,154)
----------- ---------- ----------
Net expenses 14,937,141 774,046 255,283
----------- ---------- ----------
NET INVESTMENT INCOME $82,171,895 $2,857,210 $1,084,797
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
(See Notes to Financial Statements.)
Statements of Changes in Net Assets
<TABLE>
Firstar Stellar Firstar Stellar
Firstar Stellar Tax-Free Ohio Tax-Free
Treasury Money Market Money Market
Fund Fund Fund
-------------------------- --------------------------- --------------------------
Six Months Six Months Six Months
Ended Year Ended Ended Year Ended Ended Year Ended
May 31, 2000 November 30, May 31, 2000 November 30, May 31, 2000 November 30,
(unaudited) 1999 (unaudited) 1999 (unaudited) 1999
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS--
Net investment income $82,171,895 $80,548,642 $2,857,210 $3,589,708 $1,084,797 $1,471,848
-------------- -------------- ------------ ------------ ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
C Shares (28,684,453) (24,520,208) (2,857,210) (3,589,708) (1,084,797) (1,471,848)
Y Shares (53,487,442) (56,028,434) -- -- -- --
-------------- -------------- ------------ ------------ ----------- -----------
Change in net assets from distributions
to shareholders (82,171,895) (80,548,642) (2,857,210) (3,589,708) (1,084,797) (1,471,848)
-------------- -------------- ------------ ------------ ----------- -----------
SHARE TRANSACTIONS--
Proceeds from sales of shares 5,947,852,953 8,570,767,432 308,539,397 345,887,714 61,732,530 141,618,617
Net asset value of shares issued to
shareholders in payment of
distributions declared 21,144,697 7,205,758 1,092,213 609,745 4,572 9,325
Cost of shares redeemed (5,433,521,359) (7,427,659,654) (294,316,989) (325,458,578) (77,764,040) (134,766,418)
-------------- -------------- ------------ ------------ ----------- -----------
Change in net assets from
share transactions 535,476,291 1,150,313,536 15,314,621 21,038,881 (16,026,938) 6,861,524
-------------- -------------- ------------ ------------ ----------- -----------
Change in net assets 535,476,291 1,150,313,536 15,314,621 21,038,881 (16,026,938) 6,861,524
-------------- -------------- ------------ ------------ ----------- -----------
NET ASSETS:
Beginning of period 2,815,887,021 1,665,573,485 155,595,317 134,556,436 64,475,173 57,613,649
-------------- -------------- ------------ ------------ ----------- -----------
End of period $3,351,363,312 $2,815,887,021 $170,909,938 $155,595,317 $48,448,235 $64,475,173
-------------- -------------- ------------ ------------ ----------- -----------
-------------- -------------- ------------ ------------ ----------- -----------
</TABLE>
(See Notes to Financial Statements.)
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
RATIOS TO AVERAGE NET ASSETS
NET ASSET DISTRIBUTIONS ------------------------------------ NET ASSETS,
VALUE, NET FROM NET NET ASSET NET EXPENSE END OF
PERIOD ENDED BEGINNING INVESTMENT INVESTMENT VALUE, END TOTAL INVESTMENT WAIVER/ PERIOD
NOVEMBER 30, OF PERIOD INCOME INCOME OF PERIOD RETURN (A) EXPENSES INCOME REIMBURSEMENT (B) (000 OMITTED)
<F2> <F3>
------------ --------- ---------- ---------- --------- ---------- -------- -------- ---------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FIRSTAR STELLAR TREASURY FUND
C SHARES
1995 $1.00 0.05 (0.05) $1.00 5.23% 0.71% 5.14% 0.20% $654,963
1996 $1.00 0.05 (0.05) $1.00 4.80% 0.70% 4.69% 0.20% $829,259
1997 $1.00 0.05 (0.05) $1.00 4.85% 0.73% 4.73% 0.20% $469,400
1998 $1.00 0.05 (0.05) $1.00 4.69% 0.88% 4.58% 0.20% $542,430
1999 $1.00 0.04 (0.04) $1.00 4.02% 0.92% 3.98% 0.16% $1,049,641
2000(f)<F7> $1.00 0.02 (0.02) $1.00 2.36% 0.97%(d) 4.68%(d) 0.11%(d) $1,483,384
<F5> <F5> <F5>
Y SHARES
1997(c)<F4> $1.00 0.03 (0.03) $1.00 3.37% 0.72%(d) 4.87%(d) 0.20%(d) $659,296
<F5> <F5> <F5>
1998 $1.00 0.05 (0.05) $1.00 4.84% 0.73% 4.73% 0.20% $1,123,144
1999 $1.00 0.04 (0.04) $1.00 4.18% 0.77% 4.13% 0.16% $1,766,246
2000(f)<F7> $1.00 0.02 (0.02) $1.00 2.44% 0.82%(d) 4.83%(d) 0.11%(d) $1,867,979
<F5> <F5> <F5>
FIRSTAR STELLAR TAX-FREE MONEY MARKET FUND
C SHARES
1995 $1.00 0.03 (0.03) $1.00 3.32% 0.66% 3.26% 0.35% $167,356
1996 $1.00 0.03 (0.03) $1.00 2.91% 0.70% 2.87% 0.31% $153,256
1997 $1.00 0.03 (0.03) $1.00 3.02% 0.69% 2.96% 0.30% $126,348
1998 $1.00 0.03 (0.03) $1.00 2.83% 0.75% 2.79% 0.30% $134,556
1999 $1.00 0.02 (0.02) $1.00 2.50% 0.76% 2.46% 0.26% $155,595
2000(f)<F7> $1.00 0.02 (0.02) $1.00 1.56% 0.82%(d) 3.03%(d) 0.17%(d) $170,910
<F5> <F5> <F5>
FIRSTAR STELLAR OHIO TAX-FREE MONEY MARKET FUND
C SHARES
1998(e)<F6> $1.00 0.03 (0.03) $1.00 2.85% 0.69%(d) 2.81%(d) 0.60%(d) $57,614
<F5> <F5> <F5>
1999 $1.00 0.03 (0.03) $1.00 2.67% 0.58% 2.64% 0.51% $64,475
2000(f)<F7> $1.00 0.02 (0.02) $1.00 1.60% 0.73%(d) 3.10%(d) 0.33%(d) $48,448
<F5> <F5> <F5>
</TABLE>
(a)<F2> Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(b)<F3> This voluntary expense decrease is reflected in both the expense and
net investment income ratios.
(c)<F4> Reflects operations for the period from March 25, 1997 (date of initial
public investment) to November 30, 1997.
(d)<F5> Computed on an annualized basis.
(e)<F6> Reflects operations for the period from December 2, 1997 (date of
initial public investment) to November 30, 1998.
(f)<F7> For the six months ended May 31, 2000 (unaudited).
(See Notes to Financial Statements.)
Notes to Financial Statements
MAY 31, 2000 (UNAUDITED)
(1) ORGANIZATION
Firstar Stellar 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 ten diversified portfolios and two non-
diversified portfolios. 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
-------------- --------------------
Firstar Stellar Treasury Fund Stability of principal and current
("Treasury Fund") income consistent with stability of
principal.
Firstar Stellar Tax-Free Money Current income exempt from federal
Market Fund ("Tax-Free regular income tax consistent
Money Market Fund") with stability of principal.
Firstar Stellar Ohio Tax-Free Current income exempt from federal
Money Market Fund ("Ohio income tax and the personal
Tax-Free Money Market Fund") income taxes imposed by the state of Ohio
and Ohio municipalities with stability of
principal.
The financial statements of the Bond and Stock 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 Treasury Fund offers two classes of shares, (C Shares and Y Shares); the
Tax-Free Money Market Fund offers one class of shares (C Shares); and the Ohio
Tax-Free Money Market Fund offers one class of shares (C 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
The Funds' use of the amortized cost method, which approximates market, to value
their portfolio securities is in accordance with Rule 2a-7 under the Act.
Investments in other open-end investment companies are valued at net asset
value.
B. REPURCHASE AGREEMENTS
It is the policy of the Funds to require the 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 approved 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, applicable to regulated investment companies and to distribute
to shareholders each year substantially all of its income. Accordingly, no
provisions for federal taxes are necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Funds may engage in when-issued or delayed delivery transactions. The Funds
record when-issued securities on the trade date and maintain security positions
such that sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed delivery
basis are marked to market daily and begin earning interest on the settlement
date.
F. 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 estimates.
G. OTHER
Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At May
31, 2000, paid in capital for the Treasury Fund, Tax-Free Money Market Fund and
Ohio Tax-Free Money Market Fund aggregated $3,351,363,312, $170,909,938 and
$48,448,235, respectively. Transactions in Fund shares were as follows:
TREASURY FUND
----------------------------------
SIX MONTHS YEAR
ENDED ENDED
MAY 31, NOVEMBER 30,
C SHARES 2000 1999
-------------------------------------- --------------- ---------------
Shares sold 1,780,253,850 3,727,501,528
Shares issued to shareholders
in payment of distributions
declared 20,896,128 6,880,377
Shares redeemed (1,367,407,346) (3,227,170,514)
-------------- --------------
Net change resulting from
C Share transactions 433,742,632 507,211,391
-------------- --------------
TREASURY FUND
----------------------------------
SIX MONTHS YEAR
ENDED ENDED
MAY 31, NOVEMBER 30,
Y SHARES 2000 1999
-------------------------------------- --------------- ---------------
Shares sold 4,167,599,103 4,843,265,904
Shares issued to shareholders
in payment of distributions
declared 248,569 325,381
Shares redeemed (4,066,114,013) (4,200,489,140)
-------------- --------------
Net change resulting from
Y Share transactions 101,733,659 643,102,145
-------------- --------------
Net change resulting from
Fund Share transactions 535,476,291 1,150,313,536
-------------- --------------
-------------- --------------
TAX-FREE MONEY
MARKET FUND
----------------------------------
SIX MONTHS YEAR
ENDED ENDED
MAY 31, NOVEMBER 30,
C SHARES 2000 1999
-------------------------------------- --------------- ---------------
Shares sold 308,539,397 345,887,714
Shares issued to shareholders
in payment of distributions
declared 1,092,213 609,745
Shares redeemed (294,316,989) (325,458,578)
-------------- --------------
Net change resulting from
C Share transactions 15,314,621 21,038,881
-------------- --------------
-------------- --------------
OHIO TAX-FREE
MONEY MARKET FUND
----------------------------------
SIX MONTHS YEAR
ENDED ENDED
MAY 31, NOVEMBER 30,
C SHARES 2000 1999
-------------------------------------- --------------- ---------------
Shares sold 61,732,530 141,618,617
Shares issued to shareholders
in payment of distributions
declared 4,572 9,325
Shares redeemed (77,764,040) (134,766,418)
-------------- --------------
Net change resulting from
C Share transactions (16,026,938) 6,861,524
-------------- --------------
-------------- --------------
(4) INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A. GENERAL
Certain officers of Firstar Investment Research & Management Company, LLC
(FIRMCO) and Firstar Mutual Fund Services, LLC ("Firstar") serve as officers of
the Trust. FIRMCO and Firstar are related by virtue of each being a subsidiary
of Firstar Corporation.
B. INVESTMENT ADVISORY FEES
FIRMCO serves as the Trust's investment adviser (the "Adviser"). Prior to April
1, 2000, the Funds were managed by Firstar Bank, N.A. As part of an internal
restructuring of the investment advisory function within Firstar Corporation,
the investment management resources of Firstar Bank, N.A. have been consolidated
with those of FIRMCO. 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 NAME ANNUAL RATE
------------------------------- -----------
Treasury Fund 0.50%
Tax-Free Money Market Fund 0.55%
Ohio Tax-Free Money Market Fund 0.55%
The Adviser may voluntarily choose to waive a portion of its fee. In the case of
the Tax-Free Money Market Fund and Ohio Tax-Free Money Market Fund, the Adviser
has waived a portion of its fee so that the fees actually charged are 0.50% and
0.35% of average daily net assets, respectively. The Adviser may modify or
terminate this voluntary waiver of its advisory fees at any time at its sole
discretion.
C. ADMINISTRATIVE FEES
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.
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"), C Shares of the Trust may pay to
the distributor of the Funds an amount computed at an annual rate of 0.25% of
the average daily net assets to finance any activity which is principally
intended to result in the sale of shares subject to the Plan. Edgewood Services,
Inc. serves as the distributor of the Funds. Currently, only the Treasury Fund
is accruing and paying 12b-1 fees.
E. SHAREHOLDER SERVICES FEES
Under the terms of a Shareholder Services Agreement with Firstar Bank, N.A.,
each Fund may pay Firstar Bank, N.A. up to 0.25% of average daily net assets of
the Funds for the period. As of February 1, 2000, the shareholder servicing fee
was changed to 0.16% of average daily net assets. The fee paid to Firstar Bank,
N.A. is used to finance certain services for shareholders and to maintain
shareholder accounts. Firstar Bank, N.A. can modify or terminate this limitation
at any time at its sole discretion.
F. TRANSFER AND DIVIDEND DISBURSING AGENT FEES
Firstar serves as transfer and dividend disbursing agent for the Funds. The fee
paid to Firstar is based on the size, type and number of accounts and
transactions made by shareholders.
G. PORTFOLIO ACCOUNTING FEES
Firstar is 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.
H. CUSTODIAN FEES
Firstar 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 daily net assets for the period,
plus out-of-pocket expenses.
Trustees Officers
Thomas L. Conlan Jr. Bruce R. Laning
PRESIDENT
Dr. Alfred Gottschalk Joseph C. Neuberger
VICE PRESIDENT
Dr. Robert J. Hill Cheryl L. King
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. Investment in mutual funds involves investment
risks, including the possible loss of principal. Although money market funds
seek to maintain a stable net asset value of $1.00 per share, there is no
assurance that they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Trust's prospectus which contains facts
concerning its objectives and policies, management fees, expenses and other
information.
Edgewood Services, Inc. is the distributor of the Firstar Stellar Funds.
FIRSTAR STELLAR FUNDS ARE AVAILABLE THROUGH:
O THE FIRSTAR FUNDS CENTER,
O FINANCIAL CONSULTANTS WHO ARE EITHER REGISTERED
REPRESENTATIVES OF FIRSTAR INVESTMENT SERVICES, INC.,
A REGISTERED BROKER/DEALER, NASD AND SIPC MEMBER,
OR REGISTERED REPRESENTATIVES OF MDS SECURITIES,
A DIVISION OF CONSECO FINANCIAL SERVICES, INC.,
A REGISTERED BROKER/DEALER, NASD AND SIPC MEMBER,
O AND THROUGH SELECTED SHAREHOLDER ORGANIZATIONS.
This report is authorized for distribution only when preceded or
accompanied by a current prospectus.
FOR ACCOUNT BALANCE AND INVESTOR SERVICES INFORMATION
1-800-677-FUND
1-414-287-3808
FIRSTAR STELLAR FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 701
MILWAUKEE, WI 53201-0701
WWW.FIRSTARSTELLARFUNDS.COM
(FIRSTAR STELLAR FUNDS LOGO)
FORM # SFMMFSEM-00
BOND FUNDS
Firstar Stellar Insured Tax-Free Bond Fund
Firstar Stellar U.S. Government Income Fund
Firstar Stellar Strategic Income Fund
Combined Semi-Annual Report
May 31, 2000
(FIRSTAR STELLAR FUNDS LOGO)
President's Message
Dear Shareholder:
MID-YEAR REVIEW
With the Y2K "bug" vanquished, it was back to "business as usual" for investors
- that is, unexpectedly strong economic growth and unbelievably volatile
financial markets. The U.S. economy continues to confound the pundits,
combining robust growth and low unemployment with modest inflation. However,
the jump in energy prices and a tight labor market have fostered a more
aggressive Federal Reserve interest rate policy. Clearly, the Fed views the
current pace of economic growth as "too fast," creating imbalances likely to
accelerate inflation if left unchecked. Some observers believe the Fed is
behind the curve and the inflation "genie" is already "out of the bottle."
Others contend the Fed is wrongly applying "old" economy metrics to a
fundamentally different "new" economy.
In our opinion, the foundation of our current economic success - robust economic
growth with low inflation - rests on the twin pillars of global competition and
improved productivity. U.S. productivity growth averaged 3.7% over the past
twelve months and has averaged 2.3% per year since the end of the last
recession.*<F8> Although Fed Chairman Alan Greenspan publicly questions the
sustainability of today's productivity gains, the recent upsurge is far from
unprecedented. The Golden Age of U.S. productivity growth, from 1950 to 1973,
saw labor productivity grow at a 2.7% compound annual rate. Improved
productivity tends to mean higher profits. Higher profits lead to more spending
on productivity-enhancing technology. Further productivity gains lead to
further profit improvements and the process repeats. Although final demand is
surging, supply-side investment is growing even faster. Finally, Congressional
approval of permanent normal trade relations with China is a reminder that
global competition will only intensify.
ECONOMIC & MARKET OUTLOOK
Looking ahead, our investment strategy is predicated on the following trends:
o Adjusted for inflation, U.S. final sales rose at a +6.9% annual rate in the
first quarter of this year, representing the fastest growth rate of the
current economic cycle.*<F8>
o Consumer confidence remains near record levels reflecting strong income
gains, low unemployment and the wealth effect from rising asset values.
o Despite higher interest rates, cheap credit is still available to drive
consumer spending.
o Like a tax increase, higher energy prices erode income gains.
o Although much is made of the wealth effect from higher stock prices, the
increase in home values has been the biggest wealth creator for the majority
of Americans.
o Higher mortgage rates are beginning to slow the housing market with
decelerating price gains not far behind.
o We believe the forty percent drop in the NASDAQ and ongoing stock market
volatility will dampen consumer exuberance.
o Fed tightening is raising the dollar's exchange rate, making imports cheaper
(holding down U.S. inflation) and exports less competitive (slowing the U.S.
economy).
o We believe signs of an economic slowdown are likely to emerge by the fall,
allowing the Fed to shift to a neutral policy and bond prices to rally (what
is good for bonds may be even better for stocks).
o In the absence of the Treasury buy back, we believe long-term government
bond yields would be higher and credit spreads (the difference in yield
between a corporate bond and a government bond of equal maturity) narrower.
o Today's high inflation-adjusted bond yields are attractive and we believe
the widening in credit spreads creates opportunities to enhance bond
portfolio returns.
o Corporate profits are better-than-expected, reflecting ongoing gains from
investments in productivity-enhancing technology and efficiencies from
restructuring.
o A "Jekyll and Hyde" stock market has emerged as "old economy" shares vie
with the leading technology names for investor favor.
o We believe the stock market will broaden out as the year progresses making
portfolio diversification, complemented by security selection that
emphasizes high quality companies with strong balance sheets, good earnings
visibility and dominant industry positions, a winning strategy.
*<F8> Source: Department of Labor
In summary, we expect the Federal Reserve will successfully engineer a "soft
landing" for the U.S. economy, extending this unprecedented period of economic
prosperity. We believe slower growth will prevent inflation from accelerating
further, yet corporate profitability should remain strong thanks to ongoing
productivity gains and efficiencies achieved through restructuring and mergers.
In short, we anticipate the advent of a more favorable environment for financial
assets later in the year. As you peruse the following pages of this report, you
will find a broad range of equity and fixed income products to help meet a wide
variety of investment objectives. As always, we encourage you to contact us
with your comments regarding portfolio performance or our investment strategy.
Thank you for your continued confidence in Firstar Stellar Funds.
Sincerely yours,
Firstar Investment Research & Management Company, LLC (FIRMCO)
Investment Policy Committee
John Blixen
Executive Vice President
Richard Burling
Senior Vice President, Director of Credit Research
Walter Dewey
Senior Vice President, Senior Portfolio Manager
Donald Keller
Senior Vice President, Senior Portfolio Manager
George Schupp
Senior Vice President, Director of Fixed Income
Marian Zentmyer, Committee Chairperson
Executive Vice President, Chief Equity Investment Officer
July 24, 2000
Investment Reviews
FIRSTAR STELLAR INSURED TAX-FREE BOND FUND*<F9>
Q What were the conditions in the economy and the municipal bond market during
the reporting period?
A Interest rates rose during much of the period, due to conflicting data about
the strength of the U.S. economy. It appeared at times that the economy was
growing at a moderate, sustainable pace and inflation would remain low, but
recurrent signs of rapid economic growth have caused the Fed to remain on
watch to head off inflation.
Q How did the municipal bond market and the Fund perform in that environment?
A Longer-term municipal bonds outperformed shorter-term municipals, and rising
interest rates provided fewer municipal refundings. There were, however,
some attractive opportunities among new municipal issues. Firstar Stellar
Insured Tax-Free Bond Fund earned 0.59% (A shares without a sales charge)
during the six months ended May 31, 2000.**<F10>
Q How did you manage the Portfolio in that environment?
A The average maturity of the Fund increased gradually during the period --
from approximately 8.5 years to just over 9 years. The Fund's composition
was dominated by insured and pre-refunded municipal securities which
accounted for approximately 90% of the assets during the period. As a
result, the Fund's credit quality remained very high with an average credit
quality of AAA.
Q What is your outlook for the months ahead?
A We believe the economy will continue to grow at a moderate pace with low
inflation. However, the Fed may again raise rates if inflation appears to
be in danger of rising. In that somewhat uncertain environment, we believe
the overall bond market will likely trade in a narrow range, with long-term
yields between 5.50% and 6.00%. Demand for municipal bonds should remain
strong, and we believe the municipal market should continue to perform well
relative to taxable bonds.
Q How will you manage the Portfolio in that environment?
A We will maintain the Portfolio's current position with an average maturity
of between eight and ten years in order to capture attractive yields for
shareholders. We will also continue to invest in bonds with very high
credit ratings, because the higher yields of lower-quality bonds do not
justify their additional risk.
FIRSTAR STELLAR U.S. GOVERNMENT INCOME FUND
Q Over the past six months, interest rates have risen causing bond prices to
fall. How has the U.S. Government Income Fund performed in this
environment?
A Interest rates have increased during the past several months due to strong
economic growth and Federal Reserve rate increases which were actions aimed
at restraining this growth. High quality (especially Treasury bonds) were
the standout performers while low-grade corporate bonds suffered significant
under performance. The Firstar Stellar U.S. Government Income Fund benefited
from its Treasury bond holdings and overall high credit quality.
*<F9> Income may be subject to the federal alternative minimum tax and state
and local taxes.
**<F10> 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 adjusted for the
4.0% sales charge for the six months ended May 31, 2000 was (3.40)%.
Total return for B Shares based on net asset value and adjusted for the
maximum contingent deferred sales charge of 5.0% for the two months
ended May 31, 2000 was (1.21)% and (6.11)%, respectively.
Q With a strong economy and good profit prospects, why have corporate bonds
not performed well?
A In the past few years there have been crises responsible for corporate bonds
being aggressively sold (e.g. Asia or Russian crisis). However, the current
environment has three smaller factors conspiring together: an inverted
Treasury yield curve (short-term rates are higher than long-term rates),
Federal Reserve reducing liquidity, and Government buyback of Treasury debt.
The end result is exceptionally wide yield premiums for U.S. Government
agency, mortgage-backed, and corporate issues. This has created an
opportunity for the Fund to purchase non-Treasury government issues with
yield premiums at exceptional levels. "Locking-in" these yields should help
boost performance potential going forward as we believe premiums will fall
to more normal levels.
Q What is your outlook for the remainder of 2000?
A We are anticipating the pace of economic growth to slow towards a more
moderate level by year-end. Increased interest rates will start being felt
in the real economy through higher corporate lending costs and mortgage
rates. While the Federal Reserve may raise the Federal funds rate further
from the current 6.5% rate, we believe the end of this tightening cycle is
near.
In terms of the bond market, we foresee Treasury yields declining slightly.
If the economy slows and gives the Federal Reserve reason to pause, bond
yields can decline further. But the real story remains with non-Treasury
bonds. We have increased our emphasis on agency and mortgage-backed
securities with the expectation that a less restrictive Fed and reduced
inflationary pressures will produce strong results.
FIRSTAR STELLAR STRATEGIC INCOME FUND
Q With the fixed income market showing mixed results over the past six months,
how has the Strategic Income Fund performed?
A The Fund is enjoying the renewed interest by investors in REIT's (real
estate investment trusts). According to the Morgan Stanley REIT Index*<F11>
for the six months ended May 31, 2000, this market has produced a 14% total
return compared to 2.9% for the S&P 500.**<F12> The combination of strong
earnings reports, solid domestic economy, and good valuation attracted many
investors into the market. Maintaining a full, diversified exposure to
REIT's helped the Fund generate solid performance relative to other bond
funds while maintaining a high dividend yield.
Q How have the other segments of the Fund performed?
A Our outlook for 2000 envisioned corporate and mortgage-backed bonds
providing better total returns compared to Treasury securities. Through
May, both corporate and mortgage-related bonds are underperforming Treasury
securities. The Fund has maintained approximately a 40% allocation to
corporate bonds in a variety of industries.
Equity markets have been volatile thus far in 2000. Our focus on "value"
type issues with high dividend yields helped reduce volatility within the
portfolio. One area that helped performance was the preferred stock market.
Tax-related selling last December resulted in depressed asset prices as we
find their low volatility and high yields attractive for the Fund. As the
new year has unfolded, the Fund has benefited from increasing the allocation
to preferred stocks.
Q What is your outlook for the remainder of 2000?
A We mentioned in the review of the Firstar Stellar U.S. Government Income
Fund that we believe bond yields have peaked for 2000. As for the fixed
income sectors, we are advocating an overweight allocation in corporate
securities. With no recession in sight, a Federal Reserve close to ending
its tightening cycle, and historically ample yield premiums, the risk/reward
trade-off is compelling. Our REIT focus retains a yield emphasis that is
diversified across sub-industries and geographically. Lastly, the equity
allocation will remain focused on high yielding, quality issuers.
*<F11> The Morgan Stanley REIT Index is an unmanaged index comprised of the
most actively traded real estate investment trusts.
