NEWPOINT FUNDS, 485BPOS, 1997-01-21

NEWPOINT FUNDS
485BPOS, 1997-01-21

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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. 12 ...............

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
-

Amendment No. 10 ..............................

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, 1997, 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 15, 1997; 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..............(1,2) Financial Highlights; (1,2)
Performance Information.
Item 4. General Description of
Registrant...............(1,2) General Information; Investment
Information; (1,2) Investment Objective;
(1,2) Investment Policies; (1,2)
Investment Limitations.

Item 5. Management of the Fund...(1,2) Newpoint Funds Information; (1,2)
Management of the Newpoint Funds; (1,2)
Distribution of Fund Shares; (1,2)
Administration of the Fund; (1,2)
Brokerage Transactions.

Item 6. Capital Stock and Other
Securities...............(1,2) Dividends; (1,2) Capital Gains;
(1,2) Shareholder Information; (1,2)
Voting Rights; (1,2) Effect of Banking
Laws; (1,2) Tax Information; (1,2)
Federal Income Tax.

Item 7. Purchase of Securities Being
Offered..................(1,2) Net Asset Value; (1,2) Investing
in the Fund; (1,2) Share Purchases;
(1,2) Minimum Investment Required; (1,2)
What Shares Cost; (1,2) Systematic
Investment Program; (1,2) Certificates
and Confirmations; (2) Eliminating or
Reducing the Sales Charge; (2)
Subaccounting Services.

Item 8. Redemption or Repurchase.(1,2) Redeeming Shares; (1,2) Systematic
Withdrawal Program; (1,2) Accounts with
Low Balances; (1) Through First National
Bank of Ohio; (2) Through First National
Bank of Ohio or FirstMerit Securities,
Inc.; (1,2) Exchange Privilege.

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;
(1,2) 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;
(1,2) Other 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; (1,2)
Determining Net Asset Value; (1,2)
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; (1,2) Performance
Comparisons; (1) Effective Yield; (1,2)
Total Return; (1,2) Appendix.
Item 23. Financial Statements.....(1,2) Filed in Part A.

- --------------------------------------------------------------------------------
NEWPOINT GOVERNMENT MONEY MARKET FUND
(A PORTFOLIO OF NEWPOINT FUNDS)
PROSPECTUS

Newpoint Government Money Market Fund (the "Fund") is a 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
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,
1997 with the Securities and Exchange Commission ("SEC"). 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 1-800-627-1289. To
obtain other information or to make inquiries about the Fund, contact the Fund
at the address listed in the back of this prospectus. The Statement of
Additional Information, material incorporated by reference into this document,
and other information regarding the Fund is maintained electronically with the
SEC at Internet Web site (http://www.sec.gov).

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

Prospectus dated January 31, 1997

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 5
- ------------------------------------------------------
Management of Newpoint Funds 5
Distribution of Fund Shares 6
Administration of the Fund 6

NET ASSET VALUE 7
- ------------------------------------------------------

INVESTING IN THE FUND 7
- ------------------------------------------------------
Share Purchases 7
Minimum Investment Required 7
What Shares Cost 7
Systematic Investment Program 7
Certificates and Confirmations 8
Dividends 8
Capital Gains 8

EXCHANGE PRIVILEGE 8
- ------------------------------------------------------
Exchange-By-Telephone 9

REDEEMING SHARES 9

- ------------------------------------------------------
Through First National Bank of Ohio or
FirstMerit Securities, Inc. 9
Systematic Withdrawal Program 10
Accounts with Low Balances 10

SHAREHOLDER INFORMATION 11

- ------------------------------------------------------
Voting Rights 11

EFFECT OF BANKING LAWS 11

- ------------------------------------------------------

TAX INFORMATION 11

- ------------------------------------------------------
Federal Income Tax 11

PERFORMANCE INFORMATION 12
- ------------------------------------------------------

FINANCIAL STATEMENTS 13
- ------------------------------------------------------

REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS 20
- ------------------------------------------------------

ADDRESSES 21
- ------------------------------------------------------

SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)............................................... None
Maximum Sales Charge 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...................................................................... 0.33%
Total Fund Operating Expenses(2)............................................... 0.63%
</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 0.83% 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."
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
contingent deferred sales charges..................... $6 $20 $35 $ 79
</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 20.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
---------------------------------------------------------------
1996 1995 1994(b) 1993 1992 1991(a)
------ ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------
Net investment income 0.05 0.05 0.03 0.02 0.03 0.04
- -----------------------------------------
LESS DISTRIBUTIONS
- -----------------------------------------
Distributions from net investment
income (0.05) (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 $ 1.00
- ----------------------------------------- ------ ------ ------- ------ ------ -------
TOTAL RETURN (c) 4.83% 5.24% 3.25% 2.47% 3.23% 3.87%
- -----------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------
Expenses 0.63% 0.74% 0.77% 0.74% 0.73% 0.57% *
- -----------------------------------------
Net investment income 4.73% 5.12% 3.24% 2.44% 3.21% 5.26% *
- -----------------------------------------
Expense waiver/reimbursement (d) 0.20% 0.20% 0.20% 0.20% 0.20% 0.26% *
- -----------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------
Net assets, end of period (000 omitted) $85,230 $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) 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. The table above presents Trust
Share information for the years prior to November 30, 1994. For the years
ended November 30, 1993, 1992, and for the period ended November 30, 1991,
Investment Share net assets (000 omitted) were $10,315, $14,114, and $7,933,
respectively.

(c) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.

(See Notes which are an integral part of the Financial Statements)

GENERAL INFORMATION
- --------------------------------------------------------------------------------

Newpoint Funds were established as a Massachusetts business trust under a
Declaration of Trust dated November 12, 1990. 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.

The Fund is designed for customers of FirstMerit Corp. and its affiliates as a
convenient means of participating in a professionally managed, 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 diversification and other 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 issued to guaranteed by U.S. government
agencies and instrumentalities supported by the full faith and credit of
the United States;

- notes, bonds, and discount notes of other U.S. government agencies or
instrumentalities which receive or have access to federal funding; and

- notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the instrumentalities.

Some obligations issued or guaranteed by agencies or instrumentalities of the
U.S. government 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.

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.

The Fund, its distributor, 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 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.

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, 1996, the Trust Division of First National Bank of Ohio
had approximately $2.4 billion in assets under administration, of which it
had investment discretion over $1.3 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% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% 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 330-384-7300. 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 330-384-7230. 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 charge imposed by the Fund.

The net asset value is determined at 12:00 noon (Eastern time), 3:00 p.m.
(Eastern time), and as of the close of trading (normally 4:00 p.m., Eastern
time), on the New York Stock Exchange, Monday through Friday, except on: 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, through its
subsidiary Federated Shareholder 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 the Fund for shares of Newpoint Equity Fund
by calling or sending a written request to FirstMerit Securities, Inc. In
addition, shares of the 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 charge (if any) already paid and any sales charge of the fund into
which Fund shares are to be exchanged, if higher.

When an exchange is made from a fund with a sales charge to a fund with no sales
charge, 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 charge 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 330-384-7230.

EXCHANGE-BY-TELEPHONE

Instructions for exchanges between portfolios which are part of the Trust may be
given by telephone to FirstMerit Securities, Inc. at 330-384-7230. 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
330-384-7300. A shareholder who is an individual investor/customer of FirstMerit
Securities, Inc. may redeem shares by telephoning 330-384-7230. 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
Shareholder 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 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 Shareholder 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 Shareholder Services Company or State
Street Bank and Trust Company to redeem shares. Canceled checks are sent to the
shareholder each month upon request.

SYSTEMATIC WITHDRAWAL 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 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 3, 1997, Parcol & Co., owned approximately
49,126,040 shares (61.99%) 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 Trustees or by 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.

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 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.

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

PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
U.S. GOVERNMENT AGENCIES--67.7%
- ------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK BOND--11.7%
-----------------------------------------------------------------
$10,000,000 5.45%, 4/1/1997 $10,002,278
----------------------------------------------------------------- -----------
FEDERAL FARM CREDIT BANK DISCOUNT NOTE--5.8%
-----------------------------------------------------------------
5,000,000 (a) 5.19%, 1/27/1997 4,958,912
----------------------------------------------------------------- -----------
FEDERAL HOME LOAN BANK BONDS--7.1%
-----------------------------------------------------------------
6,000,000 5.05%-7.65%, 2/21/1997-3/25/1997 6,006,946
----------------------------------------------------------------- -----------
FEDERAL HOME LOAN BANK DISCOUNT NOTES--17.5%
-----------------------------------------------------------------
15,000,000 (a) 5.21%-5.36%, 12/3/1996-2/20/1997 14,881,174
----------------------------------------------------------------- -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION DISCOUNT NOTES--25.6%
-----------------------------------------------------------------
22,000,000 (a) 5.20%-5.47%, 12/6/1996-2/10/1997 21,845,132
----------------------------------------------------------------- -----------
TOTAL U.S. GOVERNMENT AGENCIES 57,694,442
----------------------------------------------------------------- -----------
U.S. TREASURY--9.3%
- ------------------------------------------------------------------------------------
U.S. TREASURY BILLS--9.3%
-----------------------------------------------------------------
8,000,000 2/6/1997-3/6/1997 7,911,980
----------------------------------------------------------------- -----------
(B)REPURCHASE AGREEMENTS--23.0%
- ------------------------------------------------------------------------------------
9,567,000 Merrill Lynch, Pierce, Fenner and Smith, 5.45%, dated 11/29/1996,
due 12/2/1996 9,567,000
-----------------------------------------------------------------
10,000,000 Smith Barney, Inc., 5.50%, dated 11/29/1996, due 12/2/1996 10,000,000
----------------------------------------------------------------- -----------
TOTAL REPURCHASE AGREEMENTS 19,567,000
----------------------------------------------------------------- -----------
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $85,173,422
----------------------------------------------------------------- -----------
</TABLE>

(a) Discount rate at time of purchase.

(b) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.

Note: The categories of investments are shown as a percentage of net assets
($85,230,075) at November 30, 1996.

