File No. 33-53698
and 811-7322
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. __ [ ]
Post-Effective Amendment No. 4 [X]
and/or
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 5
(Check Appropriate Box or Boxes)
____________________
CANANDAIGUA NATIONAL COLLECTIVE INVESTMENT FUND
FOR QUALIFIED TRUSTS
(Exact Name of Registrant as Specified in Charter)
72 SOUTH MAIN STREET, CANANDAIGUA, NEW YORK 14424
(Address of Principal Executive Office and Zip Code)
REGISTRANT'S TELEPHONE NUMBER: 1-800-724-2621 (EXT. 216)
____________________
Robert G. Sheridan
Cashier
The Canandaigua National Bank and Trust Company
72 South Main Street
CANANDAIGUA, NEW YORK 14424
(Name and Address of Agent for Service)
Copy to:
Stephen H. Waite, Esq.
Underberg & Kessler
1800 Chase Square
Rochester, New York 14604
Approximate Date of Proposed Public Offering:
Registration Statement Became Effective
December 11, 1992
<PAGE>
It is proposed that this filing will become effective:
(Check appropriate box)
[ ] Immediately Upon Filing Pursuant to Paragraph (b)
[X] On April 29, 1996 Pursuant to Paragraph (b)
[ ] Sixty (60) Days After Filing Pursuant to Paragraph
(a)
[ ] On [date] Pursuant to Paragraph (a) of Rule 485
<PAGE>
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF MAXIMUM MAXIMUM AMOUNT
SECURITIES AMOUNT OFFERING AGGREGATE OF
BEING BEING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER UNIT PRICE FEE
<S> <C> <C> <C> <C>
Units Indefinite* N/A N/A $ 500
____________ ____________ ____________ ____________ ____________
</TABLE>
_______________________________
* An indefinite number of units of beneficial interest in the Registrant is
being registered by this Registration Statement pursuant to Rule 24f-2
under the Investment Company Act of 1940.
The Registrant's Rule 24f-2 Notice for its fiscal year ended December 31,
1995, will be filed no later than June 30, 1996.
<PAGE>
CROSS REFERENCE SHEET
PART A
<TABLE>
<CAPTION>
N-1A ITEM NO. DESCRIPTION LOCATION (CAPTION)
<S> <C> <C>
Item 1. Cover Page Cover Page
Item 2. Synopsis Prospectus Summary
Item 3. Condensed Financial Information Fee Table; Supplementary Financial
Information
Item 4. General Description of Registrant Investment Objectives and Policies;
Investment Restrictions
Item 5. Management of the Fund Administration of the Collective Trust
Item 6. Capital Stock and Other Cover Page; Investment in the Collective
Securities Trust; General Information
Item 7. Purchase of Securities Being Cover Page; Investment in the Collective
Offered Trust; Valuation of Units
Item 8. Redemption or Repurchase Investment in the Collective Trust;
Valuation of Units
Item 9. Pending Legal Proceedings Not Applicable
<PAGE>
CROSS REFERENCE SHEET
PART B
N-1A ITEM NO. DESCRIPTION LOCATION (CAPTION)
Item 10 Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History Not Applicable
Item 13. Investment Objectives and Investment Objectives and Policies;
Policies Investment Restrictions
Item 14. Management of the Fund Administration of the Collective Trust;
Supervisory Committee and Officers; Other
Officers
Item 15. Control Persons and Principal General Information
Holders of Securities
Item 16. Investment Advisory and Other Investment in the Collective Trust;
Services Administration of the Collective Trust;
The Trustee; General Information
Item 17. Brokerage Allocation and Other Portfolio Transactions
Practices
Item 18. Capital Stock and Other Investment in the collective Trust;
Securities General Information
Item 19. Purchase, Redemption and Pricing Investment in the Collective Trust;
of Securities Being Offered Valuation of Units
Item 21. Underwriters Not Applicable
Item 20. Tax Status Tax Information
Item 21. Underwriters Not Applicable
Item 22. Calculation of Performance Data Supplementary Financial Information;
Performance Data
Item 23. Financial Statements Statement of Assets and Liabilities
</TABLE>
<PAGE>
PROSPECTUS
CANANDAIGUA NATIONAL COLLECTIVE INVESTMENT FUND
FOR QUALIFIED TRUSTS
72 South Main Street
Canandaigua, New York 14424
Telephone No.: 1-800-724-2621 (Ext. 216)
The Canandaigua National Collective Investment Fund for Qualified
Trusts (the "Collective Trust"), also known as the Canandaigua National Bank
Retirement Portfolios, is registered with the Securities and Exchange
Commission as an open-end diversified management investment company. The
Canandaigua National Bank and Trust Company is the trustee (in such capacity,
the "Trustee", otherwise "Canandaigua National") of the Collective Trust. For
purposes of the Securities Act of 1933, Canandaigua National may be considered
by the Securities and Exchange Commission to be the principal underwriter for
the Collective Trust.
