UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933
Pre-Effective Amendment No. 2 X
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 2 X
(Check appropriate box or boxes.)
The Staar System Trust
Exact Name of Registrant as Specified in Charter)
604 McKnight Park Drive, Pittsburgh, PA 15237
(Address of Principal Executive Offices) Zip Code)
Registrant's Telephone Number(including Area Code)(412) 367-9076
J. Andre Weisbrod, 604 McKnight Park Drive, Pittsburgh, PA, 15237
(Name and Address of Agent for Services)
Copies to Alan Z. Lefkowitz, Esquire, Kabala & Geeseman, 200
First Avenue, Pittsburgh, PA 15222
Approximate Date of Proposed Public Offering As soon as possible
after the Registration Statement becomes effective.
It is proposed that this filing will become effective (check
appropriate box)
immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
on ________________ pursuant to paragraph (a) of Rule
485
As soon as possible after the effective date of the Registration under the
Securities Act of 1933
<TABLE>
<CAPTION>
Calculation of Registration Fee under the Securities Act of
1933
Title of
Securities
Being
Registered
Amount
Being
Registered
Proposed
Maximum
Offering
Price Per
Unit
Proposed
Maximum
Aggregate
Offering
Price
Amount
of
Registrati
on Fee
<S>
Shares of
Beneficial
Interest
<C>
Indefinite*
<C>
$10.40
<C>
<C>
$500
</TABLE>
Registrant hereby elects to register an indefinite number of
shares under the Securities Act of 1933 in accordance with the
provisions of Rule 24f-2 under the Investment Company Act of 1940
[17 CFR 270.24f-2].1
Delaying Amendment
The registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date
until the registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission acting
pursuant to said Section 8(a) may determine.
<PAGE>
THE STAAR SYSTEM TRUST
CROSS REFERENCE SHEET
PURSUANT TO RULE 481(a)
UNDER THE SECURITIES ACT OF 1933
Form N-1A
<TABLE>
<CAPTION>
Item Registration Statement Prospectus
No. Caption Caption
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis (a)
3. Condensed Financial Information (a)
4. General Description of Registrant Cover Page, The
Funds, the Advisor;
General Investment
Objectives and
Policies
5. Management of Fund Management of
the Funds
5A. Management Discussion of (a)
Funds Performance
6. Capital Stock and (a)
Other Securities
7. Purchase of Securities How to Buy
Shares
being offered
8. Redemption or Repurchase How to Redeem
Shares
9. Pending Legal Proceedings (a)
</TABLE>
<TABLE>
<CAPTION>
Additional Information Statement of Additional Information
Caption
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information
and History General Information
and History
13. Investment Objectives Investment Objective
and Policies and Policies, Investment
Restrictions
14. Management of the Fund Board of Trustees
15. Control Persons and Control Persons and
Principal Holders of Principal Holders of
Securities Securities
16. Investment Advisory and Investment Advisory and
Other Services other services
17. Brokerage Allocation and other Brokerage Allocation and
other Practices other Practices
18. Capital Stock and (a)
19. Purchase Redemption and Pricing Purchase, redemption and
of shares pricing of Shares
20. Tax Status Dividends,Capital
Gains, Distributions &
Taxes
21. Underwriter (a)
22. Calculations of Performance Data Performance Data
23. Financial Statements Financial Statements
</TABLE>
(a) Not Applicable<PAGE>
<PAGE>
PROSPECTUS
May 5, 1997
THE STAAR SYSTEM TRUST
604 McKnight Park Dr.
Pittsburgh, PA 15237
412-367-9076
New Account Information:
1-800-33ASSET P.I.N.3370
Shareholder Account Services:
1-800-33ASSET P.I.N.3371
Pittsburgh Local: 367-9076
<TABLE>
<CAPTION>
Contents Page
<S> <C>
Expenses. . . . . . . . . . . . . . . ........ 7
Fund Information. . . . . . . . . . . . .... . 8
Risks . . . . . . . . . . . . . . . . . . ... 12
Management. . . . . . . . . . . . . . . . ... 15
How to Purchase Shares. . . . . . . . . ..... 16
How to Sell Shares. . . . . . . . . . . . ... 19
How to Exchange Shares. . . . . . . . . ..... 19
Dividends, Capital Gains,
Distributions & Taxes. . . . . . . . . . . 22
Glossary. . . . . . . . . . . . . . . . . .
</TABLE>
A "Statement of Additional Information" about the Trust,
dated 5/5/97, has been filed with the Securities and Exchange
Commission and has been incorporated by reference into
this prospectus. A copy may be obtained without charge by
writing to the Trust or by calling the New Account Information
number.
A glossary of terms used in this prospectus is found on Page __.
This prospectus contains concise information important for
a prospective investor to know before investing. This
prospectus should be read thoroughly and retained for future
reference.
The STAAR SYSTEM Trust (SST), a Pennsylvania business trust,
is an open-end non-diversified management investment company
which consists of six separate series portfolios. Each is
referred to in this prospectus as a "Fund". Together, they are
referred to as the "Funds".
The Funds are organized in such manner that each Fund
corresponds to a standard asset allocation category, with the
exception of the AltCat Fund which is a flexibly-managed fund
that may invest in assets not included in the other Funds. The
Funds are:
The SST Intermediate Bond Fund (IBF)
The SST Long-Term Bond Fund (LTBF)
The SST Larger Company Stock Fund (LCSF)
The SST Smaller Company Stock Fund (SCSF)
The SST International Fund (IF)
The SST Alternative Categories Fund (AltCat)
Each Fund is managed separately and has its own investment
objectives and strategies in keeping with the asset allocation
category for which it is named. The Funds are no-load funds. There
are no sales loads or commisssions on the purchase or fees upon
redemption. Each Fund may invest in other open-end funds
(mutual funds) as well as closed-end funds andvindividual securities
subject to the limitations outlined herein.To the extent other
open-end funds are employed, this strategy will result in higher
annual expenses incurred than if you invested directly in those
mutual funds.
Shares of the Funds are not deposits or obligations of or insured
or guaranteed by the U.S. Government, any financial institution,
the Federal Deposit Insurance Corporation or any other agency.
The purchase of Fund shares involve investment risks, including
the possible loss of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
<PAGE>
Trust Expenses
Shareholder Transaction Expenses
<TABLE>
<CAPTION>
IBF
LTBF
LCSF
SCSF
INTF
ACF
<C>
Maximum Sales Load
Imposed on
Purchases
None on any of the Funds
Sales Load Imposed
on Reinvested
Dividends
None on any of the funds
Deferred Sales Load
None on any of the Funds
Exchange Fee
None on any of the funds
Wire Redemption Processing Fees
<C>
$10
<C>
$10
<C>
$10
<C>
$10
<C>
$10
<C>
$10
Other Redemption Fees
None on any of the funds
</TABLE>
ANNUAL FUND OPERATING EXPENSES*
(As a percentage of average net assets)
<TABLE>
<CAPTION>
IBF LTBF LCSF SCSF INTF ACF
<S> <C> <C> <C> <C> <C> <C>
Management Fees* .63% .72% .90% .90% .90% 1.20%
(Maximum)
12B-1 Fees (Maximum) None
Other Expenses* .09% .09% .09% .09% .09% .09%
Total Fund 72% .79% .99% .99% .99% 1.29%
Operating Expenses
</TABLE>
Example
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return, (2) Redemption at the end of
each time period and (3) Maximum Management Fee.)
<TABLE>
<CAPTION>
IBF LTBF LCSF SCSF INTF ACF
<S> <C> <C> <C> <C> <C> < c>
One Year $ 7 $ 8 $ 10 $ 10 $ 10 $ 14
Three Years $21 $ 24 $ 33 $ 33 $ 33 $ 43
</TABLE>
The purpose of the above table is to assist the investor in
understanding the various costs and expenses an investor
in the funds would bear directly or indirectly.
*Management fees include services in addition to investment
advisory services. The Advisor may also provide, according to
the Advisory Agreement, directly or through sub-contractors
transfer agency, custodial services, accounting, pricing, legal,
general administration, marketing and other services which are
included in the advisory fee. Since these funds are newly
registered, the expenses outlined are estimates. The management
fees listed are maximums agreed to by the adviser and could be
less than those stated. Management fees do not include brokerage
fees, taxes or direct fees and expenses of the trustees, except
as provided in the Advisory Agreement. Nor do they include
expenses of any mutual funds owned by the trust funds.(See
"Risks - Investment Company Risks") Other expenses include
direct fees and expenses of the trustees.
<PAGE>
The Funds
STAAR SYSTEM Trust is a Pennsylvania business trust formed on
02/28/96. It is registered as an open-end, non-diversified, management
investment company. Each Fund in the Trust's series of Funds will be
treated as a non-diversified investment company under the Investment
Company Act of 1940. Mutual funds in which any series Fund of the
STAAR SYSTEM Trust may invest may themselves be diversified
investment companies.(See "Risks - Non-Diversified Fund Risks".
The series Funds within the trust intend to qualify as management
investment companies for purposes of Subchapter M of the Internal
Revenue Code and expect to be treated as a regulated investment company
for income tax purposes. The funds will be able to invest in shares of
other open-end and closed-end mutual funds as well as in individual
securities.
The Trust consists of six portfolios, each known as separate Fund and
managed separately from the other Funds. Together they are referred to as
the Funds. Investment in any of the Funds entails various risks, and there
can be no assurance that the objectives of the Funds can be attained (see
Risks, Page 5).
The Fund names and abbreviations are as follows:
The SST Intermediate Bond Fund (IBF)
The SST Long-Term Bond Fund (LTBF)
The SST Larger Company Stock Fund (LCSF)
The SST Smaller Company Stock Fund (SCSF)
The SST International Fund (INTF)
The SST Alternative Categories Fund (AltCat
or ACF)
The Advisor, STAAR SYSTEM Financial Services, Inc, serves as
the Trust's overall investment advisor pursuant to a Master Investment
Advisory Agreement (the "Advisory Agreement").
General Investment Objectives & Policies
Each Fund has its own objectives, policies and strategies designed to meet
different investor goals. The funds may invest in a variety of securities to
achieve their objectives, including shares of other open-end and
closed-end mutual funds as well as in individual securities. A Fund may
invest up to 25% of its assets in any one mutual fund and up to 15% of its
assets in any one individual security, such as a stock or bond, except for
individual money market instruments (such as U.S. Treasury securities
having maturities of less than 52 weeks), in which the
trustees may invest with no percentage restriction. The IBF and LTBF
Funds, however, may hold up to 25% of their value in a single U.S.
Treasury Note or Bond. The funds may invest in money market mutual
funds, short-term U.S. Government Securities or other short-term
instruments when it is considered prudent by the trustees and advisors to
do so either for liquidity or for risk management purposes. These types of
holdings will be referred to
as "cash" positions in this prospectus. While there are no
restrictions on cash positions within the Funds, the general
policy is to have no more than 35% of a Fund's assets invested in
cash positions.
In general, the non-cash holdings of the Funds will be selected so as to
have a high correlation to the asset class for which they are named. This
will allow the investor to better utilize asset allocation as a planning and
risk-management tool.
In pursuing the objectives of each Fund, the trustees will seek
diversification and may use a multiple manager approach including use of
open-end and closed-end mutual funds, outside private managers or inside
management. No more than 25% of any Fund may be placed with any
single outside manager. The IBF, LTBF and ACF funds may be fully
managed in-house.
Managers, may, from time to time, employ derivatives in their
investment strategies. However, such holdings should represent a
minority (generally not in excess of 5%) of any manager's holdings, and if
any strategies employed are deemed to add undue risk to a Fund, the
Trustees may remove assets from such managers. Managers may also
invest in illiquid securities, but such securities may not make up more than
15% of the total assets of any Fund.
Specific Fund Objectives
The IBF's objective is to provide current income with reasonable
concern for safety of principal by investing primarily in U.S. Government
obligations and fixed rate corporate debt instruments of between one and
ten years maturity. Growth of capital is secondary. The Corporate debt
obligations will generally be investment grade bonds. It must invest at
least 65% of its assets in debt instruments with a dollar weighted average
maturity between three (3) to ten (10) years. Under normal circumstances,
the Fund will invest at least 40% of it's assets in debt securities issued,
guaranteed or otherwise backed by the U.S. government, either directly or
indirectly though other mutual funds. Cash positions may be increased or
decreased depending on risk management and liquidity considerations.