(See Notes which are an integral part of the Financial Statements)

NEWPOINT GOVERNMENT MONEY MARKET FUND

STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Investments in repurchase agreements $19,567,000
- -------------------------------------------------------------------
Investments in securities 65,606,422
- ------------------------------------------------------------------- -----------
Total investments in securities, at amortized cost and value $85,173,422
- ---------------------------------------------------------------------------------
Cash 5,848
- ---------------------------------------------------------------------------------
Income receivable 373,296
- --------------------------------------------------------------------------------- -----------
Total assets 85,552,566
- ---------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------
Payable for shares redeemed 81,178
- -------------------------------------------------------------------
Income distribution payable 214,354
- -------------------------------------------------------------------
Accrued expenses 26,959
- ------------------------------------------------------------------- -----------
Total liabilities 322,491
- --------------------------------------------------------------------------------- -----------
Net Assets for 85,230,075 shares outstanding $85,230,075
- --------------------------------------------------------------------------------- -----------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
($85,230,075 / 85,230,075 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, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest $4,668,792
- ---------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------
Investment advisory fee $ 435,274
- ---------------------------------------------------------------------
Administrative personnel and services fee 130,582
- ---------------------------------------------------------------------
Custodian fees 29,560
- ---------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 40,477
- ---------------------------------------------------------------------
Directors'/Trustees' fees 6,662
- ---------------------------------------------------------------------
Auditing fees 16,982
- ---------------------------------------------------------------------
Legal fees 2,468
- ---------------------------------------------------------------------
Portfolio accounting fees 36,611
- ---------------------------------------------------------------------
Share registration costs 14,285
- ---------------------------------------------------------------------
Printing and postage 8,956
- ---------------------------------------------------------------------
Insurance premiums 2,076
- ---------------------------------------------------------------------
Miscellaneous 985
- --------------------------------------------------------------------- ---------
Total expenses 724,918
- ---------------------------------------------------------------------
Waiver--
- ---------------------------------------------------------------------
Waiver of investment advisory fee (174,110)
- --------------------------------------------------------------------- ---------
Net expenses 550,808
- --------------------------------------------------------------------------------- ----------
Net investment income $4,117,984
- --------------------------------------------------------------------------------- ----------
</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 NOVEMBER 30,
-------------------------------
1996 1995
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------
Net investment income $ 4,117,984 $ 3,521,619
- ----------------------------------------------------------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------
Distributions from net investment income (4,117,984) (3,521,619)
- ----------------------------------------------------------- ------------ ------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------
Proceeds from sale of shares 195,120,125 214,437,253
- -----------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of distributions declared 1,098,483 640,172
- -----------------------------------------------------------
Cost of shares redeemed (210,662,239) (179,271,936)
- ----------------------------------------------------------- ------------ ------------
Change in net assets resulting from share transactions (14,443,631) 35,805,489
- ----------------------------------------------------------- ------------ ------------
Change in net assets (14,443,631) 35,805,489
- -----------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------
Beginning of period 99,673,706 63,868,217
- ----------------------------------------------------------- ------------ ------------
End of period $ 85,230,075 $ 99,673,706
- ----------------------------------------------------------- ------------ ------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

NEWPOINT GOVERNMENT MONEY MARKET FUND

NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------

(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 financial statements included herein are
only those of Newpoint Government Money Market Fund (the "Fund"). The financial
statements of the other portfolio are presented separately. The assets of each
portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held. The investment objective of the Fund is to
provide stability of principal and current income consistent with stability of
principal.

(2) SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.

INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.

REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.

The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards 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.

NEWPOINT GOVERNMENT MONEY MARKET 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.

USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.

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, 1996, capital paid-in aggregated $85,230,075.

Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
----------------------------
1996 1995
- ----------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Shares sold 195,120,125 214,437,253
- -----------------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 1,098,483 640,172
- -----------------------------------------------------------------
Shares redeemed (210,662,239) (179,271,936)
- ----------------------------------------------------------------- ------------ ------------
Net change resulting from share transactions (14,443,631) 35,805,489
- ----------------------------------------------------------------- ------------ ------------
</TABLE>

(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 0.50% of the Fund's average daily net assets. The Adviser
may voluntarily choose to waive any 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 paid to FAS is based
on the level of average aggregate net assets of the Trust for the period.

NEWPOINT GOVERNMENT MONEY MARKET FUND
- --------------------------------------------------------------------------------

TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ"), through its subsidiary, Federated Shareholder Services
Company ("FSSC") serves as transfer and dividend disbursing agent for the Fund.
The fee paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.

PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund'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 average daily net assets until expenses
initially borne are fully reimbursed or the expiration of five years after the
effective date, whichever occurs earlier. For the period ended November 30,
1996, the Fund paid $828 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, 1996, 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, 1996, 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, 1996, the results of its operations for the year then
ended, and the changes in its net assets, and the financial highlights for the
periods presented, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Pittsburgh, Pennsylvania
December 26, 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 Shareholder Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600

- ------------------------------------------------------------------------------------------------

Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ------------------------------------------------------------------------------------------------
</TABLE>

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
NEWPOINT GOVERNMENT
MONEY MARKET FUND
(A PORTFOLIO OF NEWPOINT FUNDS)
PROSPECTUS

An Open-end, Diversified
Management Investment Company

January 31, 1997

LOGO
FEDERATED INVESTORS

Federated Investors Tower
Pittsburgh, PA 15222-3779

Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors

Cusip 735686107
0121703A (1/97)

[LOGO]
NEWPOINT FUNDS

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, 1997. 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 or call, toll free 1-800-
627-1289.

FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

Statement dated January 31, 1997
First National Bank of Ohio,
Investment Adviser

FEDERATED INVESTORS
Federated Investors Tower
Pittsburgh, PA 15222-3779

Federated Securities Corp. is the distributor of the Fund
and is a subsidiary of Federated Investors.
Cusip 735686107
0121703B (1/97)
GENERAL INFORMATION ABOUT THE FUND 1

INVESTMENT OBJECTIVE AND POLICIES 1

Types of Investments 1
When-Issued and Delayed Delivery Transactions 1
Reverse Repurchase Agreements 1
Lending of Portfolio Securities 1
INVESTMENT LIMITATIONS 2

Regulatory Compliance 3
NEWPOINT FUNDS MANAGEMENT 4

Fund Ownership 8
Trustees Compensation 8
Trustee Liability 9
INVESTMENT ADVISORY SERVICES 9

Adviser to the Fund 9
Advisory Fees 9
OTHER SERVICES 9

Fund Administration 9
Custodian and Portfolio Recordkeeper 9
Transfer Agent 9
Independent Public Accountants 9

BROKERAGE TRANSACTIONS 10

PURCHASING SHARES 10

Distribution Plan 10
Conversion to Federal Funds 10
DETERMINING NET ASSET VALUE 10

Use of the Amortized Cost Method 11
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

TOTAL RETURN 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 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, birthdates, present
positions with Newpoint Funds, and principal occupations.

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 or Trustee of the
Funds.

Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Trustee,
University of Pittsburgh; Director or Trustee of the Funds.

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; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.

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.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.

J. Christopher Donahue *
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President and Trustee
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 Shareholder Services Company, and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Trustee 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.; Trustee of the
Funds.

Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, 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
or Trustee of the Funds.

Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.

Edward C. Gonzales *
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
President, Treasurer and Trustee
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 Shareholder Services Company; Trustee or Director of
some of the Funds; President, Executive Vice President and Treasurer of
some of the Funds.

Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street
Boston Corporation; Director or Trustee of the Funds.

Gregor F. Meyer
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney, Member of Miller, Ament, Henny & Kochuba; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director or Trustee 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 or Trustee of the Funds.

Founding Chairman, National Advisory Council for Environmental Policy and
Technology, Federal Emergency Management Advisory Board and Czech
Management Center; Director or Trustee of the Funds.

Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing/Conference Planning, Manchester Craftsmen's
Guild; Restaurant Consultant, Frick Art & History Center; Conference
Coordinator, University of Pittsburgh Art History Department; Director or
Trustee 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 Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds; Treasurer of some 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.

C. Christine Thomson
Federated Investors Tower
Pittsburgh, PA
Birthdate: September 1, 1957
Vice President and Assistant Treasurer
Vice President and Assistant Treasurer of some of the Funds.

*This Trustee is deemed to be an ``interested person'' as defined in
the Investment Company Act of 1940.
@Member of the Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board between
meetings of the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: 111 Corcoran Funds; 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;

Federated Adjustable Rate U.S. Government Fund, Inc.; Federated American
Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity Funds; Federated
Equity Income Fund, Inc.; Federated Fund for U.S. Government Securities,
Inc.; Federated GNMA Trust; Federated Government Income Securities, Inc.;
Federated Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust; Federated
Income Trust; Federated Index Trust; Federated Institutional Trust;
Federated Insurance Series; Federated Investment Portfolios; Federated
Investment Trust; Federated Master Trust; Federated Municipal Opportunities
Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated Municipal
Trust; Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock and Bond Fund, Inc.; 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: 2-5 Years;
Federated U.S. Government Securities Fund: 5-10 Years; Federated Utility
Fund, Inc.; First Priority Funds; Fixed Income Securities, Inc.; High Yield
Cash Trust; Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Investment Series Trust; Liberty Term
Trust, Inc. - 1999; Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Peachtree Funds; RIMCO Monument Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; The Planters Funds; The Starburst Funds;
The Starburst Funds II; The Virtus Funds; Trust for Financial Institutions;
Trust for Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; and World Investment
Series, Inc.

FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.

As of January 3, 1997, the following shareholders of record owned 5% or
more of the outstanding shares of the Fund: Parcol & Co., Akron, Ohio,
owned approximately 49,126,040 Shares (61.99%) and First National Bank of
Ohio, Akron, Ohio, owned approximately 8,314,967 Shares (10.49%).
TRUSTEES COMPENSATION
NAME , AND AGGREGATE
POSITION WITH THE COMPENSATION FROM
TRUST THE TRUST+

John F. Donahue,
Chairman and Trustee $0

Thomas G. Bigley,
Trustee $1,110

John T. Conroy, Jr.,
Trustee $1,221

William J. Copeland,
Trustee $1,221

J. Christopher Donahue
Executive Vice President and

Trustee $0

James E. Dowd,
Trustee $1,221

Lawrence D. Ellis, M.D.,
Trustee $1,110

Edward L. Flaherty, Jr.,
Trustee $1,221

Edward C. Gonzales,
President, Treasurer and Trustee $0

Peter E. Madden,
Trustee $1,110

Gregor F. Meyer,
Trustee $1,110

John E. Murray, Jr.
Trustee $1,110

Wesley W. Posvar,
Trustee $1,110

Marjorie P. Smuts,
Trustee $1,110

+The aggregate compensation is paid by the Trust, which is comprised of
two portfolios. Information provided is for the fiscal year ended November
30, 1996.

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, 1996 1995 and 1994, the Adviser earned $435,274, $343,660 and
$309,110, respectively, of which $174,100, $137,464 and $123,644,
respectively, were voluntarily waived.
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, 1996,
1995 and 1994, the Fund incurred costs for administrative services of
$130,582, $103,098 and $92,733, 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, through its subsidiary Federated
Shareholder Services Company, 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 charge 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.
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 Shareholder 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. 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 .50% 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:
oderive at least 90% of its gross income from dividends, interest,
and gains from the sale of securities;
oderive less than 30% of its gross income from the sale of securities
held less than three months;
oinvest in securities within certain statutory limits; and

odistribute 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:
odetermining 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;
odividing 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
omultiplying 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, 1996 was
4.74%.

EFFECTIVE YIELD

The Fund's effective yield is computed by compounding the unannualized base
period return by:
oadding 1 to the base period return;
oraising the sum to the (365/7)th power; and
osubtracting 1 from the result.

The Fund's effective yield for the seven-day period ended November 30, 1996
was 4.86%.
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 charge, adjusted over the period by any additional

shares, assuming the monthly reinvestment of all dividends and
distributions.
The Fund's average annual total returns for the one-year and five-year
periods ended November 30, 1996 and for the period from March 11, 1991
(date of initial public investment) to November 30, 1996, were 4.83%, 3.80%
and 4.06%, respectively.

