================================================================================
IMPERIAL BANKFUND
SEMI-ANNUAL REPORT
AUGUST 31, 1999
(UNAUDITED)
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<PAGE>
August 31, 1999
Dear Fellow Imperial BankFund Shareholders:
We started this letter by addressing you as "Fellow Shareholders" because we are
both shareholders of The Imperial BankFund. As shareholders along with you, we
continue to believe there is a significant buying opportunity in the financial
sector. We also feel investors have an opportunity to earn a return that might
be greater than the return available in the overall market.
We continue to ask shareholders to take a long term view with their investments.
We checked the dictionary for a definition of long term. LONG-TERM
(long'turm) ADJ. INVOLVING, MATURING OR BEING IN EFFECT AFTER A NUMBER
Of YEARS: A LONG-TERM INVEStment. As long-term investors, we must be patient and
give our investments time to grow. We have found that one of the biggest
mistakes investors make is that they do not hold their investments long enough.
We formed The Imperial BankFund in early 1999 to take advantage of the
compelling prices of banks and financial stocks. As of this report, prices are
still very compelling if not more so than in early 1999. Year to date the banks
and financial stocks are off significantly. Currently, we are using the weakness
in the financial sector to accumulate more shares of high quality banking and
financial companies for the fund.
In closing, we realize that volatile markets can be distracting even to
investors with long term horizons. Please do not let short term market
volatility distract you from your long-term goals. We would like to thank you
for your patience and for choosing The Imperial BankFund.
Sincerely,
David W. Allaire Michael R. Laliberte'
CO-Portfolio Manager CO-Portfolio Manager
<PAGE>
IMPERIAL BANKFUND
SCHEDULE OF INVESTMENTS
August 31, 1999 - (Unaudited)
<TABLE>
<CAPTION>
Market
Shares Value
- ------ ------------
<C> <S> <C> <C>
COMMON STOCKS 76.18%
BROKERAGE 4.01%
400 Merrill Lynch & Co. Inc........................... $ 29,850
300+ TD Waterhouse Group .............................. 4,519
--------
34,369
--------
BUSINESS SERVICES 0.51%
150 Paychex Inc....................................... 4,415
--------
FINANCIAL SERVICES 11.71%
600+ Concord EFS Inc................................... 22,275
900 Finova Group Inc.................................. 34,200
300+ Fiserv Inc........................................ 9,244
300 Freddie Mac....................................... 15,450
700 Metris Compani.................................... 19,294
--------
100,463
--------
INSURANCE 3.53%
600 Citigroup Inc..................................... 26,662
100 Nationwide Financial Services Inc................. 3,650
--------
30,312
--------
INTERNET CONTENT 0.43%
100+ Security First Technologies....................... 3,700
--------
INVESTMENT SERVICES 3.82%
1,000+ Knight/Trimark Group Inc. - Class A............... 32,750
--------
MONEY CENTER 6.99%
200 Bank of America Corp.............................. 7,150
200 Bank Of New York Co. Inc.......................... 12,100
300 Chase Manhattan Corp.............................. 25,106
800 Toronto-Dominion Bank............................. 15,600
--------
59,956
--------
<PAGE>
IMPERIAL BANKFUND
SCHEDULE OF INVESTMENTS
August 31, 1999 - (Unaudited)
(Continued)
Market
Shares Value
- ------ ---------
REGIONAL BANK 29.82%
500 Bank One Corp..................................... 20,062
500 BankBoston Corp................................... 23,219
400 Commerce Bancorp Inc.............................. 17,200
800 First Union Corp.................................. 33,200
300 Firstar Corp...................................... 8,044
300 Keycorp........................................... 8,700
300 MBNA Corp......................................... 7,406
400 Mercantile Bancorp................................ 22,075
1,000 North Fork Bancorp Inc............................ 18,125
300 Northern Trust Corp............................... 25,444
400 Providian Financial Corp.......................... 31,050
500 State Street Corp................................. 29,938
600 Synovus Financial Corp............................ 11,325
--------
255,788
--------
SAVINGS & LOAN BANK 11.56%
300 Astoria Financial Corp............................ 9,863
1,000 Capital One Financial Corp........................ 37,750
1,400 Charter One Financial Inc......................... 32,769
300+ Net.B@nk Inc...................................... 6,975
500+ Telebanc Financial Corp........................... 11,812
--------
99,169
--------
TRANSPORT-RAIL 3.78%
700 Kansas City Southern Industries .................. 32,419
