<PAGE> 1
STAAR Investment Trust
604 McKnight Park Dr.
Pittsburgh, PA 15237
Phone 412-367-9076
Fax 412-367-9141
Annual Report
January 1, 1999 to December 31, 1999
Investment Strategies You Can Understand(SM)
Letter to Shareholders
March 1, 2000
Dear Shareholder:
Well, we made it! It was Y2KNot. Again, the doomsayers were wrong.
The sky's still there. The power is on. The phone still works. Surf's
up on the Internet. Jesus didn't return. Airplanes didn't crash. Neither did
the stock markets. Look for great deals on generators, freeze-dried foods and
other items at this spring's garage sales.
1999 proved to be another outstanding investment year IF you owned the
right stocks. If not, you didn't make much and may have even lost money.
In late 1998 I recommended that clients look to International and
Small Company stocks as sectors that seemed ready to rebound from relatively
poor performance. I also said that the technological revolution was a driving
force and though I was concerned by high prices, believed that a well-balanced
portfolio would need a portion of tech stocks to take advantage of long-term
trends.
Like 1998, a relatively narrow band of stocks led the way in the U.S.
with technology and Internet stocks at the top of the heap. However, unlike
1998, international stocks staged a tremendous rebound and small company stocks
surged toward the end of the year.
Conservative investors lost out in 1999. Those who were afraid of
growth and Y2K and retreated to cash, bonds and "value" stocks made very little
money or lost money.
Overall, I am pleased with the performance of the STAAR Funds. Three
of our Funds returned over 30% in 1999. One of the Funds has been noted as a
"top performer" in the March, 2000 issue of Morningstar's Investment Advisor.
As I look ahead, I am impressed with the potential and opportunities
before us. We are in the midst of a gigantic technological revolution, which is
poised to thrust the world to a new level of living.
The last period of comparable magnitude began in the late 1800's and
lasted through the First World War. The invention of the interchangeable part
made the assembly line possible. The invention of the telephone made the
transfer of information instantaneous.
These and the subsequent developments they made possible propelled the
world into a greater standard of living. Conveniences and machines previously
non-existent or available only to the wealthy became commonplace. Running
water, sewage systems, telephones, cars, sewing machines, streetcars, movies,
electric lighting, better medical care, more trains, boats and finally
airplanes were made possible. People lived better and they lived longer.
This revolution makes that one pale by comparison. It's bigger, faster
and the leap forward greater by far. I believe we are maybe a third to half way
through it. This juggernaut is sweeping the world and will create incredible
results. It will take a cataclysmic reversal to thwart the direction set over
the last fifteen years.
The parallel to the interchangeable part of the late 1800's was the
invention of the personal computer (PC) in the late 1900's. The parallel to the
telephone is the Internet. These two developments have made vast advances
possible in all areas of life. These plus the successful economic policies of
the 1980's combined to create over a decade of the greatest wealth creation in
the history of the planet. And, while there will be interruptions, it is likely
to continue for another decade or two.
I believe that over the next fifteen to twenty years the following
trends are in place. Large, multinational companies will continue to grow.
However, entrepreneurs will still be the catalysts of progress. Therefore,
small companies will offer great opportunities. Computer-related companies will
lead the way. The third world will develop as a powerful economic force. China
will vie with Europe and Japan to be the second largest economy. The demand for
energy and resources will increase dramatically. Instant commerce over the
Internet will become habit. But the need for "warm body" contact and service
will not go away, causing technology to become more personal and comfortable.
Many improvements will move from possibility to probability, from
fantasy to fact. Life expectancy will increase and the demand for better health
care and medical services will soar. Many diseases will be cured or at least
controlled. I believe my children can expect to live beyond 100 and my
grandchildren may be able to expect to live to 150.
Technology will bring advancements in transportation, communication,
manufacturing, food production and recreation. Ways to better maintain and
preserve the environment will be invented. Perhaps space travel will become a
reality, though it may be further off. Work on alternative sources of energy
will advance, making a changeover from oil and gas possible within the next
thirty years.
Is all this inevitable? No. Prosperity is not guaranteed. We must
never forget the infinite ability of mankind to screw things up. But it would
take a huge force to stop this revolution. A nuclear war is still possible. Or
terrorists with a nuclear or biological weapon could wreak havoc. Governments
could make terrible economic decisions or some unknown event or events could
stall the forward march of progress.
There are always risks. There will be periods of economic crisis.
Stock markets will go down. But over the next ten to fifteen years, I believe
the growth scenario to be the most probable and I am managing the STAAR Funds
accordingly.
The stock Funds will continue to be widely diversified, utilizing
different managers having different approaches. We will try to participate in
the trends, but do so in a prudent manner.
I would like to remind our investors that our Funds are not designed
for spectacular triple-digit performance such as some funds experienced in
1999. Our goal is to provide healthy returns within our categories and
objectives. There will be times when one or more of our Funds lose money for a
period. During those times we intend to stick to our plans. We hope you will
too.
I look forward to the future. And I look forward to your company along
the way.
The detailed information in this report is provided to assist you in
understanding your investment. Please feel free to call me personally if you
have a question.
On behalf of the Trustees and people of STAAR Financial Advisors,
Inc., I want to thank you for your continued confidence in us. We sincerely
value our business.
Sincerely Yours,
/s/ J. Andre Weisbrod, Trustee
President, STAAR Financial Advisors, Inc.,
Advisor to the Trust
<PAGE> 2
Visit Our Web Site:
www.staarinvest.com
A Word About Risk
<PAGE> 3
Perspective & Performance
Indexes used for comparisons are selected as being closest to each Fund's
objectives.
Intermediate Bond Fund (IBF)
1999 saw the worst year for bonds since 1994. The Federal Reserve
seems likely to raise interest rates at least a couple times during the first
4-6 months of 2000. Should inflation numbers stay low and the oil price
situation ease, a positive environment for bonds could exist by the second half
of the year. We are pleased to report that Morningstar ranked the IBF in the
top 15% of all Funds in the Intermediate-Term Bond Fund category for the 12
months ending 12/31/99.
For periods ending 12/31/99.
<TABLE>
<CAPTION>
Description Three Year Five Year Since Public Since Private
Last One Avg. Annual Avg. Annual Inception Inception
Quarter Year Return Return (5/28/97) (4/4/96)
------- ---- ------ ------ --------- --------
<S> <C> <C> <C> <C> <C> <C>
Intermediate Bond Fund
(IBF) A high grade portfolio
of US Gov't, Gov't Agency
and Investment Grade
Corporate Bonds with an
average maturity usually
between 3 and 7 years. -0.2 % -0.1% 4.7% N/A 5.0% 4.1%
Lehman Bros. Intermed. Gov/
Corp Bond Index 0.11% 0.4% 5.5% N/A 5.8% 5.7%
Morningstar Intermed. Term
Bond Fund Average -0.2 % -1.4% 4.8% N/A 5.1% 5.2%
</TABLE>
Current Yield as of 12/31/99 ........................... 5.25% **
S.E.C. Yield as of 12/31/99 ............................ 5.23% ***
Average Maturity ....................................... 4.4 Years
Portfolio Turnover ..................................... 11.9%
* Total returns include reinvested dividends and gains.