PERFORMANCE COMPARISONS

The Fund's performance depends upon such variables as:
oportfolio quality;
oaverage portfolio maturity;
otype of instruments in which the portfolio is invested;
ochanges in interest rates on money market instruments;
ochanges in Fund expenses; and
othe 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:
oDISCOUNT 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.
oSALOMON 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.

oLIPPER 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.

Advertising and other promotional literature may include charts, graphs and
other illustrations using the Funds' returns, or returns in general, that
demonstrate basic investment concepts such as tax-deferred compounding,
dollar-cost averaging and systematic investment. In addition, the Funds can
compare their performance, or performance for the types of securities in
which they invest, to a variety of other investments, such as bank savings
accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Funds may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by Fund portfolio managers and their views and analysis
on how such developments could affect the Funds. In addition, advertising
and sales literature may quote statistics and give general information

about the mutual fund industry, including the growth of the industry, from
sources such as the Investment Company Institute (`ICI''). For example,
according to the ICI, twenty-seven percent of American households are
pursuing their financial goals through mutual funds. These investors, as
well as businesses and institutions, have entrusted over $3 trillion to the
more than 5,500 funds available.

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
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 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,
1997, with the Securities and Exchange Commission ("SEC"). 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 1-800-627-1289. To
obtain other information or to make inquiries about the Fund, contact the Fund
at the address listed in the back of this prospectus. The Statement of
Additional Information, material incorporated by reference into this document,
and other information regarding the Fund is maintained electronically with the
SEC at Internet Web site http://www.sec.gov).

Prospectus dated January 31, 1997

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

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 Charge 13
Systematic Investment Program 14
Subaccounting Services 14
Certificates and Confirmations 14
Dividends and Capital Gains 14

EXCHANGE PRIVILEGE 14
- ------------------------------------------------------
Exchange-By-Telephone 15

REDEEMING SHARES 15
- ------------------------------------------------------
Through First National Bank of Ohio or
FirstMerit Securities, Inc. 16
Systematic Withdrawal Program 17
Accounts with Low Balances 17

SHAREHOLDER INFORMATION 17
- ------------------------------------------------------
Voting Rights 17

EFFECT OF BANKING LAWS 18
- ------------------------------------------------------

TAX INFORMATION 18
- ------------------------------------------------------
Federal Income Tax 18
State and Local Taxes 18

PERFORMANCE INFORMATION 19
- ------------------------------------------------------

FINANCIAL STATEMENTS 20
- ------------------------------------------------------

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 30
- ------------------------------------------------------

ADDRESSES 31
- ------------------------------------------------------

SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)................................................. 4.50%
Maximum Sales Charge 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)...................................................... 0.38%
12b-1 Fee(2).......................................................................... 0.00%
Total Other Expenses.................................................................. 0.75%
Shareholder Services Fees(2)............................................ 0.00%
Total Fund Operating Expenses(3)............................................ 1.13%
</TABLE>

(2) The Fund has no present intention of paying or accruing 12b-1 fees or
shareholder services fees during the fiscal year ending November 30, 1997. If
the Fund were paying or accruing the 12b-1 fee or shareholder services fees, the
Fund would be able to pay up to 0.25% of its average daily net assets for the
12b-1 fees and up to 0.25% of its average daily net assets for the shareholder
services fees. See "Fund Information."

(3) The Total Fund Operating Expenses would have been 1.50% 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." 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
investment assuming (1) 5% annual return; (2)
redemption at the end of each time period; and (3)
payment of the maximum sales charge. The Fund charges
no contingent deferred sales charges.................. $ 56 $79 $ 104 $176
</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 30.

<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
--------------------------------
1996 1995 1994(a)
------ ------ --------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.69 $ 9.78 $10.00
- ------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------
Net investment income 0.07 0.10 0.05
- ------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 2.61 2.91 (0.23)
- ------------------------------------------------------------------ ------ ------ -------
Total from investment operations 2.68 3.01 (0.18)
- ------------------------------------------------------------------ ------ ------ -------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------
Distributions from net investment income (0.07) (0.10) (0.04)
- ------------------------------------------------------------------
Distributions from net realized gain on investments (0.16) -- --
- ------------------------------------------------------------------ ------ ------ -------
Total distributions (0.23) (0.10) (0.04)
- ------------------------------------------------------------------ ------ ------ -------
NET ASSET VALUE, END OF PERIOD $15.14 $12.69 $ 9.78
- ------------------------------------------------------------------ ------ ------ -------
TOTAL RETURN (b) 21.38% 30.97% (1.76%)
- ------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------
Expenses 1.13% 1.48% 1.00%*
- ------------------------------------------------------------------
Net investment income 0.51% 0.88% 2.36%*
- ------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.37% 0.52% 1.72%*
- ------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------
Net assets, end of period (000 omitted) $42,858 $25,803 $11,614
- ------------------------------------------------------------------
Average commission rate paid $0.0625 -- --
- ------------------------------------------------------------------
Portfolio turnover 49% 35% 0%
- ------------------------------------------------------------------
</TABLE>

* Computed on an annualized basis.

(a) Reflects operations for the period from September 13, 1994 (date of initial
public investment) to November 30, 1994. For the period from August 30, 1994
(start of business) to September 12, 1994, the Fund had no investment
activity.

(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

(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. 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 FirstMerit Corp. 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 charge 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.

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 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.

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.

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.

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.

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 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.

The Fund, its distributor, 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 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.

As of December 31, 1996, the Trust Division of First National Bank of Ohio
had approximately $2.4 billion in assets under administration, of which it
had investment discretion over $1.3 billion. First National Bank of Ohio
has served as the Fund's investment adviser since the Fund's inception.

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 the Adviser 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 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.

ADMINISTRATION OF THE FUND

<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY NET
ADMINISTRATIVE FEE ASSETS OF THE NEWPOINT FUNDS
- --------------------- ------------------------------------
<S> <C>
.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% 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 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 charge on Fund shares.

BROKERAGE TRANSACTIONS

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 330-384-7300. Information needed to
establish the account will be taken over the telephone.

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 charge, as follows:

<TABLE>
<CAPTION>
SALES CHARGE AS SALES CHARGE 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 as of the close of trading (normally 4:00 p.m., Eastern
time) on the New York Stock Exchange, 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 charge. The
following persons may also purchase shares of the Fund at net asset value,
without a sales charge: private banking clients of First National Bank of Ohio
and affiliates of FirstMerit Corp., employees and retired employees of First
National Bank of Ohio, FirstMerit Corp., 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. Additionally, no sales
charge is imposed for shares purchased through "wrap accounts" or similar
programs, under which clients pay a fee for services.

SALES CHARGE REALLOWANCE. For sales of shares of the Fund, a dealer will
normally receive up to 85% of the applicable sales charge. Any portion of the
sales charge 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 charge 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 charge 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 CHARGE

The sales charge 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 charge 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 charge. In addition, the sales charge, 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 charge on the additional purchase according to the schedule now in effect
would be 3.75%, not 4.50%.

To receive the sales charge 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 charge 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 charge may be eliminated or
reduced by signing a letter of intent to that effect. This letter of intent
includes a provision for a sales charge 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 charge.

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
charge 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 charge. 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
charge. 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

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

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 charge, 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 the Fund for shares of Newpoint Government
Money Market Fund by calling or sending a written request to FirstMerit
Securities, Inc. In addition, shares of the 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.

of such shares for shares of a fund with a sales charge would be at 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 330-384-7230.

EXCHANGE-BY-TELEPHONE

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
330-384-7300. A shareholder who is an individual investor/customer of FirstMerit
Securities, Inc. may redeem shares by telephoning 330-384-7230. 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.

If, at any time, the Fund shall determine it necessary to terminate or modify
this method of redemption, shareholders would be promptly notified.

- 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 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 charge, 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 3, 1997, Parcol & Co., owned approximately
2,862,082 shares (97.13%) 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 Trustees of by 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
- --------------------------------------------------------------------------------

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.

TAX INFORMATION
- --------------------------------------------------------------------------------

FEDERAL INCOME TAX

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 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
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
charge which, if excluded, would increase the total return and yield.

From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.

NEWPOINT EQUITY FUND
PORTFOLIO OF INVESTMENTS

NOVEMBER 30, 1996
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--90.6%
- ------------------------------------------------------------------------------------
BASIC INDUSTRY--7.9%
-----------------------------------------------------------------
6,000 Kimberly-Clark Corp. $ 586,500
-----------------------------------------------------------------
35,000 Monsanto Co. 1,391,250
-----------------------------------------------------------------
121,000 (a) Santa Fe Pacific Gold Corp. 1,391,500
----------------------------------------------------------------- -----------
Total 3,369,250
----------------------------------------------------------------- -----------
CAPITAL GOODS--5.7%
-----------------------------------------------------------------
8,000 Briggs & Stratton Corp. 331,000
-----------------------------------------------------------------
14,000 Deere & Co. 624,750
-----------------------------------------------------------------
6,000 Dover Corp. 320,250
-----------------------------------------------------------------
8,100 General Electric Co. 842,400
-----------------------------------------------------------------
7,000 (a) Ionics, Inc. 337,750
----------------------------------------------------------------- -----------

Total 2,456,150
----------------------------------------------------------------- -----------
CAPITAL GOODS TECHNOLOGY--22.0%
-----------------------------------------------------------------
4,500 Boeing Co. 447,187
-----------------------------------------------------------------
25,000 (a) C-Cube Microsystems, Inc. 1,090,625
-----------------------------------------------------------------
13,000 (a) Cisco Systems, Inc. 882,375
-----------------------------------------------------------------
10,000 (a) Computer Associates International, Inc. 657,500
-----------------------------------------------------------------
6,000 Diebold, Inc. 357,750
-----------------------------------------------------------------
4,000 Eastman Kodak Co. 324,000
-----------------------------------------------------------------
10,000 Intel Corp. 1,268,750
-----------------------------------------------------------------
11,000 (a) Intuit, Inc. 393,250
-----------------------------------------------------------------
5,400 Raytheon Co. 276,075
-----------------------------------------------------------------
6,000 Rockwell International Corp. 385,500
-----------------------------------------------------------------
20,000 (a) Sun Microsystems, Inc. 1,165,000
-----------------------------------------------------------------
6,000 (a) TRW, Inc. 584,250
-----------------------------------------------------------------
5,000 United Technologies Corp. 701,250

-----------------------------------------------------------------
</TABLE>

NEWPOINT EQUITY FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
CAPITAL GOODS TECHNOLOGY--CONTINUED
-----------------------------------------------------------------
35,000 (a) Westell Technologies, Inc., Class A $ 870,625
----------------------------------------------------------------- -----------
Total 9,404,137
----------------------------------------------------------------- -----------
CONSUMER CYCLICAL--2.8%
-----------------------------------------------------------------
10,000 (a) Kohl's Corp. 398,750
-----------------------------------------------------------------
14,000 Nike, Inc., Class B 796,250
----------------------------------------------------------------- -----------
Total 1,195,000
----------------------------------------------------------------- -----------
CONSUMER GROWTH STAPLES--2.8%
-----------------------------------------------------------------
16,000 (a) Boston Chicken, Inc. 620,000
-----------------------------------------------------------------
20,000 PepsiCo, Inc. 597,500
----------------------------------------------------------------- -----------
Total 1,217,500
----------------------------------------------------------------- -----------

