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. 1 X
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 1 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
1993
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
<PAGE>
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 and Policies Investment Objective
and Policies, Investment
Restrictions
14. Management of the Fund Board of Trustees
15. Control Persons and Principal Control Persons and
Holders of Securities Principal Holders of
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
November 1, 1996
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
Contents Page
<TABLE>
<CAPTION>
<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 11/1/96, 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. Each Fund may invest in other
open-end funds (mutual funds) as well as closed-end funds and
individual 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
<C>
1.5%
<C>
1.5%
<C>
1.5%
<C>
1.5%
<C>
1.5%
<C>
1.5%
(as percentage of
offering price)
No load at the $100,000 purchase
level: See details in how to
purchase and sell shares sections
Sales Load Imposed
on Reinvested
Dividends
None on any of the funds
Deferred Sales Load
1% on redemptions of purchases made
at net asset value (no load) if
redeemed during the first 12 mos
from acct inception
Exchange Fee
None on any of the funds
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%
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 and (2) Redemption at the end of
each time period. (Assumes maximum sales charge)
<TABLE>
<CAPTION>
IBF LTBF LCSF SCSF INTF
ACF
<S> <C> <C> <C> <C> <C>
< c>
One Year $ 22 $ 23 $ 25 $ 25 $ 25 $
28
Three Years $ 38 $ 40 $ 46 $ 46 $ 46
$ 56
</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
40% 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. 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. 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 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. 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 other mutual funds, which
in themselves, provide a diversification of the underlying securities.
Investment Company Risks - 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 Fund holds more than 1% of the
outstanding securities of any mutual fund, the excess will be considered
not 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 no 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 average
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.
<PAGE>
TABLE A
TOTAL RETURN PERFORMANCE
Among selected Mutual Fund Categories
<TABLE>
<CAPTION>
MUTUAL FUND TYPE
1995
AVERAGE OF ALL
FUNDS IN
CATEGORY
1995
AVERAGE OF TOP
25% OF FUNDS
IN CATEGORY
<S>
1,661 Large Company
Stock Funds
<C>
26.13%
<C>
36.56%
368 Small Company
Stock Funds
31.32%
42.27%
170 International
Large Co. Stock
Funds
10.09%
15.33%
</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. Sales charges go to defray
acquisition, administrative and value-added service costs incurred by the
Advisor and Trustees. 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. The
Trust may also waive or reduce sales charges for the following: 1) Current
or retired trustees,
directors, officers and employees of the Trust or its Advisor(s) and owners
of its Advisor(s). 2) Current or retired marketing representatives and
solicitors engaged by the Trust or its Advisor(s) to acquire assets for the
Trust.
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.
Reducing Your Sales Charge
Aggregation of Accounts
Sales charge discounts are available for certain qualifying accounts.
These may include accounts in the name of yourself, your spouse and any
of your children under the age of twenty-one. They may also include IRA,
Qualified Retirement Plan and Trust accounts set up for any of these
people.
Rights of Accumulation (ROA)
Sales charges on future purchases may be reduced by including the
current value of your aggregated accounts in the Trust at the time of the
purchase. The Trust is not responsible for identifying when a level
qualifying for ROA has been reached. The investor must notify the
Transfer Agent at the time of
purchase to assure proper credit.
Letter of Intent (LOI)
The Letter of Intent is a non-binding commitment to invest a specified
amount into the Funds over a 13 month period. An amount equivalent to
the Sales Charge that would have been paid without the LOT will be held
in escrow to cover additional sales charges which may be due if your total
investments during the LOT period are insufficient to qualify for the Sales
Charge reduction.
<TABLE>
<CAPTION>
Sales Charge Table Sales Charge (Load) as Percentage of
(all funds)
Net Amt. Offering
Invested Price
<S> <C> <C>
Less than $100,000 1.52% 1.50%
$100,000 or more None None
</TABLE>
Minimum Investment: $25,000 Total, $5,000 per Fund.
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 is 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
Contingent Deferred Sales Charge
Purchases made at Net Asset Value (with no sales charge) will be
assessed a contingent deferred sales charge of 1% on any redemptions
made during the first 12 months from account inception.
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>
<PAGE>
November 1, 1996
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 November 1,
1996, 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: November 1, 1996
<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
<PAGE>
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 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 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 and equal 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 Con-
sultant, Regional
Director, Fellow-
ship of Companies
for Christ, Inter-
national
John I. Weisbrod Trustee Retired Presi-
dent 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 no 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:
a
P(1 + T) = 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.
<PAGE>
Where Yield is calculated, the following formula is used:
YIELD = 2 [(ab/cd + 1)6 - 1]
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.
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
Independent Auditor's Report
To the Shareholders and Trustees
Staar System Trust
We have audited the statement of assets and liabilities, including the
schedule 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 March 31, 1996, and the statement of
changes in net assets for the period then ended. These financial statements
are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these
financial statements 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 are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. 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 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 March 31, 1996 and
the changes in their net assets for the period then ended, in conformity
with generally accepted accounting principles.
Sewickley, PA [SIGNATURE]Carson & Co.