** Current Yield is calculated by dividing the projected annual net income by
the current net assets (total portfolio value less accrued expenses)
*** S.E.C. Yield is calculated by taking actual net income received during the
past thirty days divided by the average shares for the last thirty days, divided
by the maximum offering price on the last day of the period and then annualized.
<PAGE> 4
Long Term Bond Fund (LTBF)
Long bonds suffered a significant downturn in 1999 as the thirty year Treasury
yield rose to over 6.5%. If interest rates stabilize by mid-year the
environment for long-term bonds could become positive.
For periods ending 12/31/99.
<TABLE>
<CAPTION>
Description Three Year Five Year Since Public Since Private
Last One Avg. Annual Avg. Annual Inception Inception
Quarter Year Return Return (5/28/97) (4/4/96)
------- ---- ------ ------ --------- --------
<S> <C> <C> <C> <C> <C> <C>
Long Term Bond Fund
(LTBF) A high grade
portfolio of US Gov't,
Gov't Agency and
Investment Grade
Corporate Bonds with
an average maturity
over 10 years. -2.5% -4.8% 4.8% N/A 7.7% 5.1%
Lehman Bros. Long-term
Gov/Corp Funds Index -1.5% -7.6% 5.7% N/A 5.0% 6.3%
Morningstar Long-Term
Bond Funds Avg. -0.3% -2.8% 4.6% N/A 6.7% 5.4%
</TABLE>
Current Yield as of 12/31/99 ........................... 6.0% **
S.E.C. Yield as of 12/31/99 ............................ 5.8% ***
Average Maturity ....................................... 14.9 Years
Portfolio Turnover ..................................... 4.1%
*Total returns include reinvested dividends and gains.
** Current Yield is calculated by dividing the projected annual net income by
the current net assets (total portfolio value less accrued expenses)
*** S.E.C. Yield is calculated by taking actual net income received during the
past thirty days divided by the average shares for the last thirty days, divided
by the maximum offering price on the last day of the period and then annualized.
<PAGE> 5
Larger Company Stock Fund (LCSF)
Stocks gained strongly in the fourth quarter to finish five straight years of
double-digit growth. With Y2K out of the way and inflation the only immediate
worry, overall conditions for stocks are still good. Like 1998, a relatively
narrow band of stocks led the way in the U.S. with technology and internet
stocks at the top of the heap.
The early part of 2000 has seen "value" stocks continue to slide while "growth"
stocks continue to fare better. Many stocks that have risen precipitously over
the last few years could slow down or even fall in price while many stocks
whose prices have already gone down could be poised to recover. A good balance
between "growth" and "value" seems prudent, and the make-up of the LCSF
reflects such a "blended" style.
For periods ending 12/31/99.
<TABLE>
<CAPTION>
Description Three Year Five Year Since Public Since Private
Last One Avg. Annual Avg. Annual Inception Inception
Quarter Year Return Return (5/28/97) (4/4/96)
------- ---- ------ ------ --------- --------
<S> <C> <C> <C> <C> <C> <C>
Larger Co. Stock Fund
(LCSF) A fund of funds
in which the underlying
investments are
primarily common stocks
of large and larger
mid-cap companies with
an objective of Growth
with some Income. Indi-
vidual stocks may be
owned. 11.9% 15.9% 17.6% N/A 16.4% 17.0%
S&P 500 Index 14.9% 21.0% 27.6% N/A 25.3% 26.1%
Dow Jones Industrial
Average 11.6% 27.2% 23.3%* N/A 20.6%* 22.9%*
New York Stock Exchange
Composite 9.7% 9.2% 18.4% N/A 16.2% 17.8%
Morningstar Growth &
Income Funds Avg. 11.0% 13.7% 19.0% N/A 17.7% 19.1%
</TABLE>
Portfolio Turnover .................................. 6.5%
* Without dividends.
**Total returns include reinvested dividends and gains.
Smaller Company Stock Fund (SCSF)
Small Companies, especially in the growth category, soared last quarter. After
lagging Large Caps for a number of years, the strong move late in 1999 gives
some indication the trend may finally be shifting to favor Small companies. We
are pleased to report that the SCSF ranked in the top 25% of funds tracked by
Morningstar in the Small Blend Funds Category for the three-year period ending
12/31/99.
For periods ending 12/31/99.
<TABLE>
<CAPTION>
Description Three Year Five Year Since Public Since Private
Last One Avg. Annual Avg. Annual Inception Inception
Quarter Year Return Return (5/28/97) (4/4/96)
------- ---- ------ ------ --------- --------
<S> <C> <C> <C> <C> <C> <C>
Smaller Co. Stock Fund
(SCSF) A fund of funds
in which the underlying
investments are primarily
common stocks of small,
microcap and smaller
mid-cap companies.
Individual stocks may
be owned. 26.5% 30.4% 15.2% N/A 17.7% 14.4%
Russell 2000 Index 18.5% 21.3% 13.1% N/A 13.3% 13.1%
Morningstar Small
Company Funds Avg. 25.3% 36.0% 17.2%* N/A 18.9%* 17.2%
</TABLE>
Portfolio Turnover ........................................ 33.5%
* Total returns include reinvested dividends and gains.
<PAGE> 6
International Fund (INTF)
International markets performed extremely well, rebounding from a
difficult 1998. The world continues its marvelous growth, increasingly embracing
free enterprise and trading cooperation. There are problems, to be sure, but
they should not stand in the way of progress. Overall, global conditions appear
more positive than negative.
For periods ending 12/31/99.
<TABLE>
<CAPTION>
Description Three Year Five Year Since Public Since Private
Last One Avg. Annual Avg. Annual Inception Inception
Quarter Year Return Return (5/28/97) (4/4/96)
------- ---- ------ ------ --------- --------
<S> <C> <C> <C> <C> <C> <C>
International Fund (INTF)
A fund of funds in which
the underlying investments
are primarily stocks of
companies in countries
outside the U.S., includ-
ing emerging markets 21.3% 38.7% 13.8% N/A 12.3% 13.9%
EAFE Index 17.0% 27.0% 15.7% N/A 15.4% 13.3%
Morningstar Foreign Stock
Funds Avg. 26.8% 44.3% 18.7% N/A 17.9% 17.0%
Morningstar Diversified
Emerging Mkts Funds 36.2% 71.8% 6.7% N/A 2.9% 6.5%
</TABLE>
Portfolio Turnover .................................. 13.1%
* Total returns include reinvested dividends and gains.
AltCat (Alternative Categories) Fund (ACF)
Among the major trends that should result in profits for companies and
investors over the next decade are: Third-world growth; China as a major
economy; increasing demand for energy and resources; technological innovation
and application, especially in computers and communications; biotechnology and
health care; entrepreneurial opportunities and small company growth. The AltCat
Fund is positioned to take advantage of these and other opportunities. We are
pleased to report that the ACF ranked in the top 5% of funds in Morningstar's
Mid-Cap Value Funds category and in the top 15% of funds having a Multi-Asset
Global objective for the year ending 12/31/99.
For periods ending 12/31/99.
