NEWPOINT EQUITY FUND
SEMI-ANNUAL REPORT
MAY 31, 1999
A Diversified Portfolio of Newpoint Funds,
an Open-End, Management Investment Company
Federated Securities Corp., Distributor
Cusip 651722209
G01234-01 (7/99)
[Logo for Recycled Paper]
[Logo of Newpoint]
PRESIDENT'S MESSAGE
- -------------------------------------------------------------------------------
Dear Shareholder:
I'm pleased to present the Semi-Annual Report to Shareholders of Newpoint Equity
Fund for the six-month period from December 1, 1998 through May 31, 1999. The
report begins with a brief commentary on the stock market from the fund's
portfolio manager. Following the commentary are a complete listing of the fund's
investments and its financial statements.
Newpoint Equity Fund invests in a diversified portfolio of high-quality stocks
across the industrial spectrum. Many of the fund's holdings include prominent,
"household name" companies, including Exxon, General Electric, Home Depot,
Intel, McDonald's, PepsicCo, Pfizer, Schwab (Charles), Time Warner, and
Wal-Mart.
During the reporting period, the U.S. stock market continued its upward
momentum, and Newpoint Equity Fund produced a strong six-month total return of
13.52%, or 8.40% adjusted for the sales charge/1/. Contributing to the fund's
total return was a 10% increase in share price and capital gains totaling $0.65
per share. At the end of the reporting period, fund assets reached $65.3
million.
Thank you for selecting Newpoint Equity Fund as a way to pursue your long-term
goals through a diversified and professionally managed portfolio of U.S. stocks.
We'll continue to keep you up-to-date on your progress.
Sincerely,
Edward C. Gonzales
President
July 15, 1999
/1/Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
INVESTMENT REVIEW
- -------------------------------------------------------------------------------
For the six-month reporting period from December 1, 1998 through May 31, 1999,
the Newpoint Equity Fund (the "fund") has underperformed the Standard & Poors
500 Index/1/, 4.48% (-0.23 after the sales change) versus 6.43%. The performance
of the fund's overweighted industrial sectors of Technology (6.57%), Drugs
(-19.43%) and the market weighted sector of Financials (1.74%) underperformed
the fund's underweighted industrial sectors of Capital Goods (11.41%), Energy
(11.89%), and Basic Industrials (12.73%). Since the Standard and Poors 500
Index's performance year-to-date has been driven by Capital Goods, Energy, and
Basic Industrials, the fund was overweighted in the wrong industrial sectors for
superior year-to-date performance. However, we antici-pate that the productivity
of the technology sector, new drugs in the health care area, and the
consolidation of the financial sector should maintain these sectors as top
performers for 1999. In the technology sector, we favor companies that have a
proprietary product with high switching costs. Examples of this type of company
are: Microsoft, Intel, Lucent and Cisco. In the financial area we favor
companies that are consolidating like Citicorp and fast growing brokers like
Schwab. In Health Care, Pfizer, Forest Labs and Warner Lambert have new drugs
that are driving strong sales growth.
We feel the stock market's dominate secular themes of globalization, technology
and demographics have been temporarily overwhelmed by the cyclical forces of
revaluations of currencies that have occurred in Southeast Asia, ripples from
revaluations that have affected other foreign country's business cycles like
Brazil, and reflation (the reversal of deflation by government intervention)
that revaluations and ripples have forced on the U.S. and other developed world
Central Banks. We feel the battle between the secular themes and the cyclical
forces will continue for awhile, but the secular themes are much stronger than
the cyclical forces and, in the end, will win. If they do, the large cap growth
stocks (which is the area we favor) should emerge as the primary beneficiaries
of globalization, technology and demographics. While the battle rages between
the secular and cyclical, the market will be inordinately volatile. We feel our
best course of action is to remain patiently with our convictions. Therefore, we
feel the fund's present structure should provide the best opportunity for
capital appreciation for the coming year.
/s/ Wesley C. Meinerding
Wesley C. Meinerding
Vice President and Trust Officer
First Merit Bank N.A.
