[TYPE] N-1A POS AMI
[DESCRIPTION] POST-EFFECTIVE AMENDMENT No. 1 to
N-1A EL
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933
Post-Effective Amendment No. 1 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 1 X
(Check appropriate box or boxes.)
The Staar Investment 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
It is proposed that this filing will become effective (check
appropriate box)
X 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
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
<PAGE>
THE STAAR INVESTMENT TRUST
CROSS REFERENCE SHEET
PURSUANT TO RULE 481(a)
UNDER THE SECURITIES ACT OF 1933
Form N-1A
<TABLE>
<CAPTION>
Item Registration Statement Prospectus
No. Caption Caption
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis (a)
3. Condensed Financial Information (a)
4. General Description of Registrant Cover Page, The
Funds, the Advisor;
General Investment
Objectives and
Policies
5. Management of Fund Management of
the Funds
5A. Management Discussion of (a)
Funds Performance
6. Capital Stock and (a)
Other Securities
7. Purchase of Securities How to Buy
Shares
being offered
8. Redemption or Repurchase How to Redeem
Shares
9. Pending Legal Proceedings (a)
</TABLE>
<TABLE>
<CAPTION>
Additional Information Statement of Additional Information
Caption
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information
and History General Information
and History
13. Investment Objectives Investment Objective
and Policies and Policies, Investment
Restrictions
14. Management of the Fund Board of Trustees
15. Control Persons and Control Persons and
Principal Holders of Principal Holders of
Securities Securities
16. Investment Advisory and Investment Advisory and
Other Services other services
17. Brokerage Allocation and other Brokerage Allocation and
other Practices other Practices
18. Capital Stock and (a)
19. Purchase Redemption and Pricing Purchase, redemption and
of shares pricing of Shares
20. Tax Status Dividends,Capital
Gains, Distributions &
Taxes
21. Underwriter (a)
22. Calculations of Performance Data Performance Data
23. Financial Statements Financial Statements
</TABLE>
(a) Not Applicable
<PAGE>
PROSPECTUS
September 21, 1998
THE STAAR INVESTMENT TRUST
604 McKnight Park Dr.
Pittsburgh, PA 15237
412-367-9076
New Account Information:
1-800-33ASSET P.I.N.3370
Shareholder Account Services:
1-800-33ASSET P.I.N.3371
Pittsburgh Local: 367-9076
<TABLE>
<CAPTION>
Contents Page
<S> <C>
Expenses. . . . . . . . . . . . . . . ....... 7
Fund Information. . . . . . . . . . . . 8
Risks . . . . . . . . . . . . . . . . . . ..... 12
Management. . . . . . . . . . . . . . . . 15
How to Purchase Shares. . . . ..... 16
How to Sell Shares. . . . . . . . . ... 19
How to Exchange Shares. . . ..... 19
Dividends, Capital Gains,
Distributions & Taxes. . . . . . . 22
Glossary. . . . . . . . . . . . . . . . . . 23
A "Statement of Additional Information" about the Trust, dated 9/21/98, 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 Investment Trust (the Trust),
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 Intermediate Bond Fund (IBF)
The Long-Term Bond Fund (LTBF)
The Larger Company Stock Fund (LCSF)
The Smaller Company Stock Fund (SCSF)
The International Fund (INTF)
The Alternative Categories Fund (AltCat)
Each Fund is managed separately and has its own investment objectives
and strategies in keeping with the asset allocation category for which it is
named. The Funds are no-load funds. There are no sales loads or commissions
on the purchase or fees upon redemption. 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.
Trust Expenses
(Period Ending 12/31/97)
Shareholder Transaction Expenses
IBF LTBF LCSF CSF INTF ACF
<C>
Maximum Sales Load
Imposed on
Purchases None on any of the Funds
Sales Load Imposed
on Reinvested
Dividends None on any of the funds
None on any of the funds
Wire Redemption Processing Fees
<C>
$20
<C>
$20
<C>
$20
<C>
$20
<C>
$20
<C>
$20
Deferred Sales Load None on any of the Funds
Exchange Fee None on any of the Funds
Other Redemption Fees None on any of the Funds
</TABLE>
ANNUAL FUND OPERATING EXPENSES*
(As a percentage of average net assets)
<TABLE>
<CAPTION>
IBF LTBF LCSF SCSF INTF ACF
<S> <C> <C> <C> <C> <C> <C>
Management Fees* .47% .55% .46% .88% .87% .73%
12B-1 Fees None None None None None None
Other Expenses* .09% .09% .09% .09% .09% .09%
Total Fund
Operating Expenses .56% .64% .65% .97% .96% .82%
</TABLE>
The Trust has adopted a 12b-1 plan. 12b-1 expenses may not exceed .25% of a
Fund's average net assets annually. Due to these distribution expenses,
long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charge permitted by the National Association of
Security Dealers, Inc.
Example
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return, (2) Redemption at the end of
each time period and (3) Maximum Management Fee.)
<TABLE>
<CAPTION>
IBF LTBF LCSF SCSF INTF ACF
<S> <C> <C> <C> <C> <C> < c>
One Year $ 6 $ 7 $ 8 $ 10 $ 10 $ 9
Three Years $ 18 $ 21 $ 22 $ 32 $ 32 $ 27
</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. The management
fees listed are actual for the period. Maximum fees according to the
Advisory Agreement are .63% IBF, .72% LTBF and .90% for LCSF, SCSF,
INTF and ACF. 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>
Financial Highlights
The following has been audited by Carson & Co., independent auditors.
This table should be read together with the financial statements which are
included in the Statement of Additional Information and annual report.
<TABLE>
Selected Per-Share Data
<CAPTION>
Year End December 31
--IBF-- --LTBF-- --LCSF-- --SCSF-- --INTF-- --ACF--
1997 1996 1997 1996 1997 1996 1997 1996
1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C> <C> <C>
NAV Beg Period 9.97 0.00 10.25 0.00 10.62 0.00 10.31 0.00
10.76 0.00 10.25 0.00
Net Inv Income 0.52 0.30 0.62 0.32 0.21 0.13 0.13 0.18
0.16 0.15 0.10 0.15
Net realized
and unrealized
gains on
securities 0.13 0.09 0.50 0.27 2.37 0.75 1.33 0.31
0.15 0.68 0.28 0.31
Total income
from investment
operations 0.65 0.39 1.12 0.59 2.58 0.88 1.46 0.49
0.31 0.83 0.38 0.46
Net Dist. from
Inv. Income -0.39 -0.17 -0.56 -0.26 -0.21 -0.14 -0.13 -0.19
- -0.16 -0.15 -0.10 -0.16
Net Dist. From
Net Realized
Gains -0.01 0.00 0.00 0.00 -0.83 -0.28 -0.19 -0.31
- -0.41 -0.13 0.00 -0.08
Total
Distributions -0.40 -0.17 -0.56 -0.26 -1.04 -0.42 -0.32 -0.50
- -0.57 -0.28 -0.10 -0.24
Net Asset Values
Shares
Purchased FY 9.75 FY 9.92 FY 10.16 FY 10.32
FY 10.21 FY 10.03
End of Yr $10.22 $9.97 $10.81 $10.25 $12.16 $10.62 $11.45 $10.31
$10.50 $10.76 $10.53 $10.25
Ratios
Net Assets at
End of Year
(in $1000's) 622 256 339 215 1,276 736 1,177 667
1,126 618 307 124
Portfolio
Turnover Rate 8.97% 0.00% 0.00% 6.21% 10.47% 0.00% 5.04% 0.00%
0.00% 0.00% 3.48% 0.00%
Ratio of
Expenses to
Average
Net Assets (%) 0.56%* 0.39% 0.64%* 0.44%* 0.65% 0.99% 0.97% 0.99%**
0.96%** 1.42%* 0.82%* 0.74%
Ratio of Net
Investment
Income to Avg.
Net Assets (%) 5.56% 1.05% 5.86% 2.55% 2.22% 1.54% 1.36% 3.00%
1.76% 1.88% 1.29% 1.60%
<FN>
* Advisory Fees were waived as follows:
12/31/96 12/31/97
IBF $ .02 $ -
LTBF .02 -
ACF .03 .01
LCSF - .05
INTF - .03
** Includes foreign tax paid equal .43% in 1996 and .18% in 1997
See notes to financial statements
FY: First year calculation
NOTE: Data shown for 1996 is not representative of a full year's operation
because the operational inception date of the six series funds was April 4,
1996.
