[TEXT]
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. 2 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 2 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)
30 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. Six Series Funds (a)
Risk/Return Summary, Performance,
Fees and expenses, investment
strategies and related risks,
management, financial highlights
3. Information Common to all the Funds Information
Buying Shares, Minimum Investment, Common to All
Adding to Your Account, Exchanging the Funds
Shares, Selling Shares, Policies,
Other Information/Year 2000
4. Where to Learn More Where to Learn
More
</TABLE>
<TABLE>
<CAPTION>
Additional Information Statement of Additional Information
Caption
<S> <C> <C>
5. Cover Page Cover Page
6. Table of Contents Table of Contents
7. General Information
and History General Information
and History
8. Investment Objectives Investment Objective
and Policies and Policies, Investment
Restrictions
9. Management of the Fund Board of Trustees
10. Control Persons and Control Persons and
Principal Holders of Principal Holders of
Securities Securities
11. Investment Advisory and Investment Advisory and
Other Services other services
12. Brokerage Allocation and other Brokerage Allocation and
other Practices other Practices
13. Capital Stock and (a)
14. Purchase Redemption and Pricing Purchase, redemption and
of shares pricing of Shares
15. Tax Status Dividends,Capital
Gains, Distributions &
Taxes
16. Underwriter (a)
17. Calculations of Performance Data Performance Data
18. Financial Statements Financial Statements
</TABLE>
(a) Not Applicable
<PAGE>
THE STAAR INVESTMENT TRUST
PROSPECTUS
June 30, 1999
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
<TABLE>
<CAPTION>
Contents Page
Information specific to each fund you should know before investing
<S> <C>
Intermediate Bond Fund (IBF) 2
Long Term Bond Fund (LTBF) 6
Larger Company Stock Fund (LCSF) 10
Smaller Company Stock Fund (SCSF) 14
International Fund (INTF) 18
AltCat Fund (ACF) 22
<CAPTION>
Information common to all of the funds
<S> <C>
Buying Shares 26
Exchanging Shares 27
Selling Shares 27
Investor Services 28
Policies 29
Other Information; Year 2000 Issues 30
Where To Learn More About the Funds Inside Back Cover
</TABLE>
<PAGE>
Page 2
Intermediate Bond Fund (IBF)
A High Quality General Bond Fund
RISK/RETURN SUMMARY
GOAL: Income
PRINCIPAL INVESTMENT STRATEGIES:
The Fund invests, under normal conditions, in a mix of U.S. Government,
Government Agency and Corporate debt instruments. At least 65% of its assets
must be invested in debt instruments with a dollar-weighted average maturity of
between three (3) years and ten (10) years. At least 40% of its assets must be
invested in 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.
MAIN RISKS:
Interest Rate Changes -- The value of bonds is directly affected by changes in
interest rates. When interest rates go down, the value of bonds goes up, and
when interest rates rise, the value of bonds goes down. Generally, bonds with
shorter maturities are affected less by interest rate changes than those with
longer maturities.
Default Risk -- If the issuer of a bond finds itself in financial difficulties,
it could delay payment on the interest it owes to investors. If an issuer
entered bankruptcy, interest payments would likely stop all together and the
bond holder would have to wait until the bankruptcy proceedings were concluded
to find out how much (if any) of the amount invested would be returned to the
investor.
Credit Rating Changes -- Independent organizations rate the creditworthiness of
bond issuers. A high rating means the issuer is considered to be sound
financially and presents a low risk of default. If an issuer's rating is
lowered, this will tend to have a negative impact on a bond's price.
Income -- Since the Fund can only distribute what it actually earns, the
dividend income per share could decrease when interest rates fall.
<PAGE>
Page 3
PERFORMANCE:
The following bar chart is provided to give you some idea of how Fund results
may vary. It shows changes in the annual total returns of the Fund on a
calendar year basis.
1.37% 7.00% 7.41%
1996* 1997 1998
* Partial year
The Fund's highest and lowest quarterly returns during this time period were:
Highest:3.41% (quarter ending 9/30/98)
Lowest:-.15% (quarter ending 3/31/97)
Average Annual Total Returns
For the periods ended December 31, 1998
1 Year Life*
STAAR Intermediate Bond Fund (IBF) 7.4% 5.7%
Salomon Big Medium Term (1-10) Index 7.9% 7.9%
* Since the Fund's inception on 4/4/96
FEES AND EXPENSES: This table describes the fees and expenses that you may pay
if you buy and hold shares of the Fund. They are based on the annual period
ending 12/31/98.
Shareholder Fees (paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Sales Charge on Reinvested Dividends None
Maximum Deferred Sales Charge None
Redemption or Exchange Fee None
Annual Operating Expenses (deducted from fund assets)
Management Fees 1 0.49%
12b-1 Fees (for distribution and service) 2 0.00%
Other Expenses 3 0.09%
Total Annual Fund Operating Expenses 0.58%
1 Management fees include services in addition to investment advisory
services, including shareholder, transfer agency, accounting, custodial, legal
and other services.
2 The Fund adopted a distribution plan under Rule 12b-1 that permits it to
pay marketing and other fees associated with the sale and distribution of
shares.
3 Other expenses may include trustee compensation, federal and state filing
fees and other expenses.
<PAGE>
Page 4
EXAMPLE OF EXPENSES: This example is provided to help you compare the cost of
investing in the fund with the cost of investing in other mutual funds. The
example assumes you invest $10,000 for the periods shown and then sell all your
shares at the end of those periods. It also assumes that your investment has a
5% return each year, that dividends and other distributions are reinvested and
that the fund's operating expenses stay the same.
Year 1 Year 3 Year 5 Year 10
$58 $183 $320 $730
INVESTMENT STRATEGIES AND RELATED RISKS
The Intermediate Bond Fund's main objective is to produce income with a
concern for safety for principal. Its strategy includes a limitation to higher
quality debt instruments (bonds). Generally, the Fund will purchase securities
with AAA, AA or A Standard & Poors ratings or its equivalent from other rating
services. While it may purchase securities having a BBB rating, it will hold
little or no securities having less than a BBB S&P rating. At least 40% of its
assets must be invested in securities issued by the U.S. government or
government agencies.
This emphasis on quality will tend to produce a lower dividend yield than
funds that invest more in lower-rated bonds. However, it will also provide
greater safety of principal.
Bonds will normally have a maturity of between two (2) and ten (10) years
when purchased. The average weighted maturity of the bonds held by the fund is
intended to be no less than three (3) and no more than seven (7) years.
The investment strategy includes intent to hold most bonds to maturity and
minimize trading unless market conditions or liq1uidity requirements make such
transactions advisable. This is to keep a stable portfolio base and lower
transaction costs.
The Fund may increase or decrease its cash position depending on risk
management and liquidity considerations. While the Fund is not prohibited from
using derivatives, its strategy assumes little or no use of derivatives.
As described in the Risk/Return Summary, there are risks associated with
investing in the Fund. Share values may decrease if interest rates rise or one
or more holdings are downgraded or default on interest payments. Income
dividends can decrease if interest rates go down.
<PAGE>
Page 5
MANAGEMENT
STAAR Financial Advisors, Inc. (SFA), 604 McKnight Park Dr., Pittsburgh, PA
15237 is the Fund's investment advisor. Mr. J. Andre Weisbrod, President of
SFA, is the Portfolio Manager and has been primarily responsible for the Fund's
day-to-day management since its inception on 4/4/96. The Fund paid SFA 0.49%
of its average daily net assets for the year ending 12/31/98. For this fee,
SFA also provided other services (directly or indirectly) in addition to
investment management, including transfer agency, shareholder services,
accounting and legal services.
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
1998 1997 1996*
<S> <C> <C> <C>
NAV Beg Period $10.22 $9.97 $0.00
Net Investment Income 0.57 0.52 0.30
Net realized and unrealized
gains on securities 0.19 0.13 0.09
Total income from investment operations 0.76 0.65 0.39
Net Distribution from Investment Income -0.51 -0.39 -0.17
Net Distrib. From Net Realized Gains -0.02 -0.01 0.00
Total Distributions -0.53 -0.40 -0.17
Net Asset Value, end of year $10.45 $10.22 $9.97
Total Return (%) 7.4% 7.0% 1.4%
Ratios/Supplemental Data
Net Assets at End of Year (in $1000's) $1154 $622 $256
Ratio of Expenses
to Average Net Assets (%) 0.58% 0.56% 0.39%
Ratio of Net Investment Income
to Average Net Assets (%) 5.48% 5.56% 1.05%
Portfolio Turnover Rate 22.54% 8.97% 0.00%
</TABLE>
* 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.
Advisory Fees of $.02 per share were waived in 1996 and $.01 per share in 1998.
<PAGE>
Page 6
Long Term Bond Fund (LTBF)
A High Quality General Bond Fund
RISK/RETURN SUMMARY
GOAL: Income
PRINCIPAL INVESTMENT STRATEGIES:
The Fund invests, under normal conditions, in a mix of U.S. Government,
Government Agency and Corporate debt instruments. At least 65% of its assets
must be invested in debt instruments with a dollar-weighted average maturity of
over ten (10) years. At least 40% of its assets must be invested in 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.
MAIN RISKS:
Interest Rate Changes -- The value of bonds is directly affected by changes in
interest rates. When interest rates go down, the value of bonds goes up, and
when interest rates rise, the value of bonds goes down. Generally, bonds with
shorter maturities are affected less by interest rate changes than those with
longer maturities; therefore, the longer the maturity, the greater the change
in value when interest rates go up or down.
Default Risk -- If the issuer of a bond finds itself in financial difficulties,
it could delay payment on the interest it owes to investors. If an issuer
entered bankruptcy, interest payments would likely stop all together and the
bond holder would have to wait until the bankruptcy proceedings were concluded
to find out how much (if any) of the amount invested would be returned to the
investor.
Credit Rating Changes -- Independent organizations rate the creditworthiness of
bond issuers. A high rating means the issuer is considered to be sound
financially and presents a low risk of default. If an issuer's rating is
lowered, this will tend to have a negative impact on a bond's price.
Income -- Since the Fund can only distribute what it actually earns, the
dividend income per share could decrease when interest rates fall.
