IMPERIAL BANKFUND
-----------------
ANNUAL REPORT
FEBRUARY 29, 2000
<PAGE>
IMPERIAL BANKFUND
April 30th, 2000
Dear Fellow Imperial BankFund Shareholders:
Let us start by saying that we are currently in an environment of great change
within our economy. As investors scramble to find sectors that will benefit from
this new age economy, our responsibility is to position the fund to achieve the
highest return possible for the risk being taken.
In light of recent changes in legislation, we believe that the financial
services industry's consolidation trend underway now for quite some time is
about to intensify. Banks, brokerage firms and insurance companies are now able
to compete in each other's businesses. As investors try to speculate about this
consolidation, our focus has been and will continue to be to own the industry
leaders.
Further, we also believe that the opportunities for growth in what would
otherwise be considered a mature industry appears to be very expansive. However,
this sector's valuations will probably continue to remain undervalued until at
least two issues are finally put to rest; interest rates and how financial
services will be delivered to the consumer.
Finally, we believe that investors who have the foresight to own shares in
financial services companies should be, in time, rewarded for their patience. As
fellow shareholders, we are hopeful that we, too, will be rewarded for this
tenacity. Thank you for your continued patience and support.
Sincerely,
/s/ David W. Allaire /s/ Michael Laliberte'
David W. Allaire Michael Laliberte'
CO-Portfolio Manager CO-Portfolio Manager
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<TABLE>
<CAPTION>
IMPERIAL BANKFUND
SCHEDULE OF INVESTMENTS
February 29, 2000
MARKET
SHARES VALUE
------ -----
COMMON STOCKS - 94.73%
BUSINESS SERVICES - .71%
<C> <S> <C>
150 Paychex, Inc. .................................. $ 7,509
-----------
COMMERCIAL BANKS - .49%
300 National Commerce Bancorporation ............... 5,100
-----------
COMPUTER HARDWARE - .97%
100 International Business Machines ................ 10,200
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DIVERSIFIED OPERATIONS - 1.25%
100 General Electric ............................... 13,219
-----------
FINANCIAL SERVICES - 17.51%
1,200 +Concord EFS, Inc. .............................. 23,475
735 +E*Trade Group, Inc. ............................ 18,099
1,000 Finova Group, Inc. ............................. 28,625
800 Freddie Mac .................................... 33,400
400 Merrill Lynch & Co., Inc. ...................... 41,000
1,000 Metris Companies, Inc. ......................... 25,875
200 Morgan Stanley Dean Witter ..................... 14,088
-----------
184,562
-----------
INSURANCE - 3.92%
800 Citigroup, Inc. ................................ 41,350
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INVESTMENT SERVICES - 6.67%
1,500 +Knight/Trimark Group Inc. - Class A ............ 70,313
-----------
MONEY CENTER - 9.32%
400 Bank of America Corp. .......................... 18,425
200 Bank Of New York Co., Inc. ..................... 6,662
600 Chase Manhattan Corp. .......................... 47,775
1,000 Toronto-Dominion Bank .......................... 25,375
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98,237
-----------
REGIONAL BANK - 37.40%
200 Comerica, Inc. ................................. 7,387
1,040 Commerce Bancorp, Inc. ......................... 34,970
1,200 First Union Corp. .............................. 35,400
2,500 Firstar Corp. .................................. 44,531
See Notes to Financial Statements
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IMPERIAL BANKFUND
SCHEDULE OF INVESTMENTS
February 29, 2000
(CONTINUED)
MARKET
SHARES VALUE
------ -----
REGIONAL BANK - 37.40% (CONTINUED)
1,100 Fleet Boston Financial Corp. ................... $29,975
300 Keycorp ........................................ 5,081
2,200 MBNA Corp. ..................................... 50,050
2,000 North Fork Bancorp, Inc. ....................... 32,750
600 Northern Trust Corp. ........................... 33,900
700 Providian Financial Corp. ...................... 45,369
500 State Street Corp. ............................. 36,438
600 Synovus Financial Corp. ........................ 9,825
300 US Bancorp ..................................... 5,494
700 Wells Fargo Co. ................................ 23,144
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394,314
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SAVINGS & LOAN BANK - 9.02%
300 Astoria Financial Corp. ........................ 7,144
1,200 Capital One Financial Corp. .................... 44,175
2,200 Charter One Financial, Inc. .................... 34,650
600 + Net.B@nk, Inc. ............................... 9,075
-----------
95,044
-----------
TRANSPORTATION - RAILROADS - 7.47%
1,000 Kansas City Southern Industries ................ 78,750
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TOTAL COMMON STOCK
(Cost $1,158,135) .............................. 998,598
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SHORT TERM INVESTMENTS - 4.65%
49,000 Firstar Treasury Fund
(Cost $49,000) ................................. 49,000
-----------
TOTAL INVESTMENTS
(Cost $1,207,135)................. 99.38% 1,047,598
Other assets less liabilities..... 0.62% 6,596
------ -----------
TOTAL NET ASSETS.................. 100.00% $ 1,054,194
====== ===========
<FN>
+ Denotes non-income producing security.
