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. 15......................... X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 13........................................ X
NEWPOINT FUNDS
(Exact Name of Registrant as Specified in Charter)
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
(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)
_ on____________, pursuant to paragraph (b)
X 60 days after filing pursuant to paragraph (a) (i) on pursuant to paragraph
(a) (i). 75 days after filing pursuant to paragraph (a)(ii) on
_________________ pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Copies To:
Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky, LLP
2101 L. Street, N.W.
Washington, D.C. 20037
PROSPECTUS _______________, 1998
NEWPOINT EQUITY FUND
(A PORTFOLIO OF NEWPOINT FUNDS)
TABLE OF CONTENTS
FUND SHARES ARE NOT BANK DEPOSITS, FEDERALLY INSURED, OR GUARANTEED, AND MAY
LOSE VALUE. As with all mutual funds, the Securities and Exchange Commission has
not approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.
<PAGE>
3
FUND GOALS, STRATEGIES, AND RISKS
WHAT IS THE FUND'S GOAL?
The Fund's goal is to achieve growth of capital and income.
WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?
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 Fund's investment adviser,
FirstMerit Bank, N.A. (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.
WHAT ARE THE FUND'S MAIN INVESTMENT POLICIES
The Fund's Adviser selects companies 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); credit
research; review of issuers' dividend growth records; and consideration of
market trends. We are looking for companies that have the following
characteristics: a stable industry structure; an industry position of low cost
provider or differentiation by product or service; proprietary products with
high switching costs; high returns on capital; and management that is incented
to increase returns on capital.
IN WHAT TYPES OF SECURITIES DOES THE FUND INVEST?
Under normal circumstances, the Fund pursues its goal by investing at least 65%
of the value of its total assets in equity securities of U.S. companies.
EQUITY SECURITIES represent a share of the issuer's earnings and assets, after
the issuer pays its liabilities. Generally, issuers have discretion as to the
payment of any dividends or distributions. As a result, investors cannot predict
the income they will receive from equity securities. However, equity securities
offer greater potential for appreciation than many other types of securities,
because their value increases directly with the value of the issuer's business.
The following describes the types of equity securities in which the Fund
invests.
COMMON STOCKS are the most prevalent type of equity security. They are the
fundamental unit of ownership of a company. Common stockholders receive the
residual value of the issuer's earnings and assets after the issuer pays its
creditors and any preferred stockholders. As a result, changes in an issuer's
earnings directly influence the value of its common stock.
PREFERRED STOCKS have the right to receive specified dividends or
distributions before the payment of dividends or distributions on common
stock. Some preferred stocks also participate in dividends and distributions
paid on common stock. Preferred stocks may provide for the issuer to redeem
the stock on a specified date. The Fund may treat such redeemable preferred
stock as a fixed income security.
WHAT ARE THE RISKS OF INVESTING IN THE FUND?
As with all mutual funds, the Fund's investments are subject to risks that could
cause their value to go down.
STOCK MARKET RISKS. The value of the stocks in the Fund's portfolio will go up
and down. These fluctuations could be a sustained trend or a drastic movement.
Fluctuations in the Fund's portfolio may reflect changes in individual portfolio
stocks or general changes in stock valuations and will result in changes in the
Fund's share price. The Adviser attempts to manage market risk through
diversification by limiting the amount the Fund invests in each stock.
Equity risk is also related to the size of the company issuing stock. Companies
may be categorized as having a small, medium, or large capitalization (market
value). The potential risks are higher with small- and medium-capitalization
companies and lower with large-capitalization companies. Therefore, you should
expect that investments in the Fund will be more volatile than broad stock
market indices such as the S&P 500.
TEMPORARY INVESTMENTS. The Fund may temporarily depart from its principal
investment strategies by investing its assets in U.S. and foreign short-term
money market instruments. It may do this to minimize potential losses and
maintain liquidity to meet shareholder redemptions during adverse market
conditions. This may cause the Fund to forego greater investment returns for the
safety of principal.
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
<PAGE>
RISK/RETURN BAR CHART AND TABLE
NEWPOINT EQUITY
FUND
BAR CHART AND PERFORMANCE TABLE
.
Average Annual Return of the Fund, compared to the S&P 500 Index ( S&P 500) and
Lipper Growth and Income Fund Average ( LGI) .
- --------------------------------------------------------------------
CALENDAR PERIOD FUND S&P 500 LGI
- --------------------------------------------------------------------
- --------------------------------------------------------------------
1 Year
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Start of
Performance*
- --------------------------------------------------------------------
* The start of performance date for the Fund
was September 13, 1994.
The table shows the Fund's average annual total returns compared to the S&P 500
Index, a broad-based market index, and the LGI, an average of fund's with
similar investment objectives.
While past performance does not necessarily predict future performance, this
information provides you with historical performance information so that you can
analyze whether the Fund's investment risks are balanced by its potential
rewards.
<PAGE>
WHAT ARE THE FUND'S FEES AND EXPENSES?
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE FUND.
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 4.50%
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase
price or redemption proceeds, as applicable) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends
(and other Distributions)
(as a percentage of offering price) None
Redemption Fee
(as a percentage of amount redeemed, if applicable) None
Exchange Fee None
Maximum Account Fee None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
(as a percentage of average net assets)
Management Fee ................................................ 0.75%
Shareholder Services Fee ...................................... 0.25%
Distribution (12b-1) Fee....................................... 0.25%
Other Expenses ................................................ 0.45%
Total Annual Fund Operating Expenses (before waivers)*......... 1.70%
* The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this voluntary waiver at any time. The management fee paid by the
Fund (after the voluntary waiver) was 0.60% for the year ended November 30,
1998. The Fund did not pay or accrue distribution (12b-1) fees or shareholder
service fees during the year ending November 30, 1998. The Fund has no present
intention of paying or accruing distribution (12b-1) fees or shareholder service
fees during the year ending November 30, 1999.
Total Annual Fund Operating Expenses (before waivers)*......... 1.70%
Waiver of Fund Expenses (1) (2)................................ 0.65%
TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES (AFTER WAIVERS).... 1.05%
EXAMPLE
The following Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund operating expenses are BEFORE WAIVERS as shown above and remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
..............................1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Payment of the maximum sales charge
Expenses assuming no redemption
WHAT DO SHARES COST?
You can purchase, redeem, or exchange shares any day the New York Stock Exchange
(NYSE) is open. When the Fund receives your transaction request in proper form,
it is processed at the next determined public offering price.
The public offering price is the net asset value (NAV) plus any applicable sales
charge. NAV is determined at the end of regular trading (normally 4 p.m. Eastern
time) each day the NYSE is open.
Fund shares are sold at NAV plus a sales charge, as follows:
------------------------------------------------------------
PURCHASE AMOUNT SALES CHARGE AS SALES CHARGE
A PERCENTAGE OF AS A
PUBLIC OFFERING PERCENTAGE OF
PRICE NAV
------------------------------------------------------------
------------------------------------------------------------
Less than $100,000 4.50% 4.71%
------------------------------------------------------------
------------------------------------------------------------
$100,000 but less than 3.75% 3.90%
$250,000
------------------------------------------------------------
------------------------------------------------------------
$250,000 but less than 2.50% 2.56%
$500,000
------------------------------------------------------------
------------------------------------------------------------
$500,000 but less than 2.00% 2.04%
$750,000
------------------------------------------------------------
------------------------------------------------------------
$750,000 but less than 1.00% 1.01%
$1 million
------------------------------------------------------------
------------------------------------------------------------
$1 million or greater 0.00% 0.00%
------------------------------------------------------------
The minimum initial investment in the Fund is $1,000. Subsequent
investments must be in amounts of at least $100.
Keep in mind that financial intermediaries may charge you fees for their
services in connection with your share transactions.
THE SALES CHARGE AT PURCHASE MAY BE REDUCED OR ELIMINATED BY:
O quantity purchases of shares;
O combining concurrent purchases of shares by you, your spouse, and your
children under age 21;
o accumulating purchases (in calculating the sales charge on an additional
purchase, you may count the current value of previous share purchases still
invested in the Fund);
o signing a letter of intent to purchase at least $100,000 of Fund shares within
13 months (call the Fund for an application and more information); or
o reinvesting redemption proceeds within 60 days.
If your investment qualifies for a reduction or elimination of the sales charge,
you or your investment professional must notify FirstMerit Securities, Inc. or
the Fund's Distributor at the time of purchase. If you fail to notify FirstMerit
Securities, Inc. or the Distributor, you will receive the reduced sales charge
only on additional purchases, and not retroactively on your previous purchases.
More information on reducing or eliminating the sales charge is in the Fund's
Statement of Additional Information.
HOW IS THE FUND SOLD?
The Fund's Distributor, Federated Securities Corp., markets the shares described
in this prospectus to institutions and individuals, directly or through
investment professionals. When the Distributor receives sales charges and
marketing fees, it may pay some or all of them to investment professionals. The
Distributor and its affiliates may pay out of their assets other amounts
(including items of material value) to investment professionals for marketing
and servicing shares. The Distributor is a subsidiary of Federated Investors,
Inc. (Federated).
RULE 12B-1 PLAN
The Fund has adopted a Rule 12b-1 Plan, which allows it to pay marketing fees to
the Distributor and financial intermediaries for the sale, distribution and
customer servicing of the Fund's shares. The Fund is not presently paying or
accruing 12b-1 fees.
HOW TO PURCHASE SHARES
THROUGH FIRSTMERIT BANK OR FIRSTMERIT SECURITIES, INC.
Trust customers placing an order to purchase shares of the Fund may open an
account by calling FirstMerit Bank 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 1-800-627-1289. An account may be
opened by completing a new account application form available from FirstMerit
Securities, Inc., P.O. Box 8612, Boston, Massachusetts 02266-8612. Texas
residents should purchase shares of the Fund through Federated Securities Corp.
at 1-800-356-2805.
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
FirstMerit Bank. Purchase orders must be received by 3:00 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 NYSE is closed or on holidays restricting wire
transfers.
Once you have opened an account, you may automatically purchase additional
shares on a regular basis by completing the Systematic Investment Program
section of the account application or contacting the Fund or your investment
professional.
BY AUTOMATED CLEARING HOUSE (ACH)
Once you have opened an account, you may purchase additional shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the account application.
THROUGH AN EXCHANGE
You may purchase shares through an exchange from Newpoint Government Money
Market Fund. You must meet the minimum initial investment requirement for
purchasing shares and both accounts must have a common owner. Your exchange
request must be received by 4:00 p.m. (Eastern time) to receive that days' NAV
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 your checking
account or by transfer from an ACH member institution and invested in shares.
You may apply for participation in this program through FirstMerit Securities,
Inc. Due to the fact that shares are sold with a sales charge, it is not
advisable for shareholders to purchase shares while participating in this
program.
HOW TO REDEEM AND EXCHANGE SHARES
DIRECTLY FROM THE FUND
BY TELEPHONE. A shareholder who is a trust customer of FirstMerit Bank may
redeem or exchange Fund shares by telephoning FirstMerit Bank at 330-384-7300. A
shareholder who is an individual investor/customer of FirstMerit Securities,
Inc. may redeem or exchange shares by telephoning 1-800-627-1289. You may redeem
or exchange shares by calling the Fund once you have completed the appropriate
authorization form for telephone transactions. If you are requesting a
redemption via electronic transfer to your account with an ACH member
institution, you must call by 3:00 p.m. (Eastern time) in order to receive a
redemption amount based on that days' NAV.
BY MAIL. You may redeem or exchange shares by sending a written request to
FirstMerit Securities, Inc. Call FirstMerit Securities, Inc. for specific
instructions before redeeming by letter. You will be asked to provide in the
request your name, the Fund name, your account number, and the share or dollar
amount requested. If you are requesting that your redemption proceeds be sent by
check through the mail, your call must be received by 4:00 p.m. (Eastern time)
to receive that days' NAV.
SIGNATURE GUARANTEES. Signatures must be guaranteed if:
w your redemption is to be sent to an address other than the address of record;
w your redemption is to be sent to an address of record that was changed within
the last thirty days; or w a redemption is payable to someone other than the
shareholder(s) of record.