**<F12> Standard & Poor's 500 Stock Index, a composite index of 500 common
stocks in industry, transportation, 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.
Portfolios of Investments
Firstar Stellar Insured Tax-Free Bond Fund May 31, 2000 (Unaudited)
PRINCIPAL AMOUNT
OR SHARES VALUE
---------------- -----
LONG-TERM MUNICIPALS - 95.0%
ALABAMA - 3.9%
$1,750,000 Alabama Water PCA, Revenue Bonds,
(AMBAC INS), 6.70%, 8/15/2006 $1,786,540
1,855,000 Alabama Water PCA, Revenue Bonds,
(AMBAC INS), 5.50%, 8/15/2012 1,837,786
2,500,000 Bessemer, AL Water Revenue, Revenue
Bonds, (AMBAC INS), 5.75%, 7/1/2016 2,488,200
------------
Total 6,112,526
------------
ALASKA - 3.4%
1,000,000 Alaska Energy Authority Power,
Revenue Bonds, Bradley Lake,
(FSA INS), 6.00%, 7/1/2010 1,036,290
4,040,000 Alaska Energy Authority Power,
Revenue Bonds, Bradley Lake,
(FSA INS), 6.00%, 7/1/2011 4,170,209
------------
Total 5,206,499
------------
COLORADO - 0.8%
1,250,000 Colorado Post-Secondary Education
Facilities, Revenue Bonds, Auraria
Foundation Project, (FSA INS),
5.75%, 9/1/2010 1,267,650
------------
FLORIDA - 1.8%
1,280,000 Florida State Department of
Transportation, Revenue Bonds,
(FGIC INS), 5.125%, 7/1/2013 1,223,501
1,500,000 Orlando & Orange County Expressway
Authority, FL, Revenue Bonds, (AMBAC
INS), 5.375%, 7/1/2008 1,506,540
------------
Total 2,730,041
------------
ILLINOIS - 21.0%
1,080,000 Bolingbrook, IL Residential
Mortgage, Revenue Bonds,
(FGIC INS), 7.50%, 8/1/2010 1,216,674
1,100,000 Chicago, IL, GO UT, (MBIA INS),
5.375%, 1/1/2013 1,074,414
2,000,000 Chicago, IL Park District, GO UT,
(MBIA INS), 5.60%, 1/1/2014 1,974,280
2,235,000 Cook County, IL School District No. 97,
GO UT, (FGIC INS), 9.00%, 12/1/2011 2,869,651
1,000,000 Cook County, IL School District No. 123,
GO LT, (FSA INS), 6.20%, 12/1/2008 1,055,700
2,500,000 Illinois Health Facilities Authority,
Revenue Bonds, Advocate Health Care
Network, (MBIA INS), 5.80%, 8/15/2016 2,444,575
2,225,000 Illinois State, GO UT, (MBIA INS),
6.10%, 2/1/2017 2,254,526
1,410,000 Illinois State, GO UT, (MBIA INS),
5.75%, 5/1/2021 1,365,782
2,400,000 McHenry County, IL Community Unit
School District No. 200, Series A,
GO UT,(FSA INS), 5.85%, 1/1/2016,
Prerefunded 1/1/2008 2,404,944
1,000,000 Northern Illinois University, Revenue
Bonds, (FGIC INS), 5.70%, 4/1/2016 986,080
2,500,000 Regional Transportation Authority
Series A, Revenue Bonds, (AMBAC INS),
6.00%, 6/1/2009 2,622,100
2,020,000 St. Clair County, IL, GO UT,
(FGIC INS), 6.00%, 10/1/2011 2,106,759
3,045,000 Will County, IL Community Unit School
District No. 365, GO UT, (FSA INS),
0.00%, 11/1/2010, principal only 1,685,346
2,500,000 Will County, IL Forest Preservation
District, GO UT, (AMBAC INS),
6.00%, 12/1/2006 2,546,900
5,805,000 Will County, IL Forest Preservation
District, GO UT, (FGIC INS),
6.00%, 12/1/2010 6,060,072
------------
Total 32,667,803
------------
INDIANA - 3.2%
2,630,000 Crown Point, IN Multi-School Building
Corp., (MBIA INS), 7.875%, 1/15/2006 2,936,921
2,000,000 Indiana Transportation Finance Authority,
Series A, Airport Lease, Revenue Bonds,
(AMBAC INS), 5.00%, 11/1/2007 1,955,720
------------
Total 4,892,641
------------
IOWA - 0.7%
1,000,000 Muscatine, IA, Electric, Revenue Bonds,
6.70%, 1/1/2013 1,071,720
------------
KENTUCKY - 1.5%
2,500,000 Jefferson County, KY HFDA, Revenue
Bonds, University Medical Center, Inc.,
(MBIA INS), 5.50%, 7/1/2017 2,402,225
------------
LOUISIANA - 4.8%
2,030,000 Baton Rouge, LA Sales & Use Tax Public
Improvements Series A, (FGIC INS),
5.25%, 8/1/2015 1,917,233
1,000,000 Jefferson Parish, LA, Revenue Bonds,
(AMBAC INS), 5.00%, 11/1/2011 955,120
1,000,000 Jefferson Parish, LA, Home Mortgage
Authority, Revenue Bonds,
(FGIC INS), 7.10%, 8/1/2011 1,127,180
1,000,000 Lafayette, LA Sales Tax Public
Improvements, Series B, (FGIC INS),
7.00%, 3/1/2008 1,101,780
1,500,000 Louisiana PFA, Revenue Bonds,
Tulane University, (MBIA INS),
5.10%, 11/15/2014 1,395,090
1,000,000 Terrebonne Parish, LA Hospital Service
District No. 1, Revenue Bonds,
Terrebonne General Medical Center,
(AMBAC INS), 5.25%, 4/1/2014 925,220
------------
Total 7,421,623
------------
MAINE - 2.4%
4,000,000 Maine Municipal Board Series D,
(AMBAC INS), 5.35%, 11/1/2017 3,774,400
------------
MASSACHUSETTS - 2.2%
1,000,000 Martha's Vineyard, MA Series A, Revenue
Bonds, (FSA INS), 5.125%, 5/1/2018 904,370
2,500,000 Massachusetts Water Resources
Authority, Revenue Bonds,
(FGIC INS), 5.40%, 11/1/2011 2,551,025
------------
Total 3,455,395
------------
MICHIGAN - 5.0%
2,450,000 Dearborn, MI Economic Development
Corp., Revenue Bonds, Oakwood
Obligated Group, (FGIC INS),
5.75%, 11/15/2015 2,404,479
1,200,000 Haslett, MI Public School District, GO
UT, (MBIA INS), 5.70%, 5/1/2016,
Prerefunded 5/1/2007 1,232,676
1,000,000 Lanse Creuse, MI Public School District,
(AMBAC INS), 5.25%, 5/1/2016 941,800
1,065,000 Richmond, MI Community School District,
GO UT, School Improvements,
(AMBAC INS), 5.60%, 5/1/2018,
Prerefunded 5/1/2006 1,087,770
2,000,000 Ypsilanti, MI School District, GO UT,
(FGIC INS), 5.60%, 5/1/2012,
Prerefunded 5/1/2007 2,042,980
------------
Total 7,709,705
------------
MONTANA - 1.5%
2,550,000 Montana State Health Facilities Authority,
Revenue Bonds, Sisters of Charity,
Leavenworth, (MBIA INS), 5.125%,
12/1/2018 2,301,910
------------
NEBRASKA - 0.7%
1,000,000 Omaha, NE Public Power District
Series B, Electric Revenue Bonds, 6.00%,
2/1/2007, Escrowed to maturity 1,039,650
------------
NEVADA - 4.3%
2,500,000 Clark County, NV School District, GO
UT, (FGIC INS), 5.75%, 6/15/2010 2,590,725
2,500,000 Clark County, NV School District, GO
UT, (MBIA INS), 5.80%, 6/15/2011 2,593,425
1,500,000 Washoe County, NV School District, GO
UT, (MBIA INS), 5.75%, 6/1/2011 1,517,040
------------
Total 6,701,190
------------
OHIO - 13.7%
2,555,000 Clermont County, OH, GO UT,
(AMBAC INS), 6.00%, 5/15/2007 2,615,247
2,460,000 Cleveland, OH Waterworks, Series H,
Improvement Revenue Bonds, (MBIA INS),
5.75%, 1/1/2016, Prerefunded 1/1/2006 2,559,827
40,000 Cleveland, OH Waterworks, Series H,
Improvement Revenue Bonds, (MBIA INS),
5.75%, 1/1/2016, Unrefunded balance 39,936
1,000,000 Columbus, OH Sewer System, Revenue
Bonds, 6.25%, 6/1/2008 1,033,300
3,500,000 Greater Cleveland Regional Transportation
Authority, OH, GO UT, (FGIC INS),
5.65%, 12/1/2016,
Prerefunded 12/1/2006 3,617,845
1,000,000 Hamilton County, OH Hospital Facilities
Authority, Revenue Bonds, Children's
Hospital Medical Center, Cincinnati,
(FGIC INS), 5.20%, 5/15/2009 985,010
2,000,000 Montgomery County, OH, Water Revenue
Bonds, Greater Moraine-Beaver Creek,
(FGIC INS), 6.25%, 11/15/2012 2,066,860
1,000,000 Ohio State Building Authority, Adult
Correctional Facilities Revenue Bonds,
Adult Correctional Facilities, (MBIA INS),
5.70%, 10/1/2006 1,027,420
1,000,000 Ohio State Building Authority, Revenue
Bonds, State Facilities - Administration
Building, (MBIA INS), 6.00%, 10/1/2008 1,037,430
1,225,000 Ohio State Building Authority, Revenue
Bonds, State Facilities - Administration
Building, (MBIA INS), 6.00%, 10/1/2009 1,262,559
1,000,000 Ohio State Turnpike Commission Series A,
(MBIA INS), 5.70%, 2/15/2013 1,005,780
2,000,000 Ohio State Water Development Authority,
Pollution Control Revenue Bonds,
(MBIA INS), 5.25%, 12/1/2009 1,985,980
1,000,000 Ohio State Water Development Authority,
Revenue Bonds, (AMBAC INS), 5.80%,
12/1/2011, Escrowed to maturity 1,036,110
1,000,000 Sylvania, OH City School District, GO UT,
(FGIC INS), 5.80%, 12/1/2015 1,004,560
------------
Total 21,277,864
------------
PENNSYLVANIA - 2.4%
1,000,000 Bucks County, PA Water & Sewer
Authority, Revenue Bonds,
(FGIC INS), 5.55%, 12/1/2017 965,820
2,000,000 Chester Upland School Authority, PA,
Series A, Revenue Bonds,
(FSA INS), 5.25%, 9/1/2017 1,859,260
1,000,000 Pennsylvania State Higher Education
Facilities Authority, Series A, Revenue
Bonds, University of Pennsylvania -
Health Services, (MBIA INS),
5.25%, 1/1/2012 966,690
------------
Total 3,791,770
------------
TENNESSEE - 1.9%
2,900,000 Jackson, TN Water & Sewer, Revenue
Bonds, 6.30%, 7/1/2011,
Escrowed to maturity 2,979,431
------------
TEXAS - 7.1%
2,500,000 Harris County, TX HFDC, Revenue Bonds,
Memorial Hospital System, (MBIA INS),
5.75%, 6/1/2019 2,401,000
1,000,000 Houston, TX Water Conveyance System
Contract, Certificate Participation Series J,
(AMBAC INS), 6.125%, 12/15/2009 1,044,750
2,290,000 Laredo, TX Independent School District,
GO UT, 6.75%, 8/1/2009 2,508,397
2,500,000 Port Houston Authority, TX Harris
County, Revenue Bonds, (MBIA INS),
6.50%, 5/1/2005 2,555,900
2,500,000 Texas Water Development Board,
Revenue Bonds, 5.50%, 7/15/2010 2,509,475
------------
Total 11,019,522
------------
UTAH - 1.6%
2,500,000 Davis County, UT School District, GO UT,
(MBIA INS), 5.70%, 6/1/2007 2,562,150
------------
VIRGINIA - 0.7%
1,000,000 Chesapeake Bay Bridge & Tunnel District,
VA, Revenue Bonds, (FGIC INS),
5.60%, 7/1/2007 1,021,320
------------
WASHINGTON - 4.0%
2,500,000 Seattle, WA Municipal Lighting & Power,
Revenue Bonds, 6.10%, 7/1/2005,
Prerefunded 7/1/2004 2,627,425
1,000,000 Snohomish County, WA Public Electric
Utility District No. 001, Revenue
Bonds, 6.75%, 1/1/2012 1,088,870
330,000 Tacoma, WA Electric System, Revenue
Bonds, (AMBAC INS), 6.15%, 1/1/2008, 341,365
2,170,000 Tacoma, WA Electric System, Revenue
Bonds, (AMBAC INS), 6.15%, 1/1/2008,
Prerefunded 2,225,661
------------
Total 6,283,321
------------
WASHINGTON, D.C. - 0.8%
1,350,000 District of Columbia, Revenue Bonds,
Association of American Medical
Colleges, (AMBAC INS),
5.375%, 2/15/2017 1,262,304
------------
WEST VIRGINIA - 1.5%
6,370,000 Kanawha Putnam County, Charleston,
WV Single Family Mortgage,
0.00%, 12/1/2016, principal only 2,359,703
------------
WISCONSIN - 4.1%
2,460,000 Wisconsin Health and Educational
Facilities Authority, Revenue Bonds,
Aurora Medical Group, (FSA INS),
5.60%, 11/15/2016 2,354,195
2,000,000 Wisconsin Health and Educational
Facilities Authority, Revenue Bonds,
Meriter Hospital, Inc., (MBIA INS),
6.00%, 12/1/2017 1,979,720
2,095,000 Wisconsin State, GO UT, (FGIC INS),
5.50%, 5/1/2010 2,103,862
------------
Total 6,437,777
------------
TOTAL LONG-TERM MUNICIPALS
(IDENTIFIED COST $150,092,222) 147,750,140
------------
MUTUAL FUNDS - 3.3%
5,184,555 SEI Tax Exempt Money Market Fund 5,184,555
30,268 Tax-Free Inv. Co. 30,268
------------
TOTAL MUTUAL FUNDS
(IDENTIFIED COST $5,214,823) 5,214,823
------------
TOTAL INVESTMENTS - 98.3%
(IDENTIFIED COST $155,307,045) 152,964,963
------------
OTHER ASSETS, LESS LIABILITIES - 1.7% 2,704,387
------------
TOTAL NET ASSETS - 100.0% $155,669,350
------------
------------
(See Notes to Financial Statements.)
Firstar Stellar U.S. Government Income Fund May 31, 2000 (Unaudited)
PRINCIPAL AMOUNT
OR CONTRACTS VALUE
---------------- -----
CORPORATE BONDS - 30.4%
AUTOMOBILE - 1.1%
$2,250,000 Ford Motor Co., 6.375%, 2/1/2029 $1,805,202
------------
BANKING - 2.7%
3,000,000 Citigroup Inc., 9.50%, 3/1/2002 3,094,968
1,400,000 Huntington National Bank,
6.75%, 6/15/2003 1,348,966
------------
Total 4,443,934
------------
BUILDING & CONSTRUCTION PRODUCTS - 1.2%
2,000,000 Masco Corp., 6.125%, 9/15/2003 1,885,920
------------
CHEMICALS - 0.5%
735,417 Dow Chemical Co., 7.60%, 1/2/2002 735,700
------------
DEFENSE - 1.2%
2,000,000 Martin Marietta Corp., 6.50%, 4/15/2003 1,910,182
------------
ELECTRONICS - 0.4%
750,000 Motorola, Inc., 6.50%, 11/15/2028 625,951
------------
FINANCE - 7.5%
1,750,000 Associates Corp. of North America,
5.50%, 2/15/2004 1,615,414
1,750,000 Bear Stearns Companies Inc. (The),
6.45%, 8/1/2002 1,697,306
850,000 Chevron Capital USA, Inc.,
7.45%, 8/15/2004 835,913
500,000 Ford Motor Credit Corp.,
6.11%, 12/28/2001 488,609
1,500,000 General Electric Global Insurance
Holding Corp., 7.00%, 2/15/2026 1,315,833
1,000,000 Goldman Sachs Group,
6.65%, 5/15/2009 893,747
250,000 International Lease Finance Corp.,
8.375%, 12/15/2004 254,106
2,000,000 Merrill Lynch & Co., Inc.,
6.00%, 2/17/2009 1,728,926
2,000,000 Salomon Smith Barney Holdings Inc.,
6.25%, 1/15/2005 1,877,832
1,500,000 Sears Roebuck Acceptance Corp.,
7.00%, 6/15/2007 1,389,351
------------
Total 12,097,037
------------
HOUSEHOLD PRODUCTS - 0.5%
1,000,000 Procter & Gamble Co., 7.375%, 3/1/2023 928,876
------------
INDUSTRIAL - 1.3%
2,200,000 Fort James Corp., 6.625%, 9/15/2004 2,082,703
------------
INTERNATIONAL - 1.7%
100,000 Koninklijke Philips Electronics NV, ADR,
8.375%, 9/15/2006 102,226
2,000,000 TransCanada PipeLines Ltd.,
9.125%, 4/20/2006 2,087,958
430,000 TransCanada PipeLines Ltd.,
8.625%, 5/15/2012 440,623
------------
Total 2,630,807
------------
OIL - 3.5%
1,000,000 Ashland Inc., 7.90%, 8/5/2006 966,337
1,750,000 Enron Corp., 7.625%, 9/10/2004 1,726,382
3,000,000 Occidental Petroleum Corp.,
8.50%, 11/9/2001 3,012,006
------------
Total 5,704,725
------------
REAL ESTATE INVESTMENT TRUSTS - 1.7%
1,000,000 Highwoods Forsyth LP, 7.19%, 6/15/2004 929,735
1,000,000 Irvine Apartment Communities, Inc.,
7.00%, 10/1/2007 860,377
1,000,000 Post Apartment Homes LP,
7.30%, 4/1/2004 973,396
------------
Total 2,763,508
------------
RETAIL - 2.2%
2,000,000 May Department Stores Company (The),
6.70%, 9/15/2028 1,621,678
1,000,000 Safeway, Inc., 5.875%, 11/15/2001 975,071
1,000,000 Safeway, Inc., 7.50%, 9/15/2009 952,992
------------
Total 3,549,741
------------
TELECOMMUNICATIONS - 1.9%
2,000,000 GTE California, Inc., 5.50%, 1/15/2009 1,691,366
1,500,000 GTE Corp., 7.83%, 5/1/2023 1,382,488
------------
Total 3,073,854
------------
UTILITIES - ELECTRIC - 3.0%
500,000 Northern Illinois Gas Co.,
7.26%, 10/15/2025 444,057
4,500,000 ENSEARCH Corp., 6.25%, 1/1/2003 4,345,700
------------
Total 4,789,757
------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $52,343,615) 49,027,897
------------
GOVERNMENT AGENCIES - 37.9%
FANNIE MAE - 19.6%
3,000,000 5.41%, 12/15/2003 2,815,668
14,318,000 5.125%, 2/13/2004 13,279,930
1,000,000 6.50%, 4/29/2009 917,519
5,500,000 6.625%, 9/15/2009 5,183,673
5,000,000 6.00%, 2/25/2011, REMIC,
Series 1996-21-PK 4,542,775
4,250,000 6.50%, 4/25/2023, REMIC,
Series 1993-210-PL 3,980,784
1,000,000 6.25%, 5/15/2029 871,073
------------
Total 31,591,422
------------
FEDERAL HOME LOAN BANK - 9.1%
5,500,000 6.00%, 8/15/2002 5,361,620
1,500,000 5.40%, 1/15/2003 1,431,994
2,500,000 7.125%, 2/15/2005 2,475,378
1,000,000 5.038%, 10/14/2008 847,679
2,000,000 5.705%, 3/2/2009 1,770,196
3,000,000 6.30%, 6/3/2009 2,765,784
------------
Total 14,652,651
------------
FREDDIE MAC - 9.2%
2,075,000 6.22%, 3/24/2003 2,015,624
5,000,000 7.375%, 5/15/2003 4,996,875
1,000,000 6.875%, 1/15/2005 980,660
2,000,000 7.585%, 9/19/2006 1,959,784
254,766 6.00%, 8/1/2013 235,434
2,000,000 6.50%, 3/15/2026 1,803,932
2,968,195 7.50%, 1/1/2030 2,889,547
------------
Total 14,881,856
------------
TOTAL GOVERNMENT AGENCIES
(IDENTIFIED COST $63,361,953) 61,125,929
------------
U.S. TREASURIES - 30.4%
U.S. TREASURY BONDS - 18.6%
5,400,000 9.875%, 11/15/2015 7,188,750
1,500,000 9.00%, 11/15/2018 1,915,312
3,500,000 8.125%, 8/15/2019 4,157,346
4,250,000 8.75%, 5/15/2020 5,361,643
5,250,000 6.75%, 8/15/2026 5,550,237
6,000,000 6.125%, 11/15/2027 5,880,000
------------
Total 30,053,288
------------
U.S. TREASURY NOTES - 11.2%
8,000,000 5.875%, 10/31/2001 7,905,000
3,000,000 6.625%, 3/31/2002 2,994,376
7,000,000 7.50%, 5/15/2002 7,098,441
------------
Total 17,997,817
------------
U.S. TREASURY STRIPS - 0.6%
5,000,000 0.00%, 11/15/2027, principal only 960,605
------------
TOTAL U.S. TREASURIES
(IDENTIFIED COST $50,674,641) 49,011,710
------------
CALL OPTIONS PURCHASED - 0.0%
100 Chicago Board Options Exchange 30-Year
Treasury Bond Index, expires 7/22/2000,
exercise price $60 11,875
------------
TOTAL CALL OPTIONS PURCHASED
(IDENTIFIED COST $14,050) 11,875
------------
SHORT-TERM INVESTMENT - 0.2%
REPURCHASE AGREEMENT - 0.2%
$242,000 Donaldson, Lufkin and Jenrette
Securities Corp., 6.40%,
dated 5/31/2000, due 6/1/2000,
repurchase price $242,043
(Collateralized by U.S.
Government Securities) 242,000
------------
TOTAL SHORT-TERM INVESTMENT
(IDENTIFIED COST $242,000) 242,000
------------
TOTAL INVESTMENTS - 98.9%
(IDENTIFIED COST $166,636,259) 159,419,411
------------
OTHER ASSETS, LESS LIABILITIES - 1.1% 1,812,781
------------
TOTAL NET ASSETS - 100.0% $161,232,192
------------
------------
(See Notes to Financial Statements.)