--------
SHORT TERM INVESTMENTS 4.66%
40,000 Firstar Treasury Fund ............................ 40,000
--------
TOTAL INVESTMENTS
(Cost $827,054) 80.84% 693,341
OTHER ASSETS LESS LIABILITIES 19.16% 164,327
-------------------------------
TOTAL NET ASSETS 100.00% $857,668
===============================
<FN>
+ Denotes non- income producing security
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
IMPERIAL BANKFUND
STATEMENT OF ASSETS AND LIABILITIES
August 31,1999
(UNAUDITED)
<TABLE>
ASSETS
<S> <C>
Investments in securities, at value
(cost $827,054) (Note 2)........................ $ 693,341
Cash ........................................... 133,613
Dividends and interest receivable .............. 1,005
Receivable for fund shares sold ................ 35,649
Due from advisor (Note 3) ..................... 12,643
---------
Total assets ................................... 876,251
---------
LIABILITIES
Accrued distribution fee (Note 5) ............. 972
Other accrued expenses ......................... 17,611
---------
Total liabilities .............................. 18,583
---------
Net Assets ..................................... $ 857,668
=========
NET ASSETS CONSIST OF:
Capital stock, $.001 par value;1,000,000
shares authorized; 97,761 shares
outstanding ............................... $ 994,748
Accumulated net investment loss ................ (3,367)
Net unrealized depreciation on investments ..... (133,713)
---------
Net Assets ................................ $ 857,668
=========
Net asset value per share ( $857,668/ 97,761 $ 8.77
shares outstanding).............................
=========
Offering price per share (100/95.25 of $8.77) ....... $ 9.21
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
IMPERIAL BANKFUND
STATEMENT OF OPERATIONS
For the six months ended August 31,1999
(UNAUDITED)
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Dividends .............................................. $ 3,466
Interest ............................................... 588
---------
Total investment income ................................ 4,054
---------
EXPENSES:
Advisory fees (Note 3) ................................. 2,685
Distribution fees ...................................... 1,339
Administration fees .................................... 11,219
Transfer agent fees .................................... 7,480
Directors fees ......................................... 2,877
Audit fees ............................................. 2,397
Custody fees ........................................... 2,397
Legal fees ............................................. 2,397
Printing and postage expense ........................... 1,918
Other expenses ......................................... 4,222
---------
Total expenses ......................................... 38,931
---------
Less: expense reimbursement from
investment advisor (Note 3) ...................... (31,510)
---------
Net expenses ........................................... 7,421
---------
Net investment loss .................................... (3,367)
---------
NET REALIZED AND UNREALIZED GAINS/(LOSSES)
ON INVESTMENTS
Net realized gain on investments ............................ 0
Net increase in unrealized depreciation
on investments ......................................... (133,713)
---------
Net decrease in net assets resulting
from operations ........................................ $(137,080)
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
IMPERIAL BANKFUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the
six months ended
August 31, 1999
(Unaudited)
-----------------
OPERATIONS:
<S> <C>
Net investment loss ............................................ $ (3,367)
Net realized gain from investment transactions ................. 0
Net increase in unrealized depreciation on investments ......... (133,713)
---------
---------
Net decrease in net assets resulting from operations ........... (137,080)
---------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gains on investments ........... 0
---------
FUND SHARE TRANSACTIONS:
Proceeds from shares sold ...................................... 895,288
Dividends reinvested ........................................... 0
Payment for shares redeemed .................................... (540)
---------
Net increase in net assets from fund share transactions ........ 894,748
---------
Net increase in net assets ..................................... 757,668
NET ASSETS, BEGINNING
OF PERIOD ................................................... 100,000
---------
NET ASSETS, END OF PERIOD ...................................... $ 857,668
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
IMPERIAL BANKFUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the six