Generally, for Federal income tax purposes, money invested in the
Collective Trust and income earned by the Collective Trust will not be taxable
to an investor until such investor receives a distribution from the Collective
Trust. Under the Tax Reform Act of 1986, contributions for calendar year 1987
and subsequent years by certain investors in individual retirement accounts are
no longer deductible. However, the income earned on such contributions will
not be taxable to the investor until the investor receives a distribution from
the Participating Trust. The Collective Trust consists of two Retirement
Portfolios, each with a different investment objective, for investment of
retirement funds held in certain Qualified Trusts. "Qualified Trusts" include
individual retirement trust accounts established under trust agreements with
Canandaigua National as trustee ("Canandaigua National IRAs"), and single or
commingled pension or profit-sharing trusts, including 401(k) plans, 403(b)
plans, and corporate pension or profit-sharing trusts and pension or profit-
sharing trusts benefiting one or more self-employed individuals (generally
referred to as HR 10 or Keogh plans), established under trust agreements with
Canandaigua National as trustee ("Canandaigua National Pension Trusts").
Qualified Trusts may select one or both Retirement Portfolios and may transfer
retirement funds from one Retirement Portfolio to the other.
The BOND PORTFOLIO seeks to earn a high level of current income
with consideration also given to safety of principal.
The EQUITY PORTFOLIO seeks long term growth of asset values through
capital appreciation and dividend income.
Retirement funds invested in the Retirement Portfolios are not bank
deposits or obligations of, or guaranteed or endorsed by, The Canandaigua
National Bank and Trust Company, and are not insured by the Federal Deposit
Insurance Corporation, The Federal Reserve Board or any other agency.
Units of beneficial interest in the Collective Trust, which are
sold without a sales charge, are available only to Qualified Trusts. There
currently is no fee for establishing or maintaining a Qualified Trust.
<PAGE>
This Prospectus sets forth concisely information about the
Collective Trust that an investor ought to know before investing. Please read
and retain this Prospectus for future reference. Before investing in the
Collective Trust, each investor should assess the suitability of the Collective
Trust and the individual Retirement Portfolios for such investor. The
Collective Trust has filed with the Securities and Exchange Commission a
Statement of Additional Information, dated April 29, 1996 ("Statement of
Additional Information"), which sets forth additional and more detailed
information with respect to the Collective Trust. The information in the
Statement of Additional Information is incorporated by reference in this
Prospectus. A copy of the Statement of Additional Information may be obtained
without charge by calling the Canandaigua National Investment Department at 1-
800-724-2621 (Ext. 216).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
April 29, 1996
<PAGE>
TABLE OF CONTENTS
PAGE NO.
FEE TABLE 5
PROSPECTUS SUMMARY 6
SUPPLEMENTARY FINANCIAL INFORMATION 8
THE COLLECTIVE TRUST 10
INVESTMENT OBJECTIVES AND POLICIES 10
RETIREMENT PORTFOLIOS 10
BOND PORTFOLIO 10
EQUITY PORTFOLIO 12
OTHER INVESTMENT POLICIES 13
INVESTMENT IN THE COLLECTIVE TRUST 13
ELIGIBILITY FOR ADMISSION (QUALIFIED TRUSTS) 13
CANANDAIGUA NATIONAL IRAS 14
CANANDAIGUA NATIONAL PENSION TRUSTS 14
PURCHASES (ADMISSIONS) 14
WITHDRAWALS (REDEMPTIONS) 15
CANANDAIGUA NATIONAL IRAS 15
CANANDAIGUA NATIONAL PENSION TRUSTS 15
EXCHANGE PRIVILEGE 16
ADMINISTRATION OF THE COLLECTIVE TRUST 16
SUPERVISORY COMMITTEE 16
THE TRUSTEE 16
INVESTMENT MANAGEMENT 17
COMPENSATION OF THE TRUSTEE; EXPENSES 18
GLASS-STEAGALL ACT CONSIDERATIONS 19
TAX INFORMATION 20
PERFORMANCE DATA 20
GENERAL INFORMATION 21
DESCRIPTION OF VOTING RIGHTS 21
PARTICIPANT LIABILITY 22
CUSTODIAN AND UNITHOLDER ACCOUNT SERVICE 22
APPENDIX 23
<PAGE>
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION, AND, IF GIVEN
OR MADE, SUCH REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES, OR AN OFFER TO OR A SOLICITATION OF ANY PERSON IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.
