NEWPOINT GOVERNMENT
MONEY MARKET FUND
SEMI-ANNUAL REPORT
MAY 31, 1995
A Diversified Portfolio of Newpoint Funds
an Open-End, Management Investment Company
FEDERATED SECURITIES CORP.
- ---------------------------------------------
Distributor
Cusip 735686107
G00580-03 (7/95)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Shareholder's Report of the Newpoint
Government Money Market Fund for the six-month period ending May 31, 1995. This
report provides you with complete financial information for the fund, including
an investment review by the portfolio manager, a list of investments for the
fund, and the financial statements.
The fund is an excellent way to earn daily income from your investment dollars.
And since the fund invests only in short-term U.S. government securities that
are guaranteed for prompt payment of principal and interest, you can rest easy
knowing that your money will be there when you need it.
Please note the following highlights from the last six-month reporting period.*
The fund paid shareholders dividends of $1.5 million, or $0.03 per share. Assets
in the fund amounted to $62.7 million at the end of the reporting period.
Thank you for your confidence in the Newpoint Government Money Market Fund as a
way to put your money to work. We will continue to keep you informed on your
investment, and welcome your comments and questions.
Sincerely,
Edward C. Gonzales
President
June 15, 1995
* Performance quoted represents past performance. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
The money markets have been wrought with constant change for the past year as
the Federal Reserve Bank Chairman Greenspan increased short-term rates to stave
off inflation before it could gain momentum. The last move, raising the Fed
discount rate to six percent, came in February of this year. After being shunned
for two years, money market funds have become an attractive investment
alternative to other fixed income assets as yields have followed the moves of
the Fed. A surprisingly strong drop in intermediate and long-term interest rates
this year, resulting in relative flattening of the yield curve, magnified this
phenomenon. Money market rates have been very steady, at just under six percent
so far this year, and the yield curve has been flat, meaning an investor can
earn almost the same yield on the money market fund as bonds, without the
associated volatility.
To make the most of a flat yield curve, the Fund has just under half its assets
in overnight repurchase agreements which carry an attractive yield. The rest of
the portfolio is laddered in agency discount notes which yield a higher return
than their treasury counterparts. The average maturity of the fund has been
pegged at 40-60 days. In this way the fund maximizes yield to shareholders while
providing regular opportunities for reinvestment. As always, we continue to
monitor the interest rate environment closely and stand prepared to invest the
Newpoint Government Money Market Fund's portfolio to optimize yield within the
high quality standards of the Fund.
Kathleen E. Wells
Trust Officer
of FIRSTMERIT First National Bank
NEWPOINT GOVERNMENT MONEY MARKET FUND
(FORMERLY, PORTAGE GOVERNMENT MONEY MARKET FUND)
PORTFOLIO OF INVESTMENTS
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS--55.7%
- ------------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK--11.3%
----------------------------------------------------------------------
$ 7,080,000 5.47%-5.70%, 6/1/1995-9/1/1995 $ 7,081,309
---------------------------------------------------------------------- -----------
FEDERAL FARM CREDIT BANK-DISCOUNT NOTE--4.7%
----------------------------------------------------------------------
3,000,000 5.87%, 6/27/1995 2,987,282
---------------------------------------------------------------------- -----------
FEDERAL HOME LOAN BANK-DISCOUNT NOTES--25.3%
----------------------------------------------------------------------
16,000,000 5.86%-6.50%, 6/2/1995-10/20/1995 15,858,215
---------------------------------------------------------------------- -----------
FEDERAL HOME LOAN MORTGAGE CORPORATION--9.6%
----------------------------------------------------------------------
6,000,000 7.24%, 2/5/1996 6,015,298
---------------------------------------------------------------------- -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION-DISCOUNT NOTE--4.8%
----------------------------------------------------------------------
3,000,000 5.86%, 6/16/1995 2,992,675
---------------------------------------------------------------------- -----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 34,934,779
---------------------------------------------------------------------- -----------
*REPURCHASE AGREEMENTS--44.2%
- ------------------------------------------------------------------------------------------
12,752,000 Merrill Lynch, Pierce, Fenner & Smith, Inc., 6.00%, dated 5/31/1995,
due 6/1/1995 12,752,000
----------------------------------------------------------------------
5,000,000 Sanwa-BGK Securities, Inc., 6.00%, dated 5/31/1995, due 6/1/1995 5,000,000
----------------------------------------------------------------------
10,000,000 Smith Barney, Inc., 6.00%, dated 5/31/1995, due 6/1/1995 10,000,000
---------------------------------------------------------------------- -----------
TOTAL REPURCHASE AGREEMENTS 27,752,000
---------------------------------------------------------------------- -----------
TOTAL INVESTMENTS, AT AMORTIZED COST $62,686,779+
---------------------------------------------------------------------- -----------
</TABLE>
+ Also represents cost for federal tax purposes.
* Repurchase agreements are fully collateralized by U.S. Treasury Obligations
based on market prices at the date of the portfolio.