Firstar Stellar Strategic Income Fund May 31, 2000 (Unaudited)
SHARES,
PRINCIPAL AMOUNT
OR CONTRACTS VALUE
---------------- -----
DOMESTIC EQUITY - 11.1%
COMMON STOCKS - 3.8%
AUTOMOTIVE PARTS & EQUIPMENT - 0.6%
20,000 Dana Corp. $522,250
15,000 Goodyear Tire & Rubber Co. (The) 373,125
------------
Total 895,375
------------
BANKING & FINANCE - 0.5%
10,000 Banc One Corp. 330,625
15,000 KeyCorp 315,000
------------
Total 645,625
------------
INSURANCE - 0.2%
22,500 Ohio Casualty Corp. 268,594
------------
RETAIL - 0.3%
20,000 Penney (J.C.) Co., Inc. 362,500
------------
TOBACCO - 0.8%
40,000 Philip Morris Cos., Inc. 1,045,000
------------
UTILITIES - 1.4%
12,500 Central and South West Corp. 260,156
1,900 GPU, Inc. 53,675
20,000 Kansas City Power & Light Co. 473,750
25,000 TXU Corp. 893,750
14,900 Western Resources, Inc. 232,813
------------
Total 1,914,144
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $4,859,683) 5,131,238
------------
PREFERRED STOCKS - 7.3%
ENERGY - 1.2%
68,200 Enron Capital Trust I, $2.08 1,628,275
------------
FINANCE - 4.8%
40,000 Merrill Capital Trust V, $1.82 865,000
11,100 MSDW Capital Trust I, $1.78 231,019
136,500 PLC Capital Trust I, Series B, $2.06 3,054,188
75,000 SI Financing Trust I, $2.38 1,917,188
25,000 TXU Capital Trust II, $2.18 620,313
------------
Total 6,687,708
------------
TELECOMMUNICATIONS - 0.8%
50,000 MCI Capital I, Series A, $2.00 1,152,344
------------
UTILITIES - 0.5%
32,500 Alabama Power Capital Trust II, $1.90 710,938
------------
TOTAL PREFERRED STOCKS
(IDENTIFIED COST $11,010,313) 10,179,265
------------
TOTAL DOMESTIC EQUITY
(IDENTIFIED COST $15,869,996) 15,310,503
------------
REAL ESTATE INVESTMENT TRUSTS - 20.1%
10,000 Apartment Investment & Management Co. 400,625
20,000 Archstone Communities Trust 433,750
55,000 Bedford Property Investors, Inc. 979,687
45,000 Brandywine Realty Trust 795,938
30,000 CarrAmerica Realty Corp. 750,000
5,000 Crescent Real Estate Equities Co. 102,187
130,000 Developers Diversified Realty Corp. 1,876,875
15,000 Duke-Weeks Realty Corp. 323,438
20,000 EastGroup Properties, Inc. 430,000
60,000 Equity Residential Properties Trust,
Pfd., $1.81 1,335,000
84,637 Healthcare Realty Trust, Inc. 1,407,090
23,000 Highwoods Properties, Inc., Pfd., $2.00 419,750
55,000 Hospitality Properties Trust 1,265,000
42,100 Kimco Realty Corp., Cumulative
Pfd., $2.13 899,888
170,000 LaSalle Hotel Properties 2,380,000
162,000 Lexington Corporate Properties Trust 1,782,000
70,000 Liberty Property Trust 1,750,000
30,000 Pacific Gulf Properties Inc. 693,750
84,356 Pennsylvania Real Estate Investment Trust 1,470,958
55,000 Public Storage, Inc., Pfd., Series F, $2.44 1,357,812
175,000 RFS Hotel Investors, Inc. 2,100,000
77,300 Realty Income Corp. 1,826,212
20,000 Reckson Associates Realty Corp. 438,750
148,700 Sizeler Property Investors, Inc. 1,068,782
20,000 Storage USA, Inc. 601,250
114,000 Winston Hotels, Inc. 862,125
------------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(IDENTIFIED COST $30,607,369) 27,750,867
------------
CORPORATE BONDS - 40.2%
AUTOMOTIVE - 2.0%
$2,925,000 Ford Motor Co., 7.50%, 8/1/2026 2,681,783
------------
BANKS & SAVINGS INSTITUTIONS - 1.7%
500,000 Capital Holding Corp., 9.25%, 5/7/2001 503,939
2,000,000 Wells Fargo & Co., 7.96%, 12/15/2026 1,777,690
------------
Total 2,281,629
------------
COMPUTERS - 2.2%
3,500,000 Dell Computer Corp., 7.10%, 4/15/2028 3,034,808
------------
DIVERSIFIED ENERGY - 1.6%
2,000,000 Occidental Petroleum Corp.,
10.69%, 7/27/2000 2,223,140
------------
ENERGY - 4.4%
750,000 Ashland Inc., Series F, 7.90%, 8/5/2006 724,753
1,500,000 Ashland Inc., 7.78%, 9/19/2016 1,377,233
2,000,000 Atlantic Richfield Co., Series B,
8.60%, 5/15/2012 2,126,534
500,000 Chevron Capital USA, Inc.,
7.45%, 8/15/2004 491,714
1,000,000 Coastal Corp., 9.625%, 5/15/2012 1,097,422
289,000 Duke Energy Corp., 7.875%, 5/1/2024 272,458
------------
Total 6,090,114
------------
FINANCE - 6.4%
2,000,000 Banc One Corp., 8.00%, 4/29/2027 1,899,840
2,000,000 Finova Capital Corp., 9.125%, 2/27/2002 1,735,908
1,500,000 International Lease Finance Corp.,
8.375%, 12/15/2004 1,524,641
4,150,000 NationsBank Capital Trust IV,
8.25%, 4/15/2027 3,749,894
------------
Total 8,910,283
------------
GROCERY STORE - RETAIL - 2.2%
3,000,000 Safeway, Inc., Medium Term Note,
8.57%, 4/1/2003 3,025,560
------------
HOUSEHOLD PRODUCTS - 1.3%
2,000,000 Procter & Gamble Co., 7.375%, 3/1/2023 1,857,752
------------
INDUSTRIAL - 1.2%
2,000,000 Lockheed Martin Corp.,
7.875%, 3/15/2023 1,706,600
------------
INSURANCE - 1.5%
2,000,000 Ohio National Life Insurance Co.,
8.875%, 7/15/2004 2,031,284
------------
REAL ESTATE INVESTMENT TRUSTS - 7.4%
2,000,000 AvalonBay Communities, Inc.,
6.80%, 7/15/2006 1,831,362
2,000,000 EOP Operating LP, 6.763%, 6/15/2007 1,804,046
2,000,000 Highwoods Forsyth LP, 7.19%, 6/15/2004 1,859,470
1,125,000 Irvine Apartment Communities, Inc.,
7.00%, 10/1/2007 967,924
1,000,000 Post Apartment Homes LP,
7.30%, 4/1/2004 973,396
2,000,000 Spieker Properties, Inc., 8.00%, 7/19/2005 1,960,944
1,000,000 Spieker Properties, Inc., 7.35%, 12/1/2017 846,974
------------
Total 10,244,116
------------
RETAIL & APPAREL - 4.0%
2,250,000 Federated Department Stores, Inc.,
7.45%, 7/15/2017 2,013,959
1,000,000 May Department Stores Company (The),
7.625%, 8/15/2013 958,469
1,050,000 Penney (J.C.) Co., Inc., 9.45%, 7/15/2002 1,036,777
1,000,000 Penney (J.C.) Co., Inc., 7.95%, 4/1/2017 766,656
725,000 Sears, Roebuck & Co., 8.66%, 10/2/2006 740,469
------------
Total 5,516,330
------------
TELECOMMUNICATIONS - 2.3%
3,500,000 GTE Corp., 7.83%, 5/1/2023 3,225,807
------------
TOBACCO - 0.7%
1,017,000 Philip Morris Cos., Inc., 7.125%, 8/15/2002 991,124
------------
UTILITIES - 1.3%
2,000,000 Northern Illinois Gas Co.,
7.26%, 10/15/2025 1,776,228
------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $61,684,339) 55,596,558
------------
INTERNATIONAL SECURITIES - 11.6%
CLOSED-END INVESTMENT COMPANIES - 1.8%
220,000 First Commonwealth Fund Inc. 1,925,000
125,000 First Australia Prime Income Fund 515,625
------------
Total 2,440,625
------------
ELECTRONICS - 0.7%
1,000,000 Koninklijke Philips Electronics NV,
8.375%, 9/15/2006 1,022,266
------------
FINANCE - 5.4%
3,700,000 ABN-AMRO Bank NV, New York,
7.75%, 5/15/2023 3,411,996
4,500,000 Zurich Capital Trust, 8.376%, 6/1/2037 4,058,100
------------
Total 7,470,096
------------
INTERNATIONAL OIL - 3.7%
144,300 TransCanada PipeLines Ltd., Pfd., $2.13 3,201,656
1,645,000 TransCanada PipeLines Ltd.,
9.875%, 1/1/2021 1,885,116
------------
Total 5,086,772
------------
TOTAL INTERNATIONAL SECURITIES
(IDENTIFIED COST $19,125,901) 16,019,759
------------
MORTGAGE-BACKED SECURITIES - 15.2%
FANNIE MAE - 4.1%
228,953 7.00%, 11/1/2006 223,944
287,393 7.50%, 4/1/2007 286,450
235,125 8.40%, REMIC, 8/25/2019 238,265
1,398,298 8.00%, 4/1/2020 1,393,495
48,847 7.50%, REMIC, 5/25/2020 48,670
543,567 9.50%, REMIC, 6/25/2020 563,899
2,992,752 8.00%, 2/1/2030 2,970,572
------------
Total 5,725,295
------------
FREDDIE MAC - 4.8%
14,420 11.00%, 4/1/2003 14,593
670,000 10.00%, REMIC, 12/15/2020 696,985
2,000,000 10.00%, REMIC, 1/15/2021 2,121,471
360,703 9.00%, 5/1/2021 372,252
682,965 7.50%, REMIC, 7/15/2021 683,535
2,000,000 7.50%, REMIC, 5/20/2024 1,990,218
759,050 8.50%, 6/1/2024 771,915
------------
Total 6,650,969
------------
GINNIE MAE - 6.3%
65,380 9.00%, 7/15/2016 67,671
203,257 9.00%, 1/15/2022 210,071
4,000,000 7.50%, REMIC, 5/16/2023 3,947,584
330,743 8.00%, 11/20/2026 330,147
530,001 7.50%, 12/15/2026 521,546
1,005,822 7.50%, 2/20/2027 983,549
2,773,174 6.50%, 12/20/2028 2,581,619
------------
Total 8,642,187
------------
TOTAL MORTGAGE-BACKED SECURITIES
(IDENTIFIED COST $21,758,988) 21,018,451
------------
PUT OPTIONS PURCHASED - 0.0%
100 Anheuser-Busch Companies, Inc.,
expires 6/17/2000, exercise price $50 940
100 Citigroup Inc., expires 6/17/2000,
exercise price $47.50 940
100 Home Depot, Inc. (The), expires 11/18/2000,
exercise price $45 35,000
200 Kohl's Corp., expires 7/22/2000,
exercise price $37.50 11,250
100 Merrill Lynch & Co., expires 7/22/2000,
exercise price $80 16,875
------------
TOTAL PUT OPTIONS PURCHASED
(IDENTIFIED COST $78,616) 65,005
------------
SHORT-TERM INVESTMENT - 1.2%
REPURCHASE AGREEMENT - 1.2%
$1,599,000 Donaldson, Lufkin and Jenrette Securities
Corp., 6.40%, dated 5/31/2000, due
6/1/2000, repurchase price $1,599,284
(Collateralized by U.S. Government
Securities) 1,599,000
------------
TOTAL SHORT-TERM INVESTMENT
(IDENTIFIED COST $1,599,000) 1,599,000
------------
TOTAL INVESTMENTS - 99.4%
(IDENTIFIED COST $150,724,209) 137,360,143
------------
OTHER ASSETS, LESS LIABILITIES - 0.6% 889,446
------------
TOTAL NET ASSETS - 100.0% $138,249,589
------------
------------
SCHEDULE OF CALL OPTIONS WRITTEN
125 Central and South West Corp.,
expires 8/19/2000, exercise price $20 21,094
50 Crescent Real Estate Equities Co.,
expires 7/22/2000, exercise price $17.50 15,938
200 Penney (J.C.) Co., Inc., expires 8/19/2000,
exercise price $17.50 30,000
400 Philip Morris Cos., Inc., expires 1/20/2001,
exercise price $25 175,000
100 TXU Corp., expires 7/22/2000,
exercise price $35 15,625
------------
TOTAL CALL OPTIONS WRITTEN
(PREMIUMS RECEIVED $146,434) 257,657
------------
SCHEDULE OF PUT OPTIONS WRITTEN
100 Goodyear Tire & Rubber Co. (The),
expires 7/22/2000, exercise price $25 14,375
100 Home Depot, Inc. (The), expires 11/18/2000,
exercise price $55 89,375
200 Kohl's Corp., expires 7/22/2000,
exercise price $45 40,000
100 Merrill Lynch & Co., expires 7/22/2000,
exercise price $90 42,500
200 Starwood Hotels & Resorts Worldwide, Inc.,
expires 8/19/2000, exercise price $25 20,000
50 U S WEST, Inc., expires 7/22/2000,
exercise price $65 9,375
------------
TOTAL PUT OPTIONS WRITTEN
(PREMIUMS RECEIVED $237,698) 215,625
------------
TOTAL OPTIONS WRITTEN
(PREMIUMS RECEIVED $384,132) $473,282
------------
------------
(See Notes to Financial Statements.)
Abbreviations to Portfolios of Investments
The following abbreviations are used in these portfolios:
AMBAC -- American Municipal Bond Assurance Corporation
FGIC -- Financial Guaranty Insurance Company
FSA -- Financial Security Assurance
GO -- General Obligation
HFDA -- Health Facility Development Authority
HFDC -- Health Facility Development Corporation
INS -- Insured
LP -- Limited Partnership
LT -- Limited Tax
MBIA -- Municipal Bond Investors Assurance
PCA -- Pollution Control Authority
PFA -- Public Facility Authority
PFD -- Preferred
REMIC -- Real Estate Mortgage Investment Conduit
UT -- Unlimited Tax
Statements of Assets and Liabilities
May 31, 2000 (Unaudited)
<TABLE>
Firstar Stellar Firstar Stellar Firstar Stellar
Insured U.S. Government Strategic
Tax-Free Income Income
Bond Fund Fund Fund
--------------- --------------- ---------------
<S> <C> <C> <C>
ASSETS:
Total investments in securities, at value $152,964,964 $159,419,411 $137,360,143
Cash -- 864 --
Income receivable 2,752,936 2,131,407 1,776,873
Receivable for investments sold -- -- 1,429,260
Receivable for Fund shares sold 350,000 56,690 10,009
Other assets 23,190 20,303 36,644
------------ ------------ ------------
Total assets 156,091,090 161,628,675 140,612,929
------------ ------------ ------------
LIABILITIES:
Payable for investments purchased -- -- 1,340,500
Payable for Fund shares redeemed 266,314 80,821 88,284
Payable to bank -- -- 77,536
Income distribution payable -- 152,232 179,595
Options written, at value -- -- 473,282
Payable to affiliates 147,836 158,315 194,714
Accrued expenses 7,590 5,115 9,429
------------ ------------ ------------
Total liabilities 421,740 396,483 2,363,340
------------ ------------ ------------
NET ASSETS $155,669,350 $161,232,192 $138,249,589
------------ ------------ ------------
------------ ------------ ------------
NET ASSETS CONSIST OF:
Paid in capital $157,756,780 $170,388,780 $180,069,794
Accumulated undistributed (distributions in excess of)
net investment income 3,279 -- (465,496)
Accumulated undistributed net realized gain (loss)
on investments and options 251,372 (1,939,740) (27,901,493)
Net unrealized depreciation on
investments and options (2,342,081) (7,216,848) (13,453,216)
------------ ------------ ------------
Total net assets $155,669,350 $161,232,192 $138,249,589
------------ ------------ ------------
------------ ------------ ------------
NET ASSETS:
A Shares $155,669,340 $159,911,214 $8
B Shares 10 1,320,978 138,249,581
------------ ------------ ------------
Total net assets $155,669,350 $161,232,192 $138,249,589
------------ ------------ ------------
------------ ------------ ------------
SHARES OUTSTANDING:
A Shares 15,949,835 17,237,526 1
B Shares 1 142,458 16,609,431
------------ ------------ ------------
Total shares outstanding 15,949,836 17,379,984 16,609,432
------------ ------------ ------------
------------ ------------ ------------
NET ASSET VALUE PER SHARE:
A Shares $9.76 $9.28 $8.32
B Shares $9.76 $9.27 $8.32
------------ ------------ ------------
OFFERING PRICE PER SHARE:
A Shares $10.17 $9.67 $8.67
B Shares $9.76 $9.27 $8.32
------------ ------------ ------------
REDEMPTION PROCEEDS PER SHARE:
A Shares $9.76 $9.28 $8.32
B Shares $9.27 $8.81 $7.90
------------ ------------ ------------
Investments, at identified cost $155,307,045 $166,636,259 $150,724,209
------------ ------------ ------------
------------ ------------ ------------
Investments, at tax cost $155,307,045 $166,661,329 $151,798,067
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
(See Notes to Financial Statements.)
Statements of Operations
Six Months Ended May 31, 2000 (Unaudited)
<TABLE>
Firstar Stellar Firstar Stellar Firstar Stellar
Insured U.S. Government Strategic
Tax-Free Income Income
Bond Fund Fund Fund
--------------- --------------- ---------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $4,135,619 $5,466,100 $3,904,201
Dividend income -- -- 2,703,442
---------- ---------- ----------
Total income 4,135,619 5,466,100 6,607,643
---------- ---------- ----------
EXPENSES:
Investment advisory fees 596,629 493,490 700,668
Shareholder services fees 198,873 205,620 184,193
Administration fees 87,505 90,473 81,130
Portfolio accounting fees 27,116 32,391 29,223
Custodian fees 19,888 20,562 18,439
Transfer and dividend disbursing agent fees and expenses 19,183 20,655 29,460
Federal and state registration fees 6,717 7,783 4,426
Auditing fees 5,817 5,793 5,817
Printing and postage 3,747 5,037 14,630
Trustees' fees 2,602 2,602 2,602
Legal fees 1,066 1,082 1,082
Miscellaneous 2,013 2,196 2,196
---------- ---------- ----------
Total expenses 971,156 887,684 1,073,866
---------- ---------- ----------
Waivers--
Waiver of investment advisory fees (159,101) -- --
Waiver of shareholder services fees (87,680) (90,647) (81,864)
---------- ---------- ----------
Total waivers (246,781) (90,647) (81,864)
---------- ---------- ----------
Net expenses 724,375 797,037 992,002
---------- ---------- ----------
NET INVESTMENT INCOME 3,411,244 4,669,063 5,615,641
---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND OPTIONS:
Net realized gain (loss) on investments and options 251,431 (676,083) (5,389,908)
Net change in unrealized appreciation (depreciation)
on investments and options (2,592,350) (1,857,712) 2,170,255
---------- ---------- ----------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS AND OPTIONS (2,340,919) (2,533,795) (3,219,653)
---------- ---------- ----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $1,070,325 $2,135,268 $2,395,988
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
(See Notes to Financial Statements.)
Statements of Changes in Net Assets
<TABLE>
Firstar Stellar Firstar Stellar
Firstar Stellar Insured U.S. Government Strategic
Tax-Free Bond Fund Income Fund Income Fund
------------------------- ----------------------- -------------------------
Six Months Six Months Six Months
Ended Year Ended Ended Year Ended Ended Year Ended
May 31, 2000 November 30, May 31, 2000 November 30, May 31, 2000 November 30,
(unaudited) 1999 (unaudited) 1999 (unaudited) 1999
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS--
Net investment income $3,411,244 $6,768,988 $4,669,063 $8,588,157 $5,615,641 $13,167,719
Net realized gain (loss) on investments
and options 251,431 92,300 (676,083) (811,188) (5,389,908) (17,555,019)
Net change in unrealized appreciation
(depreciation) on investments and options (2,592,350) (8,739,502) (1,857,712) (11,492,349) 2,170,255 (5,028,961)
------------ ------------ ------------ ------------ ------------ ------------
Change in net assets resulting from operations 1,070,325 (1,878,214) 2,135,268 (3,715,380) 2,395,988 (9,416,261)
------------ ------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
A Shares (3,414,476) (6,874,733) (4,632,986) (8,553,900) -- --
B Shares -- -- (36,077) (44,235) (6,081,499) (13,047,652)
Distributions in excess of net
investment income
B Shares -- -- -- -- -- (142,618)
Distributions from net realized gain on
investments and options
A Shares (91,558) (167,577) -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Change in net assets from distributions to
shareholders (3,506,034) (7,042,310) (4,669,063) (8,598,135) (6,081,499) (13,190,270)
------------ ------------ ------------ ------------ ------------ ------------
SHARE TRANSACTIONS--
Proceeds from sales of shares 13,129,636 37,245,264 20,481,487 62,147,773 8,780,425 39,163,705
Net asset value of shares issued to shareholders
in payment of distributions declared 166,418 158,664 1,901,786 3,007,102 1,630,859 3,845,725
Cost of shares redeemed (15,446,598) (20,459,273) (22,170,562) (38,365,710) (29,081,720) (62,150,941)
------------ ------------ ------------ ------------ ------------ ------------
Change in net assets from share transactions (2,150,544) 16,944,655 212,711 26,789,165 (18,670,436) (19,141,511)
------------ ------------ ------------ ------------ ------------ ------------
Change in net assets (4,586,253) 8,024,131 (2,321,084) 14,475,650 (22,355,947) (41,748,042)
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS:
Beginning of period 160,255,603 152,231,472 163,553,276 149,077,626 160,605,536 202,353,578
------------ ------------ ------------ ------------ ------------ ------------
End of period $155,669,350 $160,255,603 $161,232,192 $163,553,276 $138,249,589 $160,605,536
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
Accumulated undistributed
net investment income included
in net assets at end of period $3,278 $6,511 -- -- $(465,496) $362
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
(See Notes to Financial Statements.)
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
NET REALIZED
AND DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
NET ASSET UNREALIZED DISTRIBUTIONS IN EXCESS FROM NET IN EXCESS OF NET
VALUE, NET GAIN (LOSS) ON TOTAL FROM FROM NET OF NET REALIZED GAIN REALIZED GAIN
PERIOD ENDED BEGINNING INVESTMENT INVESTMENTS INVESTMENT INVESTMENT INVESTMENT ON INVESTMENTS ON INVESTMENTS
NOVEMBER 30, OF PERIOD INCOME AND OPTIONS OPERATIONS INCOME INCOME AND OPTIONS AND OPTIONS (D)
<F16>
------------ --------- ---------- -------------- ----------- -------------- ------------ -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FIRSTAR STELLAR INSURED TAX-FREE BOND FUND
A SHARES
1997(a)<F13> $10.00 0.44 0.24 0.68 (0.43) -- -- --
1998 $10.25 0.46 0.26 0.72 (0.46) -- (0.02) --
1999 $10.49 0.44 (0.55) (0.11) (0.45) -- (0.01) --
2000(i)<F21> $9.92 0.21 (0.15) 0.06 (0.21) -- (0.01) --
B SHARES
2000(j)<F22> $9.95 0.07 (0.19) (0.12) (0.07) -- -- --
FIRSTAR STELLAR U.S. GOVERNMENT INCOME FUND
A SHARES
1995 $9.24 0.60 0.74 1.34 (0.60) -- -- --
1996 $9.98 0.57 (0.15) 0.42 (0.57) -- -- --
1997 $9.83 0.57 0.04 0.61 (0.57) -- -- --
1998 $9.87 0.56 0.30 0.86 (0.55) -- -- --
1999 $10.18 0.52 (0.76) (0.24) (0.52) -- -- --
2000(i)<F21> $9.42 0.27 (0.14) 0.13 (0.27) -- -- --
B SHARES
1998(c)<F15> $9.89 0.36 0.29 0.65 (0.36) -- -- --
1999 $10.18 0.52 (0.76) (0.24) (0.52) -- -- --
2000(i)<F21> $9.42 0.27 (0.15) 0.12 (0.27) -- -- --
FIRSTAR STELLAR STRATEGIC INCOME FUND
A SHARES
2000(j)<F22> $8.32 0.11 -- 0.11 (0.11) -- -- --
B SHARES
1995(b)<F14> $10.00 0.69 0.55 1.24 (0.67) -- (0.04) (0.00)(h)
<F20>
1996 $10.53 0.73 (0.04) 0.69 (0.72) -- -- --
1997 $10.50 0.73 0.18 0.91 (0.74) -- -- --
1998 $10.67 0.72 (0.94) (0.22) (0.73) -- (0.10) --
1999 $9.62 0.64 (1.10) (0.46) (0.63) (0.01) -- --
2000(i)<F21> $8.52 0.32 (0.18) 0.14 (0.34) -- -- --
</TABLE>
<TABLE>
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 (E) EXPENSES INCOME REIMBURSEMENT (G) (000 OMITTED) RATE
<F17> <F19>
------------- ---------- ---------- -------- ---------- ----------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(0.43) $10.25 6.91% 0.79%(f) 4.66%(f) 0.45%(f) $128,591 15%
<F18> <F18> <F18>
(0.48) $10.49 7.20% 0.79% 4.43% 0.45% $152,231 14%
(0.46) $9.92 (1.13)% 0.86% 4.27% 0.37% $160,256 15%
(0.22) $9.76 0.59% 0.91%(f) 4.29%(f) 0.31%(f) $155,669 6%
<F18> <F18> <F18>
(0.07) $9.76 (1.21)% 0.97%(f) 4.30%(f) 0.29%(f) -- 6%
<F18> <F18> <F18>
(0.60) $9.98 14.90% 0.92% 6.23% 0.20% $109,666 236%
(0.57) $9.83 4.46% 0.92% 5.88% 0.20% $138,874 158%
(0.57) $9.87 6.46% 0.89% 5.88% 0.20% $137,445 140%
(0.55) $10.18 9.00% 0.91% 5.51% 0.20% $148,773 88%
(0.52) $9.42 (2.34)% 0.93% 5.38% 0.16% $162,523 122%
(0.27) $9.28 1.35% 0.97%(f) 5.68%(f) 0.11(f) $159,911 31%
<F18> <F18> <F18>
(0.36) $10.18 6.71% 0.91%(f) 5.51%(f) 0.20%(f) $305 88%
<F18> <F18> <F18>
(0.52) $9.42 (2.36)% 0.93% 5.38% 0.16% $1,030 122%
(0.27) $9.27 1.25% 0.97%(f) 5.68%(f) 0.11%(f) $1,321 31%
<F18> <F18> <F18>
(0.11) $8.32 1.32% 1.42%(f) 6.94%(f) 0.09%(f) -- 29%
<F18> <F18> <F18>
(0.71) $10.53 12.71% 1.47%(f) 7.41%(f) 0.30%(f) $47,513 258%
<F18> <F18> <F18>
(0.72) $10.50 6.99% 1.36% 7.26% 0.20% $110,775 201%
(0.74) $10.67 9.02% 1.26% 7.13% 0.20% $179,413 142%
(0.83) $9.62 (2.16)% 1.26% 7.19% 0.20% $202,354 146%
(0.64) $8.52 (4.99)% 1.28% 6.95% 0.16% $160,605 73%
(0.34) $8.32 1.77% 1.35%(f) 7.62%(f) 0.11%(f) $138,250 29%
<F18> <F18> <F18>
</TABLE>
(a)<F13> Reflects operations for the period from December 30, 1996 (date of
initial public investment) to November 30, 1997.
(b)<F14> Reflects operations for the period from December 12, 1994 (date of
initial public investment) to November 30, 1995.
(c)<F15> Reflects operations for the period from April 27, 1998 (date of
initial public investment) to November 30, 1998.
(d)<F16> 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.
(e)<F17> Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge if applicable.
(f)<F18> Computed on an annualized basis.
(g)<F19> This voluntary expense decrease is reflected in both the expense and
net investment income ratios.
(h)<F20> Less than one cent per share.
(i)<F21> For the six months ended May 31, 2000 (unaudited).
(j)<F22> Reflects operations for the period from March 31, 2000 (date of
initial public investment) to May 31, 2000 (unaudited).
(See Notes to Financial Statements.)
Notes to Financial Statements
MAY 31, 2000 (UNAUDITED)
(1) ORGANIZATION
Firstar Stellar 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 ten diversified portfolios and two non-
diversified portfolios. 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
-------------- --------------------
Firstar Stellar Insured Tax- Provide current income which
Free Bond Fund is exempt from federal
("Stellar Tax-Free Bond Fund") income tax.
Firstar Stellar U.S. Government Provide current income.
Income Fund ("U.S.
Government Income Fund")
Firstar Stellar Strategic Income Fund Generate high current income.