June 12, 1996 <PAGE>
STAAR SYSTEM TRUST
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996
<TABLE>
<CAPTION>
ASSETS
<S>
Investment in money
market funds, at value
-identified cost $12,000 (Note 2)
Cash
Total Assets
LIABILITIES
Note Payable - Investment Adviser
(Note 5)
Total Liabilities
NET ASSETS
Net assets (equivalent to $10.00 per
share
based on 1200 shares of capital
stock issued and outstanding;
unlimited shares authorized) (Note
3)<PAGE>
<PAGE>
<C>
$ 12,000
1,000
13,000
1,000
1,000
$ 12,000 <PAGE>
</TABLE>
STAAR SYSTEM TRUST
STATEMENT OF CHANGES IN NET ASSETS
FOR PERIOD FROM INCEPTION (MARCH 19, 1996) THROUGH
MARCH 31,
1996
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTIONS
<C> <S>
Initial Investment of 1,200 shares @$10 per share
Total Increase
NET ASSETS
Beginning of Period
End of Period
/TABLE
<PAGE>
<PAGE>
$ 12,000
12,000
-0-
$ 12,000
<PAGE>
<PAGE>
<PAGE>
<PAGE>
STAAR SYSTEM TRUST
INVESTMENT IN SECURITIES OF
UNAFFILIATED ISSUERS
MARCH 31, 1996
<TABLE>
<CAPTION>
INTERMEDIAT
E BOND FUND
LONG TERM
BOND FUND
LARGER
COMPANY
STOCK FUND
SMALLER
COMPANY
STOCK FUND
INTERNATIONA
L FUND
ALTERNATIVE
CATEGORIES
FUND
COMBINED
<S>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
Money Market
funds
$2,000
$2,000
$2,000
$2,000
$2,000
$2,000
$12,000
/TABLE
<PAGE>
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
effective March 19, 1996. As of March 31, 1996, operations consisted of
matters relating to its organization and registration and acceptance of
initial investments on March 29,
1996.
The Trust is in the process of applying for registration 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 securities traded on a national
securities exchange (or reported on the NASDAQ national market) will be
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 will be stated at the last quoted bid price, except for any short
positions and call options written, for which the last quoted asked price
will be used. Short-term notes will be 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 plans to comply with the requirements
of the Internal Revenue Code that are applicable to regulated investment
companies and to distribute all its taxable income to its shareholders.
Therefore, no significant federal or state income tax provision is expected
to be required, after operations commence.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Distributions to shareholders - Dividends to shareholders will be recorded
on the ex-dividend date.
Other - The Trust will follow industry practice and record security
transactions on the trade date. Dividend income will be recognized on the
ex-dividend date, and interest income will be recognized on the accrual
basis. Discounts and premiums on securities purchased will be amortized
over the life of the respective securities.
NOTE 3 - CAPITAL SHARE TRANSACTIONS
As of March 31, 1996, the Trust had authorized an unlimited number of
shares of beneficial ownership. As of that date a total of 1,200 shares (200
per portfolio) had been issued.
NOTE 4 - 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 (adviser). This agreement appointed the Adviser to act as investment
adviser to the Trust on behalf of six series portfolios for a one year period.
The adviser will furnish 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). In addition, the Trust will pay to the adviser 2/3 of any sales
charge, front or contingent, which it charges to customers.
The president of the investment adviser is the organizer of the Trust.
The agreement provides for an expense reimbursement from the
investment adviser if the Trust's total expenses 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 permitted 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 adviser as well as certain marketing, legal and accounting and
transfer and custodial services for the first two years.
NOTE 5 - NOTE PAYABLE - INVESTMENT ADVISER
On March 29, 1996, the Investment Adviser advanced the Company
$1,000 to cover initial operating expenses. The resulting note is payable
on demand, together with interest at 7%. <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...........................33
Statement of Assets and Liabilities...................35
Statement of Changes in Net Assets..................36
Investment in Securities of Unaffiliated
Issuers.............................................................37
Notes to Financial Statements.............................38
</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
(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
X(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.
</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 June 30, 1996 of
the shares of beneficial interest of the Registrant:
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
<C> <S>
Shares of Beneficial
Interest, no par value ______
</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.
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 1st day of November, 1996.
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 November 1, 1996
(Signature) (date)
<PAGE>
CUSTODY AGREEMENT
This Agreement (the "Agreement") is entered into as of the day
of , 1996 by and between STARR SYSTEM Trust, (the
"Fund"), an open-end non-diversified investment business trust organized
under the laws of Pennsylvania and having its office at 604 McKnight
Park Drive, Pittsburgh, PA 15237 and Star Bank, National Association,
(the "Custodian"), a national banking association having its principal
office at 425 Walnut Street, Cincinnati, Ohio, 45202.
WHEREAS, the Fund and the Custodian desire to enter into this
Agreement to provide for the custody and safekeeping of the assets of the
Fund as requited by the Investment (Company Act of 1940, as amended
(the "Act").
WHEREAS, the Fund hereby appoints the Custodian as custodian of
all the Fund's Securities and moneys at any time owned by the Fund
during the term of this Agreement (the "Fund Assets").
WHEREAS, the Custodian hereby accepts such appointment as
Custodian and agrees to perform the duties thereof as hereinafter set forth.