<TABLE>
<CAPTION>
Description Three Year Five Year Since Public Since Private
Last One Avg. Annual Avg. Annual Inception Inception
Quarter Year Return Return (5/28/97) (4/4/96)
------- ---- ------ ------ --------- --------
<S> <C> <C> <C> <C> <C> <C>
AltCat Fund ACF)
The Alternative Categories
Fund invests in a wide
range of mixed global
assets including mostly
aggressive funds (fund
of funds),which generally
do not fit into the other
major categories. 14.9% 30.7% 8.5% N/A 8.2% 8.1%
Morningstar Multi-Asset
Global Funds Avg. 12.6% 20.2% 10.7% N/A 11.6% 11.4%
Morningstar Mid-Cap Value
Funds Avg. 6.2% 6.7% 10.7% N/A 9.1% 12.3%
</TABLE>
Portfolio Turnover ........................................ 4.2%
* Total returns include reinvested dividends and gains.
Notes regarding performance: Total Return assumes dividends and/or capital gains
reinvested. STAAR Fund returns are based on Net Asset Value. Indexes such as
the S&P 500, Lehman Bros. (LB) Bond and Russell 2000 indexes are unmanaged, and
therefore have little or no expenses. Morningstar mutual fund averages reflect
net returns after expenses. Performance numbers are quoted directly or derived
from data published in the Wall St. Journal, Morningstar and other public
sources and may be preliminary data. Past performance is no guarantee of future
results. Investment returns and principal values fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus. The STAAR Investment Trust, 604
McKnight Park Dr., Pittsburgh, PA 15237 412-367-9076
<PAGE> 7
Portfolio Holdings as of 12/31/99
1 SST INTERMEDIATE BOND FUND
Portfolio Valuation Date 12/31/1999
<TABLE>
<CAPTION>
Quantity Description UnitCost Price Cost MktVal UnrealG/L % of Val
---------------------- ---------- ------- ------ -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
205,758 Cash & Equiv. 100.00 100.00 51,094 51,094 0 3.3%
Sub-Total Cash & Equiv. 51,094 51,094 0 3.3%
------- ------- - ----
U.S. Treasury Obligations
45,000 US Tr Nt 6.25 8/31/00 98.97 100.19 44,535 45,085 550 2.9%
20,000 US Tr Nt 6.375 8/15/02 100.45 100.19 20,089 20,038 (51) 1.3%
20,000 US Tr Nt 6.5 5/15/05 100.19 100.03 20,038 20,006 (31) 1.3%
20,000 US Tr Nt 5.5 2/15/08 100.42 93.63 20,084 18,725 (1,359) 1.2%
90,000 US Tr Nt 5.375 2/15/01 101.35 99.19 91,213 89,269 (1,944) 5.8%
50,000 US Tr Nt 5.5 12/31/00 102.69 99.41 51,344 49,703 (1,641) 3.2%
30,000 US Tr Nt 5.25 5/15/04 97.75 95.75 29,325 28,725 (600) 1.9%
Sub-Total U.S. Treasury 276,627 271,551 (5,076) 17.5%
------- ------- ------ ----
Gov. Agency Obligations
50,000 FHLMC Deb 6.49 12/19/05 100.70 96.19 50,350 48,094 (2,255) 3.1%
60,000 FHLMC Deb 6.25 6/24/08 100.00 91.44 60,000 54,863 (5,137) 3.5%
30,000 FHLMC Deb 6.125 7/24/08 93.75 91.81 28,125 27,544 (581) 1.8%
40,000 FHLMC Deb 5.0 2/15/01 99.16 98.50 39,662 39,400 (262) 2.5%
20,000 Fed Hm Ln Bk 6.17 7/30/02 102.22 98.94 20,443 19,788 (655) 1.3%
40,000 Fed Hm Ln Bk 5.925 8/14/03 100.98 96.56 40,391 38,625 (1,766) 2.5%
60,000 Fed Hm Ln Bk 5.8 11/04/05 96.63 93.69 57,975 56,213 (1,762) 3.6%
40,000 Fed Hm Ln Bk 6.05 2/24/06 95.25 92.72 38,100 37,088 (1,012) 2.4%
50,000 Fed Hm Ln Bk 6.18 5/29/03 98.50 98.53 49,250 49,266 16 3.2%
25,000 Fed Nat Mtg Ass 7.32 5/3/06 100.00 98.64 25,000 24,660 (340) 1.6%
35,000 Fed Nat Mtg Ass 7.37 3/09/07 103.12 96.64 36,092 33,824 (2,268) 2.2%
75,000 Fed Nat Mtg Ass 5.39 11/5/03 99.56 95.26 74,672 71,445 (3,227) 4.6%
25,000 Fed Nat Mtg Ass 6.1 4/24/03 98.00 96.37 24,500 24,093 (408) 1.8%
20,000 Fed Nat Mtg Ass 6.03 2/2/09 92.75 91.48 18,550 18,296 (254) 1.2%
20,000 TVA Pwr 93Ser 6.125 7/15/03 97.00 97.28 19,400 19,456 56 1.3%
13,000 TVA Pwr 95Ser 6.375 6/15/05 97.25 97.07 12,643 12,619 (24) 0.8%
Sub-Total Gov. Agency 595,152 575,272 (19,880) 37.1%
------- ------- ------- ----
Corporate Obligations
50,000 Am Gen Corp 6.25 3/15/03 103.07 97.07 51,537 48,535 (3,002) 3.1%
25,000 Avco Fin Srv 7.375 8/15/01 102.00 100.50 25,500 25,125 (375) 1.6%
30,000 Columb/HCA Hlth 6.87 9/15/03 98.63 92.82 29,588 27,846 (1,742) 1.8%
20,000 IBM NT BkEntNC 7.25 11/01/02 102.14 100.79 20,427 20,158 (269) 1.3%
25,000 M Lynch&Co Nts NC 8.0 2/1/02 103.50 101.79 25,875 25,448 (428) 1.6%
15,000 Morg Stnly Nt 6.375 12/15/03 96.90 97.23 14,535 14,585 50 0.9%
40,000 Disney Co Nts 6.375 3/30/01 102.79 99.51 41,117 39,804 (1,313) 2.6%
20,000 BellSouth Comm 6.5 2/01/00 100.25 100.05 20,050 20,010 (40) 1.3%
80,000 Ford Mtr Cr 6.0 1/14/03 102.84 96.86 82,268 77,488 (4,780) 5.0%
50,000 Lehman Bros 6.625 2/05/06 97.07 94.24 48,534 47,120 (1,414) 3.0%
50,000 Lehman Bros 6.625 4/01/04 98.29 96.57 49,147 48,285 (862) 3.1%
40,000 Mellon Finl Co. 6.0 3/01/04 100.09 95.95 40,036 38,380 (1,656) 2.5%
45,000 M Lynch & Co Nts 5.5 2/12/04 100.00 93.60 45,000 42,120 (2,879) 2.7%
40,000 M Lynch & Co Nts 6.0 2/17/09 92.72 89.78 37,089 35,912 (1,176) 2.3%
50,000 Morg Stnly Nts 5.625 1/20/04 99.72 94.52 49,859 47,260 (2,599) 3.0%
35,000 New Eng Tel Co. 6.125 10/01/06 101.03 92.41 35,359 32,344 (3,015) 2.1%
25,000 St Paul Cos 6.17 1/15/01 99.99 99.28 24,997 24,820 (177) 1.6%
40,000 Sears Acc Corp 6.92 6/17/04 104.80 96.08 41,920 38,432 (3,488) 2.5%
Sub-Total Corporate 682,836 653,671 (29,163) 42.1%
------- ------- ------- ----
Total Account 1,605,711 1,551,588 (54,123) 100.0%