/1/The Standard & Poors 500 Index is an unmanaged capitalization-weighted index
of 500 stocks designed to measure performance of the broad domestic economy
through changes in the aggregate market value of 500 stocks representing all
major industries. Investments cannot be made in an index.
NEWPOINT EQUITY FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ ------------------------------- -----------
<C> <S> <C>
COMMON STOCKS--98.5%
--------------------------------------
BASIC INDUSTRY--2.2%
-------------------------------
35,000 Monsanto Co. $ 1,452,500
------------------------------- -----------
CAPITAL GOODS--4.1%
-------------------------------
26,200 General Electric Co. 2,664,212
------------------------------- -----------
CAPITAL GOODS TECHNOLOGY--33.8%
-------------------------------
3,500 (1)America Online, Inc. 417,813
-------------------------------
13,504 Boeing Co. 570,544
-------------------------------
36,600 (1)Cisco Systems, Inc. 3,989,400
-------------------------------
46,000 (1)Dell Computer Corp. 1,584,125
-------------------------------
12,000 (1)EMC Corp. Mass 1,195,500
-------------------------------
34,000 Intel Corp. 1,838,125
-------------------------------
48,000 Lucent Technologies, Inc. 2,730,000
-------------------------------
42,000 (1)Microsoft Corp. 3,388,875
-------------------------------
13,250 Nokia Oy, Class A, ADR 940,750
-------------------------------
18,400 Raytheon Co., Class B 1,252,350
-------------------------------
60,000 (1)Sun Microsystems, Inc. 3,585,000
-------------------------------
5,000 Texas Instruments, Inc. 546,875
------------------------------- -----------
Total 22,039,357
------------------------------- -----------
CONSUMER CYCLICAL--8.0%
-------------------------------
31,000 Home Depot, Inc. 1,763,125
-------------------------------
10,000 Limited, Inc. 488,750
-------------------------------
15,000 Nike, Inc., Class B 914,062
-------------------------------
48,000 Wal-Mart Stores, Inc. 2,046,000
------------------------------- -----------
Total 5,211,937
------------------------------- -----------
CONSUMER SERVICES--2.6%
-------------------------------
20,000 McDonald's Corp. 770,000
-------------------------------
14,000 Time Warner, Inc. $ 952,875
------------------------------- -----------
Total 1,722,875
------------------------------- -----------
CONSUMER STAPLES--5.2%
-------------------------------
16,000 Gillette Co. 816,000
-------------------------------
20,000 PepsiCo, Inc. 716,250
-------------------------------
20,000 Procter & Gamble Co. 1,867,500
------------------------------- -----------
Total 3,399,750
------------------------------- -----------
DRUGS & HEALTHCARE--18.7%
-------------------------------
20,000 (1)Amgen, Inc. 1,265,000
-------------------------------
52,000 (1)Boston Scientific Corp. 1,972,750
-------------------------------
10,000 (1)Forest Labratories, Inc.,
Class A 476,250
-------------------------------
10,000 Lilly (Eli) & Co. 714,375
-------------------------------
22,000 Medtronic, Inc. 1,562,000
-------------------------------
20,000 Pfizer, Inc. 2,140,000
-------------------------------
31,500 (1)Thermo Cardiosystems, Inc. 376,031
-------------------------------
60,000 Warner-Lambert Co. 3,720,000
------------------------------- -----------
Total 12,226,406
------------------------------- -----------
ENERGY--4.7%
-------------------------------
16,800 Exxon Corp. 1,341,900
-------------------------------
15,000 Royal Dutch Petroleum Co., ADR 848,437
-------------------------------
15,000 Schlumberger Ltd. 902,813
------------------------------- -----------
Total 3,093,150
------------------------------- -----------
FINANCE--INSURANCE, BANKING
& OTHER--13.8%
-------------------------------
16,875 American International
Group, Inc. 1,929,023
-------------------------------
16,000 Citigroup, Inc. 1,060,000
-------------------------------
10,000 Firstar Corp. 288,125
-------------------------------
58,331 Healthcare Realty Trust, Inc. 1,261,408
-------------------------------
20,000 National Golf Properties, Inc. 516,250
-------------------------------
FINANCE--INSURANCE, BANKING
& OTHER--(CONTINUED)
------------------------------
20,500 Progressive Corp., OH $ 2,877,688
------------------------------
10,000 Schwab (Charles) Corp. 1,058,125
------------------------------ -----------
Total 8,990,619
------------------------------ -----------
TRANSPORTATION--2.7%
------------------------------
32,000 (1)FDX Corp. 1,762,000
------------------------------ -----------
UTILITIES--2.7%
------------------------------
20,000 (1)MCI Worldcom, Inc. 1,727,500
------------------------------ -----------
TOTAL COMMON STOCKS
(IDENTIFIED COST $35,885,909) 64,290,306
------------------------------ -----------
MUTUAL FUND SHARES--1.5%
- --------------------------------------
274,995 SSGA U.S. Government Money
Market Fund, Series A 274,995
------------------------------
725,164 Seven Seas Money Market Fund 725,164
------------------------------ -----------
TOTAL MUTUAL FUND SHARES
(AT AMORTIZED COST) 1,000,159
----------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED
COST $36,886,068)(2) $65,290,465
----------------------------- -----------
</TABLE>
(1) Non-income producing security.