THEREFORE, in consideration of the mutual promises hereinafter
set forth, the Fund and the Custodian agree as follows:
ARTICLE I
Definitions
The following words and phrases, when used in this Agreement,
unless the context otherwise requires, shall have the following meanings:
Authorized Person - the Chairman, President, Secretary, Treasurer,
Controller, or Senior Vice President of the Fund, or any other person,
whether or not any such person is an officer or employee of the Fund, duly
authorized by the Board of Trustees of the Fund to give Oral Instructions
and Written Instructions on behalf of the Fund, and listed in the Certificate
annexed hereto as Appendix A, or such other Certificate as may be
received by the Custodian from time to time.
Book-Entry System - the Federal Reserve Bank book-entry system
for United States Treasury securities and federal agency securities.
Depository - The Depository Trust Company ("DTC"), a limited
purpose trust company its successor(s) and its nominee(s) or any other
person or clearing agent
Dividend and Transfer Agent - the dividend and transfer agent
appointed, from time to time, pursuant to a written agreement between the
dividend and transfer agent and the Fund Foreign Securities - a) securities
issued and sold primarily outside of the United States by a foreign
government, a national of any foreign country, or a trust or other
organization incorporated or organized under the laws of any foreign
country or, b) securities issued or guaranteed by the government of the
United States, by any state, by any political subdivision or agency thereof,
or by any entity organized under the laws of the United States or of any
state thereof, which have been issued and sold primarily outside of the
United States.
Money Market Security - debt obligations issued or guaranteed as to
principal and/or interest by the government of the United States or
agencies or instrumentalities thereof, commercial paper, obligations
(including certificates of deposit, bankers' acceptances, repurchase
agreements and reverse repurchase agreements with respect to the same),
and time deposits of domestic banks and thrift institutions whose deposits
are insured by the Federal Deposit Insurance Corporation, and short-term
corporate obligations where the purchase and sale of such securities
normally require settlement in federal funds or their equivalent on the
same day as such purchase and sale, all of which mature in not more than
thirteen (13) months.
Officers - the Chairman, President, Secretary, Treasurer, Controller,
and Senior Vice President and/or Trustee of the Fund listed in the
Certificate annexed hereto as Appendix A, or such other Certificate as may
be received by the Custodian from time to time.
Oral Instructions - verbal instructions received by the Custodian
from an Authorized Person (or from a person that the Custodian
reasonably believes in good faith to be an Authorized Person) and
confirmed by Written Instructions in such a manner that such Written
Instructions are received by the Custodian on the business day
immediately following receipt of such Oral Instructions.
Prospectus - the Fund's then currently effective prospectus and
Statement of Additional Information, as filed with and declared effective
from time to time by the Securities and Exchange Commission.
Security or Securities - Money Market Securities, common stock,
preferred stock, options, financial futures, bonds, notes, debentures,
corporate debt securities, mortgages, and any certificates, receipts,
warrants, or other instruments representing rights to receive, purchase, or
subscribe for the same or evidencing or representing any other rights or
interest therein, or in any property or assets.
Written Instructions - communication received in writing by the
Custodian from an Authorized Person.
ARTICLE II
Documents and Notices to be Furnished By the Fund
A. The following documents, including any amendments thereto,
will be provided contemporaneously with the execution of the Agreement,
to the Custodian by the Fund:
1. A copy of the Declaration of Trust of the Fund certified by
the Secretary.
2. A copy of the By-Laws of the Fund certified by the Secretary.
3. A copy of the resolution of the Board of Trustees of the Fund
appointing the Custodian, certified by the Secretary.
4. A copy of the then current Prospectus.
5. A Certificate of the President and Secretary of the Fund
setting forth the names and signatures of the Officers of the Fund.
B. The Fund agrees to notify the Custodian in writing of the
appointment of any Dividend and Transfer Agent.
ARTICLE III
Receipt of Fund Assets
A. During the term of this Agreement, the Fund will deliver or
cause to be delivered to the Custodian all moneys constituting Fund
Assets. The Custodian shall be entitled to reverse any deposits made on
the Fund's behalf where such deposits have been entered and moneys are
not finally collected within 30 days of the making of such entry.
B. During the term of this Agreement, the Fund will deliver or cause
to be delivered to the Custodian all Securities constituting Fund Assets.
the Custodian will not have any duties or responsibilities with respect to
such Securities until actually received by the Custodian.
C. As and when received, the Custodian shall deposit to the
account(s) of the Fund any and all payments for shares of the Fund issued
or sold from time to time as they are received from the Fund's distributor
or Dividend and Transfer Agent or from the Fund itself.
ARTICLE IV
Disbursement of Fund Assets
A. The Fund shall furnish to the Custodian a copy of the resolution
of the Board of Trustees of the Fund, certified by the Fund's Secretary,
either (I) setting forth the date of the declaration of any dividend or
distribution in respect of shares of the Fund, the date of payment thereof,
the record date as of which Fund shareholders entitled to payment shall be
determined, the amount payable per share to Fund shareholders of record
as of that date, and the total amount to be paid by the Dividend and
Transfer Agent on the payment date, or (ii) authorizing the declaration of
dividends and distributions in respect of shares of the Fund on a daily
basis and authorizing the Custodian to rely on a Certificate setting forth
the date of the declaration of any such dividend or distribution, the date of
payment thereof, the record date as of which Fund shareholders entitled to
payment shall be determined, the amount payable per share to Fund
shareholders of record as of that date, and the total amount to be paid by
the Dividend and Transfer Agent on the payment date.
On the payment date specified in such resolution or Certificate
described above, the Custodian shall segregate such amounts from moneys
held for the account of the Fund so that they are available for such
payment.