Note: The categories of investments are shown as a percentage of net assets
($62,729,030) at May 31, 1995.
(See Notes which are an integral part of the Financial Statements)
NEWPOINT GOVERNMENT MONEY MARKET FUND
(FORMERLY, PORTAGE GOVERNMENT MONEY MARKET FUND)
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------
Investments in repurchase agreements $27,752,000
- -------------------------------------------------------------------
Investments in other securities 34,934,779
- ------------------------------------------------------------------- -----------
Total investments in securities, at amortized cost and value $62,686,779
- ---------------------------------------------------------------------------------
Cash 381
- ---------------------------------------------------------------------------------
Income receivable 282,509
- ---------------------------------------------------------------------------------
Deferred expenses 4,120
- --------------------------------------------------------------------------------- -----------
Total assets 62,973,789
- ---------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------
Income distribution payable 220,436
- -------------------------------------------------------------------
Payable for shares redeemed 1,413
- -------------------------------------------------------------------
Accrued expenses 22,910
- ------------------------------------------------------------------- -----------
Total liabilities 244,759
- --------------------------------------------------------------------------------- -----------
Net Assets for 62,729,030 shares outstanding $62,729,030
- --------------------------------------------------------------------------------- -----------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
($62,729,030 / 62,729,030 shares outstanding) $1.00
- --------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NEWPOINT GOVERNMENT MONEY MARKET FUND
(FORMERLY, PORTAGE GOVERNMENT MONEY MARKET FUND)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest $1,782,058
- ---------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------
Investment advisory fee $152,191
- ----------------------------------------------------------------------
Administrative personnel and services fee 45,657
- ----------------------------------------------------------------------
Custodian fees 13,790
- ----------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 21,625
- ----------------------------------------------------------------------
Directors'/Trustees' fees 2,841
- ----------------------------------------------------------------------
Auditing fees 9,257
- ----------------------------------------------------------------------
Legal fees 4,244
- ----------------------------------------------------------------------
Portfolio accounting fees 21,141
- ----------------------------------------------------------------------
Share registration costs 15,307
- ----------------------------------------------------------------------
Printing and postage 5,880
- ----------------------------------------------------------------------
Insurance premiums 2,550
- ----------------------------------------------------------------------
Miscellaneous 4,322
- ---------------------------------------------------------------------- --------
Total expenses 298,805
- ----------------------------------------------------------------------
Deduct--Waiver of investment advisory fee 60,876
- ---------------------------------------------------------------------- --------
Net expenses 237,929
- --------------------------------------------------------------------------------- ----------
Net investment income $1,544,129
- --------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NEWPOINT GOVERNMENT MONEY MARKET FUND
(FORMERLY, PORTAGE GOVERNMENT MONEY MARKET FUND)
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
MAY 31, 1995 NOVEMBER 30,
(UNAUDITED) 1994
------------ -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------
Net investment income $ 1,544,129 $ 1,986,954
- ------------------------------------------------------------ ----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------
Distributions from net investment income:
- ------------------------------------------------------------
Trust Shares (1,544,129) (1,947,673)
- ------------------------------------------------------------
Investment Shares -- (39,281)
- ------------------------------------------------------------ ----------- ------------
Change in net assets resulting from distributions to
shareholders (1,544,129) (1,986,954)
- ------------------------------------------------------------ ----------- ------------
SHARE TRANSACTIONS--
- ------------------------------------------------------------
Proceeds from sale of shares 91,825,697 174,363,488
- ------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of distributions declared 255,119 265,707
- ------------------------------------------------------------
Cost of shares redeemed (93,220,003) (169,972,634)
- ------------------------------------------------------------ ----------- ------------
Change in net assets resulting from share transactions (1,139,187) 4,656,561
- ------------------------------------------------------------ ----------- ------------
Change in net assets (1,139,187) 4,656,561
- ------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------
Beginning of period 63,868,217 59,211,656
- ------------------------------------------------------------ ----------- ------------
End of period $62,729,030 $ 63,868,217
- ------------------------------------------------------------ ----------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NEWPOINT GOVERNMENT MONEY MARKET FUND
(FORMERLY, PORTAGE GOVERNMENT MONEY MARKET FUND)
FINANCIAL HIGHLIGHTS--TRUST SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
MAY 31, 1995 ----------------------------------------
(UNAUDITED) 1994 1993 1992 1991(A)
------------ ----- ----- ----- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------
Net investment income 0.03 0.03 0.02 0.03 0.04
- --------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------
Distributions from net investment
income (0.03) (0.03) (0.02) (0.03) (0.04)
- -------------------------------------- -------- ----- ----- ----- ------
NET ASSET VALUE, END OF PERIOD $ 1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------------- -------- ----- ----- ----- ------
TOTAL RETURN (B) 2.56% 3.25% 2.47% 3.23% 3.87%
- --------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------
Expenses 0.78%(c) 0.77% 0.74% 0.73% 0.57%(c)
- --------------------------------------
Net investment income 5.07%(c) 3.24% 2.44% 3.21% 5.26%(c)
- --------------------------------------
Expense waiver/reimbursement (d) 0.20%(c) 0.20% 0.20% 0.20% 0.26%(c)
- --------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------
Net assets, end of period (000
omitted) $62,729 $63,868 $48,897 $54,111 $64,140
- --------------------------------------
</TABLE>
(a) Reflects operations for the period from March 11, 1991 (date of initial
public investment) to November 30, 1991. For the period from start of
business, December 20, 1990, to March 10, 1991, net investment income per
share aggregating $0.0136 per share ($1,346) was distributed to Federated
Administrative Services.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
As of February 1, 1994, Investment Shares were no longer offered and ceased to
exist. Prior to that date, the Fund had offered two classes of shares, known as
Trust Shares and Investments Shares.
