Registration No. 333-46323
ICA No. 811-08655
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 2, 2000
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 |X|
Pre-Effective Amendment No.___ | |
Post-Effective Amendment No.5 ___ |X|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 |X|
Pre-Effective Amendment No.___ | |
Post-Effective Amendment No. 5___ |X|
(Check Appropriate Box or Boxes)
QUESTAR FUNDS,INC.
-------------------
(Exact Name of Registrant as Specified in Charter)
The Hauppauge Corporate Center
150 Motor Parkway
Hauppauge, New York 11788
--------------------------
(Address of Principal Executive Offices)(Zip Code)
(516) 951-0500
---------------
(Registrant's Telephone Number, Including Area Code)
Michael Miola
Questar Funds, Inc.
The Hauppauge Corporate Center
150 Motor Parkway
Hauppauge, New York 11788
--------------------------
(Name and Address of Agent For Service)
With a copy to:
Thomas R. Westle, Esq.
Spitzer & Feldman P.C.
405 Park Avenue
New York, NY 10022
As Soon as Practicable After the Effective Date
------------------------------------------------
(Approximate Date of Proposed Public Offering)
Shares of Common Stock
----------------------
(Title of Securities Being Registered)
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It is proposed that this filing will become effective (check
appropriate box):
| | immediately upon filing pursuant to paragraph (b).
| | on (date) pursuant to paragraph (b).
| | 60 days after filing pursuant to paragraph (a)(1).
| | on (date) pursuant to paragraph (a)(1).
|X| 75 days after filing pursuant to paragraph (a)(2).
| | on (date) pursuant to paragraph (a)(2) of Rule 485.
THE REGISTRANT DECLARES THAT AN INDEFINITE AMOUNT OF ITS SHARES OF
COMMON STOCK IS BEING REGISTERED BY THE REGISTRATION STATEMENT PURSUANT TO
SECTION 24(F) UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED, AND RULE
24F-2 THEREUNDER.
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I M P E R I A L
F I N A N C I A L S E R V I C E S
F U N D
A SERIES OF
QUESTAR FUNDS, INC.
PROSPECTUS DATED ________, 2000
RETIREMENT PLANNING COMPANY OF NEW ENGLAND
(THE "ADVISER")
Imperial Financial Services Fund (the "Fund") is a series of Questar Funds, Inc.
(the "Company"), a Maryland corporation. The investment objectives of the Fund
are to provide shareholders with long-term capital appreciation with income as a
secondary objective by investing in a diversified portfolio consisting primarily
of the equity securities of financial services companies that are believed by
the Adviser to offer superior prospects for long-term growth.
The Fund is sold subject to an initial sales load of up to 4.75% and has adopted
a distribution and service plan under which it pays distribution fees equal to
0.50% of its average daily net assets and shareholder servicing fees equal to
0.25% of its average daily net assets.
This Prospectus, dated __________, 2000, concisely describes the information
about the Fund that you ought to know before investing. Please read it carefully
before investing and retain it for future reference. A Statement of Additional
Information ("SAI") about the Fund, dated ____________, 2000, is available free
of charge. The address of the Company is Questar Funds, Inc., The Hauppauge
Corporate Center, 150 Motor Parkway, Hauppauge, New York 11788 or telephone
(877) 732-7696. The SAI has been filed with the Securities and Exchange
Commission and is incorporated in its entirety by reference in this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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Table of Contents
PAGE
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Risk/Return Summary.......................................................3
Performance...............................................................4
Fees and Expenses of the Fund.............................................4
Investment Objectives, Principal Investment
Strategies and Risks.....................................5
Management, Organization and Capital Structure............................9
How to Purchase Shares...................................................12
Reduction or Elimination of Sale Loads...................................16
How to Redeem Shares.....................................................18
Shareholder Services ....................................................21
Dividends and Distributions .............................................22
Valuation of Shares......................................................23
Distribution and Service Plan............................................24
Tax Status...............................................................24
Performance Comparisons..................................................25
Custodian, Transfer Agent and Dividend Disbursing Agent..................25
Counsel and Independent Auditors.........................................25
Financial Highlights.....................................................26
For More Information.....................................................27
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RISK/RETURN SUMMARY
PRINCIPAL INVESTMENT OBJECTIVES OF THE FUND
-------------------------------------------
The Fund seeks to provide investors with long-term capital
appreciation with income as a secondary objective.
PRINCIPAL INVESTMENT STRATEGIES OF THE FUND
-------------------------------------------
- - Investing at least 65% of its total assets in the equity
securities of financial services companies that are believed by
the Adviser to offer superior prospects for long-term growth.
PRINCIPAL RISKS OF INVESTING IN THE FUND
----------------------------------------
- - RISK OF LOSS. The loss of money is a risk of investing in
this Fund
- - MARKET RISK. The net asset value of this Fund will fluctuate
based on changes in the value of the securities in which the Fund
invests. Market prices of these securities may be adversely affected
by an issuer's having experienced losses or by the lack of earnings
or the issuer's failure to meet the market's expectations with
respect to new products or services, or even by factors wholly
unrelated to the value or condition of the issuer.
- - CONCENTRATION IN THE FINANCIAL SERVICES INDUSTRY. Concentration
of the Fund's assets in the financial services industry may
expose the Fund to increased risk of loss if the market value of
securities in the financial services industry decline. Further,
economic, legislative or regulatory developments may occur which
significantly affect the entire industry and thus may subject the
Fund to greater market fluctuations than a fund that does not
concentrate in the financial services industry.
- - CHANGES IN INTEREST RATES. Unstable interest rates can have a
disproportionate effect on the financial services industry.
- - CONCENTRATION OF LOANS. Banks whose securities the Fund purchases
may themselves have concentrated portfolios, such as a high level
of loans to real estate developers, which makes them vulnerable
to economic conditions that affect that industry.
- - COMPETITION. The financial services industry has become
increasingly competitive.
- - OPTION STRATEGIES. The Fund will invest in certain options for
hedging purposes and/or direct investment. The use of options
involves certain special risks. Options transactions also involve
costs and may result in losses. Certain risks arise from the
possibility of imperfect correlations among movements in the
prices of options purchased or sold by the Fund and,
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in the case of hedging transactions, of the securities that
are the subject of the hedge. The successful use of the
strategies described above further depends on the Adviser's
ability to forecast market movements correctly.
PERFORMANCE
No Bar Chart or Performance Table is presented because the Fund does
not yet have annual returns for a full calendar year.
FEES AND EXPENSES OF THE FUND
[TO BE COMPLETED BY SUBSEQUENT AMENDMENT]
The following table describes the fees and expenses that you may pay
if you buy and hold shares of each of the Funds:
IMPERIAL FINANCIAL SERVICES FUND
- --------------------------------------------------------------------------------
Shareholder Fees (fees paid directly
from your investments):
- --------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Purchases (as a percentage of the ____%
offering price)
- --------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted
from Fund assets):
- --------------------------------------------------------------------------------
Management Fees(1) ____%
- --------------------------------------------------------------------------------
Distribution (12b-1) Fees ____%
- --------------------------------------------------------------------------------
Other Expenses (2) ____%
- --------------------------------------------------------------------------------
Total Annual ____%
Fund Operating Expenses
- --------------------------------------------------------------------------------
(1) The Adviser may, in its discretion, waive some or all of its advisory
fees.
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(2) Other Expenses include, among other expenses, administrative, custody,
and transfer agency fees.
EXAMPLE:
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN
THE FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.
THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME
PERIODS INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THESE
PERIODS. THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR
AND THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL
COSTS MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COST WOULD BE:
1 YEAR $___ 3 YEARS $___
THE EXAMPLE DOES NOT REFLECT SALES CHARGES (LOADS) ON REINVESTED
DIVIDENDS AND OTHER DISTRIBUTIONS. IF THESE SALES CHARGES (LOADS) WERE INCLUDED,
YOUR COSTS WOULD BE HIGHER.
IMPERIAL FINANCIAL SERVICES FUND
The Fund seeks to provide investors with long-term capital
appreciation with income as a secondary objective. The Fund's investment
objectives are fundamental and may not be changed without shareholder approval.
The investment strategies employed by the Adviser to achieve the Fund's
objectives are not fundamental and may be changed or eliminated by the Company's
Board of Directors, without shareholder approval. The Fund has also adopted
investment restrictions, some of which are fundamental and may not be changed
without shareholder approval, and some of which are not fundamental and,
therefore, may be changed by the Company's Board of Directors.
PRINCIPAL INVESTMENT STRATEGIES
The Fund seeks to achieve its objective by investing at least 65% of
its total assets in the equity securities of financial services companies that
are believed by the Adviser to offer superior prospects for long-term growth.
Companies in the financial services industry may include commercial banks,
savings and loans associations, consumer and industrial financial companies,
securities brokerage companies, insurance companies, real estate leasing
companies and other institutions which combine some or all of these businesses,
and holding companies for each of the foregoing. Pursuant to SEC regulations,
the Fund may not invest more than 5% of its total assets in the equity
securities of any company that derives more than 15% of its revenues from
brokerage or investment management activities. For liquidity purposes or pending
the selection of investments in furtherance of its investment objectives, the
Fund may invest a portion of its assets in U.S. Government securities and other
high quality short-term debt and money market instruments.
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The Fund's investment portfolio may include the equity securities of
financial services companies of all sizes and types. The Adviser will select
stocks of financial service companies based primarily on its analysis of
price/earnings ratios, the strength or potential strength of a company's
competitive position, strength of management, marketing prowess and product
development capabilities in order to acquire portfolio securities which contain
superior prospects for long-term growth. Accordingly, the Adviser intends to
focus on financial services companies with long histories of profitability, low
price to earnings ratios, strong revenue, and earnings and/or dividend records.
The Fund may buy and sell covered call and put options on stock
indexes. To help assure appropriate liquidity, the Fund may acquire securities
which provide for the right to resell them to the issuer, a bank or a
broker-dealer at a specified price within a specified period of time prior to
the maturity date of such obligation. Such a right to resell, commonly known as
a put option, may be sold, transferred or assigned only with the underlying
security. The Fund may engage in such options transactions for hedging purposes
and for non-hedging purposes, such as to adjust its exposure to relevant markets
or as a substitute for direct investment.
Convertible preferred stock is preferred stock that can be converted
into common stock pursuant to its terms. Convertible debentures are debt
instruments that can be converted into common stock pursuant to their terms. The
Adviser intends to invest only in convertible debentures rated A or higher by
Standard & Poor's Corporation ("S&P") or by Moody's Investors Services, Inc.
("Moody's"). The Fund may hold warrants and rights issued in conjunction with
common stock, but in general will sell any such warrants or rights as soon as
practicable after they are received. Warrants are options to purchase equity
securities at a specified price valid for a specific time period which can be
purchased on the open market. Rights are similar to warrants, but normally have
a shorter duration and are distributed by the issuer to its shareholders.
The Fund may, from time to time, take temporary defensive positions
that are inconsistent with the Fund's principal investment strategies in
attempting to respond to adverse market, economic, political, regulatory or
other conditions. Under these circumstances, the Fund may hold all or a portion
of its assets in money market instruments (high quality income securities with
maturities of less than one year), securities of money market funds or U.S.
Government repurchase agreements. To the extent that the Fund resorts to a
temporary defensive policy, the Fund may not achieve its investment objective.
OTHER NON-PRINCIPAL INVESTMENT PRACTICES
SECURITIES LENDING. The Fund may lend portfolio securities, including
entering into repurchase agreements, amounting to not more than 25% of its
assets to broker-dealers. These transactions must be fully collateralized at all
times with cash and short-term debt obligations. These transactions involve some
risk to the Fund if the other party should default on its obligation and the
Fund is delayed or prevented from recovering the collateral.
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REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements
collateralized by the securities in which it may invest. A repurchase agreement
involves the purchase by the Fund of securities with the condition that the
original seller (a bank or broker-dealer) will buy back the same securities
("collateral") at a predetermined price or yield. Repurchase agreements involve
certain risks not associated with direct investments in securities. In the event
the original seller defaults on its obligation to repurchase, the Fund will seek
to sell the collateral, which could involve costs or delays. To the extent
proceeds from the sale of collateral are less than the repurchase price, the
Fund would suffer a loss.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets
in illiquid securities which may include Restricted Securities. Illiquid
securities may offer a higher yield than securities which are more readily
marketable, but they may not always be marketable on advantageous terms. The
sale of illiquid securities often requires more time and results in higher
brokerage charges or dealer discounts than does the sale of securities eligible
for trading on national securities exchanges or in the over-the-counter markets.
"Restricted securities" are securities which were originally sold in private
placements and which have not been registered under the Securities Act of 1933.
Such securities generally have been considered illiquid, since they may be
resold only subject to statutory restrictions and delays or if registered.
Restricted securities are no longer necessarily illiquid. The Fund may therefore
invest in Rule 144A securities and treat them as liquid when they have been
determined to be liquid by the Board of Directors of the Company.
BORROWING. The Fund may borrow money from banks for temporary or
emergency purposes in order to meet redemption requests. To reduce its
indebtedness, the Fund may have to sell a portion of its investments at a time
when it may be disadvantageous to do so. In addition, interest paid by the Fund
on borrowed funds would decrease its net earnings.
PRINCIPAL RISKS OF INVESTING IN THE FUND
INVESTING IN MUTUAL FUNDS GENERALLY.
All mutual funds carry risk and you may lose money on your investment
in the Fund. The following describes the risks associated with investment in the
Fun that arise based on the Fund's investment objectives and strategies. As all
investment securities are subject to inherent market risks and fluctuations in
value due to earnings, economic and political conditions and other factors, the
Fund cannot give any assurance that its investment objective will be achieved.
INVESTMENT IN FINANCIAL SERVICES INDUSTRY
The concentration of the Fund's investments in the financial services
industry will subject the Fund to risks in addition to those that apply to the
general equity market. Economic, legislative or regulatory developments may
occur which significantly affect the entire financial services industry and thus
may subject the Fund to greater market fluctuations than a fund that does not
concentrate in a particular industry. In addition, profitability is largely
dependent on the availability and cost of capital funds, and can fluctuate
significantly when interest rates change. Credit losses
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resulting from financial difficulties of borrowers can also negatively impact
these companies.
Investment banking, securities and commodities brokerage and
investment advisory companies are also subject to governmental regulation and
investments in these companies are subject to the risks related to securities
and commodities trading and securities underwriting activities. Insurance
companies are also subject to extensive governmental regulation, including the
imposition of maximum rate levels, which may be inadequate for some lines of
businesses. The performance of insurance companies will be further affected by
interest rates, severe competition in the pricing of services, claims
activities, and marketing competition conditions. Thus, a number of factors, in
addition to general economic conditions, can adversely affect the financial
performance and condition of the institutions in which the Fund invests.
