The Best of Most Worlds
An Investment Strategy You Can Understand


Contents:
Note From the Advisor
Important Things to Know Before You Invest
Investment Planning Made Easy
3-Step Fast Track Planning
What Kind of Investor Are You?
Asset Allocation Examples
Required Paperwork
 

globesm(1).gif (13357 bytes)The STAAR Investment Trust brings you the best of most investment worlds in a simple, easy-to-use package.  Included in the STAAR concept are aspects of asset allocation, mutual fund management, no-load, private management, custom planning, wrap accounts and more.

The following is not part of the prospectus. It is provided with the prospectus to give you insight as to the purpose and concept of the STAAR SM Investment Trust. It should only be read in conjunction with the prospectus. 

IT SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS. If you have read the prospectus and are only interested in the paperwork requirements, click here: Required Paperwork

 

An Investment Strategy You Can UnderstandSM

Investor's Guide

This brochure is designed to accompany a prospectus which describes the funds' investment objectives and policies, risks, fees, and other expenses. Please read the prospectus carefully before you invest or send money.


A Note From the Advisor

Dear Investor,

Since 1981, I have been working hard to help individual and institutional clients achieve their financial goals through a prudent, disciplined approach to financial planning and investing. I developed the STAAR Investment Trust concept over these many years of listening to my clients’ concerns and aspirations – and striving to find optimum solutions tailored to each one’s circumstances.

STAAR stands for "Strategic and Tactical Asset Allocation Resource," and it represents a simple but unique and effective approach to investing. All but one of the STAAR Investment Trust Funds target a specific asset allocation category, from our Smaller Company Stock Fund to our Long Term Bond Fund. Each STAAR family fund, in turn, may invest in a spectrum of top mutual funds as well as individual securities. This "best of most worlds" approach provides investors with an elegant and straightforward alternative to trying to "pick the winners" among the bewildering array of stocks, bonds and mutual funds.

At STAAR, we are committed to certain "working principles": 

  • We will treat you as we would like to be treated. 
  • We will care for your investments with the same concern as for our own. 
  • We will make ourselves available to you personally as much as possible to help you decide on an asset allocation plan that best suits you. 
  • We will strive to keep our costs low while providing top value. 
  • We will simplify the investing process, avoiding jargon as much as possible and reporting results in an easy-to-read statement. 
  • We will invest for the long term and avoid some of the trading practices that can inappropriately increase risk.

On a personal note, I want you to know that I care as much about your investments as I do my own – indeed, my own family members and I are investors in the Trust, too.

In the pages leading up to the prospectus, you will find some helpful information about how to develop an investment strategy you can understand. It is my own goal that the STAAR Investment Trust Funds will help each of our clients navigate the tumultuous sea of investment options with greater ease and confidence – and to prosper in the process.

We truly look forward to serving you. 

Warmly,

J. Andre Weisbrod
President, STAAR Financial Advisors, Inc.

Contents


Investor's Guide
Some Important Things to Know Before You Invest
By J. Andre Weisbrod

In General…

The perfect investment doesn't exist.

All investing involves some risk.

The value of stocks and bonds goes up and down.

Bonds…

  • Are debt instruments -- you (the lender) loan money to an "issuer" (corporate or government). 
  • Pay interest income. 
  • Have a maturity date at which the issuer (borrower) promises to pay your money back. 
  • May have a "call" date at which the borrower may terminate (call) the lending agreement and pay you back at a pre-determined amount. 
  • Do not "grow" like stocks -- they usually mature at a pre-determined value. 
  • May temporarily increase or decrease in value depending on the rise and fall of interest rates. (If rates rise, the value of bonds falls. If rates fall, the value of bonds rises. Bonds are generally less volatile than stocks, though under certain circumstances, they can be quite volatile.) 
  • Have more price volatility the longer the maturity. 
  • Are backed by the issuer's promise. (The government or a private insurer may insure some bonds.) 
  • May "default" if the issuer fails to make interest payments or cannot pay back the principal. 

