THE STARBURST QUALITY INCOME FUND
(A Portfolio of The Starburst Funds II)
Supplement to Prospectus dated April 30, 1994
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 projected average net assets)
Management Fee (after waiver)(1) 0.00%
12b-1 Fee (after waiver) (2) 0.00%
Total Other Expenses (after waiver) (3) 0.86%
Total Fund Operating Expenses(4) 0.86%
(1) The estimated management fee has been reduced to reflect the
anticipated 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) The Fund is not currently paying or accruing 12b-1 fees.
The Fund will not accrue or pay 12b-1 fees until a separate
class of shares has been created for certain institutional
investors. The Fund can pay up to 0.25% as a 12b-1 fee to
the distributor.
(3) Total other expenses are estimated to be 1.14% absent the
anticipated voluntary waiver by the administrator and
custodian. The administrator and custodian can terminate
these voluntary waivers at any time at their sole
discretion.
(4) Total Fund Operating Expenses are estimated to be 2.14%
absent the voluntary waivers by the investment adviser,
distributor, administrator, and custodian.
Expenses in this table are estimated based on expenses expected to be
incurred during
the fiscal year ending October 31, 1994. During the course of this period,
expenses
may be more or less than the average amount shown.
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
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 ..... $ 34 $ 52
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. Replace the table in the section "What Shares Cost", on page 13 of the
prospectus, 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%
3. Delete the paragraph that immediately follows the above table on page
13 of the prospectus.
4. Replace the last two sentences of the first paragraph of the section
entitled "Sales Charge Reallowance", on page 13 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."
5. Delete the last paragraph of the section entitled "Sales Charge
Reallowance" which begins on page 13 and continues on page 14 of the
prospectus.
6. Replace the second paragraph of the section entitled "Quantity
Discounts and Accumulated Purchases", on page 14, 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 14, 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
G00123-02 (8/94)