The LTBF's objective is to provide current income with reasonable
concern for safety of principal by investing primarily in U.S. Government
obligations and fixed rate corporate debt instruments for the most part of
ten (10) years or greater maturity. The Corporate bonds will generally be
investment grade bonds. Growth of capital is secondary. It must invest at
least 65% of its assets in debt instruments with a dollar weighted average
maturity of greater than ten (10) years. Under normal circumstances, the
Fund will invest at least 0% of it's assets in debt securities issued,
guaranteed or otherwise backed by the U.S. government. Other
investments may consist of corporate bonds, a majority of which will be
investment grade rated bbb or better by Moody's or b2b by Standard &
Poors. Cash positions may be increased or decreased depending on risk
management and liquidity considerations.
The LCSF's objective is to provide long-term growth of capital with
some income by investing primarily (at least 65%) similar to or that could
be found in the S&P500 Index. "Mid-cap" stocks may also be owned.
Any open-end or closed-end funds purchased by the Fund must undergo a
significant evaluation to assure that the objectives, management styles and
holdings of such funds are consistent with the objective of the Fund. Any
private managers employed will be similarly evaluated and must agree to
purchase only securities that have a high correlation to the asset class for
which the Fund is named. Cash positions may be increased or decreased
depending on risk management and liquidity considerations.
The SCSF's objective is to provide long-term growth of capital by
investing primarily (at least 65%) in common stocks of smaller companies
that are similar to or that could be found in the Russell 2000 or S&P 600
Small Company Indexes or funds which primarily invest in such stocks.
"Mid-cap" and"Micro-Cap" stocks may also be owned. Any open-end or
closed-end funds purchased by the Fund must undergo a significant
evaluation to assure that the objectives, management styles and holdings
of such funds are consistent with the objective of the Fund. Any private
managers employed will be similarly evaluated and must agree to purchase
only securities that have a high correlation to the asset class for which the
Fund is named. Cash positions may be increased or decreased depending
on risk management and liquidity considerations.
The INTF's objective is to provide long-term growth of capital by
investing primarily in equity securities in markets outside the United
States. Income is secondary. The Fund will not attempt to correlate with
any one index. However, under normal conditions, the Fund will be
broadly diversified in terms of styles and geography. Atleast 65% of the
Funds assets will be invested in funds holdiong predominately stocks of
companies located outside of the United States or individual stocks of
companies outside of the United States.Managers will be monitored so as
to not unduly expose the Fund to any one country or region. Emerging
markets may be included, but may not make up more than 35% of
the fund. Emerging markets investments have additional risks in that in
certain emerging countries" markets may be affected adversely by political
turbnulence, liquidity of the markets and volatile swings in the prices on
such markets which seem to have no correlation to the inherent calues of
the shares. Occasionally, a global mutual fund that invests a minority of its
assets in the U.S. may be considered if the holdings, objectives and
strategies of such a fund are deemed desirable. Any open-end or
closed-end funds purchased by the Fund must undergo an evaluation to
assure that the objectives, management styles and holdings of such funds
are consistent with the objective of the Fund. Any private managers
employed will be similarly evaluated and must agree to purchase only
securities that have a high correlation to the asset class for which the Fund
is named. Cash positions may be increased or decreased depending on
risk management and liquidity considerations. Cash positions taken by the
trustees will normally be held in U.S. market instruments, though
managers may take cash positions in other than U.S. market instruments.
Managers may also employ various currency risk management techniques.
The ACF's objective is to provide growth of capital by investing in a
wide variety of investments that may or may not be found in the other
funds. Income is secondary, could vary from high to low, and at times
may be non-existent. The Fund may invest in any kind of investment
security allowable under securities law. Under normal conditions, the
majority of holdings will be in assets not found directly or in large amounts
in the holdings of the other Funds. Examples of the types of assets that
may be held in the AltCat Fund: real estate mutual funds and investment
trusts (REITs), precious metals, numismatic
coins, sector funds, foreign currencies, special situation stocks, or other
assets offering timely opportunities. The fund may also hold, from time to
time, assets similar to those held in one of the other funds if that particular
asset class offers a significant opportunity. Because of the flexible and
broad nature of this Fund's objectives, it should be considered aggressive
and of high risk nature. Cash positions may be increased or decreased
depending on risk management and liquidity considerations.
Risks
Like any investment program, an investment in any STAAR SYSTEM
Trust Fund entails a certain amount of risk. Among the risks to which an
investor may be exposed are:
Market Risk - values can fluctuate with and can be affected by the
market.
Investment Risk - principal may be at risk regardless of market
conditions.
Liquidity Risk - principal may not be available, or premature
liquidation could result in loss or penalty.
Opportunity Cost - use of your capital in one
investment precludes its use in another investment or for some
other purpose.
Inflation/deflation Risk - Erodes purchase power and/or value of
assets.
Rate Risk - locking in rates of interest can be adverse if rates
rise prior to maturity. Conversely, falling rates can result in decreased
income if the interest-bearing investments are not locked into long
maturities
Currency & Political Risks - In global markets currency exchange
rates among nations change daily, which can affect the value of a security
in terms of U.S. dollars even if the value is unchanged in the security's
own country. Also, political changes within other nations present a variety
of risks to securities of those nations.
Manager Risks - Mutual fund and private managers usually have
discretion over moneys they invest. Such managers could fail to
effectively achieve investment objectives of their respective funds thus
impacting on the ability of the Funds to achieve their objectives..
Non-Diversified Fund Risk - Non-diversified funds have a risk arising
from too concentrated an investment mix which may be impacted by
events more than their effect on the market as a whole.. The STAAR
SYSTEM Funds are to be invested primarily in diversified mutual funds,
which in themselves, provide a diversification of the underlying securities.
It is unlikely that the funds will be investing in Non-Diversified funds.
Investment Company Risks - Open-End Mutual funds are by law
obligated to redeem shares held by a Fund in an amount limited to 1% of
the outstanding securities of that mutual fund in any period of less than 30
days. Thus, in the unlikely event, that a all of the Funds, when aggregated
hold more than 1% of the outstanding securities of any mutual fund, the
excess will be considered ot readily marketable. The Funds are limited to
holding not more than 15% of their assets in not readily marketable
securities. Investment managers for the underlying mutual funds are
independent and may be purchasing shares of an issuer which are being
sold by another fund in which a Fund invests causing additional
transaction costs. In addition, investing in mutual funds through one of
the SST Funds involves the expenses of both SST and the funds in which
it invests. These expenses may be more than you would pay if you
invested directly in the fund in which the SST Fund invests. You may
also be subject to certain tax results which you may not otherwise have, or
to a greater imposition of tax in any given year than you would have if you
invested directly.
Also, investment companies, in certain circumstances, may redeem
shares in whole or in part, by a distribution in kind from its portfolio.
Consequently, an SST Fund may hold for a time specific securities which
it received from an underlying fund in redemption. Disposition of such
shares may result in a loss or additional expense. The Trustees do not
anticipate such a distribution occurring because they are rare. However, it
is possible
In general, the higher the return desired, the more risk there will be.
Any investment has risks. The Trust can neither eliminate or avoid risks.
Investors should anticipate that there will be times when the value of any
Fund could go down. The Trust considers risks in the selection and
monitoring of managers and securities as well as in the adjustment of cash
positions. Though denominated a Non-Diversified Fund, each Fund will
include a variety of mutual fund or other securities within the objectives
of each Fund. In addition, a variety of management styles may be used
as appropriate to each Fund. For instance, Funds investing in stocks may
include a mix of growth and value styles.
.
The Trust was founded on February 28, 1996 and has minimal
operating history. There has been a substantial growth in the number of
mutual funds and fund families in the past several years. There are more
funds vying for the investment dollar. There is no assurance that any of
the SST Funds can reach the size necessary to maintain its staff and
shareholder services in the near future.
The Trust's performance is substantially dependent on the performance
of its advisor, STAAR SYSTEM Financial Services, Inc. However, to the
extent that the Trust Funds invest in other open-end investment
companies, which are separately managed, this risk is minimized.
How SST Chooses and Monitors Investments
The trustees have entered into an advisory agreement with STAAR
SYSTEM Financial Services, Inc. (SSFS) to provide a number of services,
including research and recommendations regarding the selection of mutual
funds and individual securities, as well as advice on risk management
strategies. The trustees are responsible for execution of trades and
employment of any private managers. SSFS advice includes:
Mutual Fund Selection
Among the thousands of mutual funds available, the difference between
the performances of the top funds compared to the averages of all funds in
any given category is often significant. (See Table A). SSFS screens
funds and recommends those which it believes have a higher probability of
above aver age performance within their categories over longer periods of
time. Among the factors considered are: correlation to asset allocation
categories, objectives, management style and philosophy, management
tenure, portfolio holdings, annual expense ratios, past performance,
volatility and shareholder services. The primary factor is a relatively high
correlation to the objectives of the respective Fund of the Trust. This
evaluation process is ongoing, and it is anticipated that the selection of
(and allocation to) mutual funds owned by the trust will change
periodically. Of course there is no assurance that the funds selections will
result in the performance reflected in Table A below.
The Funds may invest in mutual funds that are sold with front-end sales
charges (loads) as well as those which are not sold with such charges.
However, the Funds will utilize quantity discount and any other available
programs to avoid or minimize any such charges.
Private Manager Selection
SSFS will evaluate and assist the Trustees in monitoring any private
managers which may be employed. Private managers will be evaluated in
a similar manner to mutual funds, with special attention to private
managers' willingness to correlate security selection according to each
Fund's stated asset allocation class.
Individual Security Selection
SSFS will also advise the Trustees regarding individual securities.
Regarding stocks and bonds, SSFS and the Trustees may use a variety of
industry research and data services, as well as research and
recommendations provided by broker-dealers with which the Funds may
have accounts. Regarding bonds and any fixed-rate guaranteed
instruments, SSFS will provide advice as to selection and maturities.
General Analysis Approach
Elements of both Fundamental and Technical Analysis may be
employed. Fundamental Analysis may include, but is not limited to,
analyzing price-earnings and price-book value ratios, dividend yields,
growth in sales, growth in total return, return on equity, return on capital
and, for debt instruments, credit ratings, maturities, duration, yields to
maturity and volatility. Technical analysis may include, but is not limited
to, analyzing moving averages, chart variations and relative strength.
Regarding mutual funds, analysis may also include analyzing
manager philosophies and tenure, style, cash positions, performance in
different market conditions and allocation of holdings within the funds.
Table A
Average Annualized Total Return Performance
For the Five year Period ending 3/31/1997
of funds existing five years ago
<TABLE>
<CAPTION>
Mutual Fund Type
Average of all funds in
category
Average of Top 35%
of Funds in Category
<S>
<C>
<C>
Domestic Large
Company Stock
Funds
13.92%
16.35%
Domestic Small
Company Stock
Funds
12.53%
16.47%
Foreign Stock Funds
10.76%
13.62%
</TABLE>
Compiled by STAAR SYSTEM Financial Services, Inc. from data
provided by Morningstar's Principii for Mutual Funds.
Management of The Funds
The Board of Trustees
The Trustees of the Trust are responsible for day-to-day operations.
The trustees determine how the assets of each Fund are to be invested, set
general policies and choose officers. Additional information about the
Trustees and executive officers of the trust may be found in the Trust's
Statement of Additional Information under "Trustees and Officers".
The Advisor
The Advisor to he Trust is STAAR SYSTEM Financial Services, Inc.
(SSFS), principal offices of which are located at 604 McKnight Park Dr.,
Pittsburgh, PA 15237. SSFS provides overall advice regarding the
strategies and make-up of the Funds, including recommendations
regarding specific mutual funds, private managers and individual
securities. SSFS also provides administrative, accounting, customer
service and marketing services to the Trust. In addition to serving as
advisor to the Trust, SSFS provides investment and financial planning
advice on a regular basis to individuals, qualified plans, corporations,
charitable organizations, trusts and estates. The President of SSFS is
J.Andre Weisbrod. Mr. Weisbrod has over 15 years experience in the
financial services industry and is majority owner of SSFS.
The Transfer Agent
The Trust has employed STAAR SYSTEM Financial Services, Inc.
(SSFS), principal offices of which are located at 604 McKnight Park Dr.,
Pittsburgh, PA 15237, to serve as transfer agent, dividend paying agent
and shareholder services agent for the Trust.
The Custodian
The Trust has employed StarBank, the principal offices of which are
located at 425 Walnut Street,.M/L 6118, P.O. Box 1118, Cincinnati, Ohio
45201-1118 to serve as Custodian for the Trust Funds.
Brokerage Allocation
The Trustees may select brokers who execute purchases and sales of
each Fund's securities, may place orders with brokers who provide
brokerage and research services to the Trust and its Advisor, and are
authorized to pay commissions to such brokers in excess of that which
might be obtained with other brokers in recognition of services provided.