(2) The cost of investments for federal tax purposes amounts to $36,886,068. The
net unrealized appreciation of investments on a federal tax basis amounts to
$28,404,397 which is comprised of $29,724,012 appreciation and $1,319,615
depreciation at May 31, 1999.
Note: The categories of investments are shown as a percentage of net assets
($65,279,189) at May 31, 1999.
The following acronym is used throughout this portfolio:
ADR--American Depositary Receipt
(See Notes which are an integral part of the Financial Statements)
NEWPOINT EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------
Total investments in
securities, at value
(identified and tax cost
$36,886,068) $65,290,465
- ----------------------------
Cash 242
- ----------------------------
Income receivable 41,335
- ---------------------------- -----------
Total assets 65,332,042
- ----------------------------
LIABILITIES:
- ------------------
Accrued expenses $52,853
- ------------------ ---------
Total liabilities 52,853
- ---------------------------- -----------
Net Assets for 3,009,404
shares outstanding $65,279,189
- ---------------------------- -----------
NET ASSETS CONSIST OF:
- ----------------------------
Paid in capital $34,676,626
- ----------------------------
Net unrealized appreciation
of investments 28,404,397
- ----------------------------
Accumulated net realized
gain on investments 2,243,841
- ----------------------------
Distributions in excess of
net investment income (45,675)
- ---------------------------- -----------
Total Net Assets $65,279,189
- ---------------------------- -----------
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
- ----------------------------
Net Asset Value Per Share
($65,279,189 / 3,009,404
shares outstanding) $21.69
- ---------------------------- -----------
Offering Price Per Share
(100/95.50 of $21.69)(1) $22.71
- ---------------------------- -----------
</TABLE>
(1) See "What Do Shares Cost?" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
NEWPOINT EQUITY FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------
Dividends $ 260,652
- ------------------------------------------------------------------
Interest 26,670
- ------------------------------------------------------------------ ----------
Total income 287,322
- ------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------
Investment advisory fee $243,675
- --------------------------------------------------------
Administrative personnel and services fee 50,086
- --------------------------------------------------------
Custodian fees 3,132
- --------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 11,260
- --------------------------------------------------------
Directors'/Trustees' fees 3,585
- --------------------------------------------------------
Auditing fees 6,264
- --------------------------------------------------------
Legal fees 936
- --------------------------------------------------------
Portfolio accounting fees 22,233
- --------------------------------------------------------
Share registration costs 7,807
- --------------------------------------------------------
Printing and postage 5,007
- --------------------------------------------------------
Insurance premiums 1,422
- --------------------------------------------------------
Miscellaneous 7,851
- -------------------------------------------------------- --------
Total expenses 363,258
- --------------------------------------------------------
Waiver--
- --------------------------------------------------------
Waiver of investment advisory fee (23,764)
- -------------------------------------------------------- --------
Net expenses 339,494
- ------------------------------------------------------------------ ----------
Net investment loss (52,172)
- ------------------------------------------------------------------ ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ------------------------------------------------------------------
Net realized gain on investments 2,243,754
- ------------------------------------------------------------------
Net change in unrealized appreciation of investments 5,664,864
- ------------------------------------------------------------------ ----------
Net realized and unrealized gain on investments 7,908,618
- ------------------------------------------------------------------ ----------
Change in net assets resulting from operations $7,856,446
- ------------------------------------------------------------------ ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NEWPOINT EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