B. Upon receipt of Written Instructions so directing it, the Custodian
shall segregate amounts necessary for the payment of redemption proceeds
to be made by the Dividend and Transfer Agent from moneys held for the
account of the Fund so that they are available for such payment.
C. Upon receipt of a Certificate directing payment and setting forth
the name and address of the person to whom such payment is to be made,
the amount of such payment, and the purpose for which payment is to be
made, the Custodian shall disburse amounts as and when directed from the
Fund Assets. The Custodian is authorized to rely on such directions and
shall be under no obligation to inquire as to the propriety of such
directions.
D. Upon receipt of a Certificate directing payment, the Custodian
shall disburse moneys from the Fund Assets in payment of the Custodian's
fees and expenses as provided in Article VIII hereof.
ARTICLE V
Custody of Fund Assets
A. The Custodian shall open and maintain a separate bank account
or accounts in the United States in the name of the Fund, subject only to
draft or order by the Custodian acting pursuant to the terms of this
Agreement, and shall hold all cash received by it from or for the account
of the Fund, other than cash maintained by the Fund in a bank account
established and used by the Fund in accordance with Rule 17f-3 under the
Act. Moneys held by the Custodian on behalf of the Fund may be
deposited by the Custodian to its credit a Custodian in the banking
department of the Custodian. Such moneys shall be deposited by the
Custodian in its capacity as such, and shall be withdrawable by the
Custodian only in such capacity.
B. The Custodian shall hold all Securities delivered to it in
safekeeping in a separate account or accounts maintained at Star Bank,
N.A. for the benefit of the Fund.
C. All Securities held which are issued or issuable only in bearer
form, shall be held by the Custodian in that form; all other Securities held
for the Fund shall be registered in the name of the Custodian or its
nominee. The Fund agrees to furnish to the Custodian appropriate
instruments to enable the Custodian to hold, or deliver in proper form for
transfer, any Securities that it may hold for the account of the Fund and
which may, from time to time, be registered in the name of the Fund.
D. With respect to all Securities held for the Fund, the Custodian
shall on a timely basis (concerning items I and 2 below, as defined in the
Custodian's standards of Service Guide, as amended from time to time,
annexed hereto as Appendix C):
1.) Collect all income due and payable with respect to such
Securities;
2.) Present for payment and collect amounts payable upon all
Securities which may mature or be called, redeemed, or retired, or
otherwise become payable;
3.) Surrender Securities in temporary form for definitive
Securities; and
4.) Execute, as agent, any necessary declarations or
certificates of ownership under the Federal income tax laws or the laws or
regulations of any other taxing authority, including any foreign taxing
authority, now or hereafter in effect.
E. Upon receipt of a Certificate and no otherwise, the Custodian
shall:
1.) Execute and deliver to such persons as may be designated in
such Certificate proxies, consents, authorizations, and any other
instruments whereby the authority of the Fund as beneficial owner of any
Securities may be exercised;
2.) Deliver any Securities in exchange for other Securities
or cash issued or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation, or recapitalization of any trust, or the
exercise of any conversion privilege;
3.) Deliver any Securities to any protective committee,
reorganization committee, or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization, or sale
of assets of any trust, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or other
instruments or documents as may be issued to it to evidence such
delivery;
4.) Make such transfers or exchanges of the assets of the Fund
and take such other steps as shall be stated in said Certificate to be for the
purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the Fund; and
5.) Deliver any Securities held for the Fund to the depository
agent for tender or other similar offers.
F. The Custodian shall promptly deliver to the Fund all notices,
proxy material and executed but unvoted proxies pertaining to shareholder
meetings of Securities held by the Fund. The Custodian shall not vote or
authorize the voting of any Securities or give any consent, waiver or
approval with respect thereto unless so directed by a Certificate or Written
Instruction.
G. The Custodian shall promptly deliver to the Fund all information
received by the Custodian and pertaining to Securities held by the Fund
with respect to tender or exchange offers, calls for redemption or
purchase, or expiration of rights.
ARTICLE VI
Purchase and Sale of Securities
A. Promptly after each purchase of Securities by the Fund, the Fund
shall deliver to the Custodian (I) with respect to each purchase of
Securities which are not Money Market Securities, Written Instructions,
and (ii) with respect to each purchase of Money Market Securities, Written
Instructions or Oral Instructions, specifying with respect to each such
purchase the;
1.) name of the issuer and the title of the Securities,
2.) principal amount purchased and accrued interest, if any,
3.) date of purchase and settlement,
4.) purchase price per unit,
5.) total amount payable, and
6.) name of the person from whom, or the broker through
which, the purchase was made.
The Custodian shall, against receipt of Securities purchased by or for the
Fund, pay out of the Fund Assets, the total amount payable to the person
from whom or the broker through which the purchase was made, provided
that the same conforms to the total amount payable as set forth in such
Written Instructions or Oral Instructions, as the case may be.
B. Promptly after each sale of Securities by the Fund, the Fund shall
deliver to the Custodian (I) with respect to each sale of Securities which
are not Money Market Securities, Written Instructions, and (ii) with
respect to each sale of Money Market Securities, Written Instructions or
Oral Instructions, specifying with respect to each such sale the;
1.) name of the issuer and the title of the Securities,
2.) principal amount sold and accrued interest, if any,
3.) date of sale and settlement,
4.) sale price per unit,
5.) total amount receivable, and
6.) name of the person to whom, or the broker through which, the
sale was made.