The Trustees may also use a broker-dealer that may have a relationship
with officers or employees of the Advisor.
Distribution
SSFS provides certain share distribution services as part of the
Advisory Agreement. The Trust pays no distribution fees other than the
advisory and services fees paid to SSFS.
Net Asset Value
The Net Asset Value (NAV) of a share of each Fund is calculated based
on the 4:00 P.M. closing price of securities on each day that the New York
Stock Exchange is open. The NAV is determined by dividing the total of
each Fund's investments and other assets less any liabilities by the total
number of outstanding shares of each Fund.
The value of mutual funds held by any of the Funds will be that value
provided by such funds according to the methods used by such funds.
Because of possible delays obtaining final pricing information regarding
other mutual funds, the calculation of the NAV of each of the Trust's
Funds will be performed as soon as possible after 4 P.M., but no later than
the opening of the market on the next trading day. The Trust can take no
responsibility for errors by other mutual funds in reporting their net asset
values.
How to Purchase Shares
Shares may be purchased by individuals, retirement plan trustees,
corporations and fiduciaries using a written application form (included
with this prospectus or obtainable from Shareholder Services). Legible
photocopies of the form are acceptable if you desire to open more than one
account. Additional prospectuses may be obtained by writing or calling
STAAR SYSTEM Financial Services, Inc. at the address and telephone
number listed on the cover of this prospectus.
Shares of each fund are purchased at the next offering price after the
properly executed forms and money are received by the Fund or its
Transfer Agent. It should be noted that the Funds must delay pricing until
any mutual funds owned by each Fund are priced. Therefore, should any
of the Funds be listed in newspapers, it is likely that the prices reported in
the newspapers will lag the Funds' actual prices by one day.
The minimum initial investment in the Trust is $25,000. The investment
may be divided among the Funds by dollar amount or percentage
allocation, except that the minimum initial deposit to any single Fund is
$5,000. The $25,000 minimum may be satisfied by multiple accounts held
by the same investor or members of his or her immediate family who reside
with him or her. The minimum subsequent investment to any single Fund is
$500. The investor is responsible for any losses or fees incurred by the
trust or its Advisor or Transfer Agent or Custodian if an order is canceled
because a check does not clear, and such costs may be deducted from your
account.
The Trust reserves the right to waive or reduce the minimum initial
amount for certain investors, including tax-deferred retirement plans.
Purchases received after 2:00p.m. on any trading day may be credited
on the following trading day.
Additional Investments
Additional investments to an existing account may be made by mailing
a check payable to STAAR SYSTEM Trust and specifying the amounts to
be allocated to each Fund. Additional investments will be allocated
among Funds according to the most recent allocation executed if not
instructed otherwise in writing by the shareholder. However, remember
that the minimum deposit to any one Fund is $500. If you do not specify a
Fund, and the amount is too small to allocate according to percentage, the
deposit will be held until instructions can be clarified. To change your
allocation percentages, you must submit an Investment Allocation
Change Form (available from Shareholder Account Services) or indicate a
new allocation on your statement's Additional Investment Form when you
send in your next deposit
How to Sell Shares
Shares may be redeemed as of any day on which the Trust is open for
business. The share price received will be the Net Asset Value next
determined after receipt of a properly executed request for redemption.
Payment is generally mailed within five business days after receipt of the
request. Payment will be mailed to the name and address of record unless
specified otherwise with a letter "signature-guaranteed" by a bank, savings
association, credit union or member firm of a domestic stock exchange or
the National Association of Securities Dealers, Inc. Redemption requests
of $5,000 or more must include a signature guarantee. The minimum
non-automatic withdrawal from any single Fund is $500. If the amount in
the Fund vis less than $500, the Fund account will
be closed.
How to Exchange Shares
A shareholder may exchange shares of a Fund for Shares of another
Fund at Net Asset Value (without a sales charge). Shareholders are
limited to six (6) exchanges among Funds within the Trust per calendar
year. Exchanges are subject to any applicable minimum initial and
subsequent purchase requirements and must be in amounts of $500 or
more to and from any single Fund.
Requests for Exchanges may be made by telephone to the Shareholder
Services line or in writing. If the request is made in valid form and is
received before 3:00 P.M. eastern standard time, the exchange will be
made at the Net Asset Value on the close of that day. Otherwise, the
exchange will be made the next trading day.
Exchanges are allowed only for shares of Funds offered for sale in your
state of residence at the time of the exchange. The Trust may terminate or
modify the Exchange Privilege upon 30 days' prior notice to Shareholders.
The Trust is not responsible for any taxable capital gains which may be
caused by an exchange. Nor is it responsible for any loss of account value
due to an exchange.
Reasonable Procedures to Verify Transaction Instructions
The Trust employs reasonable procedures to verify that transaction
instructions are genuine. First, all exchange or redemption requests must
include personal identification of the caller, the name of the account (as
recorded), the account number and the Social Security Number or Tax I.D.
Number of the account
holder. The request must be made by the account holder or authorized
person(s) for which written proof of authorization is on file. Otherwise, the
transaction request will not be acted upon. Proceeds of redemptions will
be mailed only to the name and address of record unless authorized
differently with a signature-guaranteed letter or on the original application.
Regardless, any redemption request in excess of $5,000 must be made
with a signature-guaranteed letter. The trust is not responsible for any
written transactions which are reasonably considered by Trust or Transfer
Agent employees to be made by an authorized person(s).
Telephone Transactions
Telephone exchange and redemption privileges are automatically
extended to shareholders unless they elect not to receive them. A new
application must be submitted to elect the privileges for an existing
account if the shareholder had previously rejected the privileges.
Telephone exchanges will only be performed if the caller can provide all
four of the following: Name of Account, Account Number, Soc. Security
Number (or Tax I.D. Number) and a P.I.N. Number which will be set at
the time your account is opened. Neither the Trust nor SSFS will be
liable for complying with telephone requests which they reasonably
believe to be genuine, and if they do not, then they may be held liable for
losses due to unauthorized or fraudulent instructions. (See "Reasonable
Procedures" above.)
Telephone redemptions of up to $5,000 may be made, but proceeds will
only be mailed to the name and address of record. Telephone requests
made after 3:00 P.M. will be processed at the net asset value determined
on the next trading day.
Shareholder Services
The following valuable services are offered to help make your
investments work for you as conveniently and effectively as possible:
Assistance for New Shareholders
If you need help filling out forms, or if you have questions regarding
this prospectus or any of the Funds, you may call the New Account
Information number listed on the cover of the prospectus.
Shareholder Account Services "Help" Line
You may call the Shareholder Services Line during normal business
hours (9:00 A.M. to 5:00 P.M, Eastern Time) with questions regarding
your account or telephone exchange requests. This number is listed on the
front page of this prospectus.
Investor Education
From time to time the Trust, through SSFS, plans to provide investors
with valuable educational information regarding investments and financial
planning, at no additional charge.
Account Statements
The Trust will provide consolidated statements of each account (by
name, as registered). Statements will be generated quarterly and
Confirmation Statements will be generated when there are transactions in
your account. An Asset Allocation chart will be included in quarterly
statements.
Automatic Reinvestment
Dividends and Capital Gains are automatically reinvested at no sales
charge unless you specify otherwise on the application or by letter at a
later date.
Automatic Withdrawals
You may elect to have automatic withdrawals taken from any Fund.
Payments will be made to the name and address of record unless specified
otherwise with a letter "signature-guaranteed" by a bank, savings
association, credit union or member firm of a domestic stock exchange or
the National Association of Securities Dealers, Inc. Payments will be
generated on the first business day of the month or quarter if you elect
quarterly distributions.
The minimum monthly or quarterly payment from any Fund is $250
(except for Minimum Distribution Requirements from qualified retirement
plans).
Signatures For Any Written Transactions Must Be Exactly As Written On
Original Application
Signature Guarantee Needed for Certain Transactions
For your protection, certain transaction requests may need to be in
writing and be signature guaranteed by a bank or other eligible guarantor
institution (Guarantees by Notary Publics are not acceptable). Additional
documentation may be needed to determine the authority of any person or
persons requesting redemption of shares held in the name of corporations,
trusts, executors, administrators or other fiduciaries. Requests requiring
signature guarantees include, but are not limited to:
- Requesting payment of any distributions or withdrawals to
anyone but the name and address of record.
- The gifting or transferring of shares to another person.
-Redemption Requests over $5,000
New Application May Be Needed For Certain Changes
A new application may be required for certain changes, including, but
not limited to:
-You wish to register an existing account under a different
name.
-You wish to transfer shares of an existing account to another
person or entity.
-You wish to add telephone redemption to an account.
Dividends, Capital Gains, Distributions & Taxes
Each Trust Fund will distribute substantially all of its taxable net
income to shareholders as required by Subchapter M of the Internal
Revenue Code of 1986, as amended, in order to qualify as a regulated
investment company and avoid a non-deductible excise tax. Therefore, it is
expected that the Funds will not be subject to Federal income tax. A
Fund's net income consists of all income it earns from its investment
activity less expenses, including any ordinary income such as
interest and dividends. A Fund is required to distribute at least 98% of net
earned investment income, 98% of net capital gains received in the twelve
month period preceding October 31, and any undistributed balances from
the preceding year.
It is expected that the Intermediate and Long-term Bond Funds will
distribute dividends on a quarterly basis.(The Trustees may change to a
monthly basis at their discretion.) The other Funds will generally
distribute dividends, if any, on a semi-annual or annual basis. It is
expected that capital gains, if any, will be distributed once or twice a year.
Distribution dates are determined by the Board of Trustees.
Each Fund is treated as a separate entity for federal income tax
purposes. Any dividends and capital gains distributions to shareholders
are ordinarily taxable to the shareholder in the year of distribution.
However, the Trust is permitted under the Tax Reform Act of 1986 to
make distributions up to February 1 that apply to the previous tax year.
Dividend and capital gain distributions are taxable to shareholders whether
they are received in cash or are reinvested in additional shares of a Fund.
They may also be subject to various state and local taxes.
Income generated by another mutual fund which is held in a Fund
portfolio will be distributed to that Fund after deductions for expenses and
will be taxable to Shareholders of the Fund in the same manner as any
other similar income. Mutual funds may realize taxable gains independent
of any decision of the Trust to buy or sell shares of such mutual funds.
Therefore, it is possible that investors in a Trust Fund may have an
increased tax liability in any given year. In general, a Fund will treat
income to you that is attributable to income generated by any
mutual funds held by the Fund as having the same character as reported by
those mutual funds. In other words, a long-term capital gain reported by a
mutual fund owned by a Fund will be passed on to Fund Shareholders as a
long-term capital gain.
In addition to taxable income produced by investments held in a Fund,
an investor may cause a taxable gain (or loss) to be realized by selling
shares or by exchanging shares of one Fund for another. It is
recommended that Shareholders consult appropriate tax advisors
regarding their investments.
Other Provisions
Right of Trust to Repurchase Shares If Account Falls Below Certain
Minimums
The Trust also reserves the right to close any account where total assets
in all Trust Funds fall below $20,000. The Trust reserves the right to close
any single Fund account where the assets in that Fund fall below $2,000.
The Trust will mail a notice of such decision 30 days in advance of taking
any action. You will be informed of your alternatives and given an
opportunity to respond. If the Trust receives no response by the end of the
thirty day period, it may close the specified Fund account or the specified
total Trust account and mail the
proceeds to the name and address of record.
Voting
Shareholders are entitled to one vote per share (with proportional
voting rights for fractional shares), and are able to vote for the election of
Trustees as well as any matters which require a vote of shareholders, either
by law or by the provisions of the Declaration of Trust. The Trust is not
required to hold annual shareholder meetings. See "description of Trust"
in the Statement of Additional Information.
Auditors: Carson & Co., 201 Village Commons, Sewickley, PA 15143
Legal Counsel: Kabala & Geeseman, 200 First Ave., Pittsburgh, PA
15222
<PAGE>
Glossary
<PAGE> 1
12b-1 Fees: Fees paid to Broker-dealers for acquisition and service of
shareholder accounts under regulation 12b-1.
Asset: A security or other item of property.
Asset Allocation: The apportionment of assets and/or asset classes within
a portfolio.
Asset Class: A group of assets having similar characteristics.
Bond: A debt instrument whereby an issuer (usually a government agency
or corporation) borrows money from another entity or individual with a
legal obligation to pay the lender payments of interest over a specific
period of time and pay back the original amount borrowed at the end of the
specified period of time.
Broker-dealers: Brokers engage in the business of buying and selling
securities for others while dealers purchase and sell securities for their
own accounts.