Commercial banks, savings and loan institutions, finance companies
and their holding companies are especially influenced by adverse effects of
volatile interest rates, portfolio concentrations in loans to particular
businesses, such as real estate and energy, and competition from new entrants in
their areas of business. These institutions are subject to extensive federal
regulation and, in some cases, state regulation which may limit both the amounts
and types of loans and other financial commitments they can make, and the
interest rates and fees they can charge. However, neither federal insurance of
deposits nor regulation of the bank and savings and loan industries can ensure
the solvency or profitability of commercial banks or savings and loan
institutions or their holding companies, or insure against the risk of investing
in the equity securities issued by these institutions.
In addition, some financial services companies in which the Fund may
invest have small or mid-size market capitalizations and may be subject to
additional risks associated with investment in such companies. The trading
volume of securities of smaller capitalization companies is normally less than
that of larger capitalization companies and, therefore, may disproportionately
affect their market price, tending to make them rise more in response to buying
demand and fall more in response to selling pressure than is the case with
larger capitalization companies.
OPTIONS PORTFOLIO STRATEGIES
The use of options involves certain special risks. Options
transactions also involve costs and may result in losses. Certain risks arise
from the possibility of imperfect correlations among movements in the prices of
options purchased or sold by the Fund and, in the case of hedging transactions,
of the securities that are the subject of the hedge. The successful use of the
strategies described above further depends on the Adviser's ability to forecast
market movements correctly.
The Fund's ability to engage in options transactions and to sell
related securities may be limited by tax considerations and by certain
regulatory requirements. Other risks arise from the potential inability to close
out options positions. There can be no assurance that a liquid secondary market
will exist for any option at any particular time. The Fund's ability to
terminate option positions established in the over-the-counter market may be
more limited than for exchange-traded options and may also involve the risk that
securities dealers participating in such transactions would fail to meet their
obligations to the Fund. Certain provisions of the Internal Revenue Code and
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certain regulatory requirements may limit the use of option transactions.
PORTFOLIO TURNOVER
The length of time the Fund has held a particular security is not
generally a consideration in investment decisions. As a result of the Fund's
investment policies, under certain market conditions, particularly in periods of
volatile markets, its portfolio turnover rate may be higher than that of other
mutual funds. From the commencement of investment operations of the Fund through
November 30, 1999, the portfolio turnover for the Fund was __%. In general,
however, the Fund's portfolio turnover rate is expected to range from 50% to
150%. Portfolio turnover generally involves some expense, including brokerage
commissions or dealer markups and other transaction costs on the sale of
securities and reinvestment in other securities. These transactions may also
result in realization of taxable capital gains, some or all of which may be
short-term capital gains not eligible for favored tax treatment.
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
BOARD OF DIRECTORS
The Company's Board of Directors has the primary responsibility for
overseeing the overall management of the Company and electing its officers.
INVESTMENT ADVISER
Retirement Planning Company of New England, Inc. (the "Adviser") has
been retained under an Investment Advisory Agreement with the Company to act as
the Fund's investment adviser subject to the authority of the Board of
Directors. The Adviser furnishes the Fund with investment advice and supervises
the Fund's management and investment programs. The Adviser furnishes at its own
expense all necessary administrative services, office space, equipment and
clerical personnel for servicing the investments of the Fund. The Adviser also
provides investment advisory facilities and executive and supervisory personnel
for managing the investments and effecting the portfolio transactions of the
Fund. In addition, the Adviser pays the salaries and fees of all officers of the
Company who are affiliated with the Adviser.
Under the Investment Advisory Agreement, the Fund pays the Adviser a
monthly advisory fee equal, on an annual basis, to 1.00% of its average daily
net assets. The Adviser may, from time to time, voluntarily waive a portion of
its fees.
The Adviser is engaged in the financial services business, focusing
on providing investment advisory services to over 110 private investment
accounts for individual investors, trusts, profit sharing and retirement plans,
companies and non-profit institutions. Since 1996, the Adviser has been engaged
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in the business of researching, buying, holding and selling shares of equity
securities. Additionally, the Adviser offers, as a service to some of its
clients and others, a newsletter titled "The Imperial Stock Review". This
newsletter is dedicated to the fundamental analysis and research of selected
equity securities. As a result of research performed, the Adviser invests a
substantial portion of clients' portfolios in banks, brokerage firms, mutual
fund companies, insurance companies and other financial services companies. The
Adviser, based in Providence, RI, is registered as an investment adviser with
the Securities and Exchange Commission.
Messrs. David W. Allaire and Michael R. Laliberte will be responsible
for the overall management of the Fund's portfolio. David W. Allaire is
President and Managing Director of the Adviser and has been a Senior Portfolio
Manager with the Adviser since April of 1996. He is also the Editor and Senior
Security analyst of the "The Imperial Stock Review" newsletter. Mr. Allaire has
been employed in the financial services industry since 1989 and currently holds
the following NASD licenses: Series 6, 63, 65, 7 and 24. Additionally, he is
licensed to offer various insurance products. He is currently enrolled in the
CFA program and is a Level II CFA candidate. Mr. Allaire is also Co-host of a
daily financial talk show called "Money Matters". The show is an in- depth
financial talk show which dedicates a majority of its time to the valuation and
research of equity securities, as well as the financial markets in general. Mr.
Allaire earned a Bachelor of Science Business Administration with a
concentration in Finance from the University of Rhode Island in 1988.
Michael R. Laliberte is the Executive Vice President and Managing
Director of the Adviser and has been a Senior Portfolio Manager with the Adviser
since April 1996. He is also the Publisher and a Security Analyst for the "The
Imperial Stock Review" newsletter. Mr. Laliberte has been employed in the
financial services industry since 1990 and currently holds the following
licenses: Series 6, 63, 65 and 7. Additionally, he is licensed to offer various
insurance products. Mr. Laliberte is currently a Professor of Investments at
Johnson & Wales University and has been so since 1996. Mr. Laliberte is also
co-host of a daily financial talk show called "Money Matters". Mr. Laliberte
earned a Bachelor of Science in management with a concentration in Finance from
Johnson & Wales University in 1989.
CODE OF ETHICS
The Company and the Adviser have adopted a Code of Ethics, which
restricts personal investing practices by employees of the Adviser and its
affiliates. Among other provisions, the Code of Ethics requires that employees
with access to information about the purchase or sale of securities in the
Fund's portfolio obtain preclearance before executing personal trades. With
respect to Messrs. Allaire and Laliberte and other investment personnel, the
Code of Ethics prohibits acquisition of securities in an initial public
offering, as well as profits derived from the purchase and sale of the same
security within 60 calendar days. These provisions are designed to ensure that
the interests of the Fund and its shareholders come before the interests of the
people who manage the Fund. The Board of Directors of the Fund will approve the
Fund's Code of Ethics initially and will, from year to year thereafter,
reapprove such Code after consideration of any appropriate revisions.
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PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
Portfolio transactions for the Fund will generally be executed with
broker-dealers on an agency basis. The Adviser will be responsible for placing
all orders for purchases and sales of the Fund's securities. In selecting
broker-dealers, the Adviser may consider research and brokerage services
furnished to the Fund as well as to the Adviser and its affiliates. Subject to
seeking the most favorable price and execution available, the Adviser may
consider sales of shares of the Fund's shares (and of other future series of the
Company) as a factor in the selection of broker-dealers. In addition, any
portfolio transactions for the Fund that are executed on an agency basis may be
effected through the Distributor.
ADMINISTRATOR
The Fund's Administrator is American Data Services, Inc. ("ADS" or
the "Administrator"), which has its principal office at The Hauppauge Corporate
Center, 150 Motor Parkway, Hauppauge, New York 11788, and is primarily in the
business of providing administrative, fund accounting and stock transfer
services to retail and institutional mutual funds with approximately $3 billion
of total assets through its offices in New York, Denver, and Los Angeles.
Pursuant to an Administrative Service Agreement with the Fund, the
Administrator provides all administrative services necessary for the Fund,
subject to the supervision of the Company's Board of Directors.
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 net assets are: less than $5 million, the Administrator's
fee is $1,500 per month; between $5 and $10 million, the Administrator's fee is
$1,750 per month; between $10 and $20 million, the Administrator's fee is $2,000
per month and in excess of $20 million, the Administrator receives $2,500 per
month or 0.15% of the Fund's average daily net assets, whichever is greater. The
Fund also pays the Administrator for any out-of-pocket expenses. In addition,
the Administrator serves as the Fund's transfer agent and performs fund
accounting services for which it is paid separately. For additional information,
see "Custodian, Transfer Agent and Dividend Agent."
Both the Investment Advisory Agreement and the Administrative Service
Agreement are terminable by the Board of Directors of the Company, the Adviser
or the Administrator, respectively, on sixty days' written notice. The
Investment Advisory Agreement will terminate automatically in the event of an
"assignment" as defined by the Investment Company Act. The Administrative
Service Agreement, however, may be assigned provided the non-assigning party
provides prior written consent. Each Agreement shall remain in effect for two
years from the date of its initial approval, and subject to annual approval of
the Board of Directors for one-year periods thereafter. Each Agreement provides
that in the absence of willful misfeasance, bad faith or gross negligence on the
part of the Adviser or the Administrator, respectively, or reckless disregard of
its obligations thereunder, the Adviser or the Administrator shall not be liable
for any action or failure to act in accordance with its duties thereunder.
DISTRIBUTOR
AmeriMutual Funds Distributors, Inc. ("the Distributor"), an
affiliate of the Administrator,
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has entered into a distribution agreement with the Company to serve as
distributor for the Fund's shares. The Distributor will be entitled to receive a
distribution fee equal to 0.50% of the Fund's average daily net assets under the
terms of the Fund's Distribution and Service Plan. The Distributor will pay the
promotional and advertising expenses related to the distribution of the Fund's
shares and for the printing of all Fund prospectuses used in connection with the
distribution and sale of the Fund's shares. It is expected that the Distributor
will use a portion of the distribution fee to compensate financial
intermediaries for providing distribution assistance with respect to the sale of
the Fund's shares.
The Adviser and the Distributor may, out of their own assets, pay for
certain expenses incurred in connection with the distribution of Fund shares. In
particular, the Distributor may make payments out of its own assets to sales
representatives and other broker dealers in connection with their sales of Fund
shares.
EXPENSES
The Fund pays certain operating expenses directly, including, but not
limited to custodian, audit, and legal fees; fees of the independent directors;
costs of printing and mailing prospectuses, statements of additional
information, proxy statements, notices, and reports to shareholders; insurance
expenses; and costs of registering its shares for sale under federal and state
securities laws. See the SAI for a more detailed discussion of independent
director compensation.
HOW TO PURCHASE SHARES
This section describes how to buy and sell shares of the Fund, and the services
that are available to the Fund's shareholders.
HOW TO CONTACT THE FUND
For more information about the Fund or your account, you may write to us at:
Imperial Financial Services Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
Or you may call us toll free at (877) 732-7696
GENERAL INFORMATION
When you buy or sell ("redeem") shares of the Fund, the price of the
shares will be the net asset value per share, or "NAV", next calculated after
the Transfer Agent receives a properly completed purchase or redemption order
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plus any applicable sales load (see below). For instance, if the Transfer Agent
receives your purchase request in proper form before 4 p.m., your transaction
will be priced at that day's NAV. If the Transfer Agent receives your purchase
request after 4 p.m., your transaction will be priced at the next day's NAV. The
Fund will not accept orders that request a particular day or price for the
transaction or any other special conditions.
WHEN AND HOW NAV IS DETERMINED. The Fund calculates its NAV as of the
close of the New York Stock Exchange ("NYSE") (normally 4:00 p.m., Eastern time)
on each weekday except days when the NYSE is closed. The time at which NAV is
calculated may be changed in case of an emergency or if the NYSE closes early.
The Fund's NAV is determined by taking the market value of all securities owned
by the Fund (plus all other assets such as cash), subtracting all liabilities
and then dividing the result (net assets) by the number of shares outstanding.
The Fund values securities for which market quotations are readily available at
current market value. If market quotations are not readily available, then
securities are valued at fair value, as determined by the Board.
SHARE CERTIFICATES. The Fund does not issue share certificates.
STATEMENT AND TRANSACTION CONFIRMATIONS. You will receive quarterly
statements and a confirmation of each transaction. You should verify the
accuracy of all transactions in your account as soon as you receive your
confirmation.
SUSPENSION OF SERVICES DURING UNUSUAL MARKET CONDITIONS. The Fund may
temporarily suspend or discontinue any service or privilege during unusual
market conditions.
TYPES OF ACCOUNTS
If you are making an initial investment in the Fund, you will need to
open one of the following types of accounts:
INDIVIDUAL, SOLE PROPRIETORSHIP AND JOINT ACCOUNTS. Individual and
sole proprietorship accounts are owned by one person, while joint accounts can
have two or more owners. Each individual owner of a joint account may give
instructions on purchase and redemptions without notice to the other owner.
Account Applications and written instructions to the Fund, or requests for
transactions that require a signature guarantee must be signed by both owners
exactly as their names appear on the account.
UNIFORM GIFT OR TRANSFER TO A MINOR ACCOUNTS (UGMA, UTMA). Depending
on the laws of your state, you can set up a custodial account under the Uniform
Gift (or Transfers) to Minors Act. These custodial accounts provide a way to
give money to a child and obtain tax benefits. Under the Uniform Transfers to
Minors Act, you may give up to $10,000 a year per child without paying Federal
gift tax. To open a UGMA or UTMA account, you must include the minor's social
security number on the application and the custodian, or trustee of the UGMA or
UTMA must sign instructions in a manner indicating trustee capacity.
CORPORATE AND PARTNERSHIP ACCOUNTS. To open a corporate or
partnership account, or to send instructions to the Fund, the following
documents are required:
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<PAGE>
- For corporations, a corporate resolution signed by an
authorized person with a signature guarantee.
- For partnerships, a certification for a partnership
agreement, or the pages from the partnership agreement that
identify the general partners.
An authorized officer of the corporation or other legal entity must sign the
application.
TRUST ACCOUNTS. The trust must be established before you can open a
trust account. To open the account you must include the name of each trustee,
the name of the trust and provide a certification for trust, or the pages from
the trust document that identify the trustees.
RETIREMENT ACCOUNTS. The Fund offers IRA accounts, including
traditional and Roth IRAs. Fund shares may also be an appropriate investment for
other retirement plans. Before investing in any IRA or other retirement plan,
you should consult your tax adviser. When you makes an investment in an IRA, be
sure to indicate the year in which the contribution is made.
The Fund may also be available for investment through various
employer-sponsored retirement plans such as 401(k) Plans. If you are eligible to
participate in one of these Plans, you should discuss the possibility of
investing in the Fund with your Plan's sponsor.
OPENING YOUR ACCOUNT
BY TELEPHONE
To open an account by telephone, call (877) 732-7696 to obtain an
account number and instructions. We will take information necessary to open your
account, including social security or tax identification number, over the phone.
After you have obtained an account number, you may purchase shares of
the Fund by wiring immediately available federal funds (subject to the minimum
investment amounts described below). The Fund will charge you a $10.00 wire fee.