MAY 31, 1999 NOVEMBER 30, 1998
------------ -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------
OPERATIONS--
- ------------------------------------------------
Net investment income (loss) $ (52,172) $ 43,567
- ------------------------------------------------
Net realized gain on investments ($2,243,754 and
$1,916,090, respectively, as computed for
federal tax purposes) 2,243,754 1,916,090
- ------------------------------------------------
Net change in unrealized appreciation 5,664,864 6,992,741
- ------------------------------------------------ ----------- -----------
Change in net assets resulting from operations 7,856,446 8,952,398
- ------------------------------------------------ ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------
Distributions from net investment income (5,882) (40,878)
- ------------------------------------------------
Distributions from net realized gains (1,916,013) (2,622,798)
- ------------------------------------------------ ----------- -----------
Change in net assets resulting from
distributions to shareholders (1,921,895) (2,663,676)
- ------------------------------------------------ ----------- -----------
SHARE TRANSACTIONS--
- ------------------------------------------------
Proceeds from sale of shares 1,647,154 3,758,666
- ------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 1,908,529 2,625,273
- ------------------------------------------------
Cost of shares redeemed (2,531,702) (3,241,375)
- ------------------------------------------------ ----------- -----------
Change in net assets resulting from share
transactions 1,023,981 3,142,564
- ------------------------------------------------ ----------- -----------
Change in net assets 6,958,532 9,431,286
- ------------------------------------------------
NET ASSETS:
- ------------------------------------------------
Beginning of period 58,320,657 48,889,371
- ------------------------------------------------ ----------- -----------
End of period (including undistributed net
investment income of $12,379, for the year ended
November 30, 1998) $65,279,189 $58,320,657
- ------------------------------------------------ ----------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NEWPOINT EQUITY FUND
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED NOVEMBER 30,
MAY 31, --------------------------------------------
1999 1998 1997 1996 1995 1994(1)
---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $19.71 $17.69 $15.14 $12.69 $ 9.78 $10.00
- -----------------------
INCOME FROM INVESTMENT
OPERATIONS
- -----------------------
Net investment income (0.02) 0.01 0.04 0.07 0.10 0.05
- -----------------------
Net realized and
unrealized gain (loss)
on investments 2.65 2.97 3.19 2.61 2.91 (0.23)
- ----------------------- ------- ------- ------- ------- ------- -------
Total from investment
operations 2.63 2.98 3.23 2.68 3.01 (0.18)
- ----------------------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
- -----------------------
Distributions from net
investment income 0.00(2) (0.01) (0.04) (0.07) (0.10) (0.04)
- -----------------------
Distributions from net
realized gain on
investments (0.65) (0.95) (0.64) (0.16) -- --
- ----------------------- ------- ------- ------- ------- ------- -------
Total distributions (0.65) (0.96) (0.68) (0.23) (0.10) (0.04)
- ----------------------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD $21.69 $19.71 $17.69 $15.14 $12.69 $ 9.78
- ----------------------- ------- ------- ------- ------- ------- -------
TOTAL RETURN (3) 13.52% 18.09% 22.34% 21.38% 30.97% (1.76%)
- -----------------------
RATIOS TO AVERAGE NET
ASSETS
- -----------------------
Expense (4) 1.11%(5) 1.18% 1.26% 1.50% 2.00% 2.72%(5)
- -----------------------
Net investment income
(4) (0.23)%(5) (0.07)% 0.09% 0.14% 0.36% 0.64%(5)
- -----------------------
Expenses (after
waivers) 1.04%(5) 1.03% 1.11% 1.13% 1.48% 1.00%(5)
- -----------------------
Net investment income
(after waivers) (0.16)%(5) 0.08% 0.24% 0.51% 0.88% 2.36%(5)
- -----------------------
SUPPLEMENTAL DATA
- -----------------------
Net assets, end of
period (000 omitted) $65,279 $58,321 $48,889 $42,858 $25,803 $11,614
- -----------------------
Portfolio turnover 13% 30% 44% 49% 35% 0%
- -----------------------
</TABLE>
(1) Reflects operations for the period from September 13, 1994 (date of initial
public investment) to November 30, 1994. For the period from August 30, 1994
(start of business) to September 12, 1994, the Fund had no investment activity.