Capital: Wealth in any form employed in or available for the production
of more wealth. (Funk & Wagnall's definition)
Capital Gains: Amount of appreciation (gain) or profit above the original
principal invested. If the asset has not been sold, the gain is considered
"unrealized". When the asset is sold it is considered to be "realized.".
Cash: Monetary instruments able to be liquidated or utilized immediately
without penalty and with little risk to principal. These include checking,
savings, money-market and similar accounts.
Closed-end Fund: A mutual fund which does not add new shares and
which is usually traded like a stock on one of the stock exchanges. (See
Open-end Fund)
Currency: A medium of economic exchange usually called "money".
Currency Risk Management Techniques: Methods employed by managers
to guard against portfolio losses due to changes in currency exchange
rates. These may include, but are not limited to, the purchase and sale of
options and futures contracts as well as direct purchase of currencies.
Employment of such
techniques add to expenses and may add other risk elements to a portfolio.
Custodian: An entity which holds (has custody) of securities for another
with the responsibility of safeguarding those securities..
Debt Instruments: A security in which a party lends capital to another
party in exchange for an agreement by the borrower to make payments at a
rate of interest over a specific period of time and pay back the original
amount borrowed at the end of the specified period of time, or, in the case
of certain securities such as mortgage bonds, principal may be returned
incrementally over the life of the instrument.
Derivatives: An asset which derives its value based on the value of
another asset. Examples include, but are not limited to, options and
futures contracts.
Distributions: Money, shares or units of an asset removed (distributed)
from an account. These may include, but are not limited to, dividends,
interest, capital gains, sales and "in kind" transfers.
<PAGE> 2
Diversification: The division of assets among different assets and types
of assets, usually to minimize risk.
Dividends: A sum of money distributed to a shareholder of a stock or
mutual fund. A dividend is usually a cash distribution from profits.
However, dividends are sometimes paid in the form of additional shares of
the stock or mutual fund.
Duration: The average amount of time it takes a bond to return an
investor's principal investment through a combination of interest and
principal payments. Except for "zero coupon" bonds, which pay no
interest, bond durations are shorter than their maturities.
Emerging Markets: In international investing, refers to countries having
newer, less developed economies and investment markets.
Exchange: 1) Refers to the exchange of shares of one of the Funds for
shares of another. 2) A place where brokers meet to trade, purchase and
sell securities or commodities.
Expense Ratio: A percentage determined by dividing the annual expenses
of a Fund by the average daily assets of the Fund. Foreign Currencies:
Monetary notes or coins issued by governments other than the United
States.
Fund: Refers to money "pooled" from a group of investors and invested
for them by professional managers. Investors each own shares of the fund
proportionate to the amount invested. Each share represents a portion of
all assets held by the Fund. Specifically, the term Fund is often used in this
prospectus in reference to a specific Fund of the Trust. (See Mutual Fund)
Global: The entire world, including the United States. (See International)
Government Obligations: Debt instruments issued by a government.
Growth: An increase in value. Usually does not refer to any gains from
dividends or interest unless re-invested.
Illiquid: Not able to be converted to cash easily, quickly or without
significant penalty. (See Liquidity)
Income: Cash payments from an investment. Usually refers to dividends
and interest.
Individual Securities: A single issuer's security (stock, bond, etc.) as
opposed to a mutual fund share representing ownership of many securities.
Intermediate (Intermediate-term): Generally, periods of time of less than
ten years and more than 52 weeks. (See Long-term and Short-term)
International: Outside the United States. (See Global)
Investment Advisor: A person or company which provides investment
advice. In most cases must be registered with the Securities and Exchange
Commission and specific states as required.
Larger Companies: Generally refers to companies having market
capitalization of $5 billion or more. The LCSF is not limited to companies
in this size range and may include some Mid-Cap stocks.
Liquidity: The ability to convert an asset to cash. (See Illiquid)
<PAGE> 3
Load: A sales charge assessed either at the time of purchase (front-end
load) or upon withdrawal (back-end load) (See Sales Charge)
Long-term: Generally, periods of time of ten years or longer.
(See Intermediate and Short-term)
Management Style: An investment manager's approach to investing,
including general principles and philosophy, selection criteria
and other factors.
Manager: A person or firm which is in the business of managing
investment portfolios.
Maturity: The time when the principal must be repaid on an investment
such as a bond, certificate of deposit or fixed rate annuity.
Maturity Date: The date on which an investment becomes due (matures)
and must be converted to cash by the issuer (redeemed).
Micro-Cap Stocks: Generally stocks of companies having a market
capitalization under $1 billion. The SCSF is not limited to companies in
this size range and may include some Mid Cap Stocks.
Mid-Cap Stocks: Stocks of companies that have a market capitalization in
between Larger Companies and Smaller Companies; i.e. between $1 and
$5 billion. Both the LCSF and SCSF may invest in Mid-Cap stocks.
Money Market: Generally describes debt instruments having maturities of
less than 52 weeks. These include Treasury Bills, Bankers Acceptances
AND REPURCHASE AGREEMENTS.
Money Market Funds: Mutual funds which invest in money market
instruments and are managed in such a manner as to have a stable (though
not guaranteed) net asset value.
Mutual Fund: An entity set up to receive money from a number of
investors who then hold shares of the fund which proportionately represent
all the assets held by the Fund. (See Fund)
Net Asset Value: The value at which a share of a mutual fund may be
redeemed at the end of each trading day. It is determined by dividing the
total of a fund's investments and other assets less any liabilities by the
total number of outstanding shares of the fund. (See Public Offering Price)
Non-qualified Plan: Not eligible for tax- deductible contributions.
Examples include, but are not limited to non-qualified deferred annuities,
deferred compensation agreements and "split dollar" life insurance plans.
(See Qualified Plan )
Numismatic Coins: Coins that have a value in addition to their monetary
denominations because of rarity and/or condition.
Open-end Fund: A mutual fund which has a changing number of shares
allowing an unlimited amount of new shares to be purchased and sold
directly. (See Closed-end Fund)
Operating Expenses: The ongoing expenses of a mutual fund, including,
but not limited to, acquisition costs, accounting, administration, computer
systems, regulatory filings, tax reporting,, personnel, investment
management fees, printing and general overhead.
Performance: Usually refers to total return, net of expenses, of an
investment over a period of time. (See Total Return)
<PAGE> 4
P.I.N.: Personal Identification Number
Portfolio: A list of all the investment assets owned by an individual or
organization.
Precious Metals: Metals considered valuable because of scarcity and/or
economic usefulness and demand.
Principal: The value of an original amount invested (property or capital
owned) apart from any income received.
Prospectus: A document containing information about a prospective
investment.
Public Offering Price: The maximum price, including the maximum sales
charge at which an investor can purchase a share of a mutual fund on any
given day. (See Net Asset Value)
Qualified Plan: A retirement plan that qualifies for special tax status by
the Internal Revenue Service. Generally, such plans allow pre-tax or
tax-deductible contributions plus tax-deferral of all gains and investment
income until withdrawn from the plan. Taxes are due for the year in which
a withdrawal is made. Such plans include, but are not limited to Pension
plans, profit sharing plans, 401(k) plans, 403(b) tax sheltered annuity
plans, SEP plans and IRA plans. (See Non-qualified Plan)
Real Estate Investment Trust (R.E.I.T.): A trust, usually set up as a
closed-end fund, in which real estate is the main asset type. Shares can
usually be bought and sold on a stock exchange in the same manner in
which any individual security is bought and sold.
Redemption: The buying back of a security or the payment of a debt or
obligation.
Retirement Plan: A qualified or non-qualified investment plan held for
retirement purposes. In financial planning, a written plan defining
objectives, investment projections and strategies for reaching a person's
retirement objectives. Risk Management: The practice of identifying risks
and employing reasonable strategies to minimize those risks. Investors
should be aware that there are risks inherent in all investments, and that it
is unreasonably to expect any investment manager to be able to avoid all
risks.
S&P 500 Index: An unmanaged group of 500 stocks selected by the
Standard and Poor's Corporation. The numerical index value is a
representation of the weighted average of the market value of those stocks.
Sales Charge: A fee charged in connection with the purchase or sale of a
mutual fund. This fee is separate from annual expense fees, and may be
assessed either at the time of initial investment (front-end) or a the time of
withdrawal (back-end). Most often these charges are used to cover the costs
associated with account acquisition and set-up, including, but not limited
to, advertising, promotion and compensation to marketing agents
(i.e. broker-dealers or other advisors or solicitors). (See Load)
Sales Load: (See Sales Charge and Load)
Sector Funds: Mutual funds which invest in specific industry or
geographical sectors, either continually or when management believes a
sector or sectors of the market offer greater
<PAGE> 5
opportunity.
Securities: Stocks, bonds, notes and other financial instruments,
investment or profit participation contracts.
Securities and Exchange Commission: The regulatory arm of the U.S.
government charged with oversight and enforcement of the laws and
regulations governing the buying and selling of securities and those
involved in the securities industry. Individual states also have their own
securities commissions.
Shares: A proportional unit of ownership.
Short-term: Generally, periods of time or maturities of less than 52 weeks.
(See Intermediate-term and Long-term)
Smaller Companies: Small Companies generally are companies with a
market capitalization under $1 Billion. The SCSF is not limited to
companies in this size range and may include some Mid-Cap stocks.
Special Situations: A term referring to investment opportunities arising
out of special circumstances, such as a company reorganizing after
bankruptcy or recovering from some other financial situation which has
reduced its value, a company developing an unusual product or technology
or an industry, country or economic conditions which present an unusual
set of conditions for investment.
Stock: The capital of a corporation represented by Shares. The value of a
share of stock is the sum of the perceived market value of the issuer
divided by the total shares outstanding.
Tax-deferred: Taxes are not due until an investment is liquidated or
matures. Examples of assets in which part or all of the total return is
tax-deferred include qualified retirement plans, annuities, cash value life
insurance and most forms of unrealized capital gains.
Tax-exempt: Taxes are not assessed on income generated. Usually refers
to interest paid on specific types of bonds issued by government agencies,
states and municipalities.
Total Return: A measurement of performance of an investment over a
period of time which includes the sum of net capital gains plus income
(dividends, interest or other distributions). Total return is most often
expressed in dollars or as a percentage, either cumulatively (total increase
or decrease over a period of time) or as an average (geometric mean) over
a number of time periods (usually an annual average). Regarding mutual
funds, Total Return usually assumes reinvestment of net capital gains and
dividends.
Transfer Agent: The entity responsible for processing shareholder
transactions, including buying and selling shares and the distribution of
income.
Trust: A legal entity which holds assets for the benefit of another person
or entity.
Value: The intrinsic worth of something, usually expressed in dollars or
the monetary measurement of the country in which the investment is held.
Volatility: The ability of an investment's value to change. A certificate of
deposit which cannot be traded daily has very low volatility whereas a
stock which is traded daily can have a very high degree of volatility.
Copyright 1996, STAAR SYSTEM Financial Services, Inc.
<PAGE>
May 5, 1997
STATEMENT OF ADDITIONAL INFORMATION
THE STAAR SYSTEM TRUST
604 McKnight Park Drive
Pittsburgh, PA 15237
(412) 367-9076
This Statement of Information is not a prospectus. It relates to the
Prospectus of the Staar System Trust (the "Trust") dated May 5, 1997, as
supplemented from time to time.
This Statement of Additional Information should be read in conjunction
with the Prospectus. The Trust's Prospectus can be obtained by writing to
the Trust at the above address or by telephoning the Trust at
1-800-33ASSET, P.I.N. 3370.
Date: May 5, 1997
<PAGE>
<PAGE>
THE STAAR SYSTEM TRUST
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
<TABLE>
<S> <C>
General Information And History 26
Investment Objectives and Policies 26
Management of the Funds 28
Control Persons and Principal Holders
of Securities 28
Investment Advisory and Other Services 28
Brokerage Allocation and Other Practices 30
Purchase, Redemption and Pricing of
Securities Being Offered 30
Tax Status 31
Calculation of Performance Data 31
Other Information 32
Financial Statements 33
GENERAL INFORMATION AND HISTORY
The Registrant, STAAR SYSTEM Trust (SST) was formed on
February 28, 1996 for the purposes of commencing business as an
investment company. It had engaged in no prior business
activities.
INVESTMENT OBJECTIVES AND POLICIES
As described in the prospectus, the Trust consists of six series
Funds, each of which has its own objectives, policies and strategies
designed to meet different investor goals. The information below is
provided as additional information to that already provided in the
prospectus.
Each Fund has adopted certain fundamental investment policies.
These fundamental investment policies cannot be changed unless the
change is approved by (a) 66 2/3% or more of the voting securities present
in person or by proxy at a meeting (if the holders of 50% or more of the
outstanding securities are present in person or by proxy) or (b) more than
50% of the outstanding voting securities of the Fund, whichever is lesser.
