1933 Act File No. 33-37993
1940 Act File No. 811-6224
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. 10 ...............
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
-
Amendment No. 9 ...............................
NEWPOINT FUNDS
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
X on January 31, 1996, pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
-
on pursuant to paragraph (a) of Rule 485.
Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of 1940,
and:
X filed the Notice required by that Rule on January 17, 1995; or
intends to file the Notice required by that Rule on or about
; or
------------
during the most recent fiscal year did not sell any securities pursuant
to Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to
Rule 24f-2(b)(2), need not file the Notice.
CROSS-REFERENCE SHEET
This Amendment to the Registration Statement relates to the NEWPOINT
FUNDS, which consists of two portfolios: (1) Newpoint Government Money
Market Fund and (2) Newpoint Equity Fund, and is comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page...............(1,2) Cover Page.
Item 2. Synopsis.................(1,2) Summary of Fund Expenses.
Item 3. Condensed Financial
Information..............(1) Financial Highlights; (1,2)
Performance Information.
Item 4. General Description of
Registrant...............(1,2) General Information; Investment
Information; Investment Objective;
Investment Policies; Investment
Limitations.
Item 5. Management of the Fund...(1,2) Newpoint Funds Information;
Management of the Newpoint Funds;
Distribution of Fund Shares;
Administration of the Fund; (2)
Expenses of the Fund; Brokerage
Transactions.
Item 6. Capital Stock and Other
Securities...............(1,2) Dividends; Capital Gains;
Shareholder Information; Voting Rights;
Massachusetts Partnership Law; Effect of
Banking Laws; Tax Information; Federal
Income Tax.
Item 7. Purchase of Securities Being
Offered..................(1,2) Net Asset Value; Investing in the
Fund; Share Purchases; Minimum Investment
Required; What Shares Cost; Systematic
Investment Program; Certificates and
Confirmations; (2) Eliminating or Reducing
the Sales Charge; Subaccounting Services.
Item 8. Redemption or Repurchase.(1,2) Redeeming Shares; Systematic
Withdrawal Program; Accounts with Low
Balances; (1) Through First National Bank
of Ohio; (2) Through First National Bank
of Ohio or FirstMerit Securities, Inc.;
Exchange Privilege; Exchange-by-Telephone.
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page...............(1,2) Cover Page.
Item 11. Table of Contents........(1,2) Table of Contents.
Item 12. General Information and
History..................(1,2) General Information About the Fund.
Item 13. Investment Objectives and
Policies.................(1,2) Investment Objective and Policies;
Investment Limitations.
Item 14. Management of the Fund...(1,2) Newpoint Funds Management.
Item 15. Control Persons and Principal
Holders of Securities....(1,2) Fund Ownership.
Item 16. Investment Advisory and Other
Services.................(1,2) Investment Advisory Services;
Administrative Services.
Item 17. Brokerage Allocation.....(1,2) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities...............Not applicable.
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered............(1,2) Purchasing Shares; Determining Net
Asset Value; Redeeming Shares.
Item 20. Tax Status...............(1,2) Tax Status.
Item 21. Underwriters.............(1) Distribution Plan (2) Distribution and
Shareholder Services Plans.
Item 22. Calculation of Performance
Data.....................(1,2) Yield; Performance Comparisons; (1)
Effective Yield; (2) Total Return;
Appendix.
Item 23. Financial Statements.....(1) Filed in Part A.
NEWPOINT GOVERNMENT MONEY MARKET FUND
(A PORTFOLIO OF NEWPOINT FUNDS)
PROSPECTUS
Newpoint Government Money Market Fund (the "Fund") is a diversified portfolio
of
Newpoint Funds (the "Trust"), an open-end management investment company (a
mutual fund). The Fund is a money market fund which invests in short-term U.S.
government securities to achieve stability of principal and current income
consistent with stability of principal.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
FIRSTMERIT CORP., FIRST NATIONAL BANK OF OHIO, OR ANY OF THEIR RESPECTIVE
SUBSIDIARIES OR AFFILIATES, ARE NOT ENDORSED OR GUARANTEED BY FIRSTMERIT
CORP.,
FIRST NATIONAL BANK OF OHIO, OR ANY OF THEIR RESPECTIVE SUBSIDIARIES OR
AFFILIATES, AND ARE NOT INSURED BY THE U.S. GOVERNMENT, FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER FEDERAL OR
STATE
GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE FUND ATTEMPTS TO MAINTAIN A STABLE
NET
ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE NO ASSURANCE THAT THE FUND WILL
BE
ABLE TO DO SO.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated January
31,
1996 with the Securities and Exchange Commission. The information contained in
the Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Statement of Additional Information,
or a paper copy of this prospectus, if you have received your prospectus
electronically, free of charge, by calling 1-800-235-4669. To obtain other
information or to make inquiries about the Fund, contact the Fund at the
address
listed in the back of 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.
Prospectus dated January 31, 1996
TABLE OF CONTENTS
- ------------------------------------------------------------------------------
- --
SUMMARY OF FUND EXPENSES
1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS
2
- ------------------------------------------------------
GENERAL INFORMATION
3
- ------------------------------------------------------
INVESTMENT INFORMATION
3
- ------------------------------------------------------
Investment Objective
3
Investment Policies
3
Investment Limitations
5
NEWPOINT FUNDS INFORMATION
6
- ------------------------------------------------------
Management of Newpoint Funds
6
Distribution of Fund Shares
7
Administration of the Fund
7
NET ASSET VALUE
7
- ------------------------------------------------------
INVESTING IN THE FUND
8
- ------------------------------------------------------
Share Purchases
8
Minimum Investment Required
8
What Shares Cost
8
Systematic Investment Program
8
Certificates and Confirmations
9
Dividends
9
Capital Gains
9
EXCHANGE PRIVILEGE
9
- ------------------------------------------------------
Exchange-By-Telephone
10
REDEEMING SHARES
10
- ------------------------------------------------------
Through First National Bank of Ohio or
FirstMerit Securities, Inc.
10
Systematic Withdrawal Program
12
Accounts with Low Balances
12
SHAREHOLDER INFORMATION
12
- ------------------------------------------------------
Voting Rights
12
EFFECT OF BANKING LAWS
12
- ------------------------------------------------------
TAX INFORMATION
13
- ------------------------------------------------------
Federal Income Tax
13
PERFORMANCE INFORMATION
13
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--INVESTMENT SHARES 15
- ------------------------------------------------------
FINANCIAL STATEMENTS
16
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 23
- ------------------------------------------------------
ADDRESSES
24
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- ------------------------------------------------------------------------------
- --
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............................................... None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)............................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase price
or redemption proceeds, as applicable)............................................ None
Redemption Fee (as a percentage of amount redeemed, if applicable).................. None
Exchange Fee........................................................................ None
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1).................................................... 0.30%
12b-1 Fee........................................................................... None
Other Expenses...................................................................... 0.44%
Total Fund Operating Expenses(2)............................................... 0.74%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary waiver
at any time at its sole discretion. The maximum management fee is 0.50%.
(2) The Total Fund Operating Expenses would have been 0.95% absent the
voluntary
waiver of a portion of the management fee.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS
AND
EXPENSES, SEE "NEWPOINT FUNDS INFORMATION." WIRE-TRANSFERRED REDEMPTIONS OF
LESS
THAN $5,000 MAY BE SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 invest-
ment, assuming (1) 5% annual return and (2) redemption
at the end of each time period. The Fund charges no
redemption fees....................................... $8 $24 $42 $ 93
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
NEWPOINT GOVERNMENT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
- --
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 23.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
--------------------------------------------------------
1995 1994(D) 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 0.05 0.03 0.02 0.03 0.04
- -------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------
Distributions from net investment
income (0.05) (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) 5.24% 3.25 % 2.47% 3.23% 3.87%
- -------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------
Expenses 0.74% 0.77 % 0.74% 0.73% 0.57%*
- -------------------------------------
Net investment income 5.12% 3.24 % 2.44% 3.21% 5.26%*
- -------------------------------------
Expense waiver/reimbursement (c) 0.20% 0.20 % 0.20% 0.20% 0.26%*
- -------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------
Net assets, end of period (000
omitted) $99,674 $63,868 $48,897 $54,111 $64,140
- -------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from March 11, 1991 (date of initial
public investment) to November 30, 1991. For the period from the start of
business, December 20, 1990, to March 10, 1991, net investment income
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) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(d) As of February 4, 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 Investment Shares.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- ------------------------------------------------------------------------------
- --
Newpoint Funds were established as a Massachusetts business trust under a
Declaration of Trust dated November 12, 1990. Effective January 31, 1995, the
Trust changed its name from "Portage Funds" to "Newpoint Funds," and the Fund
changed its name from "Portage Government Money Market Fund" to "Newpoint
Government Money Market Fund." The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests
in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Trust
offers
shares in two portfolios: Newpoint Equity Fund and the Fund. This prospectus
relates only to the Fund. Prior to February 1, 1994, the Fund offered two
classes of shares, called Trust Shares and Investment Shares. Effective
February
1, 1994, the Fund no longer offered separate classes of shares.
The Fund is designed for customers of First National Bank of Ohio and its
affiliates as a convenient means of participating in a professionally managed,
diversified portfolio limited to short-term U.S. government securities. A
minimum initial investment of $1,000 is required. The Fund attempts to
stabilize
the value of a share at $1.00. Fund shares are currently sold and redeemed at
that price.
INVESTMENT INFORMATION
- ------------------------------------------------------------------------------
- --
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide stability of principal and
current income consistent with stability of principal. The investment
objective
cannot be changed without approval of shareholders. While there is no
assurance
that the Fund will achieve its investment objective, it endeavors to do so by
complying with the various requirements of Rule 2a-7 under the Investment
Company Act of 1940 which regulates money market mutual funds and by following
the investment policies described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in a portfolio of
short-term U.S. government securities. The average maturity of U.S. government
securities in the Fund's portfolio, computed on a dollar weighted basis, will
be
90 days or less, and the Fund will invest only in securities with remaining
maturities of 13 months or less at the time of purchase by the Fund.
Unless indicated otherwise, the investment policies of the Fund may be changed
by the Board of Trustees (the "Trustees") without the approval of
shareholders.
Shareholders will be notified before any material change in these policies
becomes effective.
ACCEPTABLE INVESTMENTS. The U.S. government securities in which the Fund
invests
are either issued or guaranteed by the U.S. government, its agencies, or
instrumentalities. These securities include, but are not limited to:
- direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
- notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as: the Farm Credits System, including the
National Bank for Cooperatives, Farm Credit Banks, and Banks for
Cooperatives; Farmers Home Administration; Federal Home Loan Banks;
- Federal Home Loan Mortgage Corporation; Federal National Mortgage
Association; Government National Mortgage Association; and Student Loan
Marketing Association.
Some obligations issued or guaranteed by agencies or instrumentalities of the
U.S. government, such as Government National Mortgage Association
participation
certificates, are backed by the full faith and credit of the U.S. Treasury. No
assurances can be given that the U.S. government will provide financial
support
to other agencies or instrumentalities, since it is not obligated to do so.
These instrumentalities are supported by:
- the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
- the discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
- the credit of the agency or instrumentality.
REPURCHASE AGREEMENTS. The U.S. government securities in which the Fund
invests
may be purchased pursuant to repurchase agreements. Repurchase agreements are
arrangements in which banks, broker/dealers, and other recognized financial
institutions sell U.S. government securities to the Fund and agree at the time
of sale to repurchase them at a mutually agreed upon time and price within one
year from the date of acquisition. The Fund or its custodian will take
possession of the securities subject to repurchase agreements and these
securities will be marked to market daily. To the extent that the original
seller does not repurchase the securities from the Fund, the Fund could
receive
less than the repurchase price on any sale of such securities. In the event
that
such a defaulting seller filed for bankruptcy or became insolvent, disposition
of such securities by the Fund might be delayed pending court action. The Fund
believes that under the regular procedures normally in effect for custody of
the
Fund's portfolio securities subject to repurchase agreements, a court of
competent jurisdiction would rule in favor of the Fund and allow retention or
disposition of such securities. The Fund will only enter into repurchase
agreements with banks and other recognized financial institutions, such as
broker/ dealers, which are found by the Fund's investment adviser, First
National Bank of Ohio (the "Adviser"), to be creditworthy.
REVERSE REPURCHASE AGREEMENTS. The Fund may also enter into reverse repurchase
agreements. These transactions are similar to borrowing cash. In a reverse
repurchase agreement the Fund transfers possession of a portfolio instrument
to
another person, such as a financial institution, broker, or dealer, in return
for a percentage of the instrument's market value in cash, and agrees that on
a
stipulated date in the future the Fund will repurchase the portfolio
instrument
by remitting the original consideration plus interest at an agreed upon rate.
When effecting reverse repurchase agreements, assets of the Fund, in a dollar
amount sufficient to make payment for the obligations to be purchased, are
segregated on the Fund's records at the trade date and maintained until the
transaction is settled.
During the period any reverse repurchase agreements are outstanding, but only
to
the extent necessary to assure completion of the reverse repurchase
agreements,
the Fund will restrict the purchase of
portfolio instruments to money market instruments maturing on or before the
expiration date of the reverse repurchase agreements.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or a long-term basis up
to one-third of the value of its total assets to broker/dealers, banks, or
other
institutional borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the
Adviser
has determined are creditworthy under guidelines established by the Trustees,
and will receive collateral in the form of cash or U.S. government securities
equal to at least 100% of the value of the securities loaned at all times.
There is the risk that when lending portfolio securities, the securities may
not
be available to the Fund on a timely basis and the Fund may, therefore, lose
the
opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase
securities
on a when-issued or delayed delivery basis. These transactions are
arrangements
in which the Fund purchases securities with payment and delivery scheduled for
a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the Adviser deems
it
appropriate to do so. In addition, the Fund may enter into transactions to
sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at
later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
INVESTMENT LIMITATIONS
The Fund will not:
- borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for a
percentage of its cash value with an agreement to buy it back on a set
date) or pledge securities except, under certain circumstances, the
Fund
may borrow money and engage in reverse repurchase agreements in amounts
up to one-third of the value of its total assets and pledge up to 15%
of
the value of its total assets to secure such borrowings.
The above limitation cannot be changed without shareholder approval. See
"Investment Objective and Policies" in the Statement of Additional
Information.
The following limitation, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in this limitation becomes effective.
The Fund will not:
- invest more than 10% of the value of its net assets in illiquid
securities, including repurchase agreements providing for settlement in
more than seven days after notice.
NEWPOINT FUNDS INFORMATION
- ------------------------------------------------------------------------------
- --
MANAGEMENT OF NEWPOINT FUNDS
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are
responsible for managing the Fund's business affairs and for exercising all of
the powers of the Trust except those reserved for the shareholders. The
Executive Committee of the Board of Trustees handles the Board's
responsibilities between meetings of the Board.
INVESTMENT ADVISER. Pursuant to an investment advisory contract with the
Trust,
investment decisions for the Fund are made by First National Bank of Ohio
subject to direction by the Trustees. The Adviser continually conducts
investment research and supervision for the Fund and is responsible for the
purchase or sale of portfolio instruments, for which it receives an annual fee
from the Fund.
Both the Fund and the Adviser have adopted strict codes of ethics governing
the
conduct of all employees who manage the Fund and its portfolio securities.
These
codes recognize that such persons owe a fiduciary duty to the Fund's
shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance
and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial
public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Board of Trustees,
and could result in severe penalties.
ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal
to 0.50 of 1% of the Fund's average daily net assets. The investment
advisory contract provides for the voluntary reimbursement of expenses by
the Adviser to the extent any Fund expenses exceed such lower expense
limitation as the Adviser may, by notice to the Fund, voluntarily declare
to be effective. The Adviser can terminate this voluntary reimbursement
of
expenses at any time at its sole discretion. The Adviser has undertaken
to
reimburse the Fund for operating expenses in excess of limitations
established by certain states.
ADVISER'S BACKGROUND. First National Bank of Ohio, a national banking
association formed in 1947, is a wholly-owned subsidiary of FirstMerit
Corp. (formerly known as "First Bancorporation of Ohio"). Through its
subsidiaries and affiliates, FirstMerit Corp. offers a full range of
financial services to the public, including commercial lending,
depository
services, cash management, brokerage services, retail banking, credit
card
services, mortgage banking, investment advisory services, and trust
services.
As of December 31, 1995, the Trust Division of First National Bank of
Ohio
had approximately $2.6 billion in assets under administration, of which
it
had investment discretion over $1.1 billion. First National Bank of Ohio
has served as the Fund's investment adviser since the Fund's inception.
As part of its regular banking operations, First National Bank of Ohio
may
make loans to public companies. Thus, it may be possible, from time to
time, for the Fund to hold or acquire the securities of issuers which are
also lending clients of First National Bank of Ohio. The lending
relationship will not be a factor in the selection of securities.
DISTRIBUTION OF FUND SHARES
Federated Securities Corp., Pittsburgh, Pennsylvania, is the principal
distributor for shares of the Fund. It is a Pennsylvania corporation organized
on November 14, 1969, and is the principal distributor for a number of
investment companies. Federated Securities Corp. is a subsidiary of Federated
Investors.
SHAREHOLDER SERVICING ARRANGEMENTS. The distributor may pay financial
institutions a fee with respect to the average net asset value of shares held
by
their customers for providing administrative services. This fee, if paid, will
be reimbursed by the Adviser and not the Fund.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, Pittsburgh,
Pennsylvania, a subsidiary of Federated Investors, provides administrative
personnel and services (including certain legal and financial reporting
services) necessary to operate the Fund. Federated Administrative Services
provides these at an annual rate as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY NET
ADMINISTRATIVE FEE ASSETS OF THE NEWPOINT FUNDS
-------------------------------- -----------------------------------
<S> <C>
.150 of 1% on the first $250 million
.125 of 1% on the next $250 million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$50,000
for the Fund. Federated Administrative Services may choose voluntarily to
waive
a portion of its fee.
NET ASSET VALUE
- ------------------------------------------------------------------------------
- --
The Fund attempts to stabilize the net asset value of its shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net
asset
value per share is determined by subtracting total liabilities from assets and
dividing the remainder by the number of shares outstanding. The Fund, of
course,
cannot guarantee that its net asset value will always remain at $1.00 per
share.
INVESTING IN THE FUND
- ------------------------------------------------------------------------------
- --
SHARE PURCHASES
Fund shares are sold on days on which the New York Stock Exchange and the
Federal Reserve Wire System are open for business. In connection with
qualified
account relationships in the Trust Department of First National Bank of Ohio,
Fund shares may be purchased by telephone through procedures established with
First National Bank of Ohio and its affiliates. Such procedures may include
arrangements under which certain accounts are swept periodically and amounts
exceeding an agreed-upon minimum are invested automatically in the Fund.
Individual investors may place orders to purchase shares either by telephone
or
by mail. Texas residents should purchase shares of the Fund through Federated
Securities Corp. at 1-800-356-2805. The Fund reserves the right to reject any
purchase request.
THROUGH FIRST NATIONAL BANK OF OHIO AND FIRSTMERIT SECURITIES, INC. Trust
customers placing an order to purchase shares of the Fund may open an account
by
calling First National Bank of Ohio at 216-384-7300. Information needed to
establish the account will be taken over the telephone.
Individual investors placing an order to purchase shares of the Fund may
telephone FirstMerit Securities, Inc. at 216-384-7230. An account may be
opened
by completing a new account application form available from FirstMerit
Securities, Inc., 4100 Embassy Parkway, Akron, Ohio 44333.
Payment may be made by either check, transfer from an Automated Clearing House
("ACH") member institution, federal funds or by debiting a customer's account
at
First National Bank of Ohio. Purchase orders must be received by 9:30 a.m.
(Eastern time). Payment is required before 3:00 p.m. (Eastern time) on the
same
business day in order to earn dividends for that day.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund is $1,000. Subsequent investments
may
be in amounts of $100 or more. The Fund may waive the initial minimum
investment
from time to time.
WHAT SHARES COST
Fund shares are sold at their net asset value next determined after an order
is
received. There is no sales load imposed by the Fund.
The net asset value is determined at 12:00 noon (Eastern time), 3:00 p.m.
(Eastern time), and 4:00 p.m. (Eastern time), Monday through Friday, except
on:
(i) days on which there are not sufficient changes in the value of the Fund's
portfolio securities that its net asset value might be materially affected;
(ii)
days during which no shares are tendered for redemption and no orders to
purchase shares are received; and (iii) the following holidays: New Year's
Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
SYSTEMATIC INVESTMENT PROGRAM
Shareholders who are individual investors and have opened an account may add
to
their investment on a regular basis in a minimum amount of $100. Under this
program, funds may be automatically withdrawn periodically from the
shareholder's checking account or by transfer from an ACH member
institution and invested in shares. A shareholder may apply for participation
in
this program through FirstMerit Securities, Inc.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless
requested
by contacting the Fund.
Monthly confirmations are sent to report transactions such as purchases and
redemptions as well as dividends paid during the month.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends will be reinvested on
payment dates in additional shares unless cash payments are requested by
writing
to the Fund or First National Bank of Ohio or FirstMerit Securities, Inc., as
appropriate. Share purchase settlements received by the transfer agent's bank
before 3:00 p.m. (Eastern time) earn dividends that day.
CAPITAL GAINS
Capital gains, if any, could result in an increase in dividends. Capital
losses,
if any, could result in a decrease in dividends. If for some extraordinary
reason the Fund realizes net long-term or short-term capital gains, it will
distribute them at least once every 12 months.
EXCHANGE PRIVILEGE
- ------------------------------------------------------------------------------
- --
A shareholder may exchange shares of Newpoint Government Money Market Fund for
shares of Newpoint Equity Fund by calling or sending a written request to
FirstMerit Securities, Inc. In addition, shares of Newpoint Government Money
Market Fund may also be exchanged for certain other funds distributed by
Federated Securities Corp. that are not advised by First National Bank of Ohio
("Federated Funds"). For further information on the availability of Federated
Funds for exchanges, call FirstMerit Securities, Inc. Exchanges are subject to
the minimum initial investment requirements of the fund into which the
exchange
is being made. Prior to any exchange, the shareholder must receive a copy of
the
current prospectus of the fund into which an exchange is to be effected.
Shares may be exchanged at net asset value, plus the difference between the
Fund's sales load (if any) already paid and any sales load of the fund into
which Fund shares are to be exchanged, if higher.
When an exchange is made from a fund with a sales load to a fund with no sales
load, the shares exchanged and additional shares which have been purchased by
reinvesting dividends on such shares retain the character of the exchanged
shares for purposes of exercising further exchange privileges; thus, an
exchange
of such shares for shares of a fund with a sales load would be at net asset
value.
An excessive number of exchanges may be disadvantageous to the Trust.
Therefore,
the Trust, in addition to its right to reject any exchange, reserves the right
to modify or terminate the exchange privilege of any shareholder who makes
more
than six exchanges of shares of the Fund in a year, or three in a calendar
quarter. Shareholders would be notified prior to any modification or
termination.
The exchange privilege is available to shareholders residing in any state in
which the fund shares being acquired may legally be sold. Upon receipt of
proper
instructions and all necessary supporting documents, Fund shares submitted for
exchange will be redeemed at the next-determined net asset value.