<PAGE>
Page 7
PERFORMANCE:
The following bar chart is provided to give you some idea of how Fund results
may vary. It shows changes in the annual total returns of the Fund on a
calendar year basis.
4.70% 11.18% 8.63%
1996* 1997 1998
* Partial year
The Fund's highest and lowest quarterly returns during this time period were:
Highest: 4.86% (quarter ending 09/30/98)
Lowest: -2.05% (quarter ending 3/31/97)
Average Annual Total Returns
For the periods ended December 31, 1998
1 Year Life*
STAAR Long Term Bond Fund (LTBF) 8.6% 8.9%
Lipper U.S. Gov't Index 7.9% 7.9%
Lipper Corporate A Rated Index 7.3% 8.2%
* Since the Fund's inception on 4/4/96
FEES AND EXPENSES: This table describes the fees and expenses that you may pay
if you buy and hold shares of the Fund. They are based on the annual period
ending 12/31/98.
Shareholder Fees (paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Sales Charge on Reinvested Dividends None
Maximum Deferred Sales Charge None
Redemption or Exchange Fee None
Annual Operating Expenses (deducted from fund assets)
Management Fees 1 0.55%
12b-1 Fees (for distribution and service) 2 0.00%
Other Expenses 3 0.09%
Total Annual Fund Operating Expenses 0.64%
1 Management fees include services in addition to investment advisory
services, including shareholder, transfer agency, accounting, custodial, legal
and other services.
2 The Fund adopted a distribution plan under Rule 12b-1 that permits it to
pay marketing and other fees associated with the sale and distribution of
shares.
3 Other expenses may include trustee compensation, federal and state filing
fees and other expenses.
<PAGE>
Page 8
EXAMPLE OF EXPENSES: This example is provided to help you compare the cost of
investing in the fund with the cost of investing in other mutual funds. The
example assumes you invest $10,000 for the periods shown and then sell all your
shares at the end of those periods. It also assumes that your investment has a
5% return each year, that dividends and other distributions are reinvested and
that the fund's operating expenses stay the same.
Year 1 Year 3 Year 5 Year 10
$69 $218 $381 $868
INVESTMENT STRATEGIES AND RELATED RISKS
The Long Term Bond Fund's main objective is to produce income with a
concern for safety for principal.
Its strategy includes a limitation to higher quality debt instruments
(bonds). Generally, the Fund will purchase securities with AAA, AA or A
Standard & Poors ratings or its equivalent from other rating services. While
it may purchase securities having a BBB rating, it will hold little or no
securities having less than a BBB S&P rating. At least 40% of its assets must
be invested in securities issued by the U.S. government or government agencies.
This emphasis on quality will tend to produce a lower dividend yield than funds
that invest more in lower-rated bonds. However, it will also provide greater
safety of principal.
Bonds will normally have a maturity of over ten (10) years when
purchased. The average weighted maturity of the bonds held by the fund is
intended to be no less than ten (10) and no more than twenty (20) years.
The investment strategy includes intent to hold most bonds to maturity and
minimize trading unless average maturity considerations, changes in credit
quality, market conditions or liq1uidity requirements make such transactions
advisable. This is to keep a stable portfolio base and lower transaction costs.
The Fund may increase or decrease its cash position depending on risk
management and liquidity considerations. While the Fund is not prohibited
from using derivatives, its strategy assumes little or no use of derivatives.
As described in the Risk/Return Summary, there are risks associated with
investing in the Fund. Share values may decrease if interest rates rise or one
or more holdings are downgraded or default on interest payments. Income
dividends can decrease if interest rates go down. Longer-term bonds generally
have higher volatility than shorter-term bonds.
<PAGE>
Page 9
MANAGEMENT
STAAR Financial Advisors, Inc. (SFA), 604 McKnight Park Dr., Pittsburgh, PA
15237 is the Fund's investment advisor. Mr. J. Andre Weisbrod, President of
SFA, is the Portfolio Manager and has been primarily responsible for the
Fund's day-to-day management since its inception on 4/4/96. The Fund paid
SFA 0.55% of its average daily net assets for the year ending 12/31/98.
For this fee, SFA also provided other services (directly or indirectly)
in addition to investment management, including transfer agency, shareholder
services, accounting and legal services.
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
1998 1997 1996*
<S> <C> <C> <C>
NAV Beg Period $10.81 $10.25 $0.00
Net Investment Income 0.63 0.62 0.32
Net realized and unrealized
gains on securities 0.30 0.50 0.27
Total income from investment operations 0.93 1.12 0.59
Net Distribution from Investment Income -0.58 -0.56 -0.26
Net Distrib. From Net Realized Gains 0.00 0.00 0.00
Total Distributions -0.58 -0.56 -0.26
Net Asset Value, end of year $11.16 $10.81 $10.25
Total Return (%) 8.6% 11.2% 4.7%
Ratios/Supplemental Data
Net Assets at End of Year (in $1000's) $598 $339 $215
Ratio of Expenses
to Average Net Assets (%) 0.69% 0.64% 0.44%
Ratio of Net Investment Income
to Average Net Assets (%) 5.70% 5.86% 2.55%
Portfolio Turnover Rate 6.40% 0.00% 6.21%
</TABLE>
* 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.
Advisory Fees of $.02 per share were waived in 1996 and $.01 per share in 1998.
<PAGE>
Page 10
Larger Company Stock Fund (LCSF)
A broadly diversified fund investing in large and mid-sized corporate stock
mostly through owning the shares of other mutual funds.
RISK/RETURN SUMMARY
GOAL: Growth with Some Income
PRINCIPAL INVESTMENT STRATEGIES:
The Fund invests primarily in stocks of large and mid-sized companies. In
terms of market composition, the majority of holdings are intended to represent
primarily United States based companies with market capitalization (size) of $3
billion or more. A broad mix of industries is also a strategic goal. Depending
on market conditions and trends, the Fund's manager may weight the overall
portfolio mix to higher or lower market capitalization and sectors.
Most stocks owned are expected to produce some dividend income. Cash
positions may be increased or decreased depending on risk management and
liquidity considerations.
MAIN RISKS:
Market Risk -- While stocks have historically performed better than other asset
classes over long time periods, they also have experienced more extreme ups and
downs (volatility). Regardless of the condition of any single company, the
value of its stock may go down when the general market goes down.
Risk of Too Much Diversification -- While diversification can spread out risk,
thereby protecting principal and potentially reducing volatility, it can also
limit upside potential returns.
<PAGE>
Page 11
PERFORMANCE:
The following bar chart is provided to give you some idea of how Fund results
may vary. It shows changes in the annual total returns of the Fund on a
calendar year basis.
10.45% 24.40% 13.10%
1996* 1997 1998
* Partial year
The Fund's highest and lowest quarterly returns during this time period were:
Highest: 17.8% (quarter ending 12/31/98)
Lowest: -12.57% (quarter ending 9/30/98)
Average Annual Total Returns
For the periods ended December 31, 1998
1 Year Life*
STAAR Larger Company Stock Fund (LCSF) 13.1% 17.4%
Dow Jones Industrials Average 18.1% 21.4%
Lipper Growth & Income Funds Index 13.6% 19.9%
* Since the Fund's inception on 4/4/96
FEES AND EXPENSES: This table describes the fees and expenses that you may pay
if you buy and hold shares of the Fund. They are based on the annual period
ending 12/31/98.
Shareholder Fees (paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Sales Charge on Reinvested Dividends None
Maximum Deferred Sales Charge None
Redemption or Exchange Fee None
Annual Operating Expenses (deducted from fund assets)
Management Fees 1 0.90%
12b-1 Fees (for distribution and service) 2 0.00%
Other Expenses 3 0.09%
Total Annual Fund Operating Expenses 0.99%
1 Management fees include services in addition to investment advisory
services, including shareholder, transfer agency, accounting, custodial, legal
and other services.
2 The Fund adopted a distribution plan under Rule 12b-1 that permits it to
pay marketing and other fees associated with the sale and distribution of
shares.
3 Other expenses may include trustee compensation, federal and state filing
fees and other expenses.
<PAGE>
Page 12
EXAMPLE OF EXPENSES: This example is provided to help you compare the cost of
investing in the fund with the cost of investing in other mutual funds. The
example assumes you invest $10,000 for the periods shown and then sell all your
shares at the end of those periods. It also assumes that your investment has a
5% return each year, that dividends and other distributions are reinvested and
that the fund's operating expenses stay the same.
Year 1 Year 3 Year 5 Year 10
$99 $312 $547 $1245
INVESTMENT STRATEGIES AND RELATED RISKS
The Larger Company Stock Fund's objective is to produce long term growth
of capital with some income by investing primarily in common stocks of U.S.
based large and mid-sized companies, including other mutual funds that invest
primarily in such stocks. Larger companies are defined as those having a
market capitalization (size) of $3 billion or more.
The Fund invests, under normal conditions, a majority of its assets in a
mix of other mutual funds. The mutual funds are chosen to provide a mix of
investment styles and portfolios that represent the broad stock market as
opposed to any one index. Open-end, closed-end as well as unit trusts may be
owned. Individual stocks may also be owned by the Fund.
In terms of investment styles, the fund will generally employ a mix of
growth and value managers, sometimes called a "blend" style. Depending on
market conditions and trends, the Fund's manager may weight the styles toward
either growth or value.
A broad mix of industries is also a strategic goal. Depending on market
conditions and trends, the Fund's manager may weight the overall portfolio mix
to higher or lower market capitalization and sectors.
The goal is to provide a wide diversification of holdings and management
styles and expertise. Such diversification is designed to minimize certain
kinds of risks such as those associated with too much exposure to one manager,
management style or industry sector or the risks inherent in having too few
holdings.
The Fund may increase or decrease its cash position depending on risk
management and liquidity considerations. While the Fund is not prohibited from
using derivatives, its strategy assumes little or no use of derivatives.
As described in the Risk/Return Summary, there are risks associated with
investing in the Fund. Share values of the Fund will likely decrease if the
general stock market declines. Market values can fall for numerous reasons,
including changing economic and political conditions or simply because more
investors have decided to sell than buy stocks. Individual stocks or sectors
can go down in value even when the general market is up.