</FN>
</TABLE>
<PAGE>
The Funds
STAAR Investment Trust
(the 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 Investment 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 a 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 Intermediate Bond Fund (IBF)
The Long-Term Bond Fund (LTBF)
The Larger Company Stock Fund (LCSF)
The Smaller Company Stock Fund (SCSF)
The International Fund (INTF)
The Alternative Categories Fund (AltCat
or ACF)
The Advisor,
STAAR Financial Advisors, Inc.,
serves as
the Trust's overall investment advisor pursuant to an 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 or government
agencies. 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 or government
agencies. 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 in common stocks of U.S. larger
companies, including other mutual funds that invest primarily in such
stocks. Larger companies are defined as companies having market
capitalization of $3 billion or greater. 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 in common stocks of U.S. smaller companies, including
other mutual funds that invest primarily in such stocks. Smaller companies
are defined as companies having market capitalization of less than $3
billion. 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. At least 65% of the
Funds assets will be invested in funds holding predominately stocks of
companies located outside of the United States or individual stocks of
companies outside of the United States. Managers will be monitored so as
to not unduly expose the Fund to any one country or region. Emerging
markets may be included, but may not make up more than 35% of
the fund. Emerging markets investments have additional risks in that in
certain emerging countries' markets may be affected adversely by political
turbulence, liquidity of the markets and volatile swings in the prices on
such markets which seem to have no correlation to the inherent values of
the shares. Occasionally, a global mutual fund that invests a minority of
its assets in the U.S. may be considered if the holdings, objectives and
strategies of such a fund are deemed desirable. Any open-end or
closed-end funds purchased by the Fund must undergo an evaluation to
assure that the objectives, management styles and holdings of such funds
are consistent with the objective of the Fund. Any private managers
employed will be similarly evaluated and must agree to purchase only
securities that have a high correlation to the asset class for which the
Fund is named. Cash positions may be increased or decreased depending on
risk management and liquidity considerations. Cash positions taken by the
trustees will normally be held in U.S. market instruments, though
managers may take cash positions in other than U.S. market instruments.
Managers may also employ various currency risk management techniques.
The ACF's objective is to provide growth of capital by investing in a
wide variety of investments that may or may not be found in the other
funds. Income is secondary and could vary from high to low.
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, sector funds, foreign funds and
currencies, special situation stocks, or other assets offering long-term or
short-term 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 of the Trust Funds
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 Trust
Funds are to be invested primarily in diversified mutual funds,
which in themselves, provide a diversification of the underlying securities.
It is unlikely that the funds will be investing in Non-Diversified funds.
Investment Company Risks - Open-End Mutual funds are by law
obligated to redeem shares held by a Fund in an amount limited to 1% of
the outstanding securities of that mutual fund in any period of less than 30
days. Thus, in the unlikely event, that a all of the Funds, when aggregated
hold more than 1% of the outstanding securities of any mutual fund, the
excess will be considered ot readily marketable. The Funds are limited to
holding not more than 15% of their assets in not readily marketable
securities. Investment managers for the underlying mutual funds are
independent and may be purchasing shares of an issuer which are being
sold by another fund in which a Fund invests causing additional
transaction costs. In addition, investing in mutual funds through one of
the Trust Funds involves the expenses of both the Trust Fund 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 Trust 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, a Trust Fund may hold for a time specific securities which
it received from an underlying fund in redemption. Disposition of such
shares may result in a loss or additional expense. The Trustees do not
anticipate such a distribution occurring because they are rare. However, it
is possible.
In general, the higher the return desired, the more risk there will
be. Any investment has risks. The Trust can neither eliminate
or avoid risks.
Investors should anticipate that there will be times when the value of any
Fund could go down. The Trust considers risks in the selection and
monitoring of managers and securities as well as in the adjustment of cash
positions. Though denominated a Non-Diversified Fund, each Fund will
include a variety of mutual fund or other securities within the objectives
of each Fund. In addition, a variety of management styles may be used
as appropriate to each Fund. For instance, Funds investing in stocks may
include a mix of growth and value styles.
The Trust was founded on February 28, 1996 and has minimal
operating history. There has been a substantial growth in the number of
mutual funds and fund families in the past several years. There are more
funds vying for the investment dollar. There is no assurance that any of
the Trust 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 Financial Advisors, 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 the Trust Chooses and Monitors Investments
The trustees have entered into an advisory agreement with STAAR
Financial Advisors, Inc. (SFA) to provide a number of services,
including investment management, research and recommendations regarding
the selection of mutual funds and individual securities, as well as advice
on risk management strategies. SFA 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). SFA 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
SFA 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
SFA will also advise the Trustees regarding individual securities.
Regarding stocks and bonds, SFA 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, SFA will provide advice as to selection and maturities.
General Analysis Approach
Elements of both Fundamental and Technical Analysis may be
employed. Fundamental Analysis may include, but is not limited to,
analyzing price-earnings and price-book value ratios, dividend yields,
growth in sales, growth in total return, return on equity, return on capital
and, for debt instruments, credit ratings, maturities, duration, yields to
maturity and volatility. Technical analysis may include, but is not limited
to, analyzing moving averages, chart variations and relative strength.
Regarding mutual funds, analysis may also include analyzing
manager philosophies and tenure, style, cash positions, performance in
different market conditions and allocation of holdings within the funds.
Table A
Average Annualized Total Return Performance
For the five year Period ending 3/31/1998
of funds existing five years ago
<TABLE>
<CAPTION>
Mutual Fund Type
Average of all funds in
category
Average of Top 50%
of Funds in Category
<S>
<C>
<C>
Domestic Larger
Company Growth &
Income Funds
19.24%
21.30%
Domestic Small
Company Stock
Funds
17.90%
20.70%
Foreign Stock Funds
12.88%
15.43%
<FN>
Compiled by STAAR SYSTEM Financial Services, Inc. from data
provided by Morningstar's Principia for Mutual Funds.
</FN>
</TABLE>
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 the Trust is STAAR Financial Advisors, Inc.
(SFA), principal offices of which are located at 604 McKnight Park Dr.,
Pittsburgh, PA 15237. SFA provides overall advice regarding the
strategies and make-up of the Funds, including recommendations
regarding specific mutual funds, private managers and individual
securities. SFA also provides administrative, accounting, customer
service and marketing services to the Trust. In addition to serving as
advisor to the Trust, SFA provides investment and financial planning
advice on a regular basis to individuals, qualified plans, corporations,
charitable organizations, trusts and estates. The President of SFA is
J.Andre Weisbrod. Mr. Weisbrod has over 17 years experience in the
financial services industry and is majority owner of SFA.
The Transfer Agent
The Trust has employed STAAR Financial Advisors, Inc.
(SFA), 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
Effective 9/3/98The Trust has adopted a Plan of Distribution
or "12b-1 Plan" under
which it may finance activities primarily intended to sell shares, provided
the categories of expenses are approved in advance by the board of trustees
and the expenses paid under the Plan were incurred within the preceding 12
months and accrued while the Plan is in effect. The 12b-1 fee paid by the
Trust, as a percentage of net assets, for the previous year is listed
earlier under "Trust Expenses".
Investment Transactions
Security transaction orders are placed by STAAR Financial Advisors,
Inc. SFA strives to obtain the best available prices while considering
quality of order execution and other services. Fixed income securities are
generally traded on a "net" basis, which means they are obtained from a
dealer acting as principal for its own account and having no stated
commission, though a profit for the dealer is built into the price.
Initial offerings or securities purchased directly from an issuer
will also
generally not state a commission, though a profit is built in, often
referred to as a discount or concession.
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 or by third party sources used for pricing.
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 Financial Advisors, Inc. at the address and telephone
number listed on the cover of this prospectus.
Shares of each fund are purchased at the next offering price after the
properly executed forms and money are received by the Fund or its
Transfer Agent. It should be noted that the Funds must delay pricing until
any mutual funds owned by each Fund are priced. Therefore, should any
of the Funds be listed in newspapers, it is likely that the prices reported
in the newspapers will lag the Funds' actual prices by one day.
The minimum initial investment in the Trust is $25,000. The investment
may be divided among the Funds by dollar amount or percentage
allocation, except that the
minimum initial deposit to any single Fund is
$1,000. 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
$100, except automatic check draft plans for which the minimum subsequent
investment is $50.