months ended
August 31, 1999
(Unaudited)
---------------
<S> <C>
Net asset value, beginning of period ............................ $ 10.00
---------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment loss ............................................. (0.06)
Net realized and unrealized gains (losses) on investments ....... (1.17)
---------
- -Total from investment operations ................................ (1.23)
---------
LESS DISTRIBUTIONS
Dividend from net investment income ............................. 0.00
Distribution from realized gains ................................ 0.00
---------
Total dividends and distributions ............................... 0.00
---------
Net asset value, end of period .................................. $ 8.77
=========
Total return .................................................... (12.20%)^
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) ........................ $ 858
Ratio of expenses to average
net assets ................................................. 2.75% *
Ratio of expenses to average
net assets before expense reimbursement .................... 14.39% *
Ratio of net investment income (loss) to
average net assets ......................................... (1.24%)*
Ratio of net investment income (loss) to average
net assets before expense reimbursement .................... (12.89%)*
Portfolio turnover rate ......................................... 0.00%
<FN>
* Annualized
^ The return does not include the effect of the Fund's sales charge.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
IMPERIAL BANKFUND
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1999
(UNAUDITED)
NOTE 1. ORGANIZATION
Imperial BankFund (the "Fund"), is a series of Questar Funds, Inc.
(the "Company"), organized as a Maryland Corporation, incorporated on February
13, 1998, and registered as an open-end, diversified management investment
company under the Investment Company Act of 1940, as amended. The Fund's
investment objective is to seek long-term capital appreciation with income as a
secondary objective by investing in a portfolio consisting primarily of equity
securities of regional banks, lending institutions and financial services
companies. The Fund commenced operations on March 1, 1999.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies
consistently followed by the Fund. These policies are in conformity with
generally accepted accounting principles.
A. SECURITY VALUATION - Securities for which market quotations are
readily available are valued at market value. Portfolio securities
for which market quotations are not considered readily available are
stated at fair value on the basis of valuations furnished by a
pricing service approved by the Board of Directors. The pricing
service determines valuations for normal, institutional-size trading
units of such securities using methods based on market transactions
for comparable securities and various relationships between
securities that are generally recognized by institutional traders.
Short-term investments held by the Fund that mature in 60 days or
less are valued at amortized cost, which approximates market value.
All other securities and assets are valued at their fair value
following procedures approved by the Board of Directors.
B. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Securities
transactions are accounted for on the trade date. Dividend income is
recorded on the ex-dividend date. Interest income is recorded on the
accrual basis.
C. FEDERAL INCOME TAXES - The Fund intends to comply with requirements
of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its
shareholders. Therefore, no provision for Federal income tax is
required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - The Fund records
dividends and distributions to shareholders on the ex-dividend date.
The Fund will distribute its net investment income, if any, and net
realized capital gains, if any, annually.
E. USE OF ESTIMATES - The preparation of financial statements in
conformity with general 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 reporting periods.
Actual results could differ from those estimates.
NOTE 3. INVESTMENT ADVISORY AGREEMENT
The Fund has an investment advisory agreement with Retirement Planning Company
of New England, Inc. ("Advisor"). Under this agreement, the Advisor provides
the Fund with investment advice and supervises the Fund's management and
investment programs for which the Fund pays a monthly advisory fee equal, to
1.00% of its average daily net assets. The Advisor may voluntarily waive some
or all of its fees. For the six months ended August 31, 1999, the Retirement
Planning Company of New England earned investment advisory fees of $2,685.