<PAGE>
Page 13
MANAGEMENT
STAAR Financial Advisors, Inc. (SFA), 604 McKnight Park Dr., Pittsburgh, PA
15237 is the Fund's investment advisor. Mr. J. Andre Weisbrod, President of
SFA, is the Portfolio Manager and has been
primarily responsible for the Fund's
day-to-day management since its inception on 4/4/96. The Fund paid SFA 0.90%
of its average daily net assets for the year ending 12/31/98. For this fee,
SFA also provided other services (directly or indirectly) in addition to
investment management, including transfer agency, shareholder services,
accounting and legal services.
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
1998 1997 1996*
<S> <C> <C> <C>
NAV Beg Period $12.16 $10.62 $0.00
Net Investment Income 0.03 0.21 0.13
Net realized and unrealized
gains on securities 1.56 2.37 0.75
Total income from investment operations 1.59 2.58 0.88
Net Distribution from Investment Income -0.04 -0.21 -0.14
Net Distrib. From Net Realized Gains -0.72 -0.83 -0.28
Total Distributions -0.76 -1.04 -0.42
Net Asset Value, end of year $12.99 $12.16 $10.62
Total Return (%) 13.1% 24.4% 10.5%
Ratios/Supplemental Data
Net Assets at End of Year (in $1000's) $1852 $1276 $736
Ratio of Expenses
to Average Net Assets (%) 1.00% 0.65% 0.99%
Ratio of Net Investment Income
to Average Net Assets (%) 0.23% 2.22% 1.54%
Portfolio Turnover Rate 30.21% 10.47% 0.00%
</TABLE>
* 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.
Advisory Fees of $.05 per share were waived in 1997.
<PAGE>
Page 14
Smaller Company Stock Fund (SCSF)
A broadly diversified fund investing in small, very small and mid-sized
corporate stock mostly through owning the shares of other mutual funds.
RISK/RETURN SUMMARY
GOAL: Long Term Growth
PRINCIPAL INVESTMENT STRATEGIES:
A main strategy of the Fund is to invest in a mix of Small, Mid-Cap and
Micro-Cap stocks which have excellent long-term growth prospects. Open-end and
closed-end mutual funds as well as unit trusts may be owned. Individual stocks
may also be owned by the Fund.
In terms of investment styles, the fund will generally employ a mix of
growth and value management styles, sometimes called a "blend" style.
Depending on market conditions and trends, the Fund's manager may weight the
styles toward either growth or value.
In terms of market composition, the majority of holdings are intended to
represent primarily United States based companies with market capitalization
(size) of under $3 billion. A broad mix of industries is also a strategic
goal. Depending on market conditions and trends, the Fund's manager may
weight the overall portfolio mix to higher or lower market capitalization
and sectors.
Cash positions may be increased or decreased depending on risk management
and liquidity considerations.
MAIN RISKS:
Market Risk -- While stocks have historically performed better than other asset
classes over long time periods, they also have experienced more extreme ups and
downs (volatility). Regardless of the condition of any single company, the
value of its stock may go down when the general market goes down.
Smaller Companies -- Historically, smaller companies have experienced more
extreme ups and downs (volatility) than larger company stocks. Smaller
companies may have less working capital, less liquidity and greater sensitivity
to competition and overall economic and market conditions. While smaller
companies may offer greater opportunities for growth, they also should be
considered more risky.
Risk of Too Much Diversification -- While diversification can spread out risk,
thereby protecting principal and potentially reducing volatility, it can also
limit upside potential returns.
<PAGE>
Page 15
PERFORMANCE:
The following bar chart is provided to give you some idea of how Fund results
may vary. It shows changes in the annual total returns of the Fund on a
calendar year basis.
8.18% 14.10% 2.89%
1996* 1997 1998
* Partial year
The Fund's highest and lowest quarterly returns during this time period were:
Highest: 19.07% (quarter ending 12/31/98)
Lowest: -19.34% (quarter ending 9/30/98)
Average Annual Total Returns
For the periods ended December 31, 1998
1 Year Life*
STAAR Smaller Company Stock Fund (SCSF) 2.9% 9.0%
Russell 2000 Index -2.5% 10.7%
Lipper Small Cap Funds Index -0.9% 8.0%
* Since the Fund's inception on 4/4/96
FEES AND EXPENSES: This table describes the fees and expenses that you may pay
if you buy and hold shares of the Fund. They are based on the annual period
ending 12/31/98.
Shareholder Fees (paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Sales Charge on Reinvested Dividends None
Maximum Deferred Sales Charge None
Redemption or Exchange Fee None
Annual Operating Expenses (deducted from fund assets)
Management Fees 1 0.90%
12b-1 Fees (for distribution and service) 2 0.00%
Other Expenses 3 0.09%
Total Annual Fund Operating Expenses 0.99%
1 Management fees include services in addition to investment advisory
services, including shareholder, transfer agency, accounting, custodial, legal
and other services.
2 The Fund adopted a distribution plan under Rule 12b-1 that permits it to
pay marketing and other fees associated with the sale and distribution of
shares.
3 Other expenses may include trustee compensation, federal and state filing
fees and other expenses.
<PAGE>
Page 16
EXAMPLE OF EXPENSES: This example is provided to help you compare the cost of
investing in the fund with the cost of investing in other mutual funds. The
example assumes you invest $10,000 for the periods shown and then sell all your
shares at the end of those periods. It also assumes that your investment has a
5% return each year, that dividends and other distributions are reinvested and
that the fund's operating expenses stay the same.
Year 1 Year 3 Year 5 Year 10
$99 $312 $547 $1245
INVESTMENT STRATEGIES AND RELATED RISKS
The Smaller Company Stock Fund's objective is to produce long term growth
of capital by investing primarily in common stocks of U.S. based small and mid-
sized companies, including other mutual funds that invest primarily in such
stocks. Smaller companies are defined as those having a market capitalization
(size) of less than $3 billion. "MicroCap" stocks with market capitalization
of under $100 million may also be owned.
The Fund invests, under normal conditions, a majority of its assets in a
mix of other mutual funds. The mutual funds are chosen to provide a broadly
diversified mix of investment styles and portfolios. Open-end, closed-end as
well as unit trusts may be owned. Individual stocks may also be owned by the
Fund.
In terms of investment styles, the fund will generally employ a mix of
growth and value managent, sometimes called a "blend" style. Depending on
market conditions and trends, the Fund's manager may weight the styles toward
either growth or value.
A broad mix of industries is also a strategic goal. Depending on market
conditions and trends, the Fund's manager may weight the overall portfolio mix
to higher or lower market capitalization and sectors.
The goal is to provide a wide diversification of holdings and management
styles and expertise. Such diversification is designed to minimize certain
kinds of risks such as those associated with too much exposure to one manager,
management style or industry sector or the risks inherent in having too few
holdings.
The Fund may increase or decrease its cash position depending on risk
management and liquidity considerations. While the Fund is not prohibited from
using derivatives, its strategy assumes little or no use of derivatives.
As described in the Risk/Return Summary, there are risks associated with
investing in the Fund. Share values of the Fund will likely decrease if the
general stock market declines. Market values can fall for numerous reasons,
including changing economic and political conditions or simply because more
investors have decided to sell than buy stocks. Individual stocks or sectors
can go down in value even when the general market is up.
<PAGE>
Page 17
MANAGEMENT
STAAR Financial Advisors, Inc. (SFA), 604 McKnight Park Dr., Pittsburgh, PA
15237 is the Fund's investment advisor. Mr. J. Andre Weisbrod, President of
SFA, is the Portfolio Manager and has been primarily responsible for the Fund's
day-to-day management since its inception on 4/4/96.
The Fund paid SFA 0.90% of
its average daily net assets for the year ending 12/31/98. For this fee, SFA
also provided other services (directly or indirectly) in addition to investment
management, including transfer agency, shareholder services, accounting and
legal services.
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
1998 1997 1996*
<S> <C> <C> <C>
NAV Beg Period $11.45 $10.31 $0.00
Net Investment Income -0.05 0.13 0.18
Net realized and unrealized
gains on securities 0.38 1.33 0.31
Total income from investment operations 0.33 1.46 0.49
Net Distribution from Investment Income 0.00 -0.13 -0.19
Net Distrib. From Net Realized Gains -0.33 -0.19 -0.31
Total Distributions -0.33 -0.32 -0.50
Net Asset Value, end of year $11.45 $11.45 $10.31
Total Return (%) 2.9% 14.1% 8.2%
Ratios/Supplemental Data
Net Assets at End of Year (in $1000's) $1613 $1177 $667
Ratio of Expenses
to Average Net Assets (%) 0.99% 0.97% 0.99%
Ratio of Net Investment Income
to Average Net Assets (%) -0.47% 1.36% 3.00%
Portfolio Turnover Rate 6.45% 5.04% 0.00%
</TABLE>
* 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.
<PAGE>
Page 18
International Fund (INTF)
A broadly diversified fund investing primarily in stocks of companies in
countries outside the United States, including emerging markets, mostly through
owning the shares of other mutual funds.
RISK/RETURN SUMMARY
GOAL: Long term growth primarily through investments in international stocks.
PRINCIPAL INVESTMENT STRATEGIES:
A strategic goal is to maintain a broad mix of countries and industries.
Depending on market conditions and trends, the Fund's manager may weight the
overall portfolio mix to higher or lower exposure to geographical regions
and/or industry sectors.
At least 65% of the Fund's assets will be in foreign stocks or other
mutual funds that hold predominantly foreign stock. Occasionally, a global
fund having some U.S. investments may be included. The majority of the
Fund's investments will be in the stocks of developed nations outside the
United States.
Emerging markets are considered an increasingly important component of the
global economy. Therefore, the Fund's strategy includes ongoing investments in
developing countries. The Fund may not invest more than 35% of the Fund's
assets in emerging markets.
Cash positions may be increased or decreased depending on risk management
and liquidity considerations.
MAIN RISKS:
Market Risk -- While stock markets have historically performed better than
other asset classes over long time periods, they also have experienced more
extreme ups and downs (volatility). Regardless of the condition of any
single company, the value of its stock may go down when the general market
goes down.