The investor is responsible for any losses or fees
incurred by the trust or its Advisor or Transfer Agent or Custodian if an
order is canceled because a check does not clear, and such costs may be
deducted from your account.
The Trust reserves the right to waive or reduce the minimum initial
amount for certain investors, including tax-deferred retirement plans.
Purchases received after 3:00p.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 Investment 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 additional investment to any one Fund is $100.
If you do not specify a
Fund, and the amount is too small to allocate according to percentage, the
deposit will be held until instructions can be clarified. To change your
allocation percentages, you must submit an Investment Allocation
Change Form (available from Shareholder Account Services) or indicate a
new allocation on your statement's Additional Investment Form when you
send in your next deposit.
How to Sell Shares
Shares may be redeemed as of any day on which the Trust is open for
business. The share price received will be the Net Asset Value next
determined after receipt of a properly executed request for redemption.
Payment is generally mailed within five business days after receipt of the
request. Payment will be mailed to the name and address of record unless
specified otherwise with a letter "signature-guaranteed" by a bank, savings
association, credit union or member firm of a domestic stock exchange or
the National Association of Securities Dealers, Inc. Redemption requests
of $5,000 or more must include a signature guarantee. The minimum
non-automatic withdrawal from any single Fund is $250. If the amount in
the Fund is less than $250, 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 3:30 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 the Transfer Agent
will be liable for complying with telephone requests, which they
believe are genuine, using these procedures. If the Trust or Transfer Agent
do not employ such procedures, 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 3:30 P.M. may 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 SFA, plans to provide investors
with valuable educational information regarding investments and financial
planning, at no additional charge.
Account Statements
The Trust will provide consolidated statements of each account (by
name, as registered). Statements will be generated quarterly and
Confirmation Statements will be generated when there are transactions in
your account. An Asset Allocation chart will be included in quarterly
statements.
Automatic Reinvestment
Dividends and Capital Gains are automatically reinvested at no sales
charge unless you specify otherwise on the application or by letter at a
later date.
Automatic Withdrawals
You may elect to have automatic withdrawals taken from any Fund.
Payments will be made to the name and address of record unless specified
otherwise with a letter "signature-guaranteed" by a bank, savings
association, credit union or member firm of a domestic stock exchange or
the National Association of Securities Dealers, Inc. Payments will be
generated on the first business day of the month or quarter if you elect
quarterly distributions.
The minimum monthly or quarterly payment from any Fund is $250
(except for Minimum Distribution Requirements from qualified retirement
plans).
Signatures For Any Written Transactions Must Be Exactly As Written On
Original Application
Signature Guarantee Needed for Certain Transactions
For your protection, certain transaction requests may need to be in
writing and be signature guaranteed by a bank or other eligible guarantor
institution (Guarantees by Notary Publics are not acceptable). Additional
documentation may be needed to determine the authority of any person or
persons requesting redemption of shares held in the name of corporations,
trusts, executors, administrators or other fiduciaries. Requests requiring
signature guarantees include, but are not limited to:
- Requesting payment of any distributions or withdrawals to
anyone but the name and address of record.
- The gifting or transferring of shares to another person.
-Redemption Requests over $5,000
New Application May Be Needed For Certain Changes
A new application may be required for certain changes, including, but
not limited to:
-You wish to register an existing account under a different
name.
-You wish to transfer shares of an existing account to another
person or entity.
-You wish to add telephone redemption to an account.
Dividends, Capital Gains, Distributions & Taxes
Each Trust Fund will distribute substantially all of its taxable net
income to shareholders as required by Subchapter M of the Internal
Revenue Code of 1986, as amended, in order to qualify as a regulated
investment company and avoid a non-deductible excise tax. Therefore, it is
expected that the Funds will not be subject to Federal income tax. A
Fund's net income consists of all income it earns from its investment
activity less expenses, including any ordinary income such as
interest and dividends. A Fund is required to distribute at least 98% of
net earned investment income, 98% of net capital gains received in the
twelve month period preceding October 31, and any undistributed balances
from the preceding year.
It is expected that the Intermediate and Long-term Bond Funds will
distribute dividends on a quarterly basis.(The Trustees may change to a
monthly basis at their discretion.) The other Funds will generally
distribute dividends, if any, on a semi-annual or annual basis. It is
expected that capital gains, if any, will be distributed once or twice a
year. Distribution dates are determined by the Board of Trustees.
Each Fund is treated as a separate entity for federal income tax
purposes. Any dividends and capital gains distributions to shareholders
are ordinarily taxable to the shareholder in the year of distribution.
However, the Trust is permitted under the Tax Reform Act of 1986 to
make distributions up to February 1 that apply to the previous tax year.
Dividend and capital gain distributions are taxable to shareholders whether
they are received in cash or are reinvested in additional shares of a Fund.
They may also be subject to various state and local taxes.
Income generated by another mutual fund which is held in a Fund
portfolio will be distributed to that Fund after deductions for expenses and
will be taxable to Shareholders of the Fund in the same manner as any
other similar income. Mutual funds may realize taxable gains independent
of any decision of the Trust to buy or sell shares of such mutual funds.
Therefore, it is possible that investors in a Trust Fund may have an
increased tax liability in any given year. In general, a Fund will treat
income to you that is attributable to income generated by any
mutual funds held by the Fund as having the same character as reported by
those mutual funds. In other words, a long-term capital gain reported by a
mutual fund owned by a Fund will be passed on to Fund Shareholders as a
long-term capital gain.
In addition to taxable income produced by investments held in a Fund,
an investor may cause a taxable gain (or loss) to be realized by selling
shares or by exchanging shares of one Fund for another. It is
recommended that Shareholders consult appropriate tax advisors
regarding their investments.
Other Provisions
Right of Trust to Repurchase Shares If Account Falls Below Certain
Minimums
The Trust also reserves the right to close any account where total
Assets in all Trust Funds fall below $5,000. The Trust reserves the right
to close any single Fund account where the assets in that Fund fall below
$500. 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
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.
For LCSF, "larger companies" are defined as those having market
capitalization of $3 billion or more.
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.
For SCSF, "smaller companies" are defined as those having market
capitalization of less than $3 billion.
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 Financial Advisors, Inc.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE STAAR INVESTMENT 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 Investment Trust (the "Trust") dated June 30, 1998,
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: September 21, 1998
<PAGE>
THE STAAR INVESTMENT 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
</TABLE>
<PAGE>
GENERAL INFORMATION AND HISTORY
The Registrant,
STAAR Investment Trust (SIT)
was formed on
February 28, 1996 for the purposes of commencing business as an
investment company. It had engaged in no prior business
activities.
INVESTMENT OBJECTIVES AND POLICIES
As described in the prospectus, the Trust consists of six series
Funds, each of which has its own objectives, policies and strategies
designed to meet different investor goals. The information below is
provided as additional information to that already provided in the
prospectus.
Each Fund has adopted certain fundamental investment policies.
These fundamental investment policies cannot be changed unless the
change is approved by (a) 66 2/3% or more of the voting securities present
in person or by proxy at a meeting (if the holders of 50% or more of the
outstanding securities are present in person or by proxy) or (b) more than
50% of the outstanding voting securities of the Fund, whichever is lesser.
The fundamental policies provide, in addition to those listed in the
prospectus, as follows:
(1) No Fund of the Trust issues different classes of
securities
or securities having preferences of seniority over other classes.
(2) The Trust will not engage in Short Sales (borrowing stock
from someone else and selling it in anticipation of the price going down, at
which time it is repurchased and returned to the lender). However it is
possible that managers of other open or closed end funds owned by a Trust
Fund may employ short sales.
(3) The Trust will not purchase securities with borrowed money (or
margin). The Trustees will attempt to avoid purchasing shares of any
other mutual funds which utilize margin purchases other than in amounts
less than five (5%) percent of its portfolio. In general, the policy of the
registrant is to avoid debt. It will not borrow money, except where it
would become necessary to allow the Trust to maintain or improve its
day-to-day operations in the interest of Fund shareholders. For that
purpose, the Trust may obtain a line of credit or obtain specific financing
from a bank, other financial institution or individual(s).
(4) The Trust will not act as an underwriter of other issuers, except
to the extent that in selling portfolio securities, it may be 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 / or 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 Mae") loans. However, a minority of mortgage
securities owned by a Fund may be in non-government agency backed
loans.
(7) Commodities and Precious Metals or securities and contracts
deriving their value from Commodities and Precious Metals may be
purchased only in the AltCat Fund and not in the other Funds.
