THE STARBURST GOVERNMENT MONEY MARKET FUND
(A PORTFOLIO OF THE STARBURST FUNDS)
Investment Shares
Supplement to Prospectus dated December 31, 1993
1. Replace footnote (1) of the Summary of Fund Expenses on page 1 of the
prospectus with the following:
"(1) Under the Fund's Rule 12b-1 Distribution Plan, the
Fund can pay the distributor up to 0.25% as a 12b-1 fee.
The 12b-1 fee has been reduced to reflect the voluntary
waiver of compensation by the distributor. The
distributor can terminate this voluntary waiver at any
time at its sole discretion."
2. Replace footnote (2) of the "Summary of Fund Expenses" on page 1 of
the prospectus with the following:
"(2) The Annual Investment Shares Operating Expenses were
0.82% for the fiscal year ended October 31, 1993. The
Annual Investment Shares Operating Expenses in the table
above are based on expenses expected during the fiscal
year ending October 31, 1994. Total Investment Shares
Operating Expenses are estimated to be 0.94% absent the
voluntary waiver by the distributor."
3. Replace the first paragraph of the section entitled "Distribution
Plan" on page 6 of the prospectus with the following:
"Distribution Plan. Pursuant to the provisions of a
distribution plan adopted in accordance with the
Investment Company Act Rule 12b-1 (the "Plan"), the Fund
will pay to Federated Securities Corp. an amount computed
at an annual rate of .25 of 1% of the average daily net
asset value of Shares to finance any activity which is
principally intended to result in the sale of Shares
subject to the Plan."
August 17, 1994
FEDERATED SECURITIES CORP.
Distributor
G00427-01 (8/94)
THE STARBURST MONEY MARKET FUND
(A PORTFOLIO OF THE STARBURST FUNDS)
Investment Shares
Supplement to Prospectus dated December 31, 1993
1. Replace footnote (1) of the "Summary of Fund Expenses" on page 1 of
the prospectus with the following:
"(1) Under the Fund's Rule 12b-1 Distribution Plan, the
Fund can pay the distributor up to 0.25% as a 12b-1 fee.
The 12b-1 fee was reduced to reflect the waiver of
compensation by the distributor. The distributor can
terminate this voluntary waiver at any time at its sole
discretion."
2. Replace footnote (2) of the "Summary of Fund Expenses" on page 1 of
the prospectus with the following:
"(2) The Annual Investment Shares Operating Expenses were
0.86% for the fiscal year ended October 31, 1993. The
Annual Investment Shares Operating Expenses in the table
above are based on expenses expected during the fiscal
year ending October 31, 1994. Total Investment Shares
Operating Expenses are estimated to be 1.01% absent the
voluntary waiver by the distributor."
3. Replace the first paragraph of the section entitled "Distribution
Plan" on page 9 of the prospectus with the following:
"Distribution Plan. Pursuant to the provisions of a
distribution plan adopted in accordance with the
Investment Company Act Rule 12b-1 (the "Plan"), the Fund
will pay to Federated Securities Corp. an amount computed
at an annual rate of .25 of 1% of the average daily net
asset value of Shares to finance any activity which is
principally intended to result in the sale of Shares
subject to the Plan."
August 17, 1994
FEDERATED SECURITIES CORP.
Distributor
G00426-01 (8/94)
THE STARBURST GOVERNMENT INCOME FUND
(A PORTFOLIO OF THE STARBURST FUNDS)
Supplement to Prospectus dated December 31, 1993
1. Replace the "Summary of Fund Expenses" found on page 1 of the
prospectus with the following:
Summary of Fund Expenses
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)
2.50%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable) None
Redemption Fees (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
Annual Fund Operating Expenses
(As a percentage of average net assets)
Management Fees (after waiver)(1) 0.45%
12b-1 Fee 0.25%
Total Other Expenses 0.50%
Total Fund Operating Expenses 1.20%
(1)The management fee has been reduced to reflect the voluntary waiver
of the management fee. The adviser
can terminate this voluntary waiver at any time at its sole
discretion. The maximum management fee is 0.75%.
The Annual Fund Operating Expenses were 1.11% for the fiscal year ended
October 31, 1993. The Annual Fund Operating Expenses in the table above
are based on expenses expected to be incurred during the fiscal year
ending October 31, 1994. Total operating expenses are estimated to be
1.50% absent the voluntary waiver by the investment adviser.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs
and expenses, see "The Starburst Funds Information" and "Investing in the
Fund." Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.