Written exchange instructions may require a signature guarantee. Exercise of
this privilege is treated as a sale for federal income tax purposes and,
depending on the circumstances, a short or long-term capital gain or loss may
be
realized. The exchange privilege may be terminated at any time. Shareholders
will be notified of the termination of the exchange privilege. A shareholder
may
obtain further information on the exchange privilege by calling FirstMerit
Securities, Inc. at 216-384-7230.
EXCHANGE-BY-TELEPHONE
Instructions for exchanges between portfolios which are part of the Newpoint
Funds may be given by telephone to FirstMerit Securities, Inc. at 216-384-
7230.
Shares may be exchanged by telephone only between fund accounts having
identical
shareholder registrations.
Orders for exchanges received prior to 3:30 p.m. (Eastern time) on any day
that
the Fund is open for business will be executed as of the close of business
that
day. Orders for exchanges received after 3:30 p.m. (Eastern time) on any
business day will be executed at the close of the next business day. The
telephone exchange privilege may be modified or terminated at any time.
Shareholders will be notified of such modification or termination.
Telephone exchange instructions may be recorded. If reasonable procedures are
not followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
REDEEMING SHARES
- ------------------------------------------------------------------------------
- --
The Fund redeems shares at their net asset value next determined after First
National Bank of Ohio receives the redemption request. Redemptions will be
made
on days on which the Fund computes its net asset value. Redemption requests
cannot be executed on days on which the New York Stock Exchange is closed or
on
federal holidays when wire transfers are restricted. Requests for redemption
can
be made in person or by telephone for Trust customers. Individual investors
can
make requests for redemption in person, by telephone or by mail through
FirstMerit Securities, Inc.
THROUGH FIRST NATIONAL BANK OF OHIO OR FIRSTMERIT SECURITIES, INC.
BY TELEPHONE. A shareholder who is a Trust customer of First National Bank of
Ohio may redeem shares of the Fund by telephoning First National Bank of Ohio
at
216-384-7300. A shareholder who is an individual investor/customer of
FirstMerit
Securities, Inc. may redeem shares by telephoning 216-384-7230. For calls
received by FirstMerit Securities, Inc. before 9:30 a.m. (Eastern time),
proceeds will either be wired the same day to the shareholder's account at
First
National Bank of Ohio, transferred through ACH to a member institution, or a
check will be sent to the address of record. Those shares will not be entitled
to the dividend declared on the day the redemption request was received. In no
event will proceeds be sent more than seven days after a proper request for
redemption has been received. An authorization form permitting the Fund to
accept telephone requests must first
be completed. Authorization forms and information on this service are
available
from FirstMerit Securities, Inc. Telephone redemption instructions may be
recorded.
In the event of drastic economic or market changes, a shareholder may
experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption should be utilized, such as a written request to
Federated
Services Company or FirstMerit Securities, Inc.
If, at any time, the Fund shall determine it necessary to terminate or modify
this method of redemption, shareholders would be promptly notified.
If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.
BY MAIL. Shares may also be redeemed by sending a written request to
FirstMerit
Securities, Inc. Call FirstMerit Securities, Inc. for specific instructions
before redeeming by letter. The shareholder will be asked to provide in the
request his name, the Fund name, his account number, and the share or dollar
amount requested. If share certificates have been issued, they must be
properly
endorsed and should be sent by registered or certified mail with the written
request.
SIGNATURES. Shareholders requesting a redemption of any amount to be sent to
an
address other than that on record with the Fund or a redemption payable other
than to the shareholder of record must have their signatures guaranteed by:
- a trust company or commercial bank whose deposits are insured by the
Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
- a savings bank or savings and loan association whose deposits are
insured
by the Savings Association Insurance Fund ("SAIF"), which is
administered
by the FDIC; or
- any other "eligible guarantor institution," as defined in the
Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day, but in
no
event more than seven days, after receipt of a proper written redemption
request.
BY WRITING A CHECK. At the shareholder's request, Federated Services Company
will establish a checking account for redeeming shares. For further
information,
contact FirstMerit Securities, Inc.
With a Fund checking account, shares may be redeemed simply by writing a check
for $50 or more. The redemption will be made at the net asset value on the
date
that the check is presented to the Fund. A check may not be written to close
an
account. If a shareholder wishes to redeem shares and have the proceeds
available, a check may be written and negotiated through the shareholder's
bank.
Checks should never be sent to Federated Services Company or State Street to
redeem shares. Canceled checks are sent to the shareholder each month upon
request.
SYSTEMATIC WITHDRAWAL PROGRAM
If a shareholder's account has a value of at least $10,000, a Systematic
Withdrawal Program may be established whereby automatic redemptions are made
from the account and transferred electronically to any commercial bank,
savings
bank, or credit union that is an ACH member. A shareholder may apply for
participation in this program through FirstMerit Securities, Inc.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $1,000 due to
shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- ------------------------------------------------------------------------------
- --
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders of the Fund for vote. All shares in
the
Trust have equal voting rights, except that in matters affecting a particular
Fund only shares of that Fund are entitled to vote.
As a Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust or Fund's operation and for the election of Trustees
under
certain circumstances. As of January 11, 1996, Parcol & Co., First National
Bank
of Ohio, Akron, Ohio, owned approximately 87,903,276 shares (81.17%) of the
Fund, and therefore may, for certain purposes, be deemed to control the Fund
and
be able to affect the outcome of certain matters presented for a vote of
shareholders.
Trustees may be removed by the shareholders at a special meeting. A special
meeting of the shareholders for this purpose shall be called by the Trustees
upon the written request of shareholders owning at least 10% of the
outstanding
shares of all series of the Trust entitled to vote.
EFFECT OF BANKING LAWS
- ------------------------------------------------------------------------------
- --
The Glass-Steagall Act and other banking laws and regulations presently
prohibit
a bank holding company registered under the Bank Holding Company Act of 1956
or
any affiliate thereof from sponsoring, organizing or controlling a registered,
open-end investment company continuously engaged in the issuance of its
shares,
and from issuing, underwriting, selling or distributing securities in general.
Such laws and regulations do not prohibit such a holding company or affiliate
from acting as investment adviser, transfer agent, or custodian to such an
investment company or from purchasing shares of such a company as agent for
and
upon the order of their customers. The Fund's investment adviser First
National
Bank of Ohio is subject to such banking laws and regulations.
First National Bank of Ohio believes, based on the advice of its counsel, that
it may perform the investment advisory services for the Fund contemplated by
its
advisory agreement with the Fund without violating the Glass-Steagall Act or
other applicable banking laws or regulations. Changes in either federal or
state
statutes and regulations relating to the permissible activities of banks and
their subsidiaries or affiliates, as well as further judicial or
administrative
decisions or interpretations of present or future statutes and regulations,
could prevent First National Bank of Ohio from continuing to perform all or a
part of the above services. If this happens, changes in the operation of the
Trust/Fund may occur, including the possible alteration or termination of any
automatic or other share investment or redemption services then being
provided,
and the Trustees would consider alternative investment advisers and other
means
of continuing available investment services. It is not expected that
shareholders would suffer any adverse financial consequences as a result of
any
of these occurrences.
State securities laws governing the ability of depository institutions to act
as
underwriters or distributors of securities may differ from interpretations
given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.
TAX INFORMATION
- ------------------------------------------------------------------------------
- --
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements
of the Internal Revenue Code applicable to regulated investment companies and
to
receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax
on
any dividends and other distributions received. This applies whether dividends
are received in cash or as additional shares. The Fund will provide detailed
tax
information for reporting purposes.
Shareholders are urged to consult their own tax advisers regarding the status
of
their account under state and local tax laws.
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
- --
From time to time, the Fund advertises its yield and effective yield.
The yield of the Fund represents the annualized rate of income earned on an
investment in the Fund over a seven-day period. It is the annualized dividends
earned during the period on the investment, shown as a percentage of the
investment. The effective yield is calculated similarly to the yield, but,
when
annualized, the income earned by an investment in of the Fund is assumed to be
reinvested daily. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment.
Advertisements and other sales literature may also refer to total return.
Total
return represents the change, over a specified period of time, in the value of
an investment in the Fund after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed
as
a percentage.
From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Funds
performance to certain indices.
NEWPOINT GOVERNMENT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS--INVESTMENT SHARES
- ------------------------------------------------------------------------------
- --
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 23.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
--------------------------------------------
1994(D) 1993 1992 1991(A)
------- ------ ------ -------
<S> <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 0.00 4 0.02 0.03 0.04
- ------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------
Distributions from net investment income (0.00 4) (0.02) (0.03) (0.04)
- ------------------------------------------------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------ ------- ------ ------ ------
TOTAL RETURN (B) 0.40 % 2.47% 3.23% 3.87%
- ------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------
Expenses 0.79 %* 0.74% 0.73% 0.57%*
- ------------------------------------------------
Net investment income 2.37 %* 2.44% 3.13% 5.26%*
- ------------------------------------------------
Expense waiver/reimbursement (c) 0.45 %* 0.45% 0.46% 0.51%*
- ------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------
Net assets, end of period (000 omitted) $ 0 $10,315 $14,114 $7,933
- ------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from March 11, 1991 (date of initial
public investment) to November 30, 1991. For the period from the start of
business, December 20, 1990, to March 10, 1991, net investment income
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) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(d) Reflects operations for the period from December 1, 1993 to January 31,
1994.
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 Investment Shares.
(See Notes which are an integral part of the Financial Statements)
NEWPOINT GOVERNMENT MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- ------------------------------------------------------------------------------
- --
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
U.S. GOVERNMENT AGENCY--53.7%
- --------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK DISCOUNT NOTES--20.9%
------------------------------------------------------------------
$21,000,000 5.38%-5.54%, 12/27/1995-3/15/1996 $20,794,272
------------------------------------------------------------------ -----------
FEDERAL HOME LOAN MORTGAGE CORP.--6.0%
------------------------------------------------------------------
6,000,000 7.24%, 2/5/1996 6,004,055
------------------------------------------------------------------ -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION DISCOUNT NOTES--26.8%
------------------------------------------------------------------
27,000,000 5.42%-5.61%, 12/20/1995-5/15/1996 26,708,032
------------------------------------------------------------------ -----------
TOTAL U.S. GOVERNMENT AGENCY 53,506,359
------------------------------------------------------------------ -----------
(A)REPURCHASE AGREEMENTS--46.4%
- --------------------------------------------------------------------------------------
16,000,000 Merrill Lynch, Pierce, Fenner and Smith, Inc., 5.850%, dated
11/30/95, due 12/1/1995 16,000,000
------------------------------------------------------------------
15,280,000 National City Bank, 5.850% dated 11/30/1995, due 12/1/1995 15,280,000
------------------------------------------------------------------
15,000,000 Smith Barney, Inc., 5.850%, dated 11/30/1995, due 12/1/1995 15,000,000
------------------------------------------------------------------ -----------
TOTAL REPURCHASE AGREEMENTS 46,280,000
------------------------------------------------------------------ -----------
TOTAL INVESTMENTS AT AMORTIZED COST(B) $99,786,359
------------------------------------------------------------------ -----------
</TABLE>
(a) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($99,673,706) at November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
NEWPOINT GOVERNMENT MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- ------------------------------------------------------------------------------
- --
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in repurchase agreements $46,280,000
- ------------------------------------------------------------------
Investments in securities 53,506,359
- ------------------------------------------------------------------ -----------
Total investments, at amortized cost and value $ 99,786,359
- --------------------------------------------------------------------------------
Cash 316,199
- --------------------------------------------------------------------------------
Income receivable 149,173
- --------------------------------------------------------------------------------
Deferred expenses 588
- -------------------------------------------------------------------------------- ------------
Total assets 100,252,319
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Payable for shares redeemed 177,961
- ------------------------------------------------------------------
Income distribution payable 342,323
- ------------------------------------------------------------------
Accrued expenses 58,329
- ------------------------------------------------------------------ -----------
Total liabilities 578,613
- -------------------------------------------------------------------------------- ------------
Net Assets for 99,673,706 shares outstanding $ 99,673,706
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
($99,673,706 / 99,673,706 shares outstanding) $1.00
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NEWPOINT GOVERNMENT MONEY MARKET FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
- ------------------------------------------------------------------------------
- --
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest $4,033,382
- ---------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------
Investment advisory fee $ 343,660
- ---------------------------------------------------------------------
Administrative personnel and services fee 103,098
- ---------------------------------------------------------------------
Custodian fees 27,656
- ---------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 43,369
- ---------------------------------------------------------------------
Directors'/Trustees' fees 5,698
- ---------------------------------------------------------------------
Auditing fees 18,564
- ---------------------------------------------------------------------
Legal fees 8,512
- ---------------------------------------------------------------------
Portfolio accounting fees 42,398
- ---------------------------------------------------------------------
Share registration costs 30,697
- ---------------------------------------------------------------------
Printing and postage 11,793
- ---------------------------------------------------------------------
Insurance premiums 5,114
- ---------------------------------------------------------------------
Miscellaneous 8,668
- --------------------------------------------------------------------- ---------
Total expenses 649,227
- ---------------------------------------------------------------------
Waivers and reimbursements--
- ---------------------------------------------------------------------
Waiver of investment advisory fee (137,464)
- --------------------------------------------------------------------- ---------
Net expenses 511,763
- --------------------------------------------------------------------------------- ----------
Net investment income $3,521,619
- --------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NEWPOINT GOVERNMENT MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
- --
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------
Net investment income $ 3,521,619 $ 1,986,954
- ----------------------------------------------------------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------
Distributions from net investment income:
- -----------------------------------------------------------
Trust Shares (3,521,619 ) (1,947,673)
- -----------------------------------------------------------
Investment Shares -- (39,281)
- ----------------------------------------------------------- ------------ ------------
Change in net assets resulting from distributions to
shareholders (3,521,619 ) (1,986,954)
- ----------------------------------------------------------- ------------ ------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------
Proceeds from sale of shares 214,437,253 174,363,488
- -----------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of distributions declared 640,172 265,707
- -----------------------------------------------------------
Cost of shares redeemed (179,271,936 ) (169,972,634)
- ----------------------------------------------------------- ------------ ------------
Change in net assets resulting from share transactions 35,805,489 4,656,561
- ----------------------------------------------------------- ------------ ------------
Change in net assets 35,805,489 4,656,561
- -----------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------
Beginning of period 63,868,217 59,211,656
- ----------------------------------------------------------- ------------ ------------
End of period $ 99,673,706 $ 63,868,217
- ----------------------------------------------------------- ------------ ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NEWPOINT GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
- ------------------------------------------------------------------------------
- --
(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 portfolios, Newpoint Equity Fund and Newpoint Government
Money Market Fund. The financial statements included herein are only those of
Newpoint Government Money Market Fund (the "Fund"), a diversified portfolio.
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--The Fund uses the amortized cost method to value
its
portfolio securities 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 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--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 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 over 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). At
November 30, 1995, capital paid-in aggregated $99,673,706.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
TRUST SHARES NOVEMBER 30, 1995 NOVEMBER 30, 1994
- --------------------------------------------------- ----------------- -----------------
<S> <C> <C>
Shares sold 214,437,253 171,031,425
- ---------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 640,172 246,984
- ---------------------------------------------------
Shares redeemed (179,271,936) (156,307,374)
- --------------------------------------------------- --------------- ---------------
Net change resulting from Trust Share
transactions 35,805,489 14,971,035
- --------------------------------------------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
INVESTMENT SHARES NOVEMBER 30, 1995 NOVEMBER 30, 1994*
- -------------------------------------------------- ----------------- ------------------
<S> <C> <C>
Shares sold -- 3,332,063
- --------------------------------------------------
Shares issued to shareholders in payment of
distributions 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 35,805,489 4,656,561
- -------------------------------------------------- -------------- ---------------
</TABLE>
* For the period from December 1, 1993 to January 31, 1994. 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--First National Bank of Ohio, 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 this 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 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.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
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.
PORTFOLIO ACCOUNTING FEES--Federated Services Company maintains the Trust's
accounting records for which it receives a fee. The fee is based on the level
of
the Trust's average daily net assets for the period, plus out-of-pocket
expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $114,169 were borne
initially by FAS. The Fund has agreed to reimburse FAS for the organizational
expenses at an annual rate of .005 of 1% of average daily net assets until
expenses initially borne are fully reimbursed or the expiration of five years
after effective date, whichever occurs earlier. For the period ended November
30, 1995, the Fund paid $3,098 pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- ------------------------------------------------------------------------------
- --
To the Shareholders and Board of Trustees of
NEWPOINT FUNDS
(Newpoint Government Money Market Fund):
We have audited the accompanying statement of assets and liabilities of
Newpoint
Government Money Market Fund (an investment portfolio of Newpoint Funds, a
Massachusetts business trust), including the schedule of portfolio
investments,
as of November 30, 1995, the related statement of operations for the year then
ended, and the statement of changes in net assets and the financial highlights
(see pages 2 and 15 of the prospectus) for the periods presented. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on
a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian. An audit also
includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Newpoint Government Money Market Fund, an investment portfolio of Newpoint
Funds, as of November 30, 1995, the results of its operations for the year
then
ended, and the changes in net assets, and financial highlights for the periods
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN
LLP
Pittsburgh, Pennsylvania
January 12, 1996
ADDRESSES
- ------------------------------------------------------------------------------
- --
<TABLE>
<S> <C> <C>
Newpoint Government Money Market Fund
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Investment Adviser
First National Bank of Ohio 106 South Main Street
Akron, Ohio 44308-1444
- ------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ------------------------------------------------------------------------------------------------
</TABLE>
24
- ------------------------------------------------------------------------------
- --
- ------------------------------------------------------------------------------
- --
NEWPOINT GOVERNMENT
MONEY MARKET FUND
(A PORTFOLIO OF NEWPOINT FUNDS)
PROSPECTUS
An Open-end, Diversified
Management Investment Company
January 31, 1996
LOGO
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
CUSIP 651722100
0121703A (1/96)
NEWPOINT GOVERNMENT MONEY MARKET FUND
A PORTFOLIO OF NEWPOINT FUNDS
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of the Newpoint Government Money Market Fund (the "Fund") dated
January 31, 1996. This Statement is not a prospectus itself. To receive a
copy of the prospectus, write First National Bank of Ohio, 106 South Main
Street, Akron, Ohio 44308-1444.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated January 31, 1996
First National Bank of Ohio,
Investment Adviser
GENERAL INFORMATION ABOUT THE FUND1 COMPLIANCE 3
INVESTMENT OBJECTIVE AND POLICIES1 NEWPOINT FUNDS MANAGEMENT 3
TYPES OF INVESTMENTS 1 FUND OWNERSHIP 7
WHEN-ISSUED AND DELAYED DELIVERY TRUSTEES' COMPENSATION 8
TRANSACTIONS 1 TRUSTEE LIABILITY 9
REVERSE REPURCHASE AGREEMENTS 1 INVESTMENT ADVISORY SERVICES 8
LENDING OF PORTFOLIO SECURITIES 1
ADVISER TO THE FUND 8
INVESTMENT LIMITATIONS 1
ADVISORY FEES 8
FEDERATED SECURITIES CORP.
REGULAT Distributor
ORY A subsidiary of Federated Investors
OTHER SERVICES 9 BROKERAGE TRANSACTIONS 10
FUND ADMINISTRATION 9
CUSTODIAN AND PORTFOLIO PURCHASING SHARES 10
RECORDKEEPER 9
DISTRIBUTION PLAN 10
TRANSFER AGENT 9
CONVERSION TO FEDERAL FUNDS 10
INDEPENDENT PUBLIC ACCOUNTANTS 9
DETERMINING NET ASSET VALUE 10
USE OF THE AMORTIZED COST METHOD10
REDEEMING SHARES 11
REDEMPTION IN KIND 11
MASSACHUSETTS PARTNERSHIP LAW 12
TAX STATUS 12
THE FUND'S TAX STATUS 12
SHAREHOLDERS' TAX STATUS 12
YIELD 12
EFFECTIVE YIELD 13
PERFORMANCE COMPARISONS 13
GENERAL INFORMATION ABOUT THE FUND
The Fund is a portfolio in Newpoint Funds (the "Trust"), which was established
as a Massachusetts business trust under a Declaration of Trust dated November
12, 1990. Effective January 31, 1995, the Trust changed its name from "Portage
Funds" to "Newpoint Funds," and the Fund changed its name from "Portage
Government Money Market Fund" to "Newpoint Government Money Market Fund."
Prior to February 1, 1994, the Fund was offered in both a Trust Shares class
and an Investment Shares class. As of February 1, 1994, the Fund no longer
offered separate classes of shares.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to provide stability of principal and
current income consistent with stability of principal. This investment
objective cannot be changed without approval of shareholders.
TYPES OF INVESTMENTS
The Fund invests only in short-term U.S. government securities.
VARIABLE RATE U.S. GOVERNMENT SECURITIES
Some of the short-term U.S. government securities the Fund may purchase
carry variable interest rates. These securities have a rate of interest
subject to adjustment at least annually. This adjusted interest rate is
ordinarily tied to some objective standard, such as the 91-day U.S.
Treasury bill rate.
Variable interest rates will reduce the changes in the market value of
such securities from their original purchase prices. Accordingly, the
potential for capital appreciation or capital depreciation should not be
greater than the potential for capital appreciation or capital
depreciation of fixed interest rate U.S. government securities having
maturities equal to the interest rate adjustment dates of the variable
rate U.S. government securities.
The Fund may purchase variable rate U.S. government securities upon the
determination by the Board of Trustees (the "Trustees") that the interest
rate as adjusted will cause the instrument to have a current market value
that approximates its par value on the adjustment date.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price or yield for the Fund. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of the Fund sufficient
to make payment for the securities to be purchased are segregated on the
Fund's records at the trade date. These assets are marked to market daily and
are maintained until the transaction has been settled. The Fund does not
intend to engage in when-issued and delayed delivery transactions to an extent
that would cause the segregation of more than 20% of the total value of its
assets.
REVERSE REPURCHASE AGREEMENTS
The use of reverse repurchase agreements may enable the Fund to avoid selling
portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase agreements
does not ensure that the Fund will be able to avoid selling portfolio
instruments at a disadvantageous time.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be
valued daily and, should the market value of the loaned securities increase,
the borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the
option of the Fund or the borrower. The Fund may pay reasonable administrative
and custodial fees in connection with a loan and may pay a negotiated portion
of the interest earned on the cash or equivalent collateral to the borrower or
placing broker.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as may be necessary for
clearance of purchases and sales of securities.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to
one-third of the value of its total assets including the amount borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or
emergency measure or to facilitate management of the portfolio by
enabling the Fund to meet redemption requests when the liquidation of
portfolio securities is deemed to be inconvenient or disadvantageous. The
Fund will not purchase any securities while borrowings in excess of 5% of
the value of its total assets are outstanding.
RESTRICTED SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
securities subject to restrictions on resale under the Securities Act of
1933 except for certain restricted securities which meet criteria for
liquidity as established by the Trustees.
PLEDGING ASSETS
The Fund will not mortgage, pledge or hypothecate any assets, except to
secure permitted borrowings. In those cases, it may pledge assets having
a market value not exceeding the lesser of the dollar amounts borrowed or
15% of the value of total assets of the Fund at the time of the pledge.