Your bank may also charge a fee for doing this. You should instruct your bank to
wire funds to:
Star Bank, N.A. Cinti/Trust
ABA #: 0420-0001-3
F/B/O Imperial Financial Services Fund
Shareholder Account #: __________________
Shareholder Name:______________________
You will then need to mail a signed account application to:
Imperial Financial Services Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
BY MAIL
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<PAGE>
You may also open an account by mailing a completed and signed
account application, together with a check, to:
Imperial Financial Services Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
AUTOMATIC INVESTMENT PLANS
You may invest a specified amount of money in the Fund once or twice
a month on specified dates. These payments are taken from your bank account by
automated clearinghouse payment ("ACH"). Automatic investments must be for at
least $100. There is no charge for this service.
To open an Automatic Investment Plan account ("AIP"), call or write
to us to request and "Automatic Investment" form. Complete and sign the form,
and return it to us together with a voided check for the account from which
payments will be made.
INVESTMENT THROUGH THIRD PARTIES
You may be able to invest in shares of the Fund through a broker or
other financial institution, if the institution has made arrangements with the
Fund's Distributor. If you invest through a financial institution, the
institution's policies may be different than those of the Fund, and the
institution may charge fees in addition to those that the Fund charges. For
example, banks, brokers, retirement plans and financial advisers may charge
transaction fees and may set different minimum investments or limitations on
buying or selling shares. Consult a representative of your financial institution
or retirement plan for further information.
HOW TO PAY FOR YOUR PURCHASE OF SHARES
You may purchase shares of the Fund by check, automated clearinghouse
("ACH") payment, or wire. All payments must be in U.S. dollars.
CHECKS. All checks must be drawn on U.S. banks and made payable to "Imperial
Financial Services Fund". No other method of check payment is acceptable (for
instance, you may not pay by travelers check).
ACH PAYMENTS. Instruct your financial institution to make an ACH payment to us.
These payments typically take two days. Your financial institution may charge
you a fee for this service.
WIRES. Instruct your financial institution to make a federal funds wire payment
to us. The Fund charges a $10.00 fee for receipt of a wire. Your financial
institution may also charge you a fee for this service.
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<PAGE>
INVESTMENT MINIMUMS
The minimum initial investment amounts for the various types of
shareholder accounts described above are listed in the table below. The Fund may
waive or reduce such minimum investment amounts from time to time:
TYPE OF ACCOUNT MINIMUM INITIAL MINIMUM SUBSEQUENT
INVESTMENT INVESTMENT
- --------------------------------------------------------------------------------
Individual, Sole proprietorship or $2000 $100
Joint accounts
- --------------------------------------------------------------------------------
Corporate, partnership or trust $2000 $100
accounts
- --------------------------------------------------------------------------------
Uniform Gift or Transfer to a Minor $1000 $100
Accounts
- --------------------------------------------------------------------------------
Individual Retirement Accounts $1000 $100
(IRA)
- --------------------------------------------------------------------------------
Automatic Investment Plans $1000 $100
- --------------------------------------------------------------------------------
SALES LOAD
The purchase price paid for Fund shares is the current public
offering price, that is, the next determined net asset value of the shares after
the order is placed plus any applicable sales load. The sales load is a one-time
charge paid at the time of purchase of shares, most of which ordinarily goes to
the investor's broker-dealer as compensation for the services provided to the
investor. Shares of the Fund are sold on a continuous basis at the public
offering price which includes a maximum front-end sales charge ( load) of 4.75%
being added to the net asset value per share. Volume discounts on the front-end
sales charge are provided for both initial purchase and for additional
purchases. See "Reduction or Elimination of Sales Loads" below. The Fund
reserves the right to reject any subscription for shares.
REDUCTION OR ELIMINATION OF SALES LOADS VIA VOLUME DISCOUNTS
Volume discounts are provided if the total amount being invested in
shares of the Fund reaches the levels indicated in the sales load schedule
provided below. The applicable volume discount available to investors is
determined by aggregating all share purchases of the Fund. Volume discounts are
also available to investors making sufficient additional purchases of Fund
shares. The applicable sales charge may be determined by adding to the total
current value of shares already owned in the Fund, the value of new purchases
computed at the offering price on the day the additional purchase is made. For
example, if an investor previously purchased, and still holds, shares worth
$70,000 at the current offering price and purchases an additional $30,000 worth
of shares, the sales charge applicable to the new purchase would be that
applicable to the $100,000 to $249,000 bracket in the sales load schedule
provided below.
18
<PAGE>
<TABLE>
<CAPTION>
AMOUNT OF SALES CHARGE
REALLOWED TO DEALERS AS
SALES CHARGE AS A PERCENT A
OF NET PERCENT OF OFFERING
AMOUNT OF PURCHASE SALES CHARGE AMOUNT INVESTED PRICE
- ------------------ ------------ --------------- -----
<S> <C> <C> <C>
$0 to $49,999 4.75% 4.99% 4.50%
$50,000 to $99,999 4.25% 4.44% 4.00%
$100,000 to $249,999 3.75% 3.90% 3.50%
$250,000 to $499,999 2.50% 2.56% 2.25%
$500,000 to $999,999 2.00% 2.04% 1.75%
In excess of $1 million 0 0 0
</TABLE>
LETTER OF INTENT
Any investor may sign a Letter of Intent, available from the Fund,
stating an intention to make purchases of Fund shares totaling a specified
amount on an aggregate basis within a period of thirteen months from the date of
the initial purchase. Purchases within the thirteen-month period can be made at
the reduced sales load applicable to the total amount of the intended purchase
noted in the Letter of Intent. If a larger purchase is actually made during the
period, then a downward adjustment will be made to the sales charge based on the
actual aggregate amount purchased. Any shares purchased within 90 days preceding
the actual signing of the Letter of Intent are eligible for the reduced sales
charge and the appropriate price adjustment will be made on those share
purchases based on the current offering price. A number of shares equal to 5% of
the dollar amount of intended purchases specified in the Letter of Intent is
held in escrow by the Transfer Agent until the purchases are completed.
Dividends and distributions on the escrowed Fund shares are paid to the
investor. If the intended purchases are not completed during the Letter of
Intent period, the investor is required to pay the Fund an amount equal to the
difference between the regular sales load applicable to a single purchase of the
number of Fund shares actually purchased and the sales load actually paid. If
such payment is not made within 20 days after written request by the Fund, then
the Fund has the right to redeem a sufficient number of escrowed shares to
effect payment of the amount due. Any remaining escrowed shares are then
released to the investor's account. Agreeing to a Letter of Intent does not
obligate you to buy, or the Fund to sell, the indicated amount of shares. You
should read the Letter of Intent carefully before signing.
PURCHASES AT NET ASSET VALUE
There is no initial sales charge for "Qualified Persons." "Qualified
Persons" is defined to include persons who are active or retired trustees,
directors, officers, partners, employees, clients, independent professional
contractors, shareholders or registered representatives (including their spouses
and children) of the Adviser, Distributor or any affiliates or subsidiaries
thereof (the directors, officers or employees of which shall also include their
parents and siblings for all purchases of Fund shares) or any director, officer,
partner, employee or registered
19
<PAGE>
representative (including their spouses and children) of any broker-dealer or
any registered investment adviser who has executed a valid and currently active
selling agreement with the Distributor.
Banks and other lending institutions, in their fiduciary capacity or
for their own accounts, may purchase and redeem shares of the Fund without
paying a sales charge. To the extent permitted by regulatory authorities, a bank
trust department may charge fees to clients for whose account it purchases
shares at net asset value. Employees, officers and directors of these financial
institutions, including members of the immediate family, may also purchase and
redeem shares without paying a sales charge.
LIMITATIONS ON PURCHASES
The Fund reserves the right to refuse any purchase request,
particularly requests that could adversely affect the Fund or its operations.
This includes those from any individual or group who, in the Fund's view, is
likely to engage in excessive trading (usually defined as more than four
exchanges out of the Fund within a calendar year).
CANCELED OR FAILED PAYMENTS
The Fund accepts checks and ACH transfers at full value subject to
collection. If your payment for shares is not received or you pay with a check
or ACH transfer that does not clear, your purchase will be canceled. You will be
responsible for any losses or expenses incurred by the Fund or the Transfer
Agent, and the Fund may redeem other shares you own in the account as
reimbursement. The Fund and its agents have the right to reject or cancel any
purchase, exchange, or redemption due to nonpayment.
HOW TO REDEEM SHARES OF THE FUND
You may redeem or sell all or any portion of on any day that the Fund
values its shares, subject to certain restrictions. The Fund will redeem your
shares at the net asset value next determined after the Fund receives your
redemption request. This section describes the procedures for redeeming your
shares of the Fund, the restrictions on redemptions, and the circumstances under
which the Fund may charge a redemption fee.
We will mail your redemption proceeds to your current address or
transmit them electronically to your designated bank account. Except under
certain emergency conditions, we will send the proceeds from your redemption to
you within seven days after we receive your redemption request. If the Fund has
not yet collected payment for the shares you are selling, however, it may delay
sending redemption proceeds until payment is collected.
BY MAIL
To redeem shares by mail, prepare a written request including:
Your name(s) and signature(s)
The name of the Fund, and your account number
20
<PAGE>
The dollar amount or number of shares you want to redeem
How and where to send your proceeds
A signature guarantee, if required (see "Signature Guarantee Requirements"
below)
Any other required documentation, such as such as corporate resolutions
or trust documents
Mail your request and documentation to:
Imperial Financial Services Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
BY WIRE
You may only request payment of your redemption proceeds by wire if
you have previously elected wire redemption privileges on your account
application or a separate form.
Wire requests are only available if your redemption is for $1,000 or
more. If there are any wire charges, they will be deducted from the proceeds of
your redemption. Telephone redemptions are not available for IRA accounts.
To request a wire redemption, mail us your request (See "By Mail"),
or call us with your request. If you wish to make your wire request by
telephone, however, you must have previously elected telephone redemption
privileges.
BY TELEPHONE
We accept redemption requests by telephone only if you have elected
telephone redemption privileges on your account application or a separate form.
To redeem shares by telephone, call us with your request. You will
need to provide your account number and the exact name(s) in which the account
is registered. We may also require a password or additional forms of
identification.
Your proceeds will be mailed to you or wired (if you have elected
wire redemption privileges - See "By Wire" above)
Telephone redemptions are easy and convenient, but this account
option involves a risk of loss from unauthorized or fraudulent transactions. We
will take reasonable precautions to protect your account from fraud. You should
do the same by keeping your account information private and by reviewing
immediately any account statement and transaction confirmations that you
receive. Neither the Fund nor the Transfer Agent will be responsible for any
losses due to telephone fraud, so long as we have taken reasonable steps to
verify the caller's identity.
AUTOMATIC REDEMPTION
If you own shares of the Fund with an aggregate value of at least
$10,000, you may request a specified amount of money from your account once a
month or once a quarter on a specified date. These payments are sent from your
account to a designated bank account by ACH payment. Automatic redemptions must
be for at least $50.
21
<PAGE>
To set up periodic redemptions automatically, call or write us for an
"Automatic Redemption" form. You should complete the form and mail it to us with
a voided check for the account into which you would like the redemption proceeds
deposited.
REDEMPTIONS THROUGH THIRD PARTIES
If you hold shares through a broker or other financial institution,
you will have to redeem your shares through that financial institution. The net
asset value you receive will be the next calculated after receipt of the order
from the dealer. Consult a representative of your financial institution or
retirement plan for further information.
SIGNATURE GUARANTEE REQUIREMENTS
To protect you and the Fund against fraud, signatures on certain
requests must have a "signature guarantee." For requests made in writing a
signature guarantee is required for any of the following:
Redemption of over $5,000 worth of shares
Changes to a shareholder's record name or address
Redemption from an account for which the address or account registration has
changed within the last 30 days Sending proceeds to any person, address,
brokerage firm or bank account not on record Sending proceeds to an account with
a different registration (name or ownership) from yours Changes to automatic
investment or redemption programs, distribution options, telephone or wire
redemption privileges, any other election in connection with your account. A
signature guarantee verifies the authenticity of your signature. You can obtain
one from most banking institutions or securities brokers, but not from a notary
public.
SMALL ACCOUNTS/INVOLUNTARY REDEMPTION
If the value of your account in the Fund falls below $500 (not
including IRAs), the Fund may ask you to increase your balance. If the account
value is still below $500 after 30 days, the Fund may close your account and
send you the proceeds. The Fund will not close your account if it falls below
these amounts solely as a result of a reduction in your account's market value.
REDEMPTION IN KIND
The Fund reserves the right to make redemptions "in kind" -- payment
of redemption proceeds in portfolio securities rather than cash -- if the amount
requested is the greater of $250,000 or 1% of the Fund's assets.
LOST ACCOUNTS
22
<PAGE>
The Transfer Agent will consider your account "lost" if
correspondence to your address of record is returned as undeliverable, unless
the Transfer Agent determines your new address. When an account is "lost," all
distributions on the account will be reinvested in additional shares of the
Fund. In addition, the amount of any outstanding (unpaid for six months or more)
checks for distributions that have been returned to the Transfer Agent will be
reinvested and the checks will be canceled.
TRANSFERRING REGISTRATION
You may transfer the registration of your Fund shares. To do so, call
us at (877) 732- 7696 , or write the Imperial Financial Services Fund c/o
American Data Services, Inc., P.O. Box 5536, Hauppauge, NY 11788-0132, to
request an account transfer form. You should then return the completed form to
the same address.
SHAREHOLDER SERVICES
The Fund offers several shareholder service options to make your
account easier to manage which are listed on the account application. Please
make note of these options and select the ones that are appropriate for you.
AUTOMATIC INVESTMENT PROGRAM
You may arrange to make additional automated purchases of Fund shares
by completing the required section of the account application included with this
prospectus. You can automatically transfer $100 or more per month from your
bank, savings and loan or other financial institution to purchase additional
shares. You should contact your broker-dealer, financial institution or the
Transfer Agent to obtain additional application forms or for additional
information.
TELEPHONE TRANSACTION PRIVILEGES
If you hold your shares in an account with the Transfer Agent, you
may authorize telephone privileges by completing the required section of the
account application included with this prospectus. Please contact the Transfer
Agent for an additional application or for more details. It may be difficult to
reach the Fund by telephone during periods when market or economic conditions
lead to an unusually large volume of telephone activity. If you cannot reach the
Fund by telephone, you should contact your broker-dealer, financial institution
or issue written instructions to the Transfer Agent at the address set forth
herein. See " Custodian, Transfer Agent, and Dividend Disbursing Agent." The
Fund reserves the right to modify, suspend or terminate their telephone services
at any time without notice.
23
<PAGE>
TAX-QUALIFIED RETIREMENT PLANS
The Fund is available for your tax-deferred retirement plan. Call or
write us and request the appropriate forms for:
o Individual Retirement Accounts ("IRAs"), Simple IRAs and Roth IRAs; o 403(b)
plans for employees of public school systems and non-profit organizations; or o
401(k) Plans; o Profit-sharing plans and pension plans for corporations and
other employees.
You can also transfer your tax-deferred plan to us from another
company or custodian. Call or write us for a "Request to Transfer" form.