The Custodian shall deliver the Securities against receipt of the total
amount receivable, provided that the same conforms to the total amount
receivable as set forth in such Written Instructions or Oral Instructions, as
the case may be.
C. On contractual settlement date, the account of the Fund will be
charged for all purchased Securities settling on that day, regardless of
whether or not delivery is made.
Likewise, on contractual settlement date, proceeds from the sale of
Securities settling that day will be credited to the account of the Fund,
irrespective of delivery.
D. Purchases and sales of Securities effected by the Custodian will
be made on a delivery versus payment basis. The Custodian may, in its
sole discretion, upon receipt of a Certificate, elect to settle a purchase or
sale transaction in some other manner, but only upon receipt of acceptable
indemnification from the Fund.
E. The Custodian shall, upon receipt of a Written Instructions so
directing it, establish and maintain a segregated account or accounts for
and on behalf of the Fund. Cash and/or Securities may be transferred into
such account or accounts for specific purposes, to-wit:
1.) in accordance with the provision of any agreement among the
Fund, the Custodian, and a broker-dealer registered under the Securities
and Exchange Act of 1934, as amended, and also a member of the
National Association of Securities Dealers (NASD) (or any futures
commission merchant registered under
the Commodity Exchange Act), relating to compliance with the rules of
the Options Clearing Corporation and of any registered national securities
exchange, the Commodity Futures Trading Commission, any registered
contract market, or any similar organization or organizations requiring
escrow or other similar arrangements in connection with transactions by
the Fund;
2.) for purposes of segregating cash or government securities in
connection with options purchased, sold, or written by the Fund or
commodity futures contracts or options thereon purchased or sold by the
Fund;
3.) for the purpose of compliance by the fund with the procedures
required for reverse repurchase agreements, firm commitment agreements,
standby commitment agreements, and short sales by Act Release No.
10666, or any subsequent release or releases or rule of the Securities and
Exchange Commission relating to the maintenance of segregated accounts
by registered investment companies; and
4.) for other corporate purposes, only in the case of this
clause 4 upon receipt of a copy of a resolution of the Board of Trustees of
the Fund, certified by the Secretary of the Fund, setting forth the purposes
of such segregated account.
F. Except as otherwise may be agreed upon by the parties hereto, the
Custodian shall not be required to comply with any Written Instructions to
settle the purchase of any Securities on behalf of the Fund unless there is
sufficient cash in the account(s) at the time or to settle the sale of any
Securities from an account(s) unless such Securities are in deliverable
form. Notwithstanding the foregoing, if the purchase price of such
Securities exceeds the amount of cash in the account(s) at the time of such
purchase, the Custodian may, in its sole discretion, advance the amount of
the difference in order to settle the purchase of such Securities. The
amount of any such advance shall be deemed a loan from the
Custodian to the Fund payable on demand and bearing interest accruing
from the date such loan is made up to but not including the date such loan
is repaid at a rate per annum customarily charged by the Custodian on
similar loans.
ARTICLE VII
Fund Indebtedness
In connection with any borrowing by the Fund, the Fund will cause
to be delivered to the Custodian by a bank or broker requiring Securities as
collateral for such borrowing (including the Custodian if the borrowing is
from the Custodian), a notice or undertaking in the form currently
employed by such bank or broker setting forth the amount of collateral.
The Fund shall promptly deliver to the Custodian a Certificate specifying
with respect to each such borrowing: (a) the name of the bank or broker,
(b) the amount and terms of the borrowing, which may be set forth by
incorporating by reference an attached promissory note duly endorsed by
the Fund, or a loan agreement, (c) The date, and time if known,
on which the loan is to be entered into, (d) the date on which the loan
becomes due and payable, (e) the total amount payable to the Fund on the
borrowing date, and (f) the description of the Securities securing the loan,
including the name of the issuer, the title and the number of shares or the
principal amount. The Custodian shall deliver on the borrowing date
specified in the Certificate the required collateral against the lender's
delivery of the total loan amount then payable, provided that the same
conforms to that which is described in the Certificate. The Custodian shall
deliver, in the manner directed by the Fund, such Securities as additional
collateral, as may be specified in a Certificate, to secure further any
transaction described in this Article VII. The Fund shall cause all
Securities released from collateral status to be returned directly to the
Custodian and the Custodian shall receive from time to time such return of
collateral as may be tendered to it. The Custodian may, at the option of the
lender, keep such collateral in its possession, subject to all rights therein
given to the lender because of the loan. The Custodian may require such
reasonable conditions regarding such collateral and its dealings with
third-party lenders as it may deem appropriate.
ARTICLE VIII
Concerning the Custodian
A. Except as otherwise provided herein, the Custodian shall not be
liable for any loss or damage resulting from its action or omission to act or
otherwise, except for any such loss or damage arising out of its own gross
negligence or willful misconduct. The Fund shall defend, indemnify and
hold harmless the Custodian and its directors, officers, employees and
agents with respect to any loss, claim, liability or cost (including
reasonable attorneys' fees) arising or alleged to arise from or relating to the
Fund's duties hereunder or any other action or inaction of the Fund or its
Trustees, officers, employees or agents, except such as may arise from the
negligent action, omission, willful misconduct or breach of this Agreement
by the Custodian. The Custodian may, with respect to questions of law,
apply for and obtain the advice and opinion of counsel, at the expense of
the Fund, and shall be fully protected with respect to anything done or
omitted by it in good faith in conformity with the advice or opinion of
counsel. The provisions under this paragraph shall survive the termination
of this Agreement.