(2) Amount represents less than $0.01 per share.
(3) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(4) During the period, certain fees were voluntarily waived and reimbursed. If
such voluntarily waivers and reimbursements had not occurred, the ratios would
have been indicated.
(5) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
NEWPOINT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1999 (UNAUDITED)
- -------------------------------------------------------------------------------
(1) ORGANIZATION
Newpoint Funds (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "Act") as an open-end, management investment company. The
Trust consists of two portfolios. The financial statements included herein are
only those of Newpoint Equity Fund (the "Fund"), a diversified portfolio. The
financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held. The investment objective of the Fund
is to achieve growth of capital and income.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on a national securities exchange. Short-term securities are
valued at the prices provided by an independent pricing service. However,
short-term securities with remaining maturities of sixty days or less at the
time of purchase may be valued at amortized cost, which approximates fair market
value. Investments in other open-end regulated investment companies are valued
at net asset value.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are
accrued daily. Bond premium and discount, if applicable, are amortized as
required by the Internal Revenue Code, as amended (the "Code"). Dividend income
and distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code
applicable to regulated investment companies and to distribute to shareholders
each year substantially all of its income. Accordingly, no provisions for
federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis are
marked to market daily and begin earning interest on the settlement date.
USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ from
those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED NOVEMBER 30,
MAY 31, 1999 1998
- -------------------------------------------- ------------ ------------
<S> <C> <C>
Shares sold 75,890 209,947
- --------------------------------------------
Shares issued to shareholders in payment of
distributions declared 92,111 163,745
- --------------------------------------------
Shares redeemed (118,204) (177,349)
- -------------------------------------------- -------- --------
Net change resulting from share transactions 49,797 196,343
- -------------------------------------------- -------- --------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--FirstMerit Bank, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.75% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The fee paid to FAS is based
on the level of average aggregate net assets of the Trust for the period.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ"), through its subsidiary, Federated Shareholder Services
Company ("FSSC") serves as transfer and dividend disbursing agent for the Fund.
The fee paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $35,000 were borne initially
by FAS. The Fund has reimbursed FAS for this expenses. These expenses have been
deferred and have been amortized over the five year period following effective
date.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1999, were as follows:
<TABLE>
<S> <C>
- ---------
PURCHASES $8,916,245
- --------- ----------
SALES $8,245,456
- --------- ----------
</TABLE>
(6) YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and Administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
<TABLE>
<S> <C>
TRUSTEES OFFICERS
John F. Donahue John F. Donahue
Chairman
Thomas G. Bigley
Edward C. Gonzales
John T. Conroy, Jr. President and Treasurer
William J. Copeland J. Christopher Donahue
Executive Vice President
John F. Cunningham
Richard B. Fisher
J. Christopher Donahue Vice President
Lawrence D. Ellis, M.D. John W. McGonigle
Executive Vice President and Secretary
Edward C. Gonzales
Beth S. Broderick
Peter E. Madden Vice President and Assistant Treasurer
Charles F. Mansfield, Jr. C. Todd Gibson
Assistant Secretary
John E. Murray, Jr., J.D., S.J.D.
Marjorie P. Smuts
John S. Walsh
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus, which contains facts
concerning each Fund's objective and policies, management fees, expenses and
other information.