Stocks…

  • Are equity instruments -- you purchase ownership (equity) in companies. 
  • May or may not pay an income dividend. (Most dividends on stocks are less in percentage than bond interest, though some, such as utility stocks may pay dividends closer to bond rates.) 
  • Do not "mature". (A share of stock exists as long as the company unless it is repurchased or exchanged for another type of stock.) 
  • Generally go up and down with greater volatility than bonds. 
  • Are not generally guaranteed as to value or income. 
  • Have the potential to grow (increase in value as the company becomes more profitable).

Over long periods of time (10 years or longer), stocks have usually outperformed bonds and bonds have usually outperformed cash (T-bills, savings and money market accounts). 

If you want to make a decent return above inflation, you should consider placing a percentage of your investments in stocks.

We live in a global marketplace. Therefore, global investing makes sense.

International investing adds some additional risks in return for greater diversification and opportunity. These include currency exchange and political risks.

In diversified stock and bond portfolios, the longer the time frame, the less likely it is to lose money.

Diversification spreads out risk.

Buy low, sell high, and in between (or whenever you don't know), stay the courses. Give your investments time.

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Investment Planning Made Easy:
What do you want to know? What do you need to know?

Try to keep it simple!

  • What do I have? 
  • Where do I have it? 
  • How much is it worth? 
  • Where do I want to be? 
  • What do I need to do to get there? 
  • And how can I do it as quickly and safely as possible without too much cost, constraint and confusion? 
  • Seven Simple Steps:
    To Help You Answer These Questions

    Step 1:  Get professional assistance whenever you are unsure.

    Step 2:  Organize your investments into three basic categories.

    • Emergency/Liquidity Funds (often about 3 months' living expenses)
    • Targeted Investments (vehicles, vacations, home improvement, education)
    • Long Term Independence Capital

    Step 3:  Set clear, understandable goals for each category.

    Step 4:  Determine your investment philosophy. (See Page v.)

    Step 5:  Find out your "magic number".

    This is the amount you need to save and invest to pay for all your future objectives on an inflation-adjusted basis. This is your rate of discipline, which is often more important than your rate of return. You may need professional assistance to calculate this.  For a reasonable fee, STAAR Financial Advisors will produce a "Magic Number" Report for you.

    Step 6:  Choose a mix of investments that best fits you.

    Step 7:  Do it and stick to it.

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    3 Step FAST Track Planning
     For those who have a pretty good idea of where they are and what they want to do.

    Step 1:  Answer Three Important Questions.

    One: Do you have an adequate emergency/liquidity savings account or money market fund?

    Two: What is the purpose of this investment?

    ___ Retirement or Long-Term "Independence" Capital ___ Children's Education 
    ___ Car Purchase ___ Home Purchase or Improvement ___ Special Vacation 
    ___ Other Major Purchase

    Three: How long before you will need access to the principal of this investment?

    ___ Less than 2 Years ___ 2-5 Years ___ 5-10 Years ___ Over 10 Years

    Step 2: Select an Asset Allocation that is appropriate for you.

    Fund abbreviations used in charts are: 

    IBF (Intermediate Bond Fd)
    LTBF (Long Term Bond Fd)
    LCSF (Larger Company Stock Fd)
    SCSF (Smaller Company Stock Fd)
    INTF (International Fd)
    ACF (AltCat or Alternative Categories Fd)
     
     

    If your time horizon is less than three years: If your time horizon is three to five years:
    Appropriate investments may include:

    Savings Accounts
    Money Market Funds
    Certificates of Deposit (CDs)
    Highly rated bonds of the Appropriate Maturity

    The STAAR Investment Trust is probably not for you.

    The STAAR Investment Trust may be suitable, using a more conservative allocation such as the one illustrated below.
    If your time horizon is five to ten years: If your time horizon is greater than ten years:
    It would probably be suitable to use a balanced to moderately conservative approach similar to the example below. You might consider a more aggressive approach. An example is offered below.

    Note: Recommended allocations change as market conditions change. These allocations were what we showed in 2000.

    Step 3:  Fill out the Appropriate Paperwork (Click Here)

    Write any checks as needed and mail to us at:

    STAAR Investment Trust
    604 McKnight Park Dr.
    Pittsburgh, PA 15237

    If you have not read the prospectus, you should do so before investing.