</FN>
</TABLE>
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<TABLE>
<CAPTION>
IMPERIAL BANKFUND
STATEMENT OF ASSETS AND LIABILITIES
February 29, 2000
ASSETS:
<S> <C>
Investments in securities, at value
(cost $1,207,135) (Note 2) ................. $1,047,598
Cash ......................................... 2,076
Dividends and interest receivable ............ 1,328
Receivable for fund shares sold .............. 16,299
Due from advisor (Note 3) ................... 33,118
Prepaid expenses ............................. 1,850
-----------
Total assets ................................. 1,102,269
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LIABILITIES:
Accrued distribution fee (Note 5) ........... 3,470
Other accrued expenses ....................... 44,605
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Total liabilities ............................ 48,075
-----------
Net Assets ................................. $ 1,054,194
===========
NET ASSETS CONSIST OF:
Capital stock, $.001 par value;1,000,000
shares authorized; 124,655 shares
outstanding ............................... $ 1,228,766
Accumulated net realized loss from
investment transactions .................... (15,035)
Net unrealized depreciation on investments ... (159,537)
-----------
Net Assets ................................ $ 1,054,194
===========
Net asset value per share ( $1,054,194/124,655
shares outstanding) .......................... $ 8.46
===========
Offering price per share (100/95.25 of $8.46) $ 8.88
===========
</TABLE>
See Notes to Financial Statements.
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<TABLE>
<CAPTION>
IMPERIAL BANKFUND
STATEMENT OF OPERATIONS
For the year ended February 29, 2000
INVESTMENT INCOME:
<S> <C>
Dividends ....................................... $ 10,709
Interest ........................................ 1,513
---------
Total investment income ....................... 12,222
---------
EXPENSES:
Advisory fees (Note 3) .......................... 7,677
Distribution fees (Note 5) ...................... 3,837
Administration fees ............................. 23,400
Transfer agent fees ............................. 18,626
Directors fees .................................. 2,000
Audit fees ...................................... 9,000
Insurance ....................................... 6,268
Custody fees .................................... 3,885
Legal fees ...................................... 4,500
Printing and postage expense .................... 7,274
Other expenses .................................. 4,165
---------
Total expenses ................................ 90,632
Less: expense reimbursement from
investment advisor (Note 3) .................. (69,426)
---------
Net expenses .................................. 21,206
---------
Net investment loss ........................... (8,984)
---------
NET REALIZED AND UNREALIZED LOSSES
ON INVESTMENTS: (NOTE 2)
Net realized loss on investments ................ (15,035)
Net increase in unrealized depreciation
on investments ................................ (159,537)
---------
Net loss on investments ......................... (174,572)
---------
Net decrease in net assets resulting
from operations ............................... $(183,556)
=========
</TABLE>
See Notes to Financial Statements
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<TABLE>
<CAPTION>
IMPERIAL BANKFUND
Statement of Changes in Net Assets
FOR THE
YEAR ENDED
FEBRUARY 29, 2000
-----------------
OPERATIONS:
<S> <C>
Net investment loss ................................... $ (8,984)
Net realized loss from investment transactions ........ (15,035)
Net increase in unrealized depreciation on investments. (159,537)
-----------
Net decrease in net assets resulting from operations .. (183,556)
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DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income .................. 0
Distributions from net realized gains on investments .. 0
FUND SHARE TRANSACTIONS:
Proceeds from shares sold ............................. 1,148,971
Dividends reinvested .................................. 0
Payment for shares redeemed ........................... (11,221)
-----------
Net increase in net assets from fund share transactions 1,137,750
-----------
Net increase in net assets ............................ 954,194
NET ASSETS, BEGINNING
OF PERIOD ................................................. 100,000
-----------
NET ASSETS, END OF PERIOD .................................... $ 1,054,194
===========
</TABLE>
See Notes to Financial Statements.