========= ========= ======= =====
</TABLE>
Breakdown By General Asset Type
Cash & Equivalents = 3%
US Treasury & Gov't Agency = 55%
Corporate Bonds = 42%
Breakdown by General Rating
AAA Rated = 58%
AA Rated = 12%
A Rated = 28%
BBB Rated = 2%
<PAGE> 8
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>
3,017 Cash & Equiv. 1.00 1.00 18,442 18,442 0 2.3%
Sub-Total Cash & Equiv. 18,442 18,442 0 2.3%
------ ------ - ---
U.S. Treasury Obligations
10,000 US Tr Nt 5.625 2/15/06 92.70 95.66 9,270 9,566 296 1.2%
75,000 US Tr Bd 7.25 5/15/16 105.59 104.53 79,194 78,398 (796) 9.8%
25,000 US Tr Bd 7.125 2/15/23 100.88 104.03 25,219 26,008 789 3.3%
15,000 US Tr Bd 6.875 8/15/25 99.99 101.81 14,998 15,272 275 1.9%
20,000 US Tr Bd 7.25 8/15/22 100.81 105.44 20,163 21,088 925 2.6%
15,000 US Tr Bd 6.25 8/15/23 104.86 94.28 15,730 32,998 (2,682) 4.1%
40,000 US Tr Bd 5.50 8/15/28 100.75 85.28 40,300 34,112 (6,188) 4.3%
Sub-Total U.S. Treasury 224,824 217,442 (7,382) 27.3%
------- ------- ------ ----
Gov. Agency Obligations
35,000 FNMA 6.37 2/25/14 89.50 89.83 31,325 31,441 116 3.9%
20,000 FNMA 5.62 2/25/02 98.13 97.73 19,625 19,546 (79) 2.5%
25,000 FHLBB 5.73 9/04/08 92.56 91.53 23,141 22,883 (258) 2.9%
20,000 FHLMC 7.375 10/25/11 99.50 97.13 19,900 19,900 (475) 2.4%
35,000 FHLMC 6.85 5/14/13 100.28 91.31 35,099 35,099 (3,139) 4.0%
30,000 FHLMC 6.42 8/19/13 101.26 89.78 30,379 30,379 (3,444) 3.4%
25,000 FHLMC 6.7 2/15/11 102.94 92.59 25,734 25,734 (2,586) 2.9%
40,000 FFCB 6.9 9/08/15 101.95 97.28 40,780 38,912 (1,868) 4.9%
Sub-Total Gov. Agency 225,983 214,249 (11,734) 26.9%
------- ------- ------- ----
Corporate Obligations
25,000 Arkansas Power & Lt 7.0 9/08/15 103.50 87.24 25,875 21,810 (4,064) 2.7%
15,000 Bankamer Corp MTN 6.5 5/6/13 100.00 85.37 15,000 12,806 (2,194) 1.6%
15,000 Chase Man Corp MTN 6.5 5/6/13 100.25 91.02 15,037 13,653 (1,385) 1.7%
35,000 Citicorp 7.2 9/15/10 102.38 100.19 35,831 35,067 (765) 4.4%
20,000 Disney Mtn Semi 7.75 9/30/11 100.00 100.02 20,000 20,004 4 2.5%
40,000 Ford Mtr Cred MTN 7.0 9/20/10 101.00 93.69 40,400 37,476 (2,924) 4.7%
25,000 GE Cap Corp 6.4 1/16/13 99.75 88.89 24,938 22,223 (2,715) 2.8%
20,000 Gen Mot Corp Nts 7.10 3/15/06 99.31 98.85 19,861 19,770 (91) 2.5%
35,000 Lehman Bros Holdings 7.0 5/12/14 93.99 89.73 32,896 31,406 (1,490) 3.9%
50,000 Merrill Lynch 6.33 2/25/14 99.40 91.44 49,700 45,720 (3,980) 5.7%
15,000 Morgn Stnly Cap Gr 7.45 7/3/12 100.00 94.85 15,000 14,153 (848) 1.8%
15,000 So.Westn Bell Deb 6.75 6/01/08 96.25 95.19 14,438 14,279 (160) 1.8%
30,000 Xerox Cr Corp MTN 6.5 1/28/13 100.00 88.86 30,000 26,658 (3,342) 3.3%
35,000 Xerox Cr Corp MTN 6.5 2/11/13 100.00 88.84 35,000 31,094 (3,906) 3.9%
Sub-Total Corporate 373,976 346,116 (27,858) 43.5%
------- ------- ------- -----
Total Account 843,224 796,249 (46,975) 100.0%
======= ======= ======= =====
</TABLE>
Breakdown By General Asset Type
Cash & Equivalents = 2%
US Treasury & Gov't Agency = 54%
Corporate Bonds = 44%
Breakdown by General Rating
AAA Rated = 58%
AA Rated = 8%
A Rated = 34%
BBB Rated = 0%
<PAGE> 9
Page 10
3 SST LARGER COMPANY STOCK FUND Portfolio Valuation Date 12/31/99
<TABLE>
<CAPTION>
Shares Quantity Description UnitCost Price Cost MktVal UnrealG/L % of Val
- ------ ---------------------- ---------- ------- ------ -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
364,618 Cash & Equiv. 1.00 1.00 364,618 364,619 0 14.1%
Sub-Total Cash & Equiv. 364,618 364,618 0 14.1%
------- ------- - ---
U.S. Large Co. Stock Fds
10,256 Bear Stearns S&P Stars A 22.41 31.33 229,845 321,308 91,464 12.4%
5,535 Fundamental Investors Fund 25.64 32.59 141,929 180,393 38,463 7.0%
2,163 Janus Twenty Fund 62.46 83.43 135,106 180,461 45,356 7.0%
5,656 Putnam Fund For Growth & Income 19.50 18.75 110,298 106,045 (4,253) 4.1%
16,827 Putnam Investors A Fund 13.50 19.15 227,139 322,240 95,101 12.5%
6,260 Torray Fund 36.95 44.31 231,281 277,374 46,093 10.7%
7,113 Washington Mutual Investors 25.99 29.56 184,854 210,248 25,395 8.1%
Sub-Total Large Co. Stock Fds 1,260,451 1,598,070 337,618 61.9%
--------- --------- ------- ----
U.S. Large Co. Stock Unit Trusts
10,302 Peroni Top 10 Growth Tr 99 Ser 11.08 14.85 114,146 152,985 38,839 5.9%
13,774 Peroni Top 10 Picks 2000 Ser 10.89 10.97 150,000 151,102 1,102 5.9%
Sub-Total Cash & Equiv. 264,146 304,087 39,940 11.8%
--------- --------- ------- ----
U.S. Larger Mid-Cap Stock Fds
2,806 Mairs and Power Growth Fund 80.30 92.91 225,283 260,664 35,382 10.1%
2,612 Longleaf Partners 26.73 20.49 69,827 53,529 (16,298) 2.1%
Sub-Total Larger Mid-Cap Fds 295,109 314,193 19,083 12.2%
------- ------- ------ ----
Total Account 2,184,324 2,580,968 396,644 100%
========= ========= ======= ===
</TABLE>
Breakdown By General Asset Type
(Includes estimated cash positions of mutual funds owned by the Fund)
Cash & Equivalents = 14%
Domestic Stock = 80%
Foreign Stock = 4%
Bonds = 0%
Other = 2%
Breakdown by Management Style
Large Cap Growth = 32%
Large Cap Value = 30%
Large Cap Blend = 12%
Larger Mid Cap Value = 12%
Larger Mid Cap Blend = 0%
Cash Equiv. = 14%
Notes: Breakdown percentages are estimates based on information gathered from
prospectuses, quarterly reports and other sources, including Morningstar
Principia for Mutual Funds. Accuracy is not guaranteed.