CONFIRMATION OF TRANSACTIONS AND REPORTING OF OTHER INFORMATION
The Fund will mail you confirmations of all of your purchases or
redemptions of Fund shares. In addition, you will also receive account
statements on a quarterly basis. This information will be provided to you from
either your broker-dealer, financial institution or the Transfer Agent. You will
also receive various IRS forms after the first of each year detailing important
tax information and the Fund is required to supply annual and semi-annual
reports that list securities held by the Fund and include its then current
financial statements.
DIVIDENDS AND DISTRIBUTIONS
The Fund will distribute its net investment income, if any, and net
realized capital gains, if any, annually. Distributions from capital gains are
made after applying any available capital loss carryovers. As a shareholder in
the Fund, you can choose from three distribution options:
- - Reinvest all distributions in additional shares;
- - Receive distributions from net investment income in cash while
reinvesting capital gains distributions, if any, in additional
shares; or
- - Receive all distributions in cash.
You can change your distribution option by notifying the Fund in
writing. If you do not select an option when you open your account, all
distributions will be reinvested in additional shares of the Fund at net asset
value. You will receive a statement confirming reinvestment of distributions in
additional shares promptly following the end of each calendar year.
If a check representing a distribution is not cashed within a
specified period, the Transfer Agent will notify you that you have the option of
requesting another check or reinvesting the distribution in the Fund. If the
Transfer Agent does not receive your election, the distribution
24
<PAGE>
will be reinvested in the Fund at the then-current net asset value per share.
Similarly, if correspondence sent by the Fund or the Transfer Agent is returned
as "undeliverable," all Fund distributions will automatically be reinvested in
the Fund.
VALUATION OF SHARES
The Fund computes its net asset value (or price per share) at the end
of the regular session of trading on each day the NYSE is open for business.
Portfolio 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
which 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 which are generally recognized by
institutional traders.
FOREIGN SECURITIES
Trading in foreign securities may be completed at times when the NYSE
is closed. In computing the Fund's NAV, the adviser values foreign securities at
the latest closing price on the exchange on which they are traded immediately
prior to the closing of the NYSE. Certain foreign currency exchange rates may
also be determined at the latest rate prior to the closing of the NYSE. Foreign
securities quoted in foreign currencies are translated into U.S. dollars at
current rates. Occasionally, events that affect these values and exchange rates
may occur between the times at which they are determined and the closing of the
NYSE. If such events materially affect the value of portfolio securities, these
securities may be valued at their fair value as determined in good faith by the
Fund's Board of Directors.
DISTRIBUTION AND SERVICE PLAN
The Fund has adopted a Distribution and Service Plan (the "Plan"),
pursuant to Rule 12b-1 under the Act (the "Rule"). The Rule provides that an
investment company which bears any direct or indirect expense of distributing
its shares must do so only in accordance with a plan permitted by the Rule. The
Plan provides that the Fund will compensate the Distributor by paying the
Distributor 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. Shareholder servicing agents and broker-dealers may
charge investors a fee in connection with their use of specialized purchase and
redemption procedures offered to investors by the shareholder servicing agents
and broker-dealers. In addition, shareholder servicing agents and broker-dealers
offering purchase and redemption procedures
25
<PAGE>
similar to those offered to shareholders who invest in the Fund directly may
impose charges, limitations, minimums and restrictions in addition to or
different from those applicable to shareholders who invest in the Fund directly.
Accordingly, the net return to investors who invest through shareholder
servicing agents and broker-dealers may be less than by investing in the Fund
directly. An investor should read the Prospectus in conjunction with the
materials provided by the shareholder servicing agent and broker-dealer
describing the procedures under which Fund shares may be purchased and redeemed
through the shareholder servicing agent and broker- dealer.
TAX STATUS
The Fund is treated as a corporation for federal income tax purposes
under the Internal Revenue Code of 1986, as amended. The Fund intends to qualify
and to elect to be treated as a regulated investment company. If so qualified,
the Fund will not be liable for federal income taxes to the extent they
distribute taxable income to shareholders.
Distributions to shareholders by the Fund, whether received in cash
or reinvested in additional shares of the Fund, are generally subject to federal
income tax at varying rates depending on whether such distributions are treated
as ordinary income or capital gains distributions. Interest income from direct
investment by non-corporate taxpayers in United States Government obligations
(but not repurchase agreements) generally is not subject to state taxation.
However, some states may tax mutual fund dividends attributable to such income.
Any redemption of the Fund's shares is a taxable event that may
result in a capital gain or loss.
Before investing in the Fund, you should consult your tax adviser
regarding the consequences of your local and state tax laws.
PERFORMANCE COMPARISONS
Advertisements and other sales literature may refer to the Fund's
total return. The total return for the one, five and ten-year periods (or for
the life of the Fund until the Fund is in existence for such longer periods)
through the most recent calendar quarter represents the average annual
compounded rate of return on an investment of $1,000 in the Fund invested at the
public offering price, plus any applicable sales load. Total return may also be
presented for other periods. All data are based on past investment results and
do not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, portfolio composition and
Fund operating expenses. Investment performance also often reflects the risks
associated with the Fund's investment objectives and strategies. These factors
should be considered when comparing the Fund's investment results with those of
other mutual funds and other investment vehicles.
Quotations of investment performance for any period when an expense
limitation is in effect will be greater than if the limitation had not been in
effect. Fund performance may be compared to that of various indexes.
26
<PAGE>
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Star Bank, N.A. serves as custodian for the Fund's cash and
securities. The Custodian does not assist in, and is not responsible for,
investment decisions involving assets of the Fund. American Data Services, Inc.,
the Fund's Administrator, also acts as the Fund's transfer and dividend
disbursing agent. The Fund pays the Administrator the greater of $900 per month
or $9.00 per year per account, plus out-of-pocket expenses, for rendering such
transfer and dividend agency services.
COUNSEL AND INDEPENDENT AUDITORS
Legal matters in connection with the issuance of shares of common
stock of the Fund are passed upon by Spitzer & Feldman P.C., 405 Park Avenue,
New York, New York 10022. McCurdy & Associates, CPAs, Inc., 27955 Clemens Road,
Westlake, Ohio 44145, have been selected as independent auditors for the Fund.
FINANCIAL HIGHLIGHTS
The following table is intended to help you understand the financial
performance of the Fund since it commenced investment operations. Total return
in the table represents the rate an investor would have earned (or lost) on an
investment in the Fund (assuming the reinvestment of all distributions).
[FINANCIAL STATEMENTS TO BE INSERTED BY THE ADMINISTRATOR]
<PAGE>
FOR MORE INFORMATION
QUESTAR FUNDS, INC.
IMPERIAL FINANCIAL SERVICES FUND
More information on the Fund is available free upon request, including the
following:
ANNUAL AND SEMIANNUAL REPORTS TO SHAREHOLDERS
Describe the Fund's performance, lists the Fund's holdings and contains a letter
from the Fund's Adviser discussing recent market conditions, economic trends and
investment strategies that significantly affected the Fund's performance.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
Provides more details about the Fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference herein (and is legally considered part of this prospectus).
TO OBTAIN INFORMATION OR MAKE SHAREHOLDER INQUIRIES:
BY TELEPHONE:
(877) 732-7696
ON THE INTERNET:
---------------
Text only versions of the Fund's documents can be viewed online or downloaded
from the Securities and Exchange Commission at HTTP://WWW.SEC.GOV.
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington D.C. (phone at (1) (202) 942-8090) or by electronic request at
[email protected] or by sending your request and a duplicating fee to the SEC's
Public Reference Section, Washington, DC 20549- 6009.
FILE NO. 811-08655
28
<PAGE>
QUESTAR FUNDS, INC.
IMPERIAL FINANCIAL SERVICES FUND
STATEMENT OF ADDITIONAL INFORMATION
___________, 2000
TABLE OF CONTENTS
PAGE
----
Investment Objecives, Policies, and Risk Factors........................... 2
Directors and Executive Officers...........................................11
Investment Advisory and Other Services.....................................13
Shareholder Servicing & Distribution Plan..................................17
Portfolio Transactions and Allocation of Brokerage.........................20
Taxation...................................................................22
Ownership of Shares........................................................24
Purchase of Shares.........................................................24
Dividends and Distributions................................................25
Net Asset Value............................................................25
Performance Comparisons....................................................25
Redemption of Shares.......................................................28
Counsel and Independent Auditors...........................................30
Other Information..........................................................30
Financial Statements.......................................................30
This Statement of Additional Information is not a prospectus, but should be read
in conjunction with the Fund's Prospectus dated January __, 1999. A copy of the
Prospectus may be obtained from the Fund at The Hauppauge Corporate Center, 150
Motor Parkway, Hauppauge, New York 11788 or telephone (516) 951-0500.
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS
The Imperial Financial Services Fund's (the "Fund") investment objectives as set
forth in the Prospectus are fundamental and may not be changed without a vote of
a majority of the Fund's shares. Additional information regarding the Fund's
investment policies and restrictions is set forth below.
INVESTMENT POLICIES
The following paragraphs provide a more detailed description of the investment
policies identified in the Prospectus. Unless otherwise noted, the policies
described in this Statement of Additional Information are not fundamental and
may be changed by the Board of Directors.
REPURCHASE AGREEMENTS.
- ---------------------
The Fund may invest in repurchase agreements. A repurchase agreement involves
the purchase by the Fund of the securities with the condition that after a
stated period of time the original seller will buy back the same securities at a
predetermined price or yield. The Fund's custodian will hold the securities
underlying any repurchase agreement or such securities will be part of the
Federal Reserve Book Entry System. The market value of the collateral underlying
the repurchase agreement will be determined on each business day. If at any time
the market value of the Fund's collateral falls below the repurchase price of
the repurchase agreement (including any accrued interest), the Fund will
promptly receive additional collateral (so the total collateral is an amount at
least equal to the repurchase price plus accrued interest).
FOREIGN SECURITIES.
- ------------------
Under its current policy, which may be changed without shareholder approval, the
Fund may invest up to 5% of its total assets in securities principally traded in
markets outside the United States. Eurodollar certificates of deposit are
excluded for purposes of this limitation. Since foreign securities are normally
denominated and traded in foreign currencies, the value of the Fund's assets may
be affected favorably or unfavorably by changes in currency exchange rates,
exchange control regulations, foreign withholding taxes and restrictions or
prohibitions on the repatriation of foreign currencies. There may be less
information publicly available about a foreign company than about a U.S.
company, and foreign companies are not generally subject to accounting, auditing
and financial reporting standards and practices comparable to those in the
United States. The securities of some foreign companies are less liquid and at
times more volatile than securities of comparable U.S. companies. Foreign
brokerage commissions and other fees are also generally higher than in the
United States. Foreign settlement procedures and trade regulations may involve
certain risks (such as delay in payment or delivery of securities or in the
recovery of the Fund's assets held abroad) and expenses not present in the
settlement of domestic investments.
In addition, there may be a possibility of nationalization or expropriation of
assets, imposition of currency exchange controls, confiscatory taxation,
political or financial instability and diplomatic developments which could
affect the value of the Fund's investments in certain foreign countries. Legal
remedies available to investors in certain foreign countries may be more limited
than those available with respect to investments in the United States or in
other foreign countries. The laws of some foreign countries may limit the Fund's
ability to invest in securities of certain issuers located in those foreign
countries. Special tax considerations apply to foreign securities.
1
<PAGE>
The risks described above, including the risks of nationalization or
expropriation of assets, are typically increased to the extent that the Fund
invests in issuers located in less developed and developing nations, whose
securities markets are sometimes referred to as "emerging securities markets."
Investments in securities located in such countries are speculative and subject
to certain special risks. Political and economic structures in many of these
countries may be in their infancy and developing rapidly, and such countries may
lack the social, political and economic stability characteristic of more
developed countries. Certain of these countries have in the past failed to
recognize private property rights and have at times nationalized and
expropriated the assets of private companies. The Fund does not currently intend
to invest in the securities of less developed and developing nations.
In addition, unanticipated political or social developments may affect the value
of the Fund's investments in these countries and the availability to the Fund of
additional investments in these countries. The small size, limited trading
volume and relative inexperience of the securities markets in these countries
may make the Fund's investments in such countries illiquid and more volatile
than investments in more developed countries, and the Fund may be required to
establish special custodial or other arrangements before making investments in
these countries. There may be little financial or accounting information
available with respect to issuers located in these countries, and it may be
difficult as a result to assess the value or prospects of an investment in such
issuers.
PRIVATE PLACEMENTS.
- ------------------
The Fund may invest in securities that are purchased in private placements
(primarily Rule 144A securities) and, accordingly, are subject to restrictions
on resale as a matter of contract or under Federal securities laws. Because
there may be relatively few potential purchasers for such investments,
especially under adverse market or economic conditions or in the event of
adverse changes in the financial condition of the issuer, the Fund could find it
more difficult to sell such securities when the Adviser believes it advisable to
do so or may be able to sell such securities only at prices lower than if such
securities were more widely held. At times, it may also be more difficult to
determine the fair value of such securities for purposes of computing the Fund's
net asset value.
SECURITIES LOANS.
- ----------------
The Fund may make secured loans of its portfolio securities, on either a
short-term or long-term basis, amounting to not more than 25% of its total
assets, thereby realizing additional income. The risks in lending portfolio
securities, as with other extensions of credit, consist of possible delay in
recovery of the securities or possible loss rights in the collateral should the
borrower fail financially. As a matter of policy, securities loans are made to
broker-dealers pursuant to agreements requiring that the loans be continuously
secured by collateral consisting of cash or short-term debt obligations at least
equal at all times to the value of the securities on loan, "marked-to-market"
daily. The borrower pays to the Fund an amount equal to any dividends or
interest received on securities lent. The Fund retains all or a portion of the
interest received on investment of the cash collateral or receives a fee from
the borrower. Although voting rights, or rights to consent, with respect to the
loaned securities may pass to the borrower, the Fund retains the right to call
the loans at any time on reasonable notice, and it will do so to enable the Fund
to exercise voting rights on any matters materially affecting the investment.
The Fund may also call such loans in order to sell the securities.
2
<PAGE>
PUTS.
- -----
To help assure appropriate liquidity, the Fund may acquire securities which
provide for the right to resell them to the issuer, a bank or a broker-dealer at
a specified price within a specified period of time prior to the maturity date
of such obligation. Such a right to resell, which is commonly known as a "put,"
may be sold, transferred or assigned only with the underlying security or
securities.
If an issuer, bank or broker-dealer should default on its obligation to
repurchase a security, the Fund might be unable to recover all or a portion of
any loss sustained from having to sell the security elsewhere. It will be the
Fund's policy to enter into puts only with issuers, banks or broker-dealers that
are determined by the Adviser to present minimal credit risks.
WRITING COVERED OPTIONS ON SECURITIES.
- -------------------------------------
The Fund may write covered call options and covered put options on optionable
securities held in its portfolio, when in the opinion of the Adviser such
transactions are consistent with the Fund's investment objective and policies.
Call options written by the Fund give the purchaser the right to buy the
underlying securities from the Fund at a stated exercise price; put options give
the purchaser the right to sell the underlying securities to the Fund at a
stated price.