(See Notes which are an integral part of the Financial Statements)
NEWPOINT GOVERNMENT MONEY MARKET FUND
(FORMERLY, PORTAGE GOVERNMENT MONEY MARKET FUND)
FINANCIAL HIGHLIGHTS--INVESTMENT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
MAY 31, 1995 ------------------------------------------
(UNAUDITED) 1994(A) 1993 1992 1991(B)
------------ ------- ----- ----- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD -- $1.00 $1.00 $1.00 $1.00
- ------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------
Net investment income -- 0.004 0.02 0.03 0.04
- ------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------
Distributions from net investment income -- (0.004) (0.02) (0.03) (0.04)
- ------------------------------------------ -------- ------- ----- ----- ------
NET ASSET VALUE, END OF PERIOD -- $1.00 $1.00 $1.00 $1.00
- ------------------------------------------ -------- ------- ----- ----- ------
TOTAL RETURN (C) -- 0.40% 2.47% 3.23% 3.87%
- ------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------
Expenses -- 0.79% 0.74% 0.73% 0.57%(d)
- ------------------------------------------
Net investment income -- 2.37% 2.44% 3.13% 5.26%(d)
- ------------------------------------------
Expense waiver/reimbursement (e) -- 0.45% 0.45% 0.46% 0.51%(d)
- ------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------
Net assets, end of period (000 omitted) $0 $0 $10,315 $14,114 $7,933
- ------------------------------------------
</TABLE>
(a) Reflects operations from December 1, 1993 to January 31, 1994.
(b) Reflects operations for the period from March 11, 1991 (date of initial
public investment) to November 30, 1991. For the period from start of
business, December 20, 1990, to March 10, 1991, net investment income per
share aggregating $0.0136 per share ($1,346) was distributed to Federated
Administrative Services.
(c) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(d) Computed on an annualized basis.
(e) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
As of February 1, 1994, Investment Shares were no longer offered and ceased to
exist. Prior to that date, the Fund had offered two classes of shares, known as
Trust Shares and Investments Shares.
(See Notes which are an integral part of the Financial Statements)
NEWPOINT GOVERNMENT MONEY MARKET FUND
(FORMERLY, PORTAGE GOVERNMENT MONEY MARKET FUND)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Newpoint Funds (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end management investment company. The
Trust consists of two diversified portfolios. The financial statements included
herein present only those of Newpoint Government Money Market Fund (the "Fund").
The financial statements of the other portfolio are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
As of February 1, 1994, Investment Shares were no longer offered and ceased to
exist. Prior to that date, the Funds had offered two classes of shares (Trust
Shares and Investment Shares). Investment Shares were identical in all respects
to Trust Shares, except that Investment Shares were sold pursuant to a
Distribution Plan adopted in accordance with the Act's Rule 12b-1.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards established or reviewed by the Board of Trustees (the
"Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less
than the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its taxable income.
Accordingly, no provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At May 31, 1995, capital paid in aggregated $62,729,030.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
TRUST SHARES MAY 31, 1995 NOVEMBER 30, 1994
- --------------------------------------------------------- ------------ -----------------
<S> <C> <C>
Shares sold 91,825,697 171,031,425
- ---------------------------------------------------------
Shares issued in payment of dividends declared 255,119 246,984
- ---------------------------------------------------------
Shares redeemed (93,220,003) (156,307,374)
- --------------------------------------------------------- ----------- ---------------
Net change resulting from Trust Share transactions (1,139,187) 14,971,035
- --------------------------------------------------------- ----------- ---------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
INVESTMENT SHARES MAY 31, 1995* NOVEMBER 30, 1994
- -------------------------------------------------------- ------------- -----------------
<S> <C> <C>
Shares sold -- 3,332,063
- --------------------------------------------------------
Shares issued in payment of dividends declared -- 18,723
- --------------------------------------------------------
Shares redeemed -- (13,665,260)
- -------------------------------------------------------- ------------ ---------------
Net change resulting from Investment Share transactions -- (10,314,474)
- -------------------------------------------------------- ------------ ---------------
Net change resulting from Fund share transactions (1,139,187) 4,656,561
- -------------------------------------------------------- ------------ ---------------
</TABLE>
*As of February 1, 1994, Investment Shares were no longer offered and ceased to
exist.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--FirstMerit First National Bank, the Fund's investment
adviser (the "Adviser"), receives for its services an annual investment advisory
fee equal to .50 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive a portion of its fee. The Adviser can modify or
terminate the voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust for the period. FAS may
voluntarily choose to waive a portion of its fee. FAS can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT AND PORTFOLIO ACCOUNTING FEES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The fee is based on the size, type, and number of accounts and
transactions made by shareholders.