(8) Trust Funds may not loan cash or portfolio securities to any
person. However, this does not prevent managers of other mutual funds
owned by a fund from making such loans within their portfolios.
(9) The Trust and any managers it employs may use Derivatives,
which are financial instruments which derive their values from the
performance of another security, assets or index. Derivatives include
options and future contracts.
The writing of Put and Call options are permitted by the Trust and
any managers it may employ. However, the use of such options is to
represent a minority of any managers activity, and will be employed in a
conservative manner to protect a profit or offset losses in the event of
projected significant price reductions. The Trustees or a manager
employed by them may purchase a Put, which provides the right to sell a
security to another party at a predetermined price within a period of time.
Similarly a Call option may be purchased which provides the right to
purchase a security at a predetermined price within a period of time. A
Call option may also be sold to another party. Such options will be
"covered", meaning the Fund owns an amount of the underlying
security equal to or greater than the amount of the security represented in
the option. Put options will not be sold because, in the Advisor's
opinion,
they expose a Fund to additional risk which The Trustees wish to avoid.
Similarly, options based upon indexes or other assets, such as
commodities, may be purchased to protect a portfolio, but not sold where a
Fund would be required to pay cash to another party based upon a future
price change. Any mutual funds owned by a Fund will be screened to
determine if such mutual funds' policies on options, futures, margin or
other strategies differ greatly from that of the Trust; however, the
Trustees will not be able to control the use of such strategies by mutual
funds. Therefore, at any given time a Fund's risk could be increased to
the extent managers of other mutual funds employ these kinds of strategies
in a manner inconsistent with the Trust's policies.
There are no restrictions regarding portfolio turnover. While the
trust recognizes that a higher portfolio turnover will, in most cases,
increase expenses, there are times when a high turnover may be justified,
either to protect a portfolio against certain kinds of risks or to take
advantage of opportunities presented by market conditions. In general, the
Trust's objective is to keep expenses, and, therefore, turnover, as low as
possible. This objective will be considered when screening other mutual
funds for possible inclusion in a Fund's portfolio.
The Trust has certain non-fundamental policies which may be
changed by the Trustees. Among these are the following:
1) No Fund may invest in securities for the purpose of
exercising control over or management of an issuer; or
2) purchase securities of a closed-end or other investment
company where the shares are not registered in the United States pursuant
to applicable securities laws.
MANAGEMENT OF THE FUNDS
Trustees
<TABLE>
<CAPTION>
Name Position Held Principal Occupation(s)
& Address With Registrant during Past 5 Years
<S> <C> <C>
J. Andre Weisbrod President of Trustees President STAAR
Financial Advisors,
Inc., Pittsburgh, PA
Ronald Benson Secretary Business Consultant,
Regional Director,
Fellowship of Companies
for Christ,International
Jeffrey Dewhirst Trustee Investment Banker,
Sewickley, PA
John H. Weisbrod Trustee Retired President of
Sea Breeze Laboratories
</TABLE>
Control Persons and Principal Holders of Securities
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 Financial
Advisors, Inc. (SFA), 604 McKnight Park Dr., Pittsburgh, PA
15237. The President and principal owner of SFA 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 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 .0750% .90%
</TABLE>
These are maximum fees and will be accrued daily and paid at the
closing of the last business day of the month. The Advisor has agreed to
waive fees as needed to keep advisor fees plus any 12(b)-1 fees from
exceeding 1% of average net assets through 1999.
CUSTODIAN
The Registrant has contracted with Star Bank of Cincinnati, Ohio to be
the Trust's custodian.
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. 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.
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.
12b-1 Plan
Effective September 3, 1998 The Trust has adopted a Plan of Distribution or
"12b-1 Plan" under which it may finance activities primarily intended to
sell shares, provided
the categories of expenses are approved in advance by the board of trustees
and the expenses paid under the Plan were incurred within the preceding 12
months and accrued while the Plan is in effect. 12b-1 expenses
may not exceed .25% of a
Fund's average net assets annually. Any 12b-1 fees paid by the
Trust, as a percentage of net assets, for the previous year are listed
In the prospectus under "Trust Expenses". 12b-1 expenses
may not exceed .25% of a
Fund's average net assets annually. Due to these distribution expenses,
long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charge permitted by the National Association of
Security Dealers, Inc.
PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING
OFFERED
Detailed information on Purchase and Redemption of Shares as well
as Pricing is included in the Prospectus. The Trust may suspend the right
to redeem shares or postpone the date of payment upon redemption for
more than seven (7) days for (a) any period during which the New York
Stock Exchange is closed or trading on the exchange is restricted; (b) for
any period during which an emergency exists which makes it impossible
or impractical for the Funds to dispose of securities owned by them or the
Funds cannot determine the value of their respective net assets or for
such other periods as the Securities and Exchange Commission may
permit.
TAX STATUS
Detailed information concerning the tax status of the Trust is
contained in the Prospectus.
CALCULATION OF PERFORMANCE DATA
Each Fund's performance will be calculated on a Total Return
basis, which is the sum of any income paid and any realized or unrealized
gain or loss of principal. From time to time, the Funds may publish their
average total returns for periods of time. The formula for calculating such
returns is as follows:
P(1 + T)n = ERV
where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning at the 1, 5 or 10 year periods at the end of the 1, 5
or 10 year periods (or fractional portions thereof) Other time periods may
be used from time to time.
Dividends and capital gains are assumed to be reinvested.
Total Return Performance Since Inception
<TABLE>
<CAPTION>
IBF LTBF LCSF SCSF INTF ACF
<S> <C> <C> <C> <C> <C> <C>
Payment $1000 $1000 $1000 $1000 $1000 $1000
Av.Annualized
Tot Ret 4.8% 9.1% 20.0% 12.9% 7.6% 5.0%
Years: 4/4/96
to 12/31/97 1.74 1.74 1.74 1.74 1.74 1.74
Ending
Value 1084.66 1164.04 1374.02 1234.39 1135.71 1089.07
</TABLE>
Where Yield is calculated, the following formula is used:
YIELD = 2 [(a-b + 1)6 - 1]
cd
where:
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the
period.
Yield Calculation 30 Days Ended 12/31/1997
<TABLE>
<CAPTION>
IBF LTBF LCSF SCSF INTF ACF
<S> <C> <C> <C> <C> <C> <C>
Divs &
Int Earned 3450 1797 7965 3114 10486 2939
Expenses
Accrued 316 190 1008 931 874 242
Avg. Shrs.
Outstanding 63188 30768 95566 99304 98235 28474
Max
Offering
price end
of Period 10.22 10.81 12.16 11.44 10.50 10.54
30 Day
Yield 5.89% 5.87% 7.29% 2.32% 11.45% 11.03%
</TABLE>
OTHER INFORMATION
The Prospectus and this Statement of Additional Information do not
contain all of the information contained in the Trust's registration
Statement. The Registration Statement and its exhibits may be examined
at the offices of the Securities and Exchange Commission in Washington,
D.C.
Statements contained in the Prospectus and this Statement of
Additional Information as to the contents of any agreement or other
document referred to are not necessarily complete and reference is made to
the copy of the agreement or document filed as an exhibit to the
Registration Statement for their complete and unqualified contents.
<PAGE>
FINANCIAL STATEMENTS
STAAR INVESTMENT TRUST
FINANCIAL STATEMENTS
DECEMBER 31, 1997
CERTIFIED PUBLIC ACCOUNTANTS
CARSON & COMPANY
P.O. BOX 395
201 VILLAGE COMMONS
SEWlCKLEY, PA 15143
(412) 741-8588
FAX (412) 741-0833
Independent Auditor's Report
To the Shareholders and Trustees
Staar System Trust
We have audited the statement of assets and liabilities, including the
schedules of investments of Staar System Trust (comprising, respectively,
the Intermediate Bond Fund, Long Term Bond Fund, Larger Company
Stock Fund, Smaller Company Stock Fund, International Fund and
Alternative Categories Fund) as of December 31, 1997, and the
related statements of operations and cash flows for the period then ended,
the statement of changes in net assets for the period then ended, and the
selected per share data and ratios for the period then ended. These
financial statements and per share data and ratios are the responsibility
of the Trust's management. Our responsibility is to express an opinion
on these financial statements and per share data and ratios based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and per
share data and ratios are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1997 by
correspondence with the custodians. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and selected per share data and
ratios referred to above present fairly, in all material respects, the
financial position of each of the respective portfolios constituting the
Staar System Trust as of December 31, 1997, the results of their operations
and their cash flows for the period then ended, the changes in their net
assets for the period then ended, and the selected per share data and
ratios for the period then ended, in conformity with generally
accepted accounting principles.