UNDERWRITING
The Fund will not underwrite any issue of securities except as it may be
deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its investment
objective, policies, and limitations.
INVESTING IN REAL ESTATE
The Fund will not buy or sell real estate including limited partnership
interests, although it may invest in securities secured by real estate or
interests in real estate.
INVESTING IN COMMODITIES
The Fund will not buy or sell commodities, commodity contracts, or
commodities futures contracts.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except portfolio securities.
This shall not prevent the Fund from purchasing or holding bonds,
debentures, notes, certificates of indebtedness or other debt securities,
entering into repurchase agreements or engaging in other transactions
where permitted by its investment objective, policies and limitations or
the Trust's Declaration of Trust.
The above investment limitations cannot be changed without shareholder
approval. The following limitations, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any
material change in these limitations becomes effective.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities, including repurchase agreements providing for
settlement more than seven days after notice and certain restricted
securities determined by the Trustees not to be liquid.
DEALING IN PUTS AND CALLS
The Fund will not buy or sell puts, calls, straddles, spreads, or any
combination of these.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not purchase securities of other investment companies
except as part of a merger, consolidation, or other acquisition.
INVESTING IN MINERALS
The Fund will not purchase or sell, oil, gas, or other mineral
exploration or development programs, or leases.
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not
result in a violation of such restriction.
The Fund did not borrow money, issue senior securities, or pledge
securities in excess of 5% of the value of its net assets in the last
fiscal year and has no present intent to do so in the coming fiscal year.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than their fundamental investment limitations, as set forth in
this prospectus and Statement of Additional Information, in order to comply
with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940, (the "ICA"). In
particular, the Fund will comply with the various requirements of SEC Rule 2a-
7 under the ICA which regulates money market mutual funds. For example, with
limited exceptions, Rule 2a-7 prohibits the investment of more than 5% of a
fund's total assets in the securities of any one issuer, although the Fund's
investment limitation only requires such 5% diversification with respect to
75% of its assets. The Fund will invest more than 5% of its assets in any
one issuer only under the circumstances permitted by Rule 2a-7. The Fund will
also determine the effective maturity of its investments, as well as its
ability to consider a security as having received the requisite short-term
ratings by the rating agencies, according to Rule 2a-7. The Fund may change
these operational policies to reflect changes in the laws and regulations
without the approval of its shareholders.
NEWPOINT FUNDS MANAGEMENT
Officers and Trustees are listed with their addresses, principal occupations,
and present positions.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.;
Chief Executive Officer and Director, Trustee, or Managing General Partner of
the Funds. Mr. Donahue is the father of J. Christopher Donahue, Executive Vice
President of the Trust .
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's Hospital
of Pittsburgh; Director, Trustee, or Managing General Partner of the Funds;
formerly, Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; President, Northgate Village Development
Corporation; Partner or Trustee in private real estate ventures in Southwest
Florida; Director, Trustee, or Managing General Partner of the Funds;
formerly, President, Naples Property Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice Chairman and
Director, PNC Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes, Inc.
J. Christopher Donahue *
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.;
Trustee, Federated Administrative Services, Federated Services Company, and
Federated Shareholder Services; President or Executive Vice President of the
Funds; Director, Trustee, or Managing General Partner of some of the Funds.
Mr. Donahue is the son of John F. Donahue, Chairman of the Company.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director, Trustee,
or Managing General Partner of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, University of Pittsburgh;
Medical Director, University of Pittsburgh Medical Center - Downtown; Member,
Board of Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
Hospitals; Director, Trustee, or Managing General Partner of the Funds.
Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty; Director,
Eat'N Park Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Counsel, Horizon
Financial, F.A., Western Region.
Edward C. Gonzales *
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
President and Treasurer
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated
Research Corp., Federated Global Research Corp. and Passport Research, Ltd.;
Executive Vice President and Director, Federated Securities Corp.; Trustee,
Federated Services Company; Chairman, Treasurer, and Trustee, Federated
Administrative Services; Trustee or Director of some of the Funds; President,
Executive Vice President and Treasurer of some of the Funds.
Peter E. Madden
Seacliff
562 Bellevue Avenue
Newport, RI
Birthdate: March 16, 1942
Trustee
Consultant; State Representative, Commonwealth of Massachusetts; Director,
Trustee, or Managing General Partner of the Funds; formerly, President, State
Street Bank and Trust Company and State Street Boston Corporation.
Gregor F. Meyer
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or
Managing General Partner of the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director, Trustee or Managing General Partner of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., and U.S. Space Foundation; Chairman, Czecho Management Center;
Director, Trustee, or Managing General Partner of the Funds; President
Emeritus, University of Pittsburgh; founding Chairman, National Advisory
Council for Environmental Policy and Technology and Federal Emergency
Management Advisory Board.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/marketing consultant; Conference Coordinator, Non-profit
entities; Director, Trustee, or Managing General Partner of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President and Secretary
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Services Company; President and Trustee, Federated
Shareholder Services; Director, Federated Securities Corp.; Executive Vice
President and Secretary of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of
the Funds; Director or Trustee of some of the Funds.
David M. Taylor
Federated Investors Tower
Pittsburgh, PA
Birthdate: January 13, 1947
Treasurer
Senior Vice President and Trustee, Federated Investors; Vice President,
Federated Shareholder Services; Treasurer of some of the Funds.
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940, as amended.
@ Member of the Executive Committee. The Executive Committee of the Board of
Trustees handles the responsibilities of the Board of Trustees between
meetings of the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management Series;
Arrow Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; FTI Funds;
Federated ARMs Fund; Federated Equity Funds; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Master Trust; Federated
Municipal Trust; Federated Short-Term Municipal Trust; Federated Short-Term
U.S. Government Trust; Federated Stock Trust; Federated Tax-Free Trust;
Federated Total Return Series, Inc.; Federated U.S. Government Bond Fund;
Federated U.S. Government Securities Fund: 1-3 Years; Federated U.S.
Government Securities Fund: 3-5 Years; Federated U.S. Government Securities
Fund: 5-10 Years; First Priority Funds; Fixed Income Securities, Inc.;
Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress Municipal Income
Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S. Government Securities,
Inc.; Government Income Securities, Inc.; High Yield Cash Trust; Insurance
Management Series; Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Investment Series Trust; Liberty Equity Income
Fund, Inc.; Liberty High Income Bond Fund, Inc.; Liberty Municipal Securities
Fund, Inc.; Liberty U.S. Government Money Market Trust; Liberty Term Trust,
Inc. - 1999; Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed Series
Trust; Money Market Management, Inc.; Money Market Obligations Trust; Money
Market Trust; Municipal Securities Income Trust; Newpoint Funds; 111 Corcoran
Funds; Peachtree Funds; The Planters Funds; RIMCO Monument Funds; Star Funds;
The Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.;
Targeted Duration Trust; Tax-Free Instruments Trust; Trust for Financial
Institutions; Trust For Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; The Virtus Funds;
World Investment Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of January 6, 1996, the following shareholders of record owned 5% or more
of the outstanding shares of the Fund: Parcol and Co., Akron, OH, owned
approximately 87,903,276 shares (81.17%); and First National Bank of Ohio,
Akron, Ohio, owned approximately 5,837,002 shares (5.39%).
Trustees Compensation
NAME , AND AGGREGATE TOTAL COMPENSATION
POSITION WITH THE COMPENSATION FROM PAID TO THE TRUSTEES FROM THE
TRUST THE TRUST+ TRUST AND FUND COMPLEX **
John F. Donahue,
Chairman and Trustee $ -0- $ -0- for the Trust and
69 investment companies
Thomas G. Bigley,
Trustee $266 $24,991 for the Trust and
50 investment companies
John T. Conroy, Jr.,
Trustee $1,163.75 $136,100 for the Trust and
65 investment companies
William J. Copeland,
Trustee $1,163.75 $136,100 for the Trust and
65 investment companies
J. Christopher Donahue
Trustee $ $ for the Trust and
------- -------
investment companies
---
James E. Dowd,
Trustee $1,163.75 $136,100 for the Trust and
65 investment companies
Lawrence D. Ellis, M.D.,
Trustee $1,059.50 $123,600 for the Trust and
65 investment companies
Edward L. Flaherty, Jr.,
Trustee $1,163.75 $136,100 for the Trust and
65 investment companies
Edward C. Gonzales,
President and Trustee $ -0- $ -0- for the Trust and
18 investment companies
Peter E. Madden,
Trustee $899.50 $104,880 for the Trust and
65 investment companies
Gregor F. Meyer,
Trustee $1,059.50 $123,600 for the Trust and
65 investment companies
John E. Murray, Jr.
Trustee $ $ for the Trust and
------- -------
investment companies
---
Wesley W. Posvar,
Trustee $1,059.50 $123,600 for the Trust and
65 investment companies
Marjorie P. Smuts,
Trustee $1,059.50 $123,600 for the Trust and
65 investment companies
+The aggregate compensation is paid by the Trust, which is comprised of two
portfolios.
**Certain of the Trustees name as Trustees of some, but not all, of the
investment companies that comprise the Federated Funds Complex. In addition to
Messrs. John F. Donahue and Edward C. Gonzales, no other Officer of the Trust
received any compensation from the Trust.
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees will only be
liable for their own willful defaults. If reasonable care has been exercised
in the selection of officers, agents, employees, or investment advisers, a
Trustee shall not be liable for any neglect or wrong doing of any such person.
However, they are not protected against any liability to which they would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of
their office.
INVESTMENT ADVISORY SERVICES
ADVISER TO THE FUND
The Fund's investment adviser is First National Bank of Ohio (the "Adviser").
It is a wholly-owned subsidiary of FirstMerit Corp. Because of the internal
controls maintained by First National Bank of Ohio to restrict the flow of
non-public information, Fund investments are typically made without any
knowledge of First National Bank of Ohio's or its affiliates' lending
relationships with an issuer.
The Adviser shall not be liable to the Trust, the Fund or any shareholder of
the Fund for any losses that may be sustained in the purchase, holding, or
sale of any security or for anything done or omitted by it, except acts or
omissions involving willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by its contract with the
Trust.
ADVISORY FEES
For its advisory services, the Adviser receives an annual investment advisory
fee as described in the prospectus. For the fiscal years ended November 30,
1995, 1994, and 1993, the Adviser earned $343,660, $309,110, and $301,679
respectively, of which $137,464, $123,644, and $120,671, respectively, were
voluntarily waived.
STATE EXPENSE LIMITATIONS
The Adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses)
exceed 2 1/2% per year of the first $30 million of average net assets, 2%
per year of the next $70 million of average net assets, and 1 1/2% per
year of the remaining average net assets, the Adviser will reimburse the
Fund for its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this expense
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the Adviser will
be limited, in any single fiscal year, by the amount of the investment
advisory fee.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
OTHER SERVICES
FUND ADMINISTRATION
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee as
described in the prospectus. For the fiscal years ended November 30, 1995,
1994 and 1993, the Fund incurred costs for administrative services of
$103,098, $92,733, and $90,504, respectively.
CUSTODIAN. AND PORTFOLIO RECORDKEEPER
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for
the securities and cash of the Fund.
TRANSFER AGENT
Federated Services Company, Boston, MA, a subsidiary of Federated Investors,
is transfer agent and dividend disbursing agent for the Fund. It also provides
certain accounting and recordkeeping services with respect to the Fund's
portfolio investments.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Fund are Arthur Andersen LLP,
Pittsburgh, Pennsylvania.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the adviser looks for prompt execution of the order at
a favorable price. In working with dealers, the adviser will generally use
those who are recognized dealers in specific portfolio instruments, except
when a better price and execution of the order can be obtained elsewhere. The
adviser makes decisions on portfolio transactions and selects brokers and
dealers subject to guidelines established by the Trustees. The adviser may
select brokers and dealers who offer brokerage and research services. These
services may be furnished directly to the Fund or to the adviser and may
include: advice as to the advisability of investing in securities; security
analysis and reports; economic studies; industry studies; receipt of
quotations for portfolio evaluations; and similar services. Research services
provided by brokers and dealers may be used by the adviser or its affiliates
in advising the Fund and other accounts. To the extent that receipt of these
services may supplant services for which the adviser or its affiliates might
otherwise have paid, it would tend to reduce their expenses. The adviser and
its affiliates exercise reasonable business judgment in selecting brokers who
offer brokerage and research services to execute securities transactions. They
determine in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research services
provided.
Although investment decisions for the Fund are made independently from those
of the other accounts managed by the adviser, investments of the type the Fund
may make may also be made by those other accounts. When the Fund and one or
more other accounts managed by the adviser are prepared to invest in, or
desire to dispose of, the same security, available investments or
opportunities for sales will be allocated in a manner believed by the adviser
to be equitable to each. In some cases, this procedure may adversely affect
the price paid or received by the Fund or the size of the position obtained or
disposed of by the Fund. In other cases, however, it is believed that
coordination and the ability to participate in volume transactions will be to
the benefit of the Fund
PURCHASING SHARES
Shares are sold at their net asset value without a sales load on days the New
York Stock Exchange and Federal Reserve Wire System are open for business. The
procedure for purchasing shares of the Fund is explained in the prospectus
under "Investing in the Fund."
DISTRIBUTION PLAN
As mentioned earlier in this Statement of Additional Information, the Fund
had, prior to February 1, 1994, offered both an Investment Shares class and
Trust Shares class. With respect to the Investment Shares class of the Fund,
the Trust had adopted and implemented a Distribution Plan pursuant to Rule
12b-1 which was promulgated by the Securities and Exchange Commission pursuant
to the Investment Company Act of 1940.
For the fiscal years ended November 30, 1995, 1994 and 1993, Federated
Securities Corp. earned distribution fees of $43,369, $42,289, and $31,505,
respectively, of which $0, $4,069, and $31,505 were voluntarily waived.
CONVERSION TO FEDERAL FUNDS
It is the Fund's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be in
federal funds or be converted into federal funds. First National Bank of Ohio
and Federated Services Company act as the shareholder's agent in depositing
checks and converting them to federal funds.
DETERMINING NET ASSET VALUE
The Fund attempts to stabilize the value of a share at $1.00. The days on
which net asset value is calculated by the Fund is described in the
prospectus.
USE OF THE AMORTIZED COST METHOD
The Trustees have decided that the best method for determining the value of
portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization of
premium or accumulation of discount rather than at current market value. The
Fund's use of the amortized cost method of valuing portfolio instruments
depends on its compliance with certain conditions contained in Rule 2a-7 ("the
Rule") under the Investment Company Act of 1940, as amended. Under the Rule,
the Trustees must establish procedures reasonably designed to stabilize the
net asset value per share, as computed for purposes of distribution and
redemption, at $1.00 per share, taking into account current market conditions
and the Fund's investment objective.
MONITORING PROCEDURES
The Trustees' procedures include monitoring the relationship between the
amortized cost value per share and the net asset value per share based
upon available indications of market value. The Trustees will decide
what, if any, steps should be taken if there is a difference of more than
.5 of 1% between the two values. The Trustees will take any steps they
consider appropriate (such as redemption in kind or shortening the
average portfolio maturity) to minimize any material dilution or other
unfair results arising from differences between the two methods of
determining net asset value.
INVESTMENT RESTRICTIONS
The Rule requires that the Fund limit its investments to instruments
that, in the opinion of the Trustees, present minimal credit risks. The
Rule also requires the Fund to maintain a dollar weighted average
portfolio maturity (not more than 90 days) appropriate to the objective
of maintaining a stable net asset value of $1.00 per share. In addition,
no instrument with a remaining maturity of more than 13 months can be
purchased by the Fund.
Should the disposition of a portfolio security result in a dollar
weighted average portfolio maturity of more than 90 days, the Fund will
invest its available cash to reduce the average maturity to 90 days or
less as soon as possible.
The Fund may attempt to increase yield by trading portfolio securities to
take advantage of short-term market variations. This policy may, from
time to time, result in high portfolio turnover. Under the amortized cost
method of valuation, neither the amount of daily income nor the net asset
value is affected by any unrealized appreciation or depreciation of the
portfolio.
In periods of declining interest rates, the indicated daily yield on
shares of the Fund computed by dividing the annualized daily income on
the Fund's portfolio by the net asset value computed as above may tend to
be higher than a similar computation made by using a method of valuation
based upon market prices and estimates.
In periods of rising interest rates, the indicated daily yield on shares
of the Fund computed the same way may tend to be lower than a similar
computation made by using a method of calculation based upon market
prices and estimates.
REDEEMING SHARES
Shares are redeemed at the next computed net asset value after the First
National Bank of Ohio receives the redemption request. Redemption procedures
are explained in the prospectus under "Redeeming Shares." Redemption requests
cannot be executed on days on which the New York Stock Exchange is closed or
on federal holidays when wire transfers are restricted.
REDEMPTION IN KIND
The Trust has elected to be governed by Rule 18f-1 of the Investment Company
Act of 1940 under which the Trust is obligated to redeem shares for any one
shareholder in cash only up to the lesser of $250,000 or 1% of the Fund's net
asset value during any 90-day period.
Any redemption beyond this amount will also be in cash unless the Trustees
determine that payments should be in kind. In such a case, the Trust will pay
all or a portion of the remainder of the redemption in portfolio instruments,
valued in the same way as the Fund determines net asset value. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable.
Redemption in kind is not as liquid as a cash redemption. If redemption is
made in kind, shareholders receiving their securities and selling them before
their maturity could receive less than the redemption value of their
securities and could incur certain transaction costs.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust. To
protect shareholders of the Fund, the Trust has filed legal documents with
Massachusetts that expressly disclaim the liability of shareholders for such
acts or obligations of the Trust. These documents require notice of this
disclaimer to be given in each agreement, obligation, or instrument the Trust
or its Trustees enter into or sign on behalf of the Fund.
In the unlikely event a shareholder of the Fund is held personally liable for
the Trust's obligations, the Trust is required by the Declaration of Trust to
use its property to protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a shareholder
for any act or obligation of the Trust. Therefore, financial loss resulting
from liability as a shareholder will occur only if the Trust itself cannot
meet its obligations to indemnify shareholders and pay judgments against them
from its assets.
TAX STATUS
THE FUND'S TAX STATUS
The Fund will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment, the Fund must,
among other requirements:
o derive at least 90% of its gross income from dividends, interest, and
gains from the sale of securities;
o derive less than 30% of its gross income from the sale of securities held
less than three months;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income earned
during the year.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends received as cash
or additional shares. No portion of any income dividend paid by the Fund is
eligible for the dividends received deduction available to corporations. These
dividends, and any short-term capital gains, are taxable as ordinary income.
CAPITAL GAINS
Capital gains experienced by the Fund could result in an increase in
dividends. Capital losses could result in a decrease in dividends. If,
for some extraordinary reason, the Fund realizes net long-term capital
gains, it will distribute them at least once every 12 months.
YIELD
The Fund calculates its yield daily, based upon the seven days ending on the
day of the calculation, called the "base period." This yield is computed by:
o determining the net change in the value of a hypothetical account with a
balance of one share at the beginning of the base period, with the net
change excluding capital changes but including the value of any
additional shares purchased with dividends earned from the original one
share and all dividends declared on the original and any purchased
shares;
o dividing the net change in the account's value by the value of the
account at the beginning of the base period to determine the base period
return; and
o multiplying the base period return by (365/7).
To the extent that financial institutions and brokers/dealers charge fees in
connection with services provided in conjunction with an investment in the
Fund's shares, the performance will be reduced for those shareholders paying
those fees.
The yield for the Fund for the seven-day period ended November 30, 1995 was
5.20%.
EFFECTIVE YIELD
The Fund's effective yield is computed by compounding the unannualized base
period return by:
o adding 1 to the base period return;
o raising the sum to the (365/7)th power; and
o subtracting 1 from the result.
The Fund's effective yield for the seven-day period ended November 30, 1995
was 5.33%.
PERFORMANCE COMPARISONS
The Fund's performance depends upon such variables as:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested;
o changes in interest rates on money market instruments;
o changes in Fund expenses; and
o the relative amount of Fund cash flow.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance, investors
should consider all relevant factors such as the composition of any index
used, prevailing market conditions, portfolio compositions of other funds, and
methods used to value portfolio securities and compute offering price. The
financial publications and/or indices which the Fund uses in advertising may
include:
o DISCOUNT CORPORATION OF NEW YORK 30-DAY FEDERAL AGENCIES, for example, is
a weekly quote of the average daily offering price for selected federal
agency issues maturing in 30 days.
o SALOMON 30-DAY TREASURY BILL INDEX is a weekly quote of the most
representative yields for selected securities, issued by the U.S.
Treasury, maturing in 30 days.
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories
by making comparative calculations using total return. Total return
assumes the reinvestment of all income dividends and capital gains
distributions, if any. From time to time, the Fund will quote its Lipper
ranking in the "short-term U.S. government funds" category in advertising
and sales literature.
Advertisements and other sales literature for the Fund may refer to total
return. Total return is the historic change in the value of an investment in
the Fund based on the monthly reinvestment of dividends over a specified
period of time. The Fund may also advertise its performance compared to
federally insured bank products, such as savings accounts and certificates of
deposit.
0121703B (1/96)
- ------------------------------------------------------------------------------
- --
- ------------------------------------------------------------------------------
- --
NEWPOINT EQUITY FUND
(A PORTFOLIO OF NEWPOINT FUNDS)
PROSPECTUS
Newpoint Equity Fund (the "Fund") is a diversified portfolio in Newpoint Funds
(the "Trust"), an open-end management investment company (a mutual fund). The
investment objective of the Fund is to achieve growth of capital and income.
The
Fund pursues this investment objective by investing primarily in equity
securities of U.S. companies.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
FIRSTMERIT CORP., FIRST NATIONAL BANK OF OHIO, ANY OF THEIR RESPECTIVE
AFFILIATES OR SUBSIDIARIES, OR ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY
FIRSTMERIT CORP., FIRST NATIONAL BANK OF OHIO, ANY OF ITS AFFILIATES, OR ANY
BANK, AND ARE NOT INSURED BY THE U.S. GOVERNMENT, FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER FEDERAL OR STATE
GOVERNMENT
AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated January
31,
1996, with the Securities and Exchange Commission. The information contained
in
the Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Statement of Additional Information,
or a paper copy of this prospectus, if you have received your prospectus
electronically, free of charge, by calling 1-800-235-4669. To obtain other
information or to make inquiries about the Fund, contact the Fund at the
address
listed in the back of 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.
Prospectus dated January 31, 1996
TABLE OF CONTENTS
- ------------------------------------------------------------------------------
- --
SUMMARY OF FUND EXPENSES
1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS
2
- ------------------------------------------------------
GENERAL INFORMATION
3
- ------------------------------------------------------
INVESTMENT INFORMATION
3
- ------------------------------------------------------
Investment Objective
3
Investment Policies
3
Investment Limitations
8
NEWPOINT FUNDS INFORMATION
8
- ------------------------------------------------------
Management of Newpoint Funds
8
Distribution of Fund Shares
9
Administration of the Fund
10
Brokerage Transactions
11
Expenses of the Fund
11
NET ASSET VALUE
11
- ------------------------------------------------------
INVESTING IN THE FUND
11
- ------------------------------------------------------
Share Purchases
11
Minimum Investment Required
12
What Shares Cost
12
Eliminating or Reducing the Sales Load
13
Systematic Investment Program
14
Subaccounting Services
14
Certificates and Confirmations
14
Dividends and Capital Gains
15
EXCHANGE PRIVILEGE
15
- ------------------------------------------------------
Exchange-By-Telephone
16
REDEEMING SHARES
16
- ------------------------------------------------------
Through First National Bank of Ohio
or FirstMerit Securities, Inc.