The Fund may write only covered options, which means that, so long as the Fund
is obligated as the writer of a call option, it will own the underlying
securities subject to the option (or comparable securities satisfying the cover
requirements of securities exchanges). In the case of put options, the Fund will
hold cash and/or high-grade short-term debt obligations equal to the price to be
paid if the option is exercised. In addition, the Fund will be considered to
have covered a put or call option if and to the extent that it holds an option
that offsets some or all of the risk of the option it has written. The Fund may
write combinations of covered puts and calls on the same underlying security.
The Fund will receive a premium from writing a put or call option, which
increases the Fund's return on the underlying security in the event the option
expires unexercised or is closed out at a profit. The amount of the premium
reflects, among other things, the relationship between the exercise price and
the current market value of the underlying security, the volatility of the
underlying security, the amount of time remaining until expiration, current
interest rates, and the effect of supply and demand in the options market and in
the market for the underlying security. By writing a call option, the Fund
limits its opportunity to profit from any increase in the market value of the
underlying security above the exercise price of the option but continues to bear
the risk of a decline in the value of the underlying security. By writing a put
option, the Fund assumes the risk that it may be required to purchase the
underlying security for an exercise price higher than its then- current market
value, resulting in a potential capital loss unless the security subsequently
appreciates in value.
The Fund may terminate an option that it has written prior to its expiration by
entering into a closing purchase transaction, in which it purchases an
offsetting option. The Fund realizes a profit or loss from a closing transaction
if the cost of the transaction (option premium plus transaction costs) is less
or more than the premium received from writing the option. If the Fund writes a
call option but does not own the underlying security, and when it writes a put
option, the Fund may be required to deposit cash or securities with its broker
as "margin," or collateral, for its obligation to buy or sell the underlying
security. As the value of the underlying security varies, the Fund may have to
deposit additional margin with the broker. Margin requirements are complex and
are fixed by individual brokers, subject to minimum requirements currently
3
<PAGE>
imposed by the Federal Reserve Board and by stock exchanges and other
self-regulatory organizations.
PURCHASING CALL OPTIONS.
- ------------------------
The Fund may purchase call options to hedge against an increase in the price of
securities that the Fund wants ultimately to buy. Such hedge protection is
provided during the life of the call option since the Fund, as holder of the
call option, is able to buy the underlying security at the exercise price
regardless of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transaction costs.
RISK FACTORS IN OPTIONS TRANSACTIONS.
- -------------------------------------
The successful use of the Fund's options strategies depends on the ability of
the Adviser to forecast correctly interest rate and market movements. For
example, if the Fund were to write a call option based on the Adviser's
expectation that the price of the underlying security would fall, but the price
were to rise instead, the Fund could be required to sell the security upon
exercise at a price below the current market price. Similarly, if the Fund were
to write a put option based on the Adviser's expectation that the price of the
underlying security would rise, but the price were to fall instead, the Fund
could be required to purchase the security upon exercise at a price higher than
the current market price.
When the Fund purchases an option, it runs the risk that it will lose its entire
investment in the option in a relatively short period of time, unless the Fund
exercises the option or enters into a closing sale transaction before the
option's expiration. If the price of the underlying security does not rise (in
the case of a call) or fall (in the case of a put) to an extent sufficient to
cover the option premium and transaction costs, the Fund will lose part or all
of its investment in the option. This contrasts with an investment by the Fund
in the underlying security, since the Fund will not realize a loss if the
security's price does not change.
The effective use of options also depends on the Fund's ability to terminate
option positions at times when the Adviser deems it desirable to do so. There is
no assurance that the Fund will be able to effect closing transactions at any
particular time or at an acceptable price.
If a secondary market in options were to become unavailable, the Fund could no
longer engage in closing transactions. Lack of investor interest might adversely
affect the liquidity of the market for particular options or series of options.
A market may discontinue trading of a particular option or options generally. In
addition, a market could become temporarily unavailable if unusual events --
such as volume in excess of trading or clearing capability -- were to interrupt
its normal operations.
A market may at times find it necessary to impose restrictions on particular
types of options transactions, such as opening transactions. For example, if an
underlying security ceases to meet qualifications imposed by the market or the
Options Clearing Corporation, new series of options on that security will no
longer be opened to replace expiring series, and opening transactions in
existing series may be prohibited. If an options market were to become
unavailable, the Fund as a holder of an option would be able to realize profits
or limit losses only by exercising the option, and the Fund, as option writer,
would remain obligated under the option until expiration or exercise.
Disruptions in the markets for the securities underlying options purchased or
sold by the Fund could result
4
<PAGE>
in losses on the options. If trading is interrupted in an underlying security,
the trading of options on that security is normally halted as well. As a result,
the Fund as purchaser or writer of an option will be unable to close out its
positions until options trading resumes, and it may be faced with considerable
losses if trading in the security reopens at a substantially different price. In
addition, the Options Clearing Corporation or other options markets may impose
exercise restrictions. If a prohibition on exercise is imposed at the time when
trading in the option has also been halted, the Fund as purchaser or writer of
an option will be locked into its position until one of the two restrictions has
been lifted. If the Options Clearing Corporation were to determine that the
available supply of an underlying security appears insufficient to permit
delivery by the writers of all outstanding calls in the event of exercise, it
may prohibit indefinitely the exercise of put options. The Fund, as holder of
such a put option, could lose its entire investment if the prohibition remained
in effect until the put option's expiration.
Foreign-traded options are subject to many of the same risks presented by
internationally-traded securities. In addition, because of time differences
between the United States and various foreign countries, and because different
holidays are observed in different countries, foreign options markets may be
open for trading during hours or on days when U.S. markets are closed. As a
result, option premiums may not reflect the current prices of the underlying
interest in the United States.
Over-the-counter ("OTC") options purchased by the Fund and assets held to cover
OTC options written by the Fund may, under certain circumstances, be considered
illiquid securities for purposes of any limitation on the Fund's ability to
invest in illiquid securities.
OPTIONS ON INDICES.
- -------------------
As an alternative to purchasing call and put options on index futures, the Fund
may purchase and sell call and put options on the underlying indices themselves.
Such options would be used in a manner identical to the use of options on index
futures.
RESTRICTED SECURITIES.
- ----------------------
The SEC Staff currently takes the view that any delegation by the Board of
Directors of the authority to determine that a restricted security is readily
marketable (as described in the investment restrictions of the Fund) must be
pursuant to written procedures established by the Board of Directors. It is the
present intention of the Board of Directors that, if the Board of Directors
decide to delegate such determinations to the Adviser or another person, they
would do so pursuant to written procedures, consistent with the Staff's
position. Should the Staff modify its position in the future, the Board of
Directors would consider what action would be appropriate in light of the
Staff's position at that time.
ILLIQUID SECURITIES.
- --------------------
As set forth in the Prospectus, the Fund may invest in Rule 144A securities and
commercial paper issued pursuant to Rule 4(2) under the Securities Act of 1933,
and treat such securities as liquid when they have been determined to be liquid
by the Board of Directors or by the Adviser subject to the oversight of and
pursuant to procedures adopted by the Board of Directors. Under these
procedures, factors taken into account in determining the liquidity of a
security include (a) the frequency of trades and quotes for the security; (b)
the number of dealers willing to purchase or sell the security and the number of
other potential purchasers; (c) dealer undertakings to make a market in the
security; and (d) the nature of the security and the nature of
5
<PAGE>
the marketplace trades (e.g., the time needed to dispose of the security, the
method of soliciting offers and the mechanics of transfer). With respect to Rule
144A securities, investing in such securities could have the effect of
increasing the level of the Fund's illiquidity to the extent that qualified
institutional buyers become, for a time, uninterested in purchasing these
securities.
CONCENTRATION.
- --------------
The Fund, as a fundamental policy, will concentrate its investments by investing
25% or more of the value of its total assets in the securities of issuers
conducting their principal business activities in the financial services
industry, in accordance with its investment objectives. The Fund may also invest
more than 25% of its assets in the securities of the U.S. Government or its
agencies and instrumentalities and repurchase agreements relating thereto.
TEMPORARY DEFENSIVE INVESTMENTS.
- -------------------------------
The Fund may, from time to time, take temporary defensive positions that are
inconsistent with the Fund's principal investment strategies in attempting to
respond to adverse market, economic, political, regulatory or other conditions.
Under these circumstances, the Fund may hold all or a portion of its assets in
money market instruments (high quality income securities with maturities of less
than one year), securities of money market funds or U.S. Government repurchase
agreements. To the extent that the Fund resorts to a temporary defensive policy,
the Fund may not achieve its investment objective.
INVESTMENT RESTRICTIONS
In addition to the investment objective and policies set forth in the Prospectus
and in this Statement of Additional Information, the Fund is subject to certain
fundamental and non-fundamental investment restrictions, as set forth below.
Fundamental investment restrictions may not be changed with respect to the Fund
individually, without the vote of a majority of the Fund's outstanding shares.
Non-fundamental investment restrictions of the Fund may be changed by the Board
of Directors.
As fundamental investment restrictions, the Fund will not:
1. Purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities), if, as a
result, as to 75% of the Fund's total assets, more than 5% of its net assets
would be invested in the securities of one issuer or the Fund would hold more
than 10% of the outstanding voting securities of any one issuer.
2. Issue any senior securities, as defined in the Investment Company Act of
1940, as amended (the "1940 Act"), other than as set forth in restriction number
3 below. Purchasing or selling securities on a when-issued or delayed delivery
basis shall not be deemed a senior security for purposes of this restriction
number 2.
3. Borrow amounts in excess of 10% of the cost or 5% of the market value of its
total assets, whichever is less, and then only from a bank and as a temporary
measure for extraordinary or emergency purposes. To secure any such borrowing,
the Fund may pledge or hypothecate not in excess of 15% of the value of its
total assets.
6
<PAGE>
4. Purchase or sell real estate or commodities or commodity futures contracts.
This restriction shall not preclude the Fund from investing in financial
services companies that own real estate or that buy and sell real estate.
5. Act as an underwriter of securities of other issuers, except insofar as the
Fund may be technically deemed an underwriter under the federal securities laws
in connection with the disposition of portfolio securities.
6. Engage in any short-selling operations.
7. Engage in margin transactions or in transactions involving puts, calls,
straddles, or spreads, except as permitted by the Fund under its investment
policies.
9. Acquire or retain more than 5% of the securities of any other investment
company.
The Fund is also subject to the following restrictions that are not fundamental
and may therefore be changed by the Board of Directors without shareholder
approval.
The Fund will not:
1. Acquire securities for the purpose of exercising control over management.
2. Invest more than 15% of its net assets in securities determined by the Board
of Directors to be illiquid.
Unless otherwise indicated, percentage limitations included in the restrictions
apply at the time the Fund enters into a transaction. Accordingly, any later
increase or decrease beyond the specified limitation resulting from a change in
the Fund's net assets will not be considered in determining whether it has
complied with its investment restrictions.
DIRECTORS AND EXECUTIVE OFFICERS
The Fund is supervised by the Board of Directors of Questar Funds, Inc (the
"Company"). The Board of Directors consists of five individuals, four of whom
are not "interested persons" of the Fund as that term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act"). The Directors are
fiduciaries for the Fund's shareholders and is governed by the laws of the State
of Maryland in this regard. They establish policies for the operation of the
Company and the Fund and appoint the officers who conduct the daily business of
the Fund. The Directors of the Fund are listed below with their addresses,
present positions with the Company and principal occupations over at least the
last five years. Directors who are interested persons, as defined by the 1940
Act, are indicated by asterisk.
7
<PAGE>
<TABLE>
<CAPTION>
NAME (AGE) AND PRINCIPAL OCCUPATION AND OTHER
ADDRESS BUSINESS EXPERIENCE DURING THE POSITIONS HELD WITH THE
PAST FIVE (5) YEARS COMPANY
- ---------------------------------------- ------------------------------------------------------ --------------------------------
<S> <C> <C>
DANIEL ABRAMSON (49) President and Chief Executive Officer, Director
c/o Dunhill Staffing Systems, Inc. Dunhill Staffing Systems, Inc. (1994-
150 Motor Parkway Present), having joined Dunhill in 1986
Hauppauge, NY 11788 as a franchise owner in Providence, RI.
He served as Franchise
Advisory Council President
(1990-1992) and is a member of
the National Association of
Personnel Services, a trade
organization.
- ---------------------------------------- ------------------------------------------------------ --------------------------------
PHILIP A. CAPALONGO (44) Managing Director in Capital Director
211 Mill River Road Investments Partners, an investment
Oyster Bay, NY 11771 banking firm. Prior thereto, he served in
a number of senior management
positions at TeleTechnologies,
a technology company, and
Michaels, Edgar & Phillips, an
investment banking firm.
- ---------------------------------------- ------------------------------------------------------ --------------------------------
ANTHONY J. HERTL, (50) Chief Financial and Administrative Director
Colobaugh Pond Road Officer for Marymount College,
Croton-on-Hudson, NY 10520 Tarrytown, New York since 1996. Prior
thereto, he served in a number of senior
management positions at Prudential
Securities Inc. from 1983-1996. Mr.
Hertl spent ten (10) years at Arthur
Andersen & Co. and is a Certified Public
Accountant.
- ---------------------------------------- ------------------------------------------------------ --------------------------------
*MICHAEL MIOLA (48) Chief Executive Officer of American Chief Executive
The Hauppauge Corporate Center Data Services, Inc. Officer, President and
150 Motor Parkway Director
Hauppauge, New York 11788
- ---------------------------------------- ------------------------------------------------------ --------------------------------
DONALD SMITH (52) President, Don Smith Realty (1971- Director
Don Smith Realty 1999). Director of Avalon Capital,
81 North Maple Avenue Inc., a closed-end investment company.
Ridgewood, NJ 07450
- ---------------------------------------- ------------------------------------------------------ --------------------------------
</TABLE>
8
<PAGE>
In addition to Mr. Miola as Chief Executive Officer and President,
the other officers of the Corporation are Michael Wagner, Treasurer and James
Colantino, Secretary. Each of the officers is employed by the Administrator.
The members of the Audit Committee of the Board of Directors are
Messrs. Hertl, Smith and Abramson. Mr. Hertl acts as the chairperson of such
committee. The Audit Committee oversees the Fund's financial reporting process,
reviews audit results and recommends annually to the Company a firm of
independent certified public accountants.
Those Directors who are officers or employees of the Administrator or
its affiliates receive no remuneration from the Fund. Each disinterested
Director receives a fee from the Fund for each regular quarterly and in-person
special meeting of the Board of Directors attended. Members of the Board who are
not affiliated with the Adviser or the Administrator receive an annual fee of
$4,000 plus $500 for each Board meeting attended. The Fund will pay a pro rata
portion of the Directors' fees and expenses based on the net assets of the Fund
and the other series of the Company. In addition, each Director who is not
affiliated with the Adviser or the Administrator is reimbursed for expenses
incurred in connection with attending meetings.
The following table sets forth the estimated compensation expected to
be received by each Director of the Company during the fiscal year ending
February 28, 2001. Directors who are interested persons of the Company, as
defined by the 1940 Act, are indicated by asterisk.