Foreign Securities -- Securities of entities located outside the U.S. involve
additional risks that can increase the potential for losses. These include
political changes and the fact that some countries may not require the same
accounting and financial practices that are standard in this country. The
fluctuation of foreign currencies against the dollar also can cause the value
of an investment to decrease in dollar terms even if it does not fall in
terms of its country's currency.
Emerging Markets -- While stock markets of smaller and developing countries
offer excellent opportunities for growth, they also increase the potential for
market volatility and investment losses due to political and economic
turbulence.
Smaller Companies -- Historically, smaller companies have experienced more
extreme ups and downs (volatility) than larger company stocks. Smaller
companies may have less working capital, less liquidity and greater sensitivity
to competition and overall economic and market conditions. While smaller
companies may offer greater opportunities for growth, they also should be
considered more risky.
Risk of Too Much Diversification -- The "fund of funds" approach offers
tremendous diversification. While diversification can spread out risk, thereby
protecting principal and potentially reducing volatility, it can also limit
upside potential returns.
<PAGE>
Page 19
PERFORMANCE:
The following bar chart is provided to give you some idea of how Fund results
may vary. It shows changes in the annual total returns of the Fund on a
calendar year basis.
10.41% 2.86% 3.64%
1996* 1997 1998
* Partial year
The Fund's highest and lowest quarterly returns during this time period were:
Highest: 16.48% (quarter ending 12/31/98)
Lowest: -16.70% (quarter ending 9/30/98)
Average Annual Total Returns
For the periods ended December 31, 1998
1 Year Life*
STAAR International Fund (INTF) 3.6% 6.0%
MSCI EAFE Index 18.2% 7.1%
Lipper International Fund Index 12.7% 10.8%
Lipper Emerging Market Funds Index -26.9% -13.3%
* Since the Fund's inception on 4/4/96
FEES AND EXPENSES: This table describes the fees and expenses that you may pay
if you buy and hold shares of the Fund. They are based on the annual period
ending 12/31/98.
Shareholder Fees (paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Sales Charge on Reinvested Dividends None
Maximum Deferred Sales Charge None
Redemption or Exchange Fee None
Annual Operating Expenses (deducted from fund assets)
Management Fees 1 0.90%
12b-1 Fees (for distribution and service) 2 0.00%
Other Expenses 3 0.09%
Total Annual Fund Operating Expenses 0.99%
1 Management fees include services in addition to investment advisory
services, including shareholder, transfer agency, accounting, custodial, legal
and other services.
2 The Fund adopted a distribution plan under Rule 12b-1 that permits it to
pay marketing and other fees associated with the sale and distribution of
shares.
3 Other expenses may include trustee compensation, federal and state filing
fees and other expenses. Foreign taxes paid are not shown here.
<PAGE>
Page 20
EXAMPLE OF EXPENSES: This example is provided to help you compare the cost of
investing in the fund with the cost of investing in other mutual funds. The
example assumes you invest $10,000 for the periods shown and then sell all your
shares at the end of those periods. It also assumes that your investment has a
5% return each year, that dividends and other distributions are reinvested and
that the fund's operating expenses stay the same.
Year 1 Year 3 Year 5 Year 10
$99 $312 $547 $1245
INVESTMENT STRATEGIES AND RELATED RISKS
The International Fund's objective is to produce long term growth of
capital by investing primarily in equity securities in markets outside the
United States, including emerging markets.
The Fund invests, under normal conditions, a majority of its assets in a
mix of other mutual funds. The mutual funds are chosen to provide a mix of
investment styles and portfolios that represent the broad international market,
including small and developing countries. Open-end and closed-end funds as well
as unit trusts may be owned. Individual stocks may also be owned by the Fund.
Large, mid-sized and small companies may be owned.
In terms of investment styles, the fund will generally employ a mix of
growth and value managers, sometimes called a "blend" style. Depending on
market conditions and trends, the Fund's manager may weight the styles toward
either growth or value.
A broad mix of industries is also a strategic goal. Depending on market
conditions and trends, the Fund's manager may weight the overall portfolio mix
to higher or lower market capitalization and sectors.
The goal is to provide a wide diversification of holdings and management
styles and expertise. Such diversification is designed to minimize certain
kinds of risks such as those associated with too much exposure to one manager,
management style, region or industry sector as well as the risks inherent in
having too few holdings.
The Fund may increase or decrease its cash position depending on risk
management and liquidity considerations. The Fund's manager or the managers of
other mutual funds owned by the Fund may employ derivatives or utilize certain
risk management techniques, such as currency hedging.
As described in the Risk/Return Summary, there are risks associated with
investing in the Fund. Share values of the Fund will likely decrease if the
general international stock market declines or if the markets in specific
countries decline. Market values can fall for numerous reasons, including
changing economic and political conditions or simply because more investors
have decided to sell than buy specific securities, sectors or regions.
Individual stocks or sectors can go down in value even
when the general market is up.
<PAGE>
Page 21
MANAGEMENT
STAAR Financial Advisors, Inc. (SFA), 604 McKnight Park Dr., Pittsburgh, PA
15237 is the Fund's investment advisor. Mr. J. Andre Weisbrod, President of
SFA, is the Portfolio Manager and has been primarily responsible for the Fund's
day-to-day management since its inception on 4/4/96. The Fund paid SFA 0.90%
of its average daily net assets for the year ending
12/31/98. For this fee, SFA
also provided other services (directly or indirectly) in addition to investment
management, including transfer agency, shareholder services, accounting and
legal services.
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
1998 1997 1996*
<S> <C> <C> <C>
NAV Beg Period $10.50 $10.76 $0.00
Net Investment Income 0.07 0.16 0.15
Net realized and unrealized
gains on securities 0.31 0.15 0.68
Total income from investment operations 0.38 0.31 0.83
Net Distribution from Investment Income -0.08 -0.16 -0.15
Net Distrib. From Net Realized Gains -0.20 -0.41 -0.13
Total Distributions -0.28 -0.57 -0.28
Net Asset Value, end of year $10.60 $10.50 $10.76
Total Return (%) 3.6% 2.9% 10.4%
Ratios/Supplemental Data
Net Assets at End of Year (in $1000's) $1608 $1126 $618
Ratio of Expenses
to Average Net Assets (%)** 0.99% 0.78% 0.99%
Ratio of Net Investment Income
to Average Net Assets (%) 0.65% 1.76% 1.88%
Portfolio Turnover Rate 2.30% 0.00% 0.00%
</TABLE>
* 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.
Advisory Fees of $.03 per share were waived in 1997.
** Does not include foreign tax paid of .18% in 1998, .18% in 1997 and .43% in
1996.
<PAGE>
Page 22
AltCat (Alternative Categories) Fund (ACF)
A flexibly-managed, multi-asset global fund investing primarily in assets
which offer long-term opportunities for growth of capital and which may or may
not be found in the major categories represented by the other Funds of the
Trust.
RISK/RETURN SUMMARY
GOAL: Long term growth through broadly diversified investments.
PRINCIPAL INVESTMENT STRATEGIES:
The Fund's main strategy is to identify investment opportunities that will
participate in long-term or short-term trends. The Fund may invest in any kind
of investment security allowable under securities laws. Under normal
conditions, a majority of the Fund's assets will be invested in other mutual
funds or securities that do not fit the general asset allocation categories of
the other Funds.
Cash positions may be increased or decreased depending on risk management
and liquidity considerations.
MAIN RISKS:
Market Risk -- While stock markets have historically performed better than
other asset classes over long time periods, they also have experienced more
extreme ups and downs (volatility). Regardless of the condition of any
single company, the value of its stock may go down when the
general market goes down.
Foreign Securities -- Securities of entities located outside the U.S. involve
additional risks that can increase the potential for losses. These include
political changes and the fact that some countries may not require the same
accounting and financial practices that are standard in this country. The
fluctuation of foreign currencies against the dollar also can cause the value
of an investment to decrease in dollar terms even if it does not fall in
terms of its country's currency.
Emerging Markets -- While stock markets of smaller and developing countries
offer excellent opportunities for growth, they also increase the potential for
market volatility and investment losses due to political and economic
turbulence.
Smaller Companies -- Historically, smaller companies have experienced more
extreme ups and downs (volatility) than larger company stocks. Smaller
companies may have less working capital, less liquidity and greater sensitivity
to competition and overall economic and market conditions. While smaller
companies may offer greater opportunities for growth, they also should be
considered more risky.
Debt Instruments -- To the extent that the Fund invests in any debt
instruments, such investments would entail the risks associated with those
instruments, including changes in interest rates, default risk and
credit rating changes.
Risk of Too Much Diversification -- The "fund of funds" approach offers
tremendous diversification. While diversification can spread out risk, thereby
protecting principal and potentially reducing volatility, it can also limit
upside potential returns.
<PAGE>
Page 23
PERFORMANCE:
The following bar chart is provided to give you some idea of how Fund results
may vary. It shows changes in the annual total returns of the Fund on a
calendar year basis.
4.90% 3.82% -5.75%
1996* 1997 1998
* Partial year
The Fund's highest and lowest quarterly returns during this time period were:
Highest: 8.32% (quarter ending 12/31/98)
Lowest: -12.06% (quarter ending 9/30/98)
Average Annual Total Returns
For the periods ended December 31, 1998
1 Year Life*
STAAR AltCat Fund (ACF) -5.8% 0.9%
Lipper Global Flexible Fund Index 9.0% 11.8%
* Since the Fund's inception on 4/4/96
FEES AND EXPENSES: This table describes the fees and expenses that you may pay
if you buy and hold shares of the Fund. They are based on the annual period
ending 12/31/98.
Shareholder Fees (paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Sales Charge on Reinvested Dividends None
Maximum Deferred Sales Charge None
Redemption or Exchange Fee None
Annual Operating Expenses (deducted from fund assets)
Management Fees 1 0.90%
12b-1 Fees (for distribution and service) 2 0.00%
Other Expenses 3 0.09%
Total Annual Fund Operating Expenses 0.99%
1 Management fees include services in addition to investment advisory
services, including shareholder, transfer agency, accounting, custodial, legal
and other services.