16
Systematic Withdrawal Program
17
Accounts with Low Balances
17
SHAREHOLDER INFORMATION
18
- ------------------------------------------------------
Voting Rights
18
EFFECT OF BANKING LAWS
18
- ------------------------------------------------------
TAX INFORMATION
19
- ------------------------------------------------------
Federal Income Tax
19
State and Local Taxes
19
PERFORMANCE INFORMATION
19
- ------------------------------------------------------
FINANCIAL STATEMENTS
20
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 31
- ------------------------------------------------------
ADDRESSES
32
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- ------------------------------------------------------------------------------
- --
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................................................. 4.50%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)................................................. None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)............................... None
Redemption Fee (as a percentage of amount redeemed, if applicable).................... None
Exchange Fee.......................................................................... None
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1)...................................................... 0.23%
12b-1 Fee(2).......................................................................... 0.00%
Total Other Expenses.................................................................. 1.25%
Shareholder Services Fees(3)............................................ 0.00%
Total Fund Operating Expenses(4)............................................ 1.48%
</TABLE>
(1) The management fee of the Fund has been reduced to reflect the voluntary
waiver by the investment adviser. The adviser can terminate its voluntary
waiver
of fees at any time at its sole discretion. The maximum management fee is
0.75%.
(2) The Fund has no present intention of paying 12b-1 fees during the fiscal
year ending November 30, 1996. If the Fund were paying 12b-1 fees, the Fund
would be able to pay up to 0.25% of its average daily net assets for 12b-1
fees.
See "Fund Information."
(3) The maximum shareholder services fee is 0.25%.
(4) The total Fund Operating Expenses would have been 2.00% absent the
voluntary
waiver of a portion of the management fee.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS
AND
EXPENSES, SEE "NEWPOINT FUNDS INFORMATION" AND "INVESTING IN THE FUND."
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2)
redemption at the end of each time period. The Fund
charges no redemption fees............................ $ 59 $90 $ 122 $214
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
NEWPOINT EQUITY FUND
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
- --
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 31.
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
------------------
1995 1994**
------ -------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.78 $10.00
- -----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------
Net investment income 0.10 0.05
- -----------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 2.91 (0.23 )
- ----------------------------------------------------------------------- ------ ------
Total from investment operations 3.01 (0.18 )
- -----------------------------------------------------------------------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------
Distributions from net investment income (0.10) (0.04 )
- ----------------------------------------------------------------------- ------ ------
Total distributions (0.10) (0.04 )
- ----------------------------------------------------------------------- ------ ------
NET ASSET VALUE, END OF PERIOD $12.69 $ 9.78
- ----------------------------------------------------------------------- ------ ------
TOTAL RETURN (A) 30.97% (1.76 %)
- -----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------
Expenses 1.48% 1.00 %*
- -----------------------------------------------------------------------
Net investment income 0.88% 2.36 %*
- -----------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.52% 1.72 %*
- -----------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------
Net assets, end of period (000 omitted) $25,803 $11,614
- -----------------------------------------------------------------------
Portfolio turnover 35% 0 %
- -----------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
** 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.
(a) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(b) 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)
GENERAL INFORMATION
- ------------------------------------------------------------------------------
- --
Newpoint Funds were established as a Massachusetts business trust under a
Declaration of Trust dated November 12, 1990. Effective January 31, 1995, the
Trust changed its name from "Portage Funds" to "Newpoint Funds", and the Fund
changed its name from "Portage Equity Fund" to "Newpoint Equity Fund." The
Declaration of Trust permits the Trust to offer separate series of shares of
beneficial interest representing interests in separate portfolios of
securities.
The shares in any one portfolio may be offered in separate classes. This
prospectus relates only to that portfolio of the Trust known as the Newpoint
Equity Fund. The Trust, as of the date of this prospectus, offers shares in
one
other portfolio, the Newpoint Government Money Market Fund.
The Fund is designed for customers of First National Bank of Ohio and its
affiliates as a convenient means of accumulating an interest in a
professionally
managed, diversified portfolio consisting primarily of equity securities of
U.S.
companies. A minimum initial investment of $1,000 is required. Except as
otherwise noted in this prospectus, shares of the Fund are sold at net asset
value plus an applicable sales load and redeemed at net asset value.
INVESTMENT INFORMATION
- ------------------------------------------------------------------------------
- --
INVESTMENT OBJECTIVE
The investment objective of the Fund is to achieve growth of capital and
income.
The investment objective cannot be changed without approval of shareholders.
While there is no assurance that the Fund will achieve its investment
objective,
it endeavors to do so by following the investment policies described in this
prospectus.
INVESTMENT POLICIES
Under normal circumstances, the Fund pursues its investment objective by
investing at least 65% of the value of its total assets in equity securities
of
U.S. companies. The Fund may also invest in domestic debt securities,
international securities, U.S. government securities, and money market
securities. The Fund's investment adviser, First National Bank of Ohio (the
"Adviser"), attempts to maintain an acceptable level of risk through careful
investment analysis including, but not limited to, the following: the
employment
of disciplined value measures (such as price/earnings ratios and price/book
ratios) when selecting equity securities; use of ratings assigned by
nationally
recognized statistical rating organizations (where applicable); credit
research;
review of issuers' historical performances; examination of issuers' dividend
growth records; and consideration of market trends.
Unless indicated otherwise, the investment policies of the Fund may be changed
by the Board of Trustees (the "Trustees") without the approval of
shareholders.
Shareholders will be notified before any material change in these policies
becomes effective.
ACCEPTABLE INVESTMENTS. The securities in which the Fund invests include the
following:
DOMESTIC EQUITY SECURITIES. The domestic equity securities of the Fund
will usually consist of common and preferred stocks of medium to large
capitalization companies and which are listed on
the New York or American Stock Exchanges or traded in the over-the-
counter
market. The companies will be selected by the Adviser based on
traditional
research techniques and technical factors, including assessment of
earnings
and dividend growth prospects and of the risk and volatility of the
company's industry. Other factors, such as product position or market
share, will also be considered by the Adviser.
DOMESTIC DEBT SECURITIES. The Fund may also invest in debt securities,
including bonds, notes, warrants, zero coupon bonds, and convertible
securities of the U.S. companies described above, all of which are rated
investment grade, i.e., Baa or better by Moody's Investors Service, Inc.
("Moody's"), or BBB or better by Standard & Poor's Ratings Group ("S&P")
or
Fitch Investors Service, Inc. ("Fitch") (or, if unrated, are deemed to be
of comparable quality by the Adviser). The Fund may also invest in
securities issued and/or guaranteed as to the payment of principal and
interest by the U.S. government or its agencies or instrumentalities. It
should be noted that securities receiving the lowest investment grade
rating are considered to have some speculative characteristics. Changes
in
economic conditions or other circumstances are more likely to lead to
weakened capacity to make principal and interest payments than higher
rated
securities. In the event that a security which had an eligible rating
when
purchased by the Fund is downgraded below Baa or BBB, the Adviser will
promptly reassess whether the continued holding of the security is
consistent with the Fund's objective. The prices of fixed income
securities
generally fluctuate inversely to the direction of interest rates.
OTHER ACCEPTABLE INVESTMENTS. The Fund may invest in equity securities
of
non-U.S. companies and corporate and government debt securities
denominated
in currencies other than U.S. dollars. In addition, the Fund may invest
in
zero coupon bonds and zero coupon convertible securities.
MONEY MARKET INSTRUMENTS. For temporary defensive purposes (up to 100%
of
total assets) and to maintain liquidity (up to 35% of total assets), the
Fund may invest in U.S. and foreign short-term money market instruments,
including:
- commercial paper rated A-1 or A-2 by S&P, Prime-1 or Prime-2 by
Moody's,
or F-1 or F-2 by Fitch, and Europaper (dollar-denominated commercial
paper issued outside the United States) rated A-1, A-2, Prime-1, or
Prime-2;
- instruments of domestic and foreign banks and savings associations
(such
as certificates of deposit, demand and time deposits, savings shares,
and
bankers' acceptances) if they have capital, surplus, and undivided
profits of over $100,000,000, or if the principal amount of the
instrument is insured by the Bank Insurance Fund ("BIF"), which is
administered by the Federal Deposit Insurance Corporation ("FDIC"), or
the Savings Association Insurance Fund ("SAIF"), which is also
administered by the FDIC. These instruments may include Eurodollar
Certificates of Deposit ("ECDs"), Yankee Certificates of Deposit
("Yankee
CDs"), and Eurodollar Time Deposits ("ETDs");
- obligations of the U.S. government or its agencies or
instrumentalities;
- repurchase agreements;
- securities of other investment companies; and
- other short-term instruments which are not rated but are determined by
the Adviser to be of comparable quality to the other obligations in
which
the Fund may invest.
CONVERTIBLE SECURITIES. Convertible securities are fixed income securities
which may be exchanged or converted into a predetermined number of the
issuer's
underlying common stock at the option of the holder during a specified time
period. Convertible securities may take the form of convertible preferred
stock,
convertible bonds or debentures, units consisting of "usable" bonds and
warrants
or a combination of the features of several of these securities.
U.S. GOVERNMENT SECURITIES. The types of U.S. government securities in which
the Fund may invest generally include direct obligations of the U.S. Treasury
(such as U.S. Treasury bills, notes, and bonds) and obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities. These
securities are backed by:
- the full faith and credit of the U.S. Treasury;
- the issuer's right to borrow from the U.S. Treasury;
- the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
- the credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:
- Federal Farm Credit Banks;
- Federal Home Loan Banks;
- Federal National Mortgage Association;
- Student Loan Marketing Association; and
- Federal Home Loan Mortgage Corporation.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell securities to
the Fund and agree at the time of sale to repurchase them at a mutually agreed
upon time and price. To the extent that the original seller does not
repurchase
the securities from the Fund, the Fund could receive less than the repurchase
price on any sale of such securities.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase
securities
on a when-issued or delayed delivery basis. These transactions are
arrangements
in which the Fund purchases securities with payment and delivery scheduled for
a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the Adviser deems
it
appropriate to do so. In addition, the Fund may enter into transactions to
sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at
later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
securities of other investment companies, but it will not own more than 3% of
the total outstanding voting stock of any investment company, invest more than
5% of its total assets in any one investment company, or invest more than 10%
of
its total assets in investment companies in general. The Fund will invest in
other investment companies primarily for the purpose of investing short-term
cash which has not yet been invested in other portfolio instruments. It should
be noted that investment companies incur certain expenses, such as management
fees and, therefore, any investment by the Fund in shares of another
investment
company would be subject to such duplicate expenses. The Adviser will waive
its
investment advisory fee on assets invested in securities of such investment
companies.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend portfolio securities up to one-third of the value of its total
assets, on a short-term or long-term basis, to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the
Adviser
has determined are creditworthy under guidelines established by the Trustees
and
will receive collateral in the form of cash or U.S. government securities
equal
to at least 100% of the value of the securities loaned at all times.
There is the risk that when lending portfolio securities, the securities may
not
be available to the Fund on a timely basis and the Fund may, therefore, lose
the
opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which
are
subject to restrictions on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including restricted
securities not determined by the Trustees to be liquid, non-negotiable time
deposits, over-the-counter options, and repurchase agreements providing for
settlement in more than seven days after notice, to 15% of its net assets.
PUT AND CALL OPTIONS. The Fund may purchase both put and call options on its
portfolio securities. These options will be used as a hedge to attempt to
protect securities which the Fund holds or will be purchasing against
decreases
or increases in value. The Fund may purchase call and put options for the
purpose of offsetting previously written call options of the same series. If
the
Fund is unable to effect a closing purchase transaction with respect to
covered
options it has written, the Fund will not be able to sell the underlying
securities or dispose of assets held in a segregated account until the options
expire or are exercised.
The Fund may also write covered call and put options on all or any portion of
its portfolio to generate income for the Fund. By writing a call option, the
Fund becomes obligated during the term of the option to deliver the securities
underlying the option upon payment of the exercise price. By writing a put
option, the Fund becomes obligated during the term of the option to purchase
the
securities underlying the option at the exercise price if the option is
expired.
The Fund will write call options on securities either held in its portfolio or
which it has the right to obtain without payment of further consideration or
for
which it has segregated cash or U.S. government securities in the amount of
any
additional consideration.
The Fund may purchase and write over-the-counter options on portfolio
securities
in negotiated transactions with the buyers or writers of the options when
options on the portfolio securities held by the Fund are not traded on an
exchange. The Fund purchases and writes options only with investment dealers
and
other financial institutions (such as commercial banks or savings and loan
associations) deemed creditworthy by the Adviser.
Over-the-counter options are two-party contracts with price and terms
negotiated
between buyer and seller. In contrast, exchange-traded options are third-party
contracts with standardized strike prices and expiration dates and are
purchased
from a clearing corporation. Exchange-traded options have a continuous liquid
market while over-the-counter options may not.
FUTURES AND OPTIONS ON FUTURES. The Fund may purchase and sell futures
contracts to hedge against the effect of changes in the value of portfolio
securities due to anticipated changes in interest rates and market conditions.
Futures contracts call for the delivery of particular instruments at a certain
time in the future. The seller of the contract agrees to make delivery of the
type of instrument called for in the contract, and the buyer agrees to take
delivery of the instrument at the specified future time.
Stock index futures contracts are based on indices that reflect the market
value
of common stock of the firms included in the indices. An index futures
contract
is an agreement pursuant to which two parties agree to take or make delivery
of
an amount of cash equal to the differences between the value of the index at
the
close of the last trading day of the contract and the price at which the index
contract was originally written.
The Fund may also write call options and purchase put options on futures
contracts as a hedge to attempt to protect securities in its portfolio against
decreases in value. When the Fund writes a call option on a futures contract,
it
is undertaking the obligation of selling a futures contract at a fixed price
at
any time during a specified period if the option is exercised. Conversely, as
purchaser of a put option on a futures contract, the Fund is entitled (but not
obligated) to sell a futures contract at the fixed price during the life of
the
option.
The Fund may also write put options and purchase call options on futures
contracts as a hedge against rising purchase prices of portfolio securities.
The
Fund will use these transactions to attempt to protect its ability to purchase
portfolio securities in the future at price levels existing at the time it
enters into the transactions. When the Fund writes a put option on a futures
contract, it is undertaking to buy a particular futures contract at a fixed
price at any time during a specified period if the option is exercised. As a
purchaser of a call option on a futures contract, the Fund is entitled (but
not
obligated) to purchase a futures contract at a fixed price at any time during
the life of the option.
The Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the Fund's
existing futures positions and premiums paid for related options would exceed
5%
of the market value of the Fund's net assets. When the Fund purchases futures
contracts, an amount of cash and cash equivalents, equal to the underlying
commodity value of the futures contracts (less any related margin deposits),
will be deposited in a segregated account with the Fund's custodian (or the
broker, if legally permitted) to collateralize the position and thereby insure
that the use of such futures contract is unleveraged. When the Fund sells
futures contracts, it will either own or have the right to receive the
underlying future or security, or will make deposits to collateralize the
position as discussed above.
RISKS. When the Fund uses futures and options on futures as hedging
devices, there is a risk that the prices of the securities subject to the
futures contracts may not correlate perfectly with the prices of the
securities in the Fund's portfolio. This may cause the futures contract
and
any related options to react differently than the portfolio securities to
market changes. In addition, the Adviser could be incorrect in its
expectations about the direction or extent of market factors such as
stock
price movements. In these events, the Fund may lose money on the futures
contract or option.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the Adviser
will
consider liquidity before entering into these transactions, there is no
assurance that a liquid secondary market on an exchange or otherwise will
exist for any particular futures contract or option at any particular
time.
The Fund's ability to establish and close out futures and options
positions
depends on this secondary market.
INVESTMENT LIMITATIONS
The Fund will not:
- borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for a
percentage of its cash value with an agreement to buy it back on a set
date) or pledge securities except, under certain circumstances, the
Fund
may borrow up to one-third of the value of its total assets and pledge
up
to 10% of the value of its total assets to secure such borrowings.
The above investment limitation cannot be changed without shareholder
approval.
See "Investment Objective and Policies" in the Statement of Additional
Information.
NEWPOINT FUNDS INFORMATION
- ------------------------------------------------------------------------------
- --
MANAGEMENT OF NEWPOINT FUNDS
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising
all
of the powers of the Trust except those reserved for the shareholders. The
Executive Committee of the Board of Trustees handles the Board's
responsibilities between meetings of the Board.
INVESTMENT ADVISER. Pursuant to an investment advisory contract with the
Trust,
investment decisions for the Fund are made by First National Bank of Ohio, the
Fund's investment adviser, subject to direction by the Trustees. The Adviser
continually conducts investment research and supervision for the Fund and is
responsible for the purchase or sale of portfolio instruments, for which it
receives an annual fee from the Fund.
Both the Fund and the Adviser have adopted strict codes of ethics governing
the
conduct of all employees who manage the Fund and its portfolio securities.
These
codes recognize that such persons owe a fiduciary duty to the Fund's
shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance
and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in
initial public offerings; and prohibit taking profits on securities held for
less than sixty days. Violations of the codes are subject to review by the
Board
of Trustees, and could result in severe penalties.
ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal to 0.75 of 1% of the Fund's average daily net assets. The fee paid
by
the Fund, while higher than the advisory fee paid by other mutual funds
in
general, is comparable to fees paid by other mutual funds with similar
objectives and policies. The investment advisory contract provides for
the
voluntary reimbursement of expenses by the Adviser to the extent any Fund
expenses exceed such lower expense limitation as the Adviser may, by
notice
to the Fund, voluntarily declare to be effective. The Adviser can
terminate
this voluntary reimbursement of expenses at any time at its sole
discretion. The Adviser has undertaken to reimburse the Fund for
operating
expenses in excess of limitations established by certain states.
ADVISER'S BACKGROUND. First National Bank of Ohio, a national banking
association formed in 1947, is a wholly-owned subsidiary of FirstMerit
Corp. (formerly known as "First Bancorporation of Ohio"). Through its
subsidiaries and affiliates, FirstMerit Corp. offers a full range of
financial services to the public, including commercial lending,
depository
services, cash management, brokerage services, retail banking, credit
card
services, mortgage banking, investment advisory services, and trust
services.
As of December 31, 1995, the Trust Division of First National Bank of
Ohio
had approximately $2.6 billion in assets under administration, of which
it
had investment discretion over $1.1 billion. First National Bank of Ohio
has served as the Fund's investment adviser since the Fund's inception.
As part of its regular banking operations, First National Bank of Ohio
may
make loans to public companies. Thus, it may be possible, from time to
time, for the Fund to hold or acquire the securities of issuers which are
also lending clients of First National Bank of Ohio. The lending
relationship will not be a factor in the selection of securities.
The portfolio manager of the Fund is Wesley C. Meinerding, a Vice
President
and Trust Officer with First National Bank of Ohio. Mr. Meinerding
manages
corporate and personal trust portfolios at First National Bank of Ohio.
Prior to joining FirstMerit Corp. in December 1982, Mr. Meinerding
managed
trust and bank assets at First National Bank in Massillon, corporate and
personal trusts at Harter Bank and Trust, and pension assets at Firestone
Tire and Rubber Company. Mr. Meinerding has managed the Fund since the
Fund's inception.
DISTRIBUTION OF FUND SHARES
Federated Securities Corp. is the principal distributor for shares of the
Fund.
It is a Pennsylvania corporation organized on November 14, 1969, and is the
distributor for a number of investment companies. Federated Securities Corp.
is
a subsidiary of Federated Investors.
DISTRIBUTION PLAN. Under a distribution plan adopted in accordance with
Investment Company Act Rule 12b-1 (the "Distribution Plan"), the Fund may pay
to
the distributor an amount, computed at an annual rate of up to 0.25 of 1% of
the
Fund's average daily net asset value, to finance any activity which is
principally intended to result in the sale of shares subject to the
Distribution
Plan. The distributor
may select financial institutions such as banks, fiduciaries, custodians for
public funds, investment advisers, and broker/dealers to provide sales support
services as agents for their clients or customers.
The Distribution Plan is a compensation-type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund
does
not pay for unreimbursed expenses of the distributor, including amounts
expended
by the distributor in excess of amounts received by it from the Fund,
interest,
carrying or other financing charges in connection with excess amounts
expended,
or the distributor's overhead expenses. However, the distributor may be able
to
recover such amount or may earn a profit from future payments made by the Fund
under the Distribution Plan.
The Glass-Steagall Act prohibits a depository institution (such as a
commercial
bank or a savings and loan association) from being an underwriter or
distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the capacities described above or
should
Congress relax current restrictions on depository institutions, the Trustees
will consider appropriate changes in the services.
State securities laws governing the ability of depository institutions to act
as
underwriters or distributors of securities may differ from interpretations
given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, Pittsburgh,
Pennsylvania, a subsidiary of Federated Investors, provides administrative
personnel and services (including certain legal and financial reporting
services) necessary to operate the Fund. Federated Administrative Services
provides these at an annual rate as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY NET
ADMINISTRATIVE FEE ASSETS OF THE NEWPOINT FUNDS
- --------------------- ------------------------------------
<S> <C>
.150 of 1% on the first $250 million
.125 of 1% on the next $250 million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$100,000 for the Fund. Federated Administrative Services may choose
voluntarily
to waive a portion of its fee.
SHAREHOLDER SERVICES PLAN. The Fund has adopted a Shareholder Services Plan
(the "Services Plan") with respect to shares of the Fund. Under the Services
Plan, financial institutions will enter into shareholder service agreements to
provide administrative support services to their customers who from time to
time
may be owners of record or beneficial owners of shares of the Fund. In return
for providing these support services, a financial institution may receive
payments at a rate not exceeding 0.25 of 1% of the average daily net assets of
shares of the Fund beneficially owned by the financial institution's customers
for whom it is holder of record or with whom it has a servicing relationship.
These administrative services may include, but are not limited to, the
following
functions: providing office space, equipment, telephone facilities, and
various
personnel, including clerical, supervisory, and computer, as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries regarding the
Fund; assisting clients in changing dividend options, account designations and
addresses; and providing such other services as the Fund reasonably requests.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to periodic payments to
financial institutions under the Distribution and Shareholder Services Plans,
certain financial institutions may be compensated by the Adviser for the
continuing investment of their customers' assets in the Fund. These payments
will be made directly by the Adviser from its assets, and will not be made
from
the assets of the Fund or by the assessment of a sales load on Fund shares.
</R
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio
instruments, the Adviser looks for prompt execution of the order at a
favorable
price. In working with dealers, the Adviser will generally utilize those who
are
recognized dealers in specific portfolio instruments, except when a better
price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the Adviser may give consideration to those
firms which have sold or are selling shares of the Fund. The Adviser makes
decisions on portfolio transactions and selects brokers and dealers subject to
review by the Trustees.
EXPENSES OF THE FUND
The Fund pays all of its own expenses and its allocable share of Trust
expenses.