("Strategic Income Fund")
The financial statements of the Money Market and Stock 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 Tax-Free Bond Fund, U.S. Government Income Fund and Strategic Income
Fund each issue two classes of shares (A and B Shares). Class A Shares are
subject to an initial sales charge imposed at the time of purchase, in
accordance with the Funds' prospectus. The maximum sales charge on Class A
Shares is 4.00% of the offering price or 4.17% of the net asset value. The
Class B Shares are subject to a contingent deferred sales charge at the time of
redemption, in accordance with the Funds' prospectus. The maximum sales charge
is 5% for redemptions in the first year, 4% in the second year, 3% in the third
and fourth years, 2% in the fifth year, 1% in the sixth year and 0% thereafter.
(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 are valued at
amortized cost, which approximates fair market value. Investments in 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 approved 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. Dividend income is recorded on
the ex-dividend date. 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.
The character of distributions made during the year from net investment income
or net realized gain may differ from the characterization for federal income tax
purposes due to differences in the recognition of income, expense and gain items
for financial statement and tax purposes. Where appropriate, reclassifications
between net asset accounts are made for such differences that are permanent in
nature.
At November 30, 1999, the U.S. Government Income Fund and Strategic Income Fund
for federal tax purposes, had capital loss carryforwards, as noted below, which
will reduce the Funds' 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 Funds of any liability for federal tax.
TOTAL CAPITAL-LOSS
FUND CARRYFORWARD
---- ------------
U.S. Government Income Fund $1,255,773
Strategic Income Fund $21,689,538
Pursuant to the Code, the capital loss carryforward for the U.S. Government
Income Fund of $451,531 will expire in the year 2004 and $804,242 will expire in
the year 2007. The capital loss carryforward for the Strategic Income Fund of
$2,607,161 will expire in the year 2006 and $19,082,377 will expire in the year
2007.
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 U.S. Government Income Fund and Strategic Income Fund may write "covered"
call option contracts. The Strategic Income Fund may also write "covered" put
options. A written option obligates the Funds to deliver (a call) or to receive
(a put) the contract amount upon exercise by the holder of the option. The
principal reason for writing call or put options is to obtain, through receipt
of premiums, a greater current return than would be realized on underlying
securities alone. By writing call options, the 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 six months ended
May 31, 2000, the U.S. Government Income Fund and Strategic Income Fund had net
realized gain on option contracts both written and purchased of $12,953 and
$422,974, respectively.
The following is a summary of the U.S. Government Income Fund and Strategic
Income Fund written options activity:
U.S. GOVERNMENT
INCOME FUND
-----------------------------
NUMBER OF
CONTRACTS PROCEEDS*<F23>
--------- --------------
Outstanding at November 30, 1999 100 $27,099
Contracts closed (100) (27,099)
---- -------
Outstanding at May 31, 2000 -- $ --
---- -------
---- -------
STRATEGIC INCOME FUND
-----------------------------
NUMBER OF
CONTRACTS PROCEEDS*<F23>
--------- --------------
Outstanding at November 30, 1999 400 $47,561
Contracts opened 4,484 1,158,598
Contracts expired (420) (92,347)
Contracts exercised (306) (38,599)
Contracts closed (2,533) (691,081)
------ --------
Outstanding at May 31, 2000 1,625 $384,132
------ --------
------ --------
*<F23> 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 estimates.
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 TAX-FREE BOND FUND
------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2000 NOVEMBER 30, 1999
------------------------ -------------------------
A SHARES SHARES DOLLARS SHARES DOLLARS
------------------------------------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Shares sold 1,339,452 $13,129,626 3,637,652 $37,245,264
Shares issued to shareholders in payment of distributions declared 16,977 166,418 15,627 158,664
Shares redeemed (1,569,001) (15,446,598) (2,004,702) (20,459,273)
---------- ----------- ---------- -----------
Net change resulting from A Share transactions (212,572) $(2,150,554) 1,648,577 $16,944,655
---------- ----------- ---------- -----------
</TABLE>
<TABLE>
STELLAR TAX-FREE BOND FUND
------------------------------------------------------
PERIOD ENDED
MAY 31, 2000*<F24>
------------------------
B SHARES SHARES DOLLARS
------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Shares sold 1 $10
Shares issued to shareholders in payment of distributions declared -- --
Shares redeemed -- --
---------- -----------
Net change resulting from B Share transactions 1 10
---------- -----------
Net change resulting from Fund Share transactions (212,571) $(2,150,544) 1,648,577 $16,944,655
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
*<F24> For the period from March 31, 2000 (date of initial public investment) to May 31, 2000.
</TABLE>
<TABLE>
U.S. GOVERNMENT INCOME FUND
-------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2000 NOVEMBER 30, 1999
------------------------ -------------------------
A SHARES SHARES DOLLARS SHARES DOLLARS
------------------------------------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Shares sold 2,127,804 $19,854,049 6,289,821 $61,288,573
Shares issued to shareholders in payment of distributions declared 199,722 1,866,301 305,559 2,976,521
Shares redeemed (2,337,638) (21,816,333) (3,955,245) (38,262,406)
---------- ----------- ---------- -----------
Net change resulting from A Share transactions (10,112) $(95,983) 2,640,135 $26,002,688
---------- ----------- ---------- -----------
</TABLE>
<TABLE>
U.S. GOVERNMENT INCOME FUND
-------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2000 NOVEMBER 30, 1999
------------------------ -------------------------
B SHARES SHARES DOLLARS SHARES DOLLARS
------------------------------------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Shares sold 67,358 $627,438 87,005 $859,200
Shares issued to shareholders in payment of distributions declared 3,807 35,485 3,161 30,581
Shares redeemed (38,090) (354,229) (10,742) (103,304)
---------- ----------- ---------- -----------
Net change resulting from B Share transactions 33,075 308,694 79,424 786,477
---------- ----------- ---------- -----------
Net change resulting from Fund Share transactions 22,963 $212,711 2,719,559 $26,789,165
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
</TABLE>
<TABLE>
STRATEGIC INCOME FUND
------------------------------------------------------
PERIOD ENDED
MAY 31, 2000**<F25>
------------------------
A SHARES SHARES DOLLARS
------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Shares sold 1 $8
Shares issued to shareholders in payment of distributions declared -- --
Shares redeemed -- --
---------- -----------
Net change resulting from A Share transactions 1 $8
---------- -----------
</TABLE>
<TABLE>
STRATEGIC INCOME FUND
-------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2000 NOVEMBER 30, 1999
------------------------ -------------------------
B SHARES SHARES DOLLARS SHARES DOLLARS
------------------------------------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Shares sold 1,054,404 $8,780,417 4,275,874 $39,163,705
Shares issued to shareholders in payment of distributions declared 196,164 1,630,859 423,835 3,845,725
Shares redeemed (3,487,738) (29,081,720) (6,898,912) (62,150,941)
---------- ----------- ---------- -----------
Net change resulting from B Share transactions (2,237,170) (18,670,444) (2,199,203) (19,141,511)
---------- ----------- ---------- -----------
Net change resulting from Fund Share transactions (2,237,169) $(18,670,436) (2,199,203) $(19,141,511)
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
**<F25> For the period from March 31, 2000 (date of initial public investment) to May 31, 2000.
</TABLE>
(4) INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A. GENERAL
Certain officers of Firstar Investment Research & Management Company, LLC
(FIRMCO) and Firstar Mutual Fund Services, LLC ("Firstar") serve as officers of
the Trust. FIRMCO and Firstar are related by virtue of each being a subsidiary
of Firstar Corporation.
B. INVESTMENT ADVISORY FEES
FIRMCO serves as the Trust's investment adviser (the "Adviser"). Prior to April
1, 2000, the Funds were managed by Firstar Bank, N.A. As part of an internal
restructuring of the investment advisory function within Firstar Corporation,
the investment management resources of Firstar Bank, N.A. have been consolidated
with those of FIRMCO. 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 Tax-Free Bond Fund 0.75%
U.S. Government Income Fund 0.60%
Strategic Income Fund 0.95%
The Adviser may voluntarily choose to waive a portion of its fee. In the case of
the Stellar Tax-Free Bond Fund, the Adviser has waived a portion of its fee so
that the fees actually charged are 0.55% of average daily net assets. The
Adviser may modify or terminate this voluntary waiver of its advisory fees at
any time at its sole discretion.
C. ADMINISTRATIVE FEES
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.
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 of all the Funds and B
Shares of the U.S. Government Income Fund and Strategic Income Fund may pay to
the distributor of the Funds an amount computed at an annual rate of 0.25% of
the average daily net assets to finance any activity which is principally
intended to result in the sale of shares subject to the Plan. B Shares of the
Stellar Tax-Free Bond Fund may pay at an annual rate of up to 0.75% of the
average daily net assets. Edgewood Services, Inc. serves as the distributor of
the Funds.
The Stellar Tax-Free Bond Fund, U.S. Government Income Fund and Strategic Income
Fund are currently not accruing or paying any distribution expenses pursuant to
the Plan.
E. SHAREHOLDER SERVICES FEES
Under the terms of the Shareholder Services Agreement with Firstar Bank, N.A.,
each Fund may pay Firstar Bank, N.A. up to 0.25% of average daily net assets of
the Funds for the period. As of February 1, 2000, the shareholder servicing fee
was changed to 0.16% of average daily net assets. The fee paid to Firstar Bank,
N.A. is used to finance certain services for shareholders and to maintain
shareholder accounts. Firstar Bank, N.A. can modify or terminate this limitation
at any time at its sole discretion.
F. TRANSFER AND DIVIDEND DISBURSING AGENT FEES
Firstar serves as transfer and dividend disbursing agent for the Funds. The fee
paid to Firstar is based on the size, type and number of accounts and
transactions made by shareholders.
G. PORTFOLIO ACCOUNTING FEES
Firstar is 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.
H. CUSTODIAN FEES
Firstar 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 daily net assets for the period,
plus out-of-pocket expenses.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended May 31, 2000, were as follows:
<TABLE>
PURCHASES SALES
U.S. GOVERNMENT OTHER U.S. GOVERNMENT OTHER
---------------- ----- ---------------- -----
<S> <C> <C> <C> <C>
Stellar Tax-Free Bond Fund -- $8,528,650 -- $11,883,086
U.S. Government Income Fund $45,904,063 4,207,952 $45,137,984 4,304,773
Strategic Income Fund 8,573,696 33,391,278 15,223,469 46,242,412
</TABLE>
<TABLE>
NET UNREALIZED GROSS GROSS
COST OF APPRECIATION UNREALIZED UNREALIZED
INVESTMENTS (DEPRECIATION) APPRECIATION DEPRECIATION
FOR FEDERAL FOR FEDERAL FOR FEDERAL FOR FEDERAL
TAX PURPOSES TAX PURPOSES TAX PURPOSES TAX PURPOSES
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Stellar Tax-Free Bond Fund $155,307,045 $(2,342,081) $1,355,129 $3,697,210
U.S. Government Income Fund 166,661,329 (7,241,918) 454,248 7,696,166
Strategic Income Fund 151,798,067 (14,437,924) 1,056,665 15,494,589
</TABLE>
Trustees Officers
Thomas L. Conlan Jr. Bruce R. Laning
PRESIDENT
Dr. Alfred Gottschalk Joseph C. Neuberger
VICE PRESIDENT
Dr. Robert J. Hill Cheryl L. King
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. Investment in mutual funds involves investment
risks, including the possible loss of principal. Although money market funds
seek to maintain a stable net asset value of $1.00 per share, there is no
assurance that they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Trust's prospectus which contains facts
concerning its objectives and policies, management fees, expenses and other
information.
Edgewood Services, Inc. is the distributor of the Firstar Stellar Funds.
FIRSTAR STELLAR FUNDS ARE AVAILABLE THROUGH:
O THE FIRSTAR FUNDS CENTER,
O FINANCIAL CONSULTANTS WHO ARE EITHER REGISTERED
REPRESENTATIVES OF FIRSTAR INVESTMENT SERVICES, INC.,
A REGISTERED BROKER/DEALER, NASD AND SIPC MEMBER,
OR REGISTERED REPRESENTATIVES OF MDS SECURITIES,
A DIVISION OF CONSECO FINANCIAL SERVICES, INC.,
A REGISTERED BROKER/DEALER, NASD AND SIPC MEMBER,
O AND THROUGH SELECTED SHAREHOLDER ORGANIZATIONS.
This report is authorized for distribution only when preceded or
accompanied by a current prospectus.
FOR ACCOUNT BALANCE AND INVESTOR SERVICES INFORMATION
1-800-677-FUND
1-414-287-3808
FIRSTAR STELLAR FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 701
MILWAUKEE, WI 53201-0701
WWW.FIRSTARSTELLARFUNDS.COM
(FIRSTAR STELLAR FUNDS LOGO)
FORM # SFBFSEM-00
STOCK FUNDS
Firstar Stellar Growth Equity Fund
Firstar Stellar Relative Value Fund
Firstar Stellar Science & Technology Fund
Firstar Stellar Fund
Firstar Stellar Capital Appreciation Fund
Firstar Stellar International Equity Fund
Combined Semi-Annual Report
May 31, 2000
(FIRSTAR STELLAR FUNDS LOGO)
President's Message
Dear Shareholder:
MID-YEAR REVIEW
With the Y2K "bug" vanquished, it was back to "business as usual" for investors
- that is, unexpectedly strong economic growth and unbelievably volatile
financial markets. The U.S. economy continues to confound the pundits,
combining robust growth and low unemployment with modest inflation. However,
the jump in energy prices and a tight labor market have fostered a more
aggressive Federal Reserve interest rate policy. Clearly, the Fed views the
current pace of economic growth as "too fast," creating imbalances likely to
accelerate inflation if left unchecked. Some observers believe the Fed is
behind the curve and the inflation "genie" is already "out of the bottle."
Others contend the Fed is wrongly applying "old" economy metrics to a
fundamentally different "new" economy.
In our opinion, the foundation of our current economic success - robust economic
growth with low inflation - rests on the twin pillars of global competition and
improved productivity. U.S. productivity growth averaged 3.7% over the past
twelve months and has averaged 2.3% per year since the end of the last
recession.*<F26> Although Fed Chairman Alan Greenspan publicly questions the
sustainability of today's productivity gains, the recent upsurge is far from
unprecedented. The Golden Age of U.S. productivity growth, from 1950 to 1973,
saw labor productivity grow at a 2.7% compound annual rate. Improved
productivity tends to mean higher profits. Higher profits lead to more spending
on productivity-enhancing technology. Further productivity gains lead to
further profit improvements and the process repeats. Although final demand is
surging, supply-side investment is growing even faster. Finally, Congressional
approval of permanent normal trade relations with China is a reminder that
global competition will only intensify.
ECONOMIC & MARKET OUTLOOK
Looking ahead, our investment strategy is predicated on the following trends:
o Adjusted for inflation, U.S. final sales rose at a +6.9% annual rate in the
first quarter of this year, representing the fastest growth rate of the
current economic cycle.*<F26>
o Consumer confidence remains near record levels reflecting strong income
gains, low unemployment and the wealth effect from rising asset values.
o Despite higher interest rates, cheap credit is still available to drive
consumer spending.
o Like a tax increase, higher energy prices erode income gains.
o Although much is made of the wealth effect from higher stock prices, the
increase in home values has been the biggest wealth creator for the majority
of Americans.
o Higher mortgage rates are beginning to slow the housing market with
decelerating price gains not far behind.
o We believe the forty percent drop in the NASDAQ and ongoing stock market
volatility will dampen consumer exuberance.
o Fed tightening is raising the dollar's exchange rate, making imports cheaper
(holding down U.S. inflation) and exports less competitive (slowing the U.S.
economy).
o We believe signs of an economic slowdown are likely to emerge by the fall,
allowing the Fed to shift to a neutral policy and bond prices to rally (what
is good for bonds may be even better for stocks).
o In the absence of the Treasury buy back, we believe long-term government
bond yields would be higher and credit spreads (the difference in yield
between a corporate bond and a government bond of equal maturity) narrower.
o Today's high inflation-adjusted bond yields are attractive and we believe
the widening in credit spreads creates opportunities to enhance bond
portfolio returns.
o Corporate profits are better-than-expected, reflecting ongoing gains from
investments in productivity-enhancing technology and efficiencies from
restructuring.
o A "Jekyll and Hyde" stock market has emerged as "old economy" shares vie
with the leading technology names for investor favor.
o We believe the stock market will broaden out as the year progresses making
portfolio diversification, complemented by security selection that
emphasizes high quality companies with strong balance sheets, good earnings
visibility and dominant industry positions, a winning strategy.
*<F26> Source: Department of Labor
In summary, we expect the Federal Reserve will successfully engineer a "soft
landing" for the U.S. economy, extending this unprecedented period of economic
prosperity. We believe slower growth will prevent inflation from accelerating
further, yet corporate profitability should remain strong thanks to ongoing
productivity gains and efficiencies achieved through restructuring and mergers.
In short, we anticipate the advent of a more favorable environment for financial
assets later in the year. As you peruse the following pages of this report, you
will find a broad range of equity and fixed income products to help meet a wide
variety of investment objectives. As always, we encourage you to contact us
with your comments regarding portfolio performance or our investment strategy.
Thank you for your continued confidence in Firstar Stellar Funds.
Sincerely yours,
Firstar Investment Research & Management Company, LLC (FIRMCO)
Investment Policy Committee
John Blixen
Executive Vice President
Richard Burling
Senior Vice President, Director of Credit Research
Walter Dewey
Senior Vice President, Senior Portfolio Manager
Donald Keller
Senior Vice President, Senior Portfolio Manager
George Schupp
Senior Vice President, Director of Fixed Income
Marian Zentmyer, Committee Chairperson
Executive Vice President, Chief Equity Investment Officer
July 24, 2000
Investment Reviews
FIRSTAR STELLAR GROWTH EQUITY FUND
Q The stock market has been somewhat erratic over the past six months. How
did this effect the performance of the Firstar Stellar Growth Equity Fund?
A The Firstar Stellar Growth Equity Fund had a very solid six months of
performance versus the S&P 500*<F27> even though there was significant
volatility. For the six months ended May 31, 2000, the Fund showed a total
return of 7.78% on a no-load, net asset value basis (Class "Y"
Shares)**<F28> versus the S&P 500 return of 2.90%. We continue to
emphasize stocks of companies which we believe to be of very high quality
with strong long term fundamentals. This means that we are taking a long
term approach and are not making significant short term changes to try to
play the volatility. With our emphasis on diversification and security
selection, the Fund has been well positioned to weather the dramatic and
quick rotations which have occurred in the market. This is why we continue
to emphasize to investors to take the long term approach to investing and
not to try to time the market or get nervous during weak market periods.
Q Which sectors of the market and which individual securities had a
significant positive impact on the Fund's performance?
A Technology for the full six months, even with the weakness in April and
May, had a tremendous positive impact on the Fund. This remains the high
earnings growth area of the market. While valuations are high, we
generally feel that they are justified because of the earnings expectations
and the continued strong global demand for technology. Some of the names
that helped in this area were Oracle which doubled during this time frame
and Texas Instruments, Intel, EMC and Ericsson.
The Fund also benefited from the rebound in health care stocks. This
sector had under performed the market during 1999 and had reached
attractive valuation levels. Our view on the "Graying of America" and the
increased usage of medication still leads us to believe that this group
will show good earnings growth, thus we maintained our weighting during
last year's decline. That decision proved beneficial for the Fund during
this six month period. Stocks with strength for us were Medtronic and both
Warner Lambert and Pfizer, which are in the process of merging.
Other stocks which helped the Fund were General Electric, Kohl's,
Halliburton, Citigroup and AIG.
Q What is your outlook for the balance of 2000?
A We are still expecting a positive market for the balance of 2000 as we
finally get past the Fed rate hikes. This should allow more concentration
on the generally solid earnings growth and help to move the market higher.
Our belief is, however, that the market will remain volatile with continued
rotation amongst the groups. Therefore, we expect to continue to remain
well diversified and urge shareholders to take the long term approach to
investing.
*<F27> Standard & Poor's 500 Stock Index, a composite index of 500 common
stocks in industry, transportation, 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.
**<F28> 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 adjusted for the 5.0% sales charge for the two months
ended May 31, 2000 was (4.68)% and (9.92)%, respectively. Total
return for B Shares based on net asset value and adjusted for the
maximum contingent deferred sales charge of 5.0% for the six months
ended May 31, 2000 was 7.58% and 2.58%, respectively.
FIRSTAR STELLAR RELATIVE VALUE FUND
Q How did the Firstar Stellar Relative Value Fund perform during the six
months ended May 31, 2000?
A For the six months ended May 31, 2000, the Firstar Stellar Relative Value
Fund had a total return of (0.15)% on a no-load, net asset value basis
(Class "Y" Shares)*<F29>. The S&P 500 was up +2.90% and the Standard &
Poor's 500/BARRA Value Index**<F30> was up +3.63% for the same time period.
Q What specific sectors impacted the performance of the Fund during the last
six months?
A Some of the prior years weakest sectors such as utilities, health care and
energy have been the best performing sectors in 2000. Despite the volatile
performance of the technology sector, strong individual gains were seen by
Intel Corporation and International Business Machines. These two stocks
represent 16.5% of the total portfolio.
Q How have rising interest rates impacted the performance of the Fund and
what is the future for "value" investing?
A Rising interest rates have had a negative impact on the financial sector
and other economic sensitive areas such as basic materials and consumer
cyclicals. The Fund has maintained a small cash position during the period
of rising interest rates as a way to reduce volatility and take advantage
of market opportunities.
"Value" investing is poised to rebound from several years of being out of
favor. As the Federal Reserve nears the end of the interest rate hikes, we
feel investors will once again focus on quality, fundamentals and
valuations. As the economy slows in the second half of 2000, the Fund
should be positioned to benefit from the opportunities that will develop in
the financial and consumer sectors.
FIRSTAR STELLAR SCIENCE & TECHNOLOGY FUND
Q Year to date, technology stocks have demonstrated significant volatility.
During this period what areas of science and technology worked best for the
Fund? What areas under performed? How did the Fund perform overall?***<F31>
A For the six months ended May 31, 2000, the Science & Technology Fund was up
19.78%. Our strategy was to focus on the established technology leaders
like Sun Microsystems and Texas Instruments. With increased uncertainty in
the market, investors are less willing to invest in emerging companies.
Large established companies have more products to offer and typically have
a larger customer base. The semiconductor industry has been the best
performing technology industry, up 50% year-to-date. The semiconductor
industry continues to benefit from telecommunication companies increasing
their fiber optic and wireless networks. Examples of large companies
supplying semiconductors to these areas are JDS Uniphase and Texas
Instruments. JDS Uniphase makes pump lasers which are used to transmit
voice and data over fiber optic networks. Texas Instruments is the largest
supplier of Digital Signal Processors (DSP's) which are used to convert
signals to digital. DSP's are used in the new digital cellular phones as
well as new digital music devices such as MP3 players.
Internet commerce names fared much worse than the majority of technology
companies. Companies in this area were trading based upon their business
model and not earnings. The market uncertainty caused most investors to
leave the unproven companies for more established names. With our outlook
being negative on these companies, we had limited exposure to this area of
technology.
*<F29> 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 adjusted for the 5.0% sales charge for the six months
ended May 31, 2000 was (0.38)% and (5.85)%, respectively. Total
return for B Shares based on net asset value and adjusted for the
maximum contingent deferred sales charge of 5.0% for the same period
was (0.65)% and (5.61)%, respectively.
**<F30> Standard & Poor's 500/BARRA Value Index is a capitalization-weighted
unmanaged index of all the stocks in the Standard & Poor's 500 Stock
Index that have low price-to-book ratios.
***<F31> Funds whose investments are concentrated in a specific industry,
sector or geographic area may be subject to a higher degree of market
risk than funds whose investments are diversified. The Fund may
invest in initial public offerings (IPOs). IPOs may have a magnified
performance impact on a fund with a small asset base.
Q Everybody seems to be talking about technology and the Internet. Where is
the majority of this growth coming from?
A Two areas with continued growth prospects are enterprise software and
wireless communications. With rising interest rates, corporate
profitability should experience downward pressure. On the corporate level,
technology spending is being used as a means to increase revenue and
profitability of companies. Corporate spending is increasingly focused on
software which allows a company to provide a higher quality experience when
transacting business. The primary focus is Customer Relationship Management
(CRM) Software. Siebel Systems, a large holding of the Science & Technology
Fund, is the leading provider of CRM Software. Corporate spending on
technology should continue to increase as companies look for ways to
increase their profitability.
The wireless industry is gaining continued focus as consumers and business
attempt to become more mobile. Wireless devices have expanded from cellular
telephones to portable devices. Current wireless devices can be used to
keep contact information and allow sales people access to this information
and wireless email. The new wireless devices are increasing the demand for
semiconductors. This wireless boom is coming while semiconductor companies
are increasing their spending on capital equipment. Semiconductor companies
are expanding rapidly to keep up with their increasing demand for their
products. The Information Age accompanied by the Internet is creating large
growth for technology. Texas Instruments and Cree Inc. are examples of how
the Science & Technology Fund has exposure to this growth industry.
Q After the fabulous year technology had in 1999, what is your outlook for
technology for the next twelve months?
A According to the U.S. Department of Commerce, "Between 1995 and 1998, these
IT-producers, while accounting for only about 8 percent of U.S. GDP,
contributed on average 35 percent of the nation's real economic growth."
Also, "in 1996 and 1997 (the last years for which detailed data are
available), falling prices in IT-producing industries brought down overall
inflation by an average 0.7 percentage points, contributing to the
remarkable ability of the U.S. economy to control inflation and keep
interest rates low in a period of historically low unemployment." The
Internet is in its infancy when you compare current users to the number of
global users possible. We are starting to see the Internet change the way
companies do business with each other. Companies are learning that they can
either embrace the Internet as a means of doing business or they will get
passed by companies who have embraced this technology.
The new year has changed the focus of corporate IT (Information Technology)
departments from Y2K fixes to newer strategic technologies designed to
either increase revenues or decrease the costs necessary to produce the
companies goods or services. The leading-edge companies have just begun to
implement a new electronic business model. This new e-business model
requires that companies expand their Internet presence and update their
internal legacy systems with software allowing the exchange of data
throughout the entire company. With continued need for companies to
increase their profitability we should continue to see increased technology
spending.