2 The Fund adopted a distribution plan under Rule 12b-1 that permits it to
pay marketing and other fees associated with the sale and distribution of
shares.
3 Other expenses may include trustee compensation, federal and state filing
fees and other expenses. Foreign taxes paid are not shown here.
<PAGE>
Page 24
EXAMPLE OF EXPENSES: This example is provided to help you compare the cost of
investing in the fund with the cost of investing in other mutual funds. The
example assumes you invest $10,000 for the periods shown and then sell all your
shares at the end of those periods. It also assumes that your investment has a
5% return each year, that dividends and other distributions are reinvested and
that the fund's operating expenses stay the same.
Year 1 Year 3 Year 5 Year 10
$99 $312 $547 $1245
INVESTMENT STRATEGIES AND RELATED RISKS
The AltCat Fund's objective is to produce long term growth of capital by
investing investment opportunities that will participate in long-term or short-
term trends. The Fund may invest in any kind of domestic or foreign security
allowable under securities laws. Current income is secondary, and could vary
from low to high or be non-existent.
The Fund invests, under normal conditions, in a mix of other mutual funds.
The mutual funds are chosen to provide a variety of investment styles and
portfolios. Open-end, closed-end as well as unit trusts may be owned.
Individual stocks may also be owned by the Fund. Large, mid-sized and small
companies may be owned.
In terms of investment styles, the fund will generally employ a mix of
growth and value managers, sometimes called a "blend" style. Depending on
market conditions and trends, the Fund's manager may weight the styles toward
either growth or value.
Other mutual funds are chosen to provide a mix of investment styles and
portfolios that represent a broad global investment market as opposed to any
one index. Open-end, closed-end as well as unit trusts may be owned.
Individual stocks may also be owned by the Fund.
A broad mix of industries is also a strategic goal. Depending on market
conditions and trends, the Fund's manager may weight the overall portfolio mix
to higher or lower market capitalization and sectors.
The goal is to provide a wide diversification of holdings and management
styles and expertise. Such diversification is designed to minimize certain
kinds of risks such as those associated with too much exposure to one manager,
management style or industry sector or the risks inherent in having too few
holdings.
The Fund may increase or decrease its cash position depending on risk
management and liquidity considerations. Direct investments in derivatives are
allowed, but normally would represent little or none of the direct assets held
by the Fund. Managers of other mutual funds owned by the Fund may utilize
derivatives and certain risk management techniques, such as currency hedging.
As described in the Risk/Return Summary, there are risks associated with
investing in the Fund. Share values of the Fund will likely decrease if the
U.S. stock markets or the markets in specific countries decline. Market values
can fall for numerous reasons, including changing economic and political
conditions, changes in currency values or simply because more investors have
decided to sell than buy certain securities or categories of securities.
Individual stocks or sectors can go down in value even when the general market
is up.
<PAGE>
Page 25
MANAGEMENT
STAAR Financial Advisors, Inc. (SFA), 604 McKnight Park Dr., Pittsburgh, PA
15237 is the Fund's investment advisor. Mr. J. Andre Weisbrod, President of
SFA, is the Portfolio Manager and has been primarily responsible for the Fund's
day-to-day management since its inception on 4/4/96. The Fund paid SFA 0.90%
of its average daily net assets for the year ending 12/31/98. For this fee,
SFA also provided other services (directly or indirectly) in addition to
investment management, including transfer agency, shareholder services,
accounting and legal services.
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
1998 1997 1996*
<S> <C> <C> <C>
NAV Beg Period $10.53 $10.25 $0.00
Net Investment Income 0.13 0.10 0.15
Net realized and unrealized
gains on securities -0.73 0.28 0.31
Total income from investment operations -0.60 0.38 0.46
Net Distribution from Investment Income -0.13 -0.10 -0.16
Net Distrib. From Net Realized Gains -0.13 -0.00 -0.08
Total Distributions -0.26 -0.10 -0.24
Net Asset Value, end of year $9.67 $10.53 $10.25
Total Return (%) -5.8% 3.8% 4.9%
Ratios/Supplemental Data
Net Assets at End of Year (in $1000's) $374 $307 $124
Ratio of Expenses
to Average Net Assets (%) ** 0.99% 0.82% 0.74%
Ratio of Net Investment Income
to Average Net Assets (%) 1.24% 1.29% 1.60%
Portfolio Turnover Rate 0.02% 3.48% 0.00%
</TABLE>
* 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.
Advisory Fees of $.02 per share were waived in 1996.
** Does not include foreign tax paid of .05% in 1998.
<PAGE>
Page 26
INFORMATION COMMON TO ALL OF THE FUNDS
BUYING SHARES
By Mail
You may open an account using the written application form. Legible
photocopies of the application form are acceptable if you desire to open more
than one account. Special applications are needed for certain retirement
accounts such as Traditional IRAs and Roth IRAs. These forms may be obtained
through Shareholder Services.
Mail the application with your check made payable to "STAAR Investment
Trust" to the Shareholder Services address listed on the inside back cover of
this prospectus. Do not forget to indicate on the Application the amounts or
percentage of your check to be put in each Fund.
Through Your Registered Investment Representative
Your representative can help you with forms and the processing of your
check.
By Wire
Call Shareholder Services for availability and instructions.
By Payroll Deduction
You may be able to purchase shares through an Employer-Sponsored Plan.
NOTE: You are 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.
MINIMUM INITIAL INVESTMENT
Regular Accounts: $10,000 to the entire Trust, which may be split among the
Funds subject to a $1,000 minimum per Fund. The $10,000 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.
IRA Accounts: $1,000 to the entire Trust, which may be split among the Funds
subject to a $250 minimum per Fund.
The Trust reserves the right to waive or reduce the minimum initial and
additional investments for certain investors, including employer-sponsored
retirement plans.
ADDING TO YOUR INVESTMENTS
By Mail
You may add to your investment at any time by mailing a check payable to
"STAAR Investment Trust" to Shareholder Services. You may use the convenient
tear-off form on your statements or provide written instructions including the
account number. Be sure to specify the amounts that should credited to each
Fund. If no instructions are received, allocation of your check will be made
according to the most recent allocation instructions received.
Minumum Amounts: Additional investments to regular accounts must be no
less than $100 per Fund. If the total amount of the check is insufficient to
meet the per Fund minimum, the deposit will be made in order of the
largest Fund allocation according to the most recent allocation
instructions received.
By Automatic Investment Plan
You may establish an Automatic Investment Plan by filling out the
appropriate form, which you may obtain from Shareholder Services. An Automatic
Investment Plan authorizes direct monthly deposits from your bank account.
Minumum Amounts: Additional investments to regular accounts must be no
less than $50 per Fund. If the total amount of the check is insufficient to
meet the per Fund minimum, the deposit will be made in order of the largest
Fund allocation according to the most recent
allocation instructions received.
<PAGE>
Page 27
EXCHANGING SHARES
You may exchange shares of one Fund for another either by phone or by
signed instructions mailed to Shareholder Services.
SELLING SHARES
You can sell your shares on any day the Trust is open for business.
Generally, you can sell up to $10,000 total from any Fund or combination of
Funds over the phone or by a signed letter. Be sure to include the signatures
of all registered owners as on the original application or any subsequent
change of authorized signatures. However, to protect you and the Trust, we
may require written instructions with a signature guarantee
for each owner if:
- You are selling more than $10,000 worth of shares.
- You want to have proceeds paid to someone who is not a registered owner.
- You want to have the proceeds sent to an address other than the address
of record or a pre-authorized account.
- You have changed the address on your account by phone within the
last 15 days.
You will receive the share price equal to the Net Asset Value at the end
of the day your request is received if it is received by 3:00 P.M.
(Eastern Time). If the request is received after 3:00 P.M. or on a day the
Trust is not open for business, it will be processed as of the close of the
next business day.
Your redemption check will generally mailed via first-class mail within
five business days after we receive your request in proper form. We will use
Priority Mail or Overnight Mail if requested, but your account will be charged
for this service.
If you want to sell shares recently purchased by check or bank draft, we
may delay sending your proceeds until your check or draft has cleared. This
delay could be seven business days or more.
<PAGE>
Page 28
INVESTOR SERVICES
Distribution Options
You may choose one of the following options when you open your account.
You may change your option at any time by notifying us in writing.
-- Dividends and capital gains distributions are reinvested in additional
shares. (This option will be assigned if no other option is selected.)
-- Dividends and short-term gains in cash and long-term capital gains
reinvested in additional shares.
-- Dividends and capital gain distributions in cash.
Automatic Investment Plan
You may transfer money directly from your checking or savings account to
buy shares monthly. The minimum amount is $50 per Fund.
Automatic Exchanges
You may request automatic monthly exchanges from one Fund to another. The
minimum is $100 per Fund.
Systematic Withdrawal Plan
You may request automatic monthly withdrawals from a Fund. The minimum
withdrawal amount is $100 per month per Fund.
Taxes on Distributions
For federal income tax purposes, distributions of investment income
(including dividends and short-term gains) are taxable as ordinary income.
Long-term capital gain distributions are eligible for reduced income tax
rates. Investments in foreign securities may be subject to foreign
withholding taxes. Distributions are taxable even if reinvested unless
the account is a qualified retirement plan. You should consult your tax
advisor regarding the effect of any investment on your taxes.
Statements and Reports
You will receive activity confirmations and statements that show your
account transactions. You will also receive the Trust's Annual and Semi-annual
Reports. Duplicate statements to an advisor may be requested.
Fees for Special Services
The Trust may charge a reasonable fee to your account for certain special
services, such as wire redemption and special mailing requests.
POLICIES
How the Funds Are Priced
The Net Asset Value (NAV) of a share of each Fund is calculated based
on the closing price of securities on each day that the New York
Stock Exchange is open (normally 4:00 P.M. eastern time). The NAV is
determined by dividing the total of each Fund's net assets 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 those 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 generally be completed the morning of the next business day.
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 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.
<PAGE>
Page 29
Time Limits For Crediting Purhases, Exchanges And Redemptions
The following types of orders must be received by the time (Eastern Time)
shown below to be credited at the closing share price on that day. Otherwise,
the transaction will be processed at the closing share price on the next
trading day.