<PAGE> 10
Page 11
4 SST SMALLER COMPANY STOCK FUND Portfolio Valuation Date 12/31/99
<TABLE>
<CAPTION>
Shares Quantity Description UnitCost Price Cost MktVal UnrealG/L % of Val
- ------ ---------------------- ---------- ------- ------ -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
47,864 Cash & Equiv. 1.00 1.00 105,034 105,034 0 4.6%
Sub-Total Cash & Equiv. 105,034 105,034 0 4.6%
--------- --------- ------- ----
U.S. Small Co. Stock Funds
16,268 Acorn Fund 16.63 18.53 270,595 301,454 30,859 13.1%
7,783 Frnkln Small Cap Growth Fd I 21.93 44.13 170,654 343,460 172,806 14.9%
10,406 Ivy Emerging Growth Fund A 28.47 47.29 296,267 492,088 195,821 21.3%
25,519 Royce Opportunity Fund 6.94 7.19 246,538 255,380 8,842 11.1%
Sub-Total Small Co. Stock Fds 984,055 1,392,382 408,328 60.4%
--------- --------- ------- ----
U.S. Smaller Mid-Cap Stocks
24,163 Putnam Capital Opportunities Fund 8.38 10.29 202,433 248,639 46,206 10.8%
9,530 T Rowe Price New Horizons Fd 24.16 27.53 230,275 262,352 32,076 11.4%
Sub-Total Smaller Mid-Cap Fds 432,708 510,991 78,282 22.2%
--------- --------- ------- ----
U.S. Microcap Stock Funds
17,413 Frnkln Microcap Value Fund I 18.99 17.05 330,647 296,889 (33,757) 12.9%
Sub-Total U.S Microcap Funds 330,647 296,889 (33,757) 12.9%
--------- --------- ------- ----
Total Account 1,852,445 2,305,297 452,852 100%
========= ========= ======= ====
</TABLE>
Breakdown By General Asset Type
(Includes estimated cash positions of mutual funds owned by the Fund)
Cash & Equivalents = 5%
Domestic Stock = 87%
Foreign Stock = 5%
Bonds = 0%
Other = 3%
Breakdown by Management Style
Small Cap Growth = 24%
Small Cap Value = 24%
Small Cap Blend = 11%
Smaller Mid Cap Growth = 36%
Cash equiv. = 5%
Notes: Breakdown percentages are estimates based on information gathered from
prospectuses, quarterly reports and other sources, including Morningstar
Principia for Mutual Funds. Accuracy is not guaranteed.
<PAGE> 11
Page 12
5 SST INTERNATIONAL FUND Portfolio Valuation Date 12/31/99
<TABLE>
<CAPTION>
Shares Quantity Description UnitCost Price Cost MktVal UnrealG/L % of Val
- ------ ---------------------- ---------- ------- ------ -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
154,990 Cash & Equiv. 1.00 1.00 154,990 154,990 0 7.1%
Sub-Total Cash & Equiv. 154,990 154,990 0 7.1%
--------- --------- ----- ----
International Stock Funds
5,710 Europacific Fund 26.69 42.66 152,392 243,597 91,204 11.2%
6,899 Hotchkis & Wiley Int'l Fund 22.56 26.40 155,661 182,140 26,479 8.4%
6,422 Ivy International Fund 36.57 47.09 234,835 302,417 67,583 13.9%
13,899 Putnam Int'l Growth Fund A 18,50 29.68 257,151 412,518 155,367 18.9%
8,331 T R Price Int'l Stock Fund 13.96 19.03 116,322 158,535 42,213 7.3%
25,826 Templeton Foreign Fund I 10.06 11.22 259,754 289,768 30,013 13.3%
5,796 Warburg Pincus Int'l Eq Fd 20.84 27.75 120,800 160,847 40,047 7.4%
Sub-Total International Fds 1,296,915 1,749,823 452,907 80.2%
--------- --------- ------- ----
Developing Markets Funds
17,677 Templeton Devel. Mkts Tr I 14.32 10.30 250,830 275,944 25,114 12.7%
Sub-Total Cash & Equiv. 250,830 275,944 25,114 12.7%
------- ------- ------- ----
Total Account 1,702,734 2,180,756 478,022 100%
========= ========= ======= ===
</TABLE>
Breakdown By General Asset Type
(Includes estimated cash positions of mutual funds owned by the Fund)
Cash & Equivalents = 7%
Domestic Stock = 1%
Foreign Stock = 87%
Bonds = 1%
Other = 4%
Breakdown by Management Style
Large Cap Growth = 30%
Large Cap Value = 35%
Large Cap Blend = 15%
Mid Cap Value = 13%
Cash Equiv. = 7%
Notes: Breakdown percentages are estimates based on information gathered from
prospectuses, quarterly reports and other sources, including Morningstar
Principia for Mutual Funds. Accuracy is not guaranteed.
<PAGE> 12
Page 13
6 SST ALTCAT FUND Portfolio Valuation 12/31/99
<TABLE>
<CAPTION>
Quantity Description UnitCost Price Cost MktVal UnrealG/L % of Val.