Sewickley, PA
May 29, 1998
<PAGE>
STAAR SYSTEM TRUST
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
ASSETS
<TABLE>
<CAPTION>
<S> <C>
Investments in securities, at value -
indentified cost $4,574,944(Note 4) $ 4,834,394
Cash 1,031
Bond Interest Receivable 16,692
Total Assets 4,852,117
LIABILITIES
Note Payable - Investment Advisor (Note 5) 1,422
Accounts Payable - Investment Advisor 3,526
Accrued Capital Stock Tax 75
Accounts Payable - Trustees 675
Total Liabilities 5,698
NET ASSETS
Net assets (see supplemental information for
per share data by shares of beneficial
interest outstanding) (Notes 3 and 4) $ 4,846,419
</TABLE>
NOTE: The accompanying notes are an integral part of these financial
statements.
<PAGE>
1 SST INTERMEDIATE BOND FUND Portfolio Valuation Date 12/31/1997
<TABLE>
<CAPTION>
Quantity Description UnitCost Price Cost MktVal
UnrealG/L % of Val.
<S> <C> <C> <C> <C> <C>
<C> <C>
13,823 Cash & Equiv. 100.00 100.00 13,823 13,823
0 2.3%
20,000 US Tr Nt 6.50 4/30/99 100.73 101.03 20,146 20,206
60 3.3%
45,000 US Tr Nt 6.25 8/31/00 98.97 101.31 44,535 45,591
1,056 7.4%
20,000 US Tr Nt 6.375 8/15/02 100.45 102.53 20,089 20,506
417 3.4%
20,000 US Tr Nt 6.5 5/15/05 100.19 104.2 20,038 20,844
806 3.4%
25,000 US Tr Nt 7.0 7/15/06 100.77 107.94 25,192 26,984
1,793 4.4%
10,000 FHLMC Deb 6.06 6/09/00 99.87 100.00 9,987 10,000
13 1.6%
25,000 FHLMC Deb 6.5 9/30/04 100.00 99.97 25,000 24,992
(8) 4.1%
20,000 FHLMC Deb 5.8 3/19/99 99.25 99.75 19,850 19,950
100 3.3%
40,000 Fed Hm Ln Bk 5.94 1/30/01 99.82 99.47 39,929 39,787
(141) 6.5%
25,000 Fed Nat Mtg Ass 7.32 5/3/06 100.00 103.00 25,000 25,750
750 4.2%
25,000 Fed Nat Mtg Ass 7.52 4/23/04 101.39 101.13 25,348 25,281
(67) 4.1%
25,000 Fed Nat Mtg Ass 7.43 8/04/05 100.00 101.00 25,000 25,250
250 4.1%
35,000 Fed Nat Mtg Ass 6.51 11/05/02 100.49 100.00 35,170 35,000
(170) 5.7%
20,000 TVA Pwr 93Ser 6.125 7/15/03 97.00 100.38 19,400 20,075
675 3.3%
13,000 TVA Pwr 95Ser 6.375 6/15/05 97.25 101.75 12,643 13,228
585 2.2%
25,000 Avco Fin Srv 7.375 8/15/01 102.00 103.75 25,500 25,938
438 4.2%
20,000 BellSth Tel NC 6.5 2/01/00 100.25 101.00 20,050 20,200
150 3.3%
20,000 DetEd SecMdTrch#59 6.27 3/15/00 100.00 100.25 20,000 20,050
50 3.3%
20,000 IBM NT BkEnt NC 7.25 11/01/02 102.14 102.00 20,427 20,400
(27) 3.3%
35,000 IBM Cred Corp MTN 6.25 10/2/00 100.00 99.75 35,000 34,913
(88) 5.7%
31,000 Marriott Intl 7.125 6/1/07 102.50 103.75 31,775 32,163
388 5.3%
25,000 M Lynch&Co NTS NC 8.0 2/01/02 103.50 105.88 25,875 26,469
594 4.3%
15,000 Morg Stnly Nt 6.375 12/15/03 96.90 99.63 14,535 14,944
409 2.4%
30,000 Student Ln Mkt Ass 6.07 2/14/02 99.50 99.00 29,850 29,700
(150) 4.9%
Total Account 604,162 612,044
7,882 100.0%
</TABLE>
See notes to financial statements
<PAGE>
2 SST LONG TERM BOND FUND Portfolio Valuation Date 12/31/97
<TABLE>
<CAPTION>
Quantity Description UnitCost Price Cost MktVal
UnrealG/L % of Val.
<S> <C> <C> <C> <C> <C>
<C> <C>
38,233 Cash & Equiv. 100.00 100.00 38,233 38,233
0 11.4%
10,000 US Tr Nt 5.625 2/15/06 92.70 98.88 9,270 9,888
618 3.0%
55,000 US Tr Nt 7.25 5/15/16 101.92 113.88 56,078 62,631
6,553 18.7%
25,000 US Tr Nt 7.125 2/15/23 100.88 114.13 25,219 28,531
3,312 8.5%
15,000 US Tr Nt 6.875 8/15/25 99.99 111.50 14,998 16,725
1,727 5.0%
20,000 US Tr Nt 7.25 8/15/22 100.81 115.53 20,163 23,106
2,944 6.9%
20,000 FHLMC Deb 7.375 10/25/11 99.50 103.31 19,900 20,663
763 6.2%
20,000 Bear Strn MtnTr798 7.4 11/20/17 100.00 99.00 20,000 19,800
(200) 5.9%
20,000 Disney Co Mtn Semi 7.75 9/30/11 100.00 104.50 20,000 20,900
900 6.2%
10,000 FPL Grp Cap Inc 7.625 5/01/13 100.26 104.13 10,025 10,413
388 3.1%
5,000 GE Cap Md Trm NTS 7.35 8/08/11 98.67 101.00 4,933 5,050
117 1.5%
20,000 Gen Mot Corp Nts 7.10 3/15/06 99.31 104.50 19,861 20,900
1,039 6.2%
15,000 Morgn Stnly Cap Gr 7.45 7/3/12 100.00 101.63 15,000 15,244
244 4.6%
12,000 NY Tel Co Ref Mtg R 7.5 3/1/09 100.25 102.00 12,030 12,240
210 3.7%
15,000 Salomon Inc Mtn G 7.75 7/15/16 100.00 100.13 15,000 15,019
19 4.5%
15,000 So.Westn Bell Deb 6.75 6/01/08 96.25 101.13 14,438 15,169
731 4.5%
Total
Account 315,147 334,510
19,363 100.0%
</TABLE>
See notes to financial statements
<PAGE>
3 SST LARGER COMPANY STOCK FUND Portfolio Valuation Date 12/31/97
<TABLE>
<CAPTION>
Quantity Description UnitCost Price Cost MktVal
UnrealG/L % of Val.
<S> <C> <C> <C> <C> <C>
<C> <C>
38,233 Cash & Equiv. 100.00 100.00 38,233 38,233
0 11.4%
U.S. Lar
ger Comp
any Stoc
k Mutual
Funds
993 Clipper Fund 68.29 76.86 67,808 76,317
8,510 6.0%
1302 Dodge & Cox Stock Fund 85.57 94.57 111,439 123,163
11,724 9.6%
10309 Franklin Equity Fund Cl 1 10.36 9.74 106,780 100,408
(6,372) 7.9%
2799 Franklin Growth Fund Cl 1 24.79 27.09 69,378 75,817
6,439 5.9%
4528 Fundamental Investors Fund 24.71 27.40 111,893 124,062
12,170 9.7%
1863 Managers Income Equity Fund 29.81 31.07 55,519 57,871
2,352 4.5%
4549 Putnam Investors A Fund 10.99 11.24 50,000 51,129
1,129 4.0%
916 Torray Fund 33.33 33.85 30,532 31,011
479 2.4%
2,536 T Rowe Price Equity Income 21.23 26.07 59,987 73,658
13,671 5.8%
5,737 Washington Mutual Investors 24.87 30.35 142,700 174,117
31,417 13.6%
U.S. Lar
ger Comp
any Stoc
k Unit
Trusts
3,500 Peroni Top 10 Grwth Tr 97 Ser 9.94 14.01 34,794 49,051
14,258 3.8%
5,000 Peroni Top 10 Grwth Tr 98 Ser 9.89 10.08 49,432 50,379
947 3.9%
U.S. Mi
d-Cap L
arger
Company
Stocks
1,266 Mairs and Power Growth Fund 63.60 86.67 80,531 109,746
29,215 8.6%
1,530 Strong Schafer Value Fund 49.28 63.90 75,389 97,750
22,362 7.7%
Total
Account 1,128,012 1,276,312
148,300 100%
</TABLE>
See notes to financial statements
<PAGE>
4 SST SMALLER COMPANY STOCK FUND Portfolio Valuation
12/31/97
<TABLE>
<CAPTION>
Quantity Description UnitCost Price Cost MktVal
UnrealG/L % of Val.