Checks by mail, courier or personal delivery: 3:00 P.M.
Automatic Investment Plans, money received: 2:00 P.M.
Wire Orders: Call Shareholder Services by 1:00 P.M. and
Wired Funds received by 3:00 P.M.
Broker-Dealer Orders: 3:55 P.M.
Telephone Exchanges: 3:30 P.M.
Requests for redemptions by mail or phone: 3:00 P.M.
Accounts With Low Balances
The Trust reserves the right to close accounts with balances low enough to
cause extra expense, which would be detrimental to other shareholders. If your
account falls into this category, a letter will be mailed to you giving you the
option of adding to your account or closing it within 30 days.
Changes in Investment Minimums
At any time, the Trust may change its investment minimums or waive
minimums for certain types of purchases.
Joint Accounts
Where two individuals are registered as owners, the Trust will designate
the ownership as "joint tenants with rights of survivorship" unless specified
otherwise. All registered owners must agree in writing to any ownership
changes.
Right to Reject Orders
The Trust reserves the right to reject purchase, exchange or redemption
orders which it considers not properly requested or where there is some doubt
as to whether the proper owner has made the request or where the order
involves actual or potential harm to the Trust.
The Trust may also impose limitations on the size and frequency of
exchanges to protect Shareholders from potential adverse effects of market
timing.
OTHER INFORMATION/YEAR 2000 CONSIDERATIONS
Fund of Funds
The Fund of Funds approach provides broader diversification of holdings as
well as managers. However, owning other mutual funds within some of its Funds
could result in greater expenses for those Funds than if they held individual
securities only. Normally, this does not apply to the bond funds (IBF and
LTBF); while they are not prohibited from doing so, they generally do not hold
other mutual funds.
Year 2000 Issues
The Trust Funds could be adversely affected if the computers used by the
Trust or any of its service providers do not properly process date-related
information. The Trust and its managers recognize the importance of this
problem and they have diligently taken steps to address it. In-house systems
have been tested, contingency plans formulated and inquiries have been made to
all service providers.
The interdependencies on multiple computer systems are significant. While
we are confident that our internal systems will be compliant, and that most of
our service providers are expressing similar confidence, there can be no
assurance or guarantee that there will be no interruptions, delays or other
adverse effects on the Funds.
<PAGE>
Back cover
Where to Learn More
Mailing Address: STAAR Investment Trust, 604 McKnight Park Dr., Pittsburgh, PA
15237.
Shareholder Services: STAAR Financial Advisors, Inc. 800/332-7738 PIN 3371
E-mail Address: [email protected]
Web Site: www.staarinvest.com
Statement of Additional Information (SAI)
You may request the SAI, which contains more detailed information on all
aspects of the Trust. A current SAI has been filed with the Securities and
Exchange Commission (SEC) and is incorporated by reference into this
prospectus. It may be obtained from Shareholder Services or at the SEC's
Public Reference Room (1-800-SEC-0330) or on the SEC's Internet Web Site at
www.sec.gov.
<PAGE>
Cover
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, 1999,
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: June 30, 1999
<PAGE>
Page 1
THE STAAR INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
<TABLE>
<S> <C>
General Information And History 2
Investment Objectives and Policies 2
Management of the Funds 3
Control Persons and Principal Holders
of Securities 3
Investment Advisory and Other Services 3
Brokerage Allocation and Other Practices 4
Purchase, Redemption and Pricing of
Securities Being Offered 4
Tax Status 4
Calculation of Performance Data 5
Other Information 5
Financial Statements 6
</TABLE>
<PAGE>
Page 2
GENERAL INFORMATION AND HISTORY
The Registrant,
STAAR Investment Trust (the Trust),
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.
<PAGE>
Page 3
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 President, STAAR
Financial Advisors, Inc.
Pittsburgh, PA
Ronald G. Benson Secretary Business Consultant,
Regional Director,
Fellowship of Companies
for Christ,International
Pittsburgh, PA
Jeffrey A. Dewhirst Trustees Investment Banker,
Sewickley, PA
Thomas J. Smith Trustee President & CEO,
Capmasters, Inc.
Pittsburgh, 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 2000.
<PAGE>
Page 4
CUSTODIAN
The Registrant has contracted with
Firstar
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 July 27, 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
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.
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 5.7% 8.9% 17.4% 9.0% 6.0% 0.9%
Years: 4/4/96
to 12/31/98 2.74 2.74 2.74 2.74 2.74 2.74
Ending
Value 1164.39 1264.02 1551.70 1267.95 1173.56 1025.99
</TABLE>
<PAGE>
Page 5
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 12/31/1998
<TABLE>
<CAPTION>
IBF LTBF LCSF SCSF INTF ACF
<S> <C> <C> <C> <C> <C> <C>
Divs &
Int Earned 4901 3167 5568 10551 11991 4490
Expenses
Accrued 499 344 1458 1210 1252 304
Avg. Shrs.
Outstanding 95292 53710 136574 134561 145842 38521
Max
Offering
price end
of Period 10.45 11.16 12.99 11.45 10.60 9.67
30 Day
Yield 5.36% 5.72% 2.80% 7.39% 8.49% 13.86%
NOTE: Since the LCSF, SCSF, INTF and ACF tend to receive most of their
income in December, the 30 day yields may significantly overstate the
annualized yields.
</TABLE>
OTHER INFORMATION
The Prospectus and this Statement of Additional Information do not
contain all of the information contained in the Trust's registration
Statement. The Registration Statement and its exhibits may be examined
at the offices of the Securities and Exchange Commission in Washington,
D.C.
Statements contained in the Prospectus and this Statement of
Additional Information as to the contents of any agreement or other
document referred to are not necessarily complete and reference is made to
the copy of the agreement or document filed as an exhibit to the
Registration Statement for their complete and unqualified contents.
<PAGE>
Page 6
FINANCIAL STATEMENTS
STAAR INVESTMENT TRUST
FINANCIAL STATEMENTS
DECEMBER 31, 1998
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 Investment Trust
We have audited the statement of assets and liabilities, including the
schedules of investments of STAAR Investment 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, 1998, 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, 1998 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 Investment Trust as of December 31, 1998, the results of their
operations
and their cash flows for the period then ended, the changes in their net
assets for the period then ended, and
the selected per share data and ratios
for the period then ended, in conformity with generally accepted accounting
principles.
Sewickley, PA
February 26, 1999
<PAGE>
Page 7
STAAR INVESTMENT TRUST
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
ASSETS
<TABLE>
<CAPTION>
<S> <C>
Investments in securities, at value - $ 7,275,055
Cash (Not including money market funds) 20,125
Bond Interest Receivable 25,188
Total Assets 7,320,379
LIABILITIES
Accounts Payable for Securities 117,264
Accounts Payable - Other
(Advisors, TTEE, 12B-1 Fees) 5,233
Total Liabilities 122,497
NET ASSETS 7,197,882
</TABLE>
NOTE: The accompanying notes are an integral part of these financial
statements.
<PAGE>
Page 8
1 SST INTERMEDIATE BOND FUND Portfolio Valuation Date 12/31/1998
<TABLE>
<CAPTION>
Quantity Description UnitCost Price Cost MktVal
UnrealG/L % of Val.
<S> <C> <C> <C> <C> <C>
<C> <C>
205,758 Cash & Equiv. 100.00 100.00 205,758 205,758
0 16.6%
20,000 US Tr Nt 6.50 4/30/99 100.73 100.63 20,146 20,125
(21) 1.6%
45,000 US Tr Nt 6.25 8/31/00 98.97 102.53 44,535 46,139
1,604 3.7%
20,000 US Tr Nt 6.375 8/15/02 100.45 105.53 20,089 21,106
1,017 1.7%
20,000 US Tr Nt 6.5 5/15/05 100.19 109.56 20,037 21,912
1,875 1.8%
25,000 US Tr Nt 7.0 7/15/06 100.76 114.09 25,191 28,523
3,332 2.3%
20,000 US Tr Nt 5.5 2/15/08 100.42 105.97 20,084 21,194
1,110 1.7%
20,000 US Tr Nt 5.375 2/15/01 100.38 101.53 20,075 20,306
231 1.6%
50,000 US Tr Nt 5.5 12/31/00 102.69 101.69 51,344 50,844
(500) 4.1%
50,000 FHLMC Deb 6.49 12/19/05 100.70 102.00 50,350 51,000
650 4.1%
60,000 FHLMC Deb 6.25 6/24/08 100.00 100.31 60,000 60,188
188 4.9%
20,000 Fed Hm Ln Bk 6.17 7/30/02 102.22 103.75 20,433 20,750
307 1.7%
40,000 Fed Hm Ln Bk 5.94 1/30/01 99.82 100.06 39,929 40,025
96 3.2%
40,000 Fed Hm Ln Bk 5.925 8/14/03 100.98 100.78 40,391 40,312
(79) 3.3%
25,000 Fed Nat Mtg Ass 7.32 5/3/06 100.00 104.88 25,000 26,220
1,220 2.1%
25,000 Fed Nat Mtg Ass 7.52 4/23/04 101.39 100.71 25,348 25,178
(170) 2.0%
35,000 Fed Nat Mtg Ass 7.37 3/09/07 103.12 102.47 36,092 35,865
(227) 2.9%
75,000 Fed Nat Mtg Ass 5.39 11/5/03 99.56 98.57 74,672 73,928
(744) 6.0%
20,000 TVA Pwr 93Ser 6.125 7/15/03 97.00 102.19 19,400 20,4380
1,038 1.6%
13,000 TVA Pwr 95Ser 6.375 6/15/05 97.25 105.91 12,643 13,768
1,125 1.1%
25,000 Avco Fin Srv 7.375 8/15/01 102.00 104.96 25,500 26,240
740 2.1%
30,000 Columb/HCA Hlth 6.87 9/15/03 98.63 98.54 29,588 29,652
(26) 2.4%
20,000 DetEd SecMdTr59 6.27 3/15/00 100.00 100.82 20,000 20,164
164 1.6%
20,000 IBM NT BkEntNC 7.25 11/01/02 102.14 106.94 20,427 21,388
961 1.7%
25,000 M Lynch&Co Nts NC 8.0 2/1/02 103.50 106.85 25,875 26,713
838 2.2%
15,000 Morg Stnly Nt 6.375 12/15/03 96.90 102.91 14,535 15,437
902 1.2%
30,000 Stud Ln Mkt Ass 6.07 2/14/02 99.50 100.04 29,850 30,012
162 2.4%
40,000 Disney Co Nts 6.375 3/30/01 102.79 102.82 41,117 41,128
11 3.3%
20,000 BellSouth Comm 6.5 2/01/00 100.25 101.37 20,050 20,274
224 1.6%
80,000 Ford Mtr Cr 6.0 1/14/03 102.84 101.82 82,268 81,456
(812) 6.6%
40,000 Mellon Finl Co. 6.0 3/01/04 100.09 101.89 40,036 40,756
720 3.3%
40,000 Sears Acc Corp 6.92 6/17/04 104.80 106.41 41,920 42,564
644 3.4%
Total Account 1,222,693 1,239,273
16,580 100.0%
</TABLE>
See notes to financial statements
<PAGE>
Page 9
2 SST LONG TERM BOND FUND Portfolio Valuation Date 12/31/98
<TABLE>
<CAPTION>
Quantity Description UnitCost Price Cost MktVal
UnrealG/L % of Val.