NEWPOINT GOVERNMENT
MONEY MARKET FUND
SEMI-ANNUAL REPORT
MAY 31, 1999
A Diversified Portfolio of
Newpoint Funds,
an Open-End, Management Investment Company
Federated Securities Corp., Distributor
Cusip 651722100
G00580-03 (7/99)
[Logo for Recycled Paper] [Logo of Newpoint]
PRESIDENT'S MESSAGE
- -------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of Newpoint
Government Money Market Fund for the six-month period from December 1, 1998
through May 31, 1999. This report includes an investment review by the portfolio
manager, a list of the fund's investments, and complete financial information.
This money market fund gives you a convenient way to help your ready cash earn
daily income--while offering you the additional advantages of daily liquidity
and stability of principal. The fund holds some of the safest investments
available--short-term U.S. government obligations.
During the reporting period, the fund's portfolio of U.S. government money
market securities paid dividends totaling $0.02 per share while maintaining a
stable share value of $1.00./1/ The fund's assets reached $136.9 million on the
last day of the reporting period.
Thank you for putting your ready cash to work on a daily basis through Newpoint
Government Money Market Fund. We'll continue to keep you up-to-date on your
investment, and provide your account with the highest level of service.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
July 15, 1999
/1/An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
INVESTMENT REVIEW
- -------------------------------------------------------------------------------
The Newpoint Government Money Market Fund had an average maturity of 51 days at
the beginning of 1999. This was relatively unchanged from the fall of 1998 when
yields came down in the face of three rate cuts by the Federal Reserve Board
(the "Fed"). The short-term yield curve proceeded to steepen through the
beginning of 1999, as concerns arose about the domestic economy, which continued
to show strength, while employment pressures increased. Even though inflation
remained muted, the bond market's fear of a preemptive rate hike escalated. This
reaction pushed yields higher through 1999. The fund continued to use this
weakness to push its average duration out past 60 days.
The fund continues to follow a tax-managed strategy. We currently invest in
issues with interest exempt from state and local taxes. Investments continue to
be concentrated in agency discount paper. We plan to continue to ladder issues
in an attempt to maximize yield to shareholders, while providing regular
opportunities for reinvestment. We will monitor the interest rate environment
closely and stand prepared to invest the Newpoint Government Money Market Fund
to help optimize yield potential within the high quality standards of the fund.
/s/ Jeff Doerfler
Jeff A. Doerfler
Trust Officer & Portfolio Manager
FirstMerit Bank, N.A.
NEWPOINT GOVERNMENT MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- ------------------------------------------------ ------------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES--107.1%
-----------------------------------------------------------
FEDERAL FARM CREDIT BANK DISCOUNT NOTES--21.8%
------------------------------------------------
30,000,000 (1)4.620%-4.836 %, 6/4/1999-8/10/1999 $ 29,842,311
------------------------------------------------ ------------
FEDERAL FARM CREDIT BANK--25.6%
------------------------------------------------
35,000,000 4.770%-4.870%, 6/1/1999-11/1/1999 35,000,000
------------------------------------------------ ------------
FEDERAL FARM CREDIT BANK--7.3%
------------------------------------------------
10,000,000 4.85%, 12/1/1999 10,000,000
------------------------------------------------ ------------
FEDERAL HOME LOAN BANK DISCOUNT NOTES--41.5%
------------------------------------------------
57,335,000 (1)4.620%-4.963%, 6/1/1995-3/30/2000 56,873,142
------------------------------------------------ ------------
STUDENT LOAN MARKETING ASSOCIATION FLOATING RATE
NOTES--10.9%
------------------------------------------------
15,000,000 (2)5.201%-5.271%, 6/1/1999-6/2/1999 15,000,000
------------------------------------------------ ------------
TOTAL U.S. GOVERNMENT AGENCIES 146,715,453
------------------------------------------------ ------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(3) $146,715,453
------------------------------------------------ ------------
</TABLE>
(1) Discount rate at time of purchase.
(2) Floating rate note with current rate and next reset date.
(3) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($136,966,780) at May 31, 1999.