FServ also maintains the Fund's accounting records for which it receives a fee.
The fee is based on the level of the Fund's average net assets for the period,
plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses ($114,169) were initially borne
by FAS. The Fund has agreed to reimburse FAS at an annual rate of .005 of 1% of
average daily net assets for organizational expenses, until either expenses
initially borne by FAS are fully reimbursed or the expiration of five years from
January 8, 1991 (the date the Fund became effective), whichever occurs earlier.
For the six months ended May 31, 1995, the Fund paid $1,335 pursuant to this
agreement.
GENERAL--Certain of the Officers of the Trust are Officers and Directors or
Trustees of the above companies.
TRUSTEES OFFICERS
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Edward C. Gonzales
William J. Copeland President and Treasurer
J. Christopher Donahue J. Christopher Donahue
James E. Dowd Vice President
Lawrence D. Ellis, M.D. Richard B. Fisher
Edward L. Flaherty, Jr. Vice President
Edward C. Gonzales John W. McGonigle
Peter E. Madden Vice President and Secretary
Gregor F. Meyer Craig P. Churman
John E. Murray, Jr. Vice President and Assistant Treasurer
Wesley W. Posvar David M. Taylor
Marjorie P. Smuts Assistant Treasurer
S. Elliott Cohan
Assistant Secretary
Mutual funds are not bank deposits or obligations of First National Bank of
Ohio, are not endorsed or guaranteed by First National Bank of Ohio, or any
bank, and are not obligations of, guaranteed by, or insured by the U.S.
government, the Federal Deposit Insurance Corporation, the Federal Reserve
Board, or any other government agency. Investment in mutual funds involves
investment risk, including possible loss of principal. Although money market
funds seek to maintain a stable net asset value of $1.00 per share, there is no
assurance that they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds' prospectus, which contains facts
concerning its objective and policies, management fees, expenses and other
information.
NEWPOINT EQUITY FUND
SEMI-ANNUAL REPORT
MAY 31, 1995
A Diversified Portfolio of Newpoint Funds
an Open-End, Management Investment Company
FEDERATED SECURITIES CORP.
- ---------------------------------------------
Distributor
Cusip 735686305
G01234-01 (7/95)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Shareholder's Report of the Newpoint
Equity Fund for the six-month period ending May 31, 1995. This report provides
you with complete financial information for the fund, including an investment
review by the portfolio manager, a list of investments for the fund, and the
financial statements.
The fund paid shareholders dividends of over $99,000, or $0.06 per share. Assets
in the fund grew to $20.9 million at the end of the reporting period.*
Thank you for your confidence in the Newpoint Equity Fund as a way to put the
stock market to work for you. We will continue to keep you informed on your
investment, and welcome your comments and questions.
Sincerely,
Edward C. Gonzales
President
July 15, 1995
* Performance quoted represents past performance. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
The stock market performance for the first half of 1995 has been very strong
with the S&P 500 and Dow Jones Industrial average advancing 17%.* All industrial
groups have been participating in the advance to varying degrees, but technology
has been leading the pack. The micro-computer chip is the driving force behind
this group's year-to-date price leading performance. The power of the micro-
computer chip has been doubling every 18 months and the price has been dropping
50% over the same time frame. The PC is becoming ubiquitous. Even small
companies can afford PCs. Service and industrial productivity have benefited
from the enhancing power of the PC; and the PC is quickly changing all work into
knowledge work.
Capital spending is becoming the dominant economic force driving our economy and
the dominant theme of the stock market. It seems that each decade is dominated
by a theme. By overweighting your investment portfolio to reflect the decade's
dominate theme your portfolio's performance may be enhanced. In the 1960's,
technology dominated the stock market. In the 1970's, the baton was passed to
the energy sector. The 1980's were dominated by brand-name consumer companies.
The capital spending boom centered on technology will soon broaden out to
include many industrial groups. Increased productivity will create demand for
industrial materials such as steel, aluminum and cement as well as machinery,
equipment, and communications. Increased capacity results in increased
production which require more trucks, airplanes, and railroad cars to deliver
the new production. The ripple effect through our economy of increased
productivity from technology should translate into the decade's major investment
theme: capital spending.
Our portfolio is currently overweighted in technology and capital goods. We feel
this is the best long-term strategy for our fund.
Wesley C. Meinerding
Vice President & Trust Officer
of FIRSTMERIT First National Bank
* These indices are unmanaged.
