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
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Pre-Effective Amendment No. ______
Post-Effective Amendment No. 16...............................X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 14..............................................X
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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)
_X_ on January 29, 1999, pursuant to paragraph (b)
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
Newpoint Equity Fund
A Portfolio of Newpoint Funds
Mutual 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.
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
Fund Goals, Strategies, and Risks 1
Risk/Return Summary 1
What are the Fund's Fees and Expenses? 2
What are the Fund's Investment Strategies? 3
What are the Principal Securities in which the
Fund Invests? 3
What are the Risks of Investing in the Fund? 3
What do Shares Cost? 4
How is the Fund Sold? 5
How to Purchase Shares 5
How to Redeem Shares 6
Purchases and Redemptions Through Exchanges 8
Account and Share Information 8
Who Manages the Fund? 9
Year 2000 Statement 10
Financial Information 10
Report of Independent Public Accountants 20
JANUARY 31, 1999
</TABLE>
Fund Goals, Strategies, and Risks
WHAT IS THE FUND'S GOAL?
The Fund's goal (objective) is to achieve growth of capital and income.
WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?
The domestic equity securities of the Fund will consist primarily 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 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 MAIN 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.
The value of the stocks in the Fund's portfolio will go up and down, and
therefore the value of your Fund shares will also change. These fluctuations
could be a sustained trend or a drastic movement. The Fund's portfolio will
reflect changes in the prices of individual portfolio stocks or general changes
in stock valuations. Consequently, the Fund's share price could decline and you
could lose money.
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.
Risk/Return Summary
Risk/Return Bar Chart and Table
[GRAPH APPEARS HERE]
The Fund's shares are sold subject to a sales charge which is not reflected in
the bar chart. If the sales charge were reflected, the returns would be less
than those shown.
Within the period shown in the Chart, the Fund's highest quarterly return was
22.68% (quarter ended 12/31/98). Its lowest quarterly return was (10.46%)
(quarter ended 9/30/98).
Average Annual Total Return
The following table represents the Fund's Average Annual Total Return through
12/31/98 after the sales charge.
<TABLE>
<CAPTION>
Calendar Period Fund S&P 500
<S> <C> <C>
1 Year 22.10% 28.58%
Start of Performance1 21.87% 27.84%
</TABLE>
1 The Fund's start of performance date was September 13, 1994.
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.
The table shows the Fund's total returns averaged over a period of years
relative to the S&P 500, a broad-based market index. The performance of the
S&P 500 has not been adjusted to reflect sales charges, expenses, or other
fees the SEC requires to be reflected in the Fund's performance.
<PAGE>
What are the Fund's Fees and Expenses?
NEWPOINT EQUITY FUND
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
<TABLE>
<CAPTION>
Shareholder Fees
Fees Paid Directly From Your Investment
<S> <C>
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............................................... None
price or redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions).................................... None
(as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable)....................................................... None
Exchange Fee............................................................................................................. None
Annual Fund Operating Expenses (Before Waivers)1
Expenses That are Deducted From Fund Assets (as a percentage of average net assets)
Management Fee/2/........................................................................................................ 0.75%
Distribution (12b-1) Fee/3/.............................................................................................. 0.25%
Shareholder Services Fee/4/.............................................................................................. 0.25%
Other Expenses/5/........................................................................................................ 0.38%
Total Annual Fund Operating Expenses..................................................................................... 1.63%
</TABLE>
1 Although not contractually obligated to do so, the adviser, distributor, and
shareholder services provider will waive certain amounts. These are shown
below along with the net expenses the Fund would actually pay for the fiscal
year ending November 30, 1999.
<TABLE>
<S> <C>
Waiver of Fund Expenses.................................................................................................. 0.55%
Total Actual Annual Fund Operating Expenses (after waivers).............................................................. 1.08%
</TABLE>
2 The adviser expects to voluntarily waive 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) is expected to be 0.70% for the
fiscal year ending November 30, 1999.
3 The Fund did not pay or accrue the distribution (12b-1) fee during the fiscal
year ended November 30, 1998. The Fund has no present intention of paying or
accruing the distribution (12b-1) fee during the fiscal year ending November
30, 1999.
4 The Fund did not pay or accrue the shareholder services fee during the fiscal
year ended November 30, 1998. The Fund has no present intention of paying or
accruing the shareholder services fee during the fiscal year ending November
30, 1999.
5 Other Expenses are based on expenses expected to be incurred for the fiscal
year ending November 30, 1999. Other Expenses were 0.43% for the fiscal year
ended November 30, 1998.
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's operating
expenses are before waivers as shown in the table and remain the same. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
$608 $941 $1,297 $2,296
</TABLE>
What are the Fund's Investment Strategies
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 has an
incentive to increase returns on capital.
TEMPORARY DEFENSIVE 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.
What are the Principal Securities in which the Fund Invests?
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
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
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
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.
What are the Risks of Investing in the Fund?
Stock Market Risks
. The value of equity securities in the Fund's portfolio will rise and fall.
These fluctuations could be a sustained trend or a drastic movement. The
Fund's portfolio will reflect changes in prices of individual portfolio
stocks or general changes in stocks valuations. Consequently, the Fund's
share price may decline.
. The Adviser attempts to manage market risk by limiting the amount the Fund
invests in each company's equity securities. However, diversification will
not protect the Fund against widespread or prolonged declines in the stock
market.
Sector Risks
. Companies with similar characteristics may be grouped together in broad
categories called sectors. Sector risk is the possibility that a certain
sector may underperform other sectors or the market as a whole. As the
Adviser allocates more of the Fund's portfolio holdings to a particular
sector, the Fund's performance will be more susceptible to any economic,
business or other developments which generally affect that sector.
Risks Related to Investing for Growth
. Due to their relatively high valuations, growth stocks are typically more
volatile than value stocks. For instance, the price of a growth stock may
experience a larger decline on a forecast of lower earnings, a negative
fundamental development, on an adverse market development. Further, growth
stocks may not pay dividends or may pay lower dividends than value stocks.
This means they depend more on price changes for returns and may be more
adversely affected in a down market compared to value stocks that pay higher
dividends.
Risks Related to Investing for Value
. Due to their relatively low valuations, value stocks are typically less
volatile than growth stocks. For instance, the price of a value stock may
experience a smaller increase on a forecast of higher earnings, a positive
fundamental development, or positive market development. Further, value
stocks tend to have higher dividends than growth stocks. This means they
depends less on price changes for returns and may lag behind growth stocks in
an up market.
Risks Related to Company Size
. Generally, the smaller market capitalization of a company, the fewer the
number of shares traded daily, the less liquid its stocks and the more
volatile its price. Market capitalization is determined by multiply the
number of its outstanding shares by the current market price per share.
. Companies with smaller market capitalizations also tend to have unproven
track records, a limited product or service base and limited access to
capital. These factors also increase risks and make these companies more
likely to fail than larger, well capitalized companies.
What do Shares Cost?
You can purchase, redeem, or exchange shares any day the New York Stock Exchange
(NYSE) and Federal Reserve wire system are open. When the Fund receives your
transaction request in proper form, it is processed at the next determined net
asset value (NAV) plus any applicable sales charge (public offering price).
NAV is determined at the end of regular trading (normally 4:00 p.m. Eastern
time) each day the NYSE and Federal Reserve wire system are open.
Fund shares are sold at NAV plus a sales charge, as follows:
<TABLE>
<CAPTION>
Purchase Amount Sales Charge Sales Charge
as a Percentage as a Percentage
of Public of NAV
Offering Price
<S> <C> <C>
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%
</TABLE>
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:
. quantity purchases of shares;
. combining concurrent purchases of shares by you, your spouse, and your
children under age 21;
. 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);
. 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
. reinvesting redemption proceeds within 60 days.
If your investment qualifies for a reduction or elimination of the sales charge,
you or your investment professional should notify FirstMerit Securities, Inc. or
the Fund's Distributor at the time of purchase. If the Distributor is not
notified, 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
Trust customers of FirstMerit Bank 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 by the
FirstMerit trust representative. Fund shares may also be purchased by telephone
by certain trust customers 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.Purchase orders by trust customers of
FirstMerit Bank must be received by 3:30 p.m. (Eastern time) in order to receive
Fund shares at that day's public offering price.
THROUGH FIRSTMERIT SECURITIES, INC.
Individual investors and customers of FirstMerit Securities, Inc. may purchase
shares by calling FirstMerit Securities, Inc. at 1-800-627-1289 by 3:00 p.m.
(Eastern time) in order to receive Fund shares at that day's public offering
price. An account application may be opened by completing a new account
application form available from FirstMerit Securities. You may also receive an
application by writing to FirstMerit Securities at: 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 a
transfer from an Automated Clearing House (ACH) member institution, federal
funds, or by sending a check.
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.
By Mail
You may also purchase Fund shares by mailing a check and completed account
application to FirstMerit Securities at P.O. Box 8612, Boston, Massachusetts
02266-8612. Purchases by check are considered received after the payment by
check is converted into federal funds and is received by the Fund. You will
receive Fund shares and dividends on the day the federal funds are received.
Through an Exchange
You may purchase shares through an exchange from Newpoint Government Money
Market Fund. See "Purchases and Redemptions Through Exchanges" below for more
information.
Systematic Investment Program
Shareholders who are individual investors and have opened an account may add to
their investment on regular basis in an minimum amount of $100. Under this
program, funds may be automatically withdrawn periodically from your checking
account or by transfer via ACH and invested in Fund shares. You may apply for
this participation in this program through FirstMerit Securities.
How to Redeem Shares
THROUGH FIRSTMERIT BANK
Trust customers of FirstMerit Bank may redeem Fund shares by telephoning
FirstMerit Bank at 330- 384-7300. You must call by 3:30 p.m. (Eastern time) in
order to receive the redemption amount based on that day's NAV.
THROUGH FIRSTMERIT SECURITIES, INC.
By Phone
Individual investors and customers of FirstMerit Securities may redeem shares by
calling FirstMerit Securities at 1-800-627-1289. You may redeem shares by
telephone once you have completed the appropriate authorization form for
telephone transactions. You must call by 3:00 p.m. (Eastern time) in order to
receive the redemption amount based on that day's NAV.
By Mail
You may redeem shares by sending a written request to FirstMerit Securities.
Call FirstMerit Securities for specific instructions before redeeming by mail.
You will be asked to provide in the request your name, the Fund's name, your
account number, and the share or dollar amount requested. Your redemption
request will be processed on the day your request is received by the Fund in
proper form.
PAYMENT OPTIONS
Your redemption proceeds will typically 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 when the account was opened:
. an electronic transfer to your depository account at an ACH member
institution ; or
. wire payment to your account at a domestic commercial bank that is a Federal
Reserve System member.
SYSTEMATIC WITHDRAWAL/EXCHANGE PROGRAM
You may automatically redeem or exchange shares in a minimum amount of $100 on a
regular basis. To participate in this program, you must complete the appropriate
form available from FirstMerit Securities. 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 to be yield or income.