Your signature can be guaranteed by any federally insured financial institution
(such as a bank or credit union) or a broker/dealer that is a domestic stock
exchange member, BUT NOT BY A NOTARY PUBLIC.
PAYMENT OPTIONS
Your redemption proceeds will be mailed by check to your address of record.
However, the following payment options are available if you complete the
appropriate authorization form. These payment options require a signature
guarantee if they were not established prior to redeeming shares:
o an electronic transfer to your depository account at a financial institution
that is an ACH member; or o wire payment to your account at a domestic
commercial bank that is a Federal Reserve System member.
LIMITATIONS ON REDEMPTION PROCEEDS
Redemption proceeds normally are wired or mailed within one business day after
receiving a request in proper form. However, payment may be delayed up to seven
days:
w to allow your purchase payment to clear;
w during periods of market volatility; or
w when a shareholder's trade activity or amount adversely impacts the Fund's
ability to manage its assets.
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.
EXCHANGE PRIVILEGES
You may exchange shares of the Fund for shares of Newpoint Government Money
Market Fund by calling (no later than 4:00 p.m. (Eastern time) 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 FirstMerit Bank ("Federated Funds").
For further information on the availability of Federated Funds for exchanges or
further information on the exchange privilege, call FirstMerit Securities, Inc.
1-800-627-1289. Both accounts must have a common owner.
To do this, you must:
w meet any minimum initial investment requirements; and w receive a prospectus
for the fund into which you wish to exchange.
An exchange is treated as a redemption and a subsequent purchase, and is a
taxable transaction. Signatures must be guaranteed if you request an exchange
into another fund with a different shareholder registration. You may also be
subject to a sales charge.
The Fund may modify or terminate the exchange privilege at any time. The Fund's
management or Adviser may determine from the amount, frequency and pattern of
exchanges that a shareholder is engaged in excessive trading which is
detrimental to the Fund and other shareholders. If this occurs, the Fund may
terminate the availability of exchanges to that shareholder and may bar that
shareholder from purchasing other funds.
SYSTEMATIC WITHDRAWAL/EXCHANGE PROGRAM
You may automatically redeem or exchange shares on a regular basis by completing
the appropriate form available from FirstMerit Securities, Inc. Your account
value must have a value of at least $10,000 at the time the program is
established. This program may reduce, and eventually deplete, your account, and
the payments should not be considered yield or income. Generally, it is not
advisable to continue to purchase shares subject to a sales charge while
redeeming shares using this program.
ADDITIONAL CONDITIONS
TELEPHONE TRANSACTIONS. The Fund will record your telephone instructions. If the
Fund does not follow reasonable procedures, it may be liable for losses due to
unauthorized or fraudulent telephone instructions. The Fund will notify you if
it changes telephone transaction privileges.
SHARE CERTIFICATES. The Fund no longer issues share certificates.
ACCOUNT AND SHARE INFORMATION
CONFIRMATIONS AND ACCOUNT STATEMENTS
You will receive confirmation of purchases, redemptions and exchanges (except
for systematic transactions). In addition, you will receive periodic statements
reporting all account activity, including systematic transactions, dividends and
capital gains paid.
DIVIDENDS AND CAPITAL GAINS
The Fund declares and pays any dividends monthly to shareholders. Dividends are
paid to all shareholders invested in the Fund on the record date.
In addition, the Fund pays any capital gains at least annually. Your dividends
and capital gains distributions will be automatically reinvested in additional
shares without a sales charge, unless you elect cash payments. If you elect cash
payments and the payment is returned as undeliverable, your cash payment will be
reinvested in shares and your distribution option will convert to automatic
reinvestment.
If you purchase shares just before the Fund declares a dividend or capital gain
distribution, you will pay the full price for the shares and then receive a
portion of the price back in the form of a distribution, whether or not you
reinvest the distribution in shares. Therefore, you should consider the tax
implications of purchasing shares shortly before the Fund declares a dividend or
capital gain. Contact your investment professional or the Fund for information
concerning when dividends and capital gains will be paid.
ACCOUNTS WITH LOW BALANCES
Non-retirement accounts may be closed if redemptions or exchanges cause the
account balance to fall below the minimum initial investment amount. Before an
account is closed, the shareholder will be notified and allowed 30 days to
purchase additional shares to meet the minimum.
TAX INFORMATION
The Fund sends you an annual statement of your account activity to assist you in
completing your federal, state and local tax returns.Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Fund. Capital gains distributions are taxable at different
rates depending upon the length of time the Fund holds its assets.
Fund distributions are expected to be both dividends and capital gains.
Redemptions and exchanges are taxable sales. Please consult your tax adviser
regarding your federal, state, and local tax liability.
WHO MANAGES THE FUND?
The Board of Trustees governs the Fund. The Board selects and oversees the
Adviser, FirstMerit Bank, N.A. The Adviser manages the Fund's assets, including
buying and selling portfolio securities. The Adviser's address is 121 South Main
Street, Akron, Ohio 44308-1440.
ADVISORY FEES. The Adviser receives an annual investment advisory fee equal to a
maximum of 0.75% 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. FirstMerit Bank, 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, 1998, the Trust Division of First National Bank of Ohio had
approximately $____ billion in assets under administration, of which it had
investment discretion over $_____ billion. FirstMerit Bank has served as the
Fund's investment adviser since the Fund's inception.
As part of its regular banking operations, FirstMerit Bank 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
FirstMerit Bank. 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 FirstMerit Bank. Mr. Meinerding manages corporate and
personal trust portfolios at FirstMerit Bank. 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.
YEAR 200 STATEMENT
Many computers cannot properly recognize dates of January 1, 2000 and beyond.
The Fund's service providers are making changes to their computer systems to fix
this problem since it could disrupt Fund operations. The financial impact on the
Fund is still being determined, but Federated and its service providers are
working to make sure this problem does not adversely affect the Fund.
THE FINANCIAL STATEMENTS (INCLUDING THE NOTES) WILL BE INCLUDED IN THE
PROSPECTUS, THEY WILL FOLLOW THE FINANCIAL HIGHLIGHTS. THE MD&A/LINE GRAPH WILL
BE CREATED AND REVIEWED AS A SEPARATE DOCUMENT, AND IS INCORPORATED BY REFERENCE
ON THE BACK COVER PAGE OF THE PROSPECTUS.
FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
The following financial highlights are intended to help you understand the
Fund's financial performance since inception. Some of the information is
presented on a per share basis. Total returns represent the rate you would have
earned (or lost) on an investment in the Fund, assuming reinvestment of all
dividends and distributions.
<PAGE>
NEWPOINT EQUITY FUND
A PORTFOLIO OF NEWPOINT FUNDS
A Statement of Additional Information (SAI) dated ______, 1998 is incorporated
by reference into this prospectus. To obtain the SAI and other information
without charge call FirstMerit Securities, Inc. or the Fund at 1-800-627-1289.
Internet Address: www.firstmerit.com
You can obtain information about the Fund by visiting or writing the Public
Reference Room of the Securities and Exchange Commission in Washington, D.C.
20549-6009 or from the Commission's Internet site at http://www.sec.gov. You can
call 1-800-SEC-0330 for information on the Public Reference Room's operations
and copying charges.
CUSIP 651722209
G00580-0X (XX/98)
811-6224
STATEMENT OF ADDITIONAL INFORMATION ______________, 1998
NEWPOINT EQUITY FUND
(A PORTFOLIO OF NEWPOINT FUNDS)
This Statement of Additional Information (SAI) is not a prospectus. Read
this SAI in conjunction with the prospectus for Newpoint Equity Fund dated
_____________, 1998. Obtain the prospectus without charge by calling
1-800-627-1289.
CONTENTS [TO BE GENERATED]
[Federated Investors Logo]
Federated Securities Corp., Distributor,
subsidiary of Federated Investors
CUSIP 651722209
G00580-0X (XX/98)
<PAGE>
24
HOW IS THE FUND ORGANIZED?
The Fund is a diversified portfolio of Newpoint Funds (Trust). The Trust is an
open-end management investment company that was established under the laws of
the Commonwealth of Massachusetts on November 12, 1990. The Trust changed its
name from "Portage Funds" to "Newpoint Funds" on January 31, 1995. The Trust may
offer separate series of shares representing interests in separate portfolios of
securities.
SECURITIES IN WHICH THE FUND INVESTS
Following is a table that indicates which types of securities and investment
techniques are a: P = PRINCIPAL investment of the Fund; (shaded in chart) A
= ACCEPTABLE (but not principal) investment of the Fund
- -----------------------------------------
- -----------------------------------------
- -----------------------------------------
BANK INSTRUMENTS A
- -----------------------------------------
- -----------------------------------------
BORROWING A
- -------------------------------
- -----------------------------------------
COMMON STOCK P
- -----------------------------------------
- -----------------------------------------
CONVERTIBLE SECURITIES A
- -----------------------------------------
- -----------------------------------------
DEBT OBLIGATIONS A
- -----------------------------------------
- -----------------------------------------
DEPOSITARY RECEIPTS A
- -----------------------------------------
- -----------------------------------------
FOREIGN SECURITIES A
- -----------------------------------------
- -----------------------------------------
FUTURES AND OPTIONS A
TRANSACTIONS
- -----------------------------------------
- -----------------------------------------
ILLIQUID AND RESTRICTED A
SECURITIES
- -------------------------------
- -----------------------------------------
LENDING OF PORTFOLIO A
SECURITIES
- -------------------------------
- -----------------------------------------
PREFERRED STOCKS P
- -----------------------------------------
- -------------------------------
PRIME COMMERCIAL PAPER A
- -----------------------------------------
- -----------------------------------------
REPURCHASE AGREEMENTS A
- -----------------------------------------
- -----------------------------------------
REVERSE REPURCHASE AGREEMENTS A
- -----------------------------------------
- -----------------------------------------
SECURITIES OF OTHER A
INVESTMENT COMPANIES
- -----------------------------------------
- -----------------------------------------
U.S. GOVERNMENT SECURITIES A
- -----------------------------------------
- -----------------------------------------
WARRANTS A
- -----------------------------------------
- -----------------------------------------
WHEN-ISSUED AND DELAYED A
DELIVERY TRANSACTIONS
- -----------------------------------------
- -----------------------------------------
ZERO COUPON SECURITIES A
- -----------------------------------------
SECURITIES DESCRIPTIONS, TECHNIQUES AND RISKS
BORROWING. The Fund may borrow money from banks or through reverse repurchase
agreements in amounts up to one-third of total assets and pledge some assets as
collateral. The Fund will pay interest on borrowed money and may incur other
transaction costs. These expenses could exceed the income received or capital
appreciation realized by the Fund from any securities purchased with borrowed
money. With respect to borrowings, the Fund is required to maintain continuous
asset coverage to 300% of the amount borrowed. If the coverage declines to less
than 300%, the Fund must sell sufficient portfolio securities to restore the
coverage even if it must sell the securities at a loss.
CONVERTIBLE SECURITIES are fixed income securities that the Fund has the option
to exchange for equity securities at a specified CONVERSION PRICE. The option
allows the Fund to realize additional returns if the market price of the equity
securities exceeds the conversion price. For example, the Fund may hold fixed
income securities convertible into shares of common stock at a conversion price
of $10 per share. If the market value of the shares reached $12, the Fund could
realize an additional $2 per share by converting its fixed income securities.
Convertible securities have lower yields than comparable fixed income securities
to compensate for the value of the conversion option. In addition, the
conversion price exceeds the market value of the underlying equity securities at
the time a convertible security is issued. Thus, convertible securities may
provide lower returns than non-convertible fixed income securities or equity
securities depending upon changes in the price of the underlying equity
securities. However, convertible securities permit the Fund to realize some of
the potential appreciation of the underlying equity securities with less risk of
losing its initial investment.
The Fund treats convertible securities as both fixed income and equity
securities for purposes of its investment policies and limitations, because of
their unique characteristics.
DEBT OBLIGATIONS pay interest, dividends or distributions at a specified rate.
The rate may be fixed or adjusted periodically. The issuer must also repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities.