FIRSTAR STELLAR FUND
Q How did the multi-asset class approach of the Stellar Fund fare as the
domestic stock market first soared and then retreated over the past six
months?
A The Firstar Stellar Fund performed well for the six months ended May 31,
2000 with a return of 7.78% on a no-load, net asset value basis (Class "Y"
Shares).*<F32> The Stellar Fund is a multi-asset fund designed to generate
competitive total returns, but with lower volatility than other balanced
funds. We will highlight the five asset classes as follows:
EQUITY
The equity market has been extremely volatile during this past six months.
December was extremely strong with significant performance coming from
technology and health care names. This trend generally continued early in 2000
with the market however, beginning to turn its back on some of the more esoteric
technology companies. It then turned into a full route of tech names in April
and May. We are in a period where we think the market will broaden and not be
so reliant on technology names to advance. We believe however, that rotation
will continue and therefore will remain strongly diversified.
*<F32> 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 adjusted for the 5.0% sales charge for the six months
ended May 31, 2000 was 7.65% and 1.71%, respectively. Total return
for B Shares based on net asset value and adjusted for the maximum
contingent deferred sales charge of 5.0% for the two months ended May
31, 2000 was (2.03)% and (6.93)%, respectively.
INTERNATIONAL*<F33>
International has been a mixed bag during this time with pockets of strength in
Europe and significant weakness from Japan and the Asian countries. Further
compounding the difficulties has been the strength of the dollar which has
caused a diminution of returns when converted from local currencies to dollars.
This segment still provides a good offset to the U.S. markets and offers a
significant benefit to Stellar holders.
FIXED
Our outlook for 2000 started the year anticipating improved confidence and
liquidity. We also thought interest rates would remain within a range, or even
decline, for most of the year. While liquidity certainly returned in the first
few months of the year, a stronger than expected economy resulted in interest
rates rising steadily during the period. High quality (especially Treasury
bonds) were the standout performers while low-grade corporate bonds suffered
significant under performance. The Firstar Stellar Fund benefited from its
Treasury bond holdings and overall high credit quality.
Increasing interest rates have certainly not helped returns. However, the bond
market offers good values currently and this has provided us a tremendous
opportunity to adjust portfolio holdings.
REIT'S
REIT'S have experienced two consecutive tough years with both 1998 and 1999
posting negative returns at (16.9)% and (4.5)% (Morgan Stanley REIT
Index)**<F34>, respectively. The first quarter of 2000 brought some relief as
the group rose 2.7% and names like Warren Buffett were mentioned as REIT buyers.
Valuations have remained attractive for the group with earnings growth at 8% to
9% and the stocks trading at discounts to their net asset values. The market's
perception of these stocks has shifted to a more positive stance with the group
up nearly 10% through May of this year. Maintaining a full, diversified
exposure to REIT's has aided the Fund's solid performance results relative to
other balanced funds.
CASH EQUIVALENTS
Money market yields rose steadily through the period as the Federal Reserve
engineered a 1% increase in the Federal funds rate from 5.5% to 6.5%. The
benefit of holding cash equivalents is to reduce overall portfolio volatility.
These instruments serve as the "shock absorber" in uncertain times as we have
recently experienced with the equity market.
FIRSTAR STELLAR CAPITAL APPRECIATION FUND
Q The stock market seemed to continue its late year trend by showing strength
in the smaller capitalization names. How did the Fund perform for this six
months ended May 31, 2000?
A The market did continue to broaden over the last six months as investors
moved towards the more attractive valuation levels which the mid-
capitalization weighted securities seemed to represent. This resulted in
the Firstar Stellar Capital Appreciation Fund returning 10.88% on a no-
load, net asset value basis (Class "A" Shares)***<F35> for the preceding
six months, although most of that return took place in December, 1999.
Still, relatively speaking, the mid-cap names did continue to perform well
so far in 2000 versus the large-cap names. The multiples, we believe, are
still very attractive for the stocks in this area and earnings growth rates
are generally consistent with those of the larger names suggesting that the
mid-cap market is still attractive.
*<F33> Foreign investing involves special risks such as currency risk,
increased volatility of foreign securities and differences in auditing
and financial standards.
**<F34> The Morgan Stanley REIT Index is an unmanaged index comprised of the
most actively traded real estate investment trusts.
***<F35> 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 adjusted for the 5.0% sales
charge on Class A Shares for the six months ended May 31, 2000 was
4.75%. Total return for B Shares based on net asset value and
adjusted for the maximum contingent deferred sales charge of 5.0% for
the two months ended May 31, 2000 was (8.19)% and (12.78)%,
respectively.
Q What sectors or securities helped to drive the performance over the past
six months?
A The fund continues to be overweighted in the technology sector which helped
the Fund as the overall group did outperform the S&P Midcap 400 Index*<F36>
over the six month time frame. We continue to like the growth
opportunities that this sector and many of the names represent and
therefore we currently are emphasizing the group. Some names which did
well in this group included Applied Microcircuits, Xilinx, Cypress
Semiconductors and Veritas. The Fund was also helped by the performance of
the energy group which saw significant strength with the continued rise in
oil prices and refining margins. This helped names such as Global Marine
and Weathorford. Lastly, health care bounced back after a disappointing
1999. Valuations in the group had become too cheap for the expected
earnings growth. Here the Fund was helped by names such as IVAX and Forest
Labs. Other strong stocks were Vishay and Dycom.
Q What do you see looking forward?
A As mentioned above, the mid-cap market still appears to be very
attractively valued versus the large-cap market for very similar earnings
growth. We believe investors will continue to focus on this fact and we
will therefore continue to see a broader based market. This should be very
good for the stocks which make up the Capital Appreciation Fund.
Therefore, for investors who are willing to take the risk that the mid-cap
market represents we think the Fund represents an excellent vehicle for
participation.
FIRSTAR STELLAR INTERNATIONAL EQUITY FUND
Q The international markets recovered nicely in 1999 after the weakness in
1998. Has the trend continued so far in 2000?**<F37>
A The international markets, as measured by EAFE***<F38>, have not continued
the rebound in 2000 that was started in 1999. The markets have not moved
together, as we have seen random pockets of strength and weakness in
various regions. Generally, we have seen positive results from the
European markets, except for Britain, but tremendous weakness in Japan and
the Far East. This weakness in Japan was in contrast to the positive
returns for most of 1999. The Japanese economy continues to struggle with
negative GDP growth and deflationary conditions. Expectations remain that
the Government's efforts will alleviate these situations, but they remain
very destructive in the near term. Further compounding the weak returns
has been the strength in the U.S. dollar. Thus, when local returns are
converted into dollars, returns have been diminished.
Q With that being the case, how has the International Equity Fund performed
during this six month periodo
A During this six month period, the International Equity Fund returned 3.70%
or 2.12% adjusted for the 1.5% sales charge which exceeded the EAFE return
of 0.03% for the same time frame. The Fund has generally been underexposed
to the Far Eastern markets and in particular Japan. This has helped the
performance from a relative standpoint. Most international economies remain
on fairly solid footing and the markets appear to represent good value.
For investors who are willing to take the risk of international investing,
we believe the fund of funds concept, which we use, gives investors a great
way to play this concept.
*<F36> The S&P Midcap 400 Index is an unmanaged index of 400 domestic stocks
created by Standard & Poor's Corporation which measures the
performance of the mid-range section of the U.S. stock market.
**<F37> Foreign investing involves special risks including currency risk,
increased volatility of foreign securities, and differences in
auditing and other financial standards.
***<F38> The Europe, Australasia and Far East (EAFE) Index is a market
capitalization weighted foreign securities index, which is widely used
to measure the performance of European, Australian, New Zealand and
Far Eastern stock markets. This index is unmanaged and investments
cannot be made in the index.
Portfolios of Investments
Firstar Stellar Growth Equity Fund May 31, 2000 (Unaudited)
CONTRACTS,
SHARES
OR PRINCIPAL
AMOUNT VALUE
------------ -----
COMMON STOCKS - 97.0%
AEROSPACE - 0.2%
25,000 Lockheed Martin Corp. $612,500
------------
AIRLINES - 0.7%
45,000 UAL Corp. *<F39> 2,317,500
------------
AUTOMOBILE - 0.8%
55,000 Ford Motor Co. 2,670,938
------------
BANKING - 5.3%
37,812 Bank of America Corp. 2,100,929
117,500 Citigroup Inc. 7,307,031
65,000 FleetBoston Financial Corp. 2,457,812
22,100 J.P. Morgan & Co., Inc. 2,845,375
55,000 Wells Fargo & Co. 2,488,750
------------
Total 17,199,897
------------
BROADCASTING - 1.2%
52,000 Clear Channel Communications, Inc. *<F39> 3,893,500
------------
BROKERAGE SERVICES - 2.0%
22,000 Merrill Lynch & Co., Inc. 2,169,750
60,000 Morgan Stanley, Dean Witter & Co. 4,316,250
------------
Total 6,486,000
------------
CHEMICALS - 1.3%
28,000 Dow Chemical Co. 2,997,750
35,000 Rohm and Haas Co. 1,194,375
------------
Total 4,192,125
------------
COMMUNICATION EQUIPMENT - 3.3%
80,092 Lucent Technologies, Inc. 4,595,279
292,000 Telefonaktiebolaget LM Ericsson,
Class B, ADR 5,986,000
------------
Total 10,581,279
------------
COMPUTER PERIPHERAL - 4.0%
80,000 EMC Corp. *<F39> 9,305,000
50,000 Lexmark International Group, Inc.,
Class A *<F39> 3,487,500
------------
Total 12,792,500
------------
COMPUTER PRODUCTS & SERVICES - 7.1%
47,500 America Online, Inc. *<F39> 2,517,500
287,400 Cisco Systems, Inc. *<F39> 16,363,837
10,000 Juniper Networks, Inc. *<F39> 1,751,875
20,000 Hewlett-Packard Co. 2,402,500
------------
Total 23,035,712
------------
COMPUTERS & SOFTWARE - 11.2%
10,000 Adobe Systems Inc. 1,125,625
96,000 Microsoft Corp. *<F39> 6,006,000
139,000 Oracle Corp. *<F39> 9,990,625
56,000 Siebel Systems, Inc. *<F39> 6,552,000
135,000 Sun Microsystems, Inc. *<F39> 10,344,375
20,000 VERITAS Software Corp. *<F39> 2,330,000
------------
Total 36,348,625
------------
COSMETICS & TOILETRIES - 0.5%
25,000 Kimberly-Clark Corp. 1,512,500
------------
DRUGS - 7.8%
30,000 American Home Products Corp. 1,616,250
52,000 Bristol-Myers Squibb Co. 2,863,250
15,000 Genentech, Inc. *<F39> 1,610,625
102,000 Merck & Co., Inc. 7,611,750
78,000 Pfizer Inc. 3,475,875
45,000 Warner-Lambert Co. 5,495,625
60,000 Watson Pharmaceuticals, Inc. *<F39> 2,647,500
------------
Total 25,320,875
------------
ELECTRICAL EQUIPMENT - 2.4%
145,500 General Electric Co. 7,656,938
------------
ELECTRONICS - SEMICONDUCTORS - 2.4%
65,000 Applied Materials, Inc. *<F39> 5,427,500
27,000 JDS Uniphase Corp. *<F39> 2,376,000
------------
Total 7,803,500
------------
ELECTRONIC TECHNOLOGY - 5.7%
84,680 Intel Corp. 10,558,537
110,000 Texas Instruments Inc. 7,947,500
------------
Total 18,506,037
------------
FOOD & BEVERAGE - 1.5%
40,000 H. J. Heinz Co. 1,567,500
83,000 PepsiCo, Inc. 3,377,062
------------
Total 4,944,562
------------
GOVERNMENT AGENCY - 1.4%
75,000 Fannie Mae 4,509,375
------------
HEALTH TECHNOLOGY - 0.8%
50,000 Guidant Corp. 2,531,250
------------
HOUSEHOLD PRODUCTS - 2.4%
90,000 Clorox Co. 3,566,250
63,658 Procter & Gamble Co. 4,233,257
------------
Total 7,799,507
------------
INSURANCE - 3.8%
85,000 Allstate Corp. 2,252,500
89,013 American International Group, Inc. 10,019,526
------------
Total 12,272,026
------------
MACHINERY - 0.2%
15,000 Caterpillar Inc. 573,750
------------
MANUFACTURING - 1.7%
94,164 Illinois Tool Works Inc. 5,467,397
------------
MEDICAL PRODUCTS & SERVICES - 2.8%
62,250 Cardinal Health, Inc. 4,038,469
99,530 Medtronic, Inc. 5,138,236
------------
Total 9,176,705
------------
METALS & MINING - 1.1%
60,000 Alcoa Inc. 3,506,250
------------
MULTI-INDUSTRY - 0.7%
41,058 Honeywell International Inc. 2,245,359
------------
NATURAL GAS - 1.4%
72,300 Coastal Corp. 4,437,413
------------
OFFICE & BUSINESS EQUIPMENT - 1.1%
34,000 International Business Machines Corp. 3,648,625
------------
OIL - 5.7%
2,500 Ashland Inc. 87,344
50,566 BP Amoco PLC, ADR 2,749,526
45,000 Chevron Corp. 4,159,688
64,238 Exxon Mobil Corp. 5,351,828
30,000 Halliburton Co. 1,530,000
42,000 Texaco Inc. 2,412,375
50,000 Tosco Corp. 1,531,250
25,000 Valero Energy Corp. 731,250
------------
Total 18,553,261
------------
PRODUCER MANUFACTURING - 1.9%
102,500 Parker-Hannifin Corp. 4,272,969
30,000 Textron, Inc. 1,882,500
------------
Total 6,155,469
------------
RETAIL TRADE - 6.5%
115,000 Federated Department Stores, Inc. *<F39> 4,427,500
5,000 Federated Department Stores, Inc.,
warrants, 12/19/2001 *<F39> 70,938
80,000 Gap (The), Inc. 2,805,000
123,200 Kohl's Corp. *<F39> 6,375,600
76,244 Safeway, Inc. *<F39> 3,516,754
65,000 Wal-Mart Stores, Inc. 3,745,625
------------
Total 20,941,417
------------
TELECOMMUNICATIONS & EQUIPMENT - 6.4%
100,000 Alcatel SA ADR 5,456,250
37,500 AT&T Corp. 1,300,781
23,040 Bell Atlantic Corp. 1,218,240
56,000 BellSouth Corp. 2,614,500
15,600 GTE Corp. 986,700
20,000 Nokia Corp., ADR 1,040,000
25,000 Nortel Networks Corp. 1,357,813
3,000 QUALCOMM Inc. *<F39> 199,125
46,000 Vodafone Group PLC, ADR 2,107,375
122,500 WorldCom, Inc. *<F39> 4,609,063
------------
Total 20,889,847
------------
UTILITIES - ELECTRIC - 1.7%
30,000 Duke Energy Corp. 1,747,500
65,000 GPU, Inc. 1,836,250
50,000 TXU Corp. 1,787,500
------------
Total 5,371,250
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $178,228,810) 313,953,889
------------
CALL OPTIONS PURCHASED - 0.0%
200 Bestfoods, expires 6/17/2000, exercise
price $65 58,750
------------
TOTAL CALL OPTIONS PURCHASED
(IDENTIFIED COST $61,850) 58,750
------------
SHORT-TERM INVESTMENTS - 3.1%
MONEY MARKET MUTUAL FUNDS - 1.3%
1,751,986 Lindner Government
Money Market Fund 1,751,986
2,500,000 RNC Money Market Fund 2,500,000
------------
Total Money Market Mutual Funds 4,251,986
------------
REPURCHASE AGREEMENT - 1.8%
$5,898,000 Donaldson, Lufkin and Jenrette
Securities Corp., 6.40%, dated
5/31/2000, due 6/1/2000,
repurchase price $5,899,048
(Collateralized by U.S.
Government Securities) 5,898,000
------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $10,149,986) 10,149,986
------------
TOTAL INVESTMENTS - 100.1%
(IDENTIFIED COST $188,440,646) 324,162,625
------------
LIABILITIES, LESS OTHER ASSETS - (0.1)% (189,710)
------------
TOTAL NET ASSETS - 100.0% $323,972,915
------------
------------
SCHEDULE OF CALL OPTIONS WRITTEN
150 America Online, Inc., expires
7/22/2000, exercise price $75 $5,625
100 Kimberly-Clark Corp., expires
7/22/2000, exercise price $55 68,750
400 Kohl's Corp., expires 7/22/2000,
exercise price $45 360,000
100 Procter & Gamble Co., expires
7/22/2000, exercise price $90 1,250
------------
TOTAL CALL OPTIONS WRITTEN
(PREMIUMS RECEIVED $334,814) 435,625
------------
SCHEDULE OF PUT OPTIONS WRITTEN
100 Safeway, Inc., expires 6/17/2000,
exercise price $32.50 1,250
------------
TOTAL PUT OPTIONS WRITTEN
(PREMIUMS RECEIVED $7,100) 1,250
------------
TOTAL OPTIONS WRITTEN
(PREMIUMS RECEIVED $341,914) $436,875
------------
------------
*<F39> Non-income producing
ADR -- American Depository Receipt
PLC -- Public Limited Company
(See Notes to Financial Statements.)
Firstar Stellar Relative Value Fund May 31, 2000 (Unaudited)
SHARES OR
PRINCIPAL
AMOUNT VALUE
--------- -----
COMMON STOCKS - 95.4%
AEROSPACE - 2.4%
240,625 Honeywell, Inc. $13,159,180
------------
APPLIANCES - 1.0%
100,000 Whirlpool Corp. 5,668,750
------------
AUTOMOBILE - 2.0%
130,000 Ford Motor Co. 6,313,125
65,000 General Motors Corp. 4,590,625
------------
Total 10,903,750
------------
AUTOMOTIVE & RELATED - 1.1%
130,000 Goodyear Tire & Rubber Co. 3,233,750
50,000 Johnson Controls, Inc. 2,846,875
------------
Total 6,080,625
------------
BANKS & SAVINGS INSTITUTIONS - 15.4%
243,230 AmSouth Bancorporation 4,393,342
130,000 Bank of America Corp. 7,223,125
300,000 Bank of New York Co., Inc. 14,081,250
322,500 Citigroup Inc. 20,055,469
192,500 First Financial Bancorp 3,416,875
165,000 First Tennessee National Corp. 3,382,500
300,000 KeyCorp 6,300,000
200,000 Mellon Financial Corp. 7,712,500
160,000 North Fork Bancorporation, Inc. 2,650,000
100,000 PNC Financial Services Corp. 5,037,500
100,000 TCF Financial Corp. 2,618,750
250,000 Union Planters Corp. 7,812,500
------------
Total 84,683,811
------------
COMPUTER SOFTWARE - 2.0%
170,000 Microsoft Corp. *<F40> 10,635,625
------------
DRUGS - 12.7%
200,000 American Home Products Corp. 10,775,000
260,000 Bristol-Myers Squibb Co. 14,316,250
207,000 Merck & Co., Inc. 15,447,375
275,000 Pharmacia Corp. 14,282,813
240,000 Smithkline Beecham Corp., ADR 15,165,000
------------
Total 69,986,438
------------
ELECTRICAL EQUIPMENT - 4.3%
450,000 General Electric Co. 23,681,250
------------
ELECTRONICS - 9.1%
400,000 Intel Corp. 49,875,000
------------
ENERGY - 2.3%
100,000 Duke Energy Corp. 5,825,000
190,000 TXU Corp. 6,792,500
------------
Total 12,617,500
------------
HOUSEHOLD PRODUCTS - 4.5%
230,000 Gillette Co. 7,676,250
260,000 Procter & Gamble Co. 17,290,000
------------
Total 24,966,250
------------
INSURANCE - 2.8%
170,000 Cincinnati Financial Corp. 6,823,906
700,000 Ohio Casualty Corp. 8,356,250
------------
Total 15,180,156
------------
MANUFACTURING - 1.7%
160,000 Lucent Technologies Inc. 9,180,000
------------
MISC. FINANCIAL SERVICES - 2.2%
225,000 American Express Co. 12,107,813
------------
OFFICE & BUSINESS EQUIPMENT - 7.4%
380,000 International Business Machines Corp. 40,778,750
------------
OIL - 9.0%
114,800 BP Amoco PLC, ADR 6,242,250
195,382 Exxon Mobil Corp. 16,277,763
156,000 Royal Dutch Petroleum Co., ADR 9,740,250
300,000 Texaco, Inc. 17,231,250
------------
Total 49,491,513
------------
PHOTO EQUIPMENT & SUPPLIES - 0.8%
70,000 Eastman Kodak Co. 4,182,500
------------
RETAILING & APPAREL - 2.7%
200,000 Federated Department Stores, Inc. *<F40> 7,700,000
400,000 J.C. Penney Company, Inc. 7,250,000
------------
Total 14,950,000
------------
TELECOMMUNICATIONS - 9.1%
253,500 AT&T Corp. 8,793,282
800,000 BroadWing Inc. *<F40> 19,050,000
67,000 Cable & Wireless Communications
PLC, ADR 3,324,875
152,000 GTE Corp. 9,614,000
195,000 Vodafone AirTouch PLC, ADR 8,933,435
------------
Total 49,715,592
------------
TOBACCO - 1.7%
350,000 Philip Morris Cos., Inc. 9,143,750
------------
UTILITIES - ELECTRIC - 1.2%
250,000 Cinergy Corp. 6,656,250
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $290,029,469) 523,644,503
------------
SHORT-TERM INVESTMENT - 6.5%
REPURCHASE AGREEMENT - 6.5%
$35,440,000 Donaldson, Lufkin and Jenrette
Securities Corp., 6.40%, dated
5/31/2000, due 6/1/2000, repurchase
price $35,446,296 (Collateralized by
U.S. Government Securities) 35,440,000
------------
TOTAL SHORT-TERM INVESTMENT
(IDENTIFIED COST $35,440,000) 35,440,000
------------
TOTAL INVESTMENTS - 101.9%
(IDENTIFIED COST $325,469,469) 559,084,503
------------
LIABILITIES, LESS OTHER ASSETS - (1.9)% (10,170,018)
------------
TOTAL NET ASSETS - 100.0% $548,914,485
------------
------------
*<F40> Non-income producing
ADR -- American Depository Receipt
PLC -- Public Limited Company
(See Notes to Financial Statements.)
Firstar Stellar Science & Technology Fund May 31, 2000 (Unaudited)
SHARES,
CONTRACTS OR
PRINCIPAL
AMOUNT VALUE
--------- -----
COMMON STOCKS - 95.5%
COMPUTER PERIPHERAL - 4.7%
23,681 EMC Corp. *<F41> $2,754,396
23,000 Immersion Corp. *<F41> 373,750
23,400 Lexmark International Group, Inc.,
Class A *<F41> 1,632,150
------------
Total 4,760,296
------------
COMPUTER PRODUCTS & SERVICES - 11.7%
28,200 Ariba, Inc. *<F41> 1,469,925
13,400 Brocade Communications Systems, Inc. *<F41> 1,580,363
50,600 Cisco Systems, Inc. *<F41> 2,881,037
23,400 Foundry Networks, Inc. *<F41> 1,475,663
14,800 Juniper Networks, Inc.*<F41> 2,592,775
11,000 Network Appliance, Inc. *<F41> 710,187
9,400 Yahoo! Inc. *<F41> 1,062,788
------------
Total 11,772,738
------------
COMPUTERS - 3.3%
13,000 Dell Computer Corp. *<F41> 560,625
36,700 Sun Microsystems, Inc. *<F41> 2,812,138
------------
Total 3,372,763
------------
COMPUTER SOFTWARE - 20.9%
30,000 Active Software, Inc. *<F41> 1,076,250
19,700 Adobe Systems Inc. 2,217,481
64,700 BroadVision, Inc. *<F41> 2,317,069
7,000 Check Point Software
Technologies Ltd. *<F41> 1,315,125
34,600 Citrix Systems, Inc. *<F41> 1,820,825
12,000 IONA Technologies PLC, ADR *<F41> 524,250
13,900 Microsoft Corp. *<F41> 869,619
14,800 Nuance Communications Inc. *<F41> 584,600
24,000 Oracle Corp. *<F41> 1,725,000
15,000 Phone.com, Inc. *<F41> 1,049,063
23,900 Siebel Systems, Inc. *<F41> 2,796,300
21,900 Symantec Corp. *<F41> 1,439,925
29,175 VERITAS Software Corp. *<F41> 3,398,888
------------
Total 21,134,395
------------
DRUGS - 8.1%
15,100 American Home Products Corp. 813,512
10,000 Bristol-Myers Squibb Co. 550,625
4,000 Genentech, Inc. *<F41> 429,500
10,600 MedImmune, Inc. *<F41> 1,646,975
6,000 Millennium Pharmaceuticals, Inc. *<F41> 501,750
17,600 Schering-Plough Corp. 851,400
10,400 Sepracor Inc. *<F41> 994,500
14,000 Warner-Lambert Co. 1,709,750
14,600 Watson Pharmaceuticals, Inc. *<F41> 644,225
------------
Total 8,142,237
------------
ELECTRONICS - 0.9%
25,000 ANADIGICS, Inc. *<F41> 867,188
------------
ELECTRONICS - SEMICONDUCTORS - 23.9%
30,900 Applied Materials, Inc. *<F41> 2,580,150
22,800 Applied Micro Circuits Corp. *<F41> 2,262,900
17,500 Bookham Technology plc, ADR 852,031
10,000 Cree, Inc. *<F41> 1,214,844
20,500 EMCORE Corp. *<F41> 1,327,375
19,300 Intel Corp. 2,406,469
32,350 JDS Uniphase Corp. *<F41> 2,846,800
19,000 Lam Research Corp. *<F41> 610,375
18,600 PMC-Sierra, Inc. *<F41> 2,850,450
29,600 QLogic Corp. *<F41> 1,454,100
17,000 SDL, Inc. *<F41> 3,851,562
35,900 Vitesse Semiconductor Corp. *<F41> 1,817,438
------------
Total 24,074,494
------------
ELECTRONIC TECHNOLOGY - 2.8%
39,800 Texas Instruments Inc. 2,875,550
------------
HEALTH TECHNOLOGY - 2.0%
11,200 Abgenix, Inc. *<F41> 884,800
8,200 PE Corp. - Celera Genomics Group *<F41> 456,125
12,500 Guidant Corp. 632,812
------------
Total 1,973,737
------------
INDUSTRIAL AUTOMATION - 0.7%
13,000 PRI Automation, Inc. *<F41> 668,078
------------
MEDICAL PRODUCTS & SERVICES - 2.4%
26,500 Amgen Inc. *<F41> 1,686,062
14,900 Medtronic, Inc. 769,212
------------
Total 2,455,274
------------
OFFICE & BUSINESS EQUIPMENT - 1.5%
14,500 International Business Machines Corp. 1,556,031
------------
TELECOMMUNICATIONS & EQUIPMENT - 12.6%
28,800 Comverse Technology, Inc. *<F41> 2,631,600
20,400 Copper Mountain Networks, Inc. *<F41> 1,704,675
60,000 General Magic, Inc. *<F41> 157,500
36,100 Lucent Technologies, Inc. 2,071,238
43,000 Netro Corp. *<F41> 1,284,625
52,400 Nokia Corp., ADR 2,724,800
10,400 QUALCOMM Inc. *<F41> 690,300
12,400 VoiceStream Wireless Corp. *<F41> 1,419,800
------------
Total 12,684,538
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $81,760,200) 96,337,319
------------
CALL OPTIONS PURCHASED - 0.0%
250 Intel Corp., expires 7/22/2000,
exercise price @ $140 10,937
------------
TOTAL CALL OPTIONS PURCHASED
(IDENTIFIED COST $20,100) 10,937
------------
SHORT-TERM INVESTMENT - 5.3%
REPURCHASE AGREEMENT - 5.3%
$5,331,000 Donaldson, Lufkin and Jenrette
Securities Corp., 6.40%, dated
5/31/2000, due 6/1/2000,
repurchase price $5,331,947
(Collateralized by U.S.