CONSUMER STAPLES--8.3%
-----------------------------------------------------------------
20,000 (a) CompUSA, Inc. 900,000
-----------------------------------------------------------------
12,500 Procter & Gamble Co. 1,359,375
-----------------------------------------------------------------
20,000 (a) Safeway, Inc. 812,500
-----------------------------------------------------------------
12,000 Seagram Co. Ltd. 490,500
----------------------------------------------------------------- -----------
Total 3,562,375
----------------------------------------------------------------- -----------
CREDIT CYCLICAL--0.7%
-----------------------------------------------------------------
4,000 Armstrong World Industries, Inc. 301,000
----------------------------------------------------------------- -----------
DRUGS & HEALTHCARE--16.0%
-----------------------------------------------------------------
11,000 (a) Boston Scientific Corp. 642,125
-----------------------------------------------------------------
5,250 Columbia/HCA Healthcare Corp. 210,000
-----------------------------------------------------------------
8,000 Johnson & Johnson 425,000
-----------------------------------------------------------------
11,000 Lilly (Eli) & Co. 841,500
-----------------------------------------------------------------
25,410 (a) MedPartners, Inc. 578,078
-----------------------------------------------------------------
9,000 Medtronic, Inc. 595,125

-----------------------------------------------------------------
10,000 Pfizer, Inc. 896,250
-----------------------------------------------------------------
</TABLE>

NEWPOINT EQUITY FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
DRUGS & HEALTHCARE--CONTINUED
-----------------------------------------------------------------
31,500 (a) Thermo Cardiosystems, Inc. $ 1,090,688
-----------------------------------------------------------------
22,000 Warner-Lambert Co. 1,573,000
----------------------------------------------------------------- -----------
Total 6,851,766
----------------------------------------------------------------- -----------
ENERGY--9.6%
-----------------------------------------------------------------
16,000 Baker Hughes, Inc. 586,000
-----------------------------------------------------------------
3,400 Exxon Corp. 321,725
-----------------------------------------------------------------
10,000 Halliburton Co. 602,500
-----------------------------------------------------------------
10,000 Mobil Corp. 1,210,000
-----------------------------------------------------------------
2,000 Royal Dutch Petroleum Co., ADR 339,750
-----------------------------------------------------------------
10,000 Schlumberger Ltd. 1,040,000
----------------------------------------------------------------- -----------

Total 4,099,975
----------------------------------------------------------------- -----------
FINANCE-INSURANCE & OTHER--9.6%
-----------------------------------------------------------------
10,000 Allstate Corp. 602,500
-----------------------------------------------------------------
4,500 American International Group, Inc. 517,500
-----------------------------------------------------------------
25,000 Progressive Corp. Ohio 1,743,750
-----------------------------------------------------------------
140,000 Reliance Group Holdings, Inc. 1,260,000
----------------------------------------------------------------- -----------
Total 4,123,750
----------------------------------------------------------------- -----------
REAL-ESTATE--0.5%
-----------------------------------------------------------------
11,000 (a) Trizec Hahn Corp. 224,125
----------------------------------------------------------------- -----------
TRANSPORTATION--0.9%
-----------------------------------------------------------------
8,000 CSX Corp. 374,000
----------------------------------------------------------------- -----------
UTILITIES--3.8%
-----------------------------------------------------------------
3,000 American Electric Power Co., Inc. 124,500
-----------------------------------------------------------------
17,000 Cincinnati Bell, Inc. 1,013,625
-----------------------------------------------------------------
4,000 Consolidated Natural Gas Co. 228,500

-----------------------------------------------------------------
5,000 Williams Cos., Inc. (The) 280,625
----------------------------------------------------------------- -----------
Total 1,647,250
----------------------------------------------------------------- -----------
TOTAL COMMON STOCKS (IDENTIFIED COST $29,544,599) 38,826,278
----------------------------------------------------------------- -----------
</TABLE>

NEWPOINT EQUITY FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
(b) REPURCHASE AGREEMENT--9.3%
- ------------------------------------------------------------------------------------
3,978,000 Merrill Lynch, Pierce, Fenner and Smith, 5.45%, dated
11/29/1996, due 12/2/1996 (AT AMORTIZED COST) $ 3,978,000
----------------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST $33,522,599)(c) $42,804,278
----------------------------------------------------------------- -----------
</TABLE>

(a) Non-income producing security.

(b) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.

(c)The cost of investments for federal tax purposes amounts to $33,522,599. The
net unrealized appreciation of investments on a federal tax basis amounts to
$9,281,679, which is comprised of $9,976,186 appreciation and $694,507
depreciation at November 30, 1996.

Note: The categories of investments are shown as a percentage of net assets
($42,857,819) at November 30, 1996.

The following acronym is used throughout this portfolio:

ADR--American Depositary Receipt

(See Notes which are an integral part of the Financial Statements)

NEWPOINT EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------
Total investments in securities, at value
(identified and tax cost $33,522,599) $42,804,278
- -------------------------------------------------------------------------------
Income receivable 60,881
- -------------------------------------------------------------------------------
Receivable for shares sold 164,543
- ------------------------------------------------------------------------------- -----------
Total assets 43,029,702
- -------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------
Income distribution payable $ 19,079
- --------------------------------------------------------------------
Payable to Bank 135,237
- --------------------------------------------------------------------
Accrued expenses 17,567
- -------------------------------------------------------------------- --------
Total liabilities 171,883
- ------------------------------------------------------------------------------- -----------
Net Assets for 2,831,669 shares outstanding $42,857,819
- ------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------
Paid in capital $31,769,998
- -------------------------------------------------------------------------------

Net unrealized appreciation of investments 9,281,679
- -------------------------------------------------------------------------------
Accumulated net realized gain on investments 1,800,716
- -------------------------------------------------------------------------------
Undistributed net investment income 5,426
- ------------------------------------------------------------------------------- -----------
Total Net Assets $42,857,819
- ------------------------------------------------------------------------------- -----------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- -------------------------------------------------------------------------------
Net Asset Value Per Share ($42,857,819 / 2,831,669 shares outstanding) $15.14
- ------------------------------------------------------------------------------- -----------
Offering Price Per Share (100/95.50 of $15.14)* $15.85
- ------------------------------------------------------------------------------- -----------
</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, 1996
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------
Dividends $ 442,690
- -----------------------------------------------------------------------------------
Interest 76,778
- ----------------------------------------------------------------------------------- ----------
Total income 519,468
- -----------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------
Investment advisory fee $237,755
- -----------------------------------------------------------------------
Administrative personnel and services fee 100,045
- -----------------------------------------------------------------------
Custodian fees 19,178
- -----------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 25,288
- -----------------------------------------------------------------------
Directors'/Trustees' fees 5,855
- -----------------------------------------------------------------------
Auditing fees 12,809
- -----------------------------------------------------------------------
Legal fees 2,168
- -----------------------------------------------------------------------
Portfolio accounting fees 47,116
- -----------------------------------------------------------------------
Share registration costs 11,716

- -----------------------------------------------------------------------
Printing and postage 8,125
- -----------------------------------------------------------------------
Insurance premiums 1,950
- -----------------------------------------------------------------------
Miscellaneous 2,611
- ----------------------------------------------------------------------- --------
Total expenses 474,616
- -----------------------------------------------------------------------
Waiver--
- -----------------------------------------------------------------------
Waiver of investment advisory fee (117,537)
- ----------------------------------------------------------------------- --------
Net expenses 357,079
- ----------------------------------------------------------------------------------- ----------
Net investment income 162,389
- ----------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
- -----------------------------------------------------------------------------------
Net realized gain on investments 1,810,858
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 4,521,064
- ----------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments 6,331,922
- ----------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $6,494,311
- ----------------------------------------------------------------------------------- ----------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

NEWPOINT EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
-----------------------------
1996 1995
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------
Net investment income $ 162,389 $ 178,891
- ----------------------------------------------------------------
Net realized gain on investments ($1,800,706 and $305,031,
respectively, as computed for federal tax purposes) 1,810,858 305,031
- ----------------------------------------------------------------
Net change in unrealized appreciation 4,521,064 5,022,005
- ---------------------------------------------------------------- ----------- -----------
Change in net assets resulting from operations 6,494,311 5,505,927
- ---------------------------------------------------------------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------
Distributions from net investment income (162,364) (179,687)
- ----------------------------------------------------------------
Distributions from net realized gains (315,173) --
- ---------------------------------------------------------------- ----------- -----------
Change in net assets resulting from distributions to
shareholders (477,537) (179,687)
- ---------------------------------------------------------------- ----------- -----------

SHARE TRANSACTIONS--
- ----------------------------------------------------------------
Proceeds from sale of shares 13,364,107 9,177,923
- ----------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 3,433 --
- ----------------------------------------------------------------
Cost of shares redeemed (2,329,055) (316,027)
- ---------------------------------------------------------------- ----------- -----------
Change in net assets resulting from share transactions 11,038,485 8,861,896
- ---------------------------------------------------------------- ----------- -----------
Change in net assets 17,055,259 14,188,136
- ----------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------
Beginning of period 25,802,560 11,614,424
- ---------------------------------------------------------------- ----------- -----------
End of period (including undistributed net investment income of
$5,426 and $5,401, respectively) $42,857,819 $25,802,560
- ---------------------------------------------------------------- ----------- -----------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

NEWPOINT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------

(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 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. The investment objective of the Fund is to
achieve growth of capital and income.

(2) SIGNIFICANT ACCOUNTING POLICIES

INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on a national securities exchange. Short-term securities are

valued at the prices provided by an independent pricing service. However,
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.

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"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.

NEWPOINT EQUITY FUND
- --------------------------------------------------------------------------------

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 NOVEMBER
30,
--------------------
1996 1995
-------- --------
<S> <C> <C>
- ------------------------------------------------------------------------
Shares sold 965,226 872,874
- ------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 246 --
- ------------------------------------------------------------------------
Shares redeemed (167,671) (27,157)
- ------------------------------------------------------------------------ -------- --------
Net change resulting from share transactions 797,801 845,717
- ------------------------------------------------------------------------ -------- --------
</TABLE>

(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 0.75% 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.

NEWPOINT EQUITY FUND
- --------------------------------------------------------------------------------

PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund'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.

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, 1996, the Fund paid $2,443 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, 1996, were as follows:

<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
PURCHASES $28,214,072
- ------------------------------------------------------------------------------- -----------
SALES $14,881,952
- ------------------------------------------------------------------------------- -----------
</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,
1996, 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 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, 1996, and the results of its operations for the year then ended and the
changes in its net assets, and the financial highlights for the periods
presented, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Pittsburgh, Pennsylvania
December 26, 1996

ADDRESSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
Newpoint Equity 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 121 South Main Street
Akron, Ohio 44308-1440
- ------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ------------------------------------------------------------------------------------------------

Transfer Agent and Dividend Disbursing Agent
and Portfolio Accounting Services
Federated Shareholder Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600

- ------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ------------------------------------------------------------------------------------------------

</TABLE>

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
NEWPOINT EQUITY FUND
(A PORTFOLIO OF NEWPOINT FUNDS)
PROSPECTUS

A Open-end, Diversified
Management Investment Company

January 31, 1997

LOGO
FEDERATED INVESTORS

Federated Investors Tower
Pittsburgh, PA 15222-3779

Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors

Cusip 651722209
G00580-01 (1/97)

[LOGO]
NEWPOINT FUNDS

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,
1997. 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 or call, toll free 1-800-627-1289.

FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

Statement dated January 31, 1997
First National Bank of Ohio,
Investment Adviser

FEDERATED INVESTORS
Federated Investors Tower
Pittsburgh, PA 15222-3779

Federated Securities Corp. is the distributor of the Fund
and is a subsidiary of Federated Investors.
Cusip 651722209
G00580-02 (1/97)
GENERAL INFORMATION ABOUT THE FUND 1

INVESTMENT OBJECTIVE AND POLICIES 1

Convertible Securities 1
Zero Coupon Securities 1
Warrants 2
International Securities 2
When-Issued and Delayed Delivery Transactions 2
Repurchase Agreements 3
Restricted and Illiquid Securities 3
Futures and Options Transactions 3
Futures Contracts 3
``Margin''in Futures Transactions 4
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 Securities 5
Over-the-Counter Options 5
Reverse Repurchase Agreements 6
Portfolio Turnover 6
INVESTMENT LIMITATIONS 6

NEWPOINT FUNDS MANAGEMENT 8

Fund Ownership 12
Trustees Compensation 13
Trustee Liability 14
INVESTMENT ADVISORY SERVICES 14

Adviser to the Fund 14
Advisory Fees 14

OTHER SERVICES 14

Fund Administration 14
Custodian and Portfolio Recordkeeper 14
Transfer Agent 14
Independent Public Accountants 14
BROKERAGE TRANSACTIONS 15

PURCHASING SHARES 15

Distribution and Shareholder Services Plans 15
Conversion to Federal Funds 15
DETERMINING NET ASSET VALUE 16

Determining Market Value of Securities 16
Trading in Foreign Securities 16
REDEEMING SHARES 16

Redemption in Kind 16
Massachusetts Partnership Law 17
TAX STATUS 17

The Fund's Tax Status 17
Foreign Taxes 17
Shareholders' Tax Status 17
TOTAL RETURN 18

YIELD 18

PERFORMANCE COMPARISONS 18

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.

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:
oless publicly available information about foreign companies;
othe lack of uniform financial accounting standards applicable to
foreign companies;
oless readily available market quotations on foreign companies;
odifferences in government regulation and supervision of foreign
stock exchanges, brokers, listed companies, and banks;
ogenerally lower foreign stock market volume;
othe likelihood that foreign securities may be less liquid or more
volatile;
ogenerally higher foreign brokerage commissions;
opossible difficulty in enforcing contractual obligations or
obtaining court judgments abroad because of differences in the legal
systems;
ounreliable mail service between countries; and
opolitical 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:
othe frequency of trades and quotes for the security;
othe number of dealers willing to purchase or sell the security and
the number of other potential buyers;
odealer undertakings to make a market in the security; and
othe 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 fiscal years ended November 30, 1996
and 1995, the Fund's portfolio turnover rates were 49% and 35%,
respectively.

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 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 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.

PURCHASING SECURITIES TO EXERCISE CONTROL
The Fund will not purchase securities of a company for the purpose of
exercising control or management.

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 association having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of investment
to be `cash items.''

NEWPOINT FUNDS MANAGEMENT

Officers and Trustees are listed with their addresses, birthdates, present
positions with Newpoint Funds, and principal occupations.

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 or Trustee of the
Funds.

J. Christopher Donahue *
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President and Trustee

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 Shareholder Services Company, and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Trustee 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.; Trustee of the
Funds.

Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer
Library Center, Inc., National Defense University, U.S. Space Foundation
and Czech Management Center; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy and
Technology, Federal Emergency Management Advisory Board and Czech
Management Center; Director or Trustee of the Funds.

C. Christine Thomson
Federated Investors Tower
Pittsburgh, PA
Birthdate: September 1, 1957
Vice President and Assistant Treasurer
Vice President and Assistant Treasurer of some of the Funds.

As used in the table above, "The Funds" and "Funds" mean the following
investment companies: 111 Corcoran Funds; 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;
Federated Adjustable Rate U.S. Government Fund, Inc.; Federated American
Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity Funds; Federated
Equity Income Fund, Inc.; Federated Fund for U.S. Government Securities,
Inc.; Federated GNMA Trust; Federated Government Income Securities, Inc.;
Federated Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust; Federated
Income Trust; Federated Index Trust; Federated Institutional Trust;
Federated Insurance Series; Federated Investment Portfolios; Federated
Investment Trust; Federated Master Trust; Federated Municipal Opportunities
Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated Municipal
Trust; Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock and Bond Fund, Inc.; 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: 2-5 Years;

Federated U.S. Government Securities Fund: 5-10 Years; Federated Utility
Fund, Inc.; First Priority Funds; Fixed Income Securities, Inc.; High Yield
Cash Trust; Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Investment Series Trust; Liberty Term
Trust, Inc. - 1999; Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Peachtree Funds; RIMCO Monument Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; The Planters Funds; The Starburst Funds;
The Starburst Funds II; The Virtus Funds; Trust for Financial Institutions;
Trust for Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; and World Investment
Series, Inc.

FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.

As of January 3, 1997, the following shareholders of record owned 5% or
more of the outstanding shares of the Fund: Parcol & Co., Akron, Ohio,
owned approximately 2,862,082 Shares (97.13%).

TRUSTEES COMPENSATION

NAME , AND AGGREGATE
POSITION WITH THE COMPENSATION FROM
TRUST THE TRUST+

John F. Donahue,
Chairman and Trustee $0

Thomas G. Bigley,
Trustee $1,110

John T. Conroy, Jr.,
Trustee $1,221

William J. Copeland,
Trustee $1,221

J. Christopher Donahue
Executive Vice President and
Trustee $0

James E. Dowd,
Trustee $1,221

Lawrence D. Ellis, M.D.,
Trustee $1,110

Edward L. Flaherty, Jr.,
Trustee $1,221

Edward C. Gonzales,
President, Treasurer and Trustee $0

Peter E. Madden,

Trustee $1,110

Gregor F. Meyer,
Trustee $1,110

John E. Murray, Jr.
Trustee $1,110

Wesley W. Posvar,
Trustee $1,110

Marjorie P. Smuts,
Trustee $1,110

+The aggregate compensation is paid by the Trust, which is comprised of
two portfolios. Information provided is for the fiscal year ended November
30, 1996.

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 years ended
November 30, 1996, 1995, and for the period from September 13, 1994 (date
of initial public investment) to November 30, 1994, the Adviser earned
$237,755, $152,062, and $17,604, respectively, of which $117,537, $123,730,
and $17,604, respectively, were voluntarily waived.

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, 1996,
1995, and for the period from September 13, 1994 (date of initial public
investment) to November 30, 1994, the Administrator earned $100,045,
$99,999, and $21,370, respectively, of which $0, $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

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 years ended November 30, 1996, 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 $58,348, $20,651, and
$22,352, respectively.

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.
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 Shareholder 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:
ofor equity securities, according to the last sale price on a
national securities exchange, if applicable;
oin the absence of recorded sales for listed equity securities,
according to the mean between the last closing bid and asked prices;
ofor unlisted equity securities, latest bid prices;
ofor bonds and other fixed income securities, as determined by an
independent pricing service;
ofor 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
ofor 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

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

number of shares purchased at the beginning of the period with $1,000, less
any applicable sales charge, adjusted over the period by any additional
shares, assuming the monthly reinvestment of all dividends and
distributions.

The Fund's average annual total returns for the one year period ended
November 30, 1996 and for the period from September 13, 1994 (date of
initial public investment) to November 30, 1996, were 15.90% and 19.76%,
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, 1996, was
0.60%.

PERFORMANCE COMPARISONS

The Fund's performance depends upon such variables as:
oportfolio quality;
oaverage portfolio maturity;
otype of instruments in which the portfolio is invested;
ochanges in interest rates and market value of portfolio securities;
ochanges in the Fund's expenses; and
ovarious 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:
oLIPPER 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.

oSTANDARD & 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.
oMORNINGSTAR, 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 charge.
Advertising and other promotional literature may include charts, graphs and
other illustrations using the Funds' returns, or returns in general, that
demonstrate basic investment concepts such as tax-deferred compounding,
dollar-cost averaging and systematic investment. In addition, the Funds can
compare their performance, or performance for the types of securities in
which they invest, to a variety of other investments, such as bank savings
accounts, certificates of deposit, and Treasury bills.

ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Funds may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by Fund portfolio managers and their views and analysis
on how such developments could affect the Funds. In addition, advertising
and sales literature may quote statistics and give general information
about the mutual fund industry, including the growth of the industry, from
sources such as the Investment Company Institute (`ICI''). For example,
according to the ICI, twenty-seven percent of American households are
pursuing their financial goals through mutual funds. These investors, as
well as businesses and institutions, have entrusted over $3 trillion to the
more than 5,500 funds available.

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) Conformed Copy of Investment Advisory Contract of the
Registrant;+
(i) Conformed Copy of Exhibit B to Investment
Advisory Contract of the Registrant to add
Portage Equity Fund to the present Investment
Advisory Contract; (6)
(6) (i) Conformed Copy of Distributor's Contract of the
Registrant;+
(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) Conformed Copy of Opinion and Consent of Counsel as to
legality of shares being registered;+
(11) Conformed copy of Consent of Independent Auditors; +
(12) Not applicable;
(13) Conformed 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) Copy of Schedule for Computation of Fund Performance
Data; (7)
(17) Copy of Financial Data Schedules;+
(18) Not Applicable.
(19) Conformed Copy of Power of Attorney;+

+ 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 3, 1997
Shares of beneficial interest
(no par value)

Newpoint Government Money
Market Fund 864

Newpoint Equity Fund 149

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, 1996 the trust division of First National
Bank of Ohio had approximately $2.4 billion under

administration of which it had investment discretion over
$1.3 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

Terry E. Patton Secretary and Counsel

Robert W.Carpenter Executive Vice President

Brad L. Tolstedt Executive Vice President

Gregory R. Bean Senior Vice President,
Senior Trust Officer

Richard G. Norton Executive Vice President

Daniel K. McGill Senior Vice President

Directors

John C. Blickle Terry L. Haines Stephen E. Myers

Clifford J. Isroff Phillip A Lloyd II Roger T. Read

Elizabeth A. Dalton John R. Masco Justin T. Rogers, Jr.