------------------------ ---------- ------- ------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
47,598 Cash & Equiv. 1.00 1.00 47,598 47,598 0 8.4%
Sub-Total Cash & Equiv. 47,598 47,598 0 8.4%
------ ------ - ---
U.S.Mid-Cap Stock Funds
1,113 Muhlenkamp Fund 34.60 41.11 38,495 45,741 7,246 8.0%
Sub-Total U.S. Mid-cap Stock 38,495 45,741 7,246 8.0%
------ ------ ----- ----
Global Small Co. Stock Funds
2,335 Mutual Series Discovery Fd I 18.48 21.00 43,151 49,037 5,886 8.6%
453 Small Cap World Fund I 26.14 39.14 11,852 17,744 5,891 3.1%
Sub-Total Global Small Co. Stock 55,003 66,781 11,778 11.7%
------ ------ ------ ----
Alternative Categories Fds
1,050 Franklin Gold Fund I 11.48 9.64 12,060 10,124 (1,936) 1.8%
3,892 Frnkln Real Estate Sec Fd I 14.46 12.77 56,268 49,704 (6,563) 8.7%
2,967 Frnkln Nat. Resources Fd I 14.52 13.94 43,087 41,354 (1,733) 7.3%
1,013 Invesco Tech Fund II 33.30 80.79 33,736 81,856 48,120 14.4%
8,041 Ivy China Region Fund A 8.13 9.15 65,409 73,577 8,169 12.9%
4,564 Templeton Latin Amer Fund I 10.64 11.42 48,561 52,125 3,564 9.1%
1,659 Vanguard Special Energy Fund 22.71 21.92 37,687 36,374 (1,313) 6.4%
679 Vanguard Special Health Fund 76.63 95.21 52,028 64,647 12,618 11.3%
Sub-Total Alternative Categories 348,836 409,761 60,925 71.9%
------- ------- ------- ----
Total Account 489,932 569,881 79,949 100%
======= ======= ======= ===
</TABLE>
Breakdown By General Asset Type
(Includes estimated cash positions of mutual funds owned by the Fund)
Cash & Equivalents = 8%
US Flexibly managed = 8%
Global fexibly Managed = 9%
Global smaller Cos. = 3%
Pacific Rim/China = 13%
Latin America = 9%
Specific Energy/Natural Resources = 14%
Prec. Metals/Mining = 2%
Real Estate & Related = 9%
Specific Health Care = 11%
Specific Technology = 14%
Breakdown by Management Style
Large Cap Growth = 14%
Mid Cap Growth = 2%
Mid Cap Value = 39%
Mid Cap Blend = 14%
Small Cap Growth = 3%
Cash Equiv. = 8%
Notes: Breakdown percentages are estimates based on information gathered from
prospectuses, quarterly reports and other sources, including Morningstar
Principia for Mutual Funds. Accuracy is not guaranteed.
<PAGE> 13
STAAR INVESTMENT TRUST
STATEMENT OF OPERATIONS
12 MONTH PERIOD ENDING DECEMBER 31, 1999 (Total, Six Series Funds)
<TABLE>
<CAPTION>
IBF LTBF LCSF SCSF INTF ACF
<S> <C> <C> <C> <C> <C> <C>
Investment Income
Mutual fund dividends
(Including Money Market
Funds) $ 2,715 $ 2,266 $ 18,573 $ 4,562 $ 26,887 $ 7,117
Less: Foreign 0 0 0 0 (2,885) (210)
Withholding Taxes
Interest 79,944 46,054 0 0 0 0
Total Income 82,659 48,320 18,573 4,562 24,002 6,907
======== ======== ======== ======== ======== ========
Expenses
Investment advisory fees 9,347 5,827 19,284 15,581 15,572 4,092
Directors fees, filing,
tax 1,227 673 1,928 1,558 1,652 412
Interest 32 32 32 32 32 32
Marketing/Distrib. 12b-1 229 3 52 11 11 34
Other Expenses
Total Expenses 10,835 6,535 21,296 17,182 17,267 4,570
Less: Fees Waived
Net Expenses
======== ======== ======== ======== ======== ========
Net Investment income $ 71,824 $ 41,785 $ (2,723) $(12,620) $ 6,735 $ 2,337
======== ======== ======== ======== ======== ========
Realized and unrealized
appreciation on Investments
Realized long and short
term capital gains $ (67) $ 359 $173,501 $175,090 $ 85,455 $ 10,602
Unrealized appreciation
(depreciation) (70,701) (79,009) 154,541 363,491 512,583 114,877
Net Realized and
Unrealized Appreciation
(Depreciation) (70,768) (78,650) 328,042 538,581 598,038 125,479
Net increase in net
assets resulting from
operations $ 1,056 $(36,865) $325,319 $525,961 $604,773 $127,816
</TABLE>
NOTE: The accompanying notes are an integral part of these financial
statements.
<PAGE> 14
Page 15
STAAR INVESTMENT TRUST STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Intermediate Bond Fund Long-Term Bond Fund Large Co. Stock Fund
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/99 12/31/98 12/31/97 12/31/99 12/31/98 12/31/97 12/31/99 12/31/98 12/31/97
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase in net
assets from
operations:
Investment income-
net $ 71,824 $ 44,443 $ 24,816 $ 41,785 $ 28,611 $ 16,027 $ (2,723) $ 3,808 $ 20,711
Net realized gain on
investments $ (67) $ 1,639 $ 416 $ 359 $ 184 $ 0 $ 173,501 $ 96,995 $ 80,391
Unrealized
appreciation
of investments $ (70,701) $ 8,698 $ 6,335 $ (79,009) $ 12,670 $ 14,766 $ 154,541 $ 93,802 $ 113,591
Net increase in net
Assets resulting
from operations $ 1,056 $ 54,780 $ 31,567 $ (36,865) $ 41,465 $ 30,793 $ 325,319 $ 194,605 $ 214,693
Distributions to
shareholders from:
Investment income $ (63,731) $ (39,696) $ (19,525) $ (38,842) $(26,356) $(14,600) $ (6,573) $ (5,139) $ (20,697)
Realized long term
gains $ 0 $ (1,639) $ (416) $ (359) $ (184) $ 0 $ (166,331) $ (95,098) $ (80,391)
Total
distributions $ (63,731 $ (41,335) $ (19,941) $ (39,201) $(26,540) $(14,600) $ (172,904) $ (100,237) $ (101,088)
========== =========== ========= ========== ======== ======== ========== ========== ==========
Capital share
transactions
(Note 3)
Purchases $ 609,981 $ 547,135 $ 485,679 $ 270,956 $245,762 $ 93,954 $ 361,449 $ 571,825 $ 367,927
Redemptions $ (189,433) $ (70,349) $(150,849) $ (24,577) $(27,482) $ (1,000) $ (107,691) $ (190,149) $ (42,803)
Reinvestment
of dividends $ 63,090 $ 40,840 $ 19,941 $ 38,724 $ 26,169 $ 14,600 $ 172,433 $ 99,911 $ 101,088
Net increase in net
assets resulting
from capital share
transactions $ 483,638 $ 517,626 $ 354,771 $ 285,103 $244,449 $107,554 $ 426,191 $ 481,587 $ 426,212
Total increase in
net assets $ 420,963 $ 531,071 $ 366,397 $ 209,037 $259,374 $123,747 $ 578,606 $ 575,955 $ 539,817
========== =========== ========= ========== ======== ======== ========== ========== ==========
Net assets
Beginning of period $1,153,503 $ 622,432 $ 256,035 $ 598,284 $338,910 $215,163 $1,851,575 $1,275,620 $ 735,803
End of period $1,574,468 $ 1,153,503 $ 622,432 $ 807,321 $598,284 $338,910 $2,430,181 $1,851,575 $1,275,620
========== =========== ========= ========== ======== ======== ========== ========== ==========
</TABLE>
STAAR INVESTMENT TRUST
STATEMENT OF CHANGES IN NET ASSETS (Cont.)