The fundamental policies provide, in addition to those listed in the
prospectus, as follows:
(1) No Fund of the Trust issues different classes of securities
or securities having preferences of seniority over other classes.
(2) The Trust will not engage in Short Sales (borrowing stock from
someone else and selling it in anticipation of the price going down, at
which time it is repurchased and returned to the lender). However it is
possible that managers of other open or closed end funds owned by a Trust
Fund may employ short sales.
(3) The Trust will not purchase securities with borrowed money (or
margin). The Trustees will attempt to avoid purchasing shares of any
other mutual funds which utilize margin purchases other than in amounts
less than five (5%) percent of its portfolio. In general, the policy of the
registrant is to avoid debt. It will not borrow money, except where it
would become necessary to allow the Trust to maintain or improve its
day-to-day operations in the interest of Fund shareholders. For that
purpose, the Trust may obtain a line of credit or obtain specific financing
from a bank, other financial institution or individual(s).
(4) The Trust will not act as an underwriter of other issuers, except
to the extent that in selling portfolio securities, it may deemed to be a
statutory underwriter for the purposes of the Securities Act of 1933.
(5) There are no fundamental policies relating to concentration of
investments in a particular industry or group of industries.
(6)The purchase of real estate is permitted in the AltCat (ACF)
Fund. The majority of any real estate holdings, if any, will be in Real
Estate Investment Trust (REITs) and real/ or estate-oriented mutual funds,
thereby preserving a high degree of liquidity that is not possible with other
forms of real estate ownership. However, if a special situation arises
which the Trustee considers to be advantageous to the Fund, a real estate
asset with limited liquidity may be owned as long as it does not exceed
five percent (5%) of the total value of the Fund at the time of purchase. If
other assets decline in value so as to force such an asset to exceed five
percent (5%), the Trustees will attempt to sell the asset if a favorable price
can be obtained. However, if it is not in the best interest of the
shareholders the Trustee may delay such sale until a more favorable time.
The purchase of real estate mortgage loans is permitted in the
Bond Funds (IBF and LTBF) and the AltCat Fund (AFC). Such
mortgages will generally be in government agency backed loans such as
GNMA ("Ginnie Mac") loans. However, a minority of mortgage
securities owned by a Fund may be in non-government agency backed
loans.
(7) Commodities and Precious Metals or securities and contracts
deriving their value from Commodities and Precious Metals may be
purchased only in the AltCat Fund and not in the other Funds.
(8) Trust Funds may not loan cash or portfolio securities to any
person. However, this does not prevent managers of other mutual funds
owned by a fund from making such loans within their portfolios.
(9) The Trust and any managers it employs may use Derivatives,
which are financial instruments which derive their values from the
performance of another security, assets or index. Derivatives include
options and future contracts.
The writing of Put and Call options are permitted by the Trust and
any managers it may employ. However, the use of such options is to
represent a minority of any managers activity, and will be employed in a
conservative manner to protect a profit or offset losses in the event of
projected significant price reductions. The Trustees or a manager
employed by them may purchase a Put, which provides the right to sell a
security to another party at a predetermined price within a period of time.
Similarly a Call option may be purchased which provides the right to
purchase a security at a predetermined price within a period of time. A
Call option may also be sold to another party. Such options will be
"covered", meaning the Fund owns an amount of the underlying
security equal to or greater than the amount of the security represented in
the option. Put options will not be sold because, in the Advisor's opinion,
they expose a Fund to additional risk which The Trustees wish to avoid.
Similarly, options based upon indexes or other assets, such as
commodities, may be purchased to protect a portfolio, but not sold where a
Fund would be required to pay cash to another party based upon a future
price change. Any mutual funds owned by a Fund will be screened to
determine if such mutual funds' policies on options, futures, margin or
other strategies differ greatly from that of the Trust; however, the Trustees
will not be able to control the use of such strategies by mutual funds.
Therefore, at any given time a Fund's risk could be increased to the extent
managers of other mutual funds employ these kinds of strategies in a
manner inconsistent with the Trust's policies.
There are no restrictions regarding portfolio turnover. While the
trust recognizes that a higher portfolio turnover will, in most cases,
increase expenses, there are times when a high turnover may be justified,
either to protect a portfolio against certain kinds of risks or to take
advantage of opportunities presented by market conditions. In general, the
Trust's objective is to keep expenses, and, therefore, turnover, as low as
possible. This objective will be considered when screening other mutual
funds for possible inclusion in a Fund's portfolio.
The Trust has certain non-fundamental policies which may be
changed by the Trustees. Among these are the following:
1) No Fund may invest in securities for the purpose of
exercising control over or management of an issuer; or
2) purchase securities of a closed-end or other investment
company where the shares are not registered in the United States pursuant
to applicable securities laws.
MANAGEMENT OF THE FUNDS
Trustees
</TABLE>
<TABLE>
<CAPTION>
Name Position Held Principal Occupation(s)
& Address With Registrant during Past 5 Years
<S> <C> <C>
Jeffrey Dewhirst President of Trustees Investment Banker,
JTR Capital
Mellon Bank,
Sewickley, PA
Ronald Benson Trustee Business Consultant,
Regional Director,
Fellowship of Companies
for Christ, International
John H. Weisbrod Trustee Retired President of
Sea Breeze
</TABLE>
Control Persons and Principal Holders of Securities
Since this is an initial offering, there are no Control Persons or
Principal Holders to report.
The Declaration of Trust and the By-Laws of the Trust provide for
indemnification by the Trust of its Trustees and Officers against liabilities
and expenses incurred in connection with litigation in which they may be
involved as a result of their positions with the Trust, unless it is finally
adjudicated that they engaged in willful misconduct, gross negligence or
reckless disregard of the duties involved in their offices, or did not act in
good faith in the reasonable belief that their actions were in the best
interest of the Trust and the Funds.
INVESTMENT ADVISORY AND OTHER SERVICES
The Advisor to the Trust is STAAR SYSTEM Financial
Services, Inc. (SSFS), 604 McKnight Park Dr., Pittsburgh, PA
15237. The President and principal owner of SSFS is J. Andre
Weisbrod. No other stockholder of the Advisor owns 5% or more of
the Advisor.
John H. Weisbrod, member of the Board of Trustees, is a minority
stockholder of the Advisor and father of J. Andre Weisbrod.
Fees to be paid to the Advisor by terms of the Master Advisory
Agreement (including "management-related service contract" provisions)
are as follows: The Trust will pay the Advisor a fee based on the average
daily assets in each Fund monthly as follows:
<TABLE>
<CAPTION>
Monthly Rate Annualized
<S> <C> <C>
INTF, LCSF & SCSF .0750% .90%
LTBF .0600% .72%
IBF .0525% .63%
ACF .1000% 1.20%
</TABLE>
These are maximum fees and will be calculated and paid at the closing
of the last business day of the month. In addition, the trust will pay to the
Advisor 2/3 of any sales charges (front or contingent). These fees are for
comprehensive services which include, but are not limited to: Design of
the structure and organization of the Trust and its Funds; writing and
printing of the Trust's prospectus; writing, design and production of any
consumer materials and presentations; obtaining appropriate legal and
accounting advice;. accounting and audits (as required by law);
maintaining any computer programs and files necessary to the operations
of the Trust; maintaining adequate records of all transactions and values of
the Trust and its Funds; preparing reports and notices for all shareholder
meetings; Transfer Agent services; marketing services;
shareholder services (as described in the prospectus); maintaining
telephones and mailing address for shareholder services; preparation of all
necessary documents and forms as required by various governmental
agencies including the federal government and any state governments in
states in which the Trust will do business.
At the time this registration becomes effective, the Registrant
intends to place securities with a custodian, StarBank of Cincinnati, Ohio.
BROKERAGE ALLOCATION AND OTHER PRACTICES
Transactions in Fund portfolios will generally be made with regard to
volume and other discounts to keep transaction expenses as low as
possible. The Trust may use brokers with which higher commissions are
paid than could be obtained elsewhere in return for research and other
services. There is no restriction as to the number of broker-dealers the
Trust may use.
It is anticipated that the Trust will use Mr. J. Andre Weisbrod,
President of the Advisor, as a broker for a portion of the Trust's
transactions. Since the Trust is new, there is little history of such
transactions to report. It is anticipated that, over time, the fees paid by
the Trust to the Advisor may be less due to Mr. Weisbrod's ability to receive
income from a portion of the Trust's transactions. While the Advisor will
offer advice regarding securities not purchased through the broker-dealer
affiliated with Mr. Weidbrod, Mr. Weisbrod will not be involved in the
execution of any such trades not made through his broker-dealer. All of
such orders will be made by the Trustees.
The criteria for selection of broker-dealers will include convenience,
reasonableness of commissions, availability and selection of securities (i.e
mutual fund selling agreements, bond inventories and access to
exchanges), and value-added services provided (i.e. research and reports).
At least once every two years, commission structures will be compared
with at least two representative firms, including a full-service brokerage
and a discount brokerage not currently used by the Trust. If the Trustees
determine that any broker(s) currently used are not reasonable with regard
to price and service, a change of such brokers will be made unless more
favorable arrangements can be obtained.
PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING
OFFERED
Detailed information on Purchase and Redemption of Shares as well
as Pricing is included in the Prospectus. The Trust may suspend the right
to redeem shares or postpone the date of payment upon redemption for
more than seven (7) days for (a) any period during which the New York
Stock Exchange is closed or trading on the exchange is restricted; (b) for
any period during which an emergency exists which makes it impossible
or impractical for the Funds to dispose of securities owned by them or the
Funds cannot determine the value of their respective net assets or for
such other periods as the Securities and Exchange Commission may
permit.
TAX STATUS
Detailed information concerning the tax status of the Trust is
contained in the Prospectus.
CALCULATION OF PERFORMANCE DATA
Each Fund's performance will be calculated on a Total Return basis,
which is the sum of any income paid and any realized or unrealized gain or
loss of principal. From time to time, the Funds may publish their average
total returns for periods of time. The formula for calculating such returns
is as follows:
P(1 + T)n = ERV
where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning at the 1, 5 or 10 year periods at the end of the 1, 5
or 10 year periods (or fractional portions thereof) Other time periods may
be used from time to time.
Dividends and capital gains are assumed to be reinvested.
Total Return Performance Since Inception
<TABLE>
<CAPTION>
IBF
LTBF
LCSF
SCSF
INTF
AF
<S>
<C>
<C>
<C>
<C>
<C>
<C>
Payment
$1000
$1000
$1000
$1000
$1000
$1000
AvAnnu
alized
Tot Ret
1.89%
6.38%
14.33
%
11.17%
14.27%
6.66%
4/4/96
to
12/31/9
6
.74
.74
.74
.74
.74
.74
Ending
Value
1013.74
1046.99
1104.
54
1081.81
1104.08
1049.02
Actual
1013.74
1046.99
1104.
54
1081.81
1104.08
1049.02
</TABLE>
Where Yield is calculated, the following formula is used:
YIELD = 2 [(a-b + 1)6 - 1]
cd
where:
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
Yield Calculation 30 Days Ended 12/31/1996
<TABLE>
<CAPTION>
IBF
LTBF
LCSF
SCSF
INTF
ACF
<S>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
Divs &
Int
Earned
522.70
682.01
20919.7
0
26798.0
8
14326.8
2
1645.84
Exp
Accrue
d
83.95
78.59
595.08
535.55
492.53
73.78
Avg
Shs
Outstan
ding
25269.8
49
20468.6
06
66352.7
88
61685.2
10
56021.4
38
11865.0
63
Max
Offerin
g price
end of
Period
9.97
10.25
10.62
10.31
10.76
10.16
30 Day
Yield
10.01
10.03
10.35
10.50
10.28
10.16
</TABLE>
OTHER INFORMATION
The Prospectus and this Statement of Additional Information do not
contain all of the information contained in the Trust's registration
Statement. The Registration Statement and its exhibits may be examined
at the offices of the Securities and Exchange Commission in Washington,
D.C.
Statements contained in the Prospectus and this Statement of
Additional Information as to the contents of any agreement or other
document referred to are not necessarily complete and reference is made to
the copy of the agreement or document filed as an exhibit to the
Registration Statement for their complete and unqualified contents.