NEWPOINT EQUITY FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--88.2%
- --------------------------------------------------------------------------------------
BASIC INDUSTRY--11.0%
-------------------------------------------------------------------
8,000 Aluminium Company of America $ 372,000
-------------------------------------------------------------------
4,000 Dow Chemical Co. 293,500
-------------------------------------------------------------------
1,900 duPont (E.I.) deNemours & Co. 128,962
-------------------------------------------------------------------
8,000 Eastman Chemical Co. of Wisconsin 480,000
-------------------------------------------------------------------
4,500 Englehard Corp. 187,313
-------------------------------------------------------------------
2,000 International Paper Co. 157,250
-------------------------------------------------------------------
3,400 Louisiana Pacific Corp. 75,650
-------------------------------------------------------------------
1,500 Monsanto Co. 124,875
-------------------------------------------------------------------
3,000 Morton International, Inc. 95,250
-------------------------------------------------------------------
30,000 Santa Fe Pacific Gold Corp. 375,000
------------------------------------------------------------------- -----------
Total 2,289,800
------------------------------------------------------------------- -----------
CAPITAL GOODS--7.9%
-------------------------------------------------------------------
1,900 Caterpillar, Inc. 114,475
-------------------------------------------------------------------
3,000 Deere & Co. 259,500
-------------------------------------------------------------------
2,000 Dover Corp. 131,250
-------------------------------------------------------------------
3,100 General Electric Co. 179,800
-------------------------------------------------------------------
1,000 Grainger W W, Inc. 59,875
-------------------------------------------------------------------
15,000 * Ionics, Inc. 412,500
-------------------------------------------------------------------
2,000 Parker Hannifin Corp. 114,250
-------------------------------------------------------------------
6,000 Premier Industrial Corp. 150,750
-------------------------------------------------------------------
3,000 Westinghouse Electric Corp. 43,500
-------------------------------------------------------------------
7,000 WMX Technologies, Inc. 190,750
------------------------------------------------------------------- -----------
Total 1,656,650
------------------------------------------------------------------- -----------
</TABLE>
NEWPOINT EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
CAPITAL GOODS TECHNOLOGY--21.1%
-------------------------------------------------------------------
5,000 AMP, Inc. $ 213,125
-------------------------------------------------------------------
3,000 Apple Computer 124,687
-------------------------------------------------------------------
3,000 Automatic Data Processing, Inc. 186,750
-------------------------------------------------------------------
3,500 Avnet, Inc. 159,250
-------------------------------------------------------------------
3,500 Boeing Co. 206,063
-------------------------------------------------------------------
7,000 * Compaq Computer Corp. 273,875
-------------------------------------------------------------------
4,000 Diebold, Inc. 166,500
-------------------------------------------------------------------
5,000 General Motors Corp. 212,500
-------------------------------------------------------------------
4,000 Hewlett Packard Co. 264,500
-------------------------------------------------------------------
6,000 Intel Corp. 673,500
-------------------------------------------------------------------
6,000 * Microsoft Corp. 508,125
-------------------------------------------------------------------
2,000 Minnesota Mining & Manufacturing Co. 119,750
-------------------------------------------------------------------
6,000 Motorola, Inc. 359,250
-------------------------------------------------------------------
2,700 Raytheon Co. 209,250
-------------------------------------------------------------------
4,000 * Silicon Graphics, Inc. 155,500
-------------------------------------------------------------------
6,000 * Storage Technology Corp. 128,250
-------------------------------------------------------------------
3,000 United Technologies Corp. 227,625
-------------------------------------------------------------------
2,000 Xerox Corp. 226,750
------------------------------------------------------------------- -----------
Total 4,415,250
------------------------------------------------------------------- -----------
CONSUMER CYCLICAL--6.4%
-------------------------------------------------------------------
4,000 Armstrong World Industries, Inc. 206,500
-------------------------------------------------------------------
4,300 Corning, Inc. 137,600
-------------------------------------------------------------------
2,000 Eastman Kodak Co. 120,750
-------------------------------------------------------------------
3,700 General Motors Corp. 177,600
-------------------------------------------------------------------
3,500 Nike, Inc. 276,062
-------------------------------------------------------------------
</TABLE>
NEWPOINT EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
CONSUMER CYCLICAL--CONTINUED
-------------------------------------------------------------------
2,000 Penney J. C., Inc. $ 94,250
-------------------------------------------------------------------
2,000 Sears Roebuck & Co. 112,750
-------------------------------------------------------------------
8,700 Wal Mart Stores, Inc. 217,500
------------------------------------------------------------------- -----------
Total 1,343,012
------------------------------------------------------------------- -----------
CONSUMER GROWTH STAPLES--16.9%
-------------------------------------------------------------------
4,000 * American Home Products Corp. 294,500
-------------------------------------------------------------------
5,000 Amgen, Inc. 362,500
-------------------------------------------------------------------
4,000 Coca-Cola Co. 247,500
-------------------------------------------------------------------
3,500 * Columbia/HCA Healthcare Corp. 143,062
-------------------------------------------------------------------