<TABLE>
<CAPTION>
Smaller Co. Stock Fund International Fund AltCat Fund
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/99 12/31/98 12/31/97 12/31/99 12/31/98 12/31/97 12/31/99 12/31/98 12/31/97
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase in net
assets from
operations:
Investment income-
net $ (12,620) $ (6,715) $ 12,895 $ 6,735 $ 9,549 $ 16,479 $ 2,337 $ 4,594 $ 3,034
Net realized gain
on investments $ 175,090 $ 47,489 $ 19,460 $ 85,455 $ 26,887 $ 41,589 $ 10,602 $ 4,944 $ 0
Unrealized
appreciation
of investments $ 363,491 $ (13,187) $ 102,497 $ 512,583 $ (11,508) $ (50,250) $114,877 $(39,359) $ 1,692
Net increase in net
Assets resulting
from operations $ 525,961 $ 27,587 $ 134,852 $ 604,773 $ 24,928 $ 7,818 $127,816 $(29,821) $ 4,726
Distributions to
shareholders from:
Investment income $ (25,047) $ 0 $ (12,886) $ (17,629) $ (10,747) $ (16,453) $ (4,157) $ (4,797) $ (2,968)
Realized long term
gains $ (137,565) $ (41,988) $ (19,460) $ (74,957) $ (26,887) $ (41,589) $ (8,868) $ (4,944) $ 0
Total
distributions $ (162,612) $ (41,988) $ (32,346) $ (92,586) $ (37,634) $ (58,042) $(13,025) $ (9,741) $ (2,968)
========== ========== ========== ========== ========== ========== ======== ======== ========
Capital share
transactions
(Note 3)
Purchases $ 294,339 $ 522,933 $ 389,837 $ 276,101 $ 588,719 $ 520,694 $ 78,673 $148,419 $186,767
Redemptions $ (152,934) $ (114,493) $ (14,389) $ (309,286) $ (131,183) $ (21,228) $(10,699) $(52,039) $ (8,496)
Reinvestment
of dividends $ 161,321 $ 41,616 $ 32,346 $ 92,307 $ 37,328 $ 58,042 $ 13,023 $ 9,741 $ 2,968
Net increase in net
assets resulting
from capital share
transactions $ 302,726 $ 450,056 $ 407,794 $ 59,122 $ 494,864 $ 557,508 $ 80,997 $106,121 $181,239
Total increase in
net assets $ 666,075 $ 435,655 $ 510,300 $ 571,309 $ 482,158 $ 507,284 $195,788 $ 66,559 $182,997
========== ========== ========== ========== ========== ========== ======== ======== ========
Net assets
Beginning of period $1,612,867 $1,177,212 $ 666,912 $1,607,850 $1,125,692 $ 618,408 $373,802 $307,242 $124,245
End of period $2,278,942 $1,612,867 $1,177,212 $2,179,159 $1,607,850 $1,125,692 $569,590 $373,801 $307,242
========== ========== ========== ========== ========== ========== ======== ======== ========
</TABLE>
NOTE: The accompanying notes are an integral part of these financial
statements.
<PAGE> 15
Page 16
STAAR INVESTMENT TRUST
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
IBF LTBF LCSF SCSF INTF ACF
--- ---- ---- ---- ---- ---
<S> <C> <C> <C> <C> <C> <C>
Net increase
in cash from
operations $ 1,056 $ (36,856) $ 325,319 $ 525,961 $ 604,773 $ 127,815
========= ========= =========== ========= ========= =========
Adjustments required
to reconcile to net
cash provided by
operating activities:
Unrealized (appreciation)
depreciation of
investments 70,701 79,009 (154,541) (363,491) (512,583) (114,877)
(Increase) decrease in:
Interest Receivable
(Accum NII) (7,333) (4,350) (641) (408) (47) (56)
Increase (Decrease)in:
Accrued Interest
Taxes Payable
Advisory/TTEE Fees 833 412 481 550 444 144
Accounts Payable (102,148) (15,116) 150,000 25,000 0 0
Net cash provided by
Operating activities $ (36,891) $ 23,090 $ 320,618 $ 187,612 $ 92,587 $ 13,026
========= ========= =========== ========= ========= =========
Cash provided (used) by
investment activities
Investments Purchased $(698,145) $(283,951) $(1,139,362) $(855,046) $(228,465) $ (76,182)
Sales or Redemptions 160,465 30,384 790,849 584,490 291,465 18,953
Net (used) by investment
Activity $(537,680) $(253,567) $ (348,513) $(270,556) $ 63,000 $ (57,229)
========= ========= =========== ========= ========= =========
Cash provided (used) by
financing activities
Shareholder
Contributions $ 609,981 $ 270,956 $ 361,449 $ 294,339 $ 276,101 $ 78,673
Shareholder Redemptions
(including amounts
Re-invested in other
Trust Funds) (189,433) (24,577) (107,691) (152,934) (309,286) (10,699)
Dividends Declared (63,731) (39,201) (172,904) (162,612) (92,586) (13,025)
Dividends reinvested by
shareholders 63,090 38,724 172,433 161,321 92,307 13,023
Net cash provided by
financing activities $ 419,907 $ 245,902 $ 253,287 $ 140,114 $ (33,464) $ 67,972
Increase (Decrease)
in Cash During Period $(154,664) $ 15,425 $ 225,392 $ 57,170 $ 122,123 $ 23,769
Cash Balance -
beginning of period $ 205,758 $ 3,017 $ 139,226 $ 47,864 $ 32,867 $ 23,829
Cash Balance -
end of period $ 51,094 $ 18,442 $ 364,618 $ 105,034 $ 154,990 $ 47,598
========= ========= =========== ========= ========= =========
</TABLE>
NOTE: The accompanying notes are an integral part of these financial
statements.