Government Securities) 5,331,000
------------
TOTAL SHORT-TERM INVESTMENT
(IDENTIFIED COST $5,331,000) 5,331,000
------------
TOTAL INVESTMENTS - 100.8%
(IDENTIFIED COST $87,111,300) 101,679,256
------------
LIABILITIES, LESS OTHER ASSETS - (0.8)% (794,656)
------------
TOTAL NET ASSETS - 100.0% $100,884,600
------------
------------
SCHEDULE OF PUT OPTIONS WRITTEN
18 Ariba, Inc., expires 7/22/2000,
exercise price $100 $86,625
50 BroadVision, Inc., expires 6/17/2000,
exercise price $55 98,125
50 Citrix Systems, Inc., expires 7/22/2000,
exercise price $60 55,000
50 E-Tek Dynamics, Inc., expires 7/22/2000,
exercise price $230 255,625
50 IONA Technologies PLC, ADR,
expires 6/17/2000, exercise price $55 57,500
100 QLogic Corp., expires 7/22/2000,
exercise price $75 246,250
50 SDL, Inc., expires 7/22/2000,
exercise price $130 17,500
------------
TOTAL PUT OPTIONS WRITTEN
(PREMIUMS RECEIVED $869,017) $816,625
------------
------------
*<F41> Non-income producing
ADR -- American Depository Receipt
PLC -- Public Limited Company
(See Notes to Financial Statements.)
Firstar Stellar Fund May 31, 2000 (Unaudited)
SHARES OR
PRINCIPAL
AMOUNT VALUE
--------- -----
U.S. EQUITIES - 21.3%
BASIC INDUSTRY - 0.3%
CHEMICALS - 0.1%
1,000 Dow Chemical Co. $107,062
-----------
METALS & MINING - 0.2%
2,600 Alcoa Inc. 151,938
-----------
TOTAL BASIC INDUSTRY 259,000
-----------
CAPITAL GOODS - 8.2%
COMPUTER PERIPHERAL - 0.4%
4,000 Lexmark International
Group, Inc., Class A*<F42> 279,000
-----------
COMPUTERS & SOFTWARE - 4.8%
4,000 BMC Software, Inc. *<F42> 176,000
14,800 Lucent Technologies Inc. 849,150
19,000 Oracle Corp. *<F42> 1,365,625
19,800 Sun Microsystems, Inc. *<F42> 1,517,175
-----------
Total 3,907,950
-----------
ELECTRICAL EQUIPMENT - 0.9%
5,400 Emerson Electric Co. 318,600
8,100 General Electric Co. 426,263
-----------
Total 744,863
-----------
ELECTRONICS - 2.1%
14,000 Intel Corp. 1,745,624
-----------
TOTAL CAPITAL GOODS 6,677,437
-----------
CONSUMER CYCLICAL - 2.3%
RETAILING & APPAREL - 2.3%
18,000 Gap (The), Inc. 631,125
9,000 Safeway, Inc. *<F42> 415,125
15,000 Wal-Mart Stores, Inc. 864,375
-----------
Total 1,910,625
-----------
TOTAL CONSUMER CYCLICAL 1,910,625
-----------
CONSUMER STAPLES - 1.3%
FOOD & BEVERAGE - 0.9%
18,000 Sysco Corp. 754,875
-----------
HOUSEHOLD PRODUCTS - 0.4%
5,000 Procter & Gamble Co. 332,500
-----------
TOTAL CONSUMER STAPLES 1,087,375
-----------
ENERGY - 1.7%
ENERGY SERVICE & EQUIPMENT - 0.4%
4,000 Schlumberger Ltd. 294,250
-----------
INTERNATIONAL OIL - 0.7%
6,600 Exxon Mobil Corp. 549,863
-----------
NATURAL GAS - 0.6%
8,500 Coastal Corp. 521,687
-----------
TOTAL ENERGY 1,365,800
-----------
FINANCE - 3.3%
INSURANCE - 1.0%
7,500 American International Group, Inc. 844,219
-----------
OTHER FINANCE - 2.3%
9,967 Citigroup Inc. 619,823
7,200 Fannie Mae 432,900
12,000 Morgan Stanley, Dean Witter & Co. 863,250
-----------
Total 1,915,973
-----------
TOTAL FINANCE 2,760,192
-----------
HEALTH CARE - 1.8%
MEDICAL DEVICES - 1.3%
13,000 Guidant Corp. 658,125
7,762 Medtronic, Inc. 400,712
-----------
Total 1,058,837
-----------
PHARMACEUTICALS - 0.5%
8,000 Bristol-Myers Squibb Co. 440,500
-----------
TOTAL HEALTH CARE 1,499,337
-----------
MANUFACTURING - 0.5%
7,000 Honeywell International Inc. 382,813
-----------
MUTUAL FUND - 0.5%
19,087 Gateway Cincinnati Fund 369,910
-----------
TELECOMMUNICATIONS - 1.4%
5,600 GTE Corp. 354,200
8,044 SBC Communications, Inc. 351,422
12,000 WorldCom, Inc. *<F42> 451,500
-----------
TOTAL TELECOMMUNICATIONS 1,157,122
-----------
TOTAL U.S. EQUITIES
(IDENTIFIED COST $6,466,818) 17,469,611
-----------
INTERNATIONAL SECURITIES - 19.0%
INTERNATIONAL EQUITIES - 17.4%
AUSTRALIA - 1.0%
11,900 News Corp., Ltd., ADR 542,194
6,700 News Corp., Ltd., ADR, Preferred 262,556
-----------
Total 804,750
-----------
CANADA - 1.2%
18,800 Nortel Networks Corp. 1,021,074
-----------
DENMARK - 0.5%
4,500 Novo-Nordisk, ADR 369,843
-----------
FINLAND - 1.5%
24,000 OY Nokia AB, Class A, ADR 1,248,000
-----------
FRANCE - 0.9%
10,000 Alcatel Alsthom, ADR 545,625
1,900 Elf Aquitaine SA, ADR 195,819
-----------
Total 741,444
-----------
GERMANY - 1.0%
3,000 Commerzbank AG, Frankfurt, ADR 109,480
8,000 SAP AG, ADR 343,000
2,500 Siemens AG, ADR 368,179
-----------
Total 820,659
-----------
HONG KONG - 0.2%
25,000 Sun Hung Kai Properties Ltd., ADR 152,400
-----------
ITALY - 1.1%
20,000 Luxottica Group S.p.A., ADR 462,500
3,100 Telecom Italia S.p.A., ADR 430,513
-----------
Total 893,013
-----------
JAPAN - 0.8%
7,300 Canon, Inc., ADR 338,538
3,600 Sony Corp., ADR 328,275
-----------
Total 666,813
-----------
MEXICO - 0.3%
4,600 Telefonos de Mexico, Class L, ADR 223,962
-----------
NETHERLANDS - 1.5%
4,000 Heineken NV, ADR 204,214
8,880 Koninklijke Philips Electronics NV, ADR 392,385
10,500 Royal Dutch Petroleum Co., ADR 655,594
-----------
Total 1,252,193
-----------
SPAIN - 0.6%
6,600 Repsol SA, ADR 139,012
5,691 Telefonica SA, ADR 346,440
-----------
Total 485,452
-----------
SWEDEN - 1.1%
42,000 Telefonaktiebolaget LM Ericsson,
Class B, ADR 861,000
-----------
SWITZERLAND - 0.7%
2,000 Roche Holding AG, ADR 210,031
800 Zurich Allied AG 391,740
-----------
Total 601,771
-----------
UNITED KINGDOM - 5.0%
11,500 BP Amoco PLC, ADR 625,312
4,000 British Sky Broadcasting Group plc, ADR 447,500
13,800 Cable & Wireless
Communications PLC, ADR 684,825
2,500 COLT Telecom Group plc, ADR *<F42> 355,000
4,000 Reuters Holdings PLC, ADR 355,500
4,000 Smithkline Beecham Corp., ADR 252,750
23,792 Vodafone AirTouch PLC, ADR 1,089,989
4,000 WPP Group plc, ADR 242,250
-----------
Total 4,053,126
-----------
TOTAL INTERNATIONAL EQUITIES 14,195,500
-----------
CLOSED-END INVESTMENT COMPANIES - 1.6%
6,500 iShares MSCI Italy Index Fund 160,062
8,000 Italy Fund, Inc. (The) 141,000
13,500 Mexico Fund (The) 183,094
53,300 Morgan Stanley Asia-Pacific Fund 506,350
45,100 Templeton Dragon Fund, Inc. 357,981
-----------
TOTAL CLOSED-END INVESTMENT COMPANIES 1,348,487
-----------
TOTAL INTERNATIONAL SECURITIES
(IDENTIFIED COST $7,270,455) 15,543,987
-----------
REAL ESTATE INVESTMENT TRUSTS - 19.3%
13,000 Apartment Investment and
Management Co. 520,812
20,000 Archstone Communities Trust 448,750
23,756 Avalonbay Communities, Inc. 944,301
30,000 BRE Properties, Inc., Class A 808,125
12,000 Boston Properties, Inc. 419,250
10,000 Brandywine Realty Trust 176,875
15,000 CBL & Associates Properties, Inc. 363,750
13,000 Camden Property Trust 364,812
39,000 Catellus Development Corp. *<F42> 524,063
15,000 Chelsea GCA Realty, Inc. 507,188
20,000 Developers Diversified Realty Corp. 288,750
34,000 Duke-Weeks Realty Corp. 733,125
25,000 EastGroup Properties, Inc. 537,500
29,875 Equity Office Properties Trust 793,555
9,000 Equity Residential Properties Trust 401,625
8,000 Franchise Finance Corp. of America 180,500
10,000 Healthcare Realty Trust, Inc. 166,250
38,000 Host Marriott Corp. 365,750
22,250 Kimco Realty Corp. 901,125
12,000 Koger Equity, Inc. 214,500
35,000 LaSalle Hotel Properties 490,000
13,000 Liberty Property Trust 325,000
7,000 Macerich Co. (The) 152,687
25,000 Mack-Cali Realty Corp. 675,000
21,000 MeriStar Hospitality Corp. 399,000
19,000 Mills Corp. (The) 336,062
32,000 Pacific Gulf Properties, Inc. 740,000
12,000 Public Storage, Inc. 267,750
8,000 Realty Income Corp. 189,000
10,000 Reckson Associates Realty Corp. 219,375
18,080 Simon Property Group, Inc. 442,960
14,000 Spieker Properties, Inc. 650,125
16,500 Starwood Hotels & Resorts
Worldwide, Inc. 487,781
7,000 Storage USA, Inc. 210,438
16,800 Summit Properties, Inc. 357,000
5,000 Sun Communities, Inc. 161,875
-----------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(IDENTIFIED COST $14,012,268) 15,764,659
-----------
FIXED INCOME OBLIGATIONS - 18.7%
AUTOMOTIVE & RELATED - 0.5%
$200,000 Ford Motor Credit Corp.,
6.11%, 12/28/2001 195,444
250,000 Ford Motor Co., 6.375%, 2/1/2029 200,578
-----------
Total 396,022
-----------
ENERGY - 0.3%
250,000 Ashland Inc., Series F, 7.90%, 8/5/2006 241,584
-----------
FINANCE - 4.2%
250,000 Bear Stearns Companies Inc. (The),
6.45%, 8/1/2002 242,472
1,000,000 Citigroup Inc., 9.50%, 3/1/2002 1,031,656
250,000 International Lease Finance Corp.,
8.375%, 12/15/2004 254,107
1,000,000 Lehman Brothers Holdings, Inc.,
6.50%, 10/1/2002 969,010
200,000 Merrill Lynch & Co., Inc.,
6.25%, 10/15/2008 177,150
500,000 Morgan Stanley, Dean Witter & Co.,
5.625%, 1/20/2004 466,202
365,000 Zurich Capital Trust, Company Guarantee,
Series 144A, 8.376%, 6/1/2037 329,157
-----------
Total 3,469,754
-----------
FOREIGN - 1.5%
200,000 TransCanada PipeLines Ltd.,
9.875%, 1/1/2021 229,193
1,000,000 TransCanada PipeLines Ltd.,
9.125%, 4/20/2006 1,043,979
-----------
Total 1,273,172
-----------
INDUSTRIAL - 0.1%
105,060 Dow Chemical Co., Series 1992-A1,
7.60%, 1/2/2002 105,100
-----------
OIL & GAS - 0.4%
250,000 Chevron Capital USA, Inc.,
7.45%, 8/15/2004 245,857
50,000 Enron Corp., 7.625%, 9/10/2004 49,325
-----------
Total 295,182
-----------
RETAILING & APPAREL - 0.6%
500,000 Sears Roebuck Acceptance Corp.,
7.00%, 6/15/2007 463,116
-----------
U.S. GOVERNMENT AGENCIES - 6.8%
$1,000,000 Fannie Mae, 5.125%, 2/13/2004 927,499
500,000 Fannie Mae, 5.25%, 1/15/2009 428,867
250,000 Fannie Mae, 6.625%, 9/15/2009 235,621
332,600 Fannie Mae, 6.00%, 2/25/2011 302,185
250,000 Fannie Mae, 6.93%, 9/17/2012 232,405
247,076 Fannie Mae, 9.50%, 6/25/2020 256,318
750,000 Fannie Mae, 6.50%, 4/25/2023 702,491
250,000 Fannie Mae, 6.25%, 5/15/2029 217,768
2,000,000 Federal Home Loan Bank,
6.00%, 8/15/2002 1,949,680
272,531 Ginnie Mae, 7.50%, 6/15/2027 268,103
-----------
Total 5,520,937
-----------
U.S. TREASURY SECURITIES - 3.7%
685,000 U.S. Treasury Bond,
9.875%, 11/15/2015 911,906
250,000 U.S. Treasury Bond,
9.00%, 11/15/2018 319,219
1,500,000 U.S. Treasury Bond,
6.75%, 8/15/2026 1,585,782
1,000,000 U.S. Treasury Strips,
0.00%, 11/15/2027, Principal Only 192,121
-----------
Total 3,009,028
-----------
UTILITIES - 0.6%
500,000 ENSERCH Corp., 6.25%, 1/1/2003 482,856
-----------
TOTAL FIXED INCOME OBLIGATIONS
(IDENTIFIED COST $15,886,703) 15,256,751
-----------
SHORT-TERM INVESTMENTS - 21.4%
MUTUAL FUNDS - 4.9%
500,000 Flex Funds 500,000
1,000,000 Lindner Government
Money Market Fund 1,000,000
2,500,000 RNC Money Market Fund 2,500,000
-----------
Total 4,000,000
-----------
REPURCHASE AGREEMENT - 14.1%
$11,518,000 Donaldson, Lufkin and Jenrette
Securities Corp., 6.40%, dated
5/31/2000, due 6/1/2000,
repurchase price $11,520,046
(Collateralized by U.S.
Government Securities) 11,518,000
-----------
U.S. GOVERNMENT AGENCIES - 2.4%
1,000,000 Sallie Mae, 6.35%, 7/20/2000 1,000,000
1,000,000 Sallie Mae, 6.24%, 3/7/2001 998,927
-----------
Total 1,998,927
-----------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $17,513,679) 17,516,927
-----------
TOTAL INVESTMENTS - 99.7%
(IDENTIFIED COST $61,149,923) 81,551,935
-----------
OTHER ASSETS, LESS LIABILITIES - 0.3% 263,707
-----------
TOTAL NET ASSETS - 100.0% $81,815,642
-----------
-----------
*<F42> Non-income producing
ADR -- American Depository Receipt
PLC -- Public Limited Company
(See Notes to Financial Statements.)
Firstar Stellar Capital Appreciation Fund May 31, 2000 (Unaudited)
SHARES OR
PRINCIPAL
AMOUNT VALUE
--------- -----
COMMON STOCKS - 98.1%
AEROSPACE & DEFENSE - 1.2%
17,300 General Dynamics Corp. $1,021,781
-----------
AIRLINES - 0.5%
12,000 Alaska Air Group, Inc. *<F43> 373,500
-----------
APPLIANCES - 0.6%
16,000 Maytag Corp. 524,000
-----------
AUTOMOTIVE & RELATED - 0.5%
2,000 Arvin Industries, Inc. 36,000
3,000 Bandag, Inc. 74,438
7,500 Lear Corp. *<F43> 175,781
8,000 Meritor Automotive, Inc. 99,500
-----------
Total 385,719
-----------
BANKING - 5.5%
13,000 Astoria Financial Corp. 354,250
13,650 Charter One Financial, Inc. 310,537
25,000 City National Corp. 975,000
13,000 Dime Bancorp, Inc. 237,250
26,000 First Tennessee National Corp. 533,000
40,000 Hibernia Corp. 515,000
11,000 Marshall & Ilsley Corp. 533,500
17,000 North Fork Bancorporation, Inc. 281,563
20,000 Sovereign Bancorp, Inc. 137,500
17,000 Zions Bancorporation 792,625
-----------
Total 4,670,225
-----------
BUILDING & CONSTRUCTION - 3.7%
14,400 Astec Industries, Inc. *<F43> 372,600
16,000 Granite Construction Inc. 417,000
19,000 Jacobs Engineering Group Inc. *<F43> 631,750
18,000 Martin Marietta Materials, Inc. 880,875
5,000 Rayonier Inc. 201,250
6,000 Southdown, Inc. 368,250
6,500 U.S.G. Corp. *<F43> 244,969
-----------
Total 3,116,694
-----------
BUSINESS SERVICES - 0.2%
5,000 Kelly Services, Inc., Class A 115,000
-----------
CHEMICALS - 0.7%
20,000 Albemarle Corp. 440,000
3,000 Fuller (H.B.) Co. 116,438
3,000 Lubrizol Corp. (The) 69,375
-----------
Total 625,813
-----------
COMMERCIAL SERVICES - 0.0%
4,000 Ogden Corp. 34,500
-----------
COMPUTER PRODUCTS & SERVICES - 2.3%
10,000 Keane, Inc. *<F43> 268,125
24,000 Lexmark International Group, Inc.,
Class A *<F43> 1,674,000
-----------
Total 1,942,125
-----------
COMPUTERS & SOFTWARE - 13.0%
20,000 Citrix Systems, Inc. *<F43> 1,052,500
18,028 Computer Associates International, Inc. 928,442
10,000 Electronic Arts, Inc. *<F43> 638,750
58,000 InterVoice-Brite, Inc. *<F43> 826,500
32,500 Intuit, Inc. *<F43> 1,178,125
6,000 Network Associates, Inc. *<F43> 131,250
7,000 Rational Software Corp. *<F43> 513,187
20,000 Siebel Systems, Inc. *<F43> 2,340,000
10,000 Symantec Corp. *<F43> 657,500
23,250 VERITAS Software Corp. *<F43> 2,708,625
-----------
Total 10,974,879
-----------
CONSUMER NON-DURABLES - 1.0%
19,500 Cintas Corp. 858,000
-----------
CONSUMER PRODUCTS - 0.1%
5,000 Church & Dwight Co., Inc. 90,938
-----------
CONTAINERS - 0.3%
12,000 Sonoco Products Co. 264,750
-----------
DATA PROCESSING - 1.1%
15,000 Fiserv, Inc. *<F43> 701,250
30,000 Informix Corp. *<F43> 217,500
-----------
Total 918,750
-----------
DENTAL SUPPLIES & EQUIPMENT - 0.2%
5,000 DENTSPLY International Inc. 153,437
-----------
DRUGS - 5.2%
13,000 Biogen, Inc. *<F43> 708,500
11,000 Forest Laboratories, Inc. *<F43> 973,500
27,000 IVAX Corp. *<F43> 1,015,875
20,000 Mylan Laboratories, Inc. 536,250
26,000 Watson Pharmaceuticals, Inc. *<F43> 1,147,250
-----------
Total 4,381,375
-----------
ELECTRICAL PRODUCTS & INSTRUMENTS - 1.3%
12,500 Molex Inc. 610,156
8,000 Sanmina Corp. *<F43> 509,000
-----------
Total 1,119,156
-----------
ELECTRONICS - SEMICONDUCTORS - 8.7%
12,000 Applied Micro Circuits Corp. *<F43> 1,191,000
15,000 Cypress Semiconductor Corp. *<F43> 630,938
15,000 Integrated Device Technology, Inc. *<F43> 711,562
18,000 Linear Technology Corp. 1,063,125
10,500 Microchip Technology Inc. *<F43> 596,039
8,000 QLogic Corp. *<F43> 393,000
15,750 Vishay Intertechnology, Inc. *<F43> 1,114,313
10,000 Vitesse Semiconductor Corp. *<F43> 506,250
15,000 Xilinx, Inc. *<F43> 1,141,875
-----------
Total 7,348,102
-----------
ENTERTAINMENT - 0.1%
5,000 Mandalay Resort Group *<F43> 105,938
-----------
FINANCE - 4.0%
17,000 Edwards (AG), Inc. 593,937
24,000 Finova Group, Inc. 286,500
11,000 Investment Technology Group, Inc. 371,250
11,000 Jefferies Group, Inc. 222,063
24,450 Old Kent Financial Corp. 812,963
30,000 Pinnacle West Capital Corp. 1,072,500
-----------
Total 3,359,213
-----------
FOOD & BEVERAGE - 1.4%
16,000 Hormel Foods Corp. 277,000
12,500 IBP, inc. 206,250
25,000 Tyson Foods, Inc. 246,875
26,000 Universal Foods Corp. 448,500
-----------
Total 1,178,625
-----------
HEALTH CARE SERVICES & SUPPLIES - 0.9%
4,000 Lincare Holdings Inc. $116,000
12,004 Priority Healthcare Corp. *<F43> 612,204
-----------
Total 728,204
-----------
HOME FURNISHINGS - 0.7%
23,000 Leggett & Platt, Inc. 461,437
7,000 Mohawk Industries, Inc. *<F43> 166,688
-----------
Total 628,125
-----------
INSURANCE - 2.9%
6,000 Allmerica Financial Corp. 346,125
12,000 American Financial Group, Inc. 335,250
6,000 Everest Re Group, Ltd. 204,000
18,000 Lincoln National Corp. 697,500
17,500 PMI Group, Inc. (The) 888,125
-----------
Total 2,471,000
-----------
MACHINERY - 1.0%
10,000 Black & Decker Corp. (The) 365,000
4,000 Imation Corp. *<F43> 113,250
2,500 SPX Corp. *<F43> 263,281
2,500 Tecumseh Products Co., Class A 112,969
-----------
Total 854,500
-----------
MANUFACTURED HOUSING - 0.1%
12,000 Clayton Homes, Inc. 106,500
-----------
MANUFACTURING - 1.0%
10,000 Carlisle Cos., Inc. 415,625
5,000 Mark IV Industries, Inc. 106,250
5,000 Pentair, Inc. 196,250
6,000 Trinity Industries, Inc. 132,375
-----------
Total 850,500
-----------
MEDIA - 1.6%
20,000 A. H. Belo Corp., Series A 321,250
13,000 Reader's Digest Association, Inc. (The) 440,375
6,000 Univision Communications Inc. *<F43> 618,000
-----------
Total 1,379,625
-----------
MEDICAL PRODUCTS & SERVICES - 4.1%
20,000 Chiron Corp. *<F43> 758,750
20,600 CONMED Corp. *<F43> 496,975
17,500 Genzyme Corp. *<F43> 994,219
10,000 Stryker Corp. 378,125
16,200 Trigon Healthcare, Inc. *<F43> 810,000
-----------
Total 3,438,069
-----------
NATURAL GAS - 2.8%
29,100 Coastal Corp. 1,786,012
11,000 El Paso Energy Corp. 566,500
-----------
Total 2,352,512
-----------
OIL & GAS - 7.6%
10,000 Amerada Hess Corp. 663,750
5,000 Conoco Inc. - Class A 133,750
8,000 ENSCO International Inc. 279,500
25,000 Global Marine Inc. *<F43> 707,812
8,000 Grant Prideco, Inc. *<F43> 186,000
4,000 Murphy Oil Corp. 259,500
10,000 Nabors Industries, Inc. *<F43> 430,000
7,000 Noble Affiliates, Inc. 275,188
10,000 Noble Drilling Corp. *<F43> 433,750
6,000 Tidewater Inc. 233,250
30,000 Tosco Corp. $918,750
20,000 Transocean Sedco Forex Inc. 983,750
20,000 Valero Energy Corp. 585,000
8,000 Weatherford International, Inc. *<F43> 344,500
-----------
Total 6,434,500
-----------
PAPER & FOREST PRODUCTS - 0.5%
6,000 Bowater Inc. 310,125
9,000 Glatfelter (P.H.) Co. 106,312
-----------
Total 416,437
-----------
PLASTICS - 1.2%
34,000 Spartech Corp. 1,007,250
-----------
RESTAURANTS - 0.9%
4,000 Outback Steakhouse, Inc. *<F43> 121,250
22,050 Sonic Corp. *<F43> 610,509
-----------
Total 731,759
-----------
RETAILING & APPAREL - 2.9%
7,000 Abercrombie & Fitch Co. *<F43> 68,688
5,000 Bed Bath & Beyond Inc. *<F43> 184,062
15,000 Best Buy Co., Inc. *<F43> 960,000
8,000 BJ's Wholesale Club, Inc. *<F43> 248,000
5,500 Claire's Stores, Inc. 111,375
10,000 Lowe's Cos., Inc. 465,625
19,100 Shopko Stores, Inc. 350,963
10,000 Warnaco Group, Inc. (The) 67,500
-----------
Total 2,456,213
-----------
STEEL PRODUCTS - 0.1%
8,000 AK Steel Holding Corp. 77,500
-----------
TECHNOLOGY SERVICES - 0.9%
30,000 Comdisco, Inc. 768,750
-----------
TELECOMMUNICATIONS & EQUIPMENT - 6.5%
15,000 BroadWing Inc. *<F43> 357,187
17,000 CenturyTel, Inc. 459,000
25,000 Comsat Corp. 612,500
20,000 Comverse Technology, Inc. *<F43> 1,827,500
25,500 Dycom Industries, Inc. *<F43> 1,235,156
15,000 QUALCOMM Inc. *<F43> 995,625
-----------
Total 5,486,968
-----------
TEXTILES - 0.1%
8,000 Shaw Industries, Inc. *<F43> 111,500
-----------
TOBACCO - 0.1%
4,000 Universal Corp. 92,750
-----------
TRANSPORTATION - 1.1%
24,000 Harley-Davidson, Inc. 894,000
-----------
UNIT INVESTMENT TRUST - 4.1%
40,000 Standard & Poor's MidCap 400
Depositary Receipts 3,507,500
-----------
UTILITIES - 5.4%
8,000 Allegheny Energy, Inc. 247,500
7,000 American Water Works Company, Inc. 163,625
28,000 CMP Group, Inc. 812,000
44,200 Energy East Corp. 944,775
28,000 Montana Power Co. (The) 1,058,750
41,000 Northeast Utilities *<F43> 907,125
8,000 OGE Energy Corp. 156,000
8,000 UtiliCorp United Inc. 157,000
6,000 Washington Gas Light Co. 159,750
-----------
Total 4,606,525
-----------
TOTAL COMMON STOCKS
(IDENTIFIED COST $61,396,497) 82,963,207
-----------
MUTUAL FUND - 0.5%
44,779 Dean Small Cap Value Fund 381,517
-----------
TOTAL MUTUAL FUND
(IDENTIFIED COST $452,849) 381,517
-----------
SHORT-TERM INVESTMENT - 1.5%
REPURCHASE AGREEMENT - 1.5%
$1,257,000 Donaldson, Lufkin and Jenrette
Securities Corp., 6.40%, dated
5/31/2000, due 6/1/2000, repurchase
price $1,257,223 (Collateralized by
U.S. Government Securities) 1,257,000
-----------
TOTAL SHORT-TERM INVESTMENT
(IDENTIFED COST $1,257,000) 1,257,000
-----------
TOTAL INVESTMENTS - 100.1%
(IDENTIFIED COST $63,106,346) 84,601,724
-----------
LIABILITIES, LESS OTHER ASSETS - (0.1)% (69,783)
-----------
TOTAL NET ASSETS - 100.0% $84,531,941
-----------
-----------
*<F43> Non-income producing
(See Notes to Financial Statements.)