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:
. to allow your purchase payment to clear;
. during periods of market volatility; or
. when a shareholder's trade activity or amount adversely impacts the Fund's
ability to manage its assets.
SIGNATURE GUARANTEES
Signatures must be guaranteed if:
. your redemption is to be sent to an address other than the address of
record;
. your redemption is to be sent to an address of record that was changed
within the last thirty days; or
. 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.
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.
Purchases and Redemptions Through Exchanges
You may purchase or redeem Fund shares through an exchange with Newpoint
Government Money Market Fund. Trust customers should call FirstMerit Bank and
all other investors should call or write to FirstMerit Securities. 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
3:30 p.m. (Eastern time) in order for shares to be exchanged based on that day's
NAV.
In addition, shares of the Fund may also be exchanged for certain other mutual
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 exchanges
privilege, call FirstMerit Securities, Inc. at 1-800-627-1289. Both accounts
must have a common owner.
To do this, you must:
. meet any minimum initial investment requirements; and
. receive a prospectus for the fund into which you wish to exchange.
An exchange is treated as a redemption and 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.
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 does not issue 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 quarterly 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 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, you 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. Dividends are taxable as ordinary income; capital gains
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 FirstMerit Bank had
approximately $4 billion in assets under administration, of which it had
investment discretion over $2.5 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 2000 Statement
The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999. The Year 2000 problem may cause systems to process information incorrectly
and could disrupt businesses that rely on computers, like the Fund.
While it is impossible to determine in advance all of the risks to the Fund,
the Fund could experience interruptions in basic financial and operational
functions. Fund shareholders could experience errors or disruptions in Fund
share transactions or Fund communications.
The Fund's service providers are making changes to their computer systems to
fix any Year 2000 problems. In addition, they are working to gather information
from third-party providers to determine their Year 2000 readiness.
Year 2000 problems would also increase the risks of the Fund's investments. To
assess the potential effect of the Year 2000 problems, the Adviser is reviewing
information regarding the Year 2000 readiness of issuers of securities the Fund
may purchase.
However, this may be difficult with certain issuers. For example, funds
dealing with foreign service providers or investing in foreign securities, will
have difficulty determining the Year 2000 readiness of those entities. This is
especially true of entities or issuers in emerging markets.
The financial impact of these issues for the Fund is still being determined.
There can be no assurance that potential Year 2000 problems would not have a
material adverse effect on the Fund.
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.
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 2
0.
<TABLE>
<CAPTION>
Year Ended November 30 1998 1997 1996 1995 1994/1/
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 17.69 $ 15.14 $ 12.69 $ 9.78 $ 10.00
Income from Investment Operations:
Net investment income 0.01 0.04 0.07 0.10 0.05
Net realized and unrealized gain (loss) on 2.97 3.19 2.61 2.91 (0.23)
investments
TOTAL FROM INVESTMENT OPERATIONS 2.98 3.23 2.68 3.01 (0.18)
Less Distributions:
Distributions from net investment income (0.01) (0.04) (0.07) (0.10) (0.04)
Distributions from net realized gain on (0.95) (0.64) (0.16)
investments
TOTAL DISTRIBUTIONS (0.96) (0.68) (0.23) (0.10) (0.04)
Net Asset Value, End of Period $ 19.71 $ 17.69 $ 15.14 $ 12.69 $ 9.78
Total Return2 18.09% 22.34% 21.38% 30.97% (1.76 %)
Ratios to Average Net Assets:
Expenses 1.03% 1.11% 1.13% 1.48% 1.00 %3
Net investment income 0.08% 0.24% 0.51% 0.88% 2.36 %3
Expense waiver/reimbursement4 0.15% 0.15% 0.37% 0.52% 1.72 %3
Supplemental Data:
Net assets, end of period (000 omitted) $58,321 $48,889 $42,858 $25,803 $11,614
Portfolio turnover 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 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
Portfolio of Investments
NOVEMBER 30, 1998
<TABLE>
<CAPTION>
Shares Value
COMMON STOCKS_95.5%
Basic Industry_2.7%
<C> <S> <C>
35,000 Monsanto Co. $ 1,585,937
Capital Goods_4.1%
26,200 General Electric Co. 2,371,100
Capital Goods Technology_28.0%
13,504 Boeing Co. 548,600
36,600 1Cisco Systems, Inc. 2,758,725
20,000 Compaq Computer Corp. 650,000
22,500 Computer Associates International, Inc. 995,625
10,000 1Dell Computer Corp. 608,125
15,000 Diebold, Inc. 515,625
17,000 Intel Corp. 1,829,625
24,000 Lucent Technologies, Inc. 2,065,500
21,000 1Microsoft Corp. 2,562,000
18,400 Raytheon Co., Class B 1,018,900
30,000 1Sun Microsystems, Inc. 2,221,875
20,000 Telefonaktiebolaget LM Ericsson, Class B, ADR 552,500
TOTAL 16,327,100
Consumer Cyclical_7.3%
26,000 Home Depot, Inc. 1,293,500
10,000 Limited, Inc. 289,375
15,000 Nike, Inc., Class B 600,000
10,000 Sherwin-Williams Co. 283,750
24,000 Wal-Mart Stores, Inc. 1,807,500
TOTAL 4,274,125
Consumer Services_1.8%
12,000 Disney (Walt) Co. 386,250
10,000 McDonald's Corp. 700,625
TOTAL 1,086,875
Consumer Staples_7.4%
16,000 Gillette Co. 735,000
20,000 PepsiCo, Inc. 773,750
20,000 Procter & Gamble Co. $ 1,752,500
20,000 1Safeway, Inc. 1,056,250
TOTAL 4,317,500
Drugs & Healthcare_20.6%
10,000 1Amgen, Inc. 752,500
26,000 1Boston Scientific Corp. 1,287,000
10,000 1Forest Labratories, Inc., Class A 466,250
10,000 Lilly (Eli) & Co. 896,875
22,000 Medtronic, Inc. 1,489,125
20,000 Pfizer, Inc. 2,232,500
31,500 1Thermo Cardiosystems, Inc. 366,188
60,000 Warner-Lambert Co. 4,530,000
TOTAL 12,020,438
Energy_5.3%
16,800 Exxon Corp. 1,261,050
15,000 Halliburton Co. 440,625
15,000 Royal Dutch Petroleum Co., ADR 705,000
15,000 Schlumberger Ltd. 670,313
TOTAL 3,076,988
Finance - Insurance, Banking & Other_14.5%
20,000 Allstate Corp. 815,000
16,875 American International Group, Inc. 1,586,250
14,000 BankAmerica Corp. 912,625
10,000 Chase Manhattan Corp. 634,375
16,000 Citigroup, Inc. 803,000
38,331 Healthcare Realty Trust, Inc. 881,613
20,000 National Golf Properties, Inc. 577,500
15,000 Progressive Corp., OH 2,225,625
TOTAL 8,435,988
Transportation_1.8%
16,000 1 FDX Corp. 1,038,000
Utilities_2.0%
20,000 1 MCI Worldcom, Inc. 1,180,000
TOTAL COMMON STOCKS (IDENTIFIED COST $32,974,518) 55,714,051
MUTUAL FUND SHARES_4.5%
1,667,382 SSGA U.S. Government Money Market Fund, Series A $ 1,667,382
940,280 Seven Seas Money Market Fund 940,280
TOTAL MUTUAL FUND SHARES (AT AMORTIZED COST) 2,607,662
TOTAL INVESTMENTS (IDENTIFIED COST $35,582,180)2 $ 58,321,713
</TABLE>
1 Non-income producing security.
2 The cost of investments for federal tax purposes amounts to $35,582,180. The
net unrealized appreciation of investments on a federal tax basis amounts to
$22,739,53 which is comprised of $23,912,073 appreciation and $1,172,540
depreciation at November 30, 1998.
Note: The categories of investments are shown as a percentage of net assets
($58,320,657) at November 30, 1998.
The following acronym is used throughout this portfolio:
ADR American Depositary Receipt
See Notes which are an integral part of the Financial Statement
Statement of Assets and Liabilities
NOVEMBER 30, 1998
<TABLE>
<S> <C>
Assets:
Total investments in securities, at value (identified and tax cost $35,582,180) $ 58,321,713
Income receivable 49,453
Receivable for shares sold 360
Deferred organizational costs 7,612
TOTAL ASSETS 58,379,138
Liabilities:
Income distribution payable $ 8,595
Payable to Bank 68
Accrued expenses 49,818
TOTAL LIABILITIES 58,481
Net Assets for 2,959,607 shares outstanding 58,320,657
Net Assets Consist of:
Paid in capital $ 33,652,645
Net unrealized appreciation of investments 22,739,533
Accumulated net realized gain on investments 1,916,100
Undistributed net investment income 12,379
TOTAL NET ASSETS $ 58,320,657
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Net Asset Value Per Share ($58,320,657 / 2,959,607 shares outstanding) $19.71
Offering Price Per Share (100/95.50 of $19.71)1 $20.64
</TABLE>
1 See "What Do Shares Cost?" in the Prospectus.
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED NOVEMBER 30, 1998
<TABLE>
<S> <C> <C>
Investment Income:
Dividends (net of foreign taxes withheld) $ 482,813
Interest 113,849
Total income 596,662
Expenses:
Investment advisory fee $ 401,923
Administrative personnel and services fee 100,000
Custodian fees 4,148
Transfer and dividend disbursing agent fees and expenses 32,397
Directors'/Trustees' fees 7,488
Auditing fees 12,952
Legal fees 2,002
Portfolio accounting fees 41,267
Share registration costs 13,707
Printing and postage 9,158
Insurance premiums 2,732
Miscellaneous 5,706
TOTAL EXPENSES 633,480
Waiver:
Waiver of investment advisory fee (80,385)
Net expenses 553,095
Net investment income 43,567
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments 1,916,090
Net change in unrealized appreciation of investments 6,992,741
Net realized and unrealized gain on investments 8,908,831
Change in net assets resulting from operations $ 8,952,398
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended November 30 1998 1997
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income $ 43,567 $ 108,704
Net realized gain (loss) on investments ($1,916,090 and $2,622,915, respectively, as 1,916,090 2,622,915
computed for federal tax purposes)
Net change in unrealized appreciation 6,992,741 6,465,113
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 8,952,398 9,196,732
Distributions to Shareholders:
Distributions from net investment income (40,878) (104,440)
Distributions from net realized gains (2,622,798) (1,800,823)
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS (2,663,676) (1,905,263)
Share Transactions:
Proceeds from sale of shares 3,758,666 4,917,490
Net asset value of shares issued to shareholders in payment of distributions declared 2,625,273 1,806,165
Cost of shares redeemed (3,241,375) (7,983,572)
Change in net assets resulting from share transactions 3,142,564 (1,259,917)
Change in net assets 9,431,286 6,031,552
Net Assets:
Beginning of period 48,889,371 42,857,819
End of period (including undistributed net investment income of $12,379 and $9,690, $ 58,320,657 $ 48,889,371
respectively)
</TABLE>
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
NOVEMBER 30, 1998
ORGANIZATION
Newpoint Funds (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "Act") as an open-end, management investment company. The
Trust consists of two portfolios. The financial statements included herein are
only those of Newpoint Equity Fund (the "Fund"), a diversified portfolio. The
financial statements of the other portfolio is 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.