B. Without limiting the generality of the foregoing, the Custodian,
acting in the capacity of Custodian hereunder, shall be under no obligation
to inquire into,, and shall not be liable for:
1.) The validity of the issue of any Securities purchased by or
for the account of the Fund, the legality of the purchase thereof, or the
propriety of the amount paid therefor;
2.) The legality of the sale of any Securities by or for the
account of the Fund, or the propriety of the amount for which the same are
sold;
3.) The legality of the issue or sale of any shares of the
Fund, or the sufficiency of the amount to be received therefor;
4.) The legality of the redemption of any shares of the Fund,
or the propriety of the amount to be paid therefor;
5.) The legality of the declaration or payment of any dividend by
the Fund in respect of shares of the Fund;
6.) The legality of any borrowing by the Fund on behalf of the
Fund, using Securities as collateral;
C. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to the Fund from any
Dividend and Transfer Agent of the Fund nor to take any action to effect
payment or distribution by any Dividend and Transfer Agent of the Fund
of any amount paid by the Custodian to any Dividend and Transfer Agent
of the Fund in accordance with this Agreement.
D. Notwithstanding Section D of Article V, the Custodian shall not
be under any duty or obligation to take action to effect collection of any
amount, if the Securities upon which such amount is payable are in
default, or if payment is refused after due demand or presentation, unless
and until (I) it shall be directed to take such action by a Certificate and (ii)
it shall be assured to its satisfaction (including prepayment thereof) of
reimbursement of its costs and expenses In connection with any such
action.
E. The Fund acknowledges and hereby authorizes the Custodian to
hold Securities through its various agents described in Appendix B
annexed hereto. The Fund hereby represents that such authorization has
been duly approved by the Board of Trustees of the Fund as required by
the Act. The Custodian acknowledges that although certain Fund Assets
are held by ???? agents, the Custodian remains primarily liable for the
safekeeping of the Fund Assets.
In addition, the Fund acknowledges that the Custodian may appoint
one or more financial institutions, as agent or agents or as sub-custodian or
sub-custodians, including, but not limited to, banking institutions located
in foreign countries, for the purpose of holding Securities and moneys at
any time owned by the Fund. The Custodian shall not be relieved of any
obligation or liability under this Agreement in connection with the
appointment or activities of such agents or sub-custodians. Any such agent
or sub-custodian shall be qualified to serve as such for assets of
investment companies registered under the Act. Upon request, the
Custodian shall promptly forward to the Fund any documents it receives
from any agent or sub-custodian appointed hereunder which may assist
trustees of registered investment companies fulfill their responsibilities
under Rule 17f-5 of the Act.
F. The Custodian shall not be under any duty or obligation to
ascertain whether any Securities at any time delivered to or held by it for
the account of the Fund are such as properly may be held by the Fund
under the provisions of the Articles of Incorporation and the Fund's
By-Laws.
G. The Custodian shall treat all records and other information
relating to the Fund and the Fund Assets as confidential and shall not
disclose any such records or information to any other person unless (I) the
Fund shall have consented thereto in writing or (ii) such disclosure is
required by law.
H. The Custodian shall be entitled to receive and the Fund agrees to
pay to the Custodian such compensation as shall be determined pursuant to
Appendix D attached hereto, or 13 as shall be determined pursuant to
amendments to such Appendix D. The Custodian shall be entitled to
charge against any money held by it for the account of the Fund, the
amount of any of its fees, any loss, damage, liability or expense, including
counsel fees. The expenses which the Custodian may charge against the
account of the Fund include, but are not limited to, the expenses of agents
or sub-custodians incurred in settling transactions involving the purchase
and sale of Securities of the Fund.
I. The Custodian shall be entitled to rely upon any Oral
Instructions and any Written Instructions. The Fund agrees to forward to
the Custodian Written Instructions confirming Oral Instructions in such a
manner so that such Written Instructions are received by the Custodian,
whether by hand delivery, facsimile or other~vise, on the same business
day on which such Oral Instructions were given. The Fund agrees that the
failure of the Custodian to receive such confirming instructions shall in no
way affect the validity of the transactions or enforceability of the
transactions hereby authorized by the Fund. The Fund agrees that the
Custodian shall incur no liability to the Fund for acting upon Oral
Instructions given to the Custodian hereunder concerning such
transactions.
J. The Custodian will (I) set up and maintain proper books of
account and complete records of all transactions in the accounts
maintained by the Custodian hereunder in such manner as will meet the
obligations of the Fund under the Act, with particular attention to Section
31 thereof and Rules 31a-1 and 31a-2 thereunder and those records are the
property of the Fund, and (ii) preserve for the periods prescribed by
applicable Federal statute or regulation all records required to be so
preserved. All such books and records shall be the property of the Fund,
and shall be open to inspection and audit at reasonable times and with
prior notice by Officers and auditors employed by the Fund.
K. The Custodian shall send to the Fund any report received on
the systems of internal accounting control of the Custodian, or its agents or
sub-custodians, as the Fund may reasonably request from time to time.