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
- ---------------------------- -------------------- --------------------- ---------------------- -------------------------
PENSION OR TOTAL
AGGREGATE RETIREMENT ESTIMATED COMPENSATION
NAME OF PERSON, COMPENSATION BENEFITS ANNUAL FROM FUND AND
POSITION FROM EACH ACCRUED AS BENEFITS UPON FUND COMPLEX
FUND(1) PART OF FUND RETIREMENT PAID TO
EXPENSES DIRECTORS
- ---------------------------- -------------------- --------------------- ---------------------- -------------------------
<S> <C> <C> <C> <C>
Daniel Abramson $6,000 NONE NONE NONE
Director
- ---------------------------- -------------------- --------------------- ---------------------- -------------------------
Philip A. Capalongo $6,000 NONE NONE $20,000
Director
- ---------------------------- -------------------- --------------------- ---------------------- -------------------------
Anthony Hertl $6,000 NONE NONE $20,000
Director
- ---------------------------- -------------------- --------------------- ---------------------- -------------------------
Donald Smith $6,000 NONE NONE $6,000
Director
- ---------------------------- -------------------- --------------------- ---------------------- -------------------------
9
<PAGE>
- -------------------------------- ------------------------- ----------------------- ------------------------ --------------------
*Michael Miola NONE NONE NONE NONE
Director
- -------------------------------- ------------------------- ----------------------- ------------------------ --------------------
<FN>
1. The information contained in this table is being provided for the
period December 1, 1999 through November 30, 2000.
2. The Officers and Directors of the Fund as a group own less than 1% of all of the Fund's equity
securities.
</FN>
</TABLE>
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
The investment adviser for the Fund is Retirement Planning Company of New
England, Inc. (the "Adviser"). The Adviser will act as such pursuant to a
written agreement which, after its initial two-year period, must be annually
re-approved by the Board of Directors. The address of the Adviser is One
Richmond Square, Providence, RI 02906.
CONTROL OF THE ADVISER
The stock of the Adviser is owned equally by Messrs. David W. Allaire and
Michael R. Laliberte.
INVESTMENT ADVISORY AGREEMENT
The Adviser acts as the investment adviser of the Fund under an Investment
Advisory Agreement which has been approved by the Board of Directors (including
a majority of the Directors who are not parties to the agreement, or interested
persons of any such party).
The Investment Advisory Agreement will terminate automatically in the event of
its assignment. In addition, the agreement is terminable at any time, without
penalty, by the Board of Directors of the Company or by vote of a majority of
the Company's outstanding voting securities on not more than 60 days' written
notice to the Adviser, and by the Adviser on 60 days' written notice to the
Company. Unless sooner terminated, the agreement shall continue in effect for
more than two years after its execution only so long as such continuance is
specifically approved at least annually by either the Board of Directors or by a
vote of a majority of the outstanding shares of the Company, provided that in
either event such continuance is also approved by a vote of a majority of the
Directors who are not parties to such agreement, or interested persons of such
parties, cast in person at a meeting called for the purpose of voting on such
approval.
Pursuant to its Investment Advisory Agreement, the Fund will pay the Adviser
monthly an advisory fee equal, on an annual basis, to 1.00% of its average daily
net assets. The Adviser may waive a portion of its fees from time to time.
10
<PAGE>
Under the Investment Advisory Agreement, the Adviser provides the Fund with
advice and assistance in the selection and disposition of the Fund's
investments. All investment decisions are subject to review by the Board of
Directors of the Company. The Adviser is obligated to pay the salaries and fees
of any affiliates of the Adviser serving as officers of the Company or the Fund.
The same security may be suitable for the Fund or other private accounts managed
by the Adviser. If and when the Fund or two or more accounts simultaneously
purchase or sell the same security, the transactions will be allocated as to
price and amount in accordance with arrangements equitable to the Fund or
account. The simultaneous purchase or sale of the same securities by the Fund
and other accounts may have a detrimental effect on the Fund, as this may affect
the price paid or received by the Fund or the size of the position obtainable or
able to be sold by the Fund.
ADMINISTRATOR
The Administrator for the Fund is American Data Services, Inc. (the
"Administrator"), which has its principal office at The Hauppauge Corporate
Center, 150 Motor Parkway, Hauppauge, New York 11788, and is primarily in the
business of providing administrative, fund accounting and stock transfer
services to retail and institutional mutual funds through its offices in New
York, Denver and Los Angeles.
Pursuant to an Administrative Service Agreement with the Fund, the Administrator
provides all administrative services necessary for the Fund, subject to the
supervision of the Board of Directors. The Administrator will provide persons to
serve as officers of the Fund. Such officers may be directors, officers or
employees of the Administrator or its affiliates.
The Administrative Service Agreement is terminable by the Board of Directors of
the Fund or the Administrator on sixty days' written notice and may be assigned
provided the non-assigning party provides prior written consent. The Agreement
shall remain in effect for two years from the date of its initial approval, and
subject to annual approval of the Board of Directors for one-year periods
thereafter. The Agreement provides that in the absence of willful misfeasance,
bad faith or gross negligence on the part of the Administrator or reckless
disregard of its obligations thereunder, the Administrator shall not be liable
for any action or failure to act in accordance with its duties thereunder.
Under the Administrative Service Agreement, the Administrator provides all
administrative services, including, without limitation: (i) provides services of
persons competent to perform such administrative and clerical functions as are
necessary to provide effective administration of the Fund; (ii) overseeing the
performance of administrative and professional services to the Fund by others,
including the Fund's Custodian; (iii) preparing, but not paying for, the
periodic updating of the Fund's Registration Statement, Prospectus and Statement
of Additional Information in conjunction with Fund counsel, including the
printing of such documents for the purpose of filings with the Securities and
Exchange Commission and state securities administrators, preparing the Fund's
tax returns, and preparing reports to the Fund's shareholders and the Securities
and Exchange Commission; (iv) preparing in conjunction with Fund counsel, but
not paying for, all filings under the securities or "Blue Sky" laws of such
states or countries as are designated by the Distributor, which may be required
to register or qualify, or continue the registration or qualification, of the
Fund and/or its shares under such laws; (v) preparing notices and agendas for
meetings of the Board of Directors and minutes of such meetings in all matters
required by
11
<PAGE>
the 1940 Act to be acted upon by the Board; and (vi) monitoring daily and
periodic compliance with respect to all requirements and restrictions of the
Investment Company Act, the Internal Revenue Code and the Prospectus.
The Administrator, pursuant to the Fund Accounting Service Agreement, provides
the Fund with all accounting services, including, without limitation: (i) daily
computation of net asset value; (ii) maintenance of security ledgers and books
and records as required by the Investment Company Act; (iii) production of the
Fund's listing of portfolio securities and general ledger reports; (iv)
reconciliation of accounting records; (v) calculation of yield and total return
for the Fund; (vi) maintaining certain books and records described in Rule 31a-1
under the 1940 Act, and reconciling account information and balances among the
Fund's Custodian and Adviser; and (vii) monitoring and evaluating daily income
and expense accruals, and sales and redemptions of shares of the Fund.
ADMINISTRATOR'S FEES
For the services rendered to the Fund by the Administrator, the Fund pays the
Administrator a monthly fee based on the Fund's average net assets. The Fund
also pays the Administrator for any out-of-pocket expenses. These fees are set
forth in the Fund's Prospectus.
In return for providing the Fund with all accounting related services, the Fund
pays the Administrator a monthly fee based on the Fund's average net assets,
plus any out-of-pocket expenses for such services.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Star Bank, N.A. serves as custodian for the Fund's cash and securities. Pursuant
to a Custodian Agreement, it is responsible for maintaining the books and
records of the Fund's portfolio securities and cash. The Custodian does not
assist in, and is not responsible for, investment decisions involving assets of
the Fund. American Data Services, Inc., the Administrator, also acts as the
Fund's transfer and dividend agent.
DISTRIBUTION AGREEMENT
Pursuant to a Distribution Agreement, AmeriMutual Funds Distributors, Inc. (the
"Distributor") has agreed to act as the principal underwriter for the Fund in
the sale and distribution to the public of shares of the Fund, either through
dealers or otherwise. The Distributor has agreed to offer such shares for sale
at all times when such shares are available for sale and may lawfully be offered
for sale and sold.
SHAREHOLDER SERVICING AND DISTRIBUTION PLAN
The Fund has adopted a Distribution and Service Plan (the "Plan"), which was
reviewed and approved by a majority of the disinterested directors of the Fund,
pursuant to Rule 12b-1 under the Act (the "Rule"). The Rule provides that an
investment company which bears any direct or indirect expense of distributing
12
<PAGE>
its shares must do so only in accordance with a plan permitted by the Rule. The
Plan provides that the Fund will compensate the Distributor for certain expenses
and costs incurred in connection with providing marketing and promotional
support to the Fund, shareholder servicing and maintaining shareholder accounts,
to compensate parties with which it has written agreements and whose clients own
shares of the Fund for providing servicing to their clients ("shareholder
servicing") and financial institutions with which it has written agreements and
whose clients are Fund shareholders (each a "broker-dealer") for providing
distribution assistance and promotional support to the Fund, which is subject to
a maximum of 0.50% per annum of the Fund's average daily net assets. Fees paid
under the Plan may not be waived for individual shareholders.
Each shareholder servicing agent and broker-dealer will, as agent for its
customers, among other things: answer customer inquiries regarding account
status and history, the manner in which purchases and redemptions of shares of
the Fund may be effected and certain other matters pertaining to the Fund;
assist shareholders in designating and changing dividend options, account
designations and addresses; provide necessary personnel and facilities to
establish and maintain shareholder accounts and records; assist in processing
purchase and redemption transactions; arrange for the wiring of funds; transmit
and receive funds in connection with customer orders to purchase or redeem
shares; verify and guarantee shareholder signatures in connection with
redemption orders and transfers and changes in shareholder designated accounts;
furnish quarterly and year-end statements and confirmations within five business
days after activity in the account; transmit to shareholders of the Fund proxy
statements, annual reports, updated prospectuses and other communications;
receive, tabulate and transmit proxies executed by shareholders with respect to
meetings of shareholders of the Fund; and provide such other related services as
the Fund or a shareholder may request.
The Plan, the shareholder servicing agreements and the form of distribution
agreement each provide that the Adviser or the Distributor may make payments
from time to time from their own resources which may include the advisory fee
and the asset based sales charges and past profits for the following purposes:
(i) to defray the costs of and to compensate others, including financial
intermediaries with whom the Distributor has entered into written agreements,
for performing shareholder servicing and related administrative functions of the
Fund; to compensate certain financial intermediaries for providing assistance in
distributing Fund shares; (ii) to pay the costs of printing and distributing the
Fund's prospectus to prospective investors; and (iii) to defray the cost of the
preparation and printing of brochures and other promotional materials, mailings
to prospective shareholders, advertising, and other promotional activities,
including the salaries and/or commissions of sales personnel in connection with
the distribution of the Fund's shares. The Distributor will determine the amount
of such payments made pursuant to the Plan with the shareholder servicing agents
and broker-dealers with whom it has contracted, provided that such payments made
pursuant to the Plan will not increase the amount which the Fund is required to
pay the Distributor for any fiscal year under the shareholder servicing
agreements or otherwise.
Shareholder servicing agents and broker-dealers may charge investors a fee in
connection with their use of specialized purchase and redemption procedures
offered to investors by the shareholder servicing agents and broker-dealers. In
addition, shareholder servicing agents and broker-dealers offering purchase and
redemption procedures similar to those offered to shareholders who invest in the
fund directly may impose charges, limitations, minimums and restrictions in
addition to or different from those applicable to shareholders who invest in the
Fund directly. Accordingly, the net yield to investors who invest
13
<PAGE>
through shareholder servicing agents and broker-dealers may be less than
realized by investing in the Fund directly. An investor should read the
Prospectus in conjunction with the materials provided by the shareholder
servicing agent and broker-dealer describing the procedures under which Fund
shares may be purchased and redeemed through the shareholder servicing agent and
broker-dealer.
In accordance with the Rule, the Plan provides that all written agreements
relating to the Plan entered into by the Fund, the Distributor or the Adviser,
and the shareholder servicing agents, broker-dealers, or other organizations,
must be in a form satisfactory to the Board of Directors. In addition, the Plan
requires the Fund and the Distributor to prepare, at least quarterly, written
reports setting forth all amounts expended for distribution purposes by the Fund
and the Distributor pursuant to the Plan and identifying the distribution
activities for which those expenditures were made for review by the Board of
Directors.
The following is a table showing all commissions and other compensation received
by the Distributor
[TO BE COMPLETED BY SUBSEQUENT AMENDMENT]
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
- ---------------------------- --------------------- ----------------------- -------------------- ---------------------------
NET
<S> <C> <C> <C> <C>
NAME OF PRINCIPAL UNDERWRITING COMPENSATION ON BROKERAGE OTHER COMPENSATION
UNDERWRITER DISCOUNTS AND REDEMPTIONS AND COMMISSIONS
COMMISSIONS REPURCHASES
- ---------------------------- --------------------- ----------------------- -------------------- ---------------------------
AMERIMUTUAL FUNDS
DISTRIBUTORS, INC.
- ---------------------------- --------------------- ----------------------- -------------------- ---------------------------
</TABLE>
OTHER EXPENSES
The Fund pays certain operating expenses that are not assumed by the Adviser,
the Administrator or any of their respective affiliates. These expenses,
together with fees paid to the Adviser, the Administrator, the Distributor and
the Transfer Agent, are deducted from income of the Fund before dividends are
paid. These expenses include, but are not limited to, organizational costs, fees
and expenses of officers and Directors who are not affiliated with the Adviser,
the Administrator or any of their respective affiliates, taxes, interest, legal
fees, custodian fees, audit fees, brokerage fees and commissions, fees and
expenses of registering and qualifying the Fund and its shares for distribution
under federal and state securities laws, the expenses of reports to
shareholders, shareholders' meetings and proxy solicitations.
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE
14
<PAGE>
The Fund's assets are invested by the Adviser in a manner consistent with its
investment objectives, policies, and restrictions and with any instructions the
Board of Directors may issue from time to time. Within this framework, the
Adviser is responsible for making all determinations as to the purchase and sale
of portfolio securities and for taking all steps necessary to implement
securities transactions on behalf of the Fund.
U.S. Government securities generally are traded in the over-the-counter market
through broker-dealers. A broker-dealer is a securities firm or bank that makes
a market for securities by offering to buy at one price and sell at a slightly
higher price. The difference between the prices is known as a spread.
In placing orders for the purchase and sale of portfolio securities for the
Fund, the Adviser will use its best efforts to obtain the best possible price
and execution and will otherwise place orders with broker-dealers subject to and
in accordance with any instructions the Board of Directors may issue from time
to time. The Adviser will select broker-dealers including, the Distributor, to
execute portfolio transactions on behalf of the Fund primarily on the basis of
best price and execution.