<PAGE>
IMPERIAL BANKFUND
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1999
(UNAUDITED)-(CONTINUED)
NOTE 3. INVESTMENT ADVISORY AGREEMENT (CONTINUED)
The Advisor has voluntarily agreed to reimburse the Fund for expenses in
excess of 2.75% of average net assets for the fiscal year ending February 29,
2000. The amount reimbursed by the Advisor in the six months ended August 31,
1999 is set forth in the Statement of Operations.
NOTE 4. FUND ADMINISTRATION AGREEMENT
The Fund has an administration agreement with American Data Services, Inc.
("ADS" or the "Administrator"). Under this agreement, the Administrator
provides the Fund with administrative, transfer agency, and fund accounting
services. For the services rendered to the Fund by the Administrator, the Fund
pays the Administrator a monthly fee, which is based on its average net
assets. If the Fund's average daily net assets are: less than $5 million, the
Administrator's fee is $1,500 per month; between $5 million and $10 million,
the Administrator's fee is $1,750; between $10 million and $20 million, the
Administrator's fee is $2,000; and in excess of $20 million, the Administrator
receives a fee equal to $2,500 per month or 0.15% of the Fund's average daily
net assets, whichever is greater. The Fund also reimburses the Administrator
for any out-of-pocket expenses. For the six months ended August 31, 1999,
American Data Services, Inc., earned $18,699 for administrative, transfer
agency, and fund accounting services.
NOTE 5. DISTRIBUTION FEES
The Board of Directors has adopted a Distribution Plan applicable to
the Fund under Section 12(b) of the 1940 Act and Rule 12-b 1 thereunder.
Pursuant to the Plan, the Distributor will receive a monthly fee equal to
0.50% of its average daily net assets, on an annual basis, to enable it to
provide marketing and promotional support to the Fund, shareholder servicing
and maintaining shareholder accounts and to make payments to broker/dealers
and other financial institutions with which it has written agreements and
whose clients are Fund shareholders for providing distribution assistance.
Fees paid under the Plan may not be waived for individual shareholders. For
the six months ended August 31, 1999, the Fund incurred distribution expenses
of $1,339.
NOTE 6. CAPITAL SHARE TRANSACTIONS
At August 31, 1999 there were 1 million shares authorized at $.001
par value.
For the six
months ended
August 31, 1999
(UNAUDITED)
---------------
SHARES AMOUNT
------ ------
Shares sold ............................... 87,813 $ 895,288
Shares issued for dividend reinvestment ... 0 0
Shares repurchased ........................ (52) ( 540)
--------- ---------
87,761 $ 894,748
========= =========
<PAGE>
IMPERIAL BANKFUND
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1999
(UNAUDITED)-(CONTINUED)
NOTE 7. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities, excluding short term
securities, for the six months ended August 31, 1999 aggregated $787,054, and
$0, respectively.
<PAGE>
INVESTMENT ADVISOR
Retirement Planning Company of New England, Inc.
One Richmond Square
Providence, Rhode Island 02906
LEGAL COUNSEL ADMINISTRATOR
Spitzer & Feldman P.C. American Data Services, Inc.
405 Park Avenue 150 Motor Parkway
New York, New York 10022 Hauppauge, New York 11788-5108
CUSTODIAN DISTRIBUTOR
Firstar Bank ADS Distributors, Inc.
425 Walnut Street, M.L. 6118 150 Motor Parkway
Cincinnati, Ohio 45202 Hauppauge, New York 11788-5108
TRANSFER AGENT (ALL PURCHASES AND INDEPENDENT AUDITORS
ALL REDEMPTION REQUESTS) McCurdy & Associates, CPA's
American Data Services, Inc. 27955 Clemens Road
P.O. Box 5536 Westlake, Ohio 44145
Hauppauge, New York 11788-0132
This report is intended for shareholders of the Fund and may not be used as
sales literature unless preceded or accompanied by a current prospectus.