EXAMPLE 1 year 3 years 5 years 10 years
You would pay the following
expenses on a $1,000
investment assuming (1) 5%
annual return and
(2) redemption at the end of
each time period. As noted in
the table above, the Fund
charges no redemption fee ..... $ 37 $ 62 $ 89 $ 167
The above example should not be considered a representation of past or future
expenses. Actual expenses may
be greater or less than those shown.
2. Add the following as the fourth paragraph of the section entitled
"Adviser's Background" which begins on page 8 of the prospectus:
"As part of its regular banking operations, Compass Bank
may make loans to public companies. Thus, it may be
possible, from time to time, for the Fund to hold or
acquire the securities of issuers which are also lending
clients of Compass Bank. The lending relationship will
not be a factor in the selection of securities."
3. Replace the table in the section "What Shares Cost", which begins on
page 11 and continues on page 12, with the following:
Sales Charge Sales Charge
as a as a
Percentage of Percentage of
Public Offering Net Amount
Amount of Transaction Price Invested
Less than $500,000 2.50% 2.56%
$500,000 but less
than $750,000 2.00% 2.04%
$750,000 but less
than $1 million 1.00% 1.01%
$1 million but less
than $2 million 0.25% 0.25%
$2 million or more 0.00% 0.00%
4. Delete the paragraph that immediately precedes the subsection entitled
"Purchases at Net Asset Value" on page 12 of the prospectus.
5. Replace the last two sentences of the first paragraph of the section
entitled "Sales Charge Reallowance", on page 12 of the prospectus,
with the following:
"However, the distributor will periodically, uniformly
offer to pay to dealers additional amounts in the form of
cash or promotional incentives, such as reimbursement of
certain expenses of qualified employees and their spouses
to attend informational meetings about the Fund or other
special events at recreational-type facilities, or items
of material value. Such payments, all or a portion of
which may be paid from the sales charge the distributor
normally retains or any other source available to it, will
be predicated upon the amount of the shares of the Fund
that are sold by the dealer."
6. Replace the second paragraph of the section entitled "Quantity
Discounts and Accumulated Purchases", on page 13, with the following:
"If an additional purchase of Fund shares is made, the
Fund will consider the previous purchases still invested
in the Fund. For example, if a shareholder already owns
shares having a current value at the public offering price
of $490,000 and purchases $10,000 more at the public
offering price, the sales charge on the additional
purchase according to the schedule now in effect would be
2.00%, not 2.50%."
7. Replace the first two paragraphs of the section entitled "Letter of
Intent", on page 13, with the following:
"Letter of Intent. If a shareholder intends to purchase
at least $500,000 of Fund shares over the next 13 months,
the sales charge may be reduced by signing a letter of
intent to that effect. This letter of intent includes a
provision for a sales charge adjustment depending on the
amount actually purchased within the 13-month period and a
provision for the Fund's custodian to hold 2.50% of the
total amount intended to be purchased in escrow (in shares
of the Fund) until such purchase is completed.
The 2.50% held in escrow will be applied to the
shareholder's account at the end of the 13-month period
unless the amount specified in the letter of intent is not
purchased. In this event, an appropriate number of
escrowed shares may be redeemed in order to realize the
difference in the sales charge."
8. Add the following sentence to the section entitled "Accounts with Low
Balances", on page 17:
"This requirement does not apply, however, if the balance
falls below $1,000 because of changes in the Fund's net
asset value."
August 17, 1994
FEDERATED SECURITIES CORP.
Distributor
G00124-01 (8/94)
THE STARBURST MUNICIPAL INCOME FUND
(A PORTFOLIO OF THE STARBURST FUNDS)
Supplement to Prospectus dated December 31, 1993
1. Replace the "Summary of Fund Expenses" found on page 1 of the
prospectus with the following:
Summary of Fund Expenses
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)
2.50%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable) None
Redemption Fees (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
Annual Fund Operating Expenses
(As a percentage of average net assets)
Management Fees (after waiver)(1) 0.00%
12b-1 Fee (after waiver) (2) 0.15%
Total Other Expenses (after waiver) (3) 0.64%
Total Fund Operating Expenses 0.79%
(1)The management fee has been reduced to reflect the voluntary waiver of the
management fee. The adviser
can terminate this voluntary waiver at any time at its sole
discretion. The maximum management fee is 0.75%.
(2)Under the Fund's Rule 12b-1 Distribution Plan, the Fund can pay the
distributor up to 0.25% as a 12b-1
fee. The 12b-1 fee has been reduced to reflect the voluntary waiver of
compensation by the distributor. The distributor can terminate this
voluntary waiver at any time at its sole discretion.