L. The Custodian performs only the services of a custodian and
shall have no responsibility for the management, investment or
reinvestment of the Securities from time to time owned by the Fund. The
Custodian is not a selling agent for shares of the Fund and performance of
its duties as custodian shall not be deemed to be a recommendation to the
Fund's depositors or others of shares of the Fund as an investment.
M. The Custodian shall take all reasonable action, that the Fund
may from time to time request, to assist the Fund in obtaining favorable
opinions from the Fund's independent accountants, with respect to the
Custodian's activities hereunder, in connection with the preparation of the
Fund's Form N-IA, Form N-SAR, or other annual reports to the Securities
and Exchange Commission.
N. T he Fund hereby pledges to and grants the Custodian a
security interest in any Fund Assets to secure the payment of any liabilities
of the Fund to the Custodian, whether acting in its capacity as Custodian
or other~vise, or on account of money borrowed from the Custodian. This
pledge is in addition to any other pledge of collateral by the Fund to the
Custodian.
ARTICLE X
Termination
A. Either of the parties hereto may terminate this Agreement for any
reason by giving to the other party a notice in writing specifying the date
of such termination, which shall be not less than ninety (90) days after the
date of giving of such notice. If such notice is given by the Fund, it shall
be accompanied by a copy of a resolution of the Board of Trustees of the
Fund, certified by the Secretary of the Fund, electing to terminate this
Agreement and designating a successor custodian or custodians. In the
event such notice is given by the Custodian, the Fund shall, on or before
the termination date, deliver to the Custodian a copy of a resolution of the
Board of Trustees of the Fund, certified by the Secretary, designating a
successor custodian or custodians to act on behalf of the Fund. In the
absence of such resignation in acting under the provisions of this
Agreement upon Oral Instructions or signatures of the then current
Authorized Persons as set forth in the last delivered Appendix A.
B. No recourse under any obligation of this Agreement or for any
claim based thereon shall be had against any organizer, shareholder,
Officer, Director, past, present or future as such, of the Fund or of any
predecessor or successor, either directly or through the Fund or any such
predecessor or successor, whether by virtue of any constitution, statute or
rule of law or equity, or be the enforcement of any assessment or penalty
or otherwise; it being expressly agreed and understood that this Agreement
and the obligations thereunder are enforceable solely against the Fund, and
that no such personal liability whatever shall attach to, or is or shall be
incurred by, the organizers, shareholders, Officers, Trustees of the Fund or
of any predecessor or successor, or any of them as such. To the extent that
any such liability exists, it is hereby expressly waived and released by the
Custodian as a condition of, and as a consideration for, the execution of
this Agreement.
C. The obligations set forth in this Agreement as having been made
by the Fund have been made by the Board of Trustees, acting as such
Trustees for and on behalf of the Fund, pursuant to the authority vested in
them under the laws of the State of Pennsylvania, the Declaration of Trust
and the By-Laws of the Fund. This Agreement has been executed by
Officers of the Fund as officers, and not individually, and the obligations
contained herein are not binding upon any of the Trustees, Officers, agents
or holders of shares, personally, but bind only the Fund.
D. Provisions of the Prospectus and any other documents (including
advertising material) specifically mentioning the Custodian (other than
merely by name and address) shall be reviewed with the Custodian by the
Fund prior to publication and/or dissemination or distribution, and shall be
subject to the consent of the Custodian.
E. Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Custodian, shall be sufficiently given
if addressed to the Custodian and mailed or delivered lo it at its offices at
Star Bank Center, 425 Walnut Street, M. L. 6118, Cincinnati, Ohio
45202, attention Mutual Fund Custody Department, or at such other place
as the Custodian may from time to time designate in writing.
F. Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Fund shall be sufficiently given when
delivered to the Fund or on the second business day following the time
such notice is deposited in the U.S. mail postage prepaid and addressed to
the Fund at its office at 604 McKnight Park, Pittsburgh, PA 15237 or at
such other place as the Fund may from time to time designate in writing.
G. This Agreement, with the exception of the Appendices, may not
be amended or modified in any manner except by a written agreement
executed by both parties with the same formality as this Agreement, and
authorized and approved by a resolution of the Board of Trustees of the
Fund.
H. This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Fund or by the
Custodian, and no attempted assignment by the Fund or the Custodian
shall be effective without the written consent of the other party hereto.
I. This Agreement shall be construed in accordance with the laws of
the State of Ohio.
J. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts
shall, together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective Officers, thereunto duly
authorized as of the day and year first above written.
ATTEST: STAAR SYSTEM Trust
By:
Title:
ATTEST: STAR BANK, N.A.
Title
<PAGE>
APPENDIX A
Authorized Persons Specimen Signatures
Chairman:
President:
Secretary:
Treasurer:
Controller:
Adviser
Employees:
Transfer Agent/
Fund Accountant
Employees:
<PAGE>
APPENDIX B
The following agents are employed currently by Star Bank, N.A.
for securities processing and control...
The Depository Trust Company (New York)
7 Hanover Square
New York, NY 10004
The Federal Reserve Bank
Cincinnati and Cleveland Branches
Bankers Trust Company
16 Wall Street
New York, NY 10005
(For Foreign Securities and certain non-DTC eligible
Securities)
<PAGE>
APPENDIX C
Standards of Service Guide
STAR BANK, N.A.