2,100 Darden Restaurants, Inc. 23,100
-------------------------------------------------------------------
2,000 Eli Lilly & Co. 149,250
-------------------------------------------------------------------
4,000 Gillette Co. 337,500
-------------------------------------------------------------------
5,000 Limited, Inc. 111,250
-------------------------------------------------------------------
8,000 McDonalds Corp. 303,000
-------------------------------------------------------------------
4,500 Medtronic, Inc. 338,625
-------------------------------------------------------------------
3,400 * Merck & Co., Inc. 160,225
-------------------------------------------------------------------
16,600 Perrigo Co. 182,600
-------------------------------------------------------------------
2,000 Pfizer, Inc. 176,250
-------------------------------------------------------------------
1,700 * Schering Plough Corp. 133,875
-------------------------------------------------------------------
9,000 Thermo Cardiosystems, Inc. 340,875
-------------------------------------------------------------------
6,000 Time Warner, Inc. 237,750
------------------------------------------------------------------- -----------
Total 3,541,862
------------------------------------------------------------------- -----------
CONSUMER STAPLES--6.1%
-------------------------------------------------------------------
3,100 CPC International, Inc. 188,325
-------------------------------------------------------------------
2,100 General Mills, Inc. 108,937
-------------------------------------------------------------------
3,400 Heinz (H.J.) Co. 153,850
-------------------------------------------------------------------
2,500 Procter & Gamble Co. 179,688
-------------------------------------------------------------------
</TABLE>
NEWPOINT EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
CONSUMER STAPLES--CONTINUED
-------------------------------------------------------------------
6,000 Rubbermaid, Inc. $ 191,250
-------------------------------------------------------------------
9,500 Sara Lee Corp. 264,813
-------------------------------------------------------------------
4,000 Walgreen Co. 192,500
------------------------------------------------------------------- -----------
Total 1,279,363
------------------------------------------------------------------- -----------
CREDIT CYCLICAL--1.1%
-------------------------------------------------------------------
4,000 Masco Corp. 115,500
-------------------------------------------------------------------
3,100 Sherwin Williams Co. 113,925
------------------------------------------------------------------- -----------
Total 229,425
------------------------------------------------------------------- -----------
ENERGY--4.8%
-------------------------------------------------------------------
2,800 Ashland Coal, Inc. 74,900
-------------------------------------------------------------------
3,400 Exxon Corp. 242,675
-------------------------------------------------------------------
11,000 Horsham Corp. 151,250
-------------------------------------------------------------------
4,000 Mobil Corp. 401,500
-------------------------------------------------------------------
1,000 Royal Dutch Petroleum Co. 126,750
------------------------------------------------------------------- -----------
Total 997,075
------------------------------------------------------------------- -----------
FINANCE--7.4%
-------------------------------------------------------------------
3,000 American International Group, Inc. 341,250
-------------------------------------------------------------------
2,600 Banc One Corp. 90,350
-------------------------------------------------------------------
6,000 Federal Home Loan Mtg Corp. 408,750
-------------------------------------------------------------------
3,400 NationsBank Corp. 192,525
-------------------------------------------------------------------
8,800 PNC Bank Corp. 237,600
-------------------------------------------------------------------
10,000 Reliance Group Holdings, Inc. 63,750
-------------------------------------------------------------------
5,000 Salomon, Inc. 205,000
------------------------------------------------------------------- -----------
Total 1,539,225
------------------------------------------------------------------- -----------
</TABLE>
NEWPOINT EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
TRANSPORTATION--2.2%
-------------------------------------------------------------------
4,000 CSX Corp. $ 305,000
-------------------------------------------------------------------
10,000 * Southern Pacific Rail Corp. 158,750
------------------------------------------------------------------- -----------
Total 463,750
------------------------------------------------------------------- -----------
UTILITIES--3.3%
-------------------------------------------------------------------
4,000 * Airtouch Communications, Inc. 109,000
-------------------------------------------------------------------
3,000 Alltel Corp. 73,875
-------------------------------------------------------------------
4,000 Consolidated Natural Gas Co. 159,500
-------------------------------------------------------------------
5,000 MCI Communications Corp. 101,250
-------------------------------------------------------------------
3,000 * SBC Communications, Inc. 135,000
-------------------------------------------------------------------
4,000 Telefonos de Mexico SA, ADR 112,500
------------------------------------------------------------------- -----------
Total 691,125
------------------------------------------------------------------- -----------
TOTAL COMMON STOCKS (IDENTIFIED COST $16,242,449) 18,446,537
------------------------------------------------------------------- -----------
**REPURCHASE AGREEMENT--10.8%
- --------------------------------------------------------------------------------------
$2,250,000 Merrill Lynch, Pierce, Fenner & Smith, Inc., 6.0%, dated 5/31/1995,
due 6/1/1995 (AT AMORTIZED COST) 2,250,000
------------------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST $18,492,449) $20,696,537+
------------------------------------------------------------------- -----------
</TABLE>
* Non-income producing securities
** The repurchase agreement is fully collateralized by U.S. Treasury obligations
based on market prices at the date of the portfolio.