Firstar Stellar International Equity Fund May 31, 2000 (Unaudited)
SHARES OR
PRINCIPAL
AMOUNT VALUE
--------- -----
CLOSED-END INVESTMENT COMPANIES - 15.8%
15,000 Asia Pacific Fund Inc. $128,438
10,000 Asia Tigers Fund Inc. 80,000
30,000 China Fund, Inc. (The) 270,000
100,000 France Growth Fund, Inc. (The) 1,406,250
10,000 Germany Fund, Inc. (The) 143,750
15,000 iShares MSCI France Index Fund 421,875
15,000 iShares MSCI Germany Index Fund 371,250
100,000 iShares MSCI Hong Kong Index Fund 1,162,500
10,000 iShares MSCI Italy Index Fund 246,250
85,000 iShares MSCI Singapore Index Fund 563,125
111,100 Italy Fund Inc. (The) 1,958,138
35,000 Japan Equity Fund, Inc. (The) *<F44> 249,375
175,000 Japan O.T.C. Equity Fund, Inc. *<F44> 1,487,500
50,000 Korea Fund, Inc. (The) *<F44> 637,500
20,000 Latin American Discovery
Fund, Inc. (The) 185,000
50,000 Mexico Fund, Inc. (The) 678,125
53,628 Swiss Helvetia Fund, Inc. (The) 744,088
75,000 Templeton Emerging Markets Fund, Inc. 660,938
-----------
TOTAL CLOSED-END INVESTMENT COMPANIES
(IDENTIFIED COST $10,445,196) 11,394,102
-----------
MUTUAL FUNDS - 75.6%
263,109 BT Institutional International
Equity Fund 4,333,405
294,287 Federated International
Equity Fund, Class A 7,848,637
44,391 Federated International Small
Company Fund *<F44> 1,335,722
40,431 Flex Partners International Equity Fund 668,324
245,193 Founders Worldwide Growth Fund 5,526,641
160,549 Janus Worldwide Fund 11,878,996
41,934 Lexington Global Fund 476,792
278,101 Morgan Stanley Global Equity
Allocation Fund 5,169,905
185,172 Scudder Global Fund 5,532,940
260,588 USAA World Growth Fund 5,370,710
181,374 Vanguard International Growth Fund 4,037,375
91,585 Vanguard International Value Fund 2,483,786
-----------
TOTAL MUTUAL FUNDS
(IDENTIFIED COST $45,899,093) 54,663,233
-----------
SHORT-TERM INVESTMENT - 8.6%
REPURCHASE AGREEMENT - 8.6%
$6,177,000 Donaldson, Lufkin and Jenrette
Securities Corp., 6.40%, dated
5/31/2000, due 6/1/2000,
repurchase price $6,178,097
(Collateralized by U.S.
Government Securities) 6,177,000
-----------
TOTAL SHORT-TERM INVESTMENT
(IDENTIFIED COST $6,177,000) 6,177,000
-----------
TOTAL INVESTMENTS - 100.1%
(IDENTIFIED COST $62,521,289) 72,234,335
-----------
LIABILITIES, LESS OTHER ASSETS - (0.1)% (37,959)
-----------
TOTAL NET ASSETS - 100.0% $72,196,376
-----------
-----------
*<F44> Non-income producing
(See Notes to Financial Statements.)
Statements of Assets and Liabilities
May 31, 2000 (Unaudited)
<TABLE>
Firstar Stellar Firstar Stellar
Firstar Stellar Firstar Stellar Science & Capital Firstar Stellar
Growth Equity Relative Value Technology Firstar Stellar Appreciation International
Fund Fund Fund Fund Fund Equity Fund
--------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Total investments in securities,
at value $324,162,625 $559,084,503 $101,679,256 $81,551,935 $84,601,724 $72,234,335
Cash -- 2,079 -- 1,024 2,507 --
Income receivable 379,700 1,161,296 7,606 366,250 71,370 1,097
Receivable for investments sold -- -- 75,593 -- -- 2,413
Receivable for Fund shares sold 370,070 230,941 207,325 27,949 4,387 64,092
Other assets 56,782 28,888 41,780 29,600 36,821 10,836
------------ ------------ ------------ ----------- ----------- -----------
Total assets 324,969,177 560,507,707 102,011,560 81,976,758 84,716,809 72,312,773
------------ ------------ ------------ ----------- ----------- -----------
LIABILITIES:
Payable for investments purchased -- 10,672,583 110,050 -- -- --
Payable for Fund shares redeemed 153,108 285,659 30,022 9,807 67,061 23,134
Payable to bank 9,677 -- 24,740 -- -- 397
Options written, at value 436,875 -- 816,625 -- -- --
Payable to affiliates 358,737 599,008 134,088 123,014 112,611 85,046
Accrued expenses 37,865 35,972 11,435 28,295 5,196 7,820
------------ ------------ ------------ ----------- ----------- -----------
Total liabilities 996,262 11,593,222 1,126,960 161,116 184,868 116,397
------------ ------------ ------------ ----------- ----------- -----------
NET ASSETS $323,972,915 $548,914,485 $100,884,600 $81,815,642 $84,531,941 $72,196,376
------------ ------------ ------------ ----------- ----------- -----------
------------ ------------ ------------ ----------- ----------- -----------
NET ASSETS CONSIST OF:
Paid in capital $184,919,241 $303,348,617 $89,435,390 $58,215,105 $64,473,154 $58,322,002
Accumulated undistributed
net investment income (loss) 8,023 1,393,123 (351,737) 337,012 (183,769) 76,433
Accumulated undistributed net
realized gain (loss) on
investments and options 3,418,633 10,557,711 (2,819,401) 2,861,513 (1,252,822) 4,084,895
Net unrealized appreciation on
investments and options 135,627,018 233,615,034 14,620,348 20,402,012 21,495,378 9,713,046
------------ ------------ ------------ ----------- ----------- -----------
Total net assets $323,972,915 $548,914,485 $100,884,600 $81,815,642 $84,531,941 $72,196,376
------------ ------------ ------------ ----------- ----------- -----------
NET ASSETS:
A Shares $194,939 $49,126,067 $532,792 $38,761,539 $84,515,528 $72,196,376
B Shares 101,799,955 16,361,020 10,510,180 13,363 16,413 --
Y Shares 221,978,021 483,427,398 89,841,628 43,040,740 -- --
------------ ------------ ------------ ----------- ----------- -----------
Total net assets $323,972,915 $548,914,485 $100,884,600 $81,815,642 $84,531,941 $72,196,376
------------ ------------ ------------ ----------- ----------- -----------
------------ ------------ ------------ ----------- ----------- -----------
SHARES OUTSTANDING:
A Shares 7,589 1,699,888 30,709 2,873,998 6,185,727 5,435,576
B Shares 3,961,050 567,939 606,646 991 1,201 --
Y Shares 8,615,579 16,699,261 5,152,013 3,191,454 -- --
------------ ------------ ------------ ----------- ----------- -----------
Total shares outstanding 12,584,218 18,967,088 5,789,368 6,066,443 6,186,928 5,435,576
------------ ------------ ------------ ----------- ----------- -----------
------------ ------------ ------------ ----------- ----------- -----------
NET ASSET VALUE PER SHARE:
A Shares $25.69 $28.90 $17.35 $13.49 $13.66 $13.28
B Shares $25.70 $28.81 $17.33 $13.48 $13.67 --
Y Shares $25.76 $28.95 $17.44 $13.49 -- --
------------ ------------ ------------ ----------- ----------- -----------
OFFERING PRICE PER SHARE:
A Shares $27.19 $30.58 $18.36 $14.28 $14.46 $13.48
B Shares $25.70 $28.81 $17.33 $13.48 $13.67 --
Y Shares $25.76 $28.95 $17.44 $13.49 -- --
------------ ------------ ------------ ----------- ----------- -----------
REDEMPTION PROCEEDS PER SHARE:
A Shares $25.69 $28.90 $17.35 $13.49 $13.66 $13.28
B Shares $24.42 $27.37 $16.46 $12.81 $12.99 --
Y Shares $25.76 $28.95 $17.44 $13.49 -- --
------------ ------------ ------------ ----------- ----------- -----------
Investments, at identified cost $188,440,646 $325,469,469 $87,111,300 $61,149,923 $63,106,346 $62,521,289
------------ ------------ ------------ ----------- ----------- -----------
------------ ------------ ------------ ----------- ----------- -----------
Investments, at tax cost $188,440,646 $325,469,469 $87,256,049 $61,156,594 $63,262,456 $62,521,289
------------ ------------ ------------ ----------- ----------- -----------
------------ ------------ ------------ ----------- ----------- -----------
</TABLE>
(See Notes to Financial Statements.)
Statements of Operations
Six Months Ended May 31, 2000 (Unaudited)
<TABLE>
Firstar Stellar Firstar Stellar
Firstar Stellar Firstar Stellar Science & Capital Firstar Stellar
Growth Equity Relative Value Technology Firstar Stellar Appreciation International
Fund Fund Fund Fund Fund Equity Fund
--------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $361,700 $675,388 $193,272 $945,345 $18,930 $152,358
Dividend income 1,529,407 5,353,109 45,065 806,193 386,488 340,515
----------- ----------- ---------- ---------- ---------- ----------
Total income 1,891,107 6,028,497 238,337 1,751,538 405,418 492,873
----------- ----------- ---------- ---------- ---------- ----------
EXPENSES:
Investment advisory fees 1,181,568 2,028,631 386,093 409,136 416,423 270,243
Shareholder services fees 394,263 675,983 107,751 107,628 109,493 90,316
Administration fees 173,297 297,533 47,189 47,374 48,218 39,636
Distribution services fees -- A Shares 27 64,567 93 50,424 -- --
Distribution services fees -- B Shares 125,178 19,293 26,080 10 3 --
Transfer and dividend disbursing
agent fees and expenses 58,347 94,349 3,224 26,132 12,157 7,829
Custodian fees 39,386 67,621 10,724 10,767 10,959 9,008
Portfolio accounting fees 39,132 59,157 26,417 31,802 23,416 21,069
Printing and postage 22,101 24,575 2,133 14,494 2,769 2,665
Federal and state registration fees 9,630 10,974 15,269 5,000 3,153 4,600
Auditing fees 6,326 6,652 5,999 6,310 5,809 5,809
Trustees' fees 2,602 2,602 2,602 2,602 2,602 2,602
Legal fees 1,082 1,050 1,090 1,050 1,082 1,082
Miscellaneous 2,562 5,673 382 1,456 1,273 915
----------- ----------- ---------- ---------- ---------- ----------
Total expenses 2,055,501 3,358,660 635,046 714,185 637,357 455,774
----------- ----------- ---------- ---------- ---------- ----------
Waiver --
Waiver of shareholder services fees (172,417) (298,645) (44,972) (47,726) (48,170) (39,334)
----------- ----------- ---------- ---------- ---------- ----------
Total waiver (172,417) (298,645) (44,972) (47,726) (48,170) (39,334)
----------- ----------- ---------- ---------- ---------- ----------
Net expenses 1,883,084 3,060,015 590,074 666,459 589,187 416,440
----------- ----------- ---------- ---------- ---------- ----------
NET INVESTMENT
INCOME (LOSS) 8,023 2,968,482 (351,737) 1,085,079 (183,769) 76,433
----------- ----------- ---------- ---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND OPTIONS:
Net realized gain (loss) on
investments and options 5,101,396 11,261,910 (2,405,136) 2,924,473 2,033,818 4,407,234
Net change in unrealized appreciation
on investments and options 16,471,768 (15,383,794) 4,909,386 2,542,220 7,280,813 (2,916,596)
----------- ----------- ---------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND OPTIONS 21,573,164 (4,121,884) 2,504,250 5,466,693 9,314,631 1,490,638
----------- ----------- ---------- ---------- ---------- ----------
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS $21,581,187 $(1,153,402) $2,152,513 $6,551,772 $9,130,862 $1,567,071
----------- ----------- ---------- ---------- ---------- ----------
----------- ----------- ---------- ---------- ---------- ----------
</TABLE>
(See Notes to Financial Statements.)
Statements of Changes in Net Assets
<TABLE>
Firstar Stellar Firstar Stellar
Growth Equity Relative Value
Fund Fund
------------------------------- --------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
May 31, 2000 November 30, May 31, 2000 November 30,
(Unaudited) 1999 (Unaudited) 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS--
Net investment income (loss) $8,023 $212,364 $2,968,482 $3,713,860
Net realized gain (loss) on investments and options 5,101,396 (1,646,342) 11,261,910 (704,200)
Net change in unrealized appreciation
on investments and options 16,471,768 54,036,897 (15,383,794) 51,592,461
------------ ------------ ------------ ------------
Change in net assets resulting from operations 21,581,187 52,602,919 (1,153,402) 54,602,121
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
A Shares -- -- (162,330) (307,136)
B Shares -- (60,891) (47,755) (68,023)
Y Shares -- (285,802) (2,052,248) (3,536,241)
Distributions in excess of net investment income
B Shares -- (6,262) -- --
Y Shares -- (110,533) -- --
Distributions from net realized gain on
investments and options
A Shares -- -- -- (202,285)
B Shares -- (1,524,025) -- (32,646)
Y Shares -- (2,792,926) -- (1,548,462)
------------ ------------ ------------ ------------
Change in net assets from distributions
to shareholders -- (4,780,439) (2,262,333) (5,694,793)
------------ ------------ ------------ ------------
SHARE TRANSACTIONS--
Proceeds from sales of shares 50,784,002 79,638,600 80,890,623 122,853,931
Net asset value of shares issued to shareholders
in payment of distributions declared -- 3,394,700 1,603,092 4,286,072
Cost of shares redeemed (25,037,514) (42,163,347) (65,470,528) (85,917,559)
------------ ------------ ------------ ------------
Change in net assets from share transactions 25,746,488 40,869,953 17,023,187 41,222,444
------------ ------------ ------------ ------------
Change in net assets 47,327,675 88,692,433 13,607,452 90,129,772
------------ ------------ ------------ ------------
NET ASSETS:
Beginning of period 276,645,240 187,952,807 535,307,033 445,177,261
------------ ------------ ------------ ------------
End of period $323,972,915 $276,645,240 $548,914,485 $535,307,033
------------ ------------ ------------ ------------
Accumulated undistributed net investment income
included in net assets at end of period $8,023 -- $1,393,123 $686,974
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
<TABLE>
Firstar Stellar Firstar Stellar Firstar Stellar
Science & Capital International
Technology Firstar Stellar Appreciation Equity
Fund Fund Fund Fund
--------------------------- ---------------------------- --------------------------- ----------------------------
Six Months Six Months Six Months Six Months
Ended Period Ended Ended Year Ended Ended Year Ended Ended Year Ended
May 31, 2000 November 30, May 31, 2000 November 30, May 31, 2000 November 30, May 31, 2000 November 30,
(Unaudited) 1999(a)<F45> (Unaudited) 1999 (Unaudited) 1999 (Unaudited) 1999
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$(351,737) $(71,140) $1,085,079 $2,562,087 $(183,769) $(274,917) $76,433 $149,811
(2,405,136) (414,265) 2,924,473 (40,690) 2,033,818 (795,404) 4,407,234 607,379
4,909,386 9,710,962 2,542,220 4,101,153 7,280,813 5,283,313 (2,916,596) 13,062,240
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
2,152,513 9,225,557 6,551,772 6,622,550 9,130,862 4,212,992 1,567,071 13,819,430
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
-- -- (449,946) (1,236,235) -- -- -- (485,816)
-- -- -- -- -- -- -- --
-- -- (578,096) (1,687,173) -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- (4,024,886) -- -- (655,386) (838,069)
-- -- -- -- -- -- -- --
-- -- -- (4,995,329) -- -- -- --
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
-- -- (1,028,042) (11,943,623) -- -- (655,386) (1,323,885)
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
61,965,324 33,788,522 3,030,617 9,831,132 1,449,102 24,201,262 14,749,222 12,639,693
-- -- 931,317 10,753,017 -- -- 470,440 963,609
(5,513,950) (733,366) (15,293,405) (32,824,225) (11,305,194) (23,137,932) (3,430,563) (15,061,986)
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
56,451,374 33,055,156 (11,331,471) (12,240,076) (9,856,092) 1,063,330 11,789,099 (1,458,684)
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
58,603,887 42,280,713 (5,807,741) (17,561,149) (725,230) 5,276,322 12,700,784 11,036,861
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
42,280,713 -- 87,623,383 105,184,532 85,257,171 79,980,849 59,495,592 48,458,731
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
$100,884,600 $42,280,713 $81,815,642 $87,623,383 $84,531,941 $85,257,171 $72,196,376 $59,495,592
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
$(351,737) -- $337,012 $279,975 $(183,769) -- $76,433 --
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
(a)<F45> Reflects operations for the period from August 9, 1999 (date of
initial public investment) to November 30, 1999.
(See Notes to Financial Statements.)
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
NET REALIZED
AND DISTRIBUTIONS DISTRIBUTIONS
NET ASSET UNREALIZED DISTRIBUTIONS IN EXCESS OF FROM NET
VALUE, NET GAIN (LOSS) ON TOTAL FROM FROM NET NET REALIZED GAIN
PERIOD ENDED BEGINNING INVESTMENT INVESTMENTS INVESTMENT INVESTMENT INVESTMENT ON INVESTMENTS
NOVEMBER 30, OF PERIOD INCOME (LOSS) AND OPTIONS OPERATIONS INCOME INCOME (F)<F51> AND OPTIONS
------------ --------- ------------ ----------- ---------- ---------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
FIRSTAR STELLAR GROWTH EQUITY FUND
A SHARES
2000(l)<F57> $26.95 -- (1.26) (1.26) -- -- --
B SHARES
1995(d)<F49> $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)
1999 $19.52 (0.04) 4.88 4.84 (0.02) (0.00)(i)<F54> (0.45)
2000(k)<F56> $23.89 (0.02) 1.83 1.81 -- -- --
Y SHARES
1997(c)<F48> $16.46 0.03 0.73 0.76 (0.04) -- --
1998 $17.18 0.06 3.30 3.36 (0.07) -- (0.96)
1999 $19.51 0.07 4.83 4.90 (0.05) (0.01) (0.45)
2000(k)<F56> $23.90 0.01 1.85 1.86 -- -- --
FIRSTAR STELLAR RELATIVE VALUE FUND
A SHARES
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)
1999 $26.26 0.10 3.01 3.11 (0.16) -- (0.11)
2000(k)<F56> $29.10 0.13 (0.24) (0.11) (0.09) -- --
B SHARES
1998(b)<F47> $26.01 0.14 0.24 0.38 (0.11) -- --
1999 $26.28 0.16 2.94 3.10 (0.18) -- (0.11)
2000(k)<F56> $29.09 0.13 (0.32) (0.19) (0.09) -- --
Y SHARES
1997(a)<F46> $22.67 0.08 0.81 0.89 (0.07) -- --
1998 $23.49 0.18 3.65 3.83 (0.23) -- (0.82)
1999 $26.27 0.23 2.96 3.19 (0.23) -- (0.11)
2000(k)<F56> $29.12 0.16 (0.21) (0.05) (0.12) -- --
FIRSTAR STELLAR SCIENCE & TECHNOLOGY FUND
A SHARES
2000(l)<F57> $21.93 (0.05) (4.53) (4.58) -- -- --
B SHARES
1999(e)<F50> $10.00 -- 4.52 4.52 -- -- --
2000(k)<F56> $14.52 (0.09) 2.90 2.81 -- -- --
Y SHARES
1999(e)<F50> $10.00 -- 4.56 4.56 -- -- --
2000(k)<F56> $14.56 (0.06) 2.94 2.88 -- -- --
FIRSTAR STELLAR FUND
A SHARES
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)
1999 $13.35 0.31 0.52 0.83 (0.35) -- (1.16)
2000(k)<F56> $12.67 0.16 0.81 0.97 (0.15) -- --
B SHARES
2000(l)<F57> $13.76 0.03 (0.31) (0.28) -- -- --
Y SHARES
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)
1999 $13.36 0.35 0.51 0.86 (0.39) -- (1.16)
2000(k)<F56> $12.67 0.18 0.81 0.99 (0.17) -- --
</TABLE>
<TABLE>
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 (G) EXPENSES INCOME REIMBURSEMENT (H) (000 OMITTED) RATE
<F52> <F53>
------------- ---------- ---------- -------- ---------- ----------------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
-- $25.69 (4.68)% 1.42%(j) (0.07)%(j) 0.09%(j) $195 9%
<F55> <F55> <F55>
(0.21) $12.70 29.44% 1.17%(j) 2.00%(j) 0.23%(j) $48,699 171%
<F55> <F55> <F55>
(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%
(0.47) $23.89 25.26% 1.36% (0.08)% 0.16% $90,468 28%
-- $25.70 7.58% 1.36%(j) (0.17)%(j) 0.11%(j) $101,800 9%
<F55> <F55> <F55>
(0.04) $17.18 4.59% 1.06%(j) 0.68%(j) 0.20%(j) $109,087 60%
<F55> <F55> <F55>
(1.03) $19.51 20.91% 1.09% 0.37% 0.20% $121,475 48%
(0.51) $23.90 25.61% 1.11% 0.17% 0.16% $186,177 28%
-- $25.76 7.78% 1.11%(j) 0.08%(j) 0.11%(j) $221,978 9%
<F55> <F55> <F55>
(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%
(0.27) $29.10 11.89% 1.30% 0.52% 0.16% $54,825 11%
(0.09) $28.90 (0.38)% 1.35%(j) 0.88%(j) 0.11%(j) $49,126 4%
<F55> <F55> <F55>
(0.11) $26.28 1.50% 1.04%(j) 0.95%(j) 0.20%(j) $7,847 26%
<F55> <F55> <F55>
(0.29) $29.09 11.84% 1.30% 0.52% 0.16% $14,278 11%
(0.09) $28.81 (0.65)% 1.35%(j) 0.88%(j) 0.11%(j) $16,361 4%
<F55> <F55> <F55>
(0.07) $23.49 3.93% 1.00%(j) 1.35%(j) 0.20%(j) $312,056 18%
<F55> <F55> <F55>
(1.05) $26.27 16.95% 1.04% 0.95% 0.20% $386,405 26%
(0.34) $29.12 12.20% 1.05% 0.77% 0.16% $466,203 11%
(0.12) $28.95 (0.15)% 1.10%(j) 1.13%(j) 0.11%(j) $483,427 4%
<F55> <F55> <F55>
-- $17.35 (20.88)% 1.61%(j) (1.10)%(j) 0.09%(j) $533 31%
<F55> <F55> <F55>
-- $14.52 45.20% 1.94%(j) (1.19)%(j) 0.15%(j) $1,345 16%
<F55> <F55> <F55>
-- $17.33 19.35% 1.98%(j) (1.43)%(j) 0.11%(j) $10,510 31%
<F55> <F55> <F55>
-- $14.56 45.60% 1.69%(j) (0.94)%(j) 0.15%(j) $40,936 16%
<F55> <F55> <F55>
-- $17.44 19.78% 1.30%(j) (0.75)%(j) 0.11%(j) $89,842 31%
<F55> <F55> <F55>
(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%
(1.51) $12.67 6.92% 1.60% 2.49% 0.16% $40,133 39%
(0.15) $13.49 7.65% 1.68%(j) 2.39%(j) 0.11%(j) $38,762 5%
<F55> <F55> <F55>
-- $13.48 (2.03)% 2.26%(j) 1.82%(j) 0.09%(j) $13 5%
<F55> <F55> <F55>
(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%
(1.55) $12.67 7.15% 1.35% 2.74% 0.16% $47,491 39%
(0.17) $13.49 7.78% 1.43%(j) 2.64%(j) 0.11%(j) $43,041 5%
<F55> <F55> <F55>
</TABLE>
(a)<F46> Reflects operations for the period from August 18, 1997 (date of
initial public investment) to November 30, 1997.