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.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
Year Ended November 30 1998 1997
<S> <C> <C>
Shares sold 209,947 315,103
Shares issued to shareholders in payment of distributions declared 163,745 125,636
Shares redeemed (177,349) (509,143)
NET CHANGE RESULTING FROM SHARE TRANSACTIONS 196,343 (68,404)
</TABLE>
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 these expenses. These expenses have been deferred and are
being amortized over the five-year period following the Fund's effective date.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1998, were as follows:
<TABLE>
<S> <C>
Purchases $15,173,159
Sales $16,258,300
</TABLE>
YEAR 2000 (UNAUDITED)
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.
Report of Independent Public Accountants
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF NEWPOINT FUNDS.
(NEWPOINT GOVERNMENT MONEY MARKET FUND AND NEWPOINT EQUITY FUND):
We have audited the accompanying statement of assets and liabilities of Newpoint
Equity Fund, (an investment portfolio of Newpoint Funds, a Massachusetts
business trust), including the schedule of portfolio investments, as of November
30, 1998, the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the periods then
ended, and the financial highlights for the periods presented. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. Our procedures included confirmation of securities owned as of
November 30, 1998, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statement and financial highlights referred to
above present fairly, in all material respects, the financial position of
Newpoint Equity Fund, an investment portfolio of Newpoint Funds, as of November
30, 1998, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and its
financial highlights for the periods presented, in conformity with generally
accepted accounting principles.
Boston, Massachusetts
January 15, 1999
[Newpoint Logo]
Newpoint Equity Fund
A Portfolio of Newpoint Funds
JANUARY 31, 1999
A Statement of Additional Information (SAI) dated January 31,1999 is
incorporated by reference into this prospectus. Additional information about the
Fund's investments is available in the Fund's annual and semi-annual report to
shareholders. The annual report discusses market conditions and investment
strategies that significantly affected the Fund's performance during its last
fiscal year. To obtain the SAI, annual and semi- annual report, and other
information without charge call FirstMerit Securities, Inc. or the Fund at 1-
800-627-1289.
You can obtain information about the Fund (including the SAI) by visiting or
writing the Public Reference Room of the Securities and Exchange Commission in
Washington, DC 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.
Newpoint Equity Fund
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
www.federatedinvestors.com
- --------------------------
Federated Securities., Distributor
Investment Company Act File No. 811-6224
Cusip 651722209
G00580-0X (1/99)
[Recycled Logo]
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 four 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 four calendar years of
the Fund beginning with the earliest year. The light gray shaded chart features
four 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 1998, are 31.76%, 16.66%, 25.10%, and 27.86%, 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 December 31, 1998, after the sales charge, was 22.10%.
Within the period shown in the Chart, the Fund's highest quarterly return
was 22.68% (quarter ended December 31, 1998). Its lowest quarterly return was
- -10.46%% (quarter ended September 30, 1998).
Average Annual Total Return for the Fund Compared to the S&P 500 for the
calendar period ending December 31, 1998.
CALENDAR PERIOD FUND S&P 500
1 Year 22.10% 28.58%
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. 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 seven 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 seven calendar years of
the Fund beginning with the earliest year. The light gray shaded chart features
seven 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 1998, are 3.10%, 2.45%, 3.46%, 5.28%, 4.79%, 4.96%, and 4.87%,
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 December 31, 1998, was 4.87%.
Within the period shown in the Chart, the Fund's highest quarterly return
was 1.33% (quarter ended June 30, 1995). Its lowest quarterly return was 0.60%
(quarter ended December 21, 1993).
The Fund's 7-DAY NET YIELD as of 12/31/98 was 4.41%.
The following table represents the Fund's Average Annual Totl Return
through 12/31/98
CALENDAR PERIOD FUND
1 Year 4.87%
5 Years 4.67%
Start of Performance* 4.28%
*The Fund's start of performance date was March 11, 1991.
Investors may call the Fund to acquire the current 7-Day Net Yield by
calling 1-800-627-1289.
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.
Newpoint Equity
Management Discussion and Analysis
The stock market ultimately had a very strong year in 1998 despite market
volatility in the third quarter, up 28.59% as measured by the Standard & Poor's
500 Index. This is the fourth year in a row that it has been stronger than
expected. In fact, as noted last year the stock market usually declines after
two years in a row of 20% gains and the chances of a fourth year of oversized
gains was very small. 1998 beat the odds. As we close 1998, we continue to feel
optimistic about the stock market prospects for 1999, but realistically only
expect a normal return of 8 to 9%.
We continue to feel that the three driving forces of our bull market:
globalization of business, the revolution on information technology, and
favorable demographics are still intact and robust. These dominant themes lead
us to overweight technology, drug and healthcare, and financial services. During
1998 we reduced our weighting in capital goods and oil and oil service while
increasing our weight in retail.
We feel the Fund's present focus on the above noted themes should provide the
best chances of capital appreciation in what should be a challenging year for
stocks.
Newpoint Equity Fund
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
www.federatedinvestors.com
Federated Securities Corp., Distributor [NEWPOINT LOGO]
Newpoint Equity Fund
Growth of $10,000 Invested in Newpoint Equity Fund
The graph below illustrates the hypothetical investment of $10,000 in the
Newpoint Equity Fund (the "Fund") from September 13, 1994 (start of performance)
to November 30, 1998 compared to the Standard & Poor's 500 Index ("S&P 500")+
and the Lipper Growth & Income Fund Average ("LGIFA")++.
[GRAPH APPEARS HERE]
Past performance is not predictive of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
This report must be preceded or accompanied by the Fund's prospectus dated
January 31, 1999, and, together with financial statements contained therein,
constitutes the Fund's annual report.
* Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge
=$9,550). The Fund's performance assumes the reinvestment of all dividends
and distributions. The S&P and the LGIFA have been adjusted to reflect
reinvestment of dividends on securities in the index and average.
** Total return quoted reflects all applicable sales charges.
+ The S&P 500 is not adjusted to reflect sales loads, expenses, or other fees
that the SEC requires to be reflected in the Fund's performance. The index is
unmanaged.
++ The Lipper Growth & Income Fund Average is a compilation of a specified
category of mutual fund total returns reported to Lipper Analytical Services,
Inc. Each Fund is reported net of expenses or other fees that the SEC
requires to be reflected in a fund's performance.
[RECYCLED PAPER LOGO]
The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. Newpoint
Equity Fund., based on a 4.50% sales load is represented by a solid line. The
Standard & Poor's 500 Index (the "S&P 500") is represented by a dotted line and
the Lipper Growth and Income Funds Average (the "LGIFA") is represented by a
broken line. The line graph is a visual representation of a comparison of change
in value of a $10,000 hypothetical investment in Newpoint Equity Fund, the S&P
500 and the LGIFA. The "x" axis reflects computation periods from 9/13/94 to
11/30/98. The "y" axis reflects the cost of the investment. The right margin
reflects the ending value of the hypothetical investment in the Newpoint Equity
Fund, based on a 4.50% sales load, as compared to the S&P 500 and the LGIFA. The
ending values were $$21,547, $26,754, and $21,548, respectively. The legend in
the bottom quadrant of the graphic presentation indicates the Fund's Average
Annual Total Returns for the one-year period ended 11/30/98 and the Fund's start
of performance (9/13/94) to 11/30/98. The total returns were 12.80% and 19.97%,
respectively.
STATEMENT OF ADDITIONAL INFORMATION JANUARY 31, 1999
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
January 31, 1999. Obtain the prospectus without charge by calling
1-800-627-1289.
CONTENTS
How is the Fund Organized? 1
Securities in Which the Fund Invests 1
What do Shares Cost? 11
How is the Fund Sold? 12
How To Buy Shares 12
Massachusetts Partnership Law 13
Account and Share Information 13
Tax Information 13
Who Manages and Provides Services to the Fund? 15
How Does the Fund Measure Performance? 19
Addresses
Federated Securities Corp., Distributor,
subsidiary of Federated Investors
CUSIP 651722209
G00580-02 (1/99)
<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 and investment
techniques are a:
o P = PRINCIPAL investment of the Fund; (shaded in chart)
o 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 TRANSACTIONS A
- --------------------------------------- ----------
- --------------------------------------- ----------
ILLIQUID AND RESTRICTED SECURITIES A
- ---------------------------------------
- --------------------------------------- ----------
LENDING OF PORTFOLIO SECURITIES A
- ---------------------------------------
- --------------------------------------- ----------
PREFERRED STOCKS P
- --------------------------------------- ----------
- ---------------------------------------
PRIME COMMERCIAL PAPER A
- --------------------------------------- ----------
- --------------------------------------- ----------
REPURCHASE AGREEMENTS A
- --------------------------------------- ----------
- --------------------------------------- ----------
REVERSE REPURCHASE AGREEMENTS A
- --------------------------------------- ----------
- --------------------------------------- ----------
SECURITIES OF OTHER INVESTMENT A
COMPANIES
- --------------------------------------- ----------
- --------------------------------------- ----------
U.S. GOVERNMENT SECURITIES A
- --------------------------------------- ----------
- --------------------------------------- ----------
WARRANTS A
- --------------------------------------- ----------
- --------------------------------------- ----------
WHEN-ISSUED AND DELAYED DELIVERY A
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 may invest.
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, but is not required to, 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, but is not required to, 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. If 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 could lose money on the futures contract or option.
If 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 unless authorized by the
"vote of a majority of its outstanding voting securities," as defined by the
Investment Company Act. The following limitations, however, may be changed by
the Board 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 sales charge. The Fund's custodian will hold shares
in escrow equal to the maximum applicable sales charge. If you complete the
Letter of Intent, the custodian will release the shares in escrow. If you do not
fulfill the Letter of Intent, the custodian will redeem the appropriate amount
from the shares held in escrow to pay the sales charges that were not applicable
to your purchases. REINVESTMENT PRIVILEGE. You may reinvest, within 60 days,
your share redemption proceeds at the next determined NAV, without any sales
charge.
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 90% (and as much as 100%) of this charge to
investment professional for sales and/or administrative services. Any payments
to investment professional in excess of 90% 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
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 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 about to the services provided, the
fees charged for those services, and any restrictions and limitations imposed.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations, the Trust is required by the Declaration of Trust to use
its property to protect or compensate the shareholder. On request, the Trust
will defend any claim made and pay any judgment against a shareholder for any
act or obligation of the Trust. Therefore, financial loss resulting from
liability as a shareholder will occur only if the Trust itself cannot meet its
obligations to indemnify shareholders and pay judgments against them.