(See Notes which are an integral part of the Financial Statements)
NEWPOINT GOVERNMENT MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------
Total investments in securities, at amortized
cost and value $146,715,453
- -----------------------------------------------
Cash 849
- -----------------------------------------------
Income receivable 749,320
- ----------------------------------------------- ------------
Total assets 147,465,622
- ----------------------------------------------- ------------
LIABILITIES:
- ----------------------------------
Payable for investments purchased $10,000,000
- ----------------------------------
Income distribution payable 497,719
- ----------------------------------
Accrued expenses 1,123
- ---------------------------------- ------------
Total liabilities 10,498,842
- ----------------------------------------------- ------------
Net Assets for 136,966,780 shares outstanding $136,966,780
- ----------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PROCEEDS PER SHARE:
- -----------------------------------------------
$136,966,780 / 136,966,780 shares outstanding $1.00
- ----------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NEWPOINT GOVERNMENT MONEY MARKET FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------
Interest $3,489,562
- ------------------------------------------------------------------- ----------
EXPENSES:
- --------------------------------------------------------
Investment advisory fee $ 357,779
- --------------------------------------------------------
Administrative personnel and services fee 107,334
- --------------------------------------------------------
Custodian fees 5,099
- --------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 33,926
- --------------------------------------------------------
Directors'/Trustees' fees 3,195
- --------------------------------------------------------
Auditing fees 6,423
- --------------------------------------------------------
Legal fees 1,069
- --------------------------------------------------------
Portfolio accounting fees 19,962
- --------------------------------------------------------
Share registration costs 7,857
- --------------------------------------------------------
Printing and postage 2,719
- --------------------------------------------------------
Insurance premiums 1,429
- --------------------------------------------------------
Miscellaneous 5,379
- -------------------------------------------------------- ---------
Total expenses 552,171
- --------------------------------------------------------
Waiver--
- --------------------------------------------------------
Waiver of investment advisory fee (143,112)
- -------------------------------------------------------- ---------
Net expenses 409,059
- ------------------------------------------------------------------- ----------
Net investment income $3,080,503
- ------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NEWPOINT GOVERNMENT MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
(UNAUDITED) NOVEMBER 30,
MAY 31, 1999 1998
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------
OPERATIONS--
- -------------------------------------------
Net investment income $ 3,080,503 $ 5,778,501
- ------------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------
Distributions from net investment income (3,080,503) (5,778,501)
- ------------------------------------------- ------------- -------------
SHARE TRANSACTIONS--
- -------------------------------------------
Proceeds from sale of shares 124,609,733 237,093,604
- -------------------------------------------
Net asset value of shares issued to
shareholders in payment of distributions
declared 1,143,000 2,832,030
- -------------------------------------------
Cost of shares redeemed (123,775,040) (228,101,846)
- ------------------------------------------- ------------- -------------
Change in net assets resulting from share
transactions 1,977,693 11,823,788
- ------------------------------------------- ------------- -------------
Change in net assets 1,977,693 11,823,788
- -------------------------------------------
NET ASSETS:
- -------------------------------------------
Beginning of period 134,989,087 123,165,299
- ------------------------------------------- ------------- -------------
End of period $ 136,966,780 $ 134,989,087
- ------------------------------------------- ------------- -------------
</TABLE>
See Notes which are an integral part of the Financial Statements
NEWPOINT GOVERNMENT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED NOVEMBER 30,
ENDED -----------------------------------------
(UNAUDITED)
MAY 31, 1999 1998 1997 1996 1995 1994(1)
------------ -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------
INCOME FROM INVESTMENT
OPERATIONS
- ------------------------
Net investment income 0.02 0.05 0.05 0.05 0.05 0.03
- ------------------------
LESS DISTRIBUTIONS
- ------------------------
Distributions from net
investment income (0.02) (0.05) (0.05) (0.05) (0.05) (0.03)
- ------------------------ ----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------ ----- ----- ----- ----- ----- -----
TOTAL RETURN (2) 2.17% 4.92% 4.93% 4.83% 5.24% 3.25%
- ------------------------
RATIOS TO AVERAGE NET
ASSETS
- ------------------------
Expenses (3) 0.77%(4) 0.80% 0.80% 0.83% 0.94% 0.97%
- ------------------------
Net investment income
(3) 4.11%(4) 4.62% 4.64% 4.53% 4.92% 3.04%
- ------------------------
Expenses (after
waivers) 0.57%(4) 0.60% 0.60% 0.63% 0.74% 0.77%
- ------------------------
Net investment income
(after waivers) 4.31%(4) 4.82% 4.84% 4.73% 5.12% 3.24%
- ------------------------
SUPPLEMENTAL DATA
- ------------------------
Net assets, end of
period
(000 omitted) $136,967 $134,989 $123,165 $85,230 $99,674 $63,868
- ------------------------
</TABLE>
(1) As of February 4, 1994, Investment Shares were no longer offered and ceased
to exist. Prior to that date, the Fund had offered two classes of shares known
as Trust Shares and Investment Shares.