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<TABLE>
<CAPTION>
IMPERIAL BANKFUND
FINANCIAL HIGHLIGHTS
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
FOR THE
YEAR ENDED
FEBRUARY 29, 2000
-----------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ............... $ 10.00
------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment loss ................................ (0.11)
Net realized and unrealized loss on investments .... (1.43)
------------
Total from investment operations ................... (1.54)
------------
LESS DISTRIBUTIONS
Dividends from net investment income ............... 0.00
Distributions from net realized gains .............. 0.00
------------
Total dividends and distributions .................. 0.00
------------
Net asset value, end of period ..................... $ 8.46
============
Total return* ...................................... (15.40%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) ........... $ 1,054
Ratio of expenses to average
net assets, net of reimbursement .............. 2.75%
Ratio of expenses to average
net assets, before reimbursement .............. 11.75%
Ratio of net investment loss to average
net assets, net of reimbursement .............. (1.17%)
Ratio of net investment loss to average
net assets, before reimbursement .............. (10.17%)
Portfolio turnover rate ............................ 8.79%
* The return does not include the effect of the Fund's sales charge.
</TABLE>
See Notes to Financial Statements.
<PAGE>
[GRAPH DELETED HERE]
GRAPH DEPICTS THE COMPARISON OF THE PERFORMANCE OF A $10,000 INVESTMENT IN
THE IMPERIAL BANKFUND AND THE S&P BANK INDEX FOR THE PERIOD OF FEBRUARY 1999
THROUGH FEBRUARY 2000.
IMPERIAL BANK FUND S&P BANK INDEX
------------------ --------------
MONTH ENDING $ MONTH ENDING $
AMOUNT AMOUNT
----- -------- ----- --------
3/1/99 $9,523.81 3/1/99 $10,000.00
3/31/99 $9,752.38 3/31/99 $10,104.71
4/30/99 $10,838.10 4/30/99 $10,859.89
5/31/99 $9,752.38 5/31/99 $10,105.62
6/30/99 $10,171.43 6/30/99 $10,678.12
7/31/99 $9,123.81 7/31/99 $9,860.39
8/31/99 $8,361.90 8/31/99 $9,407.10
9/30/99 $8,152.38 9/30/99 $8,820.09
10/31/99 $9,228.57 10/31/99 $10,178.29
11/30/99 $8,923.81 11/30/99 $9,427.95
12/31/99 $8,961.90 12/31/99 $8,541.92
1/31/00 $8,552.38 1/31/00 $8,355.92
2/29/00 $8,057.14 2/29/00 $7,324.99
The current maximum sales charge payable on an investment in the Fund is 4.75%.
At public offering price of $10,000, the net investment in the Fund would be
$9,525, assuming no waiver or reduction of sales charges. The performance
information shown represents past performance and should not be interpreted as
indicative of the Fund's future performance. Return and share price will
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost.
<PAGE>
IMPERIAL BANKFUND
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000
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.
F. OTHER- Generally accepted accounting principles require that permanent
financial reporting tax differences relating to shareholder
distributions be reclassified to paid in capital.
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 has voluntarily
agreed to waive its advisory fee or, if necessary, to reimburse the Fund if and
to the extent that the Fund's total annual operating expense ratio exceeds
2.75%. For the year ended February 29, 2000, Retirement Planning Company of New
England earned investment advisory fees of $7,677 with $69,426 reimbursed to the
Fund for expenses.