Robert M. Merzweiler

Item 29. Principal Underwriters:

(a) 111 Corcoran Funds; Arrow Funds; Automated Government Money Trust;
BayFunds; 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; Federated Adjustable Rate U.S. Government
Fund, Inc.; Federated American Leaders Fund, Inc.; Federated ARMs Fund;
Federated Equity Funds; Federated Equity Income Fund, Inc.; Federated Fund
for U.S. Government Securities, Inc.; Federated GNMA Trust; Federated
Government Income Securities, Inc.; Federated Government Trust; Federated
High Income Bond Fund, Inc.; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Insurance Series; Federated Investment
Portfolios; Federated Investment Trust; Federated Master Trust; Federated
Municipal Opportunities Fund, Inc.; Federated Municipal Securities Fund,

Inc.; Federated Municipal Trust; Federated Short-Term Municipal Trust;
Federated Short-Term U.S. Government Trust; Federated Stock and Bond Fund,
Inc.; 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: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; First Priority Funds; Fixed Income
Securities, Inc.; High Yield Cash Trust; Independence One Mutual Funds;
Intermediate Municipal Trust; International Series, Inc.; Investment Series
Funds, Inc.; Investment Series Trust; Liberty U.S. Government Money Market
Trust; Liquid Cash Trust; Managed Series Trust; Marshall Funds, Inc.; Money
Market Management, Inc.; Money Market Obligations Trust; Money Market
Trust; Municipal Securities Income Trust; Newpoint Funds; Peachtree Funds;
RIMCO Monument Funds; SouthTrust Vulcan Funds; Star Funds; Targeted
Duration Trust; Tax-Free Instruments Trust; The Biltmore Funds; The
Biltmore Municipal Funds; The Monitor Funds; The Planters Funds; The
Starburst Funds; The Starburst Funds II; The Virtus Funds; 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; Vision Group of Funds, Inc.; andWorld 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 VicePresident,
Federated Investors Tower President, Federated, Treasurer and
Pittsburgh, PA 15222-3779 Securities Corp. Trustee

Thomas R. Donahue Director, Assistant Secretary, --
Federated Investors Tower Assistant Treasurer
Pittsburgh, PA 15222-3779 Federated Securities Corp.

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

Dale R. Browne 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

R. Leonard Corton, 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

Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

John K. Goettlicher 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

James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

H. Joseph Kennedy 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

Thomas A. Peters III 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

Edward L. Smith 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

Richard Suder 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

Miles J. Wallace 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

Edward J. Wojnarowski 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

Edward R. Bozek Assistant 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

Leslie K. Platt Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

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

Newpoint Funds Federated Investors Tower
Pittsburgh, PA 15222-3779

Federated Shareholder Services Company Federated Investors Tower
(`Transfer Agent, Dividend Pittsburgh, PA 15222-3779
Disbursing Agent and
Portfolio Recordkeeper')

Federated Administrative Services Federated Investors Tower
(`Administrator'') Pittsburgh, PA 15222-3779

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 21st day of January, 1997.

NEWPOINT FUNDS

BY: /s/ C. Todd Gibson
C. Todd Gibson, Assistant Secretary
Attorney in Fact for John F. Donahue
January 21, 1997

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 21, 1997
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

* By Power of Attorney

Exhibit 11 under Form N-1A
Exhibit 23 under Item 601/Reg. S-K

ARTHUR ANDERSEN LLP

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use in Post-
Effective Amendment No. 2 to Form N-1A Registration Statement of Newpoint
Funds of our report dated December 26, 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.

/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP

Pittsburgh, Pennsylvania
January 20, 1997

Exhibit 5 under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

PORTAGE FUNDS
INVESTMENT ADVISORY CONTRACT

This Contract is made this 8th day of January, 1991, between FIRST
NATIONAL BANK OF OHIO, a national banking association having its principal
place of business in Akron, Ohio, (the "Adviser"), and PORTAGE FUNDS, a
Massachusetts business trust having its principal place of business in
Pittsburgh, Pennsylvania (the "Trust").

WHEREAS the Trust is an open-end management investment company as that
term is defined in the Investment Company Act of 1940 and is
registered as such with the Securities and Exchange Commission; and

WHEREAS Adviser is engaged in the business of rendering investment
advisory and management services.

NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:

1. The Trust hereby appoints Adviser as Investment Adviser for each
of the portfolios ("Funds") of the Trust which executes an exhibit to this
Contract, and Adviser accepts the appointments. Subject to the direction
of the Trustees of the Trust, Adviser shall provide investment research and
supervision of the investments of the Funds and conduct a continuous
program of investment evaluation and of appropriate sale or other
disposition and reinvestment of each Fund's assets.

2. Adviser, in its supervision of the investments of each of the
Funds will be guided by each of the Fund's investment objective and
policies and the provisions and restrictions contained in the Declaration
of Trust and By-Laws of the Trust and as set forth in the Registration
Statements and exhibits as may be on file with the Securities and Exchange
Commission.

3. Each Fund shall pay or cause to be paid all of its own expenses
and its allocable share of Trust expenses, including, without limitation,
the expenses of organizing the Trust and continuing its existence; fees and
expenses of Trustees and officers of the Trust; fees for investment
advisory services and administrative personnel and services; fees and
expenses of preparing and printing its Registration Statements under the
Securities Act of 1933 and the Investment Company Act of 1940 and any
amendments thereto; expenses of registering and qualifying the Trust, the
Funds, and shares ("Shares") of the Funds under federal and state laws and
regulations; expenses of preparing, printing, and distributing prospectuses
(and any amendments thereto) to shareholders; interest expense, taxes,
fees, and commissions of every kind; expenses of issue (including cost of
Share certificates), purchase, repurchase, and redemption of Shares,
including expenses attributable to a program of periodic issue; charges and
expenses of custodians, transfer agents, dividend disbursing agents,
shareholder servicing agents, and registrars; printing and mailing costs,
auditing, accounting, and legal expenses; reports to shareholders and
governmental officers and commissions; expenses of meetings of Trustees and
shareholders and proxy solicitations therefor; insurance expenses;
association membership dues and such nonrecurring items as may arise,
including all losses and liabilities incurred in administering the Trust
and the Funds. Each Fund will also pay its allocable share of such
extraordinary expenses as may arise including expenses incurred in
connection with litigation, proceedings, and claims and the legal
obligations of the Trust to indemnify its officers and Trustees and agents
with respect thereto.
4. Each of the Funds shall pay to Adviser, for all services rendered
to each Fund by Adviser hereunder, the fees set forth in the exhibits
attached hereto.

5. The net asset value of each Fund's Shares as used herein will be
calculated to the nearest 1/10th of one cent.

6. The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation (and, if appropriate, assume expenses
of one or more of the Funds or classes thereof) to the extent the expenses
of any Fund or a class thereof exceed such lower expense limitation as the
Adviser may, by notice to the Fund, voluntarily declare to be effective.

7. This contract shall begin for each Fund as of the date of
execution of the applicable exhibit and shall continue in effect with
respect to each Fund presently set forth on an exhibit (and any subsequent
Funds added pursuant to an exhibit during the initial term of this
contract) for two years from the date of this contract set forth above and
thereafter for successive periods of one year, subject to the provisions
for termination and all of the other terms and conditions hereof if: (a)
such continuation shall be specifically approved at least annually by the
vote of a majority of the Trustees of the Trust, including a majority of
the Trustees who are not parties to this Contract or interested persons of
any such party (other than as Trustees of the Trust), cast in person at a
meeting called for that purpose; and (b) Adviser shall not have notified a
Fund in writing at least sixty (60) days prior to the anniversary date of
this Contract in any year thereafter that it does not desire such
continuation with respect to that Fund. If a Fund is added after the first
approval by the Trustees as described above, this Contract will be
effective as to that Fund upon execution of the applicable exhibit and will
continue in effect until the next annual approval of this Contract by the
Trustees and thereafter for successive periods of one year, subject to
approval as described above.

8. Notwithstanding any provision in this Contract, it may be
terminated at any time with respect to any Fund, without the payment of any
penalty, by the Trustees of the Trust or by a vote of the shareholders of
that Fund on sixty (60) days' written notice to Adviser.

9. This Contract may not be assigned by Adviser and shall
automatically terminate in the event of any assignment. Adviser may employ
or contract with such other person, persons, corporation, or corporations
at its own cost and expense as it shall determine in order to assist it in
carrying out this Contract.

10. In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties under this
Contract on the part of Adviser, Adviser shall not be liable to the Trust
or to any of the Funds or to any shareholder for any act or omission in the
course of or connected in any way with rendering services or for any losses
that may be sustained in the purchase, holding, or sale of any security.

11. This Contract may be amended at any time by agreement of the
parties provided that the amendment shall be approved both by the vote of a
majority of the Trustees of the Trust, including a majority of the Trustees
who are not parties to this Contract or interested persons of any such
party to this Contract (other than as Trustees of the Trust) cast in person
at a meeting called for that purpose, and on behalf of a Fund by a majority
of the outstanding voting securities of such Fund.

12. Adviser is hereby expressly put on notice of the limitation of
liability as set forth in Article XI of the Declaration of Trust and agrees
that the obligations pursuant to this Contract of a particular Fund and of
the Trust with respect to that particular Fund be limited solely to the
assets of that particular Fund, and Adviser shall not seek satisfaction of
any such obligation from any other Fund, the shareholders of any Fund, the
Trustees, officers, employees or agents of the Trust, or any of them.

13. This Contract shall be construed in accordance with and governed
by the laws of the Commonwealth of Pennsylvania.

14. This Contract will become binding on the parties hereto upon
their execution of the attached exhibits to this Contract.

EXHIBIT A

PORTAGE GOVERNMENT MONEY MARKET FUND

For all services rendered by Adviser hereunder, the above-named Fund
of the Trust shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment
advisory fee equal to .50 of 1% of the average daily net assets of the
Fund.

The portion of the fee based upon the average daily net assets of the
Fund shall be accrued daily at the rate of 1/365th of .50 of 1% applied to
the daily net assets of the Fund.

The advisory fee so accrued shall be paid to Adviser daily.

Witness the due execution hereof this 8th day of January, 1991.
Attest: FIRST NATIONAL BANK OF OHIO

/s/ Kimberly S. Markovich By:/s/ Randall E. Thornton

Secretary Vice President

Attest: PORTAGE FUNDS

/s/ Joseph M. Huber By:/s/ John W. McGonigle

Secretary Vice
President

EXHIBIT B

PORTAGE EQUITY FUND

For all services rendered by Adviser hereunder, the above-named Fund
of the Trust shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment
advisory fee equal to .75 of 1% of the average daily net assets of the
Fund.

The portion of the fee based upon the average daily net assets of the
Fund shall be accrued daily at the rate of 1/365th of .75 of 1% applied to
the daily net assets of the Fund.

The advisory fee so accrued shall be paid to Adviser daily.

Witness the due execution hereof this 1st day of June, 1994.

Attest: FIRST NATIONAL BANK OF OHIO

/s/ Cindy L. Riegler By:/s/ Randall E. Thornton
Secretary Vice President

Attest: PORTAGE FUNDS

/s/ John W. McGonigle By: /s/ J. C. Donahue
Secretary Vice President

Exhibit 6(i) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
PORTAGE FUNDS

DISTRIBUTOR'S CONTRACT

AGREEMENT made this 8th day of January, 1991, by and between PORTAGE
FUNDS (the "Trust"), a Massachusetts business trust, and FEDERATED
SECURITIES CORP. ("FSC"), a Pennsylvania Corporation.