(2) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(3) During the period certain fees were voluntarily waived. If such waivers had
not occurred, the ratios would have been as indicated.
(4) Computed on an annualized basis.
See Notes which are an integral part of the Financial Statements
NEWPOINT GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1999 (UNAUDITED)
- -------------------------------------------------------------------------------
(1) ORGANIZATION
Newpoint Funds (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "Act") as an open-end, management investment company. The
Trust consists of two portfolios. The financial statements included herein are
only those of Newpoint Government Money Market Fund (the "Fund"). The financial
statements of the other portfolios are presented separately. The assets of each
portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held. The investment objective of the Fund is to
provide stability of principal and current income consistent with stability of
principal.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Fund uses the amortized cost method to value its
portfolio securities in accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are
accrued daily. Bond premium and discount, if applicable, are amortized as
required by the Internal Revenue Code, as amended (the "Code"). Distributions to
shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code
applicable to regulated investment companies and to distribute to shareholders
each year substantially all of its income. Accordingly, no provisions for
federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis are
marked to market daily and begin earning interest on the settlement date.
USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ from
those estimated.
OTHER--Investment transactions are accounted for on the trade date.
NEWPOINT GOVERNMENT MONEY MARKET FUND
- -------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At May
31, 1999, capital paid-in aggregated $136,966,780.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
MAY 31, 1999 NOVEMBER 30, 1998
- ---------------------------------------------- ------------ -----------------
<S> <C> <C>
Shares sold 124,609,733 237,093,604
- ----------------------------------------------
Shares issued to shareholders in payment of
distributions declared 1,143,000 2,832,030
- ----------------------------------------------
Shares redeemed (123,775,040) (228,101,846)
- ---------------------------------------------- ------------ ------------
Net change resulting from share transactions 1,977,693 11,823,788
- ---------------------------------------------- ------------ ------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--FirstMerit Bank, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50% of the Fund's average daily net assets. The Adviser may voluntary choose
to waive any portion of its fee and/or reimburse certain operating expenses of
the Fund. The Adviser can modify or terminate this voluntary waiver and/or
reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The fee paid to FAS is based
on the level of average aggregate net assets of the Trust for the period.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ"), through its subsidiary, Federated Shareholder Services
Company ("FSSC") serves as transfer and dividend disbursing agent for the Fund.
The fee paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--Fserv maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
NEWPOINT GOVERNMENT MONEY MARKET FUND
- -------------------------------------------------------------------------------
(5) YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and Administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
TRUSTEES OFFICERS
John F. Donahue John F. Donahue
Chairman
Thomas G. Bigley Edward C. Gonzales
John T. Conroy, Jr. President and Treasurer
William J. Copeland J. Christopher Donahue
Executive Vice President
John F. Cunningham Richard B. Fisher
J. Christopher Donahue Vice President
Lawrence D. Ellis, M.D. John W. McGonigle
Executive Vice President and Secretary
Edward C. Gonzales Beth S. Broderick
Peter E. Madden Vice President and Assistant Treasurer
Charles F. Mansfield, Jr. C. Todd Gibson
Assistant Secretary
John E. Murray, Jr., J.D., S.J.D.
Marjorie P. Smuts
John S. Walsh
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus, which contains facts
concerning each Fund's objective and policies, management fees, expenses and
other information.