A security's YIELD measures the annual income earned on a security as a
percentage of its price. Securities with higher credit risks generally have
higher yields. A security's yield will increase or decrease depending upon
whether it costs less (a "discount") or more (a "premium") than the principal
amount. Under normal market conditions, securities with longer maturities will
also have higher yields. If the issuer may redeem the security before its
scheduled maturity, the price and yield on a discount or premium security may
change based upon the probability of an early redemption.
The following describes the types of fixed income securities in which the Fund
invests.
AGENCY SECURITIES are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a "GSE"). Some
GSEs are supported by the full, faith and credit of the United States. Other
GSEs receive support through federal subsidies, loans or other benefits. A
few GSEs have no explicit financial support, but are regarded as having
implied support because the federal government sponsors their activities.
Investors regard agency securities as having low credit risk, but not as low
as Treasury securities.
BANK INSTRUMENTS are unsecured interest bearing deposits with banks. Bank
instruments include bank accounts, time deposits, certificates of deposit
and banker's acceptances. Instruments denominated in U.S. dollars and
issued by Non-U.S. branches of U.S. or foreign banks are commonly referred
to as EURODOLLAR instruments. Instruments denominated in U.S. dollars and
issued by U.S. branches of foreign banks are referred to as YANKEE
instruments.
COMMERCIAL PAPER is an issuer's draft or note with a maturity of less than
nine months. Companies typically issue commercial paper to Fund current
expenditures. Most issuers constantly reissue their commercial paper and use
the proceeds (or bank loans) to repay maturing paper. Commercial paper may
default if the issuer cannot continue to obtain liquidity in this fashion.
The short maturity of commercial paper reduces both the market and credit
risk as compared to other debt securities of the same issuer.
CORPORATE DEBT SECURITIES are fixed income securities issued by businesses.
Notes, bonds, debentures and commercial paper are the most prevalent types of
corporate debt security. The credit risks of corporate debt securities vary
widely among issuers.
TREASURY SECURITIES are direct obligations of the federal government of the
United States. Investors regard treasury securities as having the lowest
credit risk.
ZERO COUPON SECURITIES do not pay interest or principal until final maturity.
Most debt securities provide periodic payments of interest (referred to as a
"coupon payment"). In contrast, investors buy zero coupon securities at a
price below the amount payable at maturity. The difference between the price
and the amount paid at maturity represents interest on the zero coupon
security. This increases the market and credit risk of a zero coupon
security, because an investor must wait until maturity before realizing any
return on the investment.
There are many forms of zero coupon securities. Some securities are
originally issued at a discount and are referred to as "zero coupon" or
"capital appreciation" bonds. Others are created by separating the right to
receive coupon payments from the principal due at maturity, a process known
as "coupon stripping." Treasury STRIPs, IOs and POs are the most common forms
of "stripped" zero coupon securities. In addition, some securities give the
issuer the option to deliver additional securities in place of cash interest
payments, thereby increasing the amount payable at maturity. These are
referred to as "pay-in-kind" or "PIK" securities.
DEPOSITARY RECEIPTS. American Depositary Receipts (ADRs) are receipts, issued by
a U.S. bank, that represent an interest in shares of a foreign-based
corporation. ADRs provide a way to buy shares of foreign-based companies in the
U.S. rather than in overseas markets. European Depositary Receipts (EDRs) and
Global Depositary Receipts (GDRs) are receipts, issued by foreign banks or trust
companies, or foreign branches of U.S. banks, that represent an interest in
shares of either a foreign or U.S. corporation. Depositary Receipts may not be
denominated in the same currency as the underlying securities into which they
may be converted, and are subject to currency risks. Depositary Receipts involve
many of the same risks of investing directly in foreign securities.
FOREIGN SECURITIES. The international equity securities in which the Fund may
invest include international stocks traded domestically or abroad through
various stock exchanges, ADRs, and International Depositary Receipts ("IDRs").
The international fixed income securities will include ADRs, IDRs, and
government securities of other nations.
Investing in foreign securities carries substantial risks in addition to those
associated with domestic investments. Foreign securities may be denominated in
foreign currencies. Therefore, the value in U.S. dollars of the Fund's assets
and income may be affected by changes in exchange rates and regulations.
Although the Fund values its assets daily in U.S. dollars, it will not convert
its holding of foreign currencies to U.S. dollars daily. When the Fund converts
its holdings to another currency, it may incur currency conversion costs.
Foreign exchange dealers realize a profit on the difference between the prices
at which they buy and sell currencies.
Other differences between investing in foreign and U.S. companies include:
o less publicly available information about foreign companies;
o the lack of uniform financial accounting standards applicable to
foreign companies;
o less readily available market quotations on foreign companies;
o differences in government regulation and supervision of foreign stock
exchanges, brokers, listed companies, and banks;
o generally lower foreign stock market volume;
o the likelihood that foreign securities may be less liquid or more
volatile;
o generally higher foreign brokerage commissions;
o possible difficulty in enforcing contractual obligations or obtaining
court judgments abroad because of differences in the legal systems;
o unreliable mail service between countries; and
o political or financial changes which adversely affect investments in
some countries.
FUTURES AND OPTIONS TRANSACTIONS. As a means of reducing fluctuations in its net
asset value, the Fund may buy and sell futures contracts and options on futures
contracts, and buy put and call options on portfolio securities and securities
indices to hedge its portfolio. The Fund may also write covered put and call
options on portfolio securities to attempt to increase its current income or to
hedge its portfolio. There is no assurance that a liquid secondary market 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.
FUTURES CONTRACTS. A futures contract is a commitment by two parties under
which one party agrees to make delivery of an asset (seller) and another
party agrees to take delivery of the asset at a certain time in the future.
A futures contract may involve a variety of assets including commodities
(such as oil, wheat, or corn) or a financial asset (such as a security).
The Fund may purchase and sell financial futures contracts to hedge against
anticipated changes in the value of its portfolio without necessarily
buying or selling the securities. Although some financial futures contracts
call for making or taking delivery of the underlying securities, in most
cases these obligations are closed out before the settlement date. The
closing of a futures contract is accomplished by purchasing or selling an
identical offsetting futures contract. Other financial futures contracts
call for cash settlements.
The Fund may purchase and sell stock index futures contracts to hedge
against anticipated price changes with respect to any stock index traded on
a recognized stock exchange or board of trade. A stock index futures
contract is an agreement in which two parties agree to take or make
delivery of an amount of cash equal to the difference between the price of
the original contract and the value of the index at the close of the last
trading day of the contract. No physical delivery of the underlying
securities in the index is made. Settlement is made in cash upon
termination of the contract.
MARGIN IN FUTURES TRANSACTIONS. Since the Fund does not pay or receive
money upon the purchase or sale of a futures contract, it is required to
deposit an amount of initial margin in cash, U.S. government securities or
highly-liquid debt securities as a good faith deposit. The margin is
returned to the Fund upon termination of the contract. Initial margin in
futures transactions does not involve borrowing to finance the
transactions.
As the value of the underlying futures contract changes daily, 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. It may be viewed as settlement between the Fund and the broker of the
amount one would owe the other if the futures contract expired. When the
Fund purchases futures contracts, an amount of cash and/or 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 to collateralize the position
and insure that the use of futures contracts is unleveraged. The Fund is
also required to deposit and maintain margin when it writes call options on
futures contracts. The Fund will not enter into a futures contract or
purchase an option thereon for other than hedging purposes if immediately
thereafter the initial margin deposits for futures contracts held by it,
plus premiums paid by it for open options on futures contracts, would
exceed 5% of the market value of its net assets, after taking into account
the unrealized profits and losses on those contracts it has entered into.
However, in the case of an option that is in-the-money at the time of
purchase, the in-the-money amount may be excluded in computing such 5%.
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. 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.
The Fund may also write (sell) listed put options on financial futures
contracts to hedge its portfolio against a decrease in market interest
rates or an increase in stock prices. The Fund will use these transactions
to purchase portfolio securities in the future at price levels existing at
the time it enters into the transaction. When the Fund sells a put on a
futures contract, it receives a cash premium in exchange for granting to
the buyer of the put the right to receive from the Fund, at the strike
price, a short position in such futures contract. This is so even though
the strike price upon exercise of the option is greater than the value of
the futures position received by such holder. As market interest rates
decrease or stock prices increase, the market price of the underlying
futures contract normally increases. When the underlying futures contract
increases, the buyer of the put option has less reason to exercise the put
because the buyer can sell the same futures contract at a higher price in
the market. If the value of the underlying futures position is not such
that exercise of the option would be profitable to the option holder, the
option will generally expire without being exercised. The premium received
by the Fund can then be used to offset the higher prices of portfolio
securities to be purchased in the future.
In order to avoid the exercise of an option sold by it, generally the Fund
will cancel its obligation under the option by entering into a closing
purchase transaction, unless it is determined to be in the Fund's interest
to deliver the underlying futures position. A closing purchase transaction
consists of the purchase by the Fund of an option having the same term as
the option sold by the Fund, and has the effect of canceling the Fund's
position as a seller. The premium which the Fund will pay in executing a
closing purchase transaction may be higher than the premium received when
the option was sold, depending in large part upon the relative price of the
underlying futures position at the time of each transaction. If the hedge
is successful, the cost of buying the second option will be less than the
premium received by the Fund for the initial option.
CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS. The Fund may write (sell)
listed and over-the-counter call options on financial futures contracts to
hedge its portfolio. When the Fund writes a call option on a futures
contract, it undertakes to sell a futures contract at the fixed price at
any time during the life of the option. As stock prices fall or market
interest rates rise, causing the prices of futures to go down, the Fund's
obligation 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 may buy a listed call option on a financial futures contract to
hedge against decreases in market interest rates or increases in stock
price. The Fund will use these transactions to purchase portfolio
securities in the future at price levels existing at the time it enters
into the transaction. When the Fund purchases a call on a financial futures
contract, it receives in exchange for the payment of a cash premium the
right, but not the obligation, to enter into the underlying futures
contract at a strike price determined at the time the call was purchased,
regardless of the comparative market value of such futures position at the
time the option is exercised. The holder of a call option has the right to
receive a long (or buyer's) position in the underlying futures contract. As
market interest rates fall or stock prices increase, the value of the
underlying futures contract will normally increase, resulting in an
increase in value of the Fund's option position. When the market price of
the underlying futures contract increases above the strike price plus
premium paid, the Fund could exercise its option and buy the futures
contract below market price. Prior to the exercise or expiration of the
call option, the Fund could sell an identical call option and close out its
position. If the premium received upon selling the offsetting call is
greater than the premium originally paid, the Fund has completed a
successful hedge.
LIMITATION ON OPEN FUTURES POSITIONS. The Fund will not maintain open
positions in futures contracts it has sold or call options it has written
on futures contracts if together the value of the open positions exceeds
the current market value of the Fund's 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 SECURITIES. The Fund may purchase put
options on portfolio securities to protect against price movements in the
Fund's 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. The Fund may purchase call options on
securities acceptable for purchase to protect against price movements by
locking in on a purchase price for the underlying security. A call option
gives the Fund, in return for a premium, the right to buy the underlying
security from the seller at a specified price during the term of the
option.
WRITING COVERED CALL AND PUT OPTIONS ON SECURITIES. The Fund may write
covered call and put options to generate income and thereby protect against
price movements in the Fund's portfolio securities. As 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. The Fund may only sell 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 or U.S.
government securities in the amount of any additional consideration). As a
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. 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.
STOCK INDEX OPTIONS. The Fund may purchase or sell put or call 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. Upon the exercise of the
option, the holder of a call option has the right to receive, and the
writer of a put option has the obligation to deliver, a cash payment equal
to the difference between the closing price of the index and the exercise
price of the option. 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. The
value of an index option depends upon movements in the level of the index
rather than the price of a particular stock. Accordingly, successful use by
the Fund of options on stock indices will be subject to the Adviser
correctly predicting 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.
OVER-THE-COUNTER OPTIONS. 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. The Fund may generally purchase and write
over-the-counter options on portfolio securities or securities indices in
negotiated transactions with the buyers or writers of the options when
options on the Fund's portfolio securities or securities indices are not
traded on an exchange. The Fund purchases and writes options only with
investment dealers and other financial institutions deemed creditworthy by
Adviser.