When consistent with the objectives of prompt execution and favorable net price,
business may be placed with broker-dealers who furnish investment research or
services to the Adviser. Such research or services include advice, both directly
and in writing, as to the value of securities; the advisability of investing in,
purchasing or selling securities; and the availability of securities, or
purchasers or sellers of securities; as well as analyses and reports concerning
issues, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts. To the extent portfolio transactions are
effected with broker- dealers who furnish research services to the Adviser, the
Adviser receives a benefit, not capable of evaluation in dollar amounts, without
providing any direct monetary benefit to the Fund from these transactions. The
Adviser believes that most research services obtained by it generally benefit
several or all of the investment companies and private accounts which it
manages, as opposed to solely benefitting one specific managed fund or account.
Transactions on U.S. stock exchanges, commodities markets and futures markets
and other agency transactions involve the payment by the Fund of negotiated
brokerage commissions. Such commissions vary among different brokers. A
particular broker may charge different commissions according to such factors as
the difficulty and size of the transaction. Transactions in foreign investments
often involve the payment of fixed brokerage commissions, which may be higher
than those in the United States. There is generally no stated commission in the
case of securities traded in the over-the-counter markets, but the price paid by
the Fund usually includes an undisclosed dealer commission or mark-up. In
underwritten offerings, the price paid by the Fund includes a disclosed, fixed
commission or discount retained by the underwriter or dealer.
It has for many years been a common practice in the investment advisory business
for advisers of investment companies and other institutional investors to
receive brokerage and research services (as defined in the Securities Exchange
Act of 1934, as amended (the "1934 Act")) from broker-dealers that execute
portfolio transactions for the clients of such advisers and from third parties
with which such broker-dealers have arrangements. Consistent with this practice,
the Adviser may receive brokerage and research services and other similar
services from many broker-dealers with which the Adviser may place the Fund's
portfolio transactions and from third parties with which these broker-dealers
have arrangements. These services include such matters as general economic and
market reviews, industry and company reviews, evaluations
15
<PAGE>
of investments, recommendations as to the purchase and sale of investments,
newspapers, magazines, pricing services, quotation services, news services and
personal computers utilized by the Adviser. Where the services referred to above
are not used exclusively by the Adviser for research purposes, the Adviser,
based upon its own allocations of expected use, bears that portion of the cost
of these services which directly relates to their non-research use. Some of
these services are of value to the Adviser and its affiliates in advising
various of their clients (including the Fund), although not all of these
services are necessarily useful and of value in managing the Fund. The
management fee paid by the Fund is not reduced because the Adviser and its
affiliates receive these services even though the Adviser might otherwise be
required to purchase some of these services for cash.
As permitted by Section 28(e) of the 1934 Act, the Adviser may cause the Fund to
pay a broker-dealer which provides "brokerage and research services" (as defined
in the 1934 Act) to the Adviser an amount of disclosed commission for effecting
securities transactions on stock exchanges and other transactions for the Fund
on an agency basis in excess of the commission which another broker-dealer would
have charged for effecting that transaction. The Adviser's authority to cause
the Fund to pay any such greater commissions is also subject to such policies as
the Directors may adopt from time to time. The Adviser does not currently intend
to cause any Fund to make such payments. It is the position of the staff of the
Securities and Exchange Commission that Section 28(e) does not apply to the
payment of such greater commissions in "principal" transactions. Accordingly,
the Adviser will use its best effort to obtain the most favorable price and
execution available with respect to such transactions, as described above.
Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc. and subject to seeking the most favorable price and execution
available and such other policies as the Directors may determine, the Adviser
may consider sales of shares of the Fund as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.
TAXATION
The Fund intends to qualify each year as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). By
so qualifying, the Fund will not incur federal income or state taxes on its net
investment income and on net realized capital gains to the extent distributed as
dividends to shareholders.
Amounts not distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a nondeductible 4% excise tax at the
Fund level. To avoid the tax, the Fund must distribute during each calendar year
an amount equal to the sum of (a) at least 98% of its ordinary income (not
taking into account any capital gains or losses) for the calendar year, (b) at
least 98% of its capital gains in excess of capital losses (adjusted for certain
ordinary losses) for a one-year period generally ending on October 31st of the
calendar year, and (c) all ordinary income and capital gains for previous years
that were not distributed during such years.
Under the Code, dividends derived from interest, and any short-term capital
gains, are taxable to shareholders
16
<PAGE>
as ordinary income for federal and state tax purposes, regardless of whether
such dividends are taken in cash or reinvested in additional shares.
Distributions made from the Fund's net realized long-term capital gains (if any)
and designated as capital gain dividends are taxable to shareholders as
long-term capital gains, regardless of the length of time Fund shares are held.
Corporate investors are not eligible for the dividends- received deduction with
respect to distributions derived from interest on short-or long-term capital
gains from the Fund but may be entitled to such a deduction in respect to
distributions attributable to dividends received by the Fund. A distribution
will be treated as paid on December 31st of a calendar year if it is declared by
the Fund in October, November or December of the year with a record date in such
a month and paid by the Fund during January of the following year. Such
distributions will be taxable to shareholders in the calendar year the
distributions are declared, rather than the calendar year in which the
distributions are received.
Distributions paid by the Fund from net long-term capital gains (excess of
long-term capital gains over long- term capital losses), if any, whether
received in cash or reinvested in additional shares, are taxable as long- term
capital gains, regardless of the length of time you have owned shares in the
Fund. Distributions paid by the Fund from net short-term capital gains (excess
of short-term capital gains over short-term capital losses), if any, whether
received in cash or reinvested in additional shares are taxable as ordinary
income. Capital gains distributions are made when the Fund realizes net capital
gains on sales of portfolio securities during the year. Realized capital gains
are not expected to be a significant or predictable part of the Fund's
investment return.
Any redemption of the Fund shares is a taxable event and may result in a capital
gain or loss. A capital gain or loss may be realized from an ordinary redemption
of shares.
Dividend distributions, capital gains distributions, and capital gains or losses
from redemptions and exchanges may also be subject to state and local taxes.
Ordinarily, distributions and redemption proceeds paid to Fund shareholders are
not subject to withholding of federal income tax. However, 31% of the Fund's
distributions and redemption proceeds must be withheld if a Fund shareholder
fails to supply the Fund or its agent with such shareholder's taxpayer
identification number or if the Fund shareholder who is otherwise exempt from
withholding fails to properly document such shareholder's status as an exempt
recipient.
The information above is only a summary of some of the tax considerations
generally affecting the Fund and its shareholders. No attempt has been made to
discuss individual tax consequences. To determine whether the Fund is a suitable
investment based on his or her tax situation, a prospective investor may wish to
consult a tax advisor.
OWNERSHIP OF SHARES
The Fund has only one class of shares. Each share has one vote in the election
of Directors. Cumulative voting is not authorized. This means that the holders
of more than 50% of the shares voting for the election of Directors can elect
100% of the Directors if they choose to do so, and, in that event, the holders
of the remaining shares will be unable to elect any Directors.
17
<PAGE>
PURCHASE OF SHARES
Shares of the Fund may be purchased at the net asset value per share next
determined, plus any applicable sales load, after receipt of an order by the
Fund's Transfer Agent in proper form with accompanying check or other bank wire
payment arrangements satisfactory to the Fund. Fund shares are sold subject to
an initial sales load of up to 4.75%. The Fund's minimum initial investment is
$2,000 (except for retirement accounts for which the minimum initial investment
is $1,000) and the minimum subsequent investment is $100.
DIVIDENDS AND DISTRIBUTIONS
Net investment income, if any, is declared as dividends and paid annually.
Substantially all the realized net capital gains for the Fund, if any, are also
declared and paid on an annual basis. Dividends and distributions are payable to
shareholders of record at the time of declaration.
Distributions are automatically reinvested in additional Fund shares unless the
shareholder has elected to have them paid in cash.
The net investment income of the Fund for each business day is determined
immediately prior to the determination of net asset value. Net investment income
for other days is determined at the time net asset value is determined on the
prior business day. See "Purchase of Shares" and "Redemption of Shares" in the
Prospectus.
NET ASSET VALUE
The method for determining the Fund's net asset value is summarized in the
Prospectus. The net asset value of the Fund's shares is determined on each day
on which the New York Stock Exchange is open, provided that the net asset value
need not be determined on days when no Fund shares are tendered for redemption
and no order for Fund shares is received. The Fund's net asset value is
determined by taking the market value of all securities owned by the Fund (plus
all other assets such as cash), subtracting all liabilities and then dividing
the result (net assets) by the number of shares outstanding. The Fund values
securities for which market quotations are readily available at current market
value. If market quotations are not readily available, then securities are
valued at fair value, as determined by the Board The New York Stock Exchange is
not open for business on the following holidays (or on the nearest Monday or
Friday if the holiday falls on a weekend): New Year's Day, Martin Luther King
Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
18
<PAGE>
PERFORMANCE COMPARISONS
Total return quoted in advertising and sales literature reflects all aspects of
the Fund's return, including the effect of reinvesting dividends and capital
gain distributions and any change in the Fund's net asset value during the
period.
The Fund's total return must be displayed in any advertisement containing the
Fund's yield. Total return is the average annual total return for the 1-, 5- and
10-year period ended on the date of the most recent balance sheet included in
the Statement of Additional Information, computed by finding the average annual
compounded rates of return over 1-, 5- and 10-year periods that would equate the
initial amount invested to the ending redeemable value according to the
following formula:
P(1 + T)n = ERV
Where:
P = a hypothetical initial investment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of
a hypothetical $1000 payment
made at the beginning of the
1-, 5- or 10-year periods at
the end of the 1-, 5-or
10-year periods (or
fractions thereof).
Because the Fund has not had a registration in effect for 1, 5 or 10 years, the
period during which the registration has been effective shall be substituted.
Average annual total return is calculated by determining the growth or decline
in value of a hypothetical historical investment in the Fund over a stated
period and then calculating the annual compounded percentage rate that would
have produced the same result if the rate of growth or decline in value had been
constant throughout the period. For example, a cumulative total return of 100%
over 10 years would produce an
19
<PAGE>
average annual total return of 7.18%, which is the steady annual rate that would
result in 100% growth on a compounded basis in 10 years. While average annual
total returns are a convenient means of comparing investment alternatives,
investors should realize that the Fund's performance is not constant over time,
but changes from year to year, and that average annual total returns represent
averaged figures as opposed to actual year-to-year performance.
In addition to average annual total returns, the Fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period. Average annual and cumulative total returns may be quoted
as a percentage or as a dollar amount and may be calculated for a single
investment, a series of investments, or a series of redemptions over any time
period. Performance information may be quoted numerically or in a table, graph,
or similar illustration.
The Fund's performance may be compared with the performance of other funds with
comparable investment objectives, tracked by fund rating services or with other
indexes of market performance. Sources of economic data that may be considered
in making such comparisons may include, but are not limited to, rankings of any
mutual fund or mutual fund category tracked by Lipper Analytical Services, Inc.
or Morningstar, Inc.; data provided by the Investment Company Institute; major
indexes of stock market performance; and indexes and historical data supplied by
major securities brokerage or investment advisory firms. The Fund may also
utilize reprints from newspapers and magazines furnished by third parties to
illustrate historical performance.
The agencies listed below measure performance based on their own criteria rather
than on the standardized performance measures described in the preceding
section.
Lipper Analytical Services, Inc. distributes mutual fund rankings
monthly. The rankings are based on total return performance
calculated by Lipper, generally reflecting changes in net asset
value adjusted for reinvestment of capital gains and income
dividends. They do not reflect deduction of any sales charges.
Lipper rankings cover a variety of performance periods, including
year-to-date, 1-year, 5-year, and 10-year performance. Lipper
classifies mutual funds by investment objective and asset category.
Morningstar, Inc. distributes mutual fund ratings twice a month.
The ratings are divided into five groups: highest, above average,
neutral, below average and lowest. They represent the fund's
historical risk/reward ratio relative to other funds in its broad
investment class as determined by Morningstar, Inc. Morningstar
ratings cover a variety of performance periods, including 1-year,
3-year, 5-year, 10-year and overall performance. The performance
factor for the overall rating is a weighted-average assessment of
the fund's 1-year, 3-year, 5-year, and 10-year total return
performance (if available) reflecting deduction of expenses and
sales charges. Performance is adjusted using quantitative
techniques to reflect the risk profile of the fund. The ratings are
derived from a purely quantitative system that does not utilize the
subjective criteria customarily employed by rating agencies such as
Standard & Poor's and Moody's Investor Service, Inc.
CDA/Weisenberger's Management Results publishes mutual fund
rankings and is distributed
20
<PAGE>
monthly. The rankings are based entirely on total return calculated
by Weisenberger for periods such as year-to-date, 1-year, 3-year,
5-year and 10-year. Mutual funds are ranked in general categories
(e.g., international bond, international equity, municipal bond,
and maximum capital gain). Weisenberger rankings do not reflect
deduction of sales charges or fees.
Independent publications may also evaluate the Fund's performance. The Fund may
from time to time refer to results published in various periodicals, including
Barrons, Financial World, Forbes, Fortune, Investor's Business Daily,
Kiplinger's Personal Finance Magazine, Money, U.S. News and World Report and The
Wall Street Journal.
Independent, unmanaged indexes, such as those listed below, may be used to
present a comparative benchmark of the Fund's performance. The performance
figures of an index reflect changes in market prices, reinvestment of all
dividend and interest payments and, where applicable, deduction of foreign
withholding taxes, and do not take into account brokerage commissions or other
costs. Because the Fund is a managed portfolio, the securities it owns will not
match those in an index. Securities in an index may change from time to time.
The Dow Jones Industrial Average is an index of 30 common stocks
frequently used as a general measure of stock market performance.
The NASDAQ Industrial Average is an index of stocks traded in
The Nasdaq Stock Market, Inc. National Market System.
Standard & Poor's 500 Composite Stock Price Index is an index of
common stocks frequently used as a general measure of stock market
performance.
REDEMPTION OF SHARES
Redemption of shares, or payment for redemptions, may be suspended at times (a)
when the New York Stock Exchange is closed for other than customary weekend or
holiday closings, (b) when trading on said Exchange is restricted, (c) when an
emergency exists, as a result of which disposal by the Fund of securities owned
by it is not reasonably practicable, or it is not reasonably practicable for the
Fund fairly to determine the value of its net assets, or (d) during any other
period when the Securities and Exchange Commission, by order, so permits,
provided that applicable rules and regulations of the Securities and Exchange
Commission shall govern as to whether the conditions prescribed in (b) or (c)
exist.
Shareholders who purchased shares through a broker-dealer may also redeem such
shares by written request to the Transfer Agent which shares are held by the
Transfer Agent at the address set forth in the Prospectus. To be considered in
"good order", written requests for redemption should indicate the dollar amount
or
21
<PAGE>
number of shares to be redeemed, refer to the shareholder's Fund account number,
including either the social security or tax identification number. The request
should be signed in exactly the same way the account is registered. If there is
more than one owner of the shares, all owners must sign. If shares to be
redeemed have a value of $5,000 or more or redemption proceeds are to be paid by
someone other than the shareholder at the shareholder's address of record, the
signature(s) must be guaranteed by an "eligible guarantor institution," which
includes a commercial bank that is a member of the Federal Deposit Insurance
Corporation, a trust company, a member firm of a domestic stock exchange, a
savings association or a credit union that is authorized by its charter to
provide a signature guarantee. The Transfer Agent may reject redemption
instructions if the guarantor is neither a member of nor a participant in a
signature guarantee program. Signature guarantees by notaries public are not
acceptable. The purpose of a signature guarantee is to protect shareholders
against the possibility of fraud. Further documentation will be requested from
corporations, administrators, executors, personal representatives, trustees and
custodians. Redemption requests given by facsimile will not be accepted. Unless
other instructions are given in proper form, a check for the proceeds of the
redemption will be sent to the shareholder's address of record. Share purchases
and redemptions are governed by Maryland law.