+ The cost of investments for federal tax purposes amounts to $18,492,449. The
net unrealized appreciation of investments on a federal tax cost basis
amounts to $2,204,088, which is comprised of $2,531,204 appreciation and
$327,116 depreciation at May 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($20,903,202) at May 31, 1995.
(See Notes which are an integral part of the Financial Statements)
NEWPOINT EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------
Investment in repurchase agreement $ 2,250,000
- -----------------------------------------------------------------
Investments in securities 18,446,537
- ----------------------------------------------------------------- -----------
Total Investments in securities, at value
(identified and tax cost $18,492,449) $20,696,537
- -------------------------------------------------------------------------------
Cash 786
- -------------------------------------------------------------------------------
Income receivable 45,223
- -------------------------------------------------------------------------------
Receivable for investments sold 173,500
- -------------------------------------------------------------------------------
Receivable for shares sold 14,700
- ------------------------------------------------------------------------------- -----------
Total assets 20,930,746
- -------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------
Accrued expenses 27,544
- ------------------------------------------------------------------------------- -----------
Net Assets for 1,855,463 shares outstanding $20,903,202
- ------------------------------------------------------------------------------- -----------
NET ASSETS CONSISTS OF:
- -------------------------------------------------------------------------------
Paid in capital $18,597,852
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments 2,204,088
- -------------------------------------------------------------------------------
Accumulated net realized gain on investments 100,825
- -------------------------------------------------------------------------------
Undistributed net investment income 437
- ------------------------------------------------------------------------------- -----------
Total Net Assets $20,903,202
- ------------------------------------------------------------------------------- -----------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- -------------------------------------------------------------------------------
Net Asset Value Per Share ($20,903,202 / 1,855,463 shares outstanding) $11.27
- ------------------------------------------------------------------------------- -----------
Offering Price Per Share (100/95.50 of $11.27)+ $11.80
- ------------------------------------------------------------------------------- -----------
</TABLE>
+ See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
NEWPOINT EQUITY FUND
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------
Interest $ 79,185
- -----------------------------------------------------------------------------------
Dividends 136,460
- ----------------------------------------------------------------------------------- ----------
Total income 215,645
- -----------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------
Investment advisory fee $ 63,526
- -----------------------------------------------------------------------
Administrative personnel and services fee 49,863
- -----------------------------------------------------------------------
Custodian fees 10,854
- -----------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 11,393
- -----------------------------------------------------------------------
Directors'/Trustees' fees 1,136
- -----------------------------------------------------------------------
Auditing fees 6,864
- -----------------------------------------------------------------------
Legal fees 3,060
- -----------------------------------------------------------------------
Portfolio accounting fees 21,798
- -----------------------------------------------------------------------
Share registration costs 10,344
- -----------------------------------------------------------------------
Printing and postage 4,082
- -----------------------------------------------------------------------
Insurance premiums 2,413
- -----------------------------------------------------------------------
Miscellaneous 2,599
- ----------------------------------------------------------------------- --------
Total expenses 187,932
- -----------------------------------------------------------------------
Deduct--
- -------------------------------------------------------------
Waiver of investment advisory fee $63,526
- -------------------------------------------------------------
Reimbursement of other operating expenses 2,008
- ------------------------------------------------------------- -------
Total waivers/reimbursements 65,534
- ----------------------------------------------------------------------- --------
Net expenses 122,398
- ----------------------------------------------------------------------------------- ----------
Net investment income 93,247
- ----------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------------------------------------
Net realized gain on investments 100,825
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation 2,465,478
- ----------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments 2,566,303
- ----------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $2,659,550
- ----------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NEWPOINT EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
MAY 31, 1995 NOVEMBER 30,
(UNAUDITED) 1994+
---------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------
Net investment income $ 93,247 $ 55,497
- -------------------------------------------------------
Net realized gain on investments ($100,825 net gain and
$0, respectively, as computed for federal tax purposes) 100,825 --
- -------------------------------------------------------
Net change in unrealized appreciation (depreciation) of
investments 2,465,478 (261,390)
- ------------------------------------------------------- -------------- -------------
Change in assets resulting from operations 2,659,550 (205,893)
- ------------------------------------------------------- -------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------
Distributions from net investment income (99,007) (49,300)
- ------------------------------------------------------- -------------- -------------
SHARE TRANSACTIONS--
- -------------------------------------------------------
Proceeds from sale of shares 6,825,018 11,906,802
- -------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of distributions declared -- --
- -------------------------------------------------------
Cost of shares redeemed (96,783) (37,185)
- ------------------------------------------------------- -------------- -------------
Change in net assets resulting from share
transactions 6,728,235 11,869,617
- ------------------------------------------------------- -------------- -------------
Change in net assets 9,288,778 11,614,424
- -------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------
Beginning of period 11,614,424 --
- ------------------------------------------------------- -------------- -------------
End of period (including undistributed net investment
income of $437 and $6,197, respectively) $ 20,903,202 $11,614,424
- ------------------------------------------------------- -------------- -------------
</TABLE>
+ For the period from August 30, 1994 (start of business) to November 30, 1994.