<PAGE>
IMPERIAL BANKFUND
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000
(CONTINUED)
NOTE 4. FUND ADMINISTRATION AGREEMENT
The Fund has an administration agreement with American Data Services,
Inc. ("ADS" or the "Administrator"), of which the Fund's President is also an
officer. 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 equal to 1/12th of 0.175% of the first $75 million, 1/12th of 0.125%
of the next $75 million, and 1/12th of 0.075% of the remaining balance of the
Fund's average daily net assets. The fee is subject to a monthly minimum of
$1,950. The Fund also reimburses the Administrator for any out-of-pocket
expenses. For the year ended February 29, 2000, American Data Services, Inc.
earned $42,026 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 12b-1 thereunder. ADS
Distributors, Inc. (the "Distributor"), of which the Fund's president is also an
officer, serves as the Fund's distributor. 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 year ended February 29, 2000, the Fund incurred
distribution expenses of $3,837. The Distributor also received $1,962 as its
portion of the sales charge on sales of shares of the Fund during the year ended
February 29, 2000.
NOTE 6. CAPITAL SHARE TRANSACTIONS
At February 29, 2000, there were 1 million shares of $.001 par value
capital stock authorized and total total par value and paid in capital
aggregated $1,228,766.
Transactions in capital stock were as follows:
FOR THE YEAR ENDED
FEBRUARY 29, 2000
-----------------
SHARES AMOUNT
------ ------
Shares sold................................. 115,943 $1,148,971
Shares issued for dividend reinvestment..... 0 0
Shares repurchased..........................( 1,288) ( 11,221)
--------- -----------
114,655 $1,137,750
<PAGE>
IMPERIAL BANKFUND
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000
(CONTINUED)
NOTE 7. INVESTMENTS
Purchases and sales of investment securities, excluding short term
securities, for the year ended February 29, 2000 aggregated $1,232,966 and
$59,797, respectively. The gross unrealized appreciation for all securities
totaled $51,934 and the gross unrealized depreciation for all securities totaled
$211,471, or a net unrealized depreciation of $159,537. The aggregate cost of
securities for federal income tax purposes at February 29, 2000 was $1,207,135.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
----------------------------
To The Shareholders and
Board of Trustees
Imperial BankFund (a series of Questar Funds, Inc.)
We have audited the accompanying statement of assets and liabilities of the
Imperial BankFund, including the schedule of portfolio investments, as of
February 29, 2000, and the related statement of operations, statement of changes
in net assets and financial highlights for the period from March 1, 1999
(commencement of operations) to February 29, 2000 in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits 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 financial
highlights 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 investments and cash held as
of February 29, 2000 by correspondence with the custodian. 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 audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Imperial BankFund as of February 29,2000, the results of its operations, the
changes in its net assets, and the financial highlights for the period from
March 1, 1999 (commencement of operations) to February 29, 2000 in the period
then ended, in conformity with generally accepted accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
March 17, 2000
<PAGE>
INVESTMENT ADVISOR
Retirement Planning Company
of New England, Inc.
One Richmond Square
Providence, Rhode Island 02906
LEGAL COUNSEL
Spitzer & Feldman P.C.
405 Park Avenue
New York, NY 10022
INDEPENDENT AUDITORS
McCurdy & Associates CPA's, Inc.
27955 Clemens Road
Westlake, OH 44145
ADMINISTRATOR
American Data Services, Inc.
150 Motor Parkway, Suite 109
Hauppauge, NY 11788
DISTRIBUTOR
ADS Distributors, Inc.
150 Motor Parkway, Suite 109
Hauppauge, NY 11788
TRANSFER AGENT (ALL PURCHASE
AND REDEMPTION REQUESTS)
American Data Services, Inc.
150 Motor Parkway, Suite 109
Hauppauge, NY 11788
CUSTODIAN
Firstar Bank N.A.
425 Walnut Street
Cincinnati, OH 45202
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.