<PAGE> 16
Page 17
STAAR SYSTEM TRUST
NOTES TO FINANCIAL 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, 1999 and 1998, 99% and 99% of
dividends declared were reinvested by the respective owners of beneficial
interest. Transactions in units of beneficial interest were as follows:
<PAGE> 17
Page 18
<TABLE>
<CAPTION>
STAAR INVESTMENT TRUST SHAREHOLDER TRANSACTIONS
YEAR ENDED 12/31/99
Fund December 31, 1997 Balance Sold Reinvestment Of Dividends Redemption
Shares Amount Shares Amount Shares Amount Shares Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Intermediate
Bond Fund 60,903,780 $ 605,200 52,285,763 $547,135 3,931,675 $40,840 (6,765,385) $ (70,349)
Long-Term
Bond Fund 31,339,247 315,763 22,344,678 245,762 2,371,758 26,169 (2,444,505) (27,482)
Larger
Company
Stock Fund 104,889,391 1,131,829 45,157,660 571,825 7,678,694 99,910 (15,215,622) (190,149)
Smaller
Company
Stock Fund 102,876,597 1,075,143 45,382,099 522,933 3,627,779 41,616 (11,000,096) (114,493)
International
Fund 107,213,876 1,145,174 53,790,691 588,719 3,500,487 37,310 (12,770,633) (131,184)
Alternative
Categories
Fund 29,150,856 302,974 14,010,385 148,420 1,000,510 9,741 (5,520,477) (52,039)
Total Amount $4,576,083 $2,624,794 $255,586 $(585,696)
========== ========== ======== =========
</TABLE>
STAAR INVESTMENT TRUST SHAREHOLDER TRANSACTIONS YEAR ENDED 12/31/99
<TABLE>
<CAPTION>
Fund December 31, 1998 Balance Sold Reinvestment Of Dividends Redemption
Shares Amount Shares Amount Shares Amount Shares Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Intermediate
Bond Fund 110,355,833 $1,122,826 61,647,206 $609,981 6,258,207 $63,091 (20,162,500) $(189,433)
Long-Term
Bond Fund 53,611,178 560,212 25,023,750 270,956 3,703,448 38,724 (2,326,184) (24,577)
Larger
Company
Stock Fund 142,510,123 1,613,415 26,802,711 361,449 12,344,856 172,432 (7,822,724) (107,690)
Smaller
Company
Stock Fund 140,886,379 1,525,199 25,224,096 294,339 11,637,513 161,322 (13,335,418) (152,934)
International
Fund 151,734,421 1,640,019 23,495,891 276,101 6,557,982 92,308 (26,971,710) (309,286)
Alternative
Categories
Fund 38,641,274 409,096 7,417,676 78,673 1,054,254 13,025 (993,839) (10,698)
Total Amount $6,870,767 $1,891,499 $540,902 $(794,618)
========== ========== ======== =========
</TABLE>
STAAR INVESTMENT TRUST SHAREHOLDER TRANSACTIONS YEAR ENDED 12/31/99
<TABLE>
<CAPTION>
Fund December 31, 1999 Balance
Shares Amount
<S> <C> <C>
Intermediate
Bond Fund 158,098,746 $1,606,465
Long-Term
Bond Fund 80,012,192 845,315
Larger
Company
Stock Fund 173,834,966 2,039,606
Smaller
Company
Stock Fund 164,412,570 1,827,926
International
Fund 154,816,584 1,699,142
Alternative
Categories
Fund 46,119,365 490,096
Total Amount $8,508,550
==========
</TABLE>
Net undistributed investment income (loss) for each fund as of December 31, 1999
was as follows:
IBF $22,124
LTBF $ 8,981
LCSF $(6,069)
SCSF $(1,837)
INTF $ 1,994
ACF $ (455)
NOTE 4 - SUMMARY OF UNREALIZED GAINS AND LOSSES:
Following is a summary of unrealized gains and losses for each portfolio as of
December 31, 1999:
<TABLE>
<CAPTION>
Unrealized
-----------------------
Market
Cost Gain Loss Net Value
---- ---- ---- --- -----
<S> <C> <C> <C> <C> <C>
Intermediate Bond $1,605,711 $ 672 $ (54,795) $ (54,123) $1,551,588
Long Term Bond 843,224 2,405 (49,380) (46,975) 796,249
Larger Company
Stock Fund 2,184,324 417,195 (20,551) 396,644 2,580,968
Smaller Company
Stock Fund 1,852,445 486,609 (33,757) 452,852 2,305,297
International Fund 1,702,734 478,022 0 478,022 2,180,756
AltCat 489,932 91,494 (11,545) 79,949 569,881
---------- ---------- --------- ---------- ----------
TOTAL $8,678,370 $1,476,397 $(170,028) $1,306,369 $9,984,739
========== ========== ========= ========== ==========
</TABLE>
<PAGE> 18
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
years ended December 31, 1999 and 1998, the investment advisor waived
fees as follows:
<TABLE>
<CAPTION>
1999 1998
Amount of Amount of
Fund Fees Waived Fees Waived
<S> <C> <C>
Intermediate Bond Fund $0 $1,033
Long Term Bond Fund 0 603
</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 holding shares in the six portfolios purchased
such shares at Net Asset value on respective dates of purchase. Those
affiliated persons held aggregate investments in the respective portfolios
as of December 31, 1999 as follows:
<TABLE>
<CAPTION>
Name IBF LTBF LCSF SCSF INTF ACF
---- --- ---- ---- ---- ---- ---
<S> <C> <C> <C> <C> <C> <C>
J. Weisbrod
(including
Immediate family
and Retirement
accounts: 3,202.005 1,945.816 4,768.458 5,454.396 4,435.726 2,433.997
Other Trustees
of STAAR Invest-
ment Trust: 5,341.232 10,989.334 2,985.674 11,110.996 2,122.778 1,190.630
Employees of
investment
Advisor, including
Retirement
accounts: 0.000 0.000 38.961 578.382 37.083 36.941
---------- ----------- ---------- ----------- ---------- ----------
Number of Shares: 8,543.237 12,935.150 7,793.093 17,143.774 6,595.587 3,661.568
Value: $ 85,078 $ 130,512 $ 108,946 $ 237,630 $ 92,838 $ 45,221
========== =========== ========== =========== ========== ==========
</TABLE>
Effective September 1, 1998, Staar Investment Trust received SEC approval of
a 12B-1 arrangement which provides commission payments to broker/dealers who
refer investors who become shareholders in Staar Investment Trust. The
commission structure is .5% for bond funds and 1.0% for stock funds for the
first 12 months from date of purchase and .15% for bond funds and .25% for
stock funds thereafter. Commissions are calculated based on fair market
values and are payable monthly in the first 12 months and quarterly
thereafter. Total 12B-1 commission expense for 1999 and 1998 was $340 and
$24, respectively.
Supplementary Information - Selected Per Share Data and Ratios are provided
In detail in the prospectus.
<PAGE> 19
CARSON & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
P.O. BOX 395
201 VILLAGE COMMONS
SEWICKLEY, 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, 1999, 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, 1999 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, 1999, the results of their operations and their cash
flows for the period then ended, the changes in their net assets for the two
years then ended, and the selected per share data and ratios for the periods
indicated, in conformity with generally accepted accounting principles.
Sewickley, PA
January 31, 2000
<PAGE> 20
Offices of the Trust
604 McKnight Park Dr.
Pittsburgh, PA 15237
Investment Advisor
STAAR Financial Advisors, Inc.
604 McKnight Park Dr.
Pittsburgh, PA 15237
E-Mail: [email protected]
Web Site: www.staarinvest.com
Transfer Agent for Shareholder Accounts
STAAR Financial Advisors, Inc.
604 McKnight Park Dr.
Pittsburgh, PA 15237
Counsel
Alan Lefkowitz, Esq.
2488 Mt. Royal Blvd.
Pittsburgh, PA 15217
Independent Auditors
Carson & Co.
201 Village Commons, Sewickley, PA 15143
Trustees
Ronald G. Benson
Coraopolis, PA
Business Consultant
Regional Coordinator, Fellowship of Companies for Christ, International
Jeffrey A. Dewhirst
Sewickley, PA
Investment Banker, Corporate Finance Associates
Thomas J. Smith
Sewickley, PA
Owner/President, CapMasters
John H. Weisbrod
Cranberry, PA
Former President, Sea Breeze Laboratories, Inc.
J. Andre Weisbrod
Wexford, PA
President, STAAR Financial Advisors, Inc.