The expenses of the Fund include, but are not limited to, the cost of:
organizing the Trust and continuing its existence; Trustees' fees; investment
advisory and administrative services; printing prospectuses and other Fund
documents for shareholders; registering the Trust, the Fund, and shares of the
Fund; taxes and commissions; issuing, purchasing, repurchasing, and redeeming
shares; fees for custodians, transfer agents, dividend disbursing agents,
shareholder servicing agents, and registrars; printing, mailing, auditing,
accounting, and legal expenses; reports to shareholders and governmental
agencies; meetings of Trustees and shareholders and proxy solicitations
therefor; distribution fees; insurance premiums; association membership dues;
and such non-recurring and extraordinary items as may arise. However, the
Adviser may voluntarily reimburse the Fund the amount, up to the amount of the
advisory fee, by which operating expenses exceed limitations imposed by
certain
states.
NET ASSET VALUE
- ------------------------------------------------------------------------------
- --
The Fund's net asset value per share fluctuates. It is determined by dividing
the sum of the market value of all securities and other assets, less
liabilities, by the number of shares outstanding.
INVESTING IN THE FUND
- ------------------------------------------------------------------------------
- --
SHARE PURCHASES
Fund shares are sold on days on which the New York Stock Exchange and the
Federal Reserve Wire System are open for business. In connection with
qualified
account relationships in the Trust
Department of First National Bank of Ohio, Fund shares may be purchased by
telephone through procedures established with First National Bank of Ohio and
its affiliates. Individual investors may place orders to purchase shares
either
by telephone or by mail. Texas residents should purchase shares of the Fund
through Federated Securities Corp. at 1-800-356-2805. In connection with the
sale of Fund shares, the distributor may from time to time offer certain items
of nominal value to any shareholder or investor. The Fund reserves the right
to
reject any purchase request.
THROUGH FIRST NATIONAL BANK OF OHIO OR FIRSTMERIT SECURITIES, INC. Trust
customers placing an order to purchase shares of the Fund may open an account
by
calling First National Bank of Ohio at 216-384-7300. Information needed to
establish the account will be taken over the telephone.
Individual investors placing an order to purchase shares of the Fund may
telephone FirstMerit Securities, Inc. at 216-384-7230. An account may be
opened
by completing a new account application form available from FirstMerit
Securities, Inc., 4100 Embassy Parkway, Akron, Ohio 44333.
Payment may be made by check, transfer from an Automated Clearing House
("ACH")
member institution, federal funds or by debiting a customer's account at First
National Bank of Ohio. Purchase orders must be received by 3:30 p.m. (Eastern
time) in order for shares to be purchased at that day's price. Purchases by
check are considered received after payment by check is converted into federal
funds and is received by the Fund. When payment is made with federal funds,
the
order is considered received when federal funds are received by the Fund.
Shares
cannot be purchased on days on which the New York Stock Exchange is closed or
on
federal holidays restricting wire transfers.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund is $1,000. Subsequent investments
may
be in amounts of $100 or more. The Fund may waive the initial minimum
investment
from time to time.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received, plus a sales load, as follows:
<TABLE>
<CAPTION>
SALES CHARGE AS SALES LOAD AS
A PERCENTAGE OF A PERCENTAGE OF
AMOUNT OF TRANSACTION PUBLIC OFFERING PRICE NEW AMOUNT INVESTED
- ------------------------------------------- ---------------------- --------------------
<S> <C> <C>
Less than $100,000 4.50% 4.71%
$100,000 but less than $250,000 3.75% 3.90%
$250,000 but less than $500,000 2.50% 2.56%
$500,000 but less than $750,000 2.00% 2.04%
$750,000 but less than $1 million 1.00% 1.01%
$1 million or more 0.00% 0.00%
</TABLE>
The net asset value is determined at 12:00 noon (Eastern time), 3:00 p.m.
(Eastern time), and 4:00 p.m. (Eastern time), Monday through Friday, except
on:
(i) days on which there are not sufficient changes in the value of the Fund's
portfolio securities that its net asset value might be materially affected;
(ii)
days during which no shares are tendered for redemption and no orders to
purchase shares are
received; and (iii) the following holidays: New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day.
PURCHASES AT NET ASSET VALUE. Shareholders who are trust customers of First
National Bank of Ohio and its subsidiaries are exempt from the sales load. In
addition, the following persons may purchase shares of the Fund at net asset
value, without a sales load: employees and retired employees of First National
Bank of Ohio, Federated Securities Corp., or their affiliates, or any bank or
investment dealer who has a sales agreement with Federated Securities Corp.
with
regard to the Fund, and members of the families (including parents,
grandparents, siblings, spouses, children, aunts, uncles, and in-laws) of such
employees or retired employees.
SALES LOAD REALLOWANCE. For sales of shares of the Fund, a dealer will
normally
receive up to 85% of the applicable sales load. Any portion of the sales load
which is not paid to a dealer will be retained by the distributor. The
distributor will, periodically, uniformly offer to pay cash or promotional
incentives in the form of trips to sales seminars at luxury resorts, tickets
or
other items to all dealers selling shares of the Fund. Such payments will be
predicated upon the amount of shares of the Fund that are sold by the dealer.
The sales load for shares sold other than through registered broker/dealers
will
be retained by the distributor. The distributor may pay fees to banks out of
the
sales load in exchange for sales and/or administrative services performed on
behalf of the banks' customers in connection with the initiation of customer
accounts and purchases of Fund shares.
ELIMINATING OR REDUCING THE SALES LOAD
The sales load can be eliminated or reduced on the purchase of shares through:
- quantity discounts and accumulated purchases;
- signing a 13-month letter of intent; or
- using the reinvestment privilege.
QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES. As shown in the table under
"What
Shares Cost," larger purchases eliminate or reduce the sales load paid. The
Fund
will combine purchases made on the same day by the investor, the investor's
spouse, and the investor's children under age 21 when it calculates the
applicable sales load. In addition, the sales load, if applicable, can be
eliminated or reduced for purchases made at one time by a trustee or fiduciary
for a single trust estate or a single fiduciary account.
If an additional purchase of Fund shares is made, the Fund will consider the
previous purchases still invested in the Fund. For example, if a shareholder
already owns shares having a current value at the public offering price of
$90,000 and he purchases $10,000 more at the current public offering price,
the
sales load on the additional purchase according to the schedule now in effect
would be 3.75%, not 4.50%.
To receive the sales load elimination or reduction, FirstMerit Securities,
Inc.
or the distributor must be notified by the shareholder in writing at the time
the purchase is made that Fund shares are already owned or that purchases are
being combined. The Fund will reduce the sales load after it confirms the
purchases.
LETTER OF INTENT. If a shareholder intends to purchase at least $100,000 of
Fund shares over the next 13 months, the sales load may be eliminated or
reduced
by signing a letter of intent to that effect. This letter of intent includes a
provision for a sales load adjustment depending on the amount actually
purchased
within the 13-month period and a provision for the Fund's custodian to hold up
to 4.50% of the total amount intended to be purchased in escrow (in shares of
the Fund) until such purchase is completed.
The amount held in escrow will be applied to the shareholder's account at the
end of the 13-month period unless the amount specified in the letter of intent
is not purchased. In this event, an appropriate number of escrowed shares may
be
redeemed in order to realize the difference in the sales load.
This letter of intent will not obligate the shareholder to purchase shares,
but
if the shareholder does, each purchase during the period will be at the sales
load applicable to the total amount intended to be purchased. This letter may
be
dated as of a prior date to include any purchases made within the past 90
days.
REINVESTMENT PRIVILEGE. If shares in the Fund have been redeemed, the
shareholder has a one-time right, within 60 days, to reinvest the redemption
proceeds at the next-determined net asset value without any sales load. First
National Bank of Ohio or the distributor must be notified by the shareholder
in
writing or by his financial institution of the reinvestment in order to
eliminate a sales load. If the shareholder redeems his shares in the Fund,
there
may be tax consequences. Shareholders contemplating such transactions should
consult their own tax advisers.
SYSTEMATIC INVESTMENT PROGRAM
Shareholders who are individual investors and have opened an account may add
to
their investment on a regular basis in a minimum amount of $100. Under this
program, funds may be automatically withdrawn periodically from the
shareholder's checking account or by transfer from an ACH member institution
and
invested in shares. A shareholder may apply for participation in this program
through FirstMerit Securities, Inc. Due to the fact that shares are sold with
a
sales load, it is not advisable for shareholders to purchase shares while
participating in this program.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent charges
a
fee based on the level of subaccounting services rendered. Institutions
holding
shares of the Fund in a fiduciary, agency, custodial, or similar capacity may
charge or pass through subaccounting fees as part of or in addition to normal
trust or agency account fees. They may also charge fees for other services
provided which may be related to the ownership of Fund shares. This prospectus
should, therefore, be read together with any agreement between the customer
and
the institution with regard to the services provided, the fees charged for
those
services, and any restrictions and limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless
requested
by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder and dividend confirmations are sent to each shareholder to report
dividends paid.
DIVIDENDS AND CAPITAL GAINS
Dividends are declared and paid monthly. Dividends are declared just prior to
determining net asset value. Capital gains realized by the Fund, if any, will
be
distributed at least once every 12 months. Dividends and capital gains will be
automatically reinvested in additional shares on payment dates at the
ex-dividend date net asset value without a sales load, unless cash payments
are
requested by writing to the Fund or First National Bank of Ohio or FirstMerit
Securities, Inc., as appropriate.
EXCHANGE PRIVILEGE
- ------------------------------------------------------------------------------
- --
A shareholder may exchange shares of Newpoint Equity Fund for shares of
Newpoint
Government Money Market Fund by calling or sending a written request to
FirstMerit Securities, Inc. In addition, shares of Newpoint Equity Fund may
also
be exchanged for certain other funds distributed by Federated Securities Corp.
that are not advised by First National Bank of Ohio ("Federated Funds"). For
further information on the availability of Federated Funds for exchanges, call
FirstMerit Securities, Inc. Exchanges are subject to the minimum initial
investment requirements of the fund into which the exchange is being made.
Prior
to any exchange, the shareholder must receive a copy of the current prospectus
of the fund into which an exchange is to be effected.
Shares may be exchanged at net asset value, plus the difference between the
Fund's sales load (if any) already paid and any sales load of the fund into
which Fund shares are to be exchanged, if higher.
When an exchange is made from a fund with a sales load to a fund with no sales
load, the shares exchanged and additional shares which have been purchased by
reinvesting dividends on such shares retain the character of the exchanged
shares for purposes of exercising further exchange privileges; thus, an
exchange
of such shares for shares of a fund with a sales load would be at net asset
value.
An excessive number of exchanges may be disadvantageous to the Trust.
Therefore,
the Trust, in addition to its right to reject any exchange, reserves the right
to modify or terminate the exchange privilege of any shareholder who makes
more
than six exchanges of shares of the Fund in a year, or three in a calendar
quarter. Shareholders would be notified prior to any modification or
termination.
The exchange privilege is available to shareholders residing in any state in
which the fund shares being acquired may legally be sold. Upon receipt of
proper
instructions and all necessary supporting documents, Fund shares submitted for
exchange will be redeemed at the next-determined net asset value.
Written exchange instructions may require a signature guarantee. Exercise of
this privilege is treated as a sale for federal income tax purposes and,
depending on the circumstances, a short or long-term capital gain or loss may
be
realized. The exchange privilege may be terminated at any time. Shareholders
will be notified of the termination of the exchange privilege. A shareholder
may
obtain further information on the exchange privilege by calling FirstMerit
Securities, Inc. at 216-384-7230.
EXCHANGE-BY-TELEPHONE
Instructions for exchanges between portfolios which are part of the Newpoint
Funds may be given by telephone to FirstMerit Securities, Inc. at 216-384-
7230.
Shares may be exchanged by telephone only between fund accounts having
identical
shareholder registrations.
Orders for exchanges received prior to 3:30 p.m. (Eastern time) on any day
that
the Fund is open for business will be executed as of the close of business
that
day. Orders for exchanges received after 3:30 p.m. (Eastern time) on any
business day will be executed at the close of the next business day. The
telephone exchange privilege may be modified or terminated at any time.
Shareholders will be notified of such modification or termination.
Telephone exchange instructions may be recorded. If reasonable procedures are
not followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
REDEEMING SHARES
- ------------------------------------------------------------------------------
- --
The Fund redeems shares at their net asset value next determined after First
National Bank of Ohio receives the redemption request. Redemptions will be
made
on days on which the Fund computes its net asset value. Redemption requests
cannot be executed on days on which the New York Stock Exchange is closed or
on
federal holidays when wire transfers are restricted. Requests for redemption
can
be made in person or by telephone for Trust customers. Individual investors
can
make requests for redemption in person, by telephone or by mail through
FirstMerit Securities, Inc.
THROUGH FIRST NATIONAL BANK OF OHIO OR FIRSTMERIT SECURITIES, INC.
BY TELEPHONE. A shareholder who is a Trust customer of First National Bank of
Ohio may redeem shares of the Fund by telephoning First National Bank of Ohio
at
216-384-7300. A shareholder who is an individual investor/customer of
FirstMerit
Securities, Inc. may redeem shares by telephoning 216-384-7230. For calls
received before 3:30 p.m. (Eastern time), proceeds will normally be wired the
following day to the shareholder's account at First National Bank of Ohio,
transferred through ACH to a member institution, or a check will be sent to
the
address of record. In no event will proceeds be sent more than seven days
after
a proper request for redemption has been received. An authorization form
permitting the Fund to accept telephone requests must first be completed.
Authorization forms and information on this service are available from
FirstMerit Securities, Inc. Telephone redemption instructions may be
electronically recorded. If reasonable procedures are not followed by the
Fund,
it may be liable for losses due to unauthorized or fraudulent telephone
instructions.
In the event of drastic economic or market changes, a shareholder may
experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption should be utilized, such as a written request to
Federated
Services Company or FirstMerit Securities, Inc.
If, at any time, the Fund shall determine it necessary to terminate or modify
this method of redemption, shareholders would be promptly notified.
BY MAIL. Shares may also be redeemed by sending a written request to
FirstMerit
Securities, Inc. Call FirstMerit Securities, Inc. for specific instructions
before redeeming by letter. The shareholder will be
asked to provide in the request his name, the Fund name, his account number,
and
the share or dollar amount requested. If share certificates have been issued,
they must be properly endorsed and should be sent by registered or certified
mail with the written request.
SIGNATURES. Shareholders requesting a redemption of any amount to be sent to
an
address other than that on record with the Fund or a redemption payable other
than to the shareholder of record must have their signatures guaranteed by:
- a trust company or commercial bank whose deposits are insured by BIF,
which is administered by the FDIC;
- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
- a savings bank or savings and loan association whose deposits are
insured
by the SAIF, which is administered by the FDIC; or
- any other "eligible guarantor institution" as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day, but in
no
event more than seven days, after receipt of a proper written redemption
request.
SYSTEMATIC WITHDRAWAL PROGRAM
If a shareholder's account has a value of at least $10,000, a Systematic
Withdrawal Program may be established whereby automatic redemptions are made
from the account and transferred electronically to any commercial bank,
savings
bank, or credit union that is an ACH member. A shareholder may apply for
participation in this program through FirstMerit Securities, Inc. Depending
upon
the amount of the withdrawal payments, the amount of dividends paid and
capital
gains distributions with respect to Fund shares, and the fluctuation of the
net
asset value of Fund shares redeemed under this program, redemptions may
reduce,
and eventually deplete, the shareholder's investment in the Fund. For this
reason, payments under this program should not be considered as yield or
income
on the shareholder's investment in the Fund. Due to the fact that shares are
sold with a sales load, it is not advisable for shareholders to be purchasing
shares of the Fund while participating in this program.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $1,000 due to
shareholder redemptions. Before shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to purchase additional
shares to meet the minimum requirement.
SHAREHOLDER INFORMATION
- ------------------------------------------------------------------------------
- --
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders of the Fund for vote. All shares of
each
portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio, only shares of that portfolio are
entitled to vote.
As a Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust or Fund's operation and for the election of Trustees
under
certain circumstances. As of January 11, 1996, Parcol & Co., First National
Bank
of Ohio, Akron, Ohio, owned approximately 2,063,144 shares (100%) of the Fund,
and therefore may, for certain purposes, be deemed to control the Fund and be
able to affect the outcome of certain matters presented for a vote of
shareholders.
Trustees may be removed by the shareholders at a special meeting. A special
meeting of the shareholders for this purpose shall be called by the Trustees
upon the written request of shareholders owning at least 10% of the
outstanding
shares of all series of the Trust entitled to vote.
EFFECT OF BANKING LAWS
- ------------------------------------------------------------------------------
- --
The Glass-Steagall Act and other banking laws and regulations presently
prohibit
a bank holding company registered under the Bank Holding Company Act of 1956
or
any affiliate thereof from sponsoring, organizing or controlling a registered,
open-end investment company continuously engaged in the issuance of its
shares,
and from issuing, underwriting, selling or distributing securities in general.
Such laws and regulations do not prohibit such a holding company or affiliate
from acting as investment adviser, transfer agent, or custodian to such an
investment company or from purchasing shares of such a company as agent for
and
upon the order of their customers. The Fund's investment adviser First
National
Bank of Ohio is subject to such banking laws and regulations.
First National Bank of Ohio believes, based on the advice of its counsel, that
it may perform the investment advisory services for the Fund contemplated by
its
advisory agreement with the Fund without violating the Glass-Steagall Act or
other applicable banking laws or regulations. Changes in either federal or
state
statutes and regulations relating to the permissible activities of banks and
their subsidiaries or affiliates, as well as further judicial or
administrative
decisions or interpretations of present or future statutes and regulations,
could prevent First National Bank of Ohio from continuing to perform all or a
part of the above services. If this happens, changes in the operation of the
Fund may occur, including the possible alteration or termination of any
automatic or other share investment or redemption services then being
provided,
and the Trustees would consider alternative investment advisers and other
means
of continuing available investment services. It is not expected that
shareholders would suffer any adverse financial consequences as a result of
any
of these occurrences.
State securities laws governing the ability of depository institutions to act
as
underwriters or distributors of securities may differ from interpretations
given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.
TAX INFORMATION
- ------------------------------------------------------------------------------
- --
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements
of the Internal Revenue Code applicable to regulated investment companies and
to
receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax
on
any dividends and other distributions, including capital gains distributions,
received. This applies whether dividends and distributions are received in
cash
or as additional shares. The Fund will provide detailed tax information for
reporting purposes.
STATE AND LOCAL TAXES
Shareholders are urged to consult their own tax advisers regarding the status
of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
- --
From time to time, the Fund advertises its total return and yield.
Total return represents the change, over a specified period of time, in the
value of an investment in the Fund after reinvesting all income and capital
gains distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of the Fund is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the
Fund
over a thirty-day period by the maximum offering price per share of the Fund
on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
the Fund and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.
The performance information normally reflects the effect of the maximum sales
load which, if excluded, would increase the total return and yield.
From time to time, the Fund may advertise its performance using certain
financial publications and/ or compare its performance to certain indices.