(3)The custody fee has been reduced to reflect the voluntary waiver by the
custodian. The custodian can
terminate this voluntary waiver at any time at its sole discretion.
Other operating expenses are estimated to be 0.69% absent the voluntary
waiver by the custodian.
The Annual Fund Operating Expenses were 0.52% for the fiscal year ended
October 31, 1993. The Annual Fund Operating Expenses in the table above
are based on expenses expected to be incurred during the fiscal year
ending October 31, 1994. Total operating expenses are estimated to be
1.69% absent the voluntary waiver by the investment adviser,
distributor, and custodian.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs
and expenses, see "The Starburst Funds Information" and "Investing in the
Fund." Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.
EXAMPLE 1 year 3 years 5 years 10 years
You would pay the following
expenses on a $1,000
investment assuming (1) 5%
annual return and
(2) redemption at the end
of each time period. As
noted in
the table above, the Fund
charges no redemption fee ..... $ 33 $ 50 $ 68 $ 120
The above example should not be considered a representation of past or
future expenses. Actual expenses may
be greater or less than those shown.
2. Add the following as the fourth paragraph of the section entitled
"Adviser's Background" which begins on page 10 of the prospectus:
"As part of its regular banking operations, Compass Bank
may make loans to public companies. Thus, it may be
possible, from time to time, for the Fund to hold or
acquire the securities of issuers which are also lending
clients of Compass Bank. The lending relationship will
not be a factor in the selection of securities."
3. Replace the table in the section "What Shares Cost", which begins on
page 13 and continues on page 14, with the following:
Sales Charge Sales Charge
as a as a
Percentage of Percentage of
Public Offering Net Amount
Amount of Transaction Price Invested
Less than $500,000 2.50% 2.56%
$500,000 but less
than $750,000 2.00% 2.04%
$750,000 but less
than $1 million 1.00% 1.01%
$1 million but less
than $2 million 0.25% 0.25%
$2 million or more 0.00% 0.00%
4. Delete the paragraph that immediately precedes the subsection entitled
"Purchases at Net Asset Value" on page 14 of the prospectus.
5. Replace the last two sentences of the first paragraph of the section
entitled "Sales Charge Reallowance", on page 14 of the prospectus,
with the following:
"However, the distributor will periodically, uniformly
offer to pay to dealers additional amounts in the form of
cash or promotional incentives, such as reimbursement of
certain expenses of qualified employees and their spouses
to attend informational meetings about the Fund or other
special events at recreational-type facilities, or items
of material value. Such payments, all or a portion of
which may be paid from the sales charge the distributor
normally retains or any other source available to it, will
be predicated upon the amount of the shares of the Fund
that are sold by the dealer."
6. Replace the second paragraph of the section entitled "Quantity
Discounts and Accumulated Purchases", on page 15, with the following:
"If an additional purchase of Fund shares is made, the
Fund will consider the previous purchases still invested
in the Fund. For example, if a shareholder already owns
shares having a current value at the public offering price
of $490,000 and purchases $10,000 more at the public
offering price, the sales charge on the additional
purchase according to the schedule now in effect would be
2.00%, not 2.50%."
7. Replace the first two paragraphs of the section entitled "Letter of
Intent", on page 15, with the following:
"Letter of Intent. If a shareholder intends to purchase
at least $500,000 of Fund shares over the next 13 months,
the sales charge may be reduced by signing a letter of
intent to that effect. This letter of intent includes a
provision for a sales charge adjustment depending on the
amount actually purchased within the 13-month period and a
provision for the Fund's custodian to hold 2.50% of the
total amount intended to be purchased in escrow (in shares
of the Fund) until such purchase is completed.
The 2.50% held in escrow will be applied to the
shareholder's account at the end of the 13-month period
unless the amount specified in the letter of intent is not
purchased. In this event, an appropriate number of
escrowed shares may be redeemed in order to realize the
difference in the sales charge."
August 17, 1994
FEDERATED SECURITIES CORP.
Distributor
G00124-01 (8/94)
THE STARBURST MUNICIPAL INCOME FUND
(A PORTFOLIO OF THE STARBURST FUNDS)
Supplement to Statement of Additional Information dated December 31, 1993
1. Replace the final sentence of the section entitled "Restricted and
Illiquid Securities" on page 2 of the
Statement of Additional Information with the following:
"However, the Fund will limit investments in illiquid
securities, including certain restricted securities not
determined by the Trustees to be liquid, non-negotiable time
deposits, and repurchase agreements providing for settlement in
more than seven days after notice, to 15% of its net assets."
August 17, 1994
FEDERATED SECURITIES CORP.
Distributor
G00124-01(8/94)