<PAGE>
<PAGE>
FINANCIAL STATEMENTS
STAAR SYSTEM TRUST
FINANCIAL STATEMENTS
DECEMBER 31, 1996
CERTIFIED PUBLIC ACCOUNTANTS
CARSON & COMPANY
P.O. BOX 395
201 VILLAGE COMMONS
SEWlCKLEY, PA 15143
(412) 741-8588
FAX (412) 741-0833
Independent Auditor's Report
To the Shareholders and Trustees
Staar System Trust
We have audited the statement of assets and liabilities, including the
schedules of investments of Staar System Trust (comprising, respectively,
the Intermediate Bond Fund, Long Term Bond Fund, Larger Company
Stock Fund, Smaller Company Stock Fund, International Fund and
Alternative Categories Fund) as of December 31, 1996, and the
related statements of operations and cash flows for the period then ended,
the statement of changes in net assets for the period then ended, and the
selected per share data and ratios for the period then ended. These financial
statements and per share data and ratios are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and per share data and ratios based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and per
share data and ratios are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1996 by
correspondence with the custodians. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and selected per share data and
ratios referred to above present fairly, in all material respects, the
financial position of each of the respective portfolios constituting the
Staar System Trust as of December 31, 1996, the results of their operations
and their cash flows for the period then ended, the changes in their net
assets for the period then ended, and the selected per share data and ratios
for the period then ended, in conformity with generally accepted accounting
principles.
Sewickley, PA
February 28, 1997
<PAGE>
<PAGE>
STAAR SYSTEM TRUST
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
ASSETS
<TABLE>
<CAPTION>
<S> <C>
Investments in securities, at value -
indentified cost $2,540,049(Note 4) $ 2,610,866
Cash 807
Bond Interest Receivable 7,955
Total Assets 2,7619,628
LIABILITIES
Note Payable - Investment Advisor (Note 5) 1,052
Accounts Payable - Investment Advisor 1,724
Accrued Capital Stock Tax 300
Accounts Payable - Trustees 675
Total Liabilities 3,751
NET ASSETS
Net assets (see supplemental information for
per share data by shares of beneficial
interest outstanding) (Notes 3 and 4) $ 2,615,877
</TABLE>
NOTE: The accompanying notes are an integral part of these financial
statements.
<PAGE>
<PAGE>
1 SST INTERMEDIATE BOND FUND Portfolio Valuation
Date 12/31/1996
<TABLE>
<CAPTION>
Quan
tity
Secu
rity
Desc
ript
ion
Unit
Cost
Pric
e
Cost
Mkt
Valu
e
Unre
aliz
ed
Yiel
d
%
<S>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
Cash
&
Cash
Equi
vale
nts
JMS
Mone
y
Mkt
Fun
d-
Prim
ary
100.
00
100.
000
15.1
05
15.1
05
0
0
6.0
Tota
l
Cash
&
Cash
Equi
vale
nts
15.1
05
15.1
05
0
0
6.0
Inte
rmed
iate
Bond
s
20,0
00
US
Trea
sury
Note
6.50
4/30
/99-
100.
73
101.
1562
0,14
6
20,1
46
20,2
31
85+
6.4
8.0
20,0
00
Bell
sout
h
Tele
com
Inc
N/C
6.50
2/01
/00
100.
25
100.
75
20.0
5
20.1
5
100+
6.5
8.0
10,0
00
Fedl
Home
Ln
Mtg
Corp
Deb
6.06
6/09
/00
99.8
7
98.8
13
9.98
7
9.88
1
106-
6.1
3.9
45,0
00
U.S.
Trea
sury
Note
6.25
8/31
/00
98.9
7
100.
375
44.5
35
45.1
69
634+
6.2
18.0
15,0
00
Fedl
Home
Ln
Mtg
Corp
Deb
7.0
4/30
/01
100.
00
99.4
69
15.0
00
14.9
20
80-
7.0
5.9
25,0
00
Merr
il
Lync
h &
Co
NTS
N/C
8.00
2/01
/02
103.
5
105.
625
25.8
75
26.4
06
531+
7.6
10.5
20,0
00
U.S.
Trea
sure
Note
6.37
5
8/15
/02
100.
45
100.
656
20.0
89
20.1
31
42+
6.3
8.0
25,0
00
Gene
ral
Moto
rs
Acce
pt
Corp
NTS
6.62
5
10/0
1/02
98.5
9
99.3
75
24.6
47
24.8
44
197+
6.7
9.9
20,0
00
IBM
Corp
NT
BK
Entr
y
N/C
7/25
11/0
1/02
102.
14
102.
00
20.4
27
20.4
0
27-
7.1
8.1
20,0
00
Tenn
Val
Auth
Pwr
Bds
1993
Ser
6.12
5
7/15
/03
97.0
0
97.5
0
19.4
0
19.5
0
100+
6.3
7.8
15,0
00
Morg
an
Stan
ley
Note
s
6.375
12/15
/03
96.90
97.37
5
14.53
5
14.60
6
71+
6.5
5.8
Total
Inter
medi
ate
Bond
s
234.6
91
236.2
38
1.547
+
6.6
94.0
Total
Acco
unt
249.7
96
251.3
43
1.547
+
6.2
100.0
</TABLE>
See notes to financial statements
<PAGE>
<PAGE>
2 SST LONG TERM BOND FUND Portfolio Valuation 12/31/96
<TABLE>
<CAPTION>
Quanti
ty
Securi
ty
Descri
ption
Unit
Cost
Price
Cost
Mkt
Value
Unreal
ized
Yld
%
<S>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
Cash
&
Cash
Equiv
alents
15,774
JMS
Money
Marke
t Fund
- -
Prima
ry
100.00
100.00
15.775
15.775
0+
.0
7.4
Total
Cash
&
Cash
Equiv
alents
15.775
15.775
0+
.0
7.4
Long
Term
Bonds
10,000
U.S.
Treas
Note
CPN
5.625
%
5.625
2/15/0
6
92.70
94.625
9.27
9.463
193+
5.9
4.5
20,000
Gener
al
Motor
s Corp
Notes
7.10
3/15/0
6
99.31
100.62
5
19.861
20.125
264+
7.1
9.5
15,000
South
wester
n Bell
Tel
Deben
ture
6.75
6/01/0
8
96.25
97.375
14.438
14.606
168+
6.9
6.9
12,000
New
York
tel Co
Ref
Mtg
Ser R
7.50
3/01/0
9
100.25
99.875
12.030
11.985
45-
7.5
5.6
5,000
Genl
Elec
Cap
Corp
Med
Term
NTS
7.35
8/08/1
1
98.67
99.875
4.933
4.994
61+
7.4
2.4
20,000
Disne
y Walt
Co
Mtn
Semi
7.75
9/30/1
1
100.00
104.25
20.00
20.85
850+
7.4
9.8
20,000
Fedl
Home
Ln
Mtg
Corp
Deb
7.375
10/25/
11
99.50
100.00
19.90
20.00
100+
7.4
9.4
10,000
FPL
Group
Capita
l Inc
7.625
5/01/1
3
100.26
101.62
5
10.025
10.163
138+
7.5
4.8
55,000
U.S.
Treas
Bond
CPN
7.25%
7.25
5/15/1
6
101.96
105.59
4
56.078
58.077
1.999
+
6.9
27.4
25,000
U.S.
Treas
Bond
CPN
7.125
%
7.125
2/15/2
3
100.88
104.34
4
25.219
26.086
867+
6.8
12.3
Total
Long
Term
Bonds
191.75
4
196.34
9
4.595
+
7.0
92.6
Total
Accou
nt
207.52
9
212.12
4
4.595
+
6.5
100.0
</TABLE>
See notes to financial statements
PAGE
<PAGE>
3 SST LARGER COMPANY STOCK FUND Portfolio Valuation
12/31/96
<TABLE>
<CAPTION>
Quanti
ty
Securi
ty
Descri
ption
Unit
Cost
Price
Cost
Mkt
Value
Unreal
ized
Yld
%
<S>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
Cash
&
cash
Equiv
alents
75,843
JMS
Money
Marke
t Fund
- -
Prima
ry
100.00
100.00
75.844
75.844
0+
.0
10.3
Total
Cash
&
Cash
Equiv
alents
75.844
75.844
0+
.0
10.3
U.S.
Larger
Comp
any
Stock
Mutua
l
Funds
865
Clippe
r Fund
.898
67.12
67.570
58.120
58.509
389+
.0
7.9
643
Dodge
& Cox
Stock
Fund
.202
74.61
79.81
47.991
51.334
3.343
+
.0
7.9
3,607
Frankl
in
Growt
h
Fund
Cl 1
.532
22.32
23.43
80.52
84.524
4.004
+
.0
11.5
3,094
Funda
mental
Invest
ors
Fund
.047
23.48
24.54
72.637
75.928
3.291
+
.0
10.3
1,492
Mana
gers
Incom
e
Equity
Fund
.300
29.61
30.490
44.187
45.50
1.313
+
.0
6.2
2,536
T
Rowe
Price
Equity
Incom
e .744
20.77
22.540
52.688
57.178
4.490
+
.0
7.8
4,275
Washi
ngton
Mutua
l
Invest
ors
Fun
.267
23.49
24.540
100.41
0
104.91
5
4.505
+
.6
14.2
Total
U.S.
Larger
Comp
any
Stock
Mutua
l
Funds
456.55
3
477.88
8
21.335
+
.1
64.9
U.S.
Larger
Comp
any
Stock
Unit
Trusts
3,500
Peroni
Top
Ten
Growt
h
Trust
.199
9.94
9.878
34.794
34.574
220-
.0
4.7
Total
U.S.
Larger
Comp
any
Stock
Unit
Trusts
34.794
34.574
220-
.0
4.7
U.S.
Mid-
Cap
Larger
Comp
any
Stocks
1,158
Mairs
and
Power
Growt
h
Fund,
In
.690
62.32
69.480
72.206
80.506
8.300
+
.0
10.9
1,326
Strong
Schafe
r
Value
Fund
.395
47.03
51.020
62.379
67.673
5.294
+
.0
9.2
Total
U.S.
Mid-
Cap
Larger
Comp
any
Stocks
134.58
5
148.17
9
13.594
+
.0
20.1
Total
Accou
nt
701.77
6
736.48
5
34.709
+
.1
100.00
</TABLE>
See notes to financial statements
PAGE
<PAGE>
4 SST SMALLER COMPANY STOCK FUND Portfolio Valuation
12/31/96
<TABLE>
<CAPTION>
Quan
tity
Secur
ity
Descr
iption
Unit
Cost
Price
Cost
Mkt
Valu
e
Unre
alized
Yld
%
<S>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
Cash
&
Cash
Equi
valen
ts
66,41
4
JMS
Mone
y
Mark
et
Fund
- -
Prima
ry
100.0
0
100.0
0
66.41
4
66.41
4
0+
.0
9.9
Total
Cash
&
Cash
Equi
valen
ts
66.41
4
66.41
4
0+
.0
9.9
U.S.
Small
er
Com
pany
Stock
Mutu
al
Fund
s
4,108
Acor
n
Fund
.609
15.26
15.04
0
62.69
0
61.79
3
897-
.0
9.3
5,582
Frank
lin
Small
Cap
Grow
th
Fund
.623
20.17
20.72
0
112.6
27
115.6
72
3.045
+
.0
17.3
3,398
Ivy
Emer
ging
Grow
th
Fund
A
.439
28.73
26.53
0
97.62
9
90.16
1
7.46
8-
.0
13.5
773
Mana
gers
Speci
al
Equit
y
Fund
49.84
50.95
0
38.55
9
39.42
1
862+
.0
5.9
3,978
Seve
n
Seas
Small
Cap
Portf
olio
.363
16.99
18.30
00
67.59
4
72.80
4
5.210
+
.0
10.9
Total
U.S.
Small
er
Com
pany
Stock
Mutu
al
Fund
s
379.0
99
379.8
51
752+
.0
56.9
U.S.
Mid-
Cap
small
er
Com
pany
Stock
s
1,737
PBH
G
Grow
th
Fund
.592
27.05
26.27
0
47.00
0
45.64
7
1.35
3-
.0
6.8
2,640
T
Row
e
Price
New
Horiz
ons
Fund
.231
23.01
21.77
0
60.74
7
57.47
8
3.26
9-
.0
8.6
Total
U.S.
Mid-
Cap
Small
er
Com
pany
Stock
s
107.7
47
103.1
25
4.62
2-
.0
15.4
U.S.
Micr
ocap
Stock
Mutu
al
Fund
s
6,300
Frank
lin
Micr
ocap
Valu
e
Fund
.642
18.13
18.75
0
114.2
18
118.1
37
3.919
+
.0
17.7
Total
U.S.