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 or currency in the Fund's portfolio. This may cause the futures
contract and any related options to react differently to market changes
than the portfolio securities. 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.
When a 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, 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.
ILLIQUID AND RESTRICTED SECURITIES. Illiquid securities are those that cannot
readily be sold within seven days. Restricted securities are securities that
have restrictions with respect to their resale. Generally, the restrictions are
on whom or to what type of entity they can be sold. Often, issuers of securities
may not want to register them with the SEC, so they will sell them to a specific
class of investors under Rule 144A or Regulation D of the Securities Act of
1933. Purchasers of these "private placements" must be institutional investors
(mutual funds, insurance companies, etc.), and there may be minimum purchase
amounts. The reason 144A securities may be "illiquid" is that a fund that
purchases them cannot just sell them on the open market - they must find another
qualified institutional buyer to purchase the security under Rule 144A.
However, not all restricted securities are "illiquid". The SEC permits a fund's
board to make a determination that certain 144A securities or Section 4(2) paper
issues are liquid. Conversely, not all illiquid securities are restricted.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. In conjunction with the
Fund's ability to invest in the securities of other investment companies, the
Fund may invest in the securities of affiliated money market funds as an
efficient means of managing the Fund's uninvested cash.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend portfolio securities. When the Fund lends portfolio securities, it
will receive either cash or liquid securities as collateral from the borrower.
The Fund will reinvest cash collateral in short-term liquid securities that
qualify as an otherwise acceptable investment for the Fund. If the market value
of the loaned securities increases, 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 a securities lending agent or broker. When the Fund
lends its portfolio securities, it may not be able to get them back from the
borrower on a timely basis. If this occurs, the Fund may lose certain investment
opportunities.
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS. The Fund's custodian is
required to take possession of the securities subject to repurchase agreements.
These securities are marked to market daily. To the extent that the original
seller defaults and 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 files for bankruptcy or becomes
insolvent, disposition of such securities by the Fund might be delayed pending
court action. The Fund believes that, under the procedures normally in effect
for custody of the 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.
Reverse repurchase agreement transactions are similar to borrowing cash. In a
reverse repurchase agreement, the Fund sells a portfolio security 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 at a price
equal to the original sale price plus interest. The Fund may use reverse
repurchase agreements for liquidity and may enable the Fund to avoid selling
portfolio instruments at a time when a sale may be deemed to be disadvantageous.
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 maintained until the transaction is settled.
TEMPORARY INVESTMENTS. There may be times when market conditions warrant a
defensive position. During these market conditions the Fund may temporarily
invest without limit in short-term debt obligations (money market instruments).
These investments include commercial paper, bank instruments, U.S. government
obligations, repurchase agreements, and securities of other investment
companies. The Fund's temporary investments must be of comparable quality to its
primary investments.
WARRANTS give the Fund the option to buy the issuer's stock or other equity
securities at a specified price. The Fund may buy the designated shares by
paying the exercise price before the warrant expires. Warrants may become
worthless if the price of the stock does not rise above the exercise price by
the expiration date. Rights are the same as warrants, except they are typically
issued to existing stockholders.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. These transactions are made to
secure what is considered to be an advantageous price or yield. 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. Other than
normal transaction costs, no fees or expenses are incurred. However, liquid
assets of the Fund are segregated on the Fund's records at the trade date in an
amount sufficient to make payment for the securities to be purchased. These
assets are marked to market daily and are maintained until the transaction has
been settled.
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 the vote of a
majority of shareholders. 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."
DETERMINING MARKET VALUE OF SECURITIES
Market values of the Fund's portfolio securities are determined as follows:
o for equity securities, according to the last sale price in the market in which
they are primarily traded (either a national securities exchange or the
over-the-counter market), if available;
o in the absence of recorded sales for equity securities, according to the mean
between the last closing bid and asked prices;
o for bonds and other fixed income securities, at the last sale price on a
national securities exchange, if available, otherwise, as determined by an
independent pricing service;
o for short-term obligations, according to the mean between bid and asked prices
as furnished by an independent pricing service, except that short-term
obligations with remaining maturities of less than 60 days at the time of
purchase may be valued at amortized cost or at fair market value as determined
in good faith by the Trustees; and
o for all other securities, at fair value as determined in good faith by the
Trustees.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider: institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.
The Fund values futures contracts and options at their market values established
by the exchanges on which they are traded at the close of trading on such
exchanges. Options traded in the over-the-counter market are valued according to
the mean between the last bid and the last asked price for the option as
provided by an investment dealer or other financial institution that deals in
the option. The Trustees may determine in good faith that another method of
valuing such investments is necessary to appraise their fair market value.
TRADING IN FOREIGN SECURITIES. Trading in foreign securities may be completed at
times which vary from the closing of the New York Stock Exchange (NYSE). In
computing its net asset value (NAV), 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 NYSE. Certain foreign currency exchange rates may also be
determined at the latest rate prior to the closing of the NYSE. Foreign
securities quoted in foreign currencies are translated into U.S. dollars at
current rates. Occasionally, events that affect these values and exchange rates
may occur between the times at which they are determined and the closing of the
NYSE. If such events materially affect the value of portfolio securities, these
securities may be valued at their fair value as determined in good faith by the
Fund's Board, although the actual calculation may be done by others.
WHAT DO SHARES COST?
The Fund's NAV per share fluctuates and is based on the market value of all
securities and other assets of the Fund.
REDUCING OR ELIMINATING THE FRONT-END SALES CHARGE. You can reduce or
eliminate the applicable front-end sales charge, as follows.
QUANTITY DISCOUNTS. Larger purchases reduce the sales charge you pay. You can
combine purchases of shares made on the same day by you, your spouse, and your
children under age 21. In addition, purchases made at one time by a trustee or
fiduciary for a single trust estate or a single fiduciary account can be
combined.
ACCUMULATED PURCHASES. If you make an additional purchase of shares, you can
count previous share purchases still invested in the Fund in calculating the
applicable sales charge on the additional purchase.
LETTER OF INTENT. You can sign a letter of intent committing to purchase at
least $100,000 of shares within a 13 month period in order to combine such
purchases in calculating the applicable sales charge. The Fund's custodian will
hold shares in escrow equal to the maximum applicable sales charge. If you
complete your commitment, the escrowed shares will be released to your account.
If you do not complete your commitment within 13 months, the custodian will
redeem an appropriate number of escrowed shares to pay for the applicable sales
charge.
REINVESTMENT PRIVILEGE. You may reinvest, within 60 days, your share redemption
proceeds at the next determined NAV, without any sales charge. This sales charge
elimination is offered because a sales charge was previously assessed.
PURCHASES AT NET ASSET VALUE. Shareholders who are trust customers of FirstMerit
Bank 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 FirstMerit Bank and affiliates of FirstMerit
Corp., employees and retired employees of FirstMerit Bank, 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.
HOW IS THE FUND SOLD?
Under the Distributor's Contract with the Fund, the Distributor (Federated
Securities Corp.), located at Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, PA 15222-3779, offers shares on a continuous, best-efforts basis.
FRONT-END SALES CHARGE REALLOWANCES
The Distributor receives a front-end sales charge on certain share sales. The
Distributor generally pays up to 85% of this charge to investment professional
for sales and/or administrative services. Any payments to investment
professional in excess of 85% of the front-end sales charge are considered
supplemental payments. The Distributor retains any portion not paid to a
financial intermediary.
SHAREHOLDER SERVICES
The Fund may pay Federated Shareholder Services, a subsidiary of Federated, for
providing shareholder services and maintaining shareholder accounts. Federated
Shareholder Services may select others to perform these services for their
customers and may pay them fees.
RULE 12B-1 PLAN
As a compensation-type plan, the Rule 12b-1 Plan is designed to pay the
Distributor (who may then pay investment professionals such as banks,
broker/dealers, trust departments of banks, and registered investment advisers)
for marketing activities (such as advertising, printing and distributing
prospectuses, and providing incentives to investment professionals) to promote
sales of shares so that overall Fund assets are maintained or increased. This
helps the Fund achieve economies of scale, reduce per share expenses, and
provide cash for orderly portfolio management and share redemptions. Also, the
Fund's service providers that receive asset-based fees also benefit from stable
or increasing Fund assets. The Fund may compensate the Distributor more or less
than its actual marketing expenses. In no event will the Fund pay for any
expenses of the Distributor that exceed the maximum Rule 12b-1 Plan fee.
The Fund has no present intention of paying or accruing 12b-1 fees or
shareholder services fees during the fiscal year ending November 1999.
SUPPLEMENTAL PAYMENTS
Investment professional may be paid fees out of the assets of the Distributor
and/or Federated Shareholder Services (but not out of Fund assets). The
Distributor and/or Federated Shareholder Services may be reimbursed by the
Adviser or its affiliates.
Investment professionals receive such fees for providing distribution-related or
shareholder services such as sponsoring sales, providing sales literature,
conducting training seminars for employees, and engineering sales-related
computer software programs and systems. Also, investment professionals may be
paid cash or promotional incentives, such as reimbursement of certain expenses
of qualified employees and their spouses to attend informational meetings about
the Fund or other special events at recreational-type facilities, or items of
material value. These payments will be based upon the amount of shares the
investment professional sells or may sell and/or upon the type and nature of
sales or marketing support furnished by the financial intermediary.
HOW TO BUY SHARES
SUBACCOUNTING SERVICES
Investment professionals are encouraged to open single master accounts. However,
certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professionals holding shares 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 they provide that may be related to the ownership
of shares. This information should, therefore, be read together with any
agreement between the customer and the financial intermediary with regard to the
services provided, the fees charged for those services, and any restrictions and
limitations imposed.
ACCOUNT AND SHARE INFORMATION
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of the Trust have
equal voting rights, except that in matters affecting only a particular fund or
class, only shares of that fund or class are entitled to vote.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of shareholders will be called by the Trustees upon the
written request of shareholders who own at least 10% of the Trust's outstanding
shares of all series entitled to vote.
As of October 30, 1998, the following shareholder owned of record, beneficially,
or both, 5% or more of outstanding shares: SEI Trust Company, Oaks,
Pennsylvania, owned approximately 2,849,700.25 (96.49%) shares.
Shareholders owning 25% or more of outstanding shares may be in control and be
able to affect the outcome of certain matters presented for a vote of
shareholders.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 FirstMerit Bank
is subject to such banking laws and regulations.
FirstMerit Bank 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 FirstMerit Bank 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
The Fund will pay no federal income tax because it expects to meet requirements
of Subchapter M of the Internal Revenue Code (Code) applicable to regulated
investment companies and to receive the special tax treatment afforded such
companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income earned and capital gains and losses realized by the
Trust's other portfolio will be separate from those realized by the Fund.
FOREIGN INVESTMENTS
If the Fund purchases foreign securities, their investment income 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. The effective rate of foreign tax cannot be predicted since
the amount of Fund assets to be invested within various countries is uncertain.
However, the Fund intends to operate so as to qualify for treaty-reduced tax
rates when applicable.
Distributions from the Fund may be based on estimates of book income for the
year. Book income generally consists solely of the coupon income generated by
the portfolio, whereas tax basis income includes gains or losses attributable to
currency fluctuation. Due to differences in the book and tax treatment of fixed
income securities denominated in foreign currencies, it is difficult to project
currency effects on an interim basis. Therefore, to the extent that currency
fluctuations cannot be anticipated, a portion of distributions to shareholders
could later be designated as a return of capital, rather than income, for income
tax purposes, which may be of particular concern to simple trusts.
If the Fund invests in the stock of certain foreign corporations, they may
constitute Passive Foreign Investment Companies (PFIC), and the Fund may be
subject to federal income taxes upon disposition of PFIC investments.
If more than 50% of the value of the Fund's assets at the end of the tax year is
represented by stock or securities of foreign corporations, the Fund intends to
qualify for certain Code stipulations that would allow shareholders to claim a
foreign tax credit or deduction on their U.S. income tax returns. The Code may
limit a shareholder's ability to claim a foreign tax credit. Shareholders who
elect to deduct their portion of the Fund's foreign taxes rather than take the
foreign tax credit must itemize deductions on their income tax returns.