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 Board or by shareholders at a special
meeting. A special meeting of shareholders will be called by the Board 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 January 4, 1999, the following shareholder owned of record,
beneficially, or both, 5% or more of outstanding shares: SEI Trust Company,
Oaks, Pennsylvania, owned approximately 2, 928,261.72 (96.69%) 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.
As of January 4, 1999, the Fund's Board and Officers as a group owned less
than 1% of the Fund's outstanding shares.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund intends to meet requirements of Subchapter M of the Internal
Revenue Code applicable to regulated investment companies. If these requirements
are not met, it will not receive special tax treatment and will pay federal
income tax.
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.
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.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------ AGGREGATE
NAME COMPENSATION
BIRTHDATE PRINCIPAL OCCUPATIONS FROM [TRUST/
ADDRESS FOR PAST 5 YEARS CORPORATION]
POSITION WITH TRUST
<S> <C> <C>
JOHN F. DONAHUE*+ Chief Executive Officer and Director or Trustee of the $0
Birthdate: July 28, 1924 Federated Fund Complex; Chairman and Director,
Federated Investors Tower Federated Investors, Inc.; Chairman and Trustee,
1001 Liberty Avenue Federated Advisers, Federated Management, and
Pittsburgh, PA Federated Research; Chairman and Director, Federated
CHAIRMAN AND TRUSTEE Research Corp., and Federated Global Research Corp.;
Chairman, Passport Research, Ltd.
- -------------------------------
$546.29
THOMAS G. BIGLEY Director or Trustee of the Federated Fund Complex;
Birthdate: February 3, 1934 Director, Member of Executive Committee, Children's
15 Old Timber Trail Hospital of Pittsburgh; formerly: Senior Partner,
Pittsburgh, PA Ernst & Young LLP; Director, MED 3000 Group, Inc.;
TRUSTEE Director, Member of Executive Committee, University of
Pittsburgh.
- -------------------------------
JOHN T. CONROY, JR. Director or Trustee of the Federated Fund Complex; $601.04
Birthdate: June 23, 1937 President, Investment Properties Corporation; Senior
Wood/IPC Commercial Dept. Vice President, John R. Wood and Associates, Inc.,
John R. Wood Associates, Inc. Realtors; Partner or Trustee in private real estate
Realtors ventures in Southwest Florida; formerly: President,
3255 Tamiami Trial North Naples Property Management, Inc. and Northgate Village
Naples, FL Development Corporation.
TRUSTEE
- -------------------------------
- -------------------------------
WILLIAM J. COPELAND Director or Trustee of the Federated Fund Complex; $601.04
Birthdate: July 4, 1918 Director and Member of the Executive Committee,
One PNC Plaza-23rd Floor Michael Baker, Inc.; formerly: Vice Chairman and
Pittsburgh, PA Director, PNC Bank, N.A., and PNC Bank Corp.;
TRUSTEE Director, Ryan Homes, Inc. Retired: Director, United
Refinery; Director, Forbes Fund; Chairman, Pittsburgh
Foundation; Chairman, Pittsburgh Civic Light Opera.
- -------------------------------
JAMES E. DOWD, ESQ. Director or Trustee of the Federated Fund Complex; $601.04
Birthdate: May 18, 1922 Attorney-at-law; Director, The Emerging Germany Fund,
571 Hayward Mill Road Inc. Retired: President, Boston Stock Exchange, Inc.;
Concord, MA Regional Administrator, United States Securities and
TRUSTEE Exchange Commission.
- -------------------------------
LAWRENCE D. ELLIS, M.D.* Director or Trustee of the Federated Fund Complex; $546.29
Birthdate: October 11, 1932 Professor of Medicine, University of Pittsburgh;
3471 Fifth Avenue Medical Director, University of Pittsburgh Medical
Suite 1111 Center - Downtown; Hematologist, Oncologist, and
Pittsburgh, PA Internist, Presbyterian and Montefiore Hospitals;
TRUSTEE Member, National Board of Trustees, Leukemia Society
of America.
- -------------------------------
EDWARD L. FLAHERTY, JR., ESQ. Director or Trustee of the Federated Fund Complex; $601.04
# Attorney, of Counsel, Miller, Ament, Henny & Kochuba;
Birthdate: June 18, 1924 Director, Eat'N Park Restaurants, Inc.; formerly:
Miller, Ament, Henny & Kochuba Counsel, Horizon Financial, F.A., Western Region;
205 Ross Street Partner, Meyer and Flaherty.
Pittsburgh, PA
TRUSTEE
- -------------------------------
PETER E. MADDEN Director or Trustee of the Federated Fund Complex; $546.29
Birthdate: March 16, 1942 formerly: Representative, Commonwealth of
One Royal Palm Way Massachusetts General Court; President, State Street
100 Royal Palm Way Bank and Trust Company and State Street Corporation.
Palm Beach, FL
TRUSTEE Retired: Director, VISA USA and VISA International;
Chairman and Director, Massachusetts Bankers
Association; Director, Depository Trust Corporation.
- -------------------------------
$546.29
JOHN E. MURRAY, JR., J.D., Director or Trustee of the Federated Fund Complex;
S.J.D. President, Law Professor, Duquesne University;
Birthdate: December 20, 1932 Consulting Partner, Mollica & Murray.
President, Duquesne University
Pittsburgh, PA Retired: Dean and Professor of Law, University of
TRUSTEE Pittsburgh School of Law; Dean and Professor of Law,
Villanova University School of Law.
- -------------------------------
WESLEY W. POSVAR Director or Trustee of the Federated Fund Complex; $546.29
Birthdate: September 14, 1925 President, World Society of Ekistics, Athens;
1202 Cathedral of Learning Professor, International Politics; Management
University of Pittsburgh Consultant; Trustee, Carnegie Endowment for
Pittsburgh, PA International Peace, RAND Corporation, Online Computer
TRUSTEE 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.
Retired: Professor, United States Military Academy;
Professor, United States Air Force Academy.
- -------------------------------
MARJORIE P. SMUTS Director or Trustee of the Federated Fund Complex; $546.29
Birthdate: June 21, 1935 Public Relations/Marketing/Conference Planning.
4905 Bayard Street Retired: National Spokesperson, Aluminum Company of
Pittsburgh, PA America; business owner.
TRUSTEE
- -------------------------------
- -------------------------------
J. CHRISTOPHER DONAHUE+* President or Executive Vice President of the Federated $0
Birthdate: April 11, 1949 Fund Complex; Director or Trustee of some of the Funds
Federated Investors Tower in the Federated Fund Complex; President and Director,
1001 Liberty Avenue Federated Investors, Inc.; President and Trustee,
Pittsburgh, PA Federated Advisers, Federated Management, and
EXECUTIVE VICE PRESIDENT AND Federated Research; President and Director, Federated
TRUSTEE Research Corp. and Federated Global Research Corp.;
President, Passport Research, Ltd.; Trustee, Federated
Shareholder Services Company; Director, Federated
Services Company.
- -------------------------------
<PAGE>
EDWARD C. GONZALES* Trustee or Director of some of the Funds in the $0
Birthdate: October 22, 1930 Federated Fund Complex; President, Executive Vice
Federated Investors Tower President and Treasurer of some of the Funds in the
1001 Liberty Avenue Federated Fund Complex; Vice Chairman, Federated
Pittsburgh, PA Investors, Inc.; Vice President, Federated Advisers,
PRESIDENT, TREASURER AND Federated Management, Federated Research, Federated
TRUSTEE Research Corp., Federated Global Research Corp. and
Passport Research, Ltd.; Executive Vice President and
Director, Federated Securities Corp.; Trustee,
Federated Shareholder Services Company.
- -------------------------------
JOHN W. MCGONIGLE Executive Vice President and Secretary of the $0
Birthdate: October 26, 1938 Federated Fund Complex; Executive Vice President,
Federated Investors Tower Secretary, and Director, Federated Investors, Inc.;
1001 Liberty Avenue Trustee, Federated Advisers, Federated Management, and
Pittsburgh, PA Federated Research; Director, Federated Research Corp.
EXECUTIVE VICE PRESIDENT and Federated Global Research Corp.; Director,
Federated Services Company; Director, Federated
Securities Corp.
- -------------------------------
- -------------------------------
RICHARD B. FISHER* President or Vice President of some of the Funds in $0
Birthdate: May 17, 1923 the Federated Fund Complex; Director or Trustee of
Federated Investors Tower some of the Funds in the Federated Fund Complex;
1001 Liberty Avenue Executive Vice President, Federated Investors, Inc.;
Pittsburgh, PA Chairman and Director, Federated Securities Corp.
TRUSTEE
- -------------------------------
C. CHRISTINE THOMSON Vice President and Assistant Treasurer of some of the $0
Birthdate: September 1, 1957 Federated funds.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA
VICE PRESIDENT AND ASSISTANT
TREASURER
</TABLE>
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, 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 ADMINISTRATIVE AVERAGE AGGREGATE DAILY NET ASSETS OF THE FEDERATED
FEE --------FUNDS
0.150 of 1% on the first $250 million
- -------------------------
0.125 of 1% on the next $250 million
- -------------------------
0.100 of 1% on the next $250 million
- -------------------------
0.075 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 is the independent public accountant for the Fund.
<TABLE>
<CAPTION>
FEES PAID BY THE FUND FOR SERVICES
<S> <C> <C> <C>
- ------------------------------- 11/30/98 11/30/97 11/30/96
FOR THE YEARS ENDED:
Advisory Fee Earned $401,923 $345,408 $237,775
- --------------------------------
Advisory Fee Reduction $80,385 $60,082 $117,537
- --------------------------------
Brokerage Commissions $29,032 $44,778 $58,348
- --------------------------------
Administrative Fee $100,000 $100,000 $100,045
- --------------------------------
12b-1 Fee N/A N/A N/A
- --------------------------------
Shareholder Services Fee N/A
N/A N/A
</TABLE>
- --------------------------------
HOW DOES THE FUND MEASURE PERFORMANCE?
The Fund may advertise performance by using the 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 performance reflects the effect of
non-recurring charges, such as maximum sales charges, which, if excluded, would
increase the total return and yield. The Funds' performance 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.
Fund performance fluctuates on a daily basis largely because net earnings
fluctuate daily. Both net earnings and offering price per Share are factors in
the computation of yield and total return.
AVERAGE ANNUAL TOTAL RETURNS AND YIELD
Total returns given for the one-year and since inception periods ended
November 30, 1998.
Yield given for the 30-day period ended November 30, 1998.
30 -DAY PERIOD 1 YEAR SINCE INCEPTION ON
SEPTEMBER 13, 1994
Total Return 0.83% 12.80% 19.97%
Yield 0.07% N/A N/A
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.
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.
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
Administrator
FEDERATED ADMINISTRATIVE SERVICES Federated Investors Tower
1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779
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
Newpoint Government
Money Market Fund
A Portfolio of Newpoint Funds
Mutual 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.