<S> <C> <C> <C> <C> <C>
<C> <C>
76,532 Cash & Equiv. 100.00 100.00 76,532 76,532
0 6.5%
U.S.
Small
er
Com
pany
Stock
Mutu
al
Fund
s
6,382 Acorn Fund 15.88 16.99 101,341 108,433
7,091 9.2%
10,132 Franklin Small Cap Growth Fund 20.48 22.93 207,495 232,331
24,837 19.7%
6,735 Ivy Emerging Growth Fund A 25.93 27.67 174,629 186,368
11,739 15.8%
802 Managers Special Equity Fund 50.14 61.17 40,215 49,059
8,844 4.2%
6,638 SSGA Small Cap Fund 18.91 21.02 125,543 139,525
13,982 11.8
U.S.
Mid-
Cap
small
er
Com
pany
Stock
s
1,308 PBHG Growth Fund 25.21 25.39 32,990 33,219
229 2.8%
2,369 Putnam Capital Apprec. Fund A 21.32 21.48 50,499 50,889
389 4.3%
2,953 T Rowe Price New Horizons Fd 22.83 23.30 67,429 68,808
1,379 5.8%
U.S.
Micr
ocap
Stock
Mutu
al
Fund
s
10,373 Franklin Microcap Value Fund 19.16 22.44 198,711 232,766
34,055 19.8%
Total
Account 1,075,384 1,177,931
102,547 100%
</TABLE>
See notes to financial statements
<PAGE>
5 SST INTERNATIONAL FUND Portfolio Valuation Date 12/31/97
<TABLE>
<CAPTION>
Quantity Description UnitCost Price Cost MktVal
UnrealG/L % of Val.
<S> <C> <C> <C> <C> <C>
<C> <C>
64,040 Cash & Equiv. 100.00 100.00 64,040 64,040
0 5.7%
Inter
natio
nal
Stock
Mutu
al
Fund
s
5,162 Europacific Fund 26.09 26.02 134,672 134,311
(361) 11.9%
3,606 Hotchkis & Wiley Int'l Fund 20.49 22.67 76,173 84,269
8,097 7.5%
6,118 Ivy International Fund 35.77 39.03 218,880 238,802
19,922 21.2%
4,520 Putnam Int'l Growth Fund A 16.59 16.67 75,000 75,351
351 6.7%
5,929 T Rowe Price Int'l Stock Fund 13.23 13.42 88,558 89,830
1,273 8.0%
23,182 Templeton Foreign Fund I 10.47 9.95 242,624 230,662
(11,962) 20.5%
4,307 Warburg Pincus Int'l Equity Fd 20.22 17.01 87,065 73,261
(13,804) 6.5%
Develop
ing Mar
kets Mu
tual
Funds
10,491 Templeton Developing Mkts Tr I 15.47 12.94 162,342 135,753
(26,589) 12.1%
Total
Account 1,149,352 1,126,278
(23,074) 100%
</TABLE>
See notes to financial statements
<PAGE>
6 SST ALTCAT FUND Portfolio Valuation 12/31/96
<TABLE>
<CAPTION>
Quantity Description UnitCost Price Cost MktVal
UnrealG/L % of Val.
<S> <C> <C> <C> <C> <C>
<C> <C>
38,076 Cash & Equiv. 100.00 100.00 38,076 38,076
0 12.4%
U.S.
Mid-
Cap
Large
r
Com
pany
Stock
Mutu
al
Fund
s
687 Muhlenkamp Fund 32.82 36.55 22,537 25,096
2,559 8.2%
Glob
al
Small
er
Co.
Stock
Mutu
al
Fund
s
2,111 Franklin Mutual Discovery Fd I 18.47 18.83 38,993 39,742
749 12.9%
421 Small Cap World Fund I 26.12 25.98 10,995 10,936
(60) 3.6%
Alter
nativ
e
Cate
gorie
s
478.41 Franklin Gold Fund I 14.58 8.45 6,973 4,043
(2,931) 1.3%
1,589 Franklin Real Estate Sec Fd I 14.63 18.09 23,245 28,747
5,501 9.4%
2,688 Franklin Nat. Resources Fd I 14.71 14.34 39,545 38,539
(1,006) 12.5%
4,354 Ivy China Region Fund A 9.44 8.04 41,114 35,007
(6,107) 11.4%
3,101 Templeton Latin America Fund I 12.14 12.79 37,662 39,667
2,005 12.9%
920.86 Templeton Global Real Estate I 13.88 15.38 12,782 14,163
1,381 4.6%
703 Vanguard Special Energy Fund 23.09 24.14 16,229 16,966
737 5.5%
227 Vanguard Special Health Fund 64.83 71.88 14,737 16,339
1,602 5.3%
Total
Account 302,887 307,319
4,432 100%
</TABLE>
See notes to financial statements
<PAGE>
STAAR SYSTEM- TRUST
STATEMENT OF OPERATIONS
PERIOD FROM INCEPTION (MARCH 19, 1996) THROUGH
DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
Investment Income
Mutual fund dividends $ 69,802
Interest and money market
fund dividends 54,502
Total Income $124,304
Expenses
Investment advisory fees (Note 5) $ 24,976
Trustee fees (Note 5) $ 2,700
Foreign Taxes Paid $ 2,107
Pennsylvania Capital Stock Tax $ 300
Interest $ 70
Other Expenses $ 189
Total Expenses $ 30,342
Investment income-net $ 93,962
Realized and unrealized appreciation on
investments
Realized long term capital gain dividends
from mutual funds $135,279
Sales of securities $ 6,577
$141,856
Unrealized appreciation of investments for
the period (Note 4) $188,631
Net realized gain and unrealized apprec
iation on investments $330,487
Net increase in net assets resulting
from operations $424,449
</TABLE>
NOTE: The accompanying notes are an integral part of these financial
statements.
<PAGE>
STAAR SYSTEM TRUST
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Period From
Inception
Year Ended (3/19/96)
December 31, Through
1997 12/31/96
<S> <C> <C>
Increase in net assets from operations:
Investment income- net $ 93,962 $ 42,940
Net realized gain on investments $ 141,856 $ 46,523
Unrealized appreciation of investments $ 188,631 $ 70,817
Net increase in net assets resulting
from operations $ 424,449 $ 160,280
Distributions to shareholders from:
Investment income $( 87,129) $( 38,885)
Realized long term gains - mutual funds $(141,856) $( 46,523)
Total distributions $(228,985) $( 85,408)
Capital share transactions (Note 3)
Purchases $2,044,858 $2,465,597
Redemptions $( 238,765) $( 10,000)
Reinvestment of dividends $ 228,985 $ 85,408
Net increase in net assets resulting
from capital share transactions $2,035,078 $2,541,005
Total increase in net assets $2,230,542 $2,615,877
Net assets
Beginning of period $2,615,877 $ 0
End of period (including undistributed
Investment income of $10,888 and $4,055) $4,846,419 $2,615,877
</TABLE>
NOTE: The accompanying notes are an integral part of these financial
statements.
<PAGE>
STAAR SYSTEM TRUST
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
Net increase in net assets from operations $ 424,449
Adjustments required to reconcile to net cash
provided by operating activities:
Unrealized appreciation of investments (188,631)
(Increase) decrease in:
Bond Interest Receivable (8,737)
Increase (Decrease) in:
Accrued Interest 70
Taxes Payable (225)
Accounts Payable 1,802
Net cash provided by operating
activities 228,728
Cash provided (used) by investment activities
Investments Purchased (2,224,344)
Sales or redemptions 189,447
Net cash (used) by investment activities (2,034,897)
Cash provided (used) by financing activities
Advance on note payable - Investment Advisor 300
Shareholder Contributions 2,044,858
Shareholder Redemptions (including $158,682
Re-invested in other Trust Funds) (238,765)
Dividends declared (228,985)
Dividends reinvested by shareholders 228,985
Net cash provided by financing activities 1,806,393
Increase (Decrease) in Cash During Period 224
Cash Balance - beginning of period 807
Cash Balance - end of period $ 1,031
</TABLE>
NOTE: The accompanying notes are an integral part of these financial
statements.