<S> <C> <C> <C> <C> <C>
<C> <C>
3,017 Cash & Equiv. 1.00 1.00 3,017 3,017
0 0.5%
10,000 US Tr Nt 5.625 2/15/06 92.70 105.78 9,270 10,578
1,308 1.7%
75,000 US Tr Nt 7.25 5/15/16 105.59 121.13 79,194 90,844
11,650 15.0%
25,000 US Tr Nt 7.125 2/15/23 100.88 123.03 25,219 30,758
5,539 5.1%
15,000 US Tr Nt 6.875 8/15/25 99.99 121.44 14,998 18,216
3,218 3.0%
20,000 US Tr Nt 7.25 8/15/22 100.81 124.31 20,163 24,863
4,700 4.1%
10,000 US Tr Nt 6.25 8/15/23 104.86 111.88 15,730 16,781
1,051 2.8%
20,000 FHLMC 7.375 10/25/11 99.50 101.34 19,900 20,269
369 3.3%
35,000 FHLMC 6.85 5/14/13 100.28 101.41 35,099 35,492
393 5.9%
30,000 FHLMC 6.42 8/19/13 101.26 100.72 30,378 30,215
(163) 5.0%
25,000 FHLMC 6.7 2/15/11 102.94 101.81 25,734 25,453
(281) 4.2%
15,000 Bankamer Corp MTN 6.5 5/6/13 100.00 100.13 15,000 15,020
20 2.5%
20,000 Bear St MtnTr798 7.4 11/20/17 100.00 100.13 20,000 20,014
14 3.3%
15,000 Chase Man Corp MTN 6.5 5/6/13 100.25 99.58 15,037 14,937
(100) 2.5%
35,000 Citicorp 7.2 9/15/10 102.38 101.47 35,831 35,514
(317) 5.9%
20,000 Disney Mtn Semi 7.75 9/30/11 100.00 101.58 20,000 20,316
316 3.4%
10,000 FPL Grp Cap Inc 7.625 5/01/13 100.26 103.84 10,025 10,384
359 1.7%
40,000 Ford Mtr Cred MTN 7.0 9/20/10 101.00 102.35 40,400 40,940
540 6.8%
25,000 GE Cap Corp 6.4 1/16/13 99.75 100.05 24,938 25,012
74 4.1%
20,000 Gen Mot Corp Nts 7.10 3/15/06 99.31 108.40 19,861 21,680
1,819 3.6%
15,000 Morgn Stnly Cap Gr 7.45 7/3/12 100.00 101.01 15,000 15,152
152 2.5%
15,000 So.Westn Bell Deb 6.75 6/01/08 96.25 100.83 14,438 15,125
687 2.5%
30,000 Xerox Cr Corp MTN 6.5 1/28/13 100.00 101.03 30,000 30,309
309 5.0%
35,000 Xerox Cr Corp MTN 6.5 2/11/13 100.00 101.07 35,000 35,375
375 5.8%
Total
Account 574,232 606,264
32,032 100.0%
</TABLE>
See notes to financial statements
<PAGE>
Page 10
3 SST LARGER COMPANY STOCK FUND Portfolio Valuation Date 12/31/98
<TABLE>
<CAPTION>
Quantity Description UnitCost Price Cost MktVal
UnrealG/L % of Val.
<S> <C> <C> <C> <C> <C>
<C> <C>
139,226 Cash & Equiv. 1.00 1.00 139,226 139,226
0 7.5%
U.S. Lar
ger Comp
any Stoc
k Mutual
Funds
5726 Bear Stearns S&P Stars A 20.42 22.97 116,900 131,525
14,625 7.1%
1869 Clipper Fund 69.35 75.37 129,604 140,857
11,253 7.6%
2857 Franklin Growth Fund Cl 1 24.92 31.45 71,192 89,860
18,668 4.9%
5007 Fundamental Investors Fund 25.09 28.92 125,604 144,800
19,196 7.8%
1238 Janus Twenty Fund 44.87 53.30 55,538 65,972
10,434 3.6%
31355 Putnam Investors A Fund 12.87 14.82 403,414 464,683
61,269 25.1%
3877 Torray Fund 35.08 36.48 136,023 141,444
5,421 7.6%
6315 Washington Mutual Investors 25.54 32.91 161,308 207,843
46,535 11.2%
U.S. Lar
ger Comp
any Stoc
k Unit
Trusts
9478 Peroni Top 10 Grwth Tr 98 Ser 9.96 11.89 94,372 112,728
18,356 6.1%
U.S. Mi
d-Cap L
arger
Company
Stocks
1630 Mairs and Power Growth Fund 69.81 92.68 113,821 151,108
37,287 8.2%
1054 Strong Schafer Value Fund 60.18 59.29 63,416 62,475
(941) 3.4%
Total
Account 1,610,418 1,852,521
242,103 100%
</TABLE>
See notes to financial statements
<PAGE>
Page 11
4 SST SMALLER COMPANY STOCK FUND Portfolio Valuation
12/31/98
<TABLE>
<CAPTION>
Quantity Description UnitCost Price Cost MktVal
UnrealG/L % of Val.
<S> <C> <C> <C> <C> <C>
<C> <C>
47864 Cash & Equiv. 1.00 1.00 47,864 47,864
0 3.0%
U.S.
Small
er
Com
pany
Stock
Mutu
al
Fund
s
9261 Acorn Fund 16.25 16.85 150,510 156,045
5,535 9.7%
11156 Frnkln Small Cap Growth Fd I 20.27 22.57 226,080 251,788
25,708 15.6%
9986 Ivy Emerging Growth Fund A 26.50 32.65 264,628 326,052
61,424 20.2%
9103 SSGA Small Cap Fund 19.30 19.41 175,739 176,696
957 10.9%
U.S.
Mid-
Cap
small
er
Com
pany
Stock
s
11323 Putnam Cap. Apprec. Fund A 22.70 22.66 257,028 256,585
(443) 15.9%
5648 T Rowe Price New Horizons Fd 23.76 23.34 134,192 131,831
(2,361) 8.2%
U.S.
Micr
ocap
Stock
Mutu
al
Fund
s
13838 Frnkln Microcap Value Fund I 19.42 19.31 268,678 267,217
(1,461) 16.6%
Total
Account 1,524,719 1,614,078
89,359 100%
</TABLE>
See notes to financial statements
<PAGE>
Page 12
5 SST INTERNATIONAL FUND Portfolio Valuation Date 12/31/98
<TABLE>
<CAPTION>
Quantity Description UnitCost Price Cost MktVal
UnrealG/L % of Val.
<S> <C> <C> <C> <C> <C>
<C> <C>
32867 Cash & Equiv. 1.00 1.00 32,867 32,867
0 2.0%
Inter
natio
nal
Stock
Mutu
al
Fund
s
5464 Europacific Fund 26.20 28.40 143,148 155,183
12,035 9.6%
6339 Hotchkis & Wiley Int'l Fund 22.29 23.28 141,317 147,570
6,253 9.2%
6496 Ivy International Fund 35.92 41.20 233,321 267,646
19,922 21.2%
17088 Putnam Int'l Growth Fund A 18.22 19.23 311,355 328,600
17,245 20.4%
10201 T R Price Int'l Stock Fund 13.64 14.99 139,150 152,919
13,769 9.5%
22866 Templeton Foreign Fund I 10.04 8.39 229,559 191,844
(37,715) 11.9%
9151 Warburg Pincus Int'l Eq Fd 19.35 17.79 177,065 162,804
(14,261) 10.1%
Develop
ing Mar
kets Mu
tual
Funds
16468 Templeton Devel. Mkts Tr I 14.32 10.30 235,830 169,617
(66,213) 10.5%
Total
Account 1,643,612 1,609,050
(34,562) 100%
</TABLE>
See notes to financial statements
<PAGE>
Page 13
6 SST ALTCAT FUND Portfolio Valuation 12/31/98
<TABLE>
<CAPTION>
Quantity Description UnitCost Price Cost MktVal
UnrealG/L % of Val.
<S> <C> <C> <C> <C> <C>
<C> <C>
23829 Cash & Equiv. 1.00 1.00 23,829 23,829
0 6.4%
U.S.
Mid-
Cap
Large
r
Com
pany
Stock
Mutu
al
Fund
s
1091 Muhlenkamp Fund 34.49 37.65 37,618 41,062
3,444 11.0%
Glob
al
Small
er
Co.