In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:

1. The Trust hereby appoints FSC as its agent to sell and distribute
shares of the Trust which may be offered in one or more series (the
"Funds") consisting of one or more classes (the "Classes") of shares (the
"Shares") as described and set forth on one or more exhibits to this
Agreement at the current offering price thereof as described and set forth
in the current Prospectuses of the Trust. FSC hereby accepts such
appointment and agrees to provide such other services for the Trust, if
any, and accept such compensation from the Trust, if any, as set forth in
the applicable exhibit to this Agreement.

2. The sale of any Shares may be suspended without prior notice
whenever in the judgment of the Trust it is in its best interest to do so.

3. Neither FSC nor any other person is authorized by the Trust to
give any information or to make any representation relative to any Shares
other than those contained in the Registration Statement, Prospectuses, or
Statements of Additional Information ("SAIs") filed with the Securities and
Exchange Commission, as the same may be amended from time to time, or in
any supplemental information to said Prospectuses or SAIs approved by the
Trust. FSC agrees that any other information or representations other than
those specified above which it or any dealer or other person who purchases
Shares through FSC may make in connection with the offer or sale of Shares,
shall be made entirely without liability on the part of the Trust. No
person or dealer, other than FSC, is authorized to act as agent for the
Trust for any purpose. FSC agrees that in offering or selling Shares as
agent of the Trust, it will, in all respects, duly conform to all
applicable state and federal laws and the rules and regulations of the
National Association of Securities Dealers, Inc., including its Rules of
Fair Practice. FSC will submit to the Trust copies of all sales literature
before using the same and will not use such sales literature if disapproved
by the Trust.

4. This Agreement is effective with respect to each Class as of the
date of execution of the applicable exhibit and shall continue in effect
with respect to each Class presently set forth on an exhibit and any
subsequent Classes added pursuant to an exhibit during the initial term of
this Agreement for one year from the date set forth above, and thereafter
for successive periods of one year if such continuance is approved at least
annually by the Trustees of the Trust including a majority of the members
of the Board of Trustees of the Trust who are not interested persons of the
Trust and have no direct or indirect financial interest in the operation of
any Distribution Plan relating to the Trust or in any related documents to
such Plan ("Disinterested Trustees") cast in person at a meeting called for
that purpose. If a Class is added after the first annual approval by the
Trustees as described above, this Agreement will be effective as to that
Class upon execution of the applicable exhibit and will continue in effect
until the next annual approval of this Agreement by the Trustees and
thereafter for successive periods of one year, subject to approval as
described above.

5. This Agreement may be terminated with regard to a particular Fund
or Class at any time, without the payment of any penalty, by the vote of a
majority of the Disinterested Trustees or by a majority of the outstanding
voting securities of the particular Fund or Class on not more than sixty
(60) days' written notice to any other party to this Agreement. This
Agreement may be terminated with regard to a particular Fund or Class by
FSC on sixty (60) days' written notice to the Trust.

6. This Agreement may not be assigned by FSC and shall automatically
terminate in the event of an assignment by FSC as defined in the Investment
Company Act of 1940, provided, however, that FSC may employ such other
person, persons, corporation or corporations as it shall determine in order
to assist it in carrying out its duties under this Agreement.

7. FSC shall not be liable to the Trust 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 by this
Agreement.

8. This Agreement may be amended at any time by mutual agreement in
writing of all the parties hereto, provided that such amendment is approved
by the Trustees of the Trust including a majority of the Disinterested
Trustees of the Trust cast in person at a meeting called for that purpose.

9. This Agreement shall be construed in accordance with and governed
by the laws of the Commonwealth of Pennsylvania.

10. (a) Subject to the conditions set forth below, the Trust agrees
to indemnify and hold harmless FSC and each person, if any, who controls
FSC within the meaning of Section 15 of the Securities Act of 1933 and
Section 20 of the Securities Act of 1934, as amended, against any and all
loss, liability, claim, damage and expense whatsoever (including but not
limited to any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement, any Prospectuses or SAI's (as from time to
time amended and supplemented) or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading, unless such statement or
omission was made in reliance upon and in conformity with written
information furnished to the Trust about FSC by or on behalf of FSC
expressly for use in the Registration Statement, any Prospectuses and SAIs
or any amendment or supplement thereof.

If any action is brought against FSC or any controlling person thereof
with respect to which indemnity may be sought against the Trust pursuant to
the foregoing paragraph, FSC shall promptly notify the Trust in writing of
the institution of such action and the Trust shall assume the defense of
such action, including the employment of counsel selected by the Trust and
payment of expenses. FSC or any such controlling person thereof shall have
the right to employ separate counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of FSC or such controlling
person unless the employment of such counsel shall have been authorized in
writing by the Trust in connection with the defense of such action or the
Trust shall not have employed counsel to have charge of the defense of such
action, in any of which events such fees and expenses shall be borne by the
Trust. Anything in this paragraph to the contrary notwithstanding, the
Trust shall not be liable for any settlement of any such claim of action
effected without its written consent. The Trust agrees promptly to notify
FSC of the commencement of any litigation or proceedings against the Trust
or any of its officers or Trustees or controlling persons in connection
with the issue and sale of Shares or in connection with the Registration
Statement, Prospectuses, or SAI's.

(b) FSC agrees to indemnify and hold harmless the Trust, each of its
Trustees, each of its officers who have signed the Registration Statement
and each other person, if any, who controls the Trust within the meaning of
Section 15 of the Securities Act of 1933, but only with respect to
statements or omissions, if any, made in the Registration Statement or any
Prospectus, SAI, or any amendment or supplement thereof in reliance upon,
and in conformity with, information furnished to the Trust about FSC by or
on behalf of FSC expressly for use in the Registration Statement or any
Prospectus, SAI, or any amendment or supplement thereof. In case any
action shall be brought against the Trust or any other person so
indemnified based on the Registration Statement or any Prospectus, SAI, or
any amendment or supplement thereof, and with respect to which indemnity
may be sought against FSC, FSC shall have the rights and duties given to
the Trust, and the Trust and each other person so indemnified shall have
the rights and duties given to FSC by the provisions of subsection (a)
above.

(c) Nothing herein contained shall be deemed to protect any person
against liability to the Trust or its shareholders to which such person
would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of the duties of such person or by
reason of the reckless disregard by such person of the obligations and
duties of such person under this Agreement.

(d) Insofar as indemnification for liabilities may be permitted
pursuant to Section 17 of the Investment Company Act of 1940 for Trustees,
officers, FSC and controlling persons of the Trust by the Trust pursuant to
this Agreement, the Trust is aware of the position of the Securities and
Exchange Commission as set forth in the Investment Company Act Release
No. IC-11330. Therefore, the Trust undertakes that in addition to
complying with the applicable provisions of this Agreement, in the absence
of a final decision on the merits by a court or other body before which the
proceeding was brought, that an indemnification payment will not be made
unless in the absence of such a decision, a reasonable determination based
upon factual review has been made (i) by a majority vote of a quorum of
non-party Disinterested Trustees, or (ii) by independent legal counsel in a
written opinion that the indemnitee was not liable for an act of willful
misfeasance, bad faith, gross negligence or reckless disregard of duties.
The Trust further undertakes that advancement of expenses incurred in the
defense of a proceeding (upon undertaking for repayment unless it is
ultimately determined that indemnification is appropriate) against an
officer, Trustee, FSC or controlling person of the Trust will not be made
absent the fulfillment of at least one of the following conditions: (i) the
indemnitee provides security for his undertaking; (ii) the Trust is insured
against losses arising by reason of any lawful advances; or (iii) a
majority of a quorum of non-party Disinterested Trustees or independent
legal counsel in a written opinion makes a factual determination that there
is reason to believe the indemnitee will be entitled to indemnification.

11. FSC is hereby expressly put on notice of the limitation of
liability as set forth in Article XI of the Declaration of Trust and agrees
that the obligations assumed by the Trust pursuant to this agreement shall
be limited in any case to the Trust and its assets and FSC shall not seek
satisfaction of any such obligation from the shareholders of the Trust, the
Trustees, officers, employees or agents of the Trust, or any of them.

12. FSC agrees to adopt compliance standards as to when a class of
shares may be sold to particular investors.

13. This Agreement will become binding on the parties hereto upon the
execution of the attached exhibits to the Agreement.

Exhibit A

PORTAGE FUNDS

Portage Government Money Market Fund
Trust Shares

In consideration of the mutual covenants set forth in the
Distributor's Contract dated January 8, 1991 between Portage Funds and
Federated Securities Corp., Portage Funds executes and delivers this
Exhibit on behalf of the Funds, and with respect to the separate Classes of
Shares thereof, first set forth in this Exhibit.

Witness the due execution hereof this 8th day of January, 1991.

ATTEST: PORTAGE FUNDS

/s/ Joseph M. Huber By:/s/ Edward C. Gonzales
Assistant Secretary President
(SEAL)

ATTEST: FEDERATED SECURITIES CORP.

/s/ S. Elliott Cohan By:/s/ Richard B. Fisher
Secretary President
(SEAL)

Exhibit B
PORTAGE FUNDS

Portage Government Money Market Fund
Investment Shares

The following provisions are hereby incorporated and made part of the
Distributor's Contract dated the 8th day of January, 1991, between Portage
Funds and Federated Securities Corp. with respect to Classes of the Funds
set forth above.

1. The Trust hereby appoints FSC to engage in activities principally
intended to result in the sale of Shares of the Classes. Pursuant to this
appointment FSC is authorized to to select a group of brokers ("Brokers")
to sell shares of the above-listed Classes ("Shares"), at the current
offering price thereof as described and set forth in the respective
prospectuses of the Trust, and to render administrative support
services to the Trust and its shareholders. In addition, FSC is
authorized to select a group of Administrators ("Administrators") to render
administrative support services to the Trust and its shareholders.

2. Administrative support services may include, but are not limited
to, the following eleven functions: (1) account openings: the Broker or
Administrator communicates account openings via computer terminals located
on the Broker or Administrator's premises; 2) account closings: the Broker
or Administrator communicates account closings via computer terminals; 3)
enter purchase transactions: purchase transactions are entered through the
Broker or Administrator's own personal computer or through the use of a
toll-free telephone number; 4) enter redemption transactions: Broker or
Administrator enters redemption transactions in the same manner as
purchases; 5) account maintenance: Broker or Administrator provides or
arranges to provide accounting support for all transactions. Broker or
Administrator also wires funds and receives funds for Trust share purchases
and redemptions, confirms and reconciles all transactions, reviews the
activity in the Trust's accounts, and provides training and supervision of
its personnel; 6) interest posting: Broker or Administrator posts and
reinvests dividends to the Trust's accounts; 7) prospectus and shareholder
reports: Broker or Administrator maintains and distributes current copies
of prospectuses and shareholder reports; 8) advertisements: the Broker or
Administrator continuously advertises the availability of its services and
products; 9) customer lists: the Broker or Administrator continuously
provides names of potential customers; 10) design services: the Broker or
Administrator continuously designs material to send to customers and
develops methods of making such materials accessible to customers; and 11)
consultation services: the Broker or Administrator continuously provides
information about the product needs of customers.