NEWPOINT EQUITY FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- ------------------------------------------------------------------------------
- --
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--81.3%
- --------------------------------------------------------------------------------------
BASIC INDUSTRY--10.7%
-------------------------------------------------------------------
8,000 Aluminum Company of America $ 468,000
-------------------------------------------------------------------
4,000 Dow Chemical Co. 283,500
-------------------------------------------------------------------
8,000 Eastman Chemical Co. of Wisconsin 525,000
-------------------------------------------------------------------
6,750 Engelhard Corp. 157,781
-------------------------------------------------------------------
4,000 International Paper Co. 152,500
-------------------------------------------------------------------
3,500 Monsanto Co. 400,750
-------------------------------------------------------------------
6,000 Rockwell International Corp. 294,000
-------------------------------------------------------------------
40,000 Santa Fe Pacific Gold Corp. 480,000
------------------------------------------------------------------- -----------
Total 2,761,531
------------------------------------------------------------------- -----------
CAPITAL GOODS--9.2%
-------------------------------------------------------------------
8,000 Baker Hughes, Inc. 163,000
-------------------------------------------------------------------
8,000 Briggs & Stratton Corp. 333,000
-------------------------------------------------------------------
1,900 Caterpillar, Inc. 116,613
-------------------------------------------------------------------
9,000 Deere & Co. 295,875
-------------------------------------------------------------------
6,000 Dover Corp. 233,250
-------------------------------------------------------------------
3,100 General Electric Co. 208,475
-------------------------------------------------------------------
4,000 Halliburton Co. 173,500
-------------------------------------------------------------------
15,000 * Ionics, Inc. 648,750
-------------------------------------------------------------------
3,000 Schlumberger Ltd. 190,500
------------------------------------------------------------------- -----------
Total 2,362,963
------------------------------------------------------------------- -----------
CAPITAL GOODS TECHNOLOGY--16.6%
-------------------------------------------------------------------
5,000 AMP, Inc. 200,625
-------------------------------------------------------------------
3,000 Apple Computer 114,375
-------------------------------------------------------------------
2,000 * Applied Materials, Inc. 97,250
-------------------------------------------------------------------
3,000 Automatic Data Processing, Inc. 238,875
-------------------------------------------------------------------
</TABLE>
NEWPOINT EQUITY FUND
- ------------------------------------------------------------------------------
- --
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
CAPITAL GOODS TECHNOLOGY--CONTINUED
-------------------------------------------------------------------
3,500 Avnet, Inc. $ 164,500
-------------------------------------------------------------------
3,500 Boeing Co. 255,063
-------------------------------------------------------------------
7,000 * Compaq Computer Corp. 346,500
-------------------------------------------------------------------
4,000 Diebold, Inc. 229,500
-------------------------------------------------------------------
4,000 Hewlett-Packard Co. 331,500
-------------------------------------------------------------------
9,000 Intel Corp. 547,875
-------------------------------------------------------------------
6,000 Micron Technology, Inc. 328,500
-------------------------------------------------------------------
1,000 * Microsoft Corp. 87,125
-------------------------------------------------------------------
6,000 Motorola, Inc. 367,500
-------------------------------------------------------------------
5,400 Raytheon Co. 240,300
-------------------------------------------------------------------
7,000 * Silicon Graphics, Inc. 255,500
-------------------------------------------------------------------
8,000 * Storage Technology Corp. 198,000
-------------------------------------------------------------------
3,000 United Technologies Corp. 281,250
------------------------------------------------------------------- -----------
Total 4,284,238
------------------------------------------------------------------- -----------
CONSUMER CYCLICAL--6.3%
-------------------------------------------------------------------
4,000 Armstrong World Industries, Inc. 239,500
-------------------------------------------------------------------
5,000 Chrysler Corp. 259,375
-------------------------------------------------------------------
4,000 Eastman Kodak Co. 272,000
-------------------------------------------------------------------
3,700 General Motors Corp. 179,450
-------------------------------------------------------------------
5,000 General Motors Corp., Class E 252,500
-------------------------------------------------------------------
7,000 Nike, Inc., Class B 406,000
------------------------------------------------------------------- -----------
Total 1,608,825
------------------------------------------------------------------- -----------
CONSUMER GROWTH STAPLES--17.4%
-------------------------------------------------------------------
4,000 American Home Products Corp. 365,000
-------------------------------------------------------------------
10,000 * Amgen, Inc. 496,250
-------------------------------------------------------------------
4,000 Coca-Cola Co. 303,000
-------------------------------------------------------------------
3,500 Columbia/HCA Healthcare Corp. 180,687
-------------------------------------------------------------------
</TABLE>
NEWPOINT EQUITY FUND
- ------------------------------------------------------------------------------
- --
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
CONSUMER GROWTH STAPLES--CONTINUED
-------------------------------------------------------------------
2,000 Eli Lilly & Co. $ 199,000
-------------------------------------------------------------------
8,000 Gillette Co. 415,000
-------------------------------------------------------------------
8,000 McDonalds Corp. 357,000
-------------------------------------------------------------------
9,000 Medtronic, Inc. 493,875
-------------------------------------------------------------------
3,400 Merck & Co., Inc. 210,375
-------------------------------------------------------------------
8,000 * Officemax Inc. 182,000
-------------------------------------------------------------------
16,600 * Perrigo Co. 217,875
-------------------------------------------------------------------
4,000 Pfizer, Inc. 232,000
-------------------------------------------------------------------
3,400 Schering Plough Corp. 195,075
-------------------------------------------------------------------
11,000 * Thermo Cardiosystems, Inc. 642,125
------------------------------------------------------------------- -----------
Total 4,489,262
------------------------------------------------------------------- -----------
CONSUMER STAPLES--4.7%
-------------------------------------------------------------------
3,100 CPC International, Inc. 213,125
-------------------------------------------------------------------
5,100 Heinz (H.J.) Co. 162,562
-------------------------------------------------------------------
2,500 Procter & Gamble Co. 215,937
-------------------------------------------------------------------
4,500 Sara Lee Corp. 145,125
-------------------------------------------------------------------
7,000 Seagram Co. Ltd. 255,500
-------------------------------------------------------------------
8,000 Walgreen Co. 233,000
------------------------------------------------------------------- -----------
Total 1,225,249
------------------------------------------------------------------- -----------
ENERGY--4.6%
-------------------------------------------------------------------
3,400 Exxon Corp. 263,075
-------------------------------------------------------------------
11,000 Horsham Corp. 149,875
-------------------------------------------------------------------
5,000 Mobil Corp. 521,875
-------------------------------------------------------------------
2,000 Royal Dutch Pete Co. 256,750
------------------------------------------------------------------- -----------
Total 1,191,575
------------------------------------------------------------------- -----------
</TABLE>
NEWPOINT EQUITY FUND
- ------------------------------------------------------------------------------
- --
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
FINANCIAL--6.6%
-------------------------------------------------------------------
4,500 American International Group, Inc. $ 403,875
-------------------------------------------------------------------
2,600 Banc One Corp. 99,125
-------------------------------------------------------------------
8,000 Federal Home Loan Mtg Corp. 616,000
-------------------------------------------------------------------
3,400 NationsBank Corp. 242,675
-------------------------------------------------------------------
8,800 PNC Bank Corp. 257,400
-------------------------------------------------------------------
10,000 Reliance Group Holdings, Inc. 88,750
------------------------------------------------------------------- -----------
Total 1,707,825
------------------------------------------------------------------- -----------
TRANSPORTATION--1.4%
-------------------------------------------------------------------
4,000 CSX Corp. 350,500
-------------------------------------------------------------------
UTILITIES--3.8%
-------------------------------------------------------------------
10,000 * Airtouch Communications, Inc. 291,250
-------------------------------------------------------------------
4,000 Consolidated Natural Gas Co. 177,500
-------------------------------------------------------------------
5,000 MCI Communications Corp. 133,750
-------------------------------------------------------------------
7,000 Questar Corp. 226,625
-------------------------------------------------------------------
3,000 SBC Communications, Inc. 162,000
------------------------------------------------------------------- -----------
Total 991,125
------------------------------------------------------------------- -----------
TOTAL COMMON STOCKS (IDENTIFIED COST $16,212,478) 20,973,093
------------------------------------------------------------------- -----------
</TABLE>
NEWPOINT EQUITY FUND
- ------------------------------------------------------------------------------
- --
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
**REPURCHASE AGREEMENTS--18.8%
- --------------------------------------------------------------------------------------
4,852,000 National City Bank, 5.85%, dated 11/30/1995, due 12/1/1995
(AT AMORTIZED COST) $ 4,852,000
------------------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST $21,064,478) $25,825,093+
------------------------------------------------------------------- -----------
</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 $21,064,478.
The
net unrealized appreciation of investments on a federal tax cost basis
amounts to $4,760,615, which is comprised of $4,932,211 appreciation and
$171,596 depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($25,802,560) at November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
NEWPOINT EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- ------------------------------------------------------------------------------
- --
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------
Investments in repurchase agreements $ 4,852,000
- -----------------------------------------------------------------
Investments in other securities 20,973,093
- ----------------------------------------------------------------- -----------
Total Investments in securities, at value
(identified and tax cost $21,064,478) $25,825,093
- -------------------------------------------------------------------------------
Cash 680
- -------------------------------------------------------------------------------
Income receivable 43,595
- -------------------------------------------------------------------------------
Receivable for shares sold 2,267
- ------------------------------------------------------------------------------- -----------
Total assets 25,871,635
- -------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------
Accrued expenses 69,075
- ----------------------------------------------------------------- -----------
Total liabilities 69,075
- ------------------------------------------------------------------------------- -----------
Net Assets for 2,033,868 shares outstanding $25,802,560
- ------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------
Paid in capital $20,731,513
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments 4,760,615
- -------------------------------------------------------------------------------
Accumulated net realized gain on investments 305,031
- -------------------------------------------------------------------------------
Undistributed net investment income 5,401
- ------------------------------------------------------------------------------- -----------
Total Net Assets $25,802,560
- ------------------------------------------------------------------------------- -----------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per
Share:
- -------------------------------------------------------------------------------
Net Asset Value Per Share ($25,802,560 / 2,033,868 shares outstanding) $12.69
- ------------------------------------------------------------------------------- -----------
Offering Price Per Share (100/95.50 of $12.69)* $13.29
- ------------------------------------------------------------------------------- -----------
</TABLE>
* See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
NEWPOINT EQUITY FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
- ------------------------------------------------------------------------------
- --
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------
Dividends $ 311,549
- -----------------------------------------------------------------------------------
Interest 166,812
- ----------------------------------------------------------------------------------- ----------
Total income 478,361
- -----------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------
Investment advisory fee $ 152,062
- ----------------------------------------------------------------------
Administrative personnel and services fee 99,999
- ----------------------------------------------------------------------
Custodian fees 21,684
- ----------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 23,877
- ----------------------------------------------------------------------
Directors'/Trustees' fees 2,380
- ----------------------------------------------------------------------
Auditing fees 14,385
- ----------------------------------------------------------------------
Legal fees 5,992
- ----------------------------------------------------------------------
Portfolio accounting fees 43,577
- ----------------------------------------------------------------------
Share registration costs 21,679
- ----------------------------------------------------------------------
Printing and postage 8,344
- ----------------------------------------------------------------------
Insurance premiums 5,058
- ----------------------------------------------------------------------
Miscellaneous 5,220
- ---------------------------------------------------------------------- ---------
Total expenses 404,257
- ----------------------------------------------------------------------
Waiver and reimbursements--
- ----------------------------------------------------------------------
Waiver of investment advisory fee $(104,787)
- ---------------------------------------------------------- ---------
Net expenses 299,470
- ----------------------------------------------------------------------------------- ----------
Net investment income 178,891
- ----------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------------------------------------
Net realized gain on investments 305,031
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments 5,022,005
- ----------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments 5,327,036
- ----------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $5,505,927
- ----------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NEWPOINT EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
- --
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
-----------------------------
1995 1994*
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------
Net investment income $ 178,891 $ 55,497
- ----------------------------------------------------------------
Net realized gain (loss) on investments
($305,031 and $0, respectively, as computed for federal tax
purposes) 305,031 --
- ----------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 5,022,005 (261,390)
- ---------------------------------------------------------------- ----------- -----------
Change in net assets resulting from operations 5,505,927 (205,893)
- ---------------------------------------------------------------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------
Distributions from net investment income (179,687) (49,300)
- ----------------------------------------------------------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------
Proceeds from sale of shares 9,177,923 11,906,802
- ----------------------------------------------------------------
Cost of shares redeemed (316,027) (37,185)
- ---------------------------------------------------------------- ----------- -----------
Change in net assets resulting from share transactions 8,861,896 11,869,617
- ---------------------------------------------------------------- ----------- -----------
Change in net assets 14,188,136 11,614,424
- ----------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------
Beginning of period 11,614,424 --
- ---------------------------------------------------------------- ----------- -----------
End of period (including undistributed net investment income of
$5,401 and $6,197, respectively) $25,802,560 $11,614,424
- ---------------------------------------------------------------- ----------- -----------
</TABLE>
* For the period from August 30, 1994 (date of initial public investment) to
November 30, 1994.
(See Notes which are an integral part of the Financial Statements)
NEWPOINT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
- ------------------------------------------------------------------------------
- --
(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 portfolios, the Newpoint Equity Fund and the Newpoint
Government Money Market Fund. The financial statements included herein are
only
those of Newpoint Equity Fund (the "Fund"), a diversified portfolio. 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--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. All other securities are valued at
prices provided by an independent pricing service.
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>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994*
----------------- ------------------
<S> <C> <C>
- --------------------------------------------------
Shares sold 872,874 1,191,903
- --------------------------------------------------
Shares redeemed (27,157) (3,752)
- -------------------------------------------------- ------------- --------------
Net change resulting from share transactions 845,717 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--First National Bank of Ohio, 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/or reimburse
certain operating expenses of the Fund. The Adviser can modify or terminate
this
voluntary waiver and/or reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the
Fund
with certain administrative personnel and services. The 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.
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 Trust's accounting records for which it receives a
fee.
The fee is based on the level of the Fund's average daily net assets for the
period, plus out-of-pocket expenses.
NEWPOINT EQUITY FUND
- ------------------------------------------------------------------------------
- --
ORGANIZATIONAL EXPENSES--Organizational expenses of $35,000 were borne
initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following effective date. For the period ended
November 30, 1995, the Fund paid $2,917 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
period ended November 30, 1995, were as follows:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
PURCHASES $12,828,042
- ------------------------------------------------------------------------------- -----------
SALES $ 6,038,247
- ------------------------------------------------------------------------------- -----------
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- ------------------------------------------------------------------------------
- --
To the Shareholders and Board of Trustees of
NEWPOINT FUNDS
(Newpoint Equity Fund):
We have audited the accompanying statement of assets and liabilities of
Newpoint
Equity Fund (an investment portfolio of Newpoint Funds, a Massachusetts
business
trust), including the schedule of portfolio investments, as of November 30,
1995, and the related statements of operations for the year then ended and
changes in net assets, and the financial highlights (see page 2 of the
prospectus) for the periods presented. These financial statements and
financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial
highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on
a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian. An audit also
includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Newpoint Equity Fund, an investment portfolio of Newpoint Funds, as of
November
30, 1995, and the results of its operations for the year then ended and the
changes in net assets, and the financial highlights for the periods presented,
in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN
LLP
Pittsburgh, Pennsylvania
January 12, 1996
ADDRESSES
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<S> <C> <C>
Newpoint Equity Fund
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
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Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
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Investment Adviser
First National Bank of Ohio 121 South Main Street
Akron, Ohio 44308-1440
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Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
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Transfer Agent and Dividend Disbursing Agent
and Portfolio Accounting Services
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
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Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
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</TABLE>
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NEWPOINT EQUITY FUND
(A PORTFOLIO OF NEWPOINT FUNDS)
PROSPECTUS
A Open-end, Diversified
Management Investment Company
January 31, 1996
LOGO
FEDERATED SECURITIES CORP.
(LOGO)
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Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
CUSIP 651722209
G00580-01 (1/96)
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NEWPOINT EQUITY FUND
A PORTFOLIO OF NEWPOINT FUNDS
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of the Newpoint Equity Fund (the "Fund" ) dated January 31,
1996. This Statement is not a prospectus itself. To receive a copy of the
prospectus, write to First National Bank of Ohio, 121 South Main Street,
Akron, Ohio 44308-1440.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated January 31, 1996
First National Bank of Ohio,
Investment Adviser
GENERAL INFORMATION ABOUT THE FUND1 INVESTMENT OBJECTIVE AND POLICIES1
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
CONVERTIBLE SECURITIES 1 TRUSTEE LIABILITY 13
ZERO COUPON SECURITIES 1 INVESTMENT ADVISORY SERVICES 14
WARRANTS 2
ADVISER TO THE FUND 14
INTERNATIONAL SECURITIES 2
ADVISORY FEES 14
WHEN-ISSUED AND DELAYED DELIVERY
TRANSACTIONS 2
REPURCHASE AGREEMENTS 3
RESTRICTED AND ILLIQUID SECURITIES
3
FUTURES AND OPTIONS TRANSACTIONS3
FUTURES CONTRACTS 3
"MARGIN" IN FUTURES TRANSACTIONS4
PUT OPTIONS ON FINANCIAL FUTURES
CONTRACTS 4
STOCK INDEX OPTIONS 4
CALL OPTIONS ON FINANCIAL FUTURES
CONTRACTS 5
PURCHASING PUT AND CALL OPTIONS ON
PORTFOLIO SECURITIES 5
WRITING COVERED PUT AND CALL
OPTIONS ON PORTFOLIO SECURITIES5
OVER-THE-COUNTER OPTIONS 5
REVERSE REPURCHASE AGREEMENTS 5
PORTFOLIO TURNOVER 6
INVESTMENT LIMITATIONS 6
NEWPOINT FUNDS MANAGEMENT 8
FUND OWNERSHIP 12
TRUSTEES COMPENSATION 13
TRADING IN FOREIGN SECURITIES 16
OTHER SERVICES 14 REDEEMING SHARES 16
FUND ADMINISTRATION 14 REDEMPTION IN KIND 16
CUSTODIAN AND PORTFOLIO
RECORDKEEPER 14 MASSACHUSETTS PARTNERSHIP LAW 17
TRANSFER AGENT 14
INDEPENDENT PUBLIC ACCOUNTANTS 14 TAX STATUS 17
BROKERAGE TRANSACTIONS 15
THE FUND'S TAX STATUS 17
FOREIGN TAXES 17
PURCHASING SHARES 15 SHAREHOLDERS' TAX STATUS 17
TOTAL RETURN 17
DISTRIBUTION AND SHAREHOLDER
SERVICES PLANS 15 YIELD 18
CONVERSION TO FEDERAL FUNDS 15
PERFORMANCE COMPARISONS 18
DETERMINING NET ASSET VALUE 16
DETERMINING MARKET VALUE OF
SECURITIES 16
GENERAL INFORMATION ABOUT THE FUND
The Fund is a portfolio in Newpoint Funds (the "Trust"), which was established
as a Massachusetts business trust under a Declaration of Trust dated November
12, 1990. Effective January 31, 1995, the Trust changed its name from "Portage
Funds" to "Newpoint Funds." The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests
in separate portfolios of securities.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to achieve growth of capital and income.
The investment objective cannot be changed without the approval of
shareholders. The policies described below may be changed by the Board of
Trustees (the "Trustees") without shareholder approval. Shareholders will be
notified before any material change in these policies becomes effective.
CONVERTIBLE SECURITIES
Convertible bonds and convertible preferred stocks are fixed income securities
that generally retain the investment characteristics of fixed income
securities until they have been converted but also react to movements in the
underlying equity securities. The holder is entitled to receive the fixed
income of a bond or the dividend preference of a preferred stock until the
holder elects to exercise the conversion privilege. Usable bonds are corporate
bonds that can be used, in whole or in part, customarily at full face value,
in lieu of cash to purchase the issuer's common stock. When owned as part of a
unit along with warrants, which are options to buy the common stock, they
function as convertible bonds, except that the warrants generally will expire
before the bond's maturity. Convertible securities are senior to equity
securities and, therefore, have a claim to assets of the corporation prior to
the holders of common stock in the case of liquidation. However, convertible
securities are generally subordinated to similar non-convertible securities of
the same company. The interest income and dividends from convertible bonds and
preferred stocks provide a stable stream of income with generally higher
yields than common stocks, but lower than non-convertible securities of
similar quality.
The Fund will exchange or convert the convertible securities held in its
portfolio into shares of the underlying common stock in instances where, in
the opinion of First National Bank of Ohio, the Fund's investment adviser (the
"Adviser"), the investment characteristics of the underlying common shares
will assist the Fund in achieving its investment objective. Otherwise, the
Fund will hold or trade the convertible securities. In selecting convertible
securities for the Fund, the Adviser evaluates the investment characteristics
of the convertible security as a fixed income instrument and the investment
potential of the underlying equity security for capital appreciation. In
evaluating these matters with respect to a particular convertible security,
the Adviser considers numerous factors, including the economic and political
outlook, the value of the security relative to other investment alternatives,
trends in the determinants of the issuer's profits, and the issuer's
management capability and practices.
ZERO COUPON SECURITIES
The Fund may invest in zero coupon bonds and zero coupon convertible
securities, whose prices are more sensitive to fluctuations in interest rates
than are conventional bonds and convertible securities. The Fund may invest in
zero coupon bonds in order to receive the rate of return through the
appreciation of the bond. This application is extremely attractive in a
falling rate environment as the price of the bond rises rapidly in value as
opposed to regular coupon bonds. A zero coupon bond makes no periodic interest
payments and the entire obligation becomes due only upon maturity.
Zero coupon convertible securities are debt securities which are issued at a
discount to their face amount and do not entitle the holder to any periodic
payments of interest prior to maturity. Rather, interest earned on zero coupon
convertible securities accretes at a stated yield until the security reaches
its face amount at maturity. Zero coupon convertible securities are
convertible into a specific number of shares of the issuer's common stock. In
addition, zero coupon convertible securities usually have put features that
provide the holder with the opportunity to sell the bonds back to the issuer
at a stated price before maturity.
Federal tax law requires the holder of a zero coupon security to recognize
income from the security prior to the receipt of cash payments. To maintain
its qualification as a regulated investment company and avoid liability for
federal income taxes, the Fund will be required to distribute income accrued
from zero coupon securities which it owns, and may have to sell portfolio
securities (perhaps at disadvantageous times) in order to generate cash to
satisfy these distribution requirements.
WARRANTS
The Fund may invest in warrants. Warrants provide an option to purchase common
stock at a specific price (usually at a premium above the market value of the
optioned common stock at issuance) valid for a specific period of time.
Warrants may have a life ranging from less than a year to twenty years or may
be perpetual. However, most warrants have expiration dates after which they
are worthless. In addition, if the market price of the common stock does not
exceed the warrant's exercise price during the life of the warrant, the
warrant will expire as worthless. Warrants have no voting rights, pay no
dividends, and have no rights with respect to the assets of the corporation
issuing them. The percentage increase or decrease in the market price of the
warrant may tend to be greater than the percentage increase or decrease in the
market price of the underlying common stock. The Fund will not invest more
than 5% of the value of its total assets in warrants. No more than 2% of this
5% may be in warrants which are not listed on the New York or American Stock
Exchanges. Warrants acquired in units or attached to securities may be deemed
to be without value for purposes of this policy.
INTERNATIONAL SECURITIES
The international equity securities in which the Fund may invest include
international stocks traded domestically or abroad through various stock
exchanges, American Depositary Receipts ("ADRs"), and International Depositary
Receipts ("IDRs"). The international fixed income securities will include
ADRs, IDRs, and government securities of other nations, and will be rated
investment grade (i.e., Baa or better by Moody's Investors Service, Inc. or
BBB or better by Standard and Poor's Rating Group) or deemed by the Adviser to
be of an equivalent quality. In the event that an international debt security
which had an eligible rating when purchased is downgraded below the ratings of
Baa or BBB, the Adviser will promptly reassess whether continued holding of
the security is consistent with the Fund's objective. The Fund may also invest
in shares of open-end and closed-end management investment companies which
invest primarily in international securities described above.
Investing in foreign securities carries substantial risks in addition to those
associated with domestic investments. Foreign securities may be denominated in
foreign currencies. Therefore, the value in U.S. dollars of the Fund's assets
and income may be affected by changes in exchange rates and regulations.
Although the Fund values its assets daily in U.S. dollars, it will not convert
its holding of foreign currencies to U.S. dollars daily. When the Fund
converts its holdings to another currency, it may incur currency conversion
costs. Foreign exchange dealers realize a profit on the difference between the
prices at which they buy and sell currencies.
Other differences between investing in foreign and U.S. companies include:
o less publicly available information about foreign companies;
o the lack of uniform financial accounting standards applicable to foreign
companies;
o less readily available market quotations on foreign companies;
o differences in government regulation and supervision of foreign stock
exchanges, brokers, listed companies, and banks;
o generally lower foreign stock market volume;
o the likelihood that foreign securities may be less liquid or more
volatile;
o generally higher foreign brokerage commissions;
o possible difficulty in enforcing contractual obligations or obtaining
court judgments abroad because of differences in the legal systems;
o unreliable mail service between countries; and
o political or financial changes which adversely affect investments in some
countries.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price or yield for the Fund. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of the Fund sufficient
to make payment for the securities to be purchased are segregated on the
Fund's records at the trade date. These assets are marked to market daily and
are maintained until the transaction has been settled. The Fund does not
intend to engage in when-issued and delayed delivery transactions to an extent
that would cause the segregation of more than 20% of the total value of its
assets.
REPURCHASE AGREEMENTS
The Fund or its custodian will take possession of the securities subject to
repurchase agreements, and these securities will be marked to market daily. To
the extent that the original seller does not repurchase the securities from
the Fund, the Fund could receive less than the repurchase price on any sale of
such securities. In the event that such a defaulting seller filed for
bankruptcy or became insolvent, disposition of such securities by the Fund
might be delayed pending court action. The Fund believes that under the
regular procedures normally in effect for custody of the Fund's portfolio
securities subject to repurchase agreements, a court of competent jurisdiction
would rule in favor of the Fund and allow retention or disposition of such
securities. The Fund will only enter into repurchase agreements with banks and
other recognized financial institutions, such as broker/dealers, which are
deemed by the Adviser to be creditworthy pursuant to guidelines established by
the Trustees.
RESTRICTED AND ILLIQUID SECURITIES
The ability of the Trustees to determine the liquidity of certain restricted
securities is permitted under a Securities and Exchange Commission ("SEC")
staff position set forth in the adopting release for Rule 144A under the
Securities Act of 1933 (the "Rule"). The Rule is a non-exclusive safe-harbor
for certain secondary market transactions involving registration for resales
of otherwise restricted securities to qualified institutional buyers. The Rule
was expected to further enhance the liquidity of the secondary market for
securities eligible for resale under the Rule. The Fund believes that the
staff of the SEC has left the question of determining the liquidity of all
restricted securities to the Trustees. The Trustees may consider the following
criteria in determining the liquidity of certain restricted securities:
o the frequency of trades and quotes for the security;
o the number of dealers willing to purchase or sell the security and the
number of other potential buyers;
o dealer undertakings to make a market in the security; and
o the nature of the security and the nature of the marketplace trades.