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
Fund Goals, Strategies, and Risks 1
What are the Specific Risks of Investing in the Fund? 1
Risk/Return Summary 2
What are the Fund's Fees and Expenses? 3
What do Shares Cost? 4
How is the Fund Sold? 4
How to Purchase Shares 4
How to Redeem Shares 5
Purchases and Redemptions Through Exchanges 6
Account and Share Information 7
Who Manages the Fund? 8
Year 2000 Statement 8
Financial Information 9
Report of Independent Public Accountants 17
</TABLE>
JANUARY 31, 1999
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.
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 yield 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 full 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.
Prices of fixed income securities rise and fall in response to interest rate
changes. Generally, when interest rates rise, prices of fixed-income securities
fall. Interest rate changes have a greater effect on the price of fixed income
securities with longer maturities. Money market funds try to minimize these
risks by purchasing short-term securities. However, these risks may adversely
affect the Fund's total return or yield.
Risk/Return Summary
Risk/Return Bar Chart and Table
[GRAPH APPEARS HERE]
Historically, the Fund has maintained a constant $1.00 net asset value per
share. The bar chart shows the variability of the Fund's total returns on a
yearly basis.
The Fund's shares are not sold subject to a sales charge (load).
Within the period shown in the Chart, the Fund's highest quarterly return was
1.33% (quarter ended 6/30/95). Its lowest quarterly return was 0.60% (quarter
ended 12/31/93).
The Fund's Seven-Day Net Yield as of 12/31/98 was 4.41%.
Average Annual Total Return through 12/31/98.
<TABLE>
<CAPTION>
Calendar Period Fund
<S> <C>
1 Year 4.87%
5 Year 4.67%
Start of Performance1 4.28%
</TABLE>
1 The Fund's performance date was March 11, 1991.
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.
What are the Fund's Fees and Expenses?
NEWPOINT GOVERNMENT MONEY MARKET FUND
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
<TABLE>
<CAPTION>
Shareholder Fees
<S> <C>
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
<CAPTION>
Annual Fund Operating Expenses (Before Waivers)/1/
<S> <C>
Expenses That are Deducted From Fund Assets (as a percentage of average net assets)
Management Fee2 0.50%
Distribution (12b-1) Fee None
Shareholder Services Fee None
Other Expenses 0.30%
Total Annual Fund Operating Expenses 0.80%
</TABLE>
1 Although not contractually obligated to do so, the adviser waived certain
amounts. These are shown below along with the net expenses the Fund actually
paid for the fiscal year ended November 30, 1998.
<TABLE>
<S> <C>
Waiver of Fund Expenses 0.20%
Total Actual Annual Fund Operating Expenses (after waivers) 0.60%
</TABLE>
2 The adviser voluntary 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 fiscal year ended
November 30, 1998.
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's operating expenses are before waivers as shown
in the table and remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C>
$82 $255 $444 $990
</TABLE>
What do Shares Cost?
You can purchase, redeem, or exchange shares any day the New York Stock Exchange
(NYSE) and Federal Reserve wire system are 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 4:00 p.m. Eastern time) each day the NYSE and Federal Reserve
wire system are 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. 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
Trust customers of FirstMerit Bank 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 by a FirstMerit
trust representative.
Fund shares may also be purchased by telephone by certain trust customers
through procedures established with FirstMerit 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.
Purchase orders by trust customers must be received by 9:30 a.m. (Eastern
time) and payment received by 3:00 p.m. (Eastern time) on the same day in order
to receive Fund shares and dividends on that day.
THROUGH FIRSTMERIT SECURITIES, INC.
Individual investors and customers of FirstMerit Securities may purchase shares
by calling FirstMerit Securities, Inc. at 1-800-627-1289. An account application
may be opened by completing a new account application form available from
FirstMerit Securities. You may also receive an application by writing to
FirstMerit Securities at: 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 wire, a transfer from an Automated
Clearing House (ACH) member institution, federal funds, or by sending a check.
By Wire
Purchase orders by wire must be received by 9:30 a.m. (Eastern time) and payment
received by 3:00 p.m. (Eastern time) on the same day in order to receive Fund
shares and dividends on that day.
By Automated Clearing House (ACH)
Purchase orders for which payment will be made via ACH must be received by 3:00
p.m. (Eastern time) in order to receive Fund shares and dividends on the next
business day. This purchase option can be established by completing the
appropriate sections of the account application.
By Mail
You may also purchase Fund shares by mailing a check and a completed account
application to FirstMerit Securities at P.O. Box 8612, Boston, Massachusetts
02266-8612. Purchases by check are considered received after the payment by
check is converted into federal funds and is received by the Fund. You will
receive Fund shares and dividends on the day the federal funds are received.
Through an Exchange
You may purchase shares through an exchange from the Newpoint Equity Fund. See
"Exchange Privileges" below for more information.
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 via ACH and invested in Fund shares. You may apply for
this participation in this program through FirstMerit Securities.
How to Redeem Shares
THROUGH FIRSTMERIT BANK
Trust customers of FirstMerit Bank may redeem Fund shares by telephoning
FirstMerit Bank at 330-384-7300. If your redemption order is received by 9:30
a.m. (Eastern time) redemption proceeds will be sent to you on the same day. You
will not, however, receive dividends for that day.
THROUGH FIRSTMERIT SECURITIES, INC.
By Phone
Individual investors and customers of FirstMerit Securities may redeem shares by
calling FirstMerit Securities at 1-800-627-1289. You may redeem shares by
telephone 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 the redemption amount based on that
day's NAV.
By Mail
You may redeem shares by sending a written request to FirstMerit Securities.
Call FirstMerit Securities for specific instructions before redeeming by mail.
You will be asked to provide in the request your name, the Fund's name, your
account number, and the share or dollar amount requested. Your redemption
request will be processed on the day your request is received by the Fund in
proper form. Dividends are paid up to and including the day such request is
processed.
CHECKWRITING PRIVILEGES
At your request, the transfer agent will establish a checking account for
redeeming shares. For further information, contact FirstMerit Securities.
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 NAV 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 directly
to the transfer agent or State Street Bank and Trust Company to redeem shares.
Canceled checks are sent to you each month upon request.
PAYMENT OPTIONS
Your redemption proceeds will typically 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:
. an electronic transfer to your depositary account at an ACH member
institution; or
. wire payment to your account at a domestic commercial bank that is a
Federal Reserve System member.
SYSTEMATIC WITHDRAWAL/
EXCHANGE PROGRAM
You may automatically redeem or exchange shares in a minimum amount of $100 on a
regular basis. To participate in this program, you must complete the appropriate
form available from FirstMerit Securities. 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 to be yield or income.
LIMITATIONS OF 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:
. to allow your purchase payment to clear;
. during periods of market volatility; or
. when a shareholder's trade activity or amount adversely impacts the Fund's
ability to manage its assets.
SIGNATURE GUARANTEES
Signatures must be guaranteed if:
. your redemption is to be sent to an address other than the address of
record;
. your redemption is to be sent to an address of record that was changed
within the last thirty days; or
. 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.
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.
Purchases and Redemptions Through Exchanges
You may purchase or redeem Fund shares through an exchange with New point Equity
Fund. Trust customers should call FirstMerit Bank and all investors should call
or write to FirstMerit Securities. 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 3:30 p.m. (Eastern time) in order for
shares to be exchanged at that day's NAV.
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 of 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:
. meet any minimum initial investment requirements; and
. 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.
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 does not issue 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 begin to
earn dividends the following 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. Fund distributions are
expected to be primarily dividends.
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, you 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.
Dividends are taxable as ordinary income, capital gains 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 FirstMerit Bank
had approximately $4 billion in assets under administration, of which it had
investment discretion over $2.5 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 2000 Statement
The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999. The Year 2000 problem may cause systems to process information incorrectly
and could disrupt businesses that rely on computers, like the Fund.
While it is impossible to determine in advance all of the risks to the Fund,
the Fund could experience interruptions in basic financial and operational
functions. Fund shareholders could experience errors or disruptions in Fund
share transactions or Fund communications.
The Fund's service providers are making changes to their computer systems to
fix any Year 2000 problems. In addition, they are working to gather information
from third-party providers to determine their Year 2000 readiness.
Year 2000 problems would also increase the risks of the Fund's investments. To
assess the potential effect of the Year 2000 problem, the Adviser is reviewing
information regarding the Year 2000 readiness of issuers of securities the Fund
may purchase.
The financial impact of these issues for the Fund is still being determined.
There can be no assurance that potential Year 2000 problems would not have a
material adverse effect on the Fund.
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.
This information has been audited by Arthur Andersen LLP, whose report, along
with the Fund's audited financial statements, is included in this prospectus.
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Auditors on page 17.
<TABLE>
<CAPTION>
Year Ended November 30 1998 1997 1996 1995 1994/1/
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income 0.05 0.05 0.05 0.05 0.03
Less Distributions:
Distributions from net investment income (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
Total Return/2/ 4.92% 4.93% 4.83% 5.24% 3.25%
Ratios to Average Net Assets:
Expenses 0.60% 0.60% 0.63% 0.74% 0.77%
Net investment income 4.82% 4.84% 4.73% 5.12% 3.24%
Expense waiver/reimbursement/3/ 0.20% 0.20% 0.20% 0.20% 0.20%
Supplemental Data:
Net assets, end of period (000 omitted) $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 This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
Portfolio of Investments
NOVEMBER 30, 1998
<TABLE>
<CAPTION>
Principal Value
Amount
<S> <C> <C>
U.S. GOVERNMENT AGENCIES--111.6%
Federal Farm Credit Bank Discount Notes--22.1%
$ 30,000,000 /1/4.89% - 5.37%, 12/1/1998 - 3/29/1999 $ 29,810,217
Federal Farm Credit Bank--29.6%
40,000,000 5.48% - 5.54%, 12/1/1998 - 6/1/1999 40,004,703
Federal Home Loan Bank System Notes--59.9%
81,325,000 /1/4.91% - 5.15%, 12/1/1998 - 4/14/1999 80,890,321
TOTAL U.S. GOVERNMENT AGENCIES 150,705,241
/2/TOTAL INVESTMENTS (AT AMORTIZED COST) $ 150,705,241
</TABLE>
1 Discount rate at time of purchase.
2 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($134,989,087) at November 30, 1998.