Micr
ocap
Stock
Mutu
al
Fund
s
114.2
18
118.1
37
3.919
+
.0
17.7
Total
Acco
unt
667.4
78
667.5
27
49+
.0
100.0
</TABLE>
See notes to financial statements
PAGE
<PAGE>
5 SST INTERNATIONAL FUND Portfolio Valuation 12/31/96
<TABLE>
<CAPTION>
Quan
tity
Secur
ity
Descr
iption
Unit
Cost
Price
Cost
Mkt
Valu
e
Unre
alized
Yld
%
<S>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
Cash
&
Cash
Equi
valen
ts
14,48
5
JMS
Mone
y
Mark
et
Fund
- -
Prima
ry
100.0
0
100.0
00
14.48
5
14.48
5
0+
.0
2.3
Total
Cash
&
Cash
Equi
valen
ts
14.48
5
14.48
5
0+
.0
2.3
Inter
natio
nal
Stock
Mutu
al
Fund
s
3,033
Euro
pacifi
c
Fund
.778
24.95
26.04
0
75.69
4
79.00
0
3.306
+
.0
12.8
3,606
Hotc
hkis
&
Wiley
Int'l
Fund
20.40
22.19
0
73.58
1
80.02
6
6.445
+
.0
12.9
3,628
Ivy
Inter
natio
nal
Fund
.487
33.74
35.89
0
122.4
37
130.2
26
7.789
+
.0
21.0
5,929
T
Row
e
Price
Int'l
Stock
Fund
.775
13.19
13.80
0
78.19
2
81.83
1
3.639
+
.0
13.2
4,886
Temp
leton
Dev
Mkts
Tr I
.337
14.84
15.40
0
72.51
6
75.25
0
2.734
+
.0
12.2
7,869
Temp
leton
Forei
gn
Fund
I
.348
9.95
10.36
0
78.33
3
81.52
6
3.193
+
.0
13.2
3,677
Warb
urg
Pincu
s Int'l
Equit
y Fun
.085
20.82
20.84
0
76.55
9
76.63
0
71+
.0
12.4
Total
Inter
natio
nal
Stock
Mutu
al
Fund
s
591.3
12
604.4
89
27.17
7+
.0
97.7
Total
Acco
unt
591.7
97
618.9
74
27.17
7+
.0
100.0
</TABLE>
See notes to financial statements
PAGE
<PAGE>
6 SST ALTCAT FUND Portfolio Valuation 12/31/96
<TABLE>
<CAPTION>
Quan
tity
Secur
ity
Descr
iption
Unit
Cost
Price
Cost
Mkt
Valu
e
Unre
alized
Yld
%
<S>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
Cash
&
Cash
Equi
valen
ts
26,22
8
JMS
Mone
y
Mark
et
Fund
- -
Prima
ry
100.0
0
100.0
00
26.22
8
26.22
8
0+
.0
21.1
Total
Cash
&
Cash
Equi
valen
ts
26.22
8
26.22
8
0+
.0
21.1
U.S.
Mid-
Cap
Large
r
Com
pany
Stock
Mutu
al
Fund
s
90
Muhl
enka
mp
Fund
.872
26.88
27.54
0
2.443
2.503
60+
.0
2.0
Total
Mid-
Cap
Large
r
Com
pany
Stock
Mutu
al
Fund
s
2.443
2.503
60+
.0
2.0
Glob
al
Small
er
Co.
Stock
Mutu
al
Fund
s
294
Frank
lin
Mutu
al
Disco
very
Fund
.291
16.99
17.16
0
5.000
5.050
50+
.0
4.1
198
Amer
ican
Small
Cap
Worl
d
Fund
I
.807
25.15
25.61
0
5.000
5.091
91+
.0
4.1
Total
Glob
al
Small
er
Co.
Stock
Mutu
al
Fund
s
10.00
0
10.14
1
141+
.0
8.2
Alter
nativ
e
Cate
gorie
s
1,118
Frank
lin
Gold
Fund
I
.226
15.11
13.28
0
16.90
0
14.85
0
2.05
0-
.0
11.9
891
Frank
lin
Real
Estat
e Sec
Fund
I
.869
13.90
15.56
0
12.39
8
13.87
7
1.479
+
.0
11.2
359
Frank
lin
Natur
al
Reso
urces
Fund
.958
14.26
14.80
0
5.133
5.327
194+
.0
4.3
2,245
Ivy
China
Regi
on
Fund
A
.914
9.40
10.30
0
21.11
4
23.13
3
2.019
+
.0
18.6
1,081
Temp
leton
Latin
Amer
ica
Fund
I
.275
11.18
10.99
0
12.09
0
11.88
3
207-
.0
9.6
894
Temp
leton
Glob
al
Real
Estat
e I
.529
13.83
15.04
0
12.36
7
13.45
4
1.087
+
.0
10.8
133
Vang
uard
Speci
al
Ener
gy
Fund
.869
22.41
22.54
3.000
3.017
17+
.0
2.4
Total
Alter
nativ
e
Cate
gorie
s
83.00
2
85.54
1
2.539
+
.0
68.8
Total
Acco
unt
121.6
73
124.4
13
2.740
+
.0
</10
0.0
</TABLE>
See notes to financial statements
<PAGE>
STAAR SYSTEM- TRUST
STATEMENT OF OPERATIONS
PERIOD FROM INCEPTION (MARCH 19, 1996) THROUGH
DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
Investment Income
Mutual fund dividends $ 35,929
Interest and money market
fund dividends 20,880
Total Income $ 56,809
Expenses
Investment advisory fees (Note 5) 9,761
Trustee fees (Note 5) 2,250
Foreign Taxes Paid 1,164
Sales Charges 300
Pennsylvania Capital Stock Tax 300
Interest 52
Other Expenses 42
Total Expenses 15,869
Investment income-net 42,940
Realized and unrealized appreciation on
investments
Realized long term capital gain dividends
from mutual funds 46,523
Unrealized appreciation of investments for
the period (Note 4) 70,817
Net realized gain and unrealized appreciation
on investments 117,340
Net increase in net assets resulting
from operations $ 160,280
</TABLE>
NOTE: The accompanying notes are an integral part of these financial
statements.
<PAGE>
<PAGE>
STAAR SYSTEM TRUST
STATEMENT OF CHANGES IN NET ASSETS
PERIOD FROM INCEPTION (MARCH 19,1996) THROUGH
DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Increase in net assets from operations:
Investment income- net
$42,940
Net realized gain on investments 46,523
Unrealized appreciation of investments 70,817
Net increase in net assets resulting
from operations
160,280
Distributions to shareholders from:
Investment income
(38,885)
Realized long term gains - mutual funds
(46,523)
Total distributions
(85,408)
Capital share transactions (Note 3)
Purchases
2,465,597
Redemptions
(I0,000)
Reinvestment of dividends
85,408
Net increase in net assets resulting from
capital share transactions
2,541,005
Total increase in net assets
2,615,877
Net assets
Beginning of period
0
End of period (including undistributed investment
income of $4,055)
$ 2,615,877
</TABLE>
NOTE: The accompanying notes are an integral part of these financial
statements.
<PAGE>
<PAGE>
STAAR SYSTEM TRUST
STATEMENT OF CASH FLOWS
PERIOD FROM INCEPTION (MARCH 19, 1996) THROUGH
DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Net increase in net assets from operations $ 160,280
Adjustments required to reconcile to net cash
provided by operating activities:
Unrealized appreciation of investments (70,817)
(Increase) decrease in:
Bond Interest Receivable (7,955)
Increase (Decrease) in:
Accrued Interest 52
Taxes Payable 300
Accounts Payable - Trustees 675
Accounts Payable - Investment Advisor 1,724
Net cash provided by operating
activities 84,259
Cash provided (used) by investment activities
Investments Purchased (2,550,349)
Sales or redemptions 10,300
Net cash (used) by investment activities (2,540,049)
Cash provided (used) by financing activities
Advance on note payable - Investment Advisor 1,000
Shareholder Contributions 2,465,597
Shareholder Redemptions (10,000)
Dividends declared (85,408)
Dividends reinvested by shareholders 85,408
Net cash provided by financing activities 2,456,597
Increase (Decrease) in Cash During Period
807
Cash Balance - beginning of period 0
Cash Balance - end of period $ 807
</TABLE>
NOTE: The accompanying notes are an integral part of these financial
statements.
<PAGE>
<PAGE>
STAAR SYSTEM TRUST
NOTES TO FlNANClAL STATEMENTS
DECEMBER 31, 1996
NOTE 1 - ORGANIZATION AND PURPOSE
Staar System Trust (the Trust) was organized as a Pennsylvania business
trust under applicable statutes of the Commonwealth of Pennsylvania. It
was formed on February 28, 1996 and became effective March 19, 1996.
The Trust has applied for registration with the Securities and Exchange
Commission under the Investment Company Act of 1940 as a
non-diversified, open-end management investment company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Trust consists of six separate series portfolios (funds). The funds are
organized in such a manner that each fund corresponds to a standard asset
allocation category, with the exception of the Alternative Categories Fund
which is a flexibly managed fund that may invest in assets not included in
the other funds. The Funds are:
The SST Intermediate Bond Fund
The SST Long-Term Bond Fund
The SST Larger Company Stock Fund
The SST Smaller Company Stock Fund
The SST International Fund
The SST Alternative Categories Fund
Each fund is managed separately and has its own investment objectives and
strategies in keeping with the asset allocation category for which it is
named. Each fund may invest in other open-end funds (mutual funds) as
well as closed-end funds and individual securities.
Security Valuation - Investments in mutual funds are stated at net asset
value on the date of valuation. Securities traded on a national securities
exchange (or reported on the NASDAQ national market) are stated at the
last reported sales price on the day of valuation; other securities traded in
the over-the-counter market and listed securities for which no sale was
reported on that date are stated at the last quoted bid price. Short-term
notes are stated at amortized cost, which is equivalent to value. Restricted
securities and other securities for which quotations are not readily available
will be valued at fair value as determined by the Trustees.
Federal Income Taxes - The Trust complies with the requirements of the
Internal Revenue Code that are applicable to regulated investment
companies and distributes all its taxable income to its shareholders.
Therefore, no federal or state income tax provision is required.
Distributions to shareholders - Dividends to shareholders are recorded on
the ex-dividend date.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued) Other - The Trust follows industry practice and records
security transactions on the trade date. Dividend income is recognized on
the ex-dividend date, and interest income is recognized on the accrual
basis. Discounts and premiums on securities purchased, if significant, are
amortized over the life of the respective securities.
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 reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reported period. Actual results could differ form those
estimates.
NOTE 3 - SHAREHOLDER TRANSACTIONS
The declaration of Trust provides for an unlimited number of shares of
beneficial interest, without par value. The declaration of Trust also
established six series of shares which correspond to the six funds described
in Note 2. Transactions in units of beneficial interest were as follows:
<TABLE>
<CAPTION>
Fund
SOLD
Reinvestme
nt of
Dividends
REDEMPT
ION
December
31, 1996
Balance
Shares
Amount $
Shares
Amount $
Shares
Amount $
Shares
Amount $
<S>
<C>
<C>
<C>
<C>
Intermediate
Bond Fund
25.591.761
$249,494
353.068
$ 3,435
252,382
$ 2,500
25,692.447
$ 250429
Long Bond
Fund
20,607.239
$ 204,391
387.686
$ 3,435
0.000
$ 0
25,692.447
$ 208209
Larger
Company
Stock
66,856.772
$ 679,630
2,682.903
$ 28,487
237.210
$ 2,500
69,302.465
$ 705,617
Smaller
Company
Stock
61,894.040
$ 638.630
3,027.516
$ 31.219
232.682
$ 2,500
64,688.874
$ 667.349
Internationa
l
56,251.172
$ 574.550
1,451.105
$ 15.616
236.848
$ 2,500
57,465.429
$ 587.666
Alternative
Categories
11,852.270
$ 118.902
276.446
$ 2.833
0.000
$ 0
12,128.716
$ 121.735
Total
Amount
$ 2,465.597
$ 85,408
$ 10,000
$ 2,541,005
</TABLE>
All dividends declared during the period ended December 31, 1996
were re-invested by the respective owners of beneficial interest.
NOTE 4 - SUMMARY OF UNREALIZED GAINS AND LOSSES:
Following is a summary of unrealized gains and losses for each portfolio as
of December 31, 1996:
<TABLE>
<Caption
_____Unrealized___
Market
Cost Gain Loss Net Value
<S> <C> <C> <C> <C> <C>
Intermediate Bond $ 249,796 1,760 $ (213) $ 1,547 $ 251,343
Long Term Bond 207,529 4,640 (45) 4,595 212,124
Larger Company
Stock Fund 701,776 34,929 (220) 34,709 736,485
Smaller Company
Stock Fund 667,478 13,036 12,987) 49 667,527
International Fund 591,797 27,177 0 7,177 618,974
Alternative Categories
Fund 121,673 4,997 (2,257) 2,740 124,413
$ 2,540,049$86,539 (15,722) $ 70,817 $ 2,610,866
</TABLE>
NOTE 5 - INVESTMENT ADVISORY FEES AND OTHER
TRANSACTIONS WITH AFFILIATES: Effective
April 1, 1996, the Trust entered into a Master Investment Advisory
Agreement with Staar System Financial Services, Inc., a related party
(advisor). This agreement appointed the Advisor to act as investment
advisor to the Trust on behalf of six series portfolios for a one year period.