MAIL LOCATION #6118
425 WALNUT STREET,
CINCINNATI, OH 45202
March, 1996
Star Bank, N.A.
Standards of Service Guide
Star Bank, N.A. is committed to providing superior quality service to all
customers and their agents at all times. We have compiled this guide as a
tool for
our clients to determine our standards for the processing of security
settlements, payment collection, and capital change transactions.
Deadlines recited in this guide represent the times required for Star Bank
to guarantee processing. Failure to meet these deadlines will result in
settlement at our client s risk. In all cases, Star Bank will make every
effort to complete all processing on a timely basis.
Star Bank is a direct participant of the Depository Trust Company, a
direct member of the Federal Reserve Bank of Cleveland, and utilizes the
Bankers Trust Company as its agent for ineligible and foreign securities.
For corporate reorganizations, Star Bank utilizes SEI's Reorg Source,
Financial Information, Inc., XCITEK, DTC Important Notices, and the
Wall Street Journal.
For bond calls and mandatory puts, Star Bank utilizes SEI's Bond
Source, Kenny Information Systems, Standard and Poor's Corporation,
and DTC Important Notices. Star Bank will not notify clients of optional
opportunities.
Any securities delivered free to Star Bank or its agents must be received
three (3) business days prior to any payment or settlement in order for the
Start Bank standards of service to apply.
Should you have any questions regarding the information contained in
this guide, please feel free to contact your account representative.
The information contained in this standards of
Service Guide is subject to change.
Should any changes be made Star Bank will
provide you with an updated copy of its
Standards of Service Guide.
<PAGE>
Star Bank Security Settlements Standards
Transaction Type
Instructions
Deadlines*
Delivery
Instructions
DTC
1:30 P.M. on settlement Date
DTC Participant #2219
Agent Bank ID 27895
Institutional #
For Account #
Federal Reserve Book Entry
12:30 P.M. on Settlement Date
Federal Reserve Bank of
Cinti/Trust for Star Bank,
N.A. ABA# 042000013
For Account #
Federal Reserve Book Entry
(Repurchase Agreement
Collateral Only)
1:00 P.M. on Settlement Date
Federal Reserve Bank of
Cinti/Spec for Star Bank,
N.A. ABA# 042000013
For Account #
PTC Securities
(GNMA Book Entry)
12:00 P.M. on Settlement Date
PTC For Account BTRST/CUST
Sub Account: Star Bank, N.A.
#090334
Physical Securities
9:30 A.M. EST on Settlement
Date (for Deliveries, by
4:00 P.M. on Settlement Date
minus 1)
Bankers Trust Company
16 Wall Street 4th Floor,
Window 43
for Star Bank Account
#090334
CEDEL/EURO-CLEAR
11:00 A.M. on Settlement Date
minus 2
Euroclear Via Cedel Bridge
In favor of Bankers Trust
Comp
Cedel 53355
For Star Bank Account
#501526354
Cash Wire Transfer
3:00 P.M.
Star Bank, N.A. Cinti/Trust
ABA #042000013
Credit Account #9901877
Further Credit to
Account #
* All times listed are Eastern standard Time
<PAGE>
Star Bank Payment Standards
Security Type
Income
Principal
Equities
Payable Date
Municipal Bonds*
Payable Date
Payable Date
Corporate Bonds*
Payable Date
Payable Date
Federal Reserve
Bank Book Entry
Payable Date
Payable Date
PTC GNMA s (P&I)
Payable Date +1
Payable Date +1
CMOs*
DTC
Bankers Trust
Payable Date +1
Payable Date +1
Payable Date +1
Payable Date +1
SBA Loan
Certificates
When Received
When Received
Unit Investment
Trust
Certificates*
Payable Date
Payable Date
Certificates of
Deposit*
Payable Date +1
Payable Date +1
Limited
Partnerships
When Received
When Received
Foreign
Securities
When Received
When Received
*Variable Rate
Securities
Federal
Reserve Bank
Book Entry
DTC
Bankers Trust
Payable Date
Payable Date +1
Payable Date +1
Payable Date
Payable Date +1
Payable Date +1
NOTE: If a payable date falls on a weekend or bank
holiday, payment will be made on the immediately
following business day.<PAGE>
Star Bank Corporate Reorganization
Standards
Type of
Action
Notification to
Client
Deadline for Client
Instructions to Star
Bank
Transaction
Posting
Rights, Warrants,
and Optional
Mergers
Later of 10 business days
prior to expiration or
receipt of notice
5 business days prior to
expiration
Upon Receipt
Mandatory Puts with
Option to Retain
Later of 10 business days
prior to expiration or
receipt of notice
5 business days prior to
expiration
Upon Receipt
Class Actions
10 business days prior to
expiration
5 business days prior to
expiration
Upon Receipt
Voluntary Tenders,
Exchanges, and
conversions
Later of 10 business days
prior to expiration or
receipt of notice
5 business days prior to
expiration
Upon Receipt
Mandatory Puts,
defaults,
Liquidations,
Bankruptcies, Stock
Splits, Mandatory
Exchanges
At posting of funds or
securities received
None
Upon Receipt
Full and Partial
Calls
Later of 10 business days
prior to expiration or
receipt of notice
None
Upon Receipt
NOTE: Fractional Shares/par amounts resulting from any of the
above will be
sold.