SHARES OF THE CANANDAIGUA NATIONAL COLLECTIVE INVESTMENT FUND FOR QUALIFIED
TRUSTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE
CANANDAIGUA NATIONAL BANK AND TRUST COMPANY, AND THE SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY.
<PAGE>
FEE TABLE
There are no sales charges or unitholder transaction expenses for
the Collective Trust. The following table shows the other nonrecurring and
recurring expenses applicable to units during the Collective Trust's most
recent year of operation:
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET
ASSETS) FOR THE YEAR ENDED DECEMBER 31, 1995:
BOND EQUITY
Management Fees 0.49% 0.99%
Rule 12b-1 Fees 0.00% 0.00%
Other Expenses
Custodial Fees 0.32% 0.04%
Shareholder Servicing Costs 0.00% 0.00%
Other 0.08% 0.08%
Total Other Expenses 0.40% 0.12%
Total Fund Operating Expenses 0.89%* 1.11%*
_________________________
* The maximum annual operating expenses which may be charged to units in a
year is 1.5% of average net assets.
Example:
You would pay the following expenses on a $1,000 investment, assuming 5%
annual return and a maximum of 1.5% annual expense. The expenses would
be the same for each time period whether or not redemption occurred at
the end of the period:
<TABLE>
<CAPTION>
INVESTMENT AT END
OF PERIOD AFTER
TOTAL EXPENSES EXPENSES
<S> <C> <C>
1 Year $ 15.75 $1,034.25
3 Years $ 48.89 $1,106.30
5 Years $ 84.33 $1,183.39
10 Years $184.13 $1,400.41
</TABLE>
The purpose of the foregoing table is to assist the investor in
understanding the various costs and expenses that an investor in the Collective
Trust will bear directly or indirectly. The example should not be considered a
representation of past or future expenses, and actual expenses may be greater
or lesser than those shown.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information which appears elsewhere in this Prospectus and in the Statement of
Additional Information.
THE COLLECTIVE TRUST
The Canandaigua National Collective Investment Fund for Qualified Trusts
(the "Collective Trust") is an open-end diversified management investment
company offering two Retirement Portfolios: the Bond Portfolio and the Equity
Portfolio. The Canandaigua National Bank and Trust Company ("Canandaigua
National") is the Trustee of the Collective Trust under a Declaration of Trust
dated September 9, 1992, acts as investment manager, and administrator of the
Collective Trust and provides Unitholder account services. Canandaigua
National may be considered by the Securities and Exchange Commission to be the
principal underwriter of the Collective Trust.
As compensation for these services, the Trustee is paid with respect to
each Retirement Portfolio a monthly management fee at the annual rate of 1.00%
of the average daily net assets of such Retirement Portfolio. Currently, the
Supervisory Committee has approved a reduction of the fee for the Bond
Portfolio to 0.50%. The Trustee's fee includes not only investment advisory
services but fiduciary and administrative services. The total expenses for all
such services is, therefore, somewhat lower than the total of such expenses for
most mutual funds. For additional information relating to Canandaigua
National's fee, see "ADMINISTRATION OF THE COLLECTIVE TRUST -- COMPENSATION OF
THE TRUSTEE; EXPENSES".
QUALIFIED TRUSTS
The Collective Trust is designed for the investment of retirement funds
held in certain Qualified Trusts.
"Qualified Trusts" include individual retirement trust accounts
established under trust agreement with Canandaigua National as trustee, and
single or commingled pension or profit-sharing trusts, 401(k) plans, 403(b)
plans, and corporate pension or profit-sharing trusts and pension or profit-
sharing trusts benefiting one or more self-employed individuals (generally
referred to as HR 10 or Keogh Plans), established under trust agreements with
Canandaigua National as trustee. See "INVESTMENT IN THE COLLECTIVE TRUST --
ELIGIBILITY FOR ADMISSION (QUALIFIED TRUSTS)".
INVESTMENT OBJECTIVES AND POLICIES
The Collective Trust offers two Retirement Portfolios each with a
different investment objective. A Qualified Trust may invest in one or both
Retirement Portfolios and may transfer retirement funds from one Retirement
Portfolio to the other. There can be no assurance that the investment
objective of either Retirement Portfolio can be obtained.