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
NOVEMBER 30, 1998
<TABLE>
<S> <C> <C>
Assets:
Total investments in securities, at amortized cost and value $ 150,705,241
Cash 7,242
Income receivable 433,235
TOTAL ASSETS 151,145,718
Liabilities:
Payable for investments purchased $ 15,000,000
Payable for shares redeemed 887,643
Income distribution payable 248,857
Accrued expenses 20,131
TOTAL LIABILITIES 16,156,631
Net Assets for 134,989,087 shares outstanding $ 134,989,087
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
($134,989,087 / 134,989,087 shares outstanding) $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED NOVEMBER 30, 1998
<TABLE>
<S> <C> <C> <C>
Investment Income:
Interest $ 6,502,310
Expenses:
Investment advisory fee $ 600,375
Administrative personnel and services fee 180,112
Custodian fees 12,554
Transfer and dividend disbursing agent fees and expenses 72,877
Directors'/Trustees' fees 7,643
Auditing fees 12,764
Legal fees 2,378
Portfolio accounting fees 40,670
Share registration costs 15,595
Printing and postage 9,501
Insurance premiums 2,909
Miscellaneous 6,581
TOTAL EXPENSES 963,959
Waiver:
Waiver of investment advisory fee $ (240,150)
Net expenses 723,809
Net investment income $ 5,778,501
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended November 30 1998 1997
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income $ 5,778,501 $ 4,796,842
Distributions to Shareholders:
Distributions from net investment income (5,778,501) (4,796,842)
Share Transactions:
Proceeds from sale of shares 237,093,604 300,466,050
Net asset value of shares issued to shareholders in payment of distributions 2,832,030 2,098,311
declared
Cost of shares redeemed (228,101,846) (264,629,137)
Change in net assets resulting from share transactions 11,823,788 37,935,224
CHANGE IN NET ASSETS 11,823,788 37,935,224
Net Assets:
Beginning of period 123,165,299 85,230,075
End of period $ 134,989,087 $ 123,165,299
</TABLE>
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
ORGANIZATION
NOVEMBER 30, 1998
Newpoint Funds (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "Act") as an open-end, management investment company. The
Trust consists of two portfolios. The financial statements included herein are
only those of Newpoint Government Money Market Fund (the "Fund"). The financial
statements of the other portfolio are presented separately. The assets of each
portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held. The investment objective of the Fund is to
provide stability of principal and current income consistent with stability of
principal.
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.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At
November 30, 1998, capital paid-in aggregated $134,989,087.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
Year Ended November 30 1998 1997
<S> <C> <C>
Shares sold 237,093,604 300,466,050
Shares issued to shareholders in payment of distributions declared 2,832,030 2,098,311
Shares redeemed (228,101,846) (264,629,137)
NET CHANGE RESULTING FROM SHARE TRANSACTIONS 11,823,788 37,935,224
</TABLE>
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.
YEAR 2000 (UNAUDITED)
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.
Report of Independent Public Accountants
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF NEWPOINT FUNDS
(NEWPOINT GOVERNMENT MONEY MARKET FUND AND NEWPOINT EQUITY FUND):
We have audited the accompanying statement of assets and liabilities of Newpoint
Government Money Market Fund, (an investment portfolio of Newpoint Funds, a
Massachusetts business trust), including the schedule of portfolio investments,
as of November 30, 1998, the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1998, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Newpoint Government Money Market Fund, an investment portfolio of Newpoint
Funds, as of November 30, 1998, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and its financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
Boston, Massachusetts
January 15, 1999
Newpoint
Government
Money Market
Fund
A Portfolio of Newpoint Funds
JANUARY 31, 1999
A Statement of Additional Information (SAI) dated January 31, 1999 is
incorporated by reference into this prospectus. Additional information about the
Fund's investments is available in the Fund's annual and semi-annual report to
shareholders. To obtain the SAI, annual and semi-annual report, and other
information without charge call FirstMerit Securities, Inc. or the Fund at 1-
800-627-1289.
You can obtain information about the Fund (including the SAI) by visiting or
writing the Public Reference Room of the Securities and Exchange Commission in
Washington, DC 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.
Newpoint Government Money Market Fund
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
www.federatedinvestors.com
Federated Securities Corp., Distributor
Investment Company Act File No. 811-6224
Cusip 735686107
0121703a (1/99)
STATEMENT OF ADDITIONAL INFORMATION JANUARY 31, 1999
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 January 31, 1999. Obtain the prospectus without charge by calling
1-800-627-1289.
CONTENTS
How is the Fund Organized? 1
Securities in Which the Fund Invests 1
What do Shares Cost? 5
Massachusetts Partnership Law 5
Account and Share Information 5
Tax Information 5
Who Manages and Provides Services to the Fund? 6
How Does the Fund Measure Performance? 10
Addresses
Federated Securities Corp., Distributor,
subsidiary of Federated Investors
CUSIP 735686107
0121703B (1/99)
<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:
o P = PRINCIPAL investment of the Fund; (shaded in chart)
o A = ACCEPTABLE (but not principal) investment of the Fund
- -------------------------------------- -----------
- -------------------------------------- -----------
- --------------------------------------- ----------
BORROWING A
- ---------------------------------------
- --------------------------------------- ----------
ILLIQUID AND RESTRICTED SECURITIES A
- ---------------------------------------
- --------------------------------------- ----------
LENDING OF PORTFOLIO SECURITIES A
- ---------------------------------------
- --------------------------------------- ----------
REPURCHASE AGREEMENTS A
- --------------------------------------- ----------
- --------------------------------------- ----------
REVERSE REPURCHASE AGREEMENTS A
- --------------------------------------- ----------
- --------------------------------------- ----------
SECURITIES OF OTHER INVESTMENT A
COMPANIES
- ---------------------------------------
- --------------------------------------- ----------
US GOVERNMENT SECURITIES P
- --------------------------------------- ----------
- --------------------------------------- ----------
WHEN-ISSUED AND DELAYED DELIVERY A
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.
CONCENTRATION. The Fund will not invest more than 25% of the value of its
total assets in any one industry (other than cash or cash items, and securities
issued by the U.S. government, its agencies or instrumentalities, or repurchase
agreements secured by such securities).
The above investment limitations cannot be changed unless authorized by the
"vote of a majority of its outstanding voting securities," as defined by the
Investment Company Act. The following limitations, however, may be changed by
the Board 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
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.
Accordingly, 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 opposite may be true.
The Fund's use of the amortized cost method of valuing portfolio
instruments depends on its compliance with certain conditions in Rule 2a-7 (the
"Rule") promulgated by the Securities and Exchange Commission 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. The
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 0.5 of 1% between the two values. The
Trustees will take any steps they consider appropriate (such as redemption in
kind or shortening the average portfolio maturity) to minimize any material
dilution or other unfair results arising from differences between the two
methods of determining net asset value.
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.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations, the Trust is required by the Declaration of Trust to use
its property to protect or compensate the shareholder. On request, the Trust
will defend any claim made and pay any judgment against a shareholder for any
act or obligation of the Trust. Therefore, financial loss resulting from
liability as a shareholder will occur only if the Trust itself cannot meet its
obligations to indemnify shareholders and pay judgments against them.
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 January 4, 1999, the following shareholders owned of record,
beneficially, or both, 5% or more of outstanding shares: SEI Trust Company,
Oaks, Pennsylvania, owned approximately 73,554,716.81 (53.76%) shares;
FirstMerit Bank, Akron, Ohio, owned approximately 19,583,280.71 (14.31%) shares;
and Citizens National Bank, Canton, Ohio, owned approximately 7,080,890.57
(5.18%) 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.
As of January 4, 1999, the Fund's Board and Officers as a group owned less
than 1% of the Fund's outstanding shares.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund intends to meet requirements of Subchapter M of the Internal
Revenue Code applicable to regulated investment companies. If these requirements
are not met, it will not receive special tax treatment and will pay federal
income tax.
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.
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.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------ AGGREGATE
NAME COMPENSATION
BIRTHDATE PRINCIPAL OCCUPATIONS FROM
ADDRESS FOR PAST 5 YEARS [TRUST/
POSITION WITH TRUST CORPORATION]
JOHN F. DONAHUE*+ Chief Executive Officer and Director or $0
Birthdate: July 28, 1924 Trustee of the Federated Fund Complex;
Federated Investors Chairman and Director, Federated Investors,
Tower Inc.; Chairman and Trustee, Federated
1001 Liberty Avenue Advisers, Federated Management, and
Pittsburgh, PA Federated Research; Chairman and Director,
CHAIRMAN AND TRUSTEE Federated Research Corp., and Federated
Global Research Corp.; Chairman, Passport
Research, Ltd.
- -------------------------
THOMAS G. BIGLEY Director or Trustee of the Federated Fund $589.13
Birthdate: February 3, Complex; Director, Member of Executive
1934 Committee, Children's Hospital of
15 Old Timber Trail Pittsburgh; formerly: Senior Partner, Ernst
Pittsburgh, PA & Young LLP; Director, MED 3000 Group,
TRUSTEE Inc.; Director, Member of Executive
Committee, University of Pittsburgh.
- -------------------------
JOHN T. CONROY, JR. Director or Trustee of the Federated Fund $648.13
Birthdate: June 23, 1937 Complex; President, Investment Properties
Wood/IPC Commercial Corporation; Senior Vice President,
Dept. John R. Wood and Associates, Inc.,
John R. Wood Realtors; Partner or Trustee in private
Associates, Inc. real estate ventures in Southwest Florida;
Realtors formerly: President, Naples Property
3255 Tamiami Trial Management, Inc. and Northgate Village
North Naples, FL Development Corporation.
TRUSTEE
- -------------------------
- -------------------------
WILLIAM J. COPELAND Director or Trustee of the Federated Fund $648.13
Birthdate: July 4, 1918 Complex; Director and Member of the
One PNC Plaza-23rd Floor Executive Committee, Michael Baker, Inc.;
Pittsburgh, PA formerly: Vice Chairman and Director, PNC
TRUSTEE Bank, N.A., and PNC Bank Corp.; Director,
Ryan Homes, Inc.
Retired: Director, United Refinery;
Director, Forbes Fund; Chairman, Pittsburgh
Foundation; Chairman, Pittsburgh Civic
Light Opera.
- -------------------------
JAMES E. DOWD, ESQ. Director or Trustee of the Federated Fund $648.13
Birthdate: May 18, 1922 Complex; Attorney-at-law; Director, The
571 Hayward Mill Road Emerging Germany Fund, Inc. Retired:
Concord, MA President, Boston Stock Exchange, Inc.;
TRUSTEE Regional Administrator, United States
Securities and Exchange Commission.
- -------------------------
LAWRENCE D. ELLIS, M.D.* Director or Trustee of the Federated Fund $589.13
Birthdate: October 11, Complex; Professor of Medicine, University
1932 of Pittsburgh; Medical Director, University
3471 Fifth Avenue of Pittsburgh Medical Center - Downtown;
Suite 1111 Hematologist, Oncologist, and Internist,
Pittsburgh, PA Presbyterian and Montefiore Hospitals;
TRUSTEE Member, National Board of Trustees,
Leukemia Society of America.