3. During the term of this Agreement, the Trust will pay FSC for
services pursuant to this Agreement, a monthly fee computed at the annual
rate of .25% of the average aggregate net asset value of the Investment
Shares of the Portage Government Money Market Fund held during the month.
For the month in which this Agreement becomes effective or terminates,
there shall be an appropriate proration of any fee payable on the basis of
the number of days that the Agreement is in effect during the month.

4. FSC may from time-to-time and for such periods as it deems
appropriate reduce its compensation to the extent any classes expenses
exceed such lower expense limitation as FSC may, by notice to the Trust,
voluntarily declare to be effective.

5. FSC will enter into separate written agreements with various
firms to provide certain of the services set forth in Paragraph 1 herein.
FSC, in its sole discretion, may pay Brokers and Administrators a periodic
fee in respect of Shares owned from time to time by their clients or
customers. The schedules of such fees and the basis upon which such fees
will be paid shall be determined from time to time by FSC in its sole
discretion.

6. FSC will prepare reports to the Board of Trustees of the Trust on
a quarterly basis showing amounts expended hereunder including amounts paid
to Brokers and Administrators and the purpose for such payments.

Witness the due execution hereof this 8th day of January, 1991.

ATTEST: PORTAGE FUNDS

/s/ Joseph M. Huber By:/s/ Edward C. Gonzales
Assistant Secretary President
(SEAL)

ATTEST: FEDERATED SECURITIES CORP.

/s/ S. Elliott Cohan By:/s/ Richard B. Fisher
Secretary President
(SEAL)

Exhibit C

PORTAGE FUNDS

Portage Equity Fund

1. The Trust hereby appoints FSC to engage in activities principally
intended to result in the sale of Shares of the Classes. Pursuant to this
appointment FSC is authorized to select a group of financial institutions
such as brokers or banks ("Financial Institutions") to sell shares of the
above-listed Classes ("Shares"), at the current offering price thereof as
described and set forth in the respective prospectuses of the Trust, and/or
to render distribution and sales services to the Trust and its
shareholders.

2. During the term of this Agreement, the Trust will pay FSC for
services pursuant to this Agreement, a monthly fee computed at the annual
rate of .25% of the average aggregate net asset value of the Portage Equity
Fund held during the month. For the month in which this Agreement becomes
effective or terminates, there shall be an appropriate proration of any fee
payable on the basis of the number of days that the Agreement is in effect
during the month.

3. FSC may from time-to-time and for such periods as it deems
appropriate reduce its compensation to the extent any classes expenses
exceed such lower expense limitation as FSC may, by notice to the Trust,
voluntarily declare to be effective.

4. FSC will enter into separate written agreements with various
Financial Institutions to provide certain of the services set forth in
Paragraph 1 herein. FSC, in its sole discretion, may pay Financial
Institutions a periodic fee in respect of Shares owned from time to time by
their clients or customers. The schedules of such fees and the basis upon
which such fees will be paid shall be determined from time to time by FSC
in its sole discretion.

5. FSC will prepare reports to the Board of Trustees of the Trust on
a quarterly basis showing amounts expended hereunder including amounts paid
to Financial Institutions and the purpose for such payments.

Witness the due execution hereof this 1st day of June, 1994.
ATTEST: PORTAGE FUNDS

/s/ John W. McGonigle By: /s/ J. C. Donahue
Title: Secretary Vice President

ATTEST: FEDERATED SECURITIES CORP.

/s/ John W. McGonigle By: /s/ John A. Staley, IV
Title: Assistant Secretary Executive Vice President

Exhibit 10 under Form N-1A
Exhibit 5 under Item 601/Reg. S-K

HOUSTON, HOUSTON & DONNELLY
ATTORNEYS AT LAW
2510 CENTRE CITY TOWER
PITTSBURGH, PA 15222
William McC Houston
Fred Chalmers Houston, Jr. (412) 471-5828 Fred
Chalmers Houston
Thomas J. Donnelly FAX (412) 471-0738 (1914-1971)
John J. Heck

Mario Santillo, Jr.
Theodore M. Hammer
January 3, 1991
The Trustees of
Portage Funds
Federated Investors Tower
Pittsburgh, PA 15222-3779

Gentlemen:

Portage Funds (`Trust'') proposes to offer and sell Shares of
Beneficial Interest in two separate classes of shares known as Investment
Shares and Trust Shares, representing interests in a portfolio of
securities known as Portage Government Money Market Fund (`Shares'') in
the manner and on the terms set forth in its Registration Statement filed
with the Securities and Exchange Commission under the Securities Act of
1933, as amended.

As counsel we have participated in the organization of the Trust, its
registration under the Investment Company Act of 1940 and the preparation
and filing of its Registration Statement under the Securities Act of 1933.
We have examined and are familiar with the provisions of the written
Declaration of Trust dated November 12, 1990, as amended (`Declaration of
Trust'), the Bylaws of the Trust and such other documents and records
deemed relevant. We have also reviewed questions of law and consulted with
counsel thereon as deemed necessary or appropriate by us for the purposes
of this opinion.

Based upon the foregoing, it is our opinion that:

1. The Trust is duly organized and validly existing pursuant to the
Declaration of Trust.

2. The Shares which are currently being registered by the
Registration Statement referred to above may be legally and validly issued
from time to time in accordance with the Declaration of Trust upon receipt
of consideration sufficient to comply with the provisions of Article III,
Section 3, of the Declaration of Trust and subject to compliance with the
Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and applicable state laws regulating the sale of securities. Such
Shares, when so issued, will be fully paid and non-assessable.

We consent to your filing this opinion as an exhibit to the
Registration Statement referred to above and to any application or
registration statement filed under the securities laws of any of the States
of the United States. We further consent to the reference to our firm
under the caption Legal Counsel in the prospectus filed as a part of such
Registration Statement, applications and registration statements.

Very truly yours,
HOUSTON, HOUSTON & DONNELLY

By: /s/Thomas J. Donnelly
TJD: heh

Exhibit 19 under Form N-1A
Exhibit 24 under Item 601/Reg. S-K

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and
appoint the Secretary and Assistant Secretary of FIRST PRIORITY FUNDS and
the Assistant General Cousnel of Federated Investors, and each of them,
their true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for them and in their names, place and
stead, in any and all capacities, to sign any and all documents to be filed
with the Securities and Exchange Commission pursuant to the Securities Act
of 1933, the Securities Exchange Act of 1934 and the Investment Company Act
of 1940, by means of the Securities and Exchange Commission's electronic
disclosure system known as EDGAR; and to file the same, with all exhibits
thereto and other doucments in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents,
each of them, full power and authority to sign and perform each and every
act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as each of them might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue thereof.

SIGNATURES TITLE DATE

/s/ John F. DonahueChairman and TrusteeJanuary 10, 1997
John F. Donahue(Chief Executive Officer)

/s/ Edward C. GonzalesPresident,Treasurer andJanuary 10, 1997
Edward C. GonzalesTrustee (Principal Financial
and Accounting Officer)

/s/ J. Christopher DonahueExecutive Vice President January 10, 1997
J. Christopher Donahueand Trustee

/s/ Thomas G. Bigley Trustee January 10, 1997
Thomas G. Bigley

/s/John T. Conroy, Jr. Trustee January 10, 1997
John T. Conroy, Jr.

/s/William J. Copeland Trustee January 10, 1997
William J. Copeland

/s/James E. Dowd Trustee January 10, 1997
James E. Dowd

/s/ Lawrence D. Ellis, M.D.Trustee January 10, 1997
Lawrence D. Ellis, M.D.

/s/ Edward L. Flaherty, Jr.Trustee January 10, 1997
Edward L. Flaherty, Jr.

/s/ Peter E. Madden Trustee January 10, 1997
Peter E. Madden

/s/ Gregor F. Meyer Trustee January 10, 1997
Gregor F. Meyer

/s/John E. Murray, Jr. Trustee January 10, 1997
John E. Murray, Jr.
/s/ Wesley W. Posvar Trustee January 10, 1997
Wesley W. Posvar

/s/ Marjorie P. Smuts Trustee January 10, 1997
Marjorie P. Smuts

Sworn to and subscribed before me this 10th day of January, 1997

/s/ Marie N.Hamm
Notary Republic

<S> <C>

<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> Newpoint Funds
Newpoint Government Money Market Fund

<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1996
<PERIOD-END> Nov-30-1996
<INVESTMENTS-AT-COST> 85,173,422
<INVESTMENTS-AT-VALUE> 85,173,422
<RECEIVABLES> 373,296
<ASSETS-OTHER> 5,848
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<NUMBER-OF-SHARES-SOLD> 195,120,125
<NUMBER-OF-SHARES-REDEEMED> 210,662,239
<SHARES-REINVESTED> 1,098,483
<NET-CHANGE-IN-ASSETS> (14,443,631)
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 435,274
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<GROSS-EXPENSE> 724,918
<AVERAGE-NET-ASSETS> 87,054,776
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.050
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<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.63
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000

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<S> <C>

<ARTICLE> 6
<SERIES>
<NUMBER> 02
<NAME> Newpoint Funds
Newpoint Equity Fund

<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1996
<PERIOD-END> Nov-30-1996
<INVESTMENTS-AT-COST> 33,522,599
<INVESTMENTS-AT-VALUE> 42,804,278
<RECEIVABLES> 225,424
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 43,029,702
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 171,883
<TOTAL-LIABILITIES> 171,883
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 31,769,998
<SHARES-COMMON-STOCK> 2,831,669
<SHARES-COMMON-PRIOR> 2,033,868
<ACCUMULATED-NII-CURRENT> 5,426
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,800,716
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,281,679
<NET-ASSETS> 42,857,819
<DIVIDEND-INCOME> 442,690
<INTEREST-INCOME> 76,778
<OTHER-INCOME> 0
<EXPENSES-NET> 357,079
<NET-INVESTMENT-INCOME> 162,389
<REALIZED-GAINS-CURRENT> 1,810,858
<APPREC-INCREASE-CURRENT> 4,521,064
<NET-CHANGE-FROM-OPS> 6,494,311
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 162,364
<DISTRIBUTIONS-OF-GAINS> 315,173
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 965,226
<NUMBER-OF-SHARES-REDEEMED> 167,671
<SHARES-REINVESTED> 246
<NET-CHANGE-IN-ASSETS> 17,055,259
<ACCUMULATED-NII-PRIOR> 5,401
<ACCUMULATED-GAINS-PRIOR> 305,031
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 237,755
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 474,616
<AVERAGE-NET-ASSETS> 31,870,186
<PER-SHARE-NAV-BEGIN> 12.690
<PER-SHARE-NII> 0.070
<PER-SHARE-GAIN-APPREC> 2.610
<PER-SHARE-DIVIDEND> 0.070
<PER-SHARE-DISTRIBUTIONS> 0.160
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<PER-SHARE-NAV-END> 15.140
<EXPENSE-RATIO> 1.13
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<AVG-DEBT-PER-SHARE> 0.000

</TABLE>