BOND PORTFOLIO. The Bond Portfolio seeks to earn a high level of current
income with consideration also given to safety of principal. Investment
emphasis is on fixed-income securities, primarily debt securities, such as
bonds, notes and debentures, issued by United States corporations, bonds and
notes issued or guaranteed by the United States Government or its agencies or
instrumentalities and preferred stock of United States corporations.
EQUITY PORTFOLIO. The Equity Portfolio seeks long-term growth of asset
value through capital appreciation and dividend income, by investing in a
diversified group of companies. Primary investment emphasis will be on common
stocks.
INVESTMENT IN THE COLLECTIVE TRUST
The minimum initial investment for the purchase of units of each
Retirement Portfolio is $250.00. Subsequent investments are subject to a
minimum of $50.00. The purchase price per unit of each Retirement Portfolio
will be the net asset value per unit next computed after receipt of a purchase
order. Certain purchase orders for Canandaigua National IRAs cannot be deemed
received until seven (7) days after establishment of the IRA. See "INVESTMENT
IN THE COLLECTIVE TRUST -- PURCHASES (ADMISSIONS)".
REDEMPTIONS AND EXCHANGES
All or a portion of the units held in the Collective Trust can be
redeemed at any time. The redemption price will be the net asset value per
unit next computed after receipt of a redemption order. See "INVESTMENT IN THE
COLLECTIVE TRUST -- WITHDRAWALS (REDEMPTIONS)".
Units in either Retirement Portfolio may be exchanged without cost for
units in the other Retirement Portfolio. Any exchange will be based on the
respective net asset values of the units involved next computed after receipt
of an exchange order. See "INVESTMENT IN THE COLLECTIVE TRUST EXCHANGE
PRIVILEGE".
RISK FACTORS
The value of the Bond Portfolio's fixed income securities can be expected
to vary inversely with changes in the prevailing interest rates. In addition,
lower-rated securities in which the Portfolio may invest may be lacking certain
protective elements and may be subject to greater investment risk over an
extended period. As a result, investment in the Bond Portfolio should not be
considered a complete investment program. See "BOND PORTFOLIO RISK FACTORS."
The Equity Portfolio will invest in securities whose market values will
fluctuate daily. Further, it is expected that the Portfolio will have a dollar
weighted volatility somewhat higher than the stock market as a whole. Although
the Trustee seeks to reduce the risks associated with investing in equity
securities through diversification, quality criteria and other investment
policies, there can be no assurance that the Equity Portfolio will achieve its
objectives. Investors should not consider the Equity Portfolio to be a
complete investment program. See "EQUITY PORTFOLIO RISK FACTORS."
Because the dollar weighted average maturity of the Bond Portfolio is not
expected to exceed ten (10) years, and because the volatility of the Equity
Portfolio is expected to be slightly greater than for the stock market as a
whole, the net asset value of the Bond Portfolio is likely to be more stable
than the net asset value of the Equity Portfolio. However, assuming that
markets are efficient in compensating higher risk with higher return,
historical evidence would suggest that a well diversified equity portfolio with
higher than average volatility might produce a higher total return over an
extended period than a bond portfolio having an average maturity of less than
ten (10) years.
Retirement funds invested in the Retirement Portfolios are not bank
deposits or obligations and are not insured by the Federal Deposit Insurance
Corporation.
SUPPLEMENTARY FINANCIAL INFORMATION
The financial information in the table below has been audited in
conjunction with the annual audit of the financial statements of the Collective
Trust by Walsh, Morga & Company, P.C., independent auditors. Financial
statements for the year ended December 31, 1995 and the independent auditors'
report thereon are included in the Statement of Additional Information.
<TABLE>
<CAPTION>
BOND PORTFOLIO EQUITY PORTFOLIO
For the Year Ended December 31, For the Year Ended December 31,
<S> <C> <C> <C> <C>
1994 1995 1994 1995
SELECTED DATA FOR A UNIT OF
BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT THE YEAR:
INCREASE (DECEASE) IN NET ASSET
VALUE:
OPERATIONS:
Investment income...... $ 0.70 $ 0.91 $ 0.19 $ 0.18
Total expenses (0.08) (0.10) (0.12) (0.14)
Investment income - net 0.62 0.81 0.07 0.04
Realized and unrealized gain (1.09) 1.43 (0.03) 2.78
(loss) on investments - net
Net increase (decrease) in net
asset value resulting from