Stock
Mutu
al
Fund
s
2257 Mutual Series Discovery Fd I 18.44 17.19 41,615 38,801
(2,814) 10.4%
446 Small Cap World Fund I 25.97 27.64 11,576 10,977
(599) 2.9%
Alter
nativ
e
Cate
gorie
s
484 Franklin Gold Fund I 14.50 7.72 7,020 3,737
(3,283) 1.0%
1699 Frnkln Real Estate Sec Fd I 14.60 14.32 24,806 24,332
(474) 6.5%
2715 Frnkln Nat. Resources Fd I 14.68 10.50 39,861 28,507
(11,354) 7.6%
955 Invesco Strategic Tech Fd 31.41 34.99 30,000 33,419
3,419 8.9%
6669 Ivy China Region Fund A 8.50 6.30 56,684 42,014
(14,670) 11.2%
3802 Templeton Latin Amer Fund I 11.44 7.12 43,505 27,071
(16,434) 7.2%
1276 Templeton Global Real Est I 14.45 13.67 18,426 17,438
(988) 4.7%
1217 Vanguard Special Energy Fund 22.27 18.42 27,112 22,422
(4,690) 6.0%
624 Vanguard Special Health Fund 75.18 96.85 46,881 60,396
13,515 16.1%
Total
Account 408,933 374,005
(34,928) 100%
</TABLE>
See notes to financial statements
<PAGE>
Page 14
STAAR SYSTEM- TRUST
STATEMENT OF OPERATIONS
12 MONTH PERIOD ENDING DECEMBER 31, 1998
(Total, Six Series Funds)
<TABLE>
<CAPTION>
<S> <C> <C>
Investment Income
Mutual fund dividends $ 66,820
Interest and money market
fund dividends 77,962
Total Income $144,782
Expenses
Investment advisory fees (Note 5) $ 51,572
Directors fees, filing, tax (Note 5) $ 5,632
Foreign Taxes Paid $ 2,877
Interest $ 0
Marketing/Distrib. 12b-1 $ 24
Other Expenses $ 387
Total Expenses $ 60,492
Investment income-net $ 84,290
Realized and unrealized appreciation on
investments
Realized long and short term capital gains $178,138
Unrealized appreciation (depreciation) $ 51,116
Net Realized and Unrealized
Appreciation (Depreciation) $229,254
Net increase in net assets resulting
from operations $313,544
</TABLE>
NOTE: The accompanying notes are an integral part of these financial
statements.
<PAGE>
Page 15
STAAR SYSTEM TRUST
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Period
From
Inception
Year Ended Year Ended (3/19/96)
December 31, December 31, Through
1998 1997 12/31/96
<S> <C> <C> <C>
Increase in net assets from
operations:
Investment income- net $ 84,290 $ 93,962 $ 42,940
Net realized gain on
investments $ 178,138 $ 141,856 $ 46,523
Unrealized appreciation of
investments $ 51,116 $ 188,631 $ 70,817
Net increase in net assets
resulting from operations $ 313,544 $ 424,449 $ 160,280
Distributions to shareholders
from:
Investment income $( 86,735) $( 87,129) $( 38,885)
Realized long term gains $(170,740) $(141,856) $( 46,523)
Total distributions $(257,475) $(228,985) $( 85,408)
Capital share transactions
(Note 3)
Purchases $2,624,793 $2,044,858 $2,465,597
Redemptions $( 585,695) $( 238,765) $( 10,000)
Reinvestment of dividends $ 255,605 $ 228,985 $ 85,408
Net increase in net assets
resulting from capital
share transactions $2,294,703 $2,035,078 $2,541,005
Total increase in net assets $2,350,772 $2,231,231 $2,615,877
Net assets
Beginning of period $4,847,108 $2,615,877 $ 0
End of period $7,197,880 $4,847,108 $2,615,877
</TABLE>
NOTE: The accompanying notes are an integral part of these financial
statements.
<PAGE>
Page 16
STAAR SYSTEM TRUST
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
<S> <C>
Net increase in cash from operations $ 313,544
Adjustments required to reconcile to net cash
provided by operating activities:
Unrealized appreciation of investments (51,116)
(Increase) decrease in:
Bond Interest Receivable (9,266)
Increase (Decrease) in:
Accrued Interest 706
Taxes Payable (0)
Accounts Payable 118,586
Net cash provided by operating
activities 372,454
Cash provided (used) by investment activities
Investments Purchased (3,113,378)
Sales or redemptions 843,741
Net cash (used) by investment activities (2,269,637)
Cash provided (used) by financing activities
Shareholder Contributions 2,624,793
Shareholder Redemptions (including $158,682
Re-invested in other Trust Funds) (585,696)
Dividends declared (257,476)
Dividends reinvested by shareholders 255,586
Net cash provided by financing activities 2,037,207
Increase (Decrease) in Cash During Period 140,024
Cash Balance - beginning of period 312,536
Cash Balance - end of period $ 452,561
</TABLE>
NOTE: The accompanying notes are an integral part of these financial
statements.
<PAGE>
Page 17
STAAR SYSTEM TRUST
NOTES TO FlNANClAL STATEMENTS
DECEMBER 31, 1998
NOTE 1 - ORGANIZATION AND PURPOSE
Staar Investment 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 registered 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 STAAR Intermediate Bond Fund
The STAAR Long-Term Bond Fund
The STAAR Larger Company Stock Fund
The STAAR Smaller Company Stock Fund
The STAAR International Fund
The STAAR 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.
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. During the years ended December 31, 1998 and 1997, 99% and 100%
of dividends declared were reinvested by the respective
owners of beneficial interest. Transactions in units of beneficial
interest were as follows:
<TABLE>
<PAGE>
Page 18
STAAR INVESTMENT TRUST SHAREHOLDER TRANSACTIONS
YEAR ENDED 12/31/98
<CAPTION>
Fund December 31, 1997 Balance Sold Reinvestment Of Dividends
Redemption December 31, 1998 Balance
Shares Amount Shares Amount Shares Amount Shares
Amount Shares Amount
<S> <C> <C> <C> <C> <C> <C>
<C> <C> <C> <C>
Intermediate
Bond Fund 60,904 $ 605,200 52,286 $ 547,135 3,932 $ 40,840
(6,765) $ (70,349) 110,356 $1,122,826
Long-Term
Bond Fund 31,339 $ 315,763 22,345 $ 245,762 2,372 $ 26,169
(2,445) $ (27,482) 56,611 $ 560,212
Larger
Company
Stock Fund 104,889 $1,131,829 45,157 $ 571,825 7,679 $ 99,910
(15,216) $(190,149) 142,510 $1,613,415
Smaller
Company
Stock Fund 102,877 $1,075,143 45,382 $ 522,933 3,628 $ 41,616
(11,000) $(114,493) 140,886 $1,525,199
International
Fund 107,214 $1,145,174 53,791 $ 588,719 3,500 $ 37,310
(12,771) $(131,184) 151,734 $1,640,019
Alternative
Categories
Fund 29,151 $ 302,974 14,010 $ 148,420 1,001 $ 9,741
(5,520) $( 52,039) 38,641 $ 409,096
Total
Amount $4,576,083 $2,624,794 $ 255,586
$(585,696) $6,870,767
</TABLE>
Net undistributed investment income (loss) for each fund as of December
31, 1998 was as follows:
IBF $14,097
LTBF $ 6,040
LCSF $(3,943)
SCSF $(1,691)
INTF $ 2,394
ACF $ (368)
NOTE 4 - SUMMARY OF UNREALIZED GAINS AND LOSSES:
Following is a summary of unrealized gains and losses for each portfolio as
of December 31, 1998:
<TABLE>
<Caption
_____Unrealized___
Market
Cost Gain Loss Net Value
<S> <C> <C> <C> <C> <C>
Intermediate Bond $1,222,693 19,159 $ (2,579) $ 16,580 $1,239,273
Long Term Bond 574,232 32,893 (861) 32,032 $ 606,264
Larger Company
Stock Fund 1,610,418 243,044 (941) 242,103 1,852,521
Smaller Company
Stock Fund 1,524,719 93,624 (4,265) 89,359 1,614,078
International Fund 1,643,612 83,627 (118,189) (34,562) 1,609,050
AltCat 408,933 20,378 (55,306) (34,928) 374,005
TOTAL $6,984,607 $492,725 $(182,141) $310,584 $7,295,191
</TABLE>
<PAGE>
Page 19
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., 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,
2000. The advisor furnishes investment management and advisory services
(rate varies for each portfolio in accordance with a fee schedule ranging
from .63% to .90% of average daily net asset value). During the period ended
December 31, 1998, the investment advisor waived fees as follows:
<TABLE>
<CAPTION>
Amount of Fees Waived
Fund FeesWaived Per Share
<S> <C> <C>
Intermediate Bond Fund $1,033 $ .01
Long Term Bond Fund 603 .01
</TABLE>
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 and longer if approved by both parties on
an annual basis.
The STAAR Investment Trust is also charged 0.09% of the average daily net
asset value for each Fund for various Trust expenses; from this the
Trustees are compensated as a group at a rate of $1,125
per calendar quarter.
Certain affiliated persons held aggregate investments in the respective
portfolios as of December 31, 1998 as follows:
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Intermediate bond fund 3,937.382 $ 41,146
Long term bond fund 2,085.392 23,273
Larger company stock fund 10,678.327 138,711
Smaller company stock fund 16,459.801 188,465
International fund 16,332.305 173,122
Alternative categories fund 3,844.234 37,174
</TABLE>
Effective September 1, 1998, the Trust received approval of a 12b-1
arrangement which provides fee (commission) payments to broker/dealers
who refer investors who become shareholders in the Trust. The fee
structure is .5% for the bond funds and 1.0% for the stock funds over the
first 12 months from date of purchase and .15% for bond funds and .25% for
stock funds per year thereafter. Fees are calculated based on fair market
values and arew payable monthly the first 12 months and quarterly
thereafter. Total 12b-1 expense for 1998 was $24.
Supplementary Information - Selected Per Share Data and Ratios are provided
In detail in the prospectus.
<PAGE>
Page 20
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>
Page 21
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial statements: Included in Part A
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
This is no longer required
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.
<PAGE>
Page 22
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>
Page 23
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 28th day of May, 1999.
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 May 28, 1999
(Signature) (date)
<PAGE>
Consent
We hereby consent to the use of our name by
the Staar Investment Trust, in the Prospectus dated
June 30, 1999, as auditors and accountants.
Date: May 28, 1999 CARSON & CO.
By: Terrance Carson