(b)<F47> Reflects operations for the period from March 31, 1998 (date of
initial public investment) to November 30, 1998.
(c)<F48> Reflects operations for the period from August 18, 1997 (date of
initial public investment) to November 30, 1997.
(d)<F49> Reflects operations for the period from December 12, 1994 (date of
initial public investment) to November 30, 1995.
(e)<F50> Reflects operations for the period from August 9, 1999 (date of
initial public investment) to November 30, 1999.
(f)<F51> Distributions are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting
principles.
(g)<F52> Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(h)<F53> This voluntary expense decrease is reflected in both the expense and
net investment income ratios shown above.
(i)<F54> Less than one cent per share.
(j)<F55> Computed on an annualized basis.
(k)<F56> For the six months ended May 31, 2000 (unaudited).
(l)<F57> Reflects operations for the period from March 31, 2000 (date of
initial public investment) to May 31, 2000 (unaudited).
(See Notes to Financial Statements.)
(For a share outstanding throughout each period)
<TABLE>
NET REALIZED
AND DISTRIBUTIONS DISTRIBUTIONS
NET ASSET UNREALIZED DISTRIBUTIONS IN EXCESS OF FROM NET
VALUE, NET GAIN (LOSS) ON TOTAL FROM FROM NET NET REALIZED GAIN
PERIOD ENDED BEGINNING INVESTMENT INVESTMENTS INVESTMENT INVESTMENT INVESTMENT ON INVESTMENTS
NOVEMBER 30, OF PERIOD INCOME (LOSS) AND OPTIONS OPERATIONS INCOME INCOME (B)<F59> AND OPTIONS
------------ --------- ------------ ----------- ---------- ---------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
FIRSTAR STELLAR CAPITAL APPRECIATION FUND
A SHARES
1995 $10.15 0.03 1.72 1.75 (0.04) (0.00)(e)<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)
1999 $11.75 -- 0.57 0.57 -- -- --
2000(g)<F64> $12.32 (0.03) 1.37 1.34 -- -- --
B SHARES
2000(h)<F65> $14.89 -- (1.22) (1.22) -- -- --
FIRSTAR STELLAR INTERNATIONAL EQUITY FUND
A SHARES
1998(a)<F58> $10.00 0.05 0.34 0.39 (0.04) -- --
1999 $10.35 0.09 2.78 2.87 (0.10) -- (0.18)
2000(g)<F64> $12.94 0.01 0.47 0.48 -- -- (0.14)
</TABLE>
<TABLE>
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 (C) EXPENSES INCOME REIMBURSEMENT (D) (000 OMITTED) RATE
<F60> <F61>
------------- ---------- ---------- -------- ---------- ----------------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
(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%
-- $12.32 4.85% 1.31% (0.33)% 0.16% $85,257 92%
-- $13.66 10.88% 1.35%(f) (0.42)%(f) 0.11%(f) $84,516 1%
<F63> <F63> <F63>
-- $13.67 (8.19)% 2.17%(f) (1.02)%(f) 0.09%(f) $16 1%
<F63> <F63> <F63>
(0.04) $10.35 3.95% 1.31%(f) 0.37%(f) 0.20%(f) $48,459 3%
<F63> <F63> <F63>
(0.28) $12.94 28.44% 1.13% 0.27% 0.16% $59,496 34%
(0.14) $13.28 3.70% 1.15%(f) 0.21%(f) 0.11%(f) $72,196 7%
<F63> <F63> <F63>
</TABLE>
(a)<F58> Reflects operations for the period from December 3, 1997 (date of
initial public investment) to November 30, 1998.
(b)<F59> Distributions are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting
principles.
(c)<F60> Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(d)<F61> This voluntary expense decrease is reflected in both the expense and
net investment income ratios shown above.
(e)<F62> Less than one cent per share.
(f)<F63> Computed on an annualized basis.
(g)<F64> For the six months ended May 31, 2000 (unaudited).
(h)<F65> Reflects operations for the period from March 31, 2000 (date of
initial public investment) to May 31, 2000 (unaudited).
(See Notes to Financial Statements.)
Notes to Financial Statements
MAY 31, 2000 (UNAUDITED)
(1) ORGANIZATION
Firstar Stellar 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 ten diversified portfolios and two non-
diversified portfolios. 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
-------------- --------------------
Firstar Stellar Growth Equity Maximize capital appreciation.
Fund ("Growth Equity Fund")
Firstar Stellar Relative Value Maximize total return, a combination
Fund ("Relative Value Fund") of income and capital appreciation.
Firstar Stellar Science & Maximize growth and capital
Technology Fund ("Science appreciation by investing in the
& Technology Fund") science and technology industry.
Firstar Stellar Fund Maximize total return, a combination
("Stellar Fund") of dividend income and capital
appreciation.
Firstar Stellar Capital Maximize capital appreciation.
Appreciation Fund
("Capital Appreciation Fund")
Firstar Stellar International Long-term capital appreciation.
Equity Fund ("International
Equity Fund")
The financial statements of the Money Market and Bond 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.
Class A Shares are subject to an initial sales charge imposed at the time of
purchase, in accordance with the Funds' prospectus. The maximum sales charge on
Class A Shares in the Growth Equity Fund, Relative Value Fund, Science &
Technology Fund, Stellar Fund and Capital Appreciation Fund is 5.50% of the
offering price or 5.82% of the net asset value. The maximum sales charge on
Class A Shares in the International Equity Fund is 1.50% of the offering price
or 1.52% of the net asset value. The Class B Shares are subject to a contingent
deferred sales charge at the time of redemption, in accordance with the Funds'
prospectus. The maximum sales charge is 5% for redemptions in the first year,
4% in the second year, 3% in the third and fourth years, 2% in the fifth year,
1% in the sixth year and 0% thereafter.
(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 are valued at
amortized cost, which approximates fair market value. Investments in 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 approved 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. Dividend income is recorded on
the ex-dividend date. 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.
The character of distributions made during the year from net investment income
or net realized gain may differ from the characterization for federal income tax
purposes due to differences in the recognition of income, expense and gain items
for financial statement and tax purposes. Where appropriate, reclassifications
between net asset accounts are made for such differences that are permanent in
nature.
At November 30, 1999, the following Funds 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 Funds of any
liability for federal tax.
TOTAL CAPITAL-LOSS
FUND CARRYFORWARD
----------------------------- ------------------
Growth Equity Fund $1,146,324
Relative Value Fund 704,200
Science & Technology Fund 384,655
Stellar Fund 56,291
Capital Appreciation Fund 3,120,094
Pursuant to the Code, the capital loss carryforwards for the Growth Equity Fund,
Relative Value Fund, Science & Technology Fund, and Stellar Fund will expire in
the year 2007. The capital loss carryforward for the Capital Appreciation Fund
of $2,491,236 will expire in the year 2006 and $628,858 will expire in the year
2007.
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 Growth Equity Fund, Science & Technology Fund, Stellar 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) thecontract 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 six
months ended May 31, 2000, the Growth Equity Fund and the Science & Technology
Fund had net realized gain (loss) on options contracts, written and purchased,
of $796,107 and $(472,851), respectively.
At May 31, 2000, the Relative Value Fund, Stellar Fund and the Capital
Appreciation Fund had no outstanding options and had no written option activity
during the year. The following is a summary of the Growth Equity Fund and the
Science & Technology Fund written options activity:
GROWTH EQUITY FUND
--------------------------------
NUMBER OF
CONTRACTS PROCEEDS*<F66>
--------- --------------
Outstanding at November 30, 1999 450 $52,299
Contracts opened 4,380 1,221,666
Contracts expired (980) (77,802)
Contracts exercised (75) (95,947)
Contracts closed (2,925) (758,302)
------ ---------
Outstanding at May 31, 2000 850 $341,914
------ ---------
------ ---------
SCIENCE & TECHNOLOGY FUND
--------------------------------
NUMBER OF
CONTRACTS PROCEEDS*<F66>
--------- --------------
Outstanding at November 30, 1999 165 $105,251
Contracts opened 1,671 2,085,394
Contracts expired (45) (37,274)
Contracts exercised (197) (294,122)
Contracts closed (1,226) (990,232)
------ ---------
Outstanding at May 31, 2000 368 $869,017
------ ---------
------ ---------
*<F66> 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 estimates.
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>
GROWTH EQUITY FUND
-------------------------
PERIOD ENDED
MAY 31, 2000(A)<F67>
-------------------------
A SHARES SHARES DOLLARS
---------------------------------------------------------------- ---------- ------------
<S> <C> <C>
Shares sold 7,616 $198,853
Shares redeemed (27) (676)
--------- -----------
Net change resulting from A Share transactions 7,589 $198,177
--------- -----------
</TABLE>
<TABLE>
GROWTH EQUITY FUND
----------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2000 NOVEMBER 30, 1999
------------------------- --------------------------
B SHARES SHARES DOLLARS SHARES DOLLARS
---------------------------------------------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 453,070 $11,570,913 811,292 $17,246,658
Shares issued to shareholders in payment of distributions declared -- -- 80,016 1,585,822
Shares redeemed (279,789) (7,172,298) (509,022) (10,955,687)
--------- ----------- ---------- ------------
Net change resulting from B Share transactions 173,281 $4,398,615 382,286 $7,876,793
--------- ----------- ---------- ------------
</TABLE>
<TABLE>
GROWTH EQUITY FUND
----------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2000 NOVEMBER 30, 1999
------------------------- --------------------------
Y SHARES SHARES DOLLARS SHARES DOLLARS
---------------------------------------------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 1,522,541 $39,014,236 2,900,159 $62,374,132
Shares issued to shareholders in payment of distributions declared -- -- 90,953 1,808,878
Shares redeemed (698,113) (17,864,540) (1,425,496) (31,189,850)
--------- ----------- ---------- ------------
Net change resulting from Y Share transactions 824,428 21,149,696 1,565,616 32,993,160
--------- ----------- ---------- ------------
Net change resulting from Fund Share transactions 1,005,298 $25,746,488 1,947,902 $40,869,953
--------- ----------- ---------- ------------
--------- ----------- ---------- ------------
(a)<F67> For the period from March 31, 2000 (date of initial public investment)to May 31, 2000.
</TABLE>
<TABLE>
RELATIVE VALUE FUND
----------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2000 NOVEMBER 30, 1999
------------------------- --------------------------
A SHARES SHARES DOLLARS SHARES DOLLARS
---------------------------------------------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 75,620 $2,118,623 299,582 $8,019,398
Shares issued to shareholders in payment of distributions declared 5,497 158,500 18,148 499,780
Shares redeemed (265,018) (7,577,541) (373,125) (10,113,300)
--------- ----------- ---------- ------------
Net change resulting from A Share transactions (183,901) $(5,300,418) (55,395) $(1,594,122)
--------- ----------- ---------- ------------
</TABLE>
<TABLE>
RELATIVE VALUE FUND
----------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2000 NOVEMBER 30, 1999
------------------------- --------------------------
B SHARES SHARES DOLLARS SHARES DOLLARS
---------------------------------------------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 130,347 $3,673,418 255,384 $7,217,633
Shares issued to shareholders in payment of distributions declared 1,648 47,297 3,622 99,904
Shares redeemed (54,845) (1,552,904) (66,816) (1,894,117)
--------- ----------- ---------- ------------
Net change resulting from B Share transactions 77,150 $2,167,811 192,190 $5,423,420
--------- ----------- ---------- ------------
</TABLE>
<TABLE>
RELATIVE VALUE FUND
----------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2000 NOVEMBER 30, 1999
------------------------- --------------------------
Y SHARES SHARES DOLLARS SHARES DOLLARS
---------------------------------------------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 2,610,981 $75,098,582 3,775,254 $107,616,900
Shares issued to shareholders in payment of distributions declared 48,345 1,397,295 133,255 3,686,388
Shares redeemed (1,967,326) (56,340,083) (2,609,960) (73,910,142)
----------- ----------- ---------- ------------
Net change resulting from Y Share transactions 692,000 20,155,794 1,298,549 37,393,146
----------- ----------- ---------- ------------
Net change resulting from Fund Share transactions 585,249 $17,023,187 1,435,344 $41,222,444
----------- ----------- ---------- ------------
----------- ----------- ---------- ------------
</TABLE>
<TABLE>
SCIENCE & TECHNOLOGY FUND
-------------------------
PERIOD ENDED
MAY 31, 2000(B)<F68>
-------------------------
A SHARES SHARES DOLLARS
---------------------------------------------------------------- ---------- ------------
<S> <C> <C>
Shares sold 31,133 $568,014
Shares redeemed (424) (7,456)
----------- -----------
Net change resulting from A Share transactions 30,709 $560,558
----------- -----------
</TABLE>
<TABLE>
SCIENCE & TECHNOLOGY FUND
----------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
MAY 31, 2000 NOVEMBER 30, 1999(C)<F69>
------------------------- --------------------------
B SHARES SHARES DOLLARS SHARES DOLLARS
---------------------------------------------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 537,924 $10,457,916 92,691 $1,197,347
Shares redeemed (23,943) (440,749) (26) (374)
----------- ----------- ---------- ------------
Net change resulting from B Share transactions 513,981 $10,017,167 92,665 $1,196,973
----------- ----------- ---------- ------------
</TABLE>
<TABLE>
SCIENCE & TECHNOLOGY FUND
----------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
MAY 31, 2000 NOVEMBER 30, 1999(C)<F69)
------------------------- --------------------------
Y SHARES SHARES DOLLARS SHARES DOLLARS
---------------------------------------------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 2,600,962 $50,939,394 2,872,516 $32,591,175
Shares redeemed (260,440) (5,065,745) (61,025) (732,992)
----------- ----------- ---------- ------------
Net change resulting from Y Share transactions 2,340,522 45,873,649 2,811,491 31,858,183
----------- ----------- ---------- ------------
Net change resulting from Fund Share transactions 2,885,212 $56,451,374 2,904,156 $33,055,156
----------- ----------- ---------- ------------
----------- ----------- ---------- ------------
(b)<F68> For the period fromMarch 31, 2000 (date of initial public investment) to May 31, 2000.
(c)<F69> For the period from August 9, 1999 (date of initial public investment) to November 30, 1999.
</TABLE>
<TABLE>
STELLAR FUND
----------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2000 NOVEMBER 30, 1999
------------------------- --------------------------
A SHARES SHARES DOLLARS SHARES DOLLARS
---------------------------------------------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 39,809 $530,566 182,505 $2,276,850
Shares issued to shareholders in payment of distributions declared 32,828 439,027 423,844 5,167,728
Shares redeemed (365,673) (4,894,737) (930,028) (11,580,535)
----------- ----------- ---------- ------------
Net change resulting from A Share transactions (293,036) $(3,925,144) (323,679) $(4,135,957)
----------- ----------- ---------- ------------
</TABLE>
<TABLE>
STELLAR FUND
-------------------------
PERIOD ENDED
MAY 31, 2000(D)<F70>
-------------------------
B SHARES SHARES DOLLARS
---------------------------------------------------------------- ---------- ------------
<S> <C> <C>
Shares sold 991 $13,369
----------- -----------
Net change resulting from B Share transactions 991 $13,369
----------- -----------
</TABLE>
<TABLE>
STELLAR FUND
----------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2000 NOVEMBER 30, 1999
------------------------- --------------------------
Y SHARES SHARES DOLLARS SHARES DOLLARS
---------------------------------------------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 184,692 $2,486,682 609,006 $7,554,282
Shares issued to shareholders in payment of distributions declared 36,831 492,290 458,380 5,585,289
Shares redeemed (778,012) (10,398,668) (1,704,441) (21,243,690)
----------- ----------- ---------- ------------
Net change resulting from Y Share transactions (556,489) (7,419,696) (637,055) (8,104,119)
----------- ----------- ---------- ------------
Net change resulting from Fund Share transactions (848,534) $(11,331,471) (960,734) $(12,240,076)
----------- ----------- ---------- ------------
----------- ----------- ---------- ------------
(d)<F70> For the period from March 31, 2000 (date of initial public investment) to May 31, 2000.
</TABLE>
<TABLE>
CAPITAL APPRECIATION FUND
----------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2000 NOVEMBER 30, 1999
------------------------- --------------------------
A SHARES SHARES DOLLARS SHARES DOLLARS
---------------------------------------------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 105,130 $1,432,442 2,086,877 $24,201,262
Shares redeemed (839,945) (11,305,194) (1,972,219) (23,137,932)
----------- ----------- ---------- ------------
Net change resulting from A Share transactions (734,815) $(9,872,752) 114,658 $1,063,330
----------- ----------- ---------- ------------
</TABLE>
<TABLE>
CAPITAL APPRECIATION FUND
-------------------------
PERIOD ENDED
MAY 31, 2000(E)<F71>
-------------------------
B SHARES SHARES DOLLARS
---------------------------------------------------------------- ---------- ------------
<S> <C> <C>
Shares sold 1,201 $16,660
----------- -----------
Net change resulting from B Share transactions 1,201 16,660
----------- ----------- ---------- ------------
Net change resulting from Fund Share transactions (733,614) $(9,856,092) 114,658 $1,063,330
----------- ----------- ---------- ------------
----------- ----------- ---------- ------------
(e)<F71> For the period from March 31, 2000 (date of initial public investment) to May 31, 2000.
</TABLE>
<TABLE>
INTERNATIONAL EQUITY FUND
----------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2000 NOVEMBER 30, 1999
------------------------- --------------------------
A SHARES SHARES SHARES
---------------------------------------------------------------- ------------------------- --------------------------
<S> <C> <C>
Shares sold 1,048,155 1,131,759
Shares issued to shareholders in payment of distributions declared 34,464 93,554
Shares redeemed (243,595) (1,311,311)
--------- -----------
Net change resulting from A Share transactions 839,024 (85,998)
--------- -----------
--------- -----------
</TABLE>
(4) INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A. GENERAL
Certain officers of Firstar Investment Research & Management Company, LLC
(FIRMCO) and Firstar Mutual Fund Services, LLC ("Firstar") serve as officers of
the Trust. FIRMCO and Firstar are related by virtue of each being a subsidiary
of Firstar Corporation.
B. INVESTMENT ADVISORY FEES
FIRMCO serves as the Trust's investment adviser (the "Adviser"). Prior to April
1, 2000, the Funds were managed by Firstar Bank, N.A. As part of an internal
restructuring of the investment advisory function within Firstar Corporation,
the investment management resources of Firstar Bank, N.A. have been consolidated
with those of FIRMCO. 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
-------------------- -----------
Growth Equity Fund 0.75%
Relative Value Fund 0.75%
Science & Technology Fund 0.90%
Stellar Fund 0.95%
Capital Appreciation Fund 0.95%
International Equity Fund 0.75%
C. ADMINISTRATIVE FEES
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.
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 of all the Funds and B
Shares of the Growth Equity Fund and Relative Value Fund may pay to the
distributor of the Funds an amount computed at an annual rate of up to 0.25% of
the average daily net assets to finance any activity which is principally
intended to result in the sale of shares subject to the Plan. B Shares of the
Stellar Fund, Science & Technology Fund and Capital Appreciation Fund may pay at
an annual rate of up to 0.75% of the average daily net assets. Edgewood
Services, Inc. serves as the distributor of the Funds.
Currently, all of the Funds except the International Equity Fund are accruing
and paying 12b-1 fees.
E. SHAREHOLDER SERVICES FEES
Under the terms of the Shareholder Services Agreement with Firstar Bank, N.A.,
each Fund may pay Firstar Bank, N.A. up to 0.25% of average daily net assets of
the Funds for the period. As of February 1, 2000, the Shareholder Servicing fee
was changed to 0.16% of average daily net assets. The fee paid to Firstar Bank,
N.A. is used to finance certain services for shareholders and to maintain
shareholder accounts. Firstar Bank, N.A. can modify or terminate this limitation
at any time at its sole discretion.
F. TRANSFER AND DIVIDEND DISBURSING AGENT FEES
Firstar serves as transfer and dividend disbursing agent for the Funds. The fee
paid to Firstar is based on the size, type, and number of accounts and
transactions made by shareholders.
G. PORTFOLIO ACCOUNTING FEES
Firstar is 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.
H. CUSTODIAN FEES
Firstar 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 daily net assets for the period,
plus out-of-pocket expenses.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended May 31, 2000, were as follows:
<TABLE>
PURCHASES SALES
U.S. GOVERNMENT OTHER U.S. GOVERNMENT OTHER
--------------- ----- --------------- -----
<S> <C> <C> <C> <C>
Growth Equity Fund -- $50,105,541 -- $27,927,520
Relative Value Fund -- 23,675,507 -- 21,850,059
Science & Technology Fund -- 77,780,324 -- 24,706,976
Stellar Fund $705,383 3,179,708 $3,896,773 16,645,614
Capital Appreciation Fund -- 880,152 -- 11,805,830
International Equity Fund -- 13,594,272 -- 4,556,132
</TABLE>
<TABLE>
GROSS GROSS
COST OF NET UNREALIZED UNREALIZED UNREALIZED
INVESTMENTS APPRECIATION APPRECIATION DEPRECIATION
FOR FEDERAL FOR FEDERAL FOR FEDERAL FOR FEDERAL
TAX PURPOSES TAX PURPOSES TAX PURPOSES TAX PURPOSES
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Growth Equity Fund $188,440,646 $135,627,018 $144,528,109 $8,901,091
Relative Value Fund 325,469,469 233,615,034 255,592,911 21,977,877
Science & Technology Fund 87,256,049 14,423,207 25,296,709 10,873,502
Stellar Fund 61,156,594 20,395,341 21,467,339 1,071,998
Capital Appreciation Fund 63,262,456 21,339,268 27,612,180 6,272,912
International Equity Fund 62,521,289 9,713,046 11,459,845 1,746,799
</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 May 31, 2000, the diversification of industries was as follows:
PERCENT OF
INDUSTRY NET ASSETS
-------- ----------
Banking & Financial Services 35.2%
Capital Goods 1.3
Consumer Cyclicals 6.6
Consumer Non-Durables 13.9
Energy 7.7
Manufacturing 2.3
Miscellaneous 2.9
Services 2.6
Technology 19.6
Utilities 7.9
------
100.0%
------
------
Trustees Officers
Thomas L. Conlan Jr. Bruce R. Laning
PRESIDENT
Dr. Alfred Gottschalk Joseph C. Neuberger
VICE PRESIDENT
Dr. Robert J. Hill Cheryl L. King
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. Investment in mutual funds involves investment
risks, including the possible loss of principal. Although money market funds
seek to maintain a stable net asset value of $1.00 per share, there is no
assurance that they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Trust's prospectus which contains facts
concerning its objectives and policies, management fees, expenses and other
information.
Edgewood Services, Inc. is the distributor of the Firstar Stellar Funds.
FIRSTAR STELLAR FUNDS ARE AVAILABLE THROUGH:
o THE FIRSTAR FUNDS CENTER,
o FINANCIAL CONSULTANTS WHO ARE EITHER REGISTERED
REPRESENTATIVES OF FIRSTAR INVESTMENT SERVICES, INC.,
A REGISTERED BROKER/DEALER, NASD AND SIPC MEMBER,
OR REGISTERED REPRESENTATIVES OF MDS SECURITIES,
A DIVISION OF CONSECO FINANCIAL SERVICES, INC.,
A REGISTERED BROKER/DEALER, NASD AND SIPC MEMBER,
o AND THROUGH SELECTED SHAREHOLDER ORGANIZATIONS.
This report is authorized for distribution only when preceded or
accompanied by a current prospectus.
FOR ACCOUNT BALANCE AND INVESTOR SERVICES INFORMATION
1-800-677-FUND
1-414-287-3808
FIRSTAR STELLAR FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 701
MILWAUKEE, WI 53201-0701
WWW.FIRSTARSTELLARFUNDS.COM
(FIRSTAR STELLAR FUNDS LOGO)
FORM # SFSFSEM-00