The advisor furnishes investment management and advisory services (rate
varies for each portfolio in accordance with a fee schedule ranging from
.63% to 1.20% of average daily net asset value). During the period ended
December 31, 1996, the investment advisor waived 50% of the fees on the
following funds:
<TABLE>
<CAPTION>
Amount of Fees Waived
Fund FeesWaived Per Share
<S> <C> <C>
Intermediate Bond Fund $ 387 $ .02
Long Term Bond Fund 360 .02
AlternativeCategoriesFund 400 .03
/TABLE
<PAGE>
NOTE 5 - INVESTMENT ADVISORY FEES AND OTHER
TRANSACTIONS WITH AFFILIATES (continued)
In addition, the Trust has agreed to pay to the advisor, 2/3 of any sales
charge, front or contingent, which it charges to customers. The president
of the investment advisor is the organizer of the Trust. The agreement
provides for an expense reimbursement from the investment advisor if the
Trust's total expense for any series (fund), exclusive of taxes, interest, costs
of portfolio acquisitions and dispositions and extraordinary expenses, for
any fiscal year, exceed the level of expenses which such series is perrnitted
to bear under the most restrictive expense limitation imposed on open-end
investment companies by any state in which shares of such series are then
qualified. The agreement also stipulates that all organization expenses of
the Trust are paid by the investment advisor as well as certain
marketing, legal and accounting and transfer and custodial services for the
first two years.
The Trustees of Staar System Trust are compensated as a group at a rate
of $675 per calendar quarter.
Certain affiliated persons held aggregate investments in the respective
portfolios as of December 31, 1996 as follows:
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Intermediate bond fund 2,814.323 $ 28,050
Long term bond fund 1,325.464 13,582
Larger company stock fund 5,554.542 58,977
Smaller company stock fund 13,134.824 135,444
International fund 5,440.995 58,556
Alternative categories fund 1,326.872 13,602
</TABLE>
NOTE 6 - NOTE PAYABLE - INVESTMENT ADVISOR
On March 29, 1996, the Investment Advisor advanced the Company
$1,000 to cover initial operating expenses. The resulting note is payable on
demand, together with interest at 7% which aggregated $52 as of
December 31, 1996.
<PAGE>
STAAR SYSTEM TRUST
Supplementary Information
Selected Per Share Data and Ratios
Period from Inception (March 18, 1996)
Through December 31, 1996
<TABLE>
<CAPTION>
IBF
LTBF
LCSF
SCSF
INTF
ACF
Per
Share
Data
<S>
<C>
<C>
<C>
<C>
<C>
<C>
Investm
ent
Incom
e-net
$ 0.30
$ 0.32
$ 0.13
$ 0.18
$ 0.15
$ 0.15
Net
Realize
d and
Unreali
zed
Gain on
Securiti
es
$ 0.09
$ 0.27
$ 0.75
$ 0.31
$ 0.68
$ 0.31
Distribu
tion
from
Investm
ent
Incom
e-net
$ -0.17
$ -0.26
$ -0.14
$ -0.19
$ -0.15
$ -0.16
Distribu
tion
from
Net
realized
Gains
0.00
0.00
-0.28
-0.31
-0.13
-0.08
Total
Distribu
tions
-0.17
-0.26
-0.42
-0.50
-0.28
-0.24
Net
Asset
Value
Shares
Purchas
ed
9.75
9.92
10.16
10.32
10.21
10.03
End of
Year
9.97
10.25
10.62
10.31
10.76
10.25
Total
Return
1.37%
4.70%
10.45%
8.18%
10.41%
4.90%
Ratios
Net
Assets
at End
of Year
$
256,057
$
215,156
$
735,587
$
666,737
$
618,231
$
124,304
Portfoli
o
Turnov
er Rate
0
6.21%
0
0
0
0
Ratio of
Expens
es to
Averag
e net
assets(
%)
0.39*
0.44*
0.99
0.99
1.42**
0.74*
Ratio of
Investm
ent
Income
to
Averag
e Net
Assets(
%)
1.05
2.55
1.54
3.00
1.88
1.60
</TABLE>
* See Note 5 re fee Waived during 1996
** Includes Foreign Tax Paid equal to 43%
See Notes to Financial Statements
<PAGE>
EXAMPLE OF PRICE MAKE-UP
Using 12/31/1996 Data
<TABLE>
<CAPTION>
IBF
LTBF
LCSF
SCSF
INTF
ACF
<S>
<C>
<C>
<C>
<C>
<C>
<C>
Total
Assets
251,343
212,124
736,485
667,527
618,974
124,413
Plus
Total
Interest
Accoun
ts
4,803
3,115
- -
- -
- -
- -
Less
Expens
e
Accoui
nts
(90)
(83)
(897)
(790)
(743)
(109)
Equals
Total
Net
Assets
256,057
215,156
735,587
666.737
618,231
124,304
Divided
by total
shares
outstan
ding
25,592
20,995
69,302
64,689
57,465
12,129
Equals
net
asset
value
9.97
10.25
10.81
10.31
10.76
10.25
</TABLE>
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial statements:
Included in Part A:
None
Included in Part B:
<TABLE>
<CAPTION>
Page Number
in this Report
<S> <C>
Independent Auditor's Report...........................
Statement of Assets and Liabilities...................
Portfolio Valuation..........................................
Statement of Operations..................................
Statement of Changes in Net Assets..................
Statement of Cash Flows.................................
Notes to Financial Statements............................
Supplementary Information..............................
Example of Price Make-up..............................
</TABLE>
Included in Part C:
The required Schedules are omitted because the required information is
included in the financial statements included in Part A or Part B, or
because the conditions requiring their filing do not exist.
(b) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number
Description of Exhibit
<S> <C>
X(1) Declaration of Trust of the Registrant
X(2) By-laws of the Registrant
(3) Not Applicable
X(4) Action of Trustees Establishing Funds
X(5) Form of Investment Advisory Agreement between
Registrant and Staar System Financial Services, Inc. (the
"Advisor")
(6) Not Applicable
(7) Not Applicable
XX (8) Custodian Agreement between Registrant and StarBank.
X(9)(a) Form of Transfer Agency and Shareholder Services
Agreement among Registrant and the Advisor (see 5 above)
X(9)(b) Consent to Use of Name contained in (5) above
X(10) Opinion of Counsel and Consent of Counsel
(11) Consent of Independent Accountants
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable
(17) Not Applicable
X - Filed with Initial N-1A and incorporated herein by reference.
XX - Filed with Pre-effective Amendment # 1 to Form N-1A and
incorporated herein by reference.
</TABLE>
Item 25. Persons Controlled by or Under Common Control with
Registrant
The Registrant is not directly or indirectly controlled by or under common
control with any person other than the Trustees. The Registrant does not
have any subsidiaries.
Item 26. Number of Holders of Securities
Set forth below are the number of record holders, as of December 31, 1996
of the shares of beneficial interest of the Registrant:
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
Shares of Beneficial Interest,
no par value
<S> <C>
IBF 19
LTBF 17
LCSF 23
SCSF 29
INTF 29
ACF 15
</TABLE>
Item 27. Indemnification
Under the Registrant's Declaration of Trust and By-laws, any past or
present Trustee or Officer of the Registrant is indemnified to the fullest
extent permitted by law against liability and all expenses reasonably
incurred by him or her in connect with any action, suit or proceeding to
which he or she may be a party or is otherwise involved by reason of his or
her being or having been a Trustee or Officer of the Registrant. The
Declaration of Trust and By-laws of the Registrant do not authorize
indemnification where it is determined, in the manner specified in the
Declaration of Trust and the By-laws of the Registrant, that such Trustee
or Officer has not acted in good faith in the reasonable belief that his or her
actions were in the best interest of the Registrant. Moreover, the
Declaration of Trust and By-laws of the Registrant do not authorize
indemnification where such Trustee or Officer is liable to the Registrant or
its shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of his duties.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to Trustees, Officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a Trustee, Officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such Trustee, Officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the questions whether such indemnification is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The Registrant, its Trustees and Officers, its investment adviser, and
persons affiliated with them are insured under a policy of insurance
maintained by the Registrant and its investment adviser, within the limits
and subject to the limitations of the policy, against certain expenses in
connection with the defense of actions, suits and proceedings, and certain
liabilities that might be imposed as a result of such actions, suits and
proceedings, to which they are parties by reason of being or having been
such Trustees or Officers. The policy expressly excludes coverage for any
Trustee or Officer whose personal dishonesty, fraudulent breach of trust,
lack of good faith, or intention to deceive or defraud has been adjudicated
or may be established or who willfully fails to act prudently.
Item 28. Business and Other Connections of Investment Adviser
Staar System Financial Services, Inc. (the "Adviser"), is a registered
investment adviser providing investment advice to individuals, employee
benefit plans, charitable and other nonprofit organizations, and
corporations and other business entities.
Set forth below is a list of the Officers and Directors of the Adviser
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and
directors during the past two years.
<TABLE>
<CAPTION>
Name Position with Advisor Other
Business
<S> <C> <C>
J. Andre Weisbrod President, Director Registered Representative
Allegheny Investment
Charles Sweeney Secretary & Director Marketing Consultant
Graphic Arts Technology
Council; Before 1992
Graphic Arts Sales
Eastman Kodak
Company
Carl J, Dorsch Director Retired
</TABLE>
Item 29. Principal Underwriter
Inapplicable.
Item 30. Location of Accounts and Records
The Registrant maintains the records required by Section 31(a) of the
Investment Company Act of 1940, as amended and Rules 31a-1 to 31a-3
inclusive thereunder at its Pittsburgh office located at 604 McKnight Park
Drive, Pittsburgh, PA, 15237. Certain records, including the physical
possession of its securities, may be maintained pursuant to Rule 31a-3 at
the main office of the Registrant's custodian located as to the custodian, at
STARBANK, 425 Walnut St., M/L 6118, P.O. Box 1118, Cincinnati, OH,
45201-1118, and, as to the transfer and dividend disbursing agent
functions, % of the Advisor at 604 McKnight Park Drive, Pittsburgh, PA,
15237.
Item 31. Management Services
Inapplicable.
Item 32. Undertakings
(a) The Registrant hereby undertakes to file a post-effective
amendment using financial statements which need not be certified, within
four to six months after the effective date of this Registration Statement
under the Securities Act of 1933, as amended.
(b) The Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered with a copy of the Registrant's annual
report (when available) to shareholders upon request and without charge.
(c) The Registrant hereby undertakes that, if requested to do so by
holders of at least 10% of the Funds outstanding shares, it will call a
meeting of shareholders for the purpose of voting upon the question of
removal of a trustee or trustees and will assist in communications between
shareholders for such purpose as provided in Section 16 of the
Investment Company Act of 1940, as amended.
<PAGE>
NOTICE
"The SST Intermediate Bond Fund (IBF)," "The SST Long-Term Bond
Fund (LTBF)," The SST Larger Company Stock Fund (LCSF)," "The SST
Smaller Company Stock Fund (SCSF)," "The SST International Fund
(IF)," and "The SST Alternative Categories Fund (AltCat)" are the
designations of the Trustees under the Declaration of Trust of the Trust
dated February 28, 1996 as amended from time to time. The Declaration
of Trust has been filed with the Secretary of State of the Commonwealth
of Pennsylvania. The obligations of the Registrant are not personally
binding upon, nor shall resort be had to the private property of, any of the
Trustees, shareholders, officers, employees or agents of the Registrant,
but only the Registrant's property shall be bound.
<PAGE>
SIGNATURES
Pursuant to the requirements of (the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant (certifies that it meets all
of the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Pittsburgh, and the
State of Pennsylvania on the 25th day of April, 1997.
The Staar System Trust
Registrant
By: Jeffrey A. Dewhirst, Trustee
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.
Jeffrey A. Dewhirst
CEO, CFO And
Trustee April 25, 1997
(Signature) (date)
<PAGE>
Consent
We hereby consent to the use of our name by
the Staar System Trust, in the Prospectus dated
April 25, 1997, as auditors and accountants.
Date: April 25, 1997 CARSON & CO.
By: Terrance Carson