<PAGE>
STAAR SYSTEM TRUST
NOTES TO FlNANClAL STATEMENTS
DECEMBER 31, 1997
NOTE 1 - ORGANIZATION AND PURPOSE
Staar System Trust (the Trust) was organized as a Pennsylvania business
trust under applicable statutes of the Commonwealth of Pennsylvania. It
was formed on February 28, 1996 and became effective March 19, 1996.
The Trust is registereds with the Securities and Exchange
Commission under the Investment Company Act of 1940 as a
non-diversified, open-end management investment company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Trust consists of six separate series portfolios (funds). The funds are
organized in such a manner that each fund corresponds to a standard asset
allocation category, with the exception of the Alternative Categories Fund
which is a flexibly managed fund that may invest in assets not included in
the other funds. The Funds are:
The Intermediate Bond Fund
The Long-Term Bond Fund
The Larger Company Stock Fund
The Smaller Company Stock Fund
The International Fund
The Alternative Categories Fund
Each fund is managed separately and has its own investment objectives and
strategies in keeping with the asset allocation category for which it is
named. Each fund may invest in other open-end funds (mutual funds) as
well as closed-end funds and individual securities.
Security Valuation - Investments in mutual funds are stated at net asset
value on the date of valuation. Securities traded on a national securities
exchange (or reported on the NASDAQ national market) are stated at the
last reported sales price on the day of valuation; other securities traded
in the over-the-counter market and listed securities for which no sale was
reported on that date are stated at the last quoted bid price. Short-term
notes are stated at amortized cost, which is equivalent to value. Restricted
securities and other securities for which quotations are not readily
available will be valued at fair value as determined by the Trustees.
Federal Income Taxes - The Trust complies with the requirements of the
Internal Revenue Code that are applicable to regulated investment
companies and distributes all its taxable income to its shareholders.
Therefore, no federal or state income tax provision is required.
Distributions to shareholders - Dividends to shareholders are recorded on
the ex-dividend date.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued) Other - The Trust follows industry practice and records
security transactions on the trade date. Dividend income is recognized on
the ex-dividend date, and interest income is recognized on the accrual
basis. Discounts and premiums on securities purchased, if significant, are
amortized over the life of the respective securities.
Use of estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reported period. Actual results could differ from those
estimates.
NOTE 3 - SHAREHOLDER TRANSACTIONS
The declaration of Trust provides for an unlimited number of shares of
beneficial interest, without par value. The declaration of Trust also
established six series of shares which correspond to the six funds described
in Note 2. All dividends declared during the year ended December 31, 1997
and the period ended Decemebr 31, 1996 were reinvested by the respective
owners of beneficial interest. Transactions in units of beneficial
interest were as follows:
<TABLE>
<CAPTION>
Period from Inception (Mar. 19, 1996) through December 31, 1996
Fund Sold Reinvestment Of Dividends Redemption December 31, 1996
Balance
Shares Amount $ Shares Amount $ Shares Amount $ Shares
Amount $
<S> <C> <C> <C>
<C>
Intermediate
Bond Fund 25,591.761 $ 249,494 353.068 $ 3,435 252.382 $( 2,500)
25,692.447 $ 250,429
Long-Term
Bond Fund 20,607.239 $ 204,391 387.686 $ 3,818 0.000 $ 0
25,692.447 $ 208,209
Larger
Company
Stock Fund 66,856.772 $ 679,630 2,682.903 $ 28,487 237.210 $ 2,500
69,302.465 $ 705,617
Smaller
Company
Stock Fund 61,894.040 $ 638.630 3,027.516 $ 31,219 232.682 $ 2,500
64,688.874 $ 667,349
International
Fund 56,251.172 $ 574.550 1,451.105 $ 15,616 236.848 $ 2,500
57,465.429 $ 587,666
Alternative
Categories
Fund 11,852.270 $ 118,902 276.446 $ 2,833 0.000 $ 0
12,128.716 $ 121,735
Total
Amount $2,465,597 $ 85,408 $ 10,000
$2,541,005
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1997
Fund Sold Reinvestment Of Dividends Redemption December 31, 1996
Balance
Shares Amount $ Shares Amount $ Shares Amount $ Shares
Amount $
<S> <C> <C> <C>
<C>
Intermediate
Bond Fund 48,046.329 $ 485,679 1,975.548 $ 19,941 14,811 $(150,849)
60,903.780 $ 605,200
Long-Term
Bond Fund 9,035.332 $ 93,954 1,404.003 $ 14,600 95.010 $( 1,000)
31,339.247 $ 315,763
Larger
Company
Stock Fund 30,683.744 $ 367,927 8,312.027 $101,088 3,409 $ (42,803)
104,889.391 $1,131,829
Smaller
Company
Stock Fund 36,619.496 $ 389,837 2,826.740 $ 32,346 1,258 $ (14,389)
102,876.597 $1,075,143
International
Fund 45,969.420 $ 520,694 5,528.096 $ 58,042 1,749 $ (21,228)
107,213.876 $1,145,174
Alternative
Categories
Fund 17,482.863 $ 186,767 281.580 $ 2,968 742.303 $ (8,496)
29,150.856 $ 302,974
Total
Amount $2,044,858 $228,985 $(238,765)
$4,576,083
</TABLE>
NOTE 4 - SUMMARY OF UNREALIZED GAINS AND LOSSES:
Following is a summary of unrealized gains and losses for each portfolio as
of December 31, 1997:
<TABLE>
<Caption
_____Unrealized___
Market
Cost Gain Loss Net Value
<S> <C> <C> <C> <C> <C>
Intermediate Bond $ 604,162 8,533 $ (651) $ 7,882 $ 612,044
Long Term Bond 315,147 19,563 (200) 19,363 334,510
Larger Company
Stock Fund 1,128,012 154,672 (6,372) 148,300 1,276,312
Smaller Company
Stock Fund 1,075,384 102,547 0 102,547 1,177,931
International Fund 1,149,352 29,643 (52,717) (23,074) 1,126,278
Alternative Categories
Fund 302,887 14,535 (10,103) 4,432 307,319
4,574,944 329,493 (70,043) $259,450 $4,834,394
</TABLE>
NOTE 5 - INVESTMENT ADVISORY FEES AND OTHER
TRANSACTIONS WITH AFFILIATES: Effective
April 1, 1996, the Trust entered into a Master Investment Advisory
Agreement with STAAR Financial Advisors, Inc. (formerly Staar System
Financial Services, Inc., a related party
(advisor). This agreement appointed the Advisor to act as investment
advisor to the Trust on behalf of six series portfolios for a one year
period. This agreement has subsequently been extended through April 1,
1999. The advisor furnishes investment management and advisory services
(rate varies for each portfolio in accordance with a fee schedule ranging
from
.62% to .90% of average daily net asset value). During the period ended
December 31, 1997, the investment advisor waived fees aggregating $6,083.
This was to reimburse shareholders for 70% of a retroactive front load charged
by a mutual fund which had originally waived the load based on volume
commitments, which were not achieved. The balance of this retroactive front
end load ($2,607) was absorbed by the fund shareholders through a reduction
of the number of shares owned in the mutual fund.
<TABLE>
<CAPTION>
Amount of Fees Waived
Fund FeesWaived Per Share
<S> <C> <C>
Larger Company Stock Fund $3,793 $ .05
International Fund 2,115 .03
AlternativeCategoriesFund 175 .01
</TABLE>
NOTE 5 - INVESTMENT ADVISORY FEES AND OTHER
TRANSACTIONS WITH AFFILIATES (continued)
The president of the investment advisor is the organizer of the Trust. The
agreement provides for an expense reimbursement from the investment advisor
if the Trust's total expense for any series (fund), exclusive of taxes,
interest, costs of portfolio acquisitions and dispositions and
extraordinary
expenses, for any fiscal year, exceed the level of expenses which such
series is 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 advisor as
well as certain marketing, legal and accounting and transfer and custodial
services for the first two years.