- -------------------------
EDWARD L. FLAHERTY, Director or Trustee of the Federated Fund $648.13
JR., ESQ. # Complex; Attorney, of Counsel, Miller,
Birthdate: June 18, 1924 Ament, Henny & Kochuba; Director, Eat'N
Miller, Ament, Henny & Park Restaurants, Inc.; formerly: Counsel,
Kochuba Horizon Financial, F.A., Western Region;
205 Ross Street Partner, Meyer and Flaherty.
Pittsburgh, PA
TRUSTEE
- -------------------------
PETER E. MADDEN Director or Trustee of the Federated Fund $589.13
Birthdate: March 16, Complex; formerly: Representative,
1942 Commonwealth of Massachusetts General
One Royal Palm Way Court; President, State Street Bank and
100 Royal Palm Way Trust Company and State Street Corporation.
Palm Beach, FL
TRUSTEE Retired: Director, VISA USA and VISA
International; Chairman and Director,
Massachusetts Bankers Association;
Director, Depository Trust Corporation.
- -------------------------
JOHN E. MURRAY, JR., Director or Trustee of the Federated Fund $589.13
J.D., S.J.D. Complex; President, Law Professor, Duquesne
Birthdate: December 20, University; Consulting Partner, Mollica &
1932 Murray.
President, Duquesne
University Retired: Dean and Professor of Law,
Pittsburgh, PA University of Pittsburgh School of Law;
TRUSTEE Dean and Professor of Law, Villanova
University School of Law.
- -------------------------
WESLEY W. POSVAR Director or Trustee of the Federated Fund $589.13
Birthdate: September Complex; President, World Society of
14, 1925 Ekistics, Athens; Professor, International
1202 Cathedral of Politics; Management Consultant; Trustee,
Learning Carnegie Endowment for International Peace,
University of Pittsburgh RAND Corporation, Online Computer Library
Pittsburgh, PA Center, Inc., National Defense University
TRUSTEE 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.
Retired: Professor, United States Military
Academy; Professor, United States Air Force
Academy.
- -------------------------
MARJORIE P. SMUTS Director or Trustee of the Federated Fund $589.13
Birthdate: June 21, 1935 Complex; Public
4905 Bayard Street Relations/Marketing/Conference Planning.
Pittsburgh, PA
TRUSTEE Retired: National Spokesperson, Aluminum
Company of America; business owner.
- -------------------------
- -------------------------
J. CHRISTOPHER DONAHUE+* President or Executive Vice President of $0
Birthdate: April 11, the Federated Fund Complex; Director or
1949 Trustee of some of the Funds in the
Federated Investors Federated Fund Complex; President and
Tower Director, Federated Investors, Inc.;
1001 Liberty Avenue President and Trustee, Federated Advisers,
Pittsburgh, PA Federated Management, and Federated
EXECUTIVE VICE Research; President and Director, Federated
PRESIDENT AND TRUSTEE Research Corp. and Federated Global
Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated
Shareholder Services Company; Director,
Federated Services Company.
- -------------------------
<PAGE>
EDWARD C. GONZALES* Trustee or Director of some of the Funds in $0
Birthdate: October 22, the Federated Fund Complex; President,
1930 Executive Vice President and Treasurer of
Federated Investors some of the Funds in the Federated Fund
Tower Complex; Vice Chairman, Federated
1001 Liberty Avenue Investors, Inc.; Vice President, Federated
Pittsburgh, PA Advisers, Federated Management, Federated
PRESIDENT, TREASURER Research, Federated Research Corp.,
AND TRUSTEE Federated Global Research Corp. and
Passport Research, Ltd.; Executive Vice
President and Director, Federated
Securities Corp.; Trustee, Federated
Shareholder Services Company.
- -------------------------
JOHN W. MCGONIGLE Executive Vice President and Secretary of $0
Birthdate: October 26, the Federated Fund Complex; Executive Vice
1938 President, Secretary, and Director,
Federated Investors Federated Investors, Inc.; Trustee,
Tower Federated Advisers, Federated Management,
1001 Liberty Avenue and Federated Research; Director, Federated
Pittsburgh, PA Research Corp. and Federated Global
EXECUTIVE VICE PRESIDENT Research Corp.; Director, Federated
Services Company; Director, Federated
Securities Corp.
- -------------------------
- -------------------------
RICHARD B. FISHER* President or Vice President of some of the $0
Birthdate: May 17, 1923 Funds in the Federated Fund Complex;
Federated Investors Director or Trustee of some of the Funds in
Tower the Federated Fund Complex; Executive Vice
1001 Liberty Avenue President, Federated Investors, Inc.;
Pittsburgh, PA Chairman and Director, Federated Securities
TRUSTEE Corp.
- -------------------------
C. CHRISTINE THOMSON Vice President and Assistant Treasurer of $0
Birthdate: September 1, some of the Federated funds.
1957
Federated Investors
Tower
1001 Liberty Avenue
Pittsburgh, PA
VICE PRESIDENT AND
ASSISTANT TREASURER
</TABLE>
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, 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 ADMINISTRATIVE AVERAGE AGGREGATE DAILY NET ASSETS OF THE FEDERATED
FEE --------FUNDS
0.150 of 1% on the first $250 million
- -------------------------
0.125 of 1% on the next $250 million
- -------------------------
0.100 of 1% on the next $250 million
- -------------------------
0.075 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 is the independent public accountant for the Fund.
FEES PAID BY THE FUND FOR SERVICES
- ------------------------------- 11/30/98 11/30/97 11/30/96
FOR THE YEARS ENDED NOVEMBER 30
Advisory Fee Earned $600,375 $495,323 $435,274
- --------------------------------
Advisory Fee Reduction $240,150 $198,130 $174,100
- --------------------------------
Administrative Fee $180,112 $148,597 $130,582
- --------------------------------
HOW DOES THE FUND MEASURE PERFORMANCE?
The Fund may advertise Share performance by using the 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
fluctuate daily. Both net earnings and offering price per Share are factors in
the computation of yield and total return.
AVERAGE ANNUAL TOTAL RETURNS AND YIELD
Total returns given for the one-year, five-year and since inception periods
ended November 30, 1998.
Yield given for the 7-day period ended November 30, 1998.
7 -DAY PERIOD 1 YEAR 5 YEAR SINCE INCEPTION ON
MARCH 11, 1991
Total Return N/A 4.92% 4.63% 4.28%
Yield 4.42% N/A N/A N/A
Effective Yield 4.51% N/A N/A N/A
HOW DOES THE FUND MEASURE PERFORMANCE?
The Fund may advertise share performance by using the 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.
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 effective
yield is calculated by compounding the unannualized base-period return by:
adding 1 to the base-period return, raising the sum to the 365/7th power; and
subtracting 1 from the result.
The yield and effective yield do 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.
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
Administrator
FEDERATED ADMINISTRATIVE SERVICES. Federated Investors Tower
1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779
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
PART C. OTHER INFORMATION.
Item 23. EXHIBITS:
(a) 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)
(b) Copy of By-Laws of the Registrant; (1)
(i) Copy of Amendment No. 1 to By-Laws; (9)
(ii) Copy of Amendment No. 2 to By-Laws;+
(iii) Copy of Amendment No. 3 to By-Laws;+
(iv) Copy of Amendment No. 4 to By-Laws;+
(c) Copy of Specimen Certificate for Shares of
Beneficial Interest of the Registrant; (6)
(d) 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)
(e) (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)
(f) 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>
(g) Conformed copy of Custodian Agreement of the Registrant; (5)
(i) Copy of Custody Fee Schedule; (9)
(h) 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)
(i) Conformed Copy of Opinion and Consent of Counsel as to legality of
shares being registered; (8)
(j) Conformed copy of Consent of Independent Auditors;+;
(k) Not applicable;
(l) Conformed Copy of Initial Capital Understanding; (2)
(m) (i) Conformed Copy of Distribution Plan; (6)
(ii) Copy of Sales Agreement; (6)
(iii) Copy of 12b-1 Agreement; (6)
(n) Copy of Schedule for Computation of Fund Performance Data; (7)
(o) Not Applicable;
(p) Conformed Copy of Power of Attorney. +
- --------
+ All exhibits have been filed electronically.
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed January 4, 1991 (File Nos. 33-37993 and
811-6224).
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 $4 billion under administration of which it had investment
discretion over $2.5 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.
<TABLE>
<CAPTION>
Other Substantial
Position with Business, Profession,
NAME THE ADVISER VOCATION OR EMPLOYMENT
<S> <C> <C>
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
</TABLE>
<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>
<TABLE>
<CAPTION>
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
<S> <C> <C>
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. Ross Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
</TABLE>
<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
<TABLE>
<CAPTION>
Newpoint Funds Federated Investors Tower
Pittsburgh, PA 15222-3779
<S> <C>
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
</TABLE>
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 27th day of January, 1999.
NEWPOINT FUNDS
BY: /s/ C. Todd Gibson
C. Todd Gibson, Assistant Secretary
Attorney in Fact for John F. Donahue
January 27, 1999
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:
NAME TITLE DATE
---- ----- ----
By: /s/C. Todd Gibson Attorney in Fact January 27, 1999
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
EXHIBIT NO. B(II) UNDER FORM N-1A
EXHIBIT 3(B) UNDER ITEM 601 REG. S-K
NEWPOINT FUNDS
AMENDMENT #2
TO THE BY-LAWS
(EFFECTIVE FEBRUARY 23, 1998)
Delete Sections 1, 2 and 3 of Article I, OFFICERS AND THEIR ELECTION, and
replace with:
Section 1. OFFICERS. The Officers of the Trust shall be a President, one or
more Vice Presidents, a Treasurer, and a Secretary. The Board of Trustees, in
its discretion, may also elect or appoint a Chairman of the Board of Trustees
(who must be a Trustee) and other Officers or agents, including one or more
Assistant Vice Presidents, one or more Assistant Secretaries, and one or more
Assistant Treasurers. A Vice President, the Secretary or the Treasurer may
appoint an Assistant Vice President, an Assistant Secretary or an Assistant
Treasurer, respectively, to serve until the next election of Officers. Two or
more offices may be held by a single person except the offices of President and
Vice President may not be held by the same person concurrently. It shall not be
necessary for any Trustee or any Officer to be a holder of shares in any Series
or Class of the Trust.
Section 2. ELECTION OF OFFICERS. The Officers shall be elected annually by
the Trustees. Each Officer shall hold office for one year and until the election
and qualification of his successor, or until earlier resignation or removal. The
Chairman of the Board of Trustees, if there is one, shall be elected annually by
and from the Trustees, and serve until a successor is so elected and qualified,
or until earlier resignation or removal.
Section 3. RESIGNATIONS AND REMOVALS AND VACANCIES. Any Officer of the
Trust may resign at any time by filing a written resignation with the Board of
Trustees (or Chairman of the Trustees, if there is one), with the President, or
with the Secretary. Any such resignation shall take effect at the time specified
therein or, if no time is specified, at the time of receipt. Unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective. Any Officer elected by the Board of Trustees or whose
appointment has been ratified by the Board of Trustees may be removed with or
without cause at any time by a majority vote of all of the Trustees. Any other
employee of the Trust may be removed or dismissed at any time by the President.