The Fund may invest in commercial paper issued in reliance on the exemption
from registration afforded by Section 4(2) of the Securities Act of 1933 and
treats such commercial paper as liquid. Section 4(2) commercial paper is
restricted as to disposition under federal securities law and is generally
sold to institutional investors, such as the Fund, who agree that they are
purchasing the paper for investment purposes and not with a view to public
distribution. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) commercial paper is normally resold to other institutional
investors like the Fund through or with the assistance of the issuer or
investment dealers who make a market in Section 4(2) commercial paper, thus
providing liquidity.
FUTURES AND OPTIONS TRANSACTIONS
As a means of reducing fluctuations in the net asset value of shares of the
Fund, the Fund may attempt to hedge all or a portion of its portfolio by
buying and selling financial futures contracts, buying put and call options on
portfolio securities and put options on financial futures contracts, and
writing call options on futures contracts. The Fund may also write covered
call options on its portfolio securities and covered put options to attempt to
increase its current income. The Fund will maintain its positions in
securities, option rights, and segregated cash subject to puts and calls until
the options are exercised, closed, or have expired. An option position on
financial futures contracts may be closed out over-the-counter or on a
nationally recognized exchange which provides a secondary market for options
of the same series.
FUTURES CONTRACTS
The Fund may purchase and sell financial futures contracts to hedge against
the effects of changes in the value of portfolio securities due to anticipated
changes in interest rates and market conditions without necessarily buying or
selling the securities. The Fund also may purchase and sell stock index
futures to hedge against changes in prices. The Fund will not engage in
futures transactions for speculative purposes.
A futures contract is a firm commitment by two parties: the seller who agrees
to make delivery of the specific type of security called for in the contract
("going short") and the buyer who agrees to take delivery of the security
("going long") at a certain time in the future. For example, in the fixed
income securities market, prices move inversely to interest rates. A rise in
rates means a drop in price. Conversely, a drop in rates means a rise in
price. In order to hedge its holdings of fixed income securities against a
rise in market interest rates, the Fund could enter into contracts to deliver
securities at a predetermined price (i.e., "go short") to protect itself
against the possibility that the prices of its fixed income securities may
decline during the Fund's anticipated holding period. The Fund would "go long"
(agree to purchase securities in the future at a predetermined price) to hedge
against a decline in market interest rates.
Stock index futures contracts are based on indices that reflect the market
value of common stock of the firms included in the indices. An index futures
contract is an agreement pursuant to which two parties agree to take or make
delivery of an amount of cash equal to the differences between the value of
the index at the close of the last trading day of the contract and the price
at which the index contract was originally written.
"MARGIN" IN FUTURES TRANSACTIONS
Unlike the purchase or sale of a security, the Fund does not pay or receive
money upon the purchase or sale of a futures contract. Rather, the Fund is
required to deposit an amount of "initial margin" in cash or U.S. Treasury
bills with its custodian (or the broker, if legally permitted). The nature of
initial margin in futures transactions is different from that of margin in
securities transactions in that initial margin in futures transactions does
not involve the borrowing of funds by the Fund to finance the transactions.
Initial margin is in the nature of a performance bond or good faith deposit on
the contract which is returned to the Fund upon termination of the futures
contract, assuming all contractual obligations have been satisfied.
A futures contract held by the Fund is valued daily at the official settlement
price of the exchange on which it is traded. Each day the Fund pays or
receives cash, called "variation margin," equal to the daily change in value
of the futures contract. This process is known as "marking to market."
Variation margin does not represent a borrowing or loan by the Fund but is
instead settlement between the Fund and the broker of the amount one would owe
the other if the futures contract expired. In computing its daily net asset
value, the Fund will mark to market its open futures positions.
The Fund is also required to deposit and maintain margin when it writes call
options on futures contracts.
PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS
The Fund may purchase listed put options on financial futures contracts to
protect portfolio securities against decreases in value resulting from market
factors, such as an anticipated increase in interest rates. Unlike entering
directly into a futures contract, which requires the purchaser to buy a
financial instrument on a set date at a specified price, the purchase of a put
option on a futures contract entitles (but does not obligate) its purchaser to
decide on or before a future date whether to assume a short position at the
specified price.
Generally, if the hedged portfolio securities decrease in value during the
term of an option, the related futures contracts will also decrease in value
and the option will increase in value. In such an event, the Fund will
normally close out its option by selling an identical option. If the hedge is
successful, the proceeds received by the Fund upon the sale of the second
option will be large enough to offset both the premium paid by the Fund for
the original option plus the decrease in value of the hedged securities.
Alternatively, the Fund may exercise its put option to close out the position.
To do so, it would simultaneously enter into a futures contract of the type
underlying the option (for a price less than the strike price of the option)
and exercise the option. The Fund would then deliver the futures contract in
return for payment of the strike price. If the Fund neither closes out nor
exercises an option, the option will expire on the date provided in the option
contract, and only the premium paid for the contract will be lost.
STOCK INDEX OPTIONS
The Fund may purchase put options on stock indices listed on national
securities exchanges or traded in the over-the-counter market. A stock index
fluctuates with changes in the market values of the stocks included in the
index.
The effectiveness of purchasing stock index options will depend upon the
extent to which price movements in the Fund's portfolio correlate with price
movements of the stock index selected. Because the value of an index option
depends upon movements in the level of the index rather than the price of a
particular stock, whether the Fund will realize a gain or loss from the
purchase of options on an index depends upon movements in the level of stock
prices in the stock market generally or, in the case of certain indices, in an
industry or market segment, rather than movements in the price of a particular
stock. Accordingly, successful use by the Fund of options on stock indices
will be subject to the ability of the Adviser to predict correctly movements
in the directions of the stock market generally or of a particular industry.
This requires different skills and techniques than predicting changes in the
price of individual stocks.
CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS
In addition to purchasing put options on futures, the Fund may write listed
and over-the-counter call options on financial futures contracts to hedge its
portfolio against an increase in market interest rates. When the Fund writes a
call option on a futures contract, it is undertaking the obligation of
assuming a short futures position (selling a futures contract) at the fixed
strike price at any time during the life of the option if the option is
exercised. As stock prices fall or market interest rates rise, causing the
prices of futures to go down, the Fund's obligation under a call option on a
future (to sell a futures contract) costs less to fulfill, causing the value
of the Fund's call option position to increase.
In other words, as the underlying futures price goes down below the strike
price, the buyer of the option has no reason to exercise the call, so that the
Fund keeps the premium received for the option. This premium can substantially
offset the drop in value of the Fund's portfolio securities.
Prior to the expiration of a call written by the Fund, or exercise of it by
the buyer, the Fund may close out the option by buying an identical option. If
the hedge is successful, the cost of the second option will be less than the
premium received by the Fund for the initial option. The net premium income of
the Fund will then substantially offset the decrease in value of the hedged
securities.
The Fund will not maintain open positions in futures contracts it has sold or
call options it has written on futures contracts if, in the aggregate, the
value of the open positions (marked to market) exceeds the current market
value of its securities portfolio plus or minus the unrealized gain or loss on
those open positions, adjusted for the correlation of volatility between the
hedged securities and the futures contracts. If this limitation is exceeded at
any time, the Fund will take prompt action to close out a sufficient number of
open contracts to bring its open futures and options positions within this
limitation.
PURCHASING PUT AND CALL OPTIONS ON PORTFOLIO SECURITIES
The Fund may purchase put and call options on portfolio securities to protect
against price movements in particular securities in its portfolio. A put
option gives the Fund, in return for a premium, the right to sell the
underlying security to the writer (seller) at a specified price during the
term of the option. A call option gives the Fund, in return for a premium, the
right to buy the underlying securities from the seller.
WRITING COVERED PUT AND CALL OPTIONS ON PORTFOLIO SECURITIES
The Fund may also write covered put and call options to generate income and
thereby protect against price movements in particular securities in the Fund's
portfolio. As the writer of a call option, the Fund has the obligation upon
exercise of the option during the option period to deliver the underlying
security upon payment of the exercise price. As the writer of a put option,
the Fund has the obligation to purchase a security from the purchaser of the
option upon the exercise of the option.
The Fund may only write call options either on securities held in its
portfolio or on securities which it has the right to obtain without payment of
further consideration (or has segregated cash in the amount of any additional
consideration). In the case of put options, the Fund will segregate cash or
U.S. Treasury obligations with a value equal to or greater than the exercise
price of the underlying securities.
OVER-THE-COUNTER OPTIONS
The Fund may purchase and write over-the-counter options on portfolio
securities in negotiated transactions with the buyers or writers of the
options when options on the portfolio securities held by the Fund are not
traded on an exchange.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These transactions
are similar to borrowing cash. In a reverse repurchase agreement, the Fund
transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate. The use of
reverse repurchase agreements may enable the Fund to avoid selling portfolio
instruments at a time when a sale may be deemed to be disadvantageous, but the
ability to enter into reverse repurchase agreements does not ensure that the
Fund will be able to avoid selling portfolio instruments at a disadvantageous
time.
When effecting reverse repurchase agreements, liquid assets of the Fund in a
dollar amount sufficient to make payment for the obligations to be purchased
are segregated at the trade date. These securities are marked to market daily
and are maintained until the transaction is settled.
PORTFOLIO TURNOVER
Although the Fund does not intend to invest for the purpose of seeking short-
term profits, securities in its portfolio will be sold whenever the Adviser
believes it is appropriate to do so in light of the Fund's investment
objective, without regard to the length of time a particular security may have
been held. For the period from November 30, 1994 to November 30, 1995, the
Fund's portfolio turnover rate was 35%.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin, but may obtain such short-term credits as may be necessary for
clearance of purchases and sales of portfolio securities. The deposit or
payment by the Fund of initial or variation margin in connection with
futures contracts or related options transactions is not considered the
purchase of a security on margin.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities, except that the Fund may
borrow money directly or through reverse repurchase agreements in amounts
up to one-third of the value of its total assets, including the amount
borrowed; and except to the extent that the Fund may enter into futures
contracts. The Fund will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure or to facilitate management of the
Fund by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Fund will not purchase any securities while any
borrowings in excess of 5% of its total assets are outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may mortgage, pledge, or
hypothecate assets having a market value not exceeding 10% of the value
of total assets at the time of the pledge. For purposes of this
limitation, the following will not be deemed to be pledges of the Fund's
assets: (a) the deposit of assets in escrow in connection with the
writing of covered put or call options and the purchase of securities on
a when-issued basis; and (b) collateral arrangements with respect to (i)
the purchase and sale of stock options (and options on stock indices) and
(ii) initial or variation margin for futures contracts. Margin deposits
for the purchase and sale of futures contracts and related options are
not deemed to be a pledge.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities issued by any one issuer
(other than cash, cash items, or securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities, and repurchase
agreements collateralized by such securities) if, as a result, more than
5% of the value of its total assets would be invested in the securities
of that issuer, and will not acquire more than 10% of the outstanding
voting securities of any one issuer.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its investment
objective, policies, and limitations.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited
partnership interests, although it may invest in the securities of
companies whose business involves the purchase or sale of real estate or
in securities which are secured by real estate or interests in real
estate.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts except to the extent that the Fund may engage
in transactions involving financial futures contracts or options on
financial futures contracts.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except portfolio securities up
to one-third of the value of its total assets. This shall not prevent the
Fund from purchasing or holding U.S. government obligations, money market
instruments, variable rate demand notes, bonds, debentures, notes,
certificates of indebtedness, or other debt securities, entering into
repurchase agreements, or engaging in other transactions where permitted
by the Fund's investment objective, policies, and limitations or the
Trust's Declaration of Trust.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in
any one industry (other than securities issued by the U.S. government,
its agencies or instrumentalities).
The above investment limitations cannot be changed without shareholder
approval. The following investment limitations may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any
material change in these limitations becomes effective.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers with records of less than three years of continuous
operations, including the operation of any predecessor.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF
THE TRUST
The Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Trust or the Adviser, owning individually
more than 1/2 of 1% of the issuer's securities, together own more than 5%
of the issuer's securities.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will limit its investment in other investment companies to no
more than 3% of the total outstanding voting stock of any investment
company, invest no more than 5% of its total assets in any one investment
company, and invest no more than 10% of its total assets in investment
companies in general. The Fund will purchase securities of investment
companies only in open-market transactions involving only customary
broker's commissions. However, these limitations are not applicable if
the securities are acquired in a merger, consolidation, or acquisition of
assets.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest more than 5% of the value of its total assets in
securities subject to restrictions on resale under the Securities Act of
1933, except for commercial paper issued under Section 4(2) of the
Securities Act of 1933 and certain other restricted securities which meet
the criteria for liquidity as established by the Trustees.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of the value of its net assets in
illiquid securities, including repurchase agreements providing for
settlement in more than seven days after notice, non-negotiable fixed
time deposits with maturities over seven days, over-the-counter options,
and certain restricted securities not determined by the Trustees to be
liquid.
INVESTING IN MINERALS
The Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, although it may invest in
the securities of issuers which invest in or sponsor such programs.
PURCHASING SECURITIES TO EXERCISE CONTROL
The Fund will not purchase securities of a company for the purpose of
exercising control or management.
INVESTING IN WARRANTS
The Fund will not invest more than 5% of the value of its net assets in
warrants. No more than 2% of this 5% may be warrants which are not listed
on the New York Stock or American Stock Exchanges.
INVESTING IN OPTIONS
The Fund will not purchase put or call options on securities or futures
contracts if more than 5% of the value of the Fund's total assets would
be invested in premiums on open option positions.
WRITING COVERED CALL OPTIONS
The Fund will not write call options on securities unless the securities
are held in the Fund's portfolio or unless the Fund is entitled to them
in deliverable form without further payment or after segregating cash in
the amount of any further payment.
Except with respect to borrowing money, if a percentage limitation is adhered
to at the time of investment, a later increase or decrease in percentage
resulting from any change in value or net assets will not result in a
violation of such restriction.
The Fund does not expect to borrow money or pledge securities in excess of 5%
of the value of its total assets in the coming fiscal year.
For purposes of its policies and limitations, the Fund considers certificates
of deposit and demand and time deposits issued by a U.S. branch of a domestic
bank or savings and loan association having capital, surplus, and undivided
profits in excess of $100,000,000 at the time of investment to be "cash
items."
To comply with registration requirements in certain states, the Fund (1) will
limit the aggregate value of the assets underlying covered call options or put
options written by the Fund to not more than 25% of its net assets, (2) will
limit the premiums paid for options purchased by the Fund to 5% of its net
assets, and (3) will limit the margin deposits on futures contracts entered
into by the Fund to 5% of its net assets. (If state requirements change, these
restrictions may be revised without shareholder notification.)
NEWPOINT FUNDS MANAGEMENT
Officers and Trustees are listed with their addresses, principal occupations,
and present positions.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.;
Chief Executive Officer and Director, Trustee, or Managing General Partner of
the Funds. Mr. Donahue is the father of J. Christopher Donahue, Executive Vice
President of the Trust .
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's Hospital
of Pittsburgh; Director, Trustee, or Managing General Partner of the Funds;
formerly, Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; President, Northgate Village Development
Corporation; Partner or Trustee in private real estate ventures in Southwest
Florida; Director, Trustee, or Managing General Partner of the Funds;
formerly, President, Naples Property Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice Chairman and
Director, PNC Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes, Inc.
J. Christopher Donahue *
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.;
Trustee, Federated Administrative Services, Federated Services Company, and
Federated Shareholder Services; President or Executive Vice President of the
Funds; Director, Trustee, or Managing General Partner of some of the Funds.
Mr. Donahue is the son of John F. Donahue, Chairman of the Company.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director, Trustee,
or Managing General Partner of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, University of Pittsburgh;
Medical Director, University of Pittsburgh Medical Center - Downtown; Member,
Board of Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
Hospitals; Director, Trustee, or Managing General Partner of the Funds.
Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty; Director,
Eat'N Park Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Counsel, Horizon
Financial, F.A., Western Region.
Edward C. Gonzales *
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
President and Treasurer
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated
Research Corp., Federated Global Research Corp. and Passport Research, Ltd.;
Executive Vice President and Director, Federated Securities Corp.; Trustee,
Federated Services Company; Chairman, Treasurer, and Trustee, Federated
Administrative Services; Trustee or Director of some of the Funds; President,
Executive Vice President and Treasurer of some of the Funds.
Peter E. Madden
Seacliff
562 Bellevue Avenue
Newport, RI
Birthdate: March 16, 1942
Trustee
Consultant; State Representative, Commonwealth of Massachusetts; Director,
Trustee, or Managing General Partner of the Funds; formerly, President, State
Street Bank and Trust Company and State Street Boston Corporation.
Gregor F. Meyer
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or
Managing General Partner of the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director, Trustee or Managing General Partner of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., and U.S. Space Foundation; Chairman, Czecho Management Center;
Director, Trustee, or Managing General Partner of the Funds; President
Emeritus, University of Pittsburgh; founding Chairman, National Advisory
Council for Environmental Policy and Technology and Federal Emergency
Management Advisory Board.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/marketing consultant; Conference Coordinator, Non-profit
entities; Director, Trustee, or Managing General Partner of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President and Secretary
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Services Company; President and Trustee, Federated
Shareholder Services; Director, Federated Securities Corp.; Executive Vice
President and Secretary of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of
the Funds; Director or Trustee of some of the Funds.
David M. Taylor
Federated Investors Tower
Pittsburgh, PA
Birthdate: January 13, 1947
Treasurer
Senior Vice President and Trustee, Federated Investors; Vice President,
Federated Shareholder Services; Treasurer of some of the Funds.
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940, as amended.
@ Member of the Trust's Executive Committee. The Executive Committee of
the Board of Trustees handles the responsibilities of the Board of
Trustees between meetings of the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management Series;
Arrow Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; FTI Funds;
Federated ARMs Fund; Federated Equity Funds; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Master Trust; Federated
Municipal Trust; Federated Short-Term Municipal Trust; Federated Short-Term
U.S. Government Trust; Federated Stock Trust; Federated Tax-Free Trust;
Federated Total Return Series, Inc.; Federated U.S. Government Bond Fund;
Federated U.S. Government Securities Fund: 1-3 Years; Federated U.S.
Government Securities Fund: 3-5 Years; Federated U.S. Government Securities
Fund: 5-10 Years; First Priority Funds; Fixed Income Securities, Inc.;
Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress Municipal Income
Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S. Government Securities,
Inc.; Government Income Securities, Inc.; High Yield Cash Trust; Insurance
Management Series; Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Investment Series Trust; Liberty Equity Income
Fund, Inc.; Liberty High Income Bond Fund, Inc.; Liberty Municipal Securities
Fund, Inc.; Liberty U.S. Government Money Market Trust; Liberty Term Trust,
Inc. - 1999; Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed Series
Trust; Money Market Management, Inc.; Money Market Obligations Trust; Money
Market Trust; Municipal Securities Income Trust; Newpoint Funds; 111 Corcoran
Funds; Peachtree Funds; The Planters Funds; RIMCO Monument Funds; Star Funds;
The Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.;
Targeted Duration Trust; Tax-Free Instruments Trust; Trust for Financial
Institutions; Trust For Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; The Virtus Funds;
World Investment Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of January 6, 1996, the following shareholders of record owned 5% or more
of the outstanding shares of the Fund: Parcol and Co., Akron, OH, owned
approximately 2,063,234 shares (100%).
TRUSTEES COMPENSATION
NAME , AND AGGREGATE TOTAL COMPENSATION
POSITION WITH THE COMPENSATION FROM PAID TO THE TRUSTEES FROM THE
TRUST THE TRUST+ TRUST AND FUND COMPLEX **
John F. Donahue,
Chairman and Trustee $ -0- $ -0- for the Trust and
69 investment companies
Thomas G. Bigley,
Trustee $266 $24,991 for the Trust and
50 investment companies
John T. Conroy, Jr.,
Trustee $1,163.75 $136,100 for the Trust and
65 investment companies
William J. Copeland,
Trustee $1,163.75 $136,100 for the Trust and
65 investment companies
J. Christopher Donahue
Trustee $ $ for the Trust and
------- -------
investment companies
---
James E. Dowd,
Trustee $1,163.75 $136,100 for the Trust and
65 investment companies
Lawrence D. Ellis, M.D.,
Trustee $1,059.50 $123,600 for the Trust and
65 investment companies
Edward L. Flaherty, Jr.,
Trustee $1,163.75 $136,100 for the Trust and
65 investment companies
Edward C. Gonzales,
President and Trustee $ -0- $ -0- for the Trust and
18 investment companies
Peter E. Madden,
Trustee $899.50 $104,880 for the Trust and
65 investment companies
Gregor F. Meyer,
Trustee $1,059.50 $123,600 for the Trust and
65 investment companies
John E. Murray, Jr.
Trustee $ $ for the Trust and
------- -------
investment companies
---
Wesley W. Posvar,
Trustee $1,059.50 $123,600 for the Trust and
65 investment companies
Marjorie P. Smuts,
Trustee $1,059.50 $123,600 for the Trust and
65 investment companies
+The aggregate compensation is paid by the Trust, which is comprised of two
portfolios.
**Certain of the Trustees name as Trustees of some, but not all, of the
investment companies that comprise the Federated Funds Complex. In addition to
Messrs. John F. Donahue and Edward C. Gonzales, no other Officer of the Trust
received any compensation from the Trust.
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees will only be
liable for their own willful defaults. If reasonable care has been exercised
in the selection of officers, agents, employees, or investment advisers, a
Trustee shall not be liable for any neglect or wrongdoing of any such person.
However, they are not protected against any liability to which they would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of
their office.
INVESTMENT ADVISORY SERVICES
ADVISER TO THE FUND
The Fund's investment adviser is First National Bank of Ohio. It is a wholly-
owned subsidiary of FirstMerit Corp. Because of the internal controls
maintained by First National Bank of Ohio to restrict the flow of non-public
information, Fund investments are typically made without any knowledge of
First National Bank of Ohio's or its affiliates' lending relationships with an
issuer.
The Adviser shall not be liable to the Trust, the Fund, or any shareholder of
the Fund for any losses that may be sustained in the purchase, holding, or
sale of any security, or for anything done or omitted by it, except acts or
omissions involving willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by its contract with the
Trust.
ADVISORY FEES
For its advisory services, the Adviser receives an annual investment advisory
fee as described in the prospectus. For the fiscal year ended November 30,
1995, and for the period from September 13, 1994 (date of initial public
investment) to November 30, 1994, the Adviser earned $152,062, and $17,604,
respectively, of which $123,730, and $17,604, respectively, were voluntarily
waived.
STATE EXPENSE LIMITATIONS
The Adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses)
exceed 2 1/2% per year of the first $30 million of average net assets, 2%
per year of the next $70 million of average net assets, and 1 1/2% per
year of the remaining average net assets, the Adviser will reimburse the
Fund for its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this expense
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the Adviser will
be limited, in any single fiscal year, by the amount of the investment
advisory fee.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
OTHER SERVICES
FUND ADMINISTRATION
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee as
described in the prospectus. For the fiscal year ended November 30, 1995, and
for the period from September 13, 1994 (date of initial public investment) to
November 30, 1994, the Administrator earned $99,999, and $21,370,
respectively, of which $0 and $17,000 ,was voluntarily waived.