<PAGE>
WHO MANAGES AND PROVIDES SERVICES TO THE FUND?
BOARD OF TRUSTEES
The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes the following
data: name, address, birthdate, present position(s) held with the Trust,
principal occupations for the past five years and the total compensation
received as a Trustee from the Trust for its most recent fiscal year. The Trust
is comprised of two funds.As of October 30, 1998, the Fund's Board and Officers
as a group owned less than 1% of the Fund's outstanding shares.
An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940. The following symbol (#) denotes
a Member of the Board's Executive Committee, which handles the Board's
responsibilities between its meetings.
JOHN F. DONAHUE*#
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA
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 Federated Fund Complex.
Mr. Donahue is the father of J. Christopher Donahue, Executive Vice President
and Trustee of the Trust.
Compensation from the Trust $0
THOMAS G. BIGLEY
15 Old Timber Trail, 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.; Director, Member of
Executive Committee, University of Pittsburgh; Director or Trustee of the
Federated Fund Complex.
Compensation from the Trust $______
<PAGE>
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 Federated Fund Complex.
Compensation from the Trust $______
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 Federated Fund Complex.
Compensation from the Trust $______
JAMES E. DOWD
571 Hayward Mill Road, Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or Trustee
of the Federated Fund Complex.
Compensation from the Trust $______
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 Federated Fund
Complex.
Compensation from the Trust $______
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 Federated Fund Complex.
Compensation from the Trust $______
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 Federated Fund Complex.
Compensation from the Trust $______
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; Director or Trustee of the Federated Fund Complex.
Compensation from the Trust $______
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 and U.S. Space Foundation; President
Emeritus, University of Pittsburgh; Founding Chairman, National Advisory Council
for Environmental Policy and Technology, Federal Emergency Management Advisory
Board and Czech Management Center, Prague; Director or Trustee of the Federated
Fund Complex.
Compensation from the Trust $______
MARJORIE P. SMUTS
4905 Bayard Street, Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public Relations/Marketing/Conference Planning; Director or Trustee of the
Federated Fund Complex.
Compensation from the Trust $______
J. CHRISTOPHER DONAHUE *
Federated Investors Tower, 1001 Liberty Avenue, 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 Federated Fund Complex; Director or Trustee of some of the
Funds in the Federated Fund Complex. Mr. Donahue is the son of John F. Donahue,
Chairman and Trustee of the Trust.
Compensation from the Trust $0
Compensation from Federated Fund Complex $0
EDWARD C. GONZALES *
Federated Investors Tower, 1001 Liberty Avenue, 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 in the
Federated Fund Complex; President, Executive Vice President and Treasurer of
some of the Funds in the Federated Fund Complex.
Compensation from the Trust $0
JOHN W. MCGONIGLE
Federated Investors Tower, 1001 Liberty Avenue, 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 Federated Fund Complex;
Treasurer of some of the Funds in the Federated Fund Complex.
Compensation from the Trust $0
RICHARD B. FISHER
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA
Birthdate: May 17, 1923
Trustee
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of the
Funds in the Federated Fund Complex; Director or Trustee of some of the Funds in
the Federated Fund Complex.
Compensation from the Trust $
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.
Compensation from the Trust $0
INVESTMENT ADVISER
The Adviser conducts investment research and makes investment decisions for the
Fund.
The Adviser shall not be liable to the Trust, the Fund, or any Fund shareholder
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.
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. 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 may select brokers and dealers
based on whether they also offer research services (as described below). In
selecting among firms believed to meet these criteria, the Adviser may give
consideration to those firms which have sold or are selling shares of the Fund
and other funds distributed by the Distributor and its affiliates. The Adviser
makes decisions on portfolio transactions and selects brokers and dealers
subject to review by the Fund's Board.
RESEARCH SERVICES. Research services 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 may be used by the Adviser or by affiliates of
Federated Investors in advising other accounts. To the extent that receipt of
these services may replace 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 those
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.
Investment decisions for the Fund are made independently from those of other
accounts managed by the Adviser. When the Fund and one or more of those accounts
invests in, or disposes of, the same security, available investments or
opportunities for sales will be allocated among the Fund and the account(s) in a
manner believed by the Adviser to be equitable. While the coordination and
ability to participate in volume transactions may benefit the Fund, it is
possible that this procedure could adversely impact the price paid or received
and/or the position obtained or disposed of by the Fund.
ADMINISTRATOR
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Fund. Federated Services Company
provides these at the following annual rate of the average aggregate daily net
assets of all Federated Funds as specified below:
MAXIMUM AVERAGE AGGREGATE DAILY NET
ADMINISTRATIVE FEE ASSETS OF THE FEDERATED FUNDS
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$100,000 per portfolio. Federated Services Company may voluntarily waive a
portion of its fee and may reimburse the Fund for expenses.
Federated Services Company also provides certain accounting and recordkeeping
services with respect to the Fund's portfolio investments for a fee based on
Fund assets, plus out-of-pocket expenses.
CUSTODIAN
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Fund. Foreign instruments purchased by the Fund are
held by foreign banks participating in a network coordinated by State Street
Bank.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company, through its registered transfer agent subsidiary,
Federated Shareholder Services Company, maintains all necessary shareholder
records. The Fund pays the transfer agent a fee based on the size, type, and
number of accounts and transactions made by shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, Pittsburgh, Pennsylvania, is the independent public
accountant for the Fund.
FEES PAID BY THE FUND FOR SERVICES
FOR THE YEAR ENDED
NOVEMBER 30, 1998
Advisory Fee...................$
Brokerage Commissions..........$
Administrative Fee.............$
12b-1 Fee......................$
Shareholder Services Fee.......$
FOR THE YEAR ENDED
NOVEMBER 30, 1997
Advisory Fee...................$
Brokerage Commissions..........$
Administrative Fee.............$
12b-1 Fee......................$
Shareholder Services Fee.......$
FOR THE YEAR ENDED
NOVEMBER 30, 1996
Advisory Fee...................$
Brokerage Commissions..........$
Administrative Fee.............$
12b-1 Fee......................$
Shareholder Services Fee.......$
If the Fund's expenses are capped at a particular level, the cap does not
include reimbursement to the Fund of any expenses incurred by shareholders who
use the transfer agent's subaccounting facilities.
HOW DOES THE FUND MEASURE PERFORMANCE?
The Fund may advertise share performance by using the Securities and Exchange
Commission's (SEC) standard method for calculating performance applicable to all
mutual funds. The SEC also permits this standard performance information to be
accompanied by non-standard performance information.
Unless otherwise stated, any quoted share performance reflects the effect of
non-recurring charges, such as maximum sales charges, which, if excluded, would
increase the total return and yield. The performance of shares depends upon such
variables as: portfolio quality; average portfolio maturity; type and value of
portfolio securities; changes in interest rates; changes or differences in the
Fund's or any class of shares' expenses; and various other factors.
Share performance fluctuates on a daily basis largely because net earnings and
offering price per share fluctuate daily. Both net earnings and offering price
per share are factors in the computation of yield and total return.
TOTAL RETURN
Total return represents the change (expressed as a percentage) in the value of
shares over a specific period of time, and includes the investment of income and
capital gains distributions.
The average annual total return for shares 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 NAV 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 annual reinvestment of all
dividends and distributions.
The Fund's average annual total returns for the one year period ended November
30, 1998 and for the period from September 13, 1994 (date of initial public
investment) to November 30, 1998, were _____% and ______%, respectively.
YIELD
The yield of shares is calculated by dividing: (i) the net investment income per
share earned by the shares over a thirty-day period; by (ii) the maximum
offering price per share on the last day of the period. This number 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 12-month period and is reinvested every six months. The yield does not
necessarily reflect income actually earned by shares 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 investment professionals and broker/dealers charge fees in
connection with services provided in conjunction with an investment in shares,
the share performance is lower for shareholders paying those fees.
The Fund's yield for the thirty-day period ended November 30, 1998 was ____%.
PERFORMANCE COMPARISONS
Advertising and sales literature may include:
o references to ratings, rankings, and financial publications and/or performance
comparisons of shares to certain indices; o charts, graphs and illustrations
using the Fund's returns, or returns in general, that demonstrate investment
concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment;
o discussions of economic, financial and political developments and their impact
on the securities market, including the portfolio manager's views on how such
developments could impact the Funds; and
o information about the mutual fund industry from sources such as the Investment
Company Institute.
The Fund may compare its performance, or performance for the types of securities
in which it invests, to a variety of other investments, including federally
insured bank products such as bank savings accounts, certificates of deposit,
and Treasury bills.
The Fund may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.
You may use financial publications and/or indices to obtain a more complete view
of share performance. When comparing performance, you should consider all
relevant factors such as the composition of the 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:
LIPPER ANALYTICAL SERVICES, INC. Ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all capital gains distributions and income dividends and takes
into account any change in net asset value over a specified period of time.
MORNINGSTAR, INC. An independent rating service, is the publisher of the
bi-weekly MUTUAL FUND VALUES, which 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.
STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS (S&P 500).
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 S&P
500 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 the S&P figures.
<PAGE>
ADDRESSES
NEWPOINT EQUITY FUND
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
Distributor
FEDERATED SECURITIES CORP. Federated Investors Tower
1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779
Investment Adviser
FIRSTMERIT BANK, N.A. 121 South Main Street
Akron, Ohio 44208-1440
Custodian
STATE STREET BANK AND TRUST COMPANY P.O. Box 8600
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
PROSPECTUS _______________, 1998
NEWPOINT GOVERNMENT MONEY MARKET FUND
(A PORTFOLIO OF NEWPOINT FUNDS)
CONTENTS [TO BE COMPLETED]
FUND SHARES ARE NOT BANK DEPOSITS, FEDERALLY INSURED, OR GUARANTEED, AND MAY
LOSE VALUE. As with all mutual funds, the Securities and Exchange Commission has
not approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.
<PAGE>
11
FUND GOALS, STRATEGIES, AND RISKS
WHAT IS THE FUND'S GOAL?
The Fund is a money market fund which seeks to provide stability of principal
and current income consistent with stability of principal by investing in
short-term U.S. government securities. Although the Fund seeks to preserve the
value of your investment at $1.00 per share, it is possible to lose money by
investing in the Fund.
WHAT ARE THE FUND'S INVESTMENT STRATEGIES?
The Fund pursues its investment objective by investing in U.S. government
securities with remaining maturities of 13 months or less which are either
issued or guaranteed by the U.S. government, its agencies, or
instrumentalities.. In selecting securities for the Fund, the Adviser considers
general economic trends and analyzes overall market conditions. The Adviser
considers the current short-term curve along with the spread between government
agencies and Treasuries.
WHAT TYPES OF U.S. GOVERNMENT SECURITIES DOES THE FUND PURCHASE?
U.S. GOVERNMENT SECURITIES are securities issued by the U.S. government or
its agencies. Treasury securities are direct obligations of the federal
government of the United States. Investors regard Treasury securities as having
the lowest credit risks.
Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a GSE). The United
States supports some GSEs with its fill faith and credit. Other GSEs receive
support though federal subsidies, loans or other benefits. A few GSEs have no
explicit financial support, but are regarded as having implied support because
the federal government sponsors their activities. Investors regard agency
securities as having low credit risks, but not as low as Treasury securities.
WHAT ARE THE SPECIFIC RISKS OF INVESTING IN THE FUND?
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund. An investment in
the Fund is not a deposit of FirstMerit Bank and is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
<PAGE>
RISK/RETURN BAR CHART AND TABLE
NEWPOINT GOVERNMENT MONEY
MARKET FUND
BAR CHART AND PERFORMANCE TABLE
The Fund's 7-DAY NET YIELD as of 12/31/97 was 4.97%.
The following table represents the Fund's Average Annual Total Return through
12/31/97.
- --------------------------------------------------
CALENDAR PERIOD FUND
- --------------------------------------------------
- --------------------------------
1 Year 4.96%
- --------------------------------
- --------------------------------
5 Years 4.18%
- --------------------------------
- --------------------------------
Start of 4.20%
Performance*
- --------------------------------
* The Fund's start of performance date was
January 8, 1991.
Investors may call the Fund to acquire the current 7-Day Net Yield by calling .