Any vacancy in any of the offices, whether by resignation, removal or otherwise,
may be filled for the unexpired portion of the term by the President. A vacancy
in the office of Assistant Vice President may be filled by a Vice President; in
the office of Assistant Secretary by the Secretary; or in the office of
Assistant Treasurer by the Treasurer. Any appointment to fill any vacancy shall
serve subject to ratification by the Board of Trustees at its next regular
meeting.
EXHIBIT NO. B(III) UNDER FORM N-1A
EXHIBIT 3(B) UNDER ITEM 601 REG. S-K
NEWPOINT FUNDS
AMENDMENT #3
TO THE BY-LAWS
(EFFECTIVE FEBRUARY 27, 1998)
Delete Section 5 PROXIES of Article IV SHAREHOLDERS' MEETINGS, and replace
with the following:
Section 5. PROXIES. Any shareholder entitled to vote at any meeting of
shareholders may vote either in person, by telephone, by electronic means
including facsimile, or by proxy, but no proxy which is dated more than six
months before the meeting named therein shall be accepted unless otherwise
provided in the proxy. Every proxy shall be in writing, subscribed by the
shareholder or his duly authorized agent or be in such other form as may be
permitted by law, including documents conveyed by electronic transmission. Every
proxy shall be dated, but need not be sealed, witnessed or acknowledged. The
placing of a shareholder's name on a proxy or authorizing another to act as the
shareholder's agent, pursuant to telephone or electronically transmitted
instructions obtained in accordance with procedures reasonably designed to
verify that such instructions have been authorized by such shareholder, shall
constitute execution of a proxy by or on behalf of such shareholder. Where
Shares are held of record by more than one person, any co-owner or co-fiduciary
may execute the proxy or give authority to an agent, unless the Secretary of the
Trust is notified in writing by any co-owner or co-fiduciary that the joinder of
more than one is to be required. All proxies shall be filed with and verified by
the Secretary or an Assistant Secretary of the Trust, or the person acting as
Secretary of the Meeting. Unless otherwise specifically limited by their term,
all proxies shall entitle the holders thereof to vote at any adjournment of such
meeting but shall not be valid after the final adjournment of such meeting.
EXHIBIT NO. B(IV) UNDER FORM N-1A
EXHIBIT 3(B) UNDER ITEM 601 REG. S-K
NEWPOINT FUNDS
AMENDMENT #4
TO THE BY-LAWS
(EFFECTIVE MAY 12, 1998)
Strike Section 3 - Place of Meeting of Article IV - Shareholders' Meetings
and replace it with the following:
Section 3. PLACE OF MEETING. Meetings of the shareholders of the Trust or a
particular Series or Class shall be held at such place within or without The
Commonwealth of Massachusetts as may be fixed from time to time by resolution of
the Trustees.
Strike Section 6 - Place of Meeting of Article V - Trustees' Meetings and
replace it with the following:
Section 6. PLACE OF MEETING. Meetings of the Trustees shall be held at such
place within or without The Commonwealth of Massachusetts as fixed from time to
time by resolution of the Trustees, or as the person or persons requesting said
meeting to be called may designate, but any meeting may adjourn to any other
place.
EXHIBIT NO. P UNDER FORM N-1A
EXHIBIT 24 UNDER ITEM 601 REG. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
the Secretary and Assistant Secretaries of NEWPOINT FUNDS and each of them,
their true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for them and in their names, place and stead, in
any and all capacities, to sign any and all documents to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, the
Securities Exchange Act of 1934 and the Investment Company Act of 1940, by means
of the Securities and Exchange Commission's electronic disclosure system known
as EDGAR; and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
sign and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as each of them
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
<S> <C> <C>
/S/JOHN F. DONAHUE Chairman January 10, 1997
- ----------------------------------------
John F. Donahue (Chief Executive Officer)
/S/EDWARD C. GONZALES President and Treasurer January 10, 1997
- ----------------------------------------
Edward C. Gonzales (Principal Financial and
Accounting Officer)
/S/J. CHRISTOPHER DONAHUE Executive Vice President January 10, 1997
- ----------------------------------------
J. Christopher Donahue and Trustee
/S/THOMAS G. BIGLEY Trustee January 10, 1997
Thomas G. Bigley
/S/JOHN T. CONROY, JR. Trustee January 10, 1997
- ----------------------------------------
John T. Conroy, Jr.
/S/WILLIAM J. COPELAND Trustee January 10, 1997
William J. Copeland
<PAGE>
SIGNATURES TITLE DATE
/S/LAWRENCE D. ELLIS, M.D. Trustee January 10, 1997
- ----------------------------------------
Lawrence D. Ellis, M.D.
/S/PETER E. MADDEN Trustee January 10, 1997
Peter E. Madden
/S/JOHN E. MURRAY, JR. Trustee January 10, 1997
- ----------------------------------------
John E. Murray, Jr.
/S/MARJORIE P. SMUTS Trustee January 10, 1997
Marjorie P. Smuts
</TABLE>
Sworn to and subscribed before me this 10TH day of JANUARY, 1997
MARIE M. HAMM, NOTARY PUBLIC
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
the Secretary and Assistant Secretaries of NEWPOINT FUNDS and each of them,
their true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for them and in their names, place and stead, in
any and all capacities, to sign any and all documents to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, the
Securities Exchange Act of 1934 and the Investment Company Act of 1940, by means
of the Securities and Exchange Commission's electronic disclosure system known
as EDGAR; and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
sign and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as each of them
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
SIGNATURES TITLE DATE
/S/JOHN S. WALSH Trustee January 13, 1999
John S. Walsh
Sworn to and subscribed before me this 13TH day of JANUARY, 1999
CHERI S. GOOD, NOTARY PUBLIC
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
the Secretary and Assistant Secretaries of NEWPOINT FUNDS and each of them,
their true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for them and in their names, place and stead, in
any and all capacities, to sign any and all documents to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, the
Securities Exchange Act of 1934 and the Investment Company Act of 1940, by means
of the Securities and Exchange Commission's electronic disclosure system known
as EDGAR; and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
sign and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as each of them
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
SIGNATURES TITLE DATE
/S/JOHN F. CUNNINGHAM Trustee January 13, 1999
John F. Cunningham
Sworn to and subscribed before me this 13TH day of JANUARY, 1999
CHERI S. GOOD, NOTARY PUBLIC
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
the Secretary and Assistant Secretaries of NEWPOINT FUNDS and each of them,
their true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for them and in their names, place and stead, in
any and all capacities, to sign any and all documents to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, the
Securities Exchange Act of 1934 and the Investment Company Act of 1940, by means
of the Securities and Exchange Commission's electronic disclosure system known
as EDGAR; and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
sign and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as each of them
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
SIGNATURES TITLE DATE
/S/JOHN S. WALSH Trustee January 13, 1999
John S. Walsh
Sworn to and subscribed before me this 13TH day of JANUARY, 1999
CHERI S. GOOD, NOTARY PUBLIC
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
the Secretary and Assistant Secretaries of NEWPOINT FUNDS and each of them,
their true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for them and in their names, place and stead, in
any and all capacities, to sign any and all documents to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, the
Securities Exchange Act of 1934 and the Investment Company Act of 1940, by means
of the Securities and Exchange Commission's electronic disclosure system known
as EDGAR; and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
sign and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as each of them
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
SIGNATURES TITLE DATE
/S/CHARLES F. MANSFIELD Trustee January 13, 1999
CHARLES F. MANSFIELD
Sworn to and subscribed before me this 13TH day of JANUARY, 1999
CHERI S. GOOD, NOTARY PUBLIC
Exhibit 23(j) under Form N-1A
Exhibit 23 under Item 601/Reg.S-K
CONSENT OF INDEPENDENT PUBLIC ACCOUNTS
As independent public accountants, we hereby consent to the use in
Post-Effective Amendment No. 16 to Form N-1A Registration Statement (File No.
33-37993) of Newpoint Funds of our report dated January 15, 1999, on the
financial statements as of November 30, 1998, of Newpoint Government Money
Market Fund and Newpoint Equity Fund (the two portfolios comprising Newpoint
Funds), included in or made part of this Registration Statement.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
January 26, 1999
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 002
<NAME> Newpoint Equity Fund
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1998
<PERIOD-END> Nov-30-1998
<INVESTMENTS-AT-COST> 35,582,180
<INVESTMENTS-AT-VALUE> 58,321,713
<RECEIVABLES> 49,813
<ASSETS-OTHER> 7,612
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 58,379,138
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 58,481
<TOTAL-LIABILITIES> 58,481
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 33,652,645
<SHARES-COMMON-STOCK> 2,959,607
<SHARES-COMMON-PRIOR> 2,763,265
<ACCUMULATED-NII-CURRENT> 12,379
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,916,100
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 22,739,533
<NET-ASSETS> 58,320,657
<DIVIDEND-INCOME> 482,813
<INTEREST-INCOME> 113,849
<OTHER-INCOME> 0
<EXPENSES-NET> (553,095)
<NET-INVESTMENT-INCOME> 43,567
<REALIZED-GAINS-CURRENT> 1,916,090
<APPREC-INCREASE-CURRENT> 6,992,741
<NET-CHANGE-FROM-OPS> 8,952,398
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (40,878)
<DISTRIBUTIONS-OF-GAINS> (2,622,798)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 209,947
<NUMBER-OF-SHARES-REDEEMED> (177,349)
<SHARES-REINVESTED> 163,745
<NET-CHANGE-IN-ASSETS> 9,431,286
<ACCUMULATED-NII-PRIOR> 9,690
<ACCUMULATED-GAINS-PRIOR> 2,622,808
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 401,923
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 633,480
<AVERAGE-NET-ASSETS> 53,321,860
<PER-SHARE-NAV-BEGIN> 17.690
<PER-SHARE-NII> 0.010
<PER-SHARE-GAIN-APPREC> 2.970
<PER-SHARE-DIVIDEND> (0.010)
<PER-SHARE-DISTRIBUTIONS> (0.950)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 19.710
<EXPENSE-RATIO> 1.03
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> Newpoint Government Money Market Fund
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1998
<PERIOD-END> Nov-30-1998
<INVESTMENTS-AT-COST> 150,705,241
<INVESTMENTS-AT-VALUE> 150,705,241
<RECEIVABLES> 433,235
<ASSETS-OTHER> 7,242
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 151,145,718
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16,156,631
<TOTAL-LIABILITIES> 16,156,631
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 134,989,087
<SHARES-COMMON-STOCK> 134,989,087
<SHARES-COMMON-PRIOR> 123,165,299
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 134,989,087
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6,502,310
<OTHER-INCOME> 0
<EXPENSES-NET> (723,809)
<NET-INVESTMENT-INCOME> 5,778,501
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 5,778,501
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5,778,501)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 237,093,604
<NUMBER-OF-SHARES-REDEEMED> (228,101,846)
<SHARES-REINVESTED> 2,832,030
<NET-CHANGE-IN-ASSETS> 11,823,788
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 600,375
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 963,959
<AVERAGE-NET-ASSETS> 53,375,189
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.050)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