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    What Kind of Investor Are You?
    Which of the following best describes your investment temperment?

    • A. CONSERVATIVE. You are generally risk-adverse, desiring mostly guaranteed investment having no volatility. Government backing is important. You are willing to accept lower returns for added safety. You favor CDs, Government Bonds and Fixed Rate Annuities. If you invest in any equities or bonds, which can fluctuate in value, it is with a small portion of your investable assets (i.e. no more than 10%-20%) 
    • B. MODERATELY CONSERVATIVE. You are willing to take some risk, but generally want to minimize volatility. You wish to achieve a higher overall return than you can get with only guaranteed instruments, but you don't want to take the risk of losing much value, even on a short-term basis. While you like CD type vehicles, you are also interested in stocks of large, healthy companies, utility stocks and corporate or municipal bonds. 
    • C. BALANCED. You are willing to take measured risks within a diversified approach to investing. You understand that while stocks (equities) can be volatile, they have generally performed better over long periods of time, and, therefore you want to have a reasonable portion of your assets in stocks. However, you are not overly aggressive, and want to lessen potential risks with a portion of more conservative investments. In addition to the types of investments listed above, you are not averse to owning International Stocks, Smaller Company Stocks, Investment Real Estate and other diversified investment. 
    • D. MODERATELY AGGRESSIVE. You are willing to accept higher risk in order to achieve higher returns. You understand that variable investments can have dramatic short-term swings, but that over time periods of five, ten or fifteen years, the volatility is lessened, while the opportunity for significantly better returns is enhanced. Therefore a majority of your investment assets will be in variable investments (up to 75%-85%), but you will keep some assets in more conservative vehicles. 
    • E. AGGRESSIVE. You are willing to accept higher volatility and investment risk in order to have the opportunity to achieve higher rates of return. Most of your investments will be in equities (stocks), with only money needed for shorter-term objectives held in conservative vehicles. 
    • F. Between ______ and ______.

    Now consider the Asset Allocation examples on the next page, paying particular attention to those closest to the investment temperament you chose above.  They are only examples and are not intended as recommendations.

    Information Regarding Risk

    Investing involves risk. Nothing is 100% guaranteed. Even the most conservative investments include some risks. Remember, the two most dangerous emotions are greed and fear.  Therefore, do not lose sight of your long-term objectives and plans. Remember the Proverbs: "Wealth hastily gotten will soon dwindle" and "He who gathers little by little will prosper."

    The following is provided to help you identify some the kinds of risks that can affect your investments. Investment in stocks, bonds and other securities entails risks that may include one or more of the following:

    • Market Risk - values fluctuate with and are affected by the market.
    • Investment Risk - principal may be at risk regardless of market conditions
    • Liquidity Risk - liquidation may not be possible when desired or could result in loss &/or penalty.
    • Opportunity Cost - Use of your capital in an investment precludes other uses of the same capital.
    • Inflation/Deflation Risk - Erodes purchase power &/or value of assets.
    • Rate Risk - Locking in rates of investment interest can be adverse if rates rise prior to maturity.
    • Currency & Political Risk -- Especially in International markets, currency values change and political occurrences can dramatically affect investments.

    In general, the higher the return desired, the more risk that must be assumed.

    Some pertinent historical information:

    Over the fifty-year period 1951-2000, the worst, best and average returns for representative investment types were as follows:

    Asset Class Worst Calendar Year Best Calendar Year Avg. Annual Return
    T-Bills +0.9% +14.7% +5.2%
    Intermediate Government Bonds -5.1% +29.1% +6.2%
    Long Term Corporate Bonds -8.1% +30.1% +5.7%
    Large Company Stocks -26.5% +52.6% +12.8%
    Small Company Stocks -30.9% +83.6% +14.1%

    (Figures derived from statistical information found in the Ibbotson Associates 2000 yearbook and other sources for year-end 2000.)

    Any definition of objectives that includes estimated returns or projections of value are valid only to the extent that facts are accurate and that the future resembles the assumptions made about investments, inflation, expenses, and other variables.