COUNSEL AND INDEPENDENT AUDITORS
Legal matters in connection with the issuance of shares of common stock of the
Fund are passed upon by Spitzer & Feldman P.C., 405 Park Avenue, New York, New
York 10022. McCurdy & Associates, CPAs, Inc., 27955 Clemens Road, Westlake, Ohio
44145, have been selected as independent auditors for the Fund.
ORGANIZATION OF COMPANY
The Imperial Financial Services Fund, an open-end management investment company,
is a series of Questar Funds, Inc., a Maryland corporation organized on February
13, 1998.
FINANCIAL STATEMENTS
[TO BE COMPLETED BY SUBSEQUENT AMENDMENT]
22
<PAGE>
APPENDIX
SECURITY RATINGS
The following rating services describe rated securities as follows:
MOODY'S INVESTORS SERVICE, INC.
BONDS
AAA--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risk appear somewhat larger than the Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA--Bonds which are rated Baa are considered as medium grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
-i-
23
<PAGE>
BA--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
STANDARD & POOR'S
BONDS
AAA--Debt rated 'AAA' has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA--Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
A--Debt rated 'A' has a strong capacity to pay interest and repay principal
although somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB--Debt rated 'BBB' is regarded as having an adequate capacity to pay interest
and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
BB-B-CCC-CC-C--Debt rated 'BB', 'B', 'CCC', 'CC' and 'C' is regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. 'BB'
indicates the lowest degree of speculation and 'C' the highest. While such debt
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major exposures to adverse conditions.
-ii-
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<PAGE>
BB--Debt rated 'BB' has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The 'BB'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'BBB-' rating.
B--Debt rated 'B' has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The 'B' rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied 'BB' or 'BB-'
rating.
CCC--Debt rated 'CCC' has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The 'CCC' rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
'B' or 'B-' rating.
DUFF & PHELPS CORPORATION
LONG-TERM DEBT
AAA--Highest credit quality. The risk factors are negligible, being only
slightly more than for risk- free U.S. Treasury debt.
AA+, AA, AA-High credit quality. Protection factors are strong. Risk is modest
but may vary slightly from time to time because of economic conditions.
A+, A, A-Protection factors are average but adequate. However, risk factors are
more variable and greater in periods of economic stress.
-iii-
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<PAGE>
BBB+, BBB, BBB--Below-average protection factors but still considered sufficient
for prudent investment. Considerable variability in risk during economic cycles.
BB+, BB, BB-Below investment grade but deemed likely to meet obligations when
due. Present or prospective financial protection factors fluctuate according to
industry conditions or company fortunes. Overall quality may move up or down
frequently within this category.
B+, B, B-Below investment grade and possessing risk that obligations will not be
met when due. Financial protection factors will fluctuate widely according to
economic cycles, industry conditions and/or company fortunes. Potential exists
for frequent changes in the rating within this category or into a higher or
lower rating grade.
CCC--Well below investment-grade securities. Considerable uncertainty exists as
to timely payment of principal, interest or preferred dividends. Protection
factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company developments.
-iv-
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PART C
------
ITEM 23.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ---------- ----------------------
(a) Articles of Incorporation (See Note 1)
(b) Bylaws (See Note 1)
(c) Not Applicable.
(d)(1) Investment Advisory Agreement (Imperial BankFund) (See Note 2)
(d)(2) Form of Investment Advisory Agreement (Aii Aggressive Trading
Fund) (See Note 2)
(d)(3) Form of Investment Advisory Agreement (MegaTrends Fund;
Pheonix Management
Fund; and Kaminski Poland Fund)(See Note 3)
(e) Form of Distribution Agreement (See Note 2)
(f) Not Applicable.
(g) Form of Custody Agreement (See Note 4)
(h) Administrative Service Agreement (Imperial BankFund)
(Aii Aggressive Trading
Fund (See Note 2)
(h)(1) Form of Administrative Service Agreement (MegaTrends Fund;
Pheonix
Management Fund; Kaminski Poland Fund) (See Note 4)
(h)(2) Form of Transfer Agency Agreement (See Note 2)
(i) Opinion of Spitzer & Feldman P.C. as to the legality of the
securities being
registered, including their consent to the filing thereof and
as to the use of their
names in the Prospectus (Imperial BankFund)(See Note 1)
(i)(1) Consent of Spitzer & Feldman P.C. (Aii Aggressive Trading Fund)
(See Note 2)
(i)(2) Consent of Spitzer & Feldman P.C. (MegaTrends Fund) (See Note 3)
(i)(3) Consent of Spitzer & Feldman P.C. (Pheonix Manqgement Fund)
(See Note 3)
(i)(4) Consent of Spitzer & Feldman P.C. (Kaminski Poland Fund)
(See Note 3)
(j) Consent of McCurdy & Associates, CPAs, Inc., independent
auditors (Imperial
BankFund) (See Note 2)
(j)(1) Consent of McCurdy & Associates (Aii Aggressive Trading Fund)
(See Note 3)
(j)(2) Consent of McCurdy & Associates (MegaTrends Fund)(See Note 3)
(j)(3) Consent of McCurdy & Associates (Pheonix Management Fund)
(See Note 3)
(j)(4) Consent of McCurdy & Associates (Kaminski Poland Fund))
(See Note 3)
(k) Not Applicable.
(l) Subscription Letter (See Note 2)
(m) Distribution (12b-1) Plan (Imperial BankFund)(See Note 2)
(m)(1) Distribution (12b-1) Plan ((Aii Agressive Trading Fund)
(See Note 2)
(m)(2) Distribution (12b-1) Plan (MegaTrends Fund; Pheonix Management
Fund; and
Kaminski Poland Fund)(See Note 4)
(n) Not Applicable.
(n) Rule 18f-3 Plan (See Note 4)
Other Exhibits Not Applicable
Notes to Exhibits:
(1) Filed with the Securities and Exchange Commission as an Exhibit to the
Registrant's Registration Statement (Reg. No. 333-46323) on February 13,
1998.
(2) Filed with the Securities and Exchange Commission as an Exhibit to
Pre-Effective Amendment No. 2 to the Registration Statement (Reg. No.
333-46323) on January 25, 1999.
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<PAGE>
(3) Filed with the Securities and Exchange Commission as an Exhibit to
Post-Effective Amendment No. 4 to the Registration Statement (Reg. No.
333-46323) on December 10, 1999..
(4) To Be Filed by Future Amendment
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not applicable
ITEM 25. INDEMNIFICATION.
(a) In accordance with Section 2-418 of the General Corporation Law
of the State of Maryland, Article NINTH of the Registrant's
Articles of Incorporation provides as follows:
"NINTH:(1) The Corporation shall indemnify (i) its currently acting
and former directors and officers, whether serving the Corporation
or at its request any other entity, to the fullest extent required
or permitted by the General Laws of the State of Maryland now or
hereafter in force, including the advance of expenses under the
procedures and to the fullest extent permitted by law, and (ii)
other employees and agents to such extent as shall be authorized by
the Board of Directors or the By-Laws and as permitted by law.
Nothing contained herein shall be construed to protect any director
or officer of the Corporation against any liability to the
Corporation or its security holders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the
conduct of his office. The foregoing rights of indemnification
shall not be exclusive of any other rights to which those seeking
indemnification may be entitled. The Board of Directors may take
such action as is necessary to carry out these indemnification
provisions and is expressly empowered to adopt, approve and amend
from time to time such by-laws, resolutions or contracts
implementing such provisions or such indemnification arrangements
as may be permitted by law. No amendment of the charter of the
Corporation or repeal of any of its provisions shall limit or
eliminate the right of indemnification provided hereunder with
respect to acts or omissions occurring prior to such amendment or
repeal.
(2) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and the Investment
Company Act of 1940, no director or officer of the Corporation
shall be personally liable to the Corporation or its stockholders
for money damages; provided, however, that nothing herein shall be
construed to protect any director or officer of the Corporation
against any liability to the Corporation or its security holders to
which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of his office. No amendment of
the charter of the Corporation or repeal of any of its provisions
shall limit or eliminate the limitation of liability provided to
directors and officers hereunder with respect to any act or
omission occurring prior to such amendment or repeal."
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS.
(a) Retirement Planning Company of New England, Inc. serves as investment
adviser to Imperial Financial Services Fund. The description of
Pheonix Investment Management, Inc., under the Caption "Management -
The Adviser" and "Management - The Adviser" in the Prospectus and
Statement of
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<PAGE>
Additional Information, constituting certain of Parts A and B,
respectively, of this Registration Statement, are incorporated by
reference herein.
Retirement Planning Company of New England, Inc. is: One Richmond
Square, Providence, RI 02906. The following are the directors and officers of
Pheonix Investment Management, Inc., including any business connections of a
substantial nature that they have had in the past two years. Unless other
indicated, the address of any other business connection is also: One Richmond
Square, Providence, RI 02906. Set forth below are the names of the directors and
officers of the Adviser:
NAME TITLE BUSINESS CONNECTION
- ---- ----- -------------------
- ----
David W. Allaire President, CEO, and Director
Michael R. Laliberte CFO and Director
(b) Pheonix Investment Management, Inc. serves as investment adviser
to the Pheonix Management Fund. The description of Pheonix Investment
Management, Inc., under the Caption "Management - The Adviser" and "Management -
The Adviser" in the Prospectus and Statement of Additional Information,
constituting certain of Parts A and B, respectively, of this Registration
Statement, are incorporated by reference herein.
The address of Pheonix Investment Management, Inc. is: 2090 Palm
Beach Lakes Blvd., Suite 700, West Palm Beach, FL 33409. The following are the
directors and officers of Pheonix Investment Management, Inc., including any
business connections of a substantial nature that they have had in the past two
years. Unless other indicated, the address of any other business connection is
also: 2090 Palm Beach Lakes Blvd., Suite 700, West Palm Beach, FL 33409. .
NAME TITLE BUSINESS CONNECTION
- ---- ----- -------------------
Michael W. Burnick President and CEO Pheonix Investments, Inc.
Michael S. Robinson Executive Vice-president Contractors Success Group,
Brentwood, TN ; Service Experts,
Inc., Brentwood, TN
Thomas D. Abrams Director Pheonix Investments, Inc. (2/97-
Present); Capital Research Corp.
(2/97 - 6/98)
(c) Yale Research and Management Co., Inc., serves as investment adviser to
MegaTrends Funds. The description of Yale Research and Management Co., Inc.,
under the Caption "Management - The Adviser" and "Management - The Advisor" in
the Prospectus and Statement of additional Information, constituting certain of
Parts A and B, respectively, of this Registration Statement, are incorporated by
reference herein.
The address of YaleFunds Management and Research Co. is 3980 Howard
Hughes Parkway, Suite 400, Las Vegas, NV 89109. The following are the directors
and officers YaleFunds Management and Research Co., including any business
connections of a substantial nature that they have had in the past two years.
Unless other
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<PAGE>
indicated, the address of any other business connection is also 3980 Howard
Hughes Parkway, Suite 400, Las Vegas, NV 89109.
NAME TITLE BUSINESS CONNECTION
- ---- ----- -------------------
Yi Yale Wang President American Fronteer Financial
Corp. 3800 Paradise Road, Las
Begas, NV 89109 (3/98 - 8/99);
Presidential Brokerage, Inc. 3753
Howard Hughes Pkwy, Las Vegas,
NV 89109 (3/97 - 3/98)
(d) Kaminski Asset Management, Inc., serves as investment adviser to Kaminski
Poland Fund. The description of Kaminski Asset Management, Inc., under the
Caption "Management - The Adviser" and "Management - The Advisor" in the
Prospectus and Statement of additional Information, constituting certain of
Parts A and B, respectively, of this Registration Statement, are incorporated by
reference herein.
The address of Kaminski Asset Management Co. is 210 North 2nd Street,
Suite 050, Minneaspolis, Minnesota. The following are the directors and officers
of Kaminski Asset Management, Inc., including any business connections of a
substantial nature that they have had in the past two years. Unless other
indicated, the address of any other business connection is also 210 North 2nd
Street, Suite 050, Minneaspolis, Minnesota.
NAME TITLE BUSINESS CONNECTION
- ---- ----- -------------------
ITEM 27. PRINCIPAL UNDERWRITERS.
(a) The principal underwriter of the Company's shares, AmeriMutual
Funds Distributors, Inc., currently acts as a principal underwriter,
depositor or investment adviser for the following other investment
companies:
Millennium Capital Trust
AmeriMutual Funds Distributors, Inc.,. is registered with the
Securities and Exchange Commission as a broker-dealer and is a member
of the National Association of Securities Dealers. AmeriMutual Funds
Distributors, Inc., is an indirect wholly-owned subsidiary of Orbitex
Financial Services Group, Inc.
(b) The following table contains information with respect to each
director, officer or partner AmeriMutual Funds Distributors, Inc.,.:
NAME AND PRINCIPAL POSITIONS AND OFFICES WITH POSITIONS AND OFFICES WITH
BUSINESS ADDRESS* UNDERWRITER REGISTRANT
---------------- ----------- ----------
Christopher Klutch Director, President, CEO None
Vali Nasr General Principal, Financial None
and Operations Principal
Nathan O'Steen Vice President, General None
Principal, Chief Compliance
Officer
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Richard E. Stierwalt Director, Chief Operations None
Officer
* Unless otherwise indicated, all addresses are: The Hauppauge Corporate Center,
150 Motor Parkway, Hauppauge, NY 11788
(c) Not Applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The accounts and records of the Company required to be maintained by Section
31(a) of the 1940 Act and the rules promulgated thereunder are located, in whole
or in part, at the office of the Administrator, American Data Services, Inc.,
The Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, New York 11788 and
custodial records which are maintained at the offices of the [Custodian to be
Determined and Identified in Subsequent Amendment].
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS.
Not applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Hauppauge and State of New York, on the 1st day of February, 2000.
QUESTAR FUNDS, INC.
By:/S/ MICHAEL MIOLA
-----------------------
Michael Miola, President
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the date indicated.
/S/ MICHAEL MIOLA Director, Chairman of the February 2, 2000
- -----------------
Michael Miola Board and Chief Executive Officer
/S/ DANIEL ABRAMSON Director February 2, 2000
- -------------------
Daniel Abramson
/S/ PHILIP CAPALONGO Director February 2, 2000
- --------------------
Philip Capalongo
/S/ ANTHONY HERTL Director February 2, 2000
- -----------------
Anthony Hertl
/S/ DONALD SMITH Director February 2, 2000
- ----------------
Donald Smith
The above persons signing as Directors are all of the members of the Company's
Board of Directors.