(See Notes which are an integral part of the Financial Statements)
NEWPOINT EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS PERIOD
ENDED ENDED
MAY 31, 1995 NOVEMBER 30,
(UNAUDITED) 1994(A)
------------ ------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.78 $10.00
- ----------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------
Net investment income 0.06 0.05
- ----------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.49 (0.23)
- ---------------------------------------------------------- ---------- ----------
Total from investment operations 1.55 (0.18)
- ----------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------
Distributions from net investment income (0.06) (0.04)
- ---------------------------------------------------------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $11.27 $ 9.78
- ---------------------------------------------------------- ---------- ----------
TOTAL RETURN (B) 15.92% (1.76%)
- ----------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------
Expenses 1.45%(c) 1.00%(c)
- ----------------------------------------------------------
Net investment income 1.10%(c) 2.36%(c)
- ----------------------------------------------------------
Expense waiver/reimbursement (d) 0.77%(c) 1.47%(c)
- ----------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------
Net assets, end of period (000 omitted) $20,903 $11,614
- ----------------------------------------------------------
Portfolio turnover 6% 0%
- ----------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from September 13, 1994 (date of initial
public investment) to November 30, 1994. For the period from August 30, 1994
(start of business) to September 12, 1994, the Fund had no investment
activity.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
NEWPOINT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Newpoint Funds (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end management investment company. The
Trust consists of two diversified portfolios. The financial statements included
herein present only those of Newpoint Equity Fund (the "Fund"). The financial
statements of the other portfolio are presented separately. The assets of each
portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on national securities exchanges. Short-term securities with
remaining maturities of sixty days or less at the time of purchase may be
valued at amortized cost, which approximates fair market value.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less
than the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
Interest income and expenses are accrued daily. Bond premium and discount,
if applicable, are amortized as required by the Internal Revenue Code, as
amended (the "Code").
NEWPOINT EQUITY FUND
- --------------------------------------------------------------------------------
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD ENDED
MAY 31, 1995 NOVEMBER 30, 1994*
- -------------------------------------------------------- ------------ ------------------
<S> <C> <C>
Shares sold 676,400 1,191,903
- --------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared -- --
- --------------------------------------------------------
Shares redeemed (9,088) (3,752)
- -------------------------------------------------------- ---------- --------------
Net change resulting from share transactions 667,312 1,188,151
- -------------------------------------------------------- ---------- --------------
</TABLE>
* For the period from August 30, 1994 (start of business) to November 30, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--FirstMerit First National Bank, the Fund's investment
adviser, (the "Adviser"), receives for its services an annual investment
advisory fee equal to .75 of 1% of the Fund's average daily net assets. The
Adviser may voluntarily choose to waive a portion of its fee and reimburse
certain operating expenses of the Fund. The Adviser can modify or terminate this
voluntary waiver and reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust for the period. FAS may
voluntarily choose to waive a portion of its fee.
NEWPOINT EQUITY FUND
- --------------------------------------------------------------------------------
TRANSFER AND DIVIDEND DISBURSING AGENT AND PORTFOLIO ACCOUNTING FEES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. This fee is based on the size, type, and number of accounts and
transactions made by shareholders.
FServ also maintains the Fund's accounting records for which it receives a fee.
The fee is based on the level of the Fund's average net assets for the period,
plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses ($35,000) were initially borne
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following September 3, 1994 (the date the Fund
became effective). For the six months ended May 31, 1995, the Fund paid $1,167
pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended May 31, 1995, were as follows:
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
PURCHASES $7,860,208
- -------------------------------------------------------------------------------- ----------
SALES $ 836,236
- -------------------------------------------------------------------------------- ----------
</TABLE>
TRUSTEES OFFICERS
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Edward C. Gonzales
William J. Copeland President and Treasurer
J. Christopher Donahue J. Christopher Donahue
James E. Dowd Vice President
Lawrence D. Ellis, M.D. Richard B. Fisher
Edward L. Flaherty, Jr. Vice President
Edward C. Gonzales John W. McGonigle
Peter E. Madden Vice President and Secretary
Gregor F. Meyer Craig P. Churman
John E. Murray, Jr. Vice President and Assistant Treasurer
Wesley W. Posvar David M. Taylor
Marjorie P. Smuts Assistant Treasurer
S. Elliott Cohan
Assistant Secretary
The shares offered by Newpoint Equity Fund are not deposits or obligations of
First National Bank of Ohio, or any bank, are not endorsed or guaranteed by
First National Bank of Ohio, or any bank, and are not obligations of, guaranteed
by, or insured by the U.S. government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other government agency.
Investment in these shares involves risk, including, the possible loss of
principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds' prospectus, which contains facts
concerning its objective and policies, management fees, expenses and other
information.