    Appropriate legal and tax advice should be sought regarding legal and tax matters. This report is not intended as legal or accounting advice and is intended as a planning aid only. Any projections or comments regarding taxes and estate planning are provided for general estimates and are not guaranteed as to accuracy.

    Insurance contracts are based on assumptions inherent in such contracts, such as expenses, mortality/morbidity and investment performance. Beyond any guarantees specifically stated, insurance contracts will perform to the extent the assumptions are realized or exceeded. STAAR Financial Advisors offers no assurances or guarantees regarding insurance company projections or the financial health of any insurance company.

    When considering variable investments it is important to remember that past performance is no guarantee of future results. Investment returns and principal values fluctuate so that an investor's shares of an investment, when redeemed, may be worth more or less than their original cost.

    Contents


    Asset Allocation Examples

    Moderately Conservative Balanced
    Intermediate Bond Fund 55%
    Long Term Bond Fund 15%
    Larger Company Stock Fund 15%
    Smaller Company Stock Fund 10%
    International Fund 5%
    AltCat Fund 0%

    100%

    Intermediate Bond Fund 20%
    Long Term Bond Fund 20%
    Larger Company Stock Fund 35%
    Smaller Company Stock Fund 10%
    International Fund 10%
    AltCat Fund 5%

    100%

    Moderately Aggressive Aggressive
    Intermediate Bond Fund 15%
    Long Term Bond Fund 10%
    Larger Company Stock Fund 30%
    Smaller Company Stock Fund 20%
    International Fund 20%
    AltCat Fund 5%

    100%

    Intermediate Bond Fund 0%
    Long Term Bond Fund 0%
    Larger Company Stock Fund 30%
    Smaller Company Stock Fund 30%
    International Fund 30%
    AltCat Fund 10%

    100%

    Note: Recommended allocations change as market conditions change. These allocations were what we showed in 2000. Current allocations (2003) are weighted less to bonds, especially long term bonds, and more to stocks, particularly smaller companies.

    Contents


    Required Paperwork

    Regular Accounts (Individual, Joint, UGMA, etc.) 

    ___ Regular Application (Inside Prospectus) 
    ___Check payable to "STAAR Investment Trust"

    Traditional IRA or SEP IRA 

    ___ IRA Application
    ___ Transfer Form (if this is a direct transfer from another IRA or rollover from a qualified plan)
    ___Check payable to "STAAR Investment Trust" (unless this is a direct transfer or rollover)

    Roth IRA 

    ___ Roth IRA Application
    ___ Regular Application (Inside Prospectus) showing your allocation choices
    ___ Transfer Form (if this is a direct transfer from another IRA)
    ___Check payable to "STAAR Investment Trust" (unless this is a direct transfer)

    401(k) Plan or other employer-sponsored contributory plan 

    ___ Acceptable Enrollment Form provided by employer. 
    ___Check payable to "STAAR Investment Trust" from your employer. May be on a "List Bill".

    403(b)/"Tax Sheltered Annuity 

    ___ 403(b) Application
    ___ Regular Application (Inside Prospectus) showing your allocation choices
    ___ Transfer Form (if this is a direct transfer from another plan)
    ___ Copy of your salary reduction agreement with employer
    ___Check payable to "STAAR Investment Trust" (unless this is a direct transfer)

    Trust, Endowment, Foundation and Corporate Accounts 

    ___ Regular Application (Inside Prospectus)
    ___ Copies of trust documents, corporate resolutions or other documents showing investment powers, restrictions and authorized signatures. 
    ___Check payable to "STAAR Investment Trust"

    Third Party Discretionery Accounts
    (Where a third party has authority to buy and sell shares of the Trust Funds on behalf of the Shareholder(s)) 

    ___ Regular Application (Inside Prospectus)
    ___ Letter stating clearly who has trading authorization, including name, address and phone number. Copies of trust documents, corporate resolutions or other documents showing investment powers, restrictions and authorized signatures may be required. 
    ___Check payable to "STAAR Investment Trust"

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    If you need forms or have questions about what is required, call Shareholder Services at

    1-800-332-7738, P.I.N. 3370


    Copyright 2002 Staar Financial Advisors, Inc.