While past performance does not necessarily predict future performance, this
information provides you with historical performance information so that you can
analyze whether the Fund's investment risks are balanced by its potential
rewards.
<PAGE>
WHAT ARE THE FUND'S FEES AND EXPENSES?
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE FUND.
SHAREHOLDER FEES ( FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase
price or redemption proceeds, as applicable)....None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends
(and other Distributions)
( as a percentage of offering price)............None
Redemption Fee
(as a percentage of amount redeemed, if applicable) None
Exchange Fee..............................................None
Maximum Account Fee.......................................None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
(as a percentage of average net assets)
Management Fee ................................................ 0.50%
Shareholder Services Fee ...................................... None
Distribution (12b-1) Fee....................................... None
Other Expenses ................................................ 0.30%
Total Annual Fund Operating Expenses (before waivers)*......... 0.80%
* The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this voluntary waiver at any time. The management fee paid by the
Fund (after the voluntary waiver) was 0.30% for the year ended November 30,
1998.
Total Annual Fund Operating Expenses (before waivers).......... 0.80%
Waiver of Fund Expenses (1).................................... 0.20%
TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES (AFTER WAIVERS).... 0.60%
EXAMPLE
The following Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund operating expenses are BEFORE WAIVERS as shown above and remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------ ------- ------- --------
WHAT DO SHARES COST?
You can purchase, redeem, or exchange shares any day the NYSE is open. When the
Fund receives your transaction request in proper form, it is processed at the
next determined public offering price.
The Fund attempts to stabilize the net asset value (NAV) of its shares at $1.00
per share. The public offering price is the NAV. NAV is determined at 12:00 noon
(Eastern time), 3:00 p.m. (Eastern time), and at the end of regular trading
(normally 4 p.m. Eastern time) each day the NYSE is open. The Fund, of course,
cannot guarantee its NAV will always remain at $1.00 per share.
The minimum initial investment in the Fund is $1,000. Subsequent investments
must be in amounts of at least $100.
Keep in mind that financial intermediaries may charge you fees for their
services in connection with your share transactions.
HOW IS THE FUND SOLD?
The Fund's Distributor, Federated Securities Corp., markets the shares described
in this prospectus to institutions and individuals, directly or through
investment professionals. When the Distributor receives sales charges and
marketing fees, it may pay some or all of them to investment professionals. The
Distributor and its affiliates may pay out of their assets other amounts
(including items of material value) to investment professionals for marketing
and servicing shares. The Distributor is a subsidiary of Federated Investors,
Inc. (Federated).
HOW TO PURCHASE SHARES
THROUGH FIRSTMERIT BANK OR FIRSTMERIT SECURITIES, INC.
Trust customers placing an order to purchase shares of the Fund may open an
account by calling FirstMerit Bank at 330-384-7300. Information needed to
establish the account will be taken over the telephone. In connection with
qualified account relationships in the Trust Department of FirstMerit Bank, Fund
shares may be purchased by telephone through procedures established with
FirstMerit Bank 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 placing an order to purchase shares of the Fund may
telephone FirstMerit Securities, Inc. at 1-800-627-1289. An account may be
opened by completing a new account application form available from FirstMerit
Securities, Inc., P.O. Box 8612, Boston, Massachusetts 02266-8612. Texas
residents should purchase shares of the Fund through Federated Securities Corp.
at 1-800-356-2805.
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
FirstMerit Bank. Purchase orders must be received by 9:30 a.m. (Eastern time)
and payment received by 3:00 p.m. on the same day in order to receive dividends
on that day. 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 NYSE is
closed or on holidays restricting wire transfers.
Once you have opened an account, you may automatically purchase additional
shares on a regular basis by completing the Systematic Investment Program
section of the account application or contacting the Fund or your investment
professional.
BY AUTOMATED CLEARING HOUSE (ACH)
Once you have opened an account, you may purchase additional shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the account application.
THROUGH AN EXCHANGE
You may purchase shares through an exchange from Newpoint Equity Fund. You must
meet the minimum initial investment requirement for purchasing shares and both
accounts must have a common owner.
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 your checking
account or by transfer from an ACH member institution and invested in shares.
You may apply for participation in this program through FirstMerit Securities,
Inc. Due to the fact that shares are sold with a sales charge, it is not
advisable for shareholders to purchase shares while participating in this
program.
HOW TO REDEEM AND EXCHANGE SHARES
DIRECTLY FROM THE FUND
BY TELEPHONE. A shareholder who is a trust customer of FirstMerit Bank may
redeem or exchange Fund shares by telephoning FirstMerit Bank at 330-384-7300. A
shareholder who is an individual investor/customer of FirstMerit Securities,
Inc. may redeem or exchange shares by telephoning 1-800-627-1289. You may redeem
or exchange shares by calling the Fund once you have completed the appropriate
authorization form for telephone transactions. If you call to redeem shares
before 9:30 a.m. (Eastern time), proceeds will be sent through one of the
payment options described below on the same day. You will not, however, receive
dividends on the day. If your order for an exchange is received by 3:30 p.m.
(Eastern time), your exchange will be executed as of the close of business that
day.
BY MAIL. You may redeem or exchange shares by sending a written request to
FirstMerit Securities, Inc. Call FirstMerit Securities, Inc. for specific
instructions before redeeming by letter. You will be asked to provide in the
request your name, the Fund name, your account number, and the share or dollar
amount requested.
PAYMENT OPTIONS. Your redemption proceeds will be mailed by check to your
address of record. However, the following payment options are available if you
complete the appropriate authorization form. These payment options require a
signature guarantee if they were not established prior to redeeming shares:
o an electronic transfer to your depository account at a financial institution
that is an ACH member; or o wire payment to your account at a domestic
commercial bank that is a Federal Reserve System member.
SIGNATURE GUARANTEES. Signatures must be guaranteed if:
w your redemption is to be sent to an address other than the address of record;
w your redemption is to be sent to an address of record that was changed within
the last thirty days; or w a redemption is payable to someone other than the
shareholder(s) of record.
Your signature can be guaranteed by any federally insured financial institution
(such as a bank or credit union) or a broker/dealer that is a domestic stock
exchange member, BUT NOT BY A NOTARY PUBLIC.
BY WRITING A CHECK. At your 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 you wish to redeem shares and have the proceeds available, a check
may be written and negotiated through your 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 you each month upon request.
LIMITATIONS ON REDEMPTION PROCEEDS
Redemption proceeds normally are wired or mailed within one business day after
receiving a request in proper form. However, payment may be delayed up to seven
days:
w to allow your purchase payment to clear;
w during periods of market volatility; or
w when a shareholder's trade activity or amount adversely impacts the Fund's
ability to manage its assets.
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.
EXCHANGE PRIVILEGES
You 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 FirstMerit Bank ("Federated
Funds"). For further information on the availability of Federated Funds for
exchanges or further information about the exchange privilege, call FirstMerit
Securities, Inc. at 1-800-627-1289. Both accounts must have a common owner.
To do this, you must:
w meet any minimum initial investment requirements; and w receive a prospectus
for the fund into which you wish to exchange.
An exchange is treated as a redemption and a subsequent purchase, and is a
taxable transaction. You may also be subject to a sales charge by the fund into
which you are exchanging. Signatures must be guaranteed if you request an
exchange into another fund with a different shareholder registration.
The Fund may modify or terminate the exchange privilege at any time. The Fund's
management or Adviser may determine from the amount, frequency and pattern of
exchanges that a shareholder is engaged in excessive trading which is
detrimental to the Fund and other shareholders. If this occurs, the Fund may
terminate the availability of exchanges to that shareholder and may bar that
shareholder from purchasing other funds.
SYSTEMATIC WITHDRAWAL/EXCHANGE PROGRAM
You may automatically redeem or exchange shares on a regular basis by completing
the appropriate form available from FirstMerit Securities, Inc. Your account
value must have a value of at least $10,000 at the time the program is
established. This program may reduce, and eventually deplete, your account, and
the payments should not be considered yield or income.
ADDITIONAL CONDITIONS
TELEPHONE TRANSACTIONS. The Fund will record your telephone instructions. If the
Fund does not follow reasonable procedures, it may be liable for losses due to
unauthorized or fraudulent telephone instructions. The Fund will notify you if
it changes telephone transaction privileges.
SHARE CERTIFICATES. The Fund no longer issues share certificates.
ACCOUNT AND SHARE INFORMATION
CONFIRMATIONS AND ACCOUNT STATEMENTS
You will receive confirmation of purchases, redemptions and exchanges (except
for systematic transactions). In addition, you will receive periodic statements
reporting all account activity, including systematic transactions, dividends and
capital gains paid.
DIVIDENDS AND CAPITAL GAINS
The Fund declares any dividends daily and pays them monthly to shareholders. If
your payment for share purchases is received by 3:00 p.m., you will earn
dividends for that day.
In addition, the Fund pays capital gains, if any, at least annually. Your
dividends and capital gains distributions will be automatically reinvested in
additional shares, unless you elect cash payments. If you elect cash payments
and the payment is returned as undeliverable, your cash payment will be
reinvested in shares and your distribution option will convert to automatic
reinvestment.
If you purchase shares just before the Fund declares a dividend or capital gain
distribution, you will pay the full price for the shares and then receive a
portion of the price back in the form of a distribution, whether or not you
reinvest the distribution in shares. Therefore, you should consider the tax
implications of purchasing shares shortly before the Fund declares a dividend or
capital gain. Contact your investment professional or the Fund for information
concerning when dividends and capital gains will be paid.
ACCOUNTS WITH LOW BALANCES
Non-retirement accounts may be closed if redemptions or exchanges cause the
account balance to fall below the minimum initial investment amount. Before an
account is closed, the shareholder will be notified and allowed 30 days to
purchase additional Shares to meet the minimum.
TAX INFORMATION
The Fund sends you an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Fund. Capital gains distributions are taxable at different
rates depending upon the length of time the Fund holds its assets.
Fund distributions are expected to be primarily dividends. Redemptions and
exchanges are taxable sales. Please consult your tax adviser regarding your
federal, state, and local tax liability.
WHO MANAGES THE FUND?
The Board of Trustees governs the Fund. The Board selects and oversees the
Adviser, FirstMerit Bank, N.A.. The Adviser manages the Fund's assets, including
buying and selling portfolio securities. The Adviser's address is 121 South Main
Street, Akron, Ohio 44308-1440.
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. FirstMerit Bank, 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, 1998, the Trust Division of First National Bank of Ohio had
approximately $____ billion in assets under administration, of which it had
investment discretion over $_____ billion. FirstMerit Bank has served as the
Fund's investment adviser since the Fund's inception.
As part of its regular banking operations, FirstMerit Bank 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
FirstMerit Bank. The lending relationship will not be a factor in the selection
of securities.
YEAR 200 STATEMENT
Many computers cannot properly recognize dates of January 1, 2000 and beyond.
The Fund's service providers are making changes to their computer systems to fix
this problem since it could disrupt Fund operations. The financial impact on the
Fund is still being determined, but Federated and its service providers are
working to make sure this problem does not adversely affect the Fund.
THE FINANCIAL STATEMENTS (INCLUDING THE NOTES) WILL BE INCLUDED IN THE
PROSPECTUS, THEY WILL FOLLOW THE FINANCIAL HIGHLIGHTS.
FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
The following financial highlights are intended to help you understand the
Fund's financial performance since inception. Some of the information is
presented on a per share basis. Total returns represent the rate you would have
earned (or lost) on an investment in the Fund, assuming reinvestment of all
dividends and distributions.
<PAGE>
7
NEWPOINT GOVERNMENT MONEY MARKET FUND
A PORTFOLIO OF NEWPOINT FUNDS
A Statement of Additional Information (SAI) dated ______, 1998 is incorporated
by reference into this prospectus. To obtain the SAI and other information
without charge call FirstMerit Securities, Inc. or the Fund at 1-800-627-1289.
Internet Address: www.firstmerit.com
You can obtain information about the Fund by visiting or writing the Public
Reference Room of the Securities and Exchange Commission in Washington, D.C.
20549-6009 or from the Commission's Internet site at http://www.sec.gov. You can
call 1-800-SEC-0330 for information on the Public Reference Room's operations
and copying charges.