The Trustees of Staar Investment Trust are compensated as a group at a rate
of $900 per calendar quarter.
Certain affiliated persons held aggregate investments in the respective
portfolios as of December 31, 1997 as follows:
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Intermediate bond fund 8,239.609 $ 84,209
Long term bond fund 1,685.064 18,223
Larger company stock fund 8,907.733 108,332
Smaller company stock fund 16,472.942 188,498
International fund 14,227.884 149,386
Alternative categories fund 4,018.361 42,352
</TABLE>
NOTE 6 - NOTE PAYABLE - INVESTMENT ADVISOR
The Investment Advisor has provided advances to the Company
to cover initial operating expenses. The resulting note is payable on
demand, together with interest at 7% which aggregated $122 as of
December 31, 1997.
<PAGE>
STAAR SYSTEM TRUST
Supplementary Information
Selected Per Share Data and Ratios
Period from Inception (March 19, 1996)
Through December 31, 1997
Note: Actual date when initial seed money was invested to start Fund accounts
was 4/4/96.
<TABLE>
Selected Per-Share Data
<CAPTION>
Year End December 31
--IBF-- --LTBF-- --LCSF-- --SCSF-- --INTF-- --ACF--
1997 1996 1997 1996 1997 1996 1997 1996
1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C> <C> <C>
NAV Beg Period 9.97 0.00 10.25 0.00 10.62 0.00 10.31 0.00
10.76 0.00 10.25 0.00
Net Inv Income 0.52 0.30 0.62 0.32 0.21 0.13 0.13 0.18
0.16 0.15 0.10 0.15
Net realized
and unrealized
gains on
securities 0.13 0.09 0.50 0.27 2.37 0.75 1.33 0.31
0.15 0.68 0.28 0.31
Total income
from investment
operations 0.65 0.39 1.12 0.59 2.58 0.88 1.46 0.49
0.31 0.83 0.38 0.46
Net Dist. from
Inv. Income -0.39 -0.17 -0.56 -0.26 -0.21 -0.14 -0.13 -0.19
- -0.16 -0.15 -0.10 -0.16
Net Dist. From
Net Realized
Gains -0.01 0.00 0.00 0.00 -0.83 -0.28 -0.19 -0.31
- -0.41 -0.13 0.00 -0.08
Total
Distributions -0.40 -0.17 -0.56 -0.26 -1.04 -0.42 -0.32 -0.50
- -0.57 -0.28 -0.10 -0.24
Net Asset Values
Shares
Purchased FY 9.75 FY 9.92 FY 10.16 FY 10.32
FY 10.21 FY 10.03
End of Yr $10.22 $9.97 $10.81 $10.25 $12.16 $10.62 $11.45 $10.31
$10.50 $10.76 $10.53 $10.25
Ratios
Net Assets at
End of Year
(in $1000's) 622 256 339 215 1,276 736 1,177 667
1,126 618 307 124
Portfolio
Turnover Rate 8.97% 0.00% 0.00% 6.21% 10.47% 0.00% 5.04% 0.00%
0.00% 0.00% 3.48% 0.00%
Ratio of
Expenses to
Average
Net Assets (%) 0.56%* 0.39% 0.64%* 0.44%* 0.65% 0.99% 0.97% 0.99%**
0.96%** 1.42%* 0.82%* 0.74%
Ratio of Net
Investment
Income to Avg.
Net Assets (%) 5.56% 1.05% 5.86% 2.55% 2.22% 1.54% 1.36% 3.00%
1.76% 1.88% 1.29% 1.60%
<FN>
* Advisory Fees were waived as follows:
12/31/96 12/31/97
IBF $ .02 $ -
LTBF .02 -
ACF .03 .01
LCSF - .05
INTF - .03
** Includes foreign tax paid equal .43% in 1996 and .18% in 1997
See notes to financial statements
FY: First year calculation
NOTE: Data shown for 1996 is not representative of a full year's operation
because the operational inception date of the six series funds was April 4,
1996.
</FN>
</TABLE>
<PAGE>
EXAMPLE OF PRICE MAKE-UP
Using 12/31/1997 Data
<TABLE>
<CAPTION>
IBF
LTBF
LCSF
SCSF
INTF
ACF
<S>
<C>
<C>
<C>
<C>
<C>
<C>
Total
Assets
612,042
334,510
1,276,312
1,177,931
1,126,278
307,318
Plus
Total
Interest
Accoun
ts
10,738
4,608
415
305
372
189
Less
Expens
e
Accoui
nts
(348)
(208)
(1107)
(1024)
(858)
(265)
Equals
Total
Net
Assets
622,432
338,910
1,275,620
1,177,212
1,125,692
307,242
Divided
by total
shares
outstan
ding
60,904
31,339
104,889
102,877
107,214
29,151
Equals
net
asset
value
10.22
10.81
12.16
12.44
10.50
10.54
</TABLE>
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial statements:
Included in Part A:
None
Included in Part B:
<TABLE>
<CAPTION>
Page Number
in this Report
<S> <C>
Independent Auditor's Report...........................
Statement of Assets and Liabilities...................
Portfolio Valuation..........................................
Statement of Operations..................................
Statement of Changes in Net Assets..................
Statement of Cash Flows.................................
Notes to Financial Statements............................
Supplementary Information..............................
Example of Price Make-up..............................
</TABLE>
Included in Part C:
The required Schedules are omitted because the required information is
included in the financial statements included in Part A or Part B, or
because the conditions requiring their filing do not exist.
(b) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number
Description of Exhibit
<S> <C>
X(1) Declaration of Trust of the Registrant
X(2) By-laws of the Registrant
(3) Not Applicable
X(4) Action of Trustees Establishing Funds
X(5) Form of Investment Advisory Agreement between
Registrant and Staar System Financial Services, Inc. (the
"Advisor")
(6) Not Applicable
(7) Not Applicable
XX (8) Custodian Agreement between Registrant and StarBank.
X(9)(a) Form of Transfer Agency and Shareholder Services
Agreement among Registrant and the Advisor (see 5 above)
X(9)(b) Consent to Use of Name contained in (5) above
X(10) Opinion of Counsel and Consent of Counsel
(11) Consent of Independent Accountants
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable
(17) Not Applicable
X - Filed with Initial N-1A and incorporated herein by reference.
XX - Filed with Pre-effective Amendment # 1 to Form N-1A and
incorporated herein by reference.
</TABLE>
Item 25. Persons Controlled by or Under Common Control with
Registrant
The Registrant is not directly or indirectly controlled by or under common
control with any person other than the Trustees. The Registrant does not
have any subsidiaries.
Item 26. Number of Holders of Securities
Set forth below are the number of record holders, as of December 31, 1997
of the shares of beneficial interest of the Registrant:
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
Shares of Beneficial Interest,
no par value
<S> <C>
IBF 32
LTBF 24
LCSF 41
SCSF 47
INTF 46
ACF 36
</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 Financial Advisors, 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
Olde Economie Financial
Consultants, Ltd
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.
NOTICE
"The Intermediate Bond Fund (IBF)," "The Long-Term Bond
Fund (LTBF)," The Larger Company Stock Fund (LCSF)," "The Smaller Company
Stock Fund (SCSF)," "The International Fund
(INTF)," and "The Alternative Categories Fund (AltCat)" are the
designations of the Trustees under the Declaration of Trust of the Trust
dated February 28, 1996 as amended from time to time. The Declaration
of Trust has been filed with the Secretary of State of the Commonwealth
of Pennsylvania. The obligations of the Registrant are not personally
binding upon, nor shall resort be had to the private property of, any of the
Trustees, shareholders, officers, employees or agents of the Registrant,
but only the Registrant's property shall be bound.
<PAGE>
SIGNATURES
Pursuant to the requirements of (the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant (certifies that it meets all
of the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Pittsburgh, and the
State of Pennsylvania on the 9th day of May, 1997.
The Staar System Trust
Registrant
By: J. Andre Weisbrod, 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.
J. Andre Weisbrod
Trustee September 9, 1998
(Signature) (date)
[TYPE] EX-99.B11
[DESCRIPTION] EXH 11 to Form N-1A Consent of Accountants
<PAGE>
Consent
We hereby consent to the use of our name by
the Staar Investment Trust, in the Prospectus dated
September 21, 1998, as auditors and accountants.
Date: September 3, 1997 CARSON & CO.
By: Terrance Carson