CUSTODIAN AND PORTFOLIO RECORDKEEPER
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for
the securities and cash of the Fund.
TRANSFER AGENT
Federated Services Company, Boston, MA, a subsidiary of Federated Investors,
is transfer agent and dividend disbursing agent for the Fund. It also provides
certain accounting and recordkeeping services with respect to the Fund's
portfolio investments.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Fund are Arthur Andersen LLP,
Pittsburgh, Pennsylvania.
BROKERAGE TRANSACTIONS
The adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the
adviser and may include: advice as to the advisability of investing in
securities; security analysis and reports; economic studies; industry studies;
receipt of quotations for portfolio evaluations; and similar services.
Research services provided by brokers and dealers may be used by the adviser
or its affiliates in advising the Fund and other accounts. To the extent that
receipt of these services may supplant services for which the adviser or its
affiliates might otherwise have paid, it would tend to reduce their expenses.
The adviser and its affiliates exercise reasonable business judgment in
selecting brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such persons are reasonable in relationship to the value of the brokerage
and research services provided. During the fiscal year ended 1995, and for
the period from September 13, 1994 (date of initial public investment) to
November 30, 1994, the Fund paid total brokerage commissions of $20,651, and
$22,352, respectively.
Although investment decisions for the Fund are made independently from those
of the other accounts managed by the adviser, investments of the type the Fund
may make may also be made by those other accounts. When the Fund and one or
more other accounts managed by the adviser are prepared to invest in, or
desire to dispose of, the same security, available investments or
opportunities for sales will be allocated in a manner believed by the adviser
to be equitable to each. In some cases, this procedure may adversely affect
the price paid or received by the Fund or the size of the position obtained or
disposed of by the Fund. In other cases, however, it is believed that
coordination and the ability to participate in volume transactions will be to
the benefit of the Fund.
PURCHASING SHARES
Except under certain circumstances described in the prospectus, shares of the
Fund are sold at their net asset value plus a sales charge, if any, on days
the New York Stock Exchange and the Federal Reserve Wire System are open for
business. The procedure for purchasing shares of the Fund is explained in the
prospectus under "Investing in the Fund."
DISTRIBUTION AND SHAREHOLDER SERVICES PLANS
These arrangements permit the payment of fees to financial institutions and
the distributor to stimulate distribution activities and to cause services to
be provided to shareholders by a representative who has knowledge of the
shareholder's particular circumstances and goals. These activities and
services may include, but are not limited to: marketing efforts; providing
office space, equipment, telephone facilities, and various clerical,
supervisory, computer, and other personnel as necessary or beneficial to
establish and maintain shareholder accounts and records; processing purchase
and redemption transactions and automatic investments of client account cash
balances; answering routine client inquiries; and assisting clients in
changing dividend options, account designations, and addresses.
By adopting the distribution plan, the Trustees expect that the Fund will be
able to achieve a more predictable flow of cash for investment purposes and to
meet redemptions. This will facilitate more efficient portfolio management and
assist the Fund in pursuing its investment objectives. By identifying
potential investors whose needs are served by the Fund's objectives, and
properly servicing these accounts, it may be possible to curb sharp
fluctuations in rates of redemptions and sales.
Other benefits, which may be realized under either arrangement, may include:
(1) providing personal services to shareholders; (2) investing shareholder
assets with a minimum of delay and administrative detail; (3) enhancing
shareholder recordkeeping systems; and (4) responding promptly to
shareholders' requests and inquiries concerning their accounts.
For the fiscal year ended November 30, 1995, Federated Securities Corp. earned
distribution fees of $23,877, none of which were waived; and for the period
from September 13, 1994, (date of initial public investment) to November 30,
1994, $5,868 in distribution fees were earned, all of which were voluntarily
waived.
CONVERSION TO FEDERAL FUNDS
It is the Fund's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be in
federal funds or be converted into federal funds. First National Bank of Ohio
and Federated Services Company acts as the shareholder's agent in depositing
checks and converting them to federal funds.
DETERMINING NET ASSET VALUE
The net asset value generally changes each day. The days on which the net
asset value is calculated by the Fund are described in the prospectus.
DETERMINING MARKET VALUE OF SECURITIES
Market or fair values of the Fund's portfolio securities are determined as
follows:
o for equity securities, according to the last sale price on a national
securities exchange, if applicable;
o in the absence of recorded sales for listed equity securities, according
to the mean between the last closing bid and asked prices;
o for unlisted equity securities, latest bid prices;
o for bonds and other fixed income securities, as determined by an
independent pricing service;
o for short-term obligations, according to the mean between bid and asked
prices as furnished by an independent pricing service, or for short-term
obligations with remaining maturities of 60 days or less at the time of
purchase, at amortized cost; or
o for all other securities, at fair value as determined in good faith by
the Trustees.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may reflect: institutional trading in
similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics, and other market data.
The Fund will value futures contracts, options and put options on financial
futures at their market values established by the exchanges at the close of
options trading on such exchanges, unless the Trustees determine in good faith
that another method of valuing option positions is necessary.
Over-the-counter put options will be valued at the mean between the bid and
the asked prices. Covered call options will be valued at the last sale price
on the national exchange on which such option is traded. Unlisted call options
will be valued at the latest bid price as provided by brokers.
TRADING IN FOREIGN SECURITIES
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange. In computing its net asset value, the
Fund values foreign securities at the latest closing price on the exchange on
which they are traded immediately prior to the closing of the New York Stock
Exchange. Certain foreign currency exchange rates may also be determined at
the latest rate prior to the closing of the New York Stock Exchange. 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 New York Stock Exchange. 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 Trustees, although the actual calculation may
be done by others.
REDEEMING SHARES
Shares are redeemed at the next computed net asset value after First National
Bank of Ohio receives the redemption request. Redemption procedures are
explained in the prospectus under "Redeeming Shares." Redemption requests
cannot be executed on days on which the New York Stock Exchange is closed or
on federal holidays when wire transfers are restricted.
REDEMPTION IN KIND
The Trust has elected to be governed by Rule 18f-1 of the Investment Company
Act of 1940 under which the Trust is obligated to redeem shares for any one
shareholder in cash only up to the lesser of $250,000 or 1% of the Fund's net
asset value during any 90-day period.
Any redemption beyond this amount will also be in cash unless the Trustees
determine that payments should be in kind. In such a case, the Fund will pay
all or a portion of the remainder of the redemption in portfolio instruments,
valued in the same way as the Fund determines net asset value. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable.
Redemption in kind is not as liquid as a cash redemption. If redemption is
made in kind, shareholders receiving their securities and selling them before
their maturity could receive less than the redemption value of their
securities and could incur certain transaction costs.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust. To
protect shareholders of the Fund, the Trust has filed legal documents with
Massachusetts that expressly disclaim the liability of shareholders for such
acts or obligations of the Trust. These documents require notice of this
disclaimer to be given in each agreement, obligation, or instrument the Trust
or its Trustees enter into or sign on behalf of the Fund.
In the unlikely event a shareholder of the Fund is held personally liable for
the Trust's obligations, the Trust is required by the Declaration of Trust to
use its property to protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a shareholder
for any act or obligation of the Trust. Therefore, financial loss resulting
from liability as a shareholder will occur only if the Trust itself cannot
meet its obligations to indemnify shareholders and pay judgments against them
from its assets.
TAX STATUS
THE FUND'S TAX STATUS
The Fund will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment, the Fund must,
among other requirements:
o derive at least 90% of its gross income from dividends, interest, and
gains from the sale of securities;
o derive less than 30% of its gross income from the sale of securities held
less than three months;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income earned
during the year.
FOREIGN TAXES
Investment income on certain foreign securities in which the Fund may invest
may be subject to foreign withholding or other taxes that could reduce the
return on these securities. Tax treaties between the United States and foreign
countries, however, may reduce or eliminate the amount of foreign taxes to
which the Fund would be subject.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends and capital gains
received as cash or additional shares. The dividends received deduction for
corporations will apply to ordinary income distributions to the extent the
distribution represents amounts that would qualify for the dividends received
deduction to the Fund if the Fund were a regular corporation and to the extent
designated by the Fund as so qualifying. These dividends and any short-term
capital gains are taxable as ordinary income.
CAPITAL GAINS
Shareholders will pay federal tax at capital gains rates on long-term
capital gains distributed to them regardless of how long they have held
Fund shares.
TOTAL RETURN
The average annual total return for the Fund is the average compounded rate of
return for a given period that would equate a $1,000 initial investment to the
ending redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of shares owned at the end of the period by
the maximum offering price per share at the end of the period. The number of
shares owned at the end of the period is based on the number of shares
purchased at the beginning of the period with $1,000, less any applicable
sales load, adjusted over the period by any additional shares, assuming the
monthly reinvestment of all dividends and distributions.
Cumulative total return reflects total performance over a specific period of
time. This total return assumes and is reduced by the payment of the maximum
sales load. The Fund's total return is representative of less than three
months of investment activity since the start of performance.
The Fund's cumulative total returns for the one year period ended November 30,
1995 and for the period from September 13, 1994 (date of initial public
investment) to November 30, 1995, are 25.08% and 22.88%, respectively.
YIELD
The yield for the Fund is determined by dividing the net investment income per
share (as defined by the SEC) earned by the Fund over a thirty-day period by
the maximum offering price per share of the Fund on the last day of the
period. This value is then annualized using semi-annual compounding. This
means that the amount of income generated during the thirty-day period is
assumed to be generated each month over a twelve-month period and is
reinvested every six months. The yield does not necessarily reflect income
actually earned by the Fund because of certain adjustments required by the SEC
and, therefore, may not correlate to the dividends or other distributions paid
to shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in the
Fund, the performance will be reduced for those shareholders paying those
fees.
The Fund's yield for the thirty-day period ended November 30, 1995, was .94%.
PERFORMANCE COMPARISONS
The Fund's performance depends upon such variables as:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested;
o changes in interest rates and market value of portfolio securities;
o changes in the Fund's expenses; and
o various other factors.
The Fund's performance fluctuates on a daily basis largely because net
earnings and the maximum offering price per share fluctuate daily. Both net
earnings and offering price per share are factors in the computation of yield
and total return.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance, investors
should consider all relevant factors such as the composition of any index
used, prevailing market conditions, portfolio compositions of other funds, and
methods used to value portfolio securities and compute offering price. The
financial publications and/or indices which the Fund uses in advertising may
include:
o LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories
by making comparative calculations using total return. Total return
assumes the reinvestment of all income dividends and capital gains
distributions, if any. From time to time, the Fund will quote its Lipper
ranking in the "growth and income" category in advertising and sales
literature.
o STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS, a
composite index of common stocks in industry, transportation, and
financial and public utility companies, can be used to compare to the
total returns of funds whose portfolios are invested primarily in common
stocks. In addition, the Standard & Poor's index assumes reinvestments of
all dividends paid by stocks listed on its index. Taxes due on any of
these distributions are not included, nor are brokerage or other fees
calculated in Standard & Poor's figures.
o MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Advertisements and other sales literature for the Fund may quote total returns
which are calculated on non-standardized base periods. These total returns
also represent the historic change in the value of an investment in the Fund
based on monthly reinvestment of dividends over a specified period of time.
Advertisements may quote performance information which does not reflect the
effect of the sales load.
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements (filed in Part A);
(b) Exhibits:
(1) Copy of Declaration of Trust of the Registrant; (1)
(i) Amendment No. 1 to Declaration of Trust dated
November 12, 1990; (2)
(ii) Conformed Copy of Amendment No. 2 to Declaration of
Trust dated November 12, 1990; (6)
(iii)Conformed Copy of Amendment No. 3 to Declaration of
Trust dated November 12, 1990; (6)
(iv) Conformed Copy of Amendment No. 4 to Declaration of
Trust dated November 12, 1990;(7)
(2) Copy of By-Laws of the Registrant; (1)
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of Beneficial
Interest of the Registrant; (6)
(5) Copy of Investment Advisory Contract of the Registrant;
(2)
(i) Conformed Copy of Exhibit B to Investment Advisory
Contract of the Registrant to add Portage Equity
G00580-02 (1/96)
Fund to the present Investment Advisory Contract;
(6)
(6) (i) Copy of Distributor's Contract of the Registrant;
(1)
(ii) Conformed Copy of Exhibit to Distributor's Contract
of the Registrant; (6)
(iii)Conformed Copy of Administrative Services
Agreement; (6)
(7) Not applicable;
(8) Conformed copy of Custodian Agreement of the Registrant;
(5)
(9) Conformed copy of Transfer Agency and Service Agreement
of the Registrant; (5)
+ All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed November 26, 1990
(File Nos. 33-37993 and 811-6224).
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed January 4, 1991 (File Nos. 33-37993
and 811-6224).
5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed January 27, 1994 (File Nos. 33-37993
and 811-6224).
6. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed July 5, 1994 (File Nos. 33-37993 and
811-6224).
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed January 27, 1995 (File Nos. 33-37993
and 811-6224).
(i) Conformed copy of Amendment Number 1 to Transfer
Agency and Service Agreement; (5)
(ii) Conformed Copy of Shareholder Services Plan; (6)
(iii)Copy of Shareholder Services Contract; (6)
(iv) Copy of Shareholder Services Agreement; (6)
(v) Conformed Copy of Agreement for Fund Accounting,
Shareholder Recordkeeping, and Custody Services
Procurement; (7)
(10) Copy of Opinion and Consent of Counsel as to legality of
shares being registered; (2)
(11) Conformed copy of Consent of Independent Auditors; +
(12) Not applicable;
(13) Copy of Initial Capital Understanding; (2)
(14) Not Applicable;
(15) (i) Conformed Copy of Distribution Plan; (6)
(ii) Copy of Sales Agreement; (6)
(iii)Copy of 12b-1 Agreement; (6)
(16) Schedule for Computation of Fund Performance Data; (7)
(17) Financial Data Schedules;+
(18) Not Applicable.
(19) Conformed Copy of Power of Attorney;(7)
+ All exhibits have been filed electronically.
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed January 4, 1991 (File Nos. 33-37993
and 811-6224).
6. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed July 5, 1994 (File Nos. 33-37993 and
811-6224).
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed January 27, 1995 (File Nos. 33-37993
and 811-6224).
Item 25. Persons Controlled by or Under Common Control with Registrant:
None
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of January 6, 1996
Shares of beneficial interest
(no par value)
Newpoint Government Money
Market Fund 540
Newpoint Equity Fund 8
Item 27. Indemnification: (3)
Item 28. Business and Other Connections of Investment Adviser:
(a)First National Bank of Ohio, a national banking association
formed in 1947, is a wholly-owned subsidiary of FirstMerit
Corp. Through its subsidiaries and affiliates, FirstMerit
Corp. offers a full range of financial services to the public
including commercial lending, depository services, cash
management, brokerage services, retail banking, credit card
services, mortgage banking, investment advisory services, and
trust services.
As of December 31, 1994 the trust division of First National
Bank of Ohio had approximately $2.5 billion under
administration of which it had investment discretion over $1.1
billion.
The principal executive officers of the Fund's Investment
Adviser, and the Directors of the Fund's Adviser, are set forth
in the following tables. Unless otherwise noted, the position
listed under Other Substantial Business, Profession, Vocation
or Employment is with First National Bank of Ohio.
Other Substantial
Position with Business, Profession,
Name the Adviser Vocation or Employment
John R. Masco President and Chief
Executive Officer
Robert P. Brecht Executive Vice President
Terry E. Patton Secretary and Counsel
David T Conroy Senior Vice President
Robert W.Carpenter Executive Vice President
Brad L. Tolstedt Senior Vice President
Gregory R. Bean Senior Vice President,
Senior Trust Officer
David A. Toth Senior Vice President
Richard G. Norton Executive Vice President
Directors
John C. Blickle Terry L. Haines Stephen E. Myers
Robert M. Carter Clifford J. Isroff Gilbert H. Neal
Richard A. Chenoweth Phillip A Lloyd II Roger T. Read
Elizabeth A. Dalton John R. Masco Justin T. Rogers, Jr.
Howard L. Flood Robert M. Merzweiler
Item 29. Principal Underwriters:
(a) Federated Securities Corp., the Distributor for shares of the
Registrant, also acts as principal underwriter for the
following open-end investment companies: American Leaders Fund,
Inc.; Annuity Management Series; Arrow Funds; Automated
Government Money Trust; BayFunds; The Biltmore Funds; The
Biltmore Municipal Funds; Blanchard Funds; Blanchard Precious
Metals Fund, Inc.; Cash Trust Series, Inc.; Cash Trust Series
II; DG Investor Series; Edward D. Jones & Co. Daily Passport
Cash Trust; Federated ARMs Fund; Federated Equity Funds;
Federated Exchange Fund, Ltd.; Federated GNMA Trust; Federated
Government Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Master Trust;
Federated Municipal Trust; Federated Short-Term Municipal
Trust; Federated Short-Term U.S. Government Trust; Federated
Stock Trust; Federated Tax-Free Trust; Federated Total Return
Series, Inc.; Federated U.S. Government Bond Fund; Federated
U.S. Government Securities Fund: 1-3 Years; Federated
U.S. Government Securities Fund: 3-5 Years; Federated
U.S. Government Securities Fund: 5-10 Years;First Priority
Funds; Fixed Income Securities, Inc.; Fortress Adjustable Rate
U.S. Government Fund, Inc.; Fortress Municipal Income Fund,
Inc.; Fortress Utility Fund, Inc.; Fund for U.S. Government
Securities, Inc.; Government Income Securities, Inc.; High
Yield Cash Trust; Independence One Mutual Funds; Insurance
Management Series; Intermediate Municipal Trust; International
Series Inc.; Investment Series Funds, Inc.; Investment Series
Trust; Liberty Equity Income Fund, Inc.; Liberty High Income
Bond Fund, Inc.; Liberty Municipal Securities Fund, Inc.;
Liberty U.S. Government Money Market Trust; Liberty Utility
Fund, Inc.; Liquid Cash Trust; Managed Series Trust; Marshall
Funds, Inc.; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; The Monitor Funds;
Municipal Securities Income Trust; Newpoint Funds; 111 Corcoran
Funds; Peachtree Funds; The Planters Funds; RIMCO Monument
Funds; SouthTrust Vulcan Funds; Star Funds; The Starburst
Funds; The Starburst Funds II; Stock and Bond Fund, Inc.;
Targeted Duration Trust; Tax-Free Instruments Trust; Tower
Mutual Funds; Trust for Financial Institutions; Trust for
Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; The Virtus
Funds; Vision Group of Funds, Inc.; and World Investment
Series, Inc.
Federated Securities Corp. also acts as principal underwriter
for the following closed-end investment company: Liberty Term
Trust, Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, Asst.
Secretary, and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive ViceExecutive Vice
Federated Investors Tower President, Federated, President
Pittsburgh, PA 15222-3779 Securities Corp.
John W. McGonigle Director, Federated Executive Vice
Federated Investors Tower Securities Corp. President and
Pittsburgh, PA 15222-3779 Secretary
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust, Federated
Pittsburgh, PA 15222-3779 Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Byron F. Bowman Vice President, Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securites Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael D. Fitzgerald Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joeseph Kenedy Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Steven A. La Versa Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John C. Shelar, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jamie M. Teschner Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charlene H. Jennings Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Timothy Radcliff Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas R. Donahue Asstistant Secretary, --
Federated Investors Tower Assistant Treasurer,
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Joseph M. Huber Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David M. Taylor Assistant Secretary, Treasurer
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(c) Not Applicable
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31-a through 31a-3 promulgated
thereunder are maintained at one of the following locations:
Registrant
Federated Services Company Federated Investors Tower
("Transfer Agent, Dividend Pittsburgh, PA 15222-3779
Disbursing Agent and
Portfolio Recordkeeper")
Federated Administrative Services
("Administrator")
First National Bank of Ohio 106 South Main Street
("Adviser") Akron, Ohio 44308-1444
State Street Bank & Trust Co. P.O. Box 1713
("Custodian") Boston, Massachusetts 02105
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16 (c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered, a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, NEWPOINT FUNDS, certifies
that it meets all of the requirements for effectiveness of this Amendment to
its Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933 and has duly caused this Amendment to its Registration Statement to
be signed on its behalf by the undersigned, thereto duly authorized, in the
City of Pittsburgh and Commonwealth of Pennsylvania, on the 26th day of
January, 1996.
NEWPOINT FUNDS
BY: /s/ C. Todd Gibson
C. Todd Gibson, Assistant Secretary
Attorney in Fact for John F. Donahue
January 26, 1996
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person
in the capacity and on the date indicated:
NAME TITLE DATE
By:/s/C. Todd Gibson Attorney in Fact January 26,1996
C. Todd Gibson For the Persons
ASSISTANT SECRETARY Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Edward C. Gonzales* President, Treasurer and
Trustee (Principal Financial
and Accounting Officer)
Thomas G. Bigley* Trustee
John T. Conroy, Jr.* Trustee
William J. Copeland* Trustee
J. Christopher Donahue Trustee
James E. Dowd* Trustee
Lawrence D. Ellis, M.D.* Trustee
Edward L. Flaherty, Jr.* Trustee
Peter E. Madden* Trustee
Gregor F. Meyer* Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
Exhibit (11) under N-1A
Exhibit 23 under Item 601/Reg SK
CONSENT OF INDEPENDENT AUDITORS
As independent public accountants, we hereby consent to the use in Post-
Effective Amendment Number 9 to Form N-1A Registration Statement of Newpoint
Funds of our report dated January 31, 1996, on the financial statements of
Newpoint Government Money Market Fund and Newpoint Equity Fund (two of the
portfolios comprising the Newpoint Funds), included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
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<FISCAL-YEAR-END> Nov-30-1995
<PERIOD-END> Nov-30-1995
<INVESTMENTS-AT-COST> 21,064,478
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<NET-CHANGE-FROM-OPS> 5,505,927
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<DISTRIBUTIONS-OF-INCOME> 179,687
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<NUMBER-OF-SHARES-SOLD> 872,874
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<GROSS-EXPENSE> 404,257
<AVERAGE-NET-ASSETS> 20,093,892
<PER-SHARE-NAV-BEGIN> 9.780
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<PER-SHARE-GAIN-APPREC> 2.910
<PER-SHARE-DIVIDEND> 0.100
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<NAME> Newpoint Funds
Newpoint Government Money Market Fund
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1995
<PERIOD-END> Nov-30-1995
<INVESTMENTS-AT-COST> 99,786,359
<INVESTMENTS-AT-VALUE> 99,786,359
<RECEIVABLES> 149,173
<ASSETS-OTHER> 316,787
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 100,252,319
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 578,613
<TOTAL-LIABILITIES> 578,613
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 99,673,706
<SHARES-COMMON-STOCK> 99,673,706
<SHARES-COMMON-PRIOR> 63,868,217
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<NET-INVESTMENT-INCOME> 3,521,619
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<NET-CHANGE-FROM-OPS> 3,521,619
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<DISTRIBUTIONS-OF-INCOME> 3,521,619
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 214,437,253
<NUMBER-OF-SHARES-REDEEMED> 179,271,936
<SHARES-REINVESTED> 640,172
<NET-CHANGE-IN-ASSETS> 35,805,489
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<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 343,660
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 649,227
<AVERAGE-NET-ASSETS> 68,732,050
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>