CUSIP 735686107
0121703A (XX/98)
811-6224
STATEMENT OF ADDITIONAL INFORMATION ______________, 1998
NEWPOINT GOVERNMENT MONEY MARKET FUND
(A PORTFOLIO OF NEWPOINT FUNDS)
This Statement of Additional Information (SAI) is not a prospectus. Read
this SAI in conjunction with the prospectus for Newpoint Government Money
Market Fund dated _____________, 1998. Obtain the prospectus without charge
by calling 1-800-627-1289.
CONTENTS [TO BE GENERATED]
[Federated Investors Logo]
Federated Securities Corp., Distributor,
subsidiary of Federated Investors
CUSIP 735686107
0121703B (XX/98)
<PAGE>
HOW IS THE FUND ORGANIZED?
The Fund is a diversified portfolio of Newpoint Funds (Trust). The Trust is an
open-end management investment company that was established under the laws of
the Commonwealth of Massachusetts on November 12, 1990. The Trust changed its
name from "Portage Funds" to "Newpoint Funds" on January 31, 1995. The Trust may
offer separate series of shares representing interests in separate portfolios of
securities.
SECURITIES IN WHICH THE FUND INVESTS
Following is a table that indicates which types of securities or investment
techniques are a: P = PRINCIPAL investment of the Fund; (shaded in chart) A
= ACCEPTABLE (but not principal) investment of the Fund
- -----------------------------------------
- -----------------------------------------
- -----------------------------------------
BORROWING A
- -------------------------------
- -----------------------------------------
ILLIQUID AND RESTRICTED A
SECURITIES
- -------------------------------
- -----------------------------------------
LENDING OF PORTFOLIO A
SECURITIES
- -------------------------------
- -----------------------------------------
REPURCHASE AGREEMENTS A
- -----------------------------------------
- -----------------------------------------
REVERSE REPURCHASE AGREEMENTS A
- -----------------------------------------
- -----------------------------------------
SECURITIES OF OTHER A
INVESTMENT COMPANIES
- -------------------------------
- -----------------------------------------
US GOVERNMENT SECURITIES P
- -----------------------------------------
- -----------------------------------------
WHEN-ISSUED AND DELAYED A
DELIVERY TRANSACTIONS
- -----------------------------------------
SECURITIES DESCRIPTIONS, TECHNIQUES AND RISKS
BORROWING. The Fund may borrow money from banks or through reverse repurchase
agreements in amounts up to one-third of total assets and pledge some assets as
collateral. The Fund will pay interest on borrowed money and may incur other
transaction costs. These expenses could exceed the income received or capital
appreciation realized by the Fund from any securities purchased with borrowed
money. With respect to borrowings, the Fund is required to maintain continuous
asset coverage to 300% of the amount borrowed. If the coverage declines to less
than 300%, the Fund must sell sufficient portfolio securities to restore the
coverage even if it must sell the securities at a loss.
ILLIQUID AND RESTRICTED SECURITIES. Illiquid securities are those that cannot
readily be sold within seven days. Restricted securities are securities that
have restrictions with respect to their resale. Generally, the restrictions are
on whom or to what type of entity they can be sold. Often, issuers of securities
may not want to register them with the SEC, so they will sell them to a specific
class of investors under Rule 144A or Regulation D of the Securities Act of
1933. Purchasers of these "private placements" must be institutional investors
(mutual funds, insurance companies, etc.), and there may be minimum purchase
amounts. The reason 144A securities may be "illiquid" is that a fund that
purchases them cannot just sell them on the open market - they must find another
qualified institutional buyer to purchase the security under Rule 144A.
However, not all restricted securities are "illiquid". The SEC permits a fund's
board to make a determination that certain 144A securities or Section 4(2) paper
issues are liquid. Conversely, not all illiquid securities are restricted.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. In conjunction with the
Fund's ability to invest in the securities of other investment companies, the
Fund may invest in the securities of affiliated money market funds as an
efficient means of managing the Fund's uninvested cash.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend portfolio securities. When the Fund lends portfolio securities, it
will receive either cash or liquid securities as collateral from the borrower.
The Fund will reinvest cash collateral in short-term liquid securities that
qualify as an otherwise acceptable investment for the Fund. If the market value
of the loaned securities increases, 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 a securities lending agent or broker. When the Fund
lends its portfolio securities, it may not be able to get them back from the
borrower on a timely basis. If this occurs, the Fund may lose certain investment
opportunities.
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS. The Fund's custodian is
required to take possession of the securities subject to repurchase agreements.
These securities are marked to market daily. To the extent that the original
seller defaults and 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 files for bankruptcy or becomes
insolvent, disposition of such securities by the Fund might be delayed pending
court action. The Fund believes that, under the procedures normally in effect
for custody of the 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.
Reverse repurchase agreement transactions are similar to borrowing cash. In a
reverse repurchase agreement, the Fund sells a portfolio security 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 at a price
equal to the original sale price plus interest. The Fund may use reverse
repurchase agreements for liquidity and may enable the Fund to avoid selling
portfolio instruments at a time when a sale may be deemed to be disadvantageous.
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 maintained until the transaction is settled.
U.S. GOVERNMENT SECURITIES. Agency securities are issued or guaranteed by a
federal agency or other government sponsored entity acting under federal
authority (a "GSE"). Some GSEs are supported by the full, faith and credit of
the United States. Other GSEs receive support through federal subsidies, loans
or other benefits. A few GSEs have no explicit financial support, but are
regarded as having implied support because the federal government sponsors their
activities. Investors regard agency securities as having low credit risk, but
not as low as Treasury securities.
Treasury securities are direct obligations of the federal government of the
United States. Investors regard treasury securities as having the lowest credit
risk.
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 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. 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. Other than
normal transaction costs, no fees or expenses are incurred. However, liquid
assets of the Fund are segregated on the Fund's records at the trade date in an
amount sufficient to make payment for the securities to be purchased. These
assets are marked to market daily and are maintained until the transaction has
been settled.
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.
DETERMINING MARKET VALUE OF SECURITIES
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.
WHAT DO SHARES COST?
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
"How to Purchase Shares."
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. FirstMerit Bank and Federated
Shareholder Services Company act as the shareholder's agent in depositing checks
and converting them to federal funds.
ACCOUNT AND SHARE INFORMATION
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of the Trust have
equal voting rights, except that in matters affecting only a particular fund or
class, only shares of that fund or class are entitled to vote.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of shareholders will be called by the Trustees upon the
written request of shareholders who own at least 10% of the Trust's outstanding
shares of all series entitled to vote.
As of October 30, 1998, the following shareholders owned of record,
beneficially, or both, 5% or more of outstanding shares: SEI Trust Company,
Oaks, Pennsylvania, owned approximately 65,026,937.39 (52.25%) shares; SEI Trust
Company, Oaks, First National Bank of Ohio, Akron, Ohio, owned approximately
17,086,191.02 (13.73%) shares; and Citizens National Bank, Canton, Ohio, owned
approximately 6,908,887.37 (5.55%) shares.
Shareholders owning 25% or more of outstanding Shares may be in control and be
able to affect the outcome of certain matters presented for a vote of
shareholders.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 FirstMerit Bank
is subject to such banking laws and regulations.
FirstMerit Bank 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 FirstMerit Bank 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
The Fund will pay no federal income tax because it expects to meet requirements
of Subchapter M of the Internal Revenue Code (Code) applicable to regulated
investment companies and to receive the special tax treatment afforded such
companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income earned and capital gains and losses realized by the
Trust's other portfolio will be separate from those realized by the Fund.
<PAGE>
WHO MANAGES AND PROVIDES SERVICES TO THE FUND?
BOARD OF TRUSTEES
The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes the following
data: name, address, birthdate, present position(s) held with the Trust,
principal occupations for the past five years and the total compensation
received as a Trustee from the Trust for its most recent fiscal year. The Trust
is comprised of two funds.As of October 30, 1998, the Fund's Board and Officers
as a group owned less than 1% of the Fund's outstanding shares.
An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940. The following symbol (#) denotes
a Member of the Board's Executive Committee, which handles the Board's
responsibilities between its meetings.
JOHN F. DONAHUE*#
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA
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 Federated Fund Complex.
Mr. Donahue is the father of J. Christopher Donahue, Executive Vice President
and Trustee of the Trust.
Compensation from the Trust $0
THOMAS G. BIGLEY
15 Old Timber Trail, 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.; Director, Member of
Executive Committee, University of Pittsburgh; Director or Trustee of the
Federated Fund Complex.
Compensation from the Trust $______
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 Federated Fund Complex.
Compensation from the Trust $______
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 Federated Fund Complex.
Compensation from the Trust $______
JAMES E. DOWD
571 Hayward Mill Road, Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or Trustee
of the Federated Fund Complex.
Compensation from the Trust $______
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 Federated Fund
Complex.
Compensation from the Trust $______
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 Federated Fund Complex.
Compensation from the Trust $______
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 Federated Fund Complex.
Compensation from the Trust $______
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; Director or Trustee of the Federated Fund Complex.
Compensation from the Trust $______
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 and U.S. Space Foundation; President
Emeritus, University of Pittsburgh; Founding Chairman, National Advisory Council
for Environmental Policy and Technology, Federal Emergency Management Advisory
Board and Czech Management Center, Prague; Director or Trustee of the Federated
Fund Complex.
Compensation from the Trust $______
MARJORIE P. SMUTS
4905 Bayard Street, Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public Relations/Marketing/Conference Planning; Director or Trustee of the
Federated Fund Complex.
Compensation from the Trust $______
J. CHRISTOPHER DONAHUE *
Federated Investors Tower, 1001 Liberty Avenue, 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 Federated Fund Complex; Director or Trustee of some of the
Funds in the Federated Fund Complex. Mr. Donahue is the son of John F. Donahue,
Chairman and Trustee of the Trust.
Compensation from the Trust $0
Compensation from Federated Fund Complex $0
EDWARD C. GONZALES *
Federated Investors Tower, 1001 Liberty Avenue, 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 in the
Federated Fund Complex; President, Executive Vice President and Treasurer of
some of the Funds in the Federated Fund Complex.
Compensation from the Trust $0
JOHN W. MCGONIGLE
Federated Investors Tower, 1001 Liberty Avenue, 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 Federated Fund Complex;
Treasurer of some of the Funds in the Federated Fund Complex.
Compensation from the Trust $0
RICHARD B. FISHER
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA
Birthdate: May 17, 1923
Trustee
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of the
Funds in the Federated Fund Complex; Director or Trustee of some of the Funds in
the Federated Fund Complex.
Compensation from the Trust $
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.
Compensation from the Trust $0
INVESTMENT ADVISER
The Adviser conducts investment research and makes investment decisions for the
Fund.
The Adviser shall not be liable to the Trust, the Fund, or any Fund shareholder
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.
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. 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 may select brokers and dealers
based on whether they also offer research services (as described below). In
selecting among firms believed to meet these criteria, the Adviser may give
consideration to those firms which have sold or are selling shares of the Fund
and other funds distributed by the Distributor and its affiliates. The Adviser
makes decisions on portfolio transactions and selects brokers and dealers
subject to review by the Fund's Board.
RESEARCH SERVICES. Research services 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 may be used by the Adviser or by affiliates of
Federated Investors in advising other accounts. To the extent that receipt of
these services may replace 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 those
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.
Investment decisions for the Fund are made independently from those of other
accounts managed by the Adviser. When the Fund and one or more of those accounts
invests in, or disposes of, the same security, available investments or
opportunities for sales will be allocated among the Fund and the account(s) in a
manner believed by the Adviser to be equitable. While the coordination and
ability to participate in volume transactions may benefit the Fund, it is
possible that this procedure could adversely impact the price paid or received
and/or the position obtained or disposed of by the Fund.
ADMINISTRATOR
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Fund. Federated Services Company
provides these at the following annual rate of the average aggregate daily net
assets of all Federated Funds as specified below:
MAXIMUM AVERAGE AGGREGATE DAILY NET
ADMINISTRATIVE FEE ASSETS OF THE FEDERATED FUNDS
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least $50,000
per portfolio. Federated Services Company may voluntarily waive a portion of its
fee and may reimburse the Fund for expenses.
Federated Services Company also provides certain accounting and recordkeeping
services with respect to the Fund's portfolio investments for a fee based on
Fund assets, plus out-of-pocket expenses.
CUSTODIAN
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Fund. Foreign instruments purchased by the Fund are
held by foreign banks participating in a network coordinated by State Street
Bank.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company, through its registered transfer agent subsidiary,
Federated Shareholder Services Company, maintains all necessary shareholder
records. The Fund pays the transfer agent a fee based on the size, type, and
number of accounts and transactions made by shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, Pittsburgh, Pennsylvania, is the independent public
accountant for the Fund.
FEES PAID BY THE FUND FOR SERVICES
FOR THE YEAR ENDED
NOVEMBER 30, 1998
Advisory Fee...................$
Administrative Fee.............$
FOR THE YEAR ENDED
NOVEMBER 30, 1997
Advisory Fee...................$
Administrative Fee.............$
FOR THE YEAR ENDED
NOVEMBER 30, 1996
Advisory Fee...................$
Administrative Fee.............$
If the Fund's expenses are capped at a particular level, the cap does not
include reimbursement to the Fund of any expenses incurred by shareholders who
use the transfer agent's subaccounting facilities.
HOW DOES THE FUND MEASURE PERFORMANCE?
The Fund may advertise share performance by using the Securities and Exchange
Commission's (SEC) standard method for calculating performance applicable to all
mutual funds. The SEC also permits this standard performance information to be
accompanied by non-standard performance information.
Unless otherwise stated, any quoted share performance reflects the effect of
non-recurring charges, such as maximum sales charges, which, if excluded, would
increase the total return and yield. The performance of shares depends upon such
variables as: portfolio quality; average portfolio maturity; type and value of
portfolio securities; changes in interest rates; changes or differences in the
Fund's or any class of shares' expenses; and various other factors.
TOTAL RETURN
Total return represents the change (expressed as a percentage) in the value of
shares over a specific period of time, and includes the investment of income and
capital gains distributions.
The average annual total return for shares 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 NAV 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 annual reinvestment of all
dividends and distributions.
The Fund's average annual total returns for the one-year and five-year periods
ended November 30, 1998 and for the period from March 11, 1991 (date of initial
public investment) to November 30, 1998, were ______%, ______% and _____%,
respectively.
YIELD
The yield of shares is calculated by dividing: (i) the net investment income per
share earned by the shares over a thirty-day period; by (ii) the maximum
offering price per share on the last day of the period. This number 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 12-month period and is reinvested every six months. The yield does not
necessarily reflect income actually earned by shares 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 investment professionals and broker/dealers charge fees in
connection with services provided in conjunction with an investment in shares,
the share performance is lower for shareholders paying those fees.
The Fund's yield for the seven-day period ended November 30, 1998 was _____%.
PERFORMANCE COMPARISONS
Advertising and sales literature may include:
o references to ratings, rankings, and financial publications and/or performance
comparisons of shares to certain indices; o charts, graphs and illustrations
using the Fund's returns, or returns in general, that demonstrate investment
concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment;
o discussions of economic, financial and political developments and their impact
on the securities market, including the portfolio manager's views on how such
developments could impact the Funds; and
o information about the mutual fund industry from sources such as the Investment
Company Institute.
The Fund may compare its performance, or performance for the types of securities
in which it invests, to a variety of other investments, including federally
insured bank products such as bank savings accounts, certificates of deposit,
and Treasury bills.
The Fund may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.
You may use financial publications and/or indices to obtain a more complete view
of share performance. When comparing performance, you should consider all
relevant factors such as the composition of the 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:
LIPPER ANALYTICAL SERVICES, INC. Ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all capital gains distributions and income dividends and takes
into account any change in net asset value over a specified period of time.
DISCOUNT CORPORATION OF NEW YORK 30-DAY FEDERAL AGENCIES, for example, is a
weekly quote of the average daily offering for selected federal agency issues
maturing in 30 days.
SALOMAN 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.
<PAGE>
ADDRESSES
NEWPOINT GOVERNMENT MONEY MARKET FUND
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
Distributor
FEDERATED SECURITIES CORP. Federated Investors Tower
1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779
Investment Adviser
FIRSTMERIT BANK, N.A. 121 South Main Street
Akron, Ohio 44208-1440
Custodian
STATE STREET BANK AND TRUST COMPANY P.O. Box 8600
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
APPENDIX A
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of the Newpoint Equity Fund (the "Fund") as of the calendar
year-end for each of three years.
The `y' axis reflects the "% Total Return" beginning with 0.00% and increasing
in increments of 5.00% up to 35.00%.
The `x' axis represents calculations for the last three calendar years of the
Fund beginning with the earliest year. The light gray shaded chart features
three distinct vertical bars, each shaded in charcoal, and each visually
representing by height the total return percentages for the calendar year stated
directly at its base. The calculated total return percentages for the Fund,
which appear directly above each respective bar, for the calendar years 1995
through 1997, are 31.76%, 16.66%, and 25.10%, respectively.
The total returns displayed for the Fund do not reflect the payment of any sales
charges or recurring shareholder account fees. If these charges or fees had been
included, the returns shown would have been lower.
The Fund's average annual total return as of the most recent calendar quarter
ended September 30, 1998, was 4.22%.
Within the period shown in the Chart, the Fund's highest quarterly return was
16.61% (quarter ended June 30, 1997). Its lowest quarterly return was -0.80%
(quarter ended March 31, 1997).
Average Annual Total Return for the Fund Compared to the S&P 500 and Lipper
Growth and Income Fund Average for the calendar period ending December 31, 1998.
CALENDAR PERIOD...FUND.. S&P 500 LGI
- --------------- ---- -----------------
1 Year ..................
The bar chart shows the variability of the Fund's actual total return on a
yearly basis. The table shows the Fund's total returns averaged over a period of
one year relative to the S&P 500 Index, a broad-based market index and the LGI,
an average of funds with sim8lar investment objectives. While past performance
does not necessarily predict future performance, this information provides you
with historical performance information so that you can analyze whether the
Fund's investment risks are balanced by its potential rewards.
<PAGE>
APPENDIX B
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of the Newpoint Government Money Market Fund (the "Fund")
as of the calendar year-end for each of six years.
The `y' axis reflects the "% Total Return" beginning with 0.00% and increasing
in increments of 1.00% up to 6.00%.
The `x' axis represents calculations for the last six calendar years of the Fund
beginning with the earliest year. The light gray shaded chart features six
distinct vertical bars, each shaded in charcoal, and each visually representing
by height the total return percentages for the calendar year stated directly at
its base. The calculated total return percentages for the Fund, which appear
directly above each respective bar, for the calendar years 1992 through 1997,
are 3.10%, 2.45%, 3.46%, 5.28%, 4.79%, and 4.96%, respectively.
The Fund's shares are not sold subject to a sales charge (load). Hence the total
returns displayed are based upon the net asset value.
The Fund's average annual total return as of the most recent calendar quarter
ended September 30, 1998, was 4.96%.
Within the period shown in the Chart, the Fund's highest quarterly return was
1.33% (quarter ended March 31, 1993). Its lowest quarterly return was -0.61%
(quarter ended March 31, 1995).
The Fund's 7-DAY NET YIELD as of 12/31/97 was 4.97%.
The following table represents the Fund's Average Annual Totl Return
through 12/31/97
CALENDAR PERIOD...FUND..
1 Year ............4.96%.
5 Years ............4.18%
Start of Performance*...4.20%
*The Fund's start of performance date was January 8, 1991.
Investors may call the Fund to acquire the current 7-Day Net Yield by calling
1-800-627-1289.
While past performance does not necessarily predict future
performance, this information provides you with
historical performance information so that you can
analyze whether the Fund's investment risks are balanced
by its potential rewards.
PART C. OTHER INFORMATION.
Item 23. FINANCIAL STATEMENTS AND EXHIBITS:
(a) Financial Statements (to be filed by amendment);
(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)
(i) Copy of Amendment No. 1 to By-Laws; (9)
(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; (8)
(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; (8)
(ii) Conformed Copy of Exhibit to Distributor's
Contract of the Registrant; (6)
(iii) Conformed Copy of Administrative Services
Agreement; (6)
(7) Not applicable;
- ------------------------------
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).
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 on Form N-1A filed January 21, 1997 (File Nos. 33-37993
and 811-6224).
9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed January 23, 1998 (File Nos. 33-37993
and 811-6224).
<PAGE>
(8) Conformed copy of Custodian Agreement of the Registrant;
(5) (i) Copy of Custody Fee Schedule; (9)
(9) Conformed copy of Transfer Agency and Service Agreement
of the Registrant; (5)
(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; (8)
(11) Not applicable;
(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) Not Applicable;
(18) Conformed Copy of Power of Attorney. (8)
- ------------------------------
+ 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).
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).
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 on Form N-1A filed January 21, 1997 (File Nos. 33-37993
and 811-6224).
9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed January 23, 1998 (File Nos. 33-37993
and 811-6224).
<PAGE>
Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT:
None
Item 25. INDEMNIFICATION: (3)
Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER:
(a) FirstMerit Bank, 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, 1998 the trust division of FirstMerit Bank
had approximately $____ billion under administration of which
it had investment discretion over $______ billion.
<PAGE>
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 FirstMerit Bank.
Other Substantial
Position with Business, Profession,
NAME THE ADVISER VOCATION OR EMPLOYMENT
John R. Cochran President & Chief
Executive Officer
Jack R. Gravo Executive Vice President
& Chief Financial Officer
John R. Masco Regional President
George P. Paidas Regional President
William G. Lamb Community President
Robert W. Carpenter Executive Vice President
Richard G. Norton Executive Vice President
Gregory R. Bean Sr. Vice President & Senior
Trust Officer
Terry E. Patton Secretary
Brad L. Tolstedt Executive Vice President
Daniel K. McGill Sr. Vice President
Directors
John R. Cochran Bruce M. Kephart Robert P. Brecht
John R. Masco George P. Paidas William E. Stansifer
Carrie L. Tolstedt Jack R. Gravo Christopher J. Maurer
Terry E. Patton
<PAGE>
ITEM 27. PRINCIPAL UNDERWRITERS:
(a) Federated Securities Corp. the Distributor for shares of the
Registrant, acts as principal underwriter for the following open-end
investment companies, including the Registrant:
111 Corcoran 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;
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 Obligations Trust II; 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 Planters Funds; The Virtus Funds; The Wachovia Funds; The
Wachovia Municipal 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.;
and World Investment Series, Inc.
Federated Securities Corp. also acts as principal underwriter for the
following closed-end investment company: Liberty Term Trust, Inc.- 1999.
<PAGE>
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR 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 Vice President,
Federated Investors Tower President, Federated, Treasurer and
Pittsburgh, PA 15222-3779 Securities Corp. Trustee
Thomas R. Donahue Director, Assistant Secretary --
Federated Investors Tower and Assistant Treasurer
Pittsburgh, PA 15222-3779 Federated Securities Corp.
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David M. Taylor Executive Vice President --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
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
Laura M. Deger 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
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
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
Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Byron F. Bowman Vice President, Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
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
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Doyle 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
Raymond Hanley Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Beth A. Hetzel 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
Brian G. Kelly 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
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
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
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
Richard A. Recker 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
George D. Riedel Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas S. Schinabeck 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
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
John A. Staley 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
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
John F. Wallin 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
Terri E. Bush Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Beth C. Dell 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
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
Leslie K. Platt Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
<PAGE>
Item 28. 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
FirstMerit Bank, N.A. 121 South Main Street
("Adviser") Akron, Ohio 44308-1444
State Street Bank & Trust Co. P.O. Box 1713
("Custodian") Boston, Massachusetts 02105
Item 29. MANAGEMENT SERVICES: Not applicable.
Item 30. 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.
<PAGE>
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(a) 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 1st day of December, 1998.
NEWPOINT FUNDS
BY: /s/ C. Todd Gibson
C. Todd Gibson, Assistant Secretary
Attorney in Fact for John F. Donahue
December 1, 1998
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 December 1, 1998
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
John E. Murray, Jr.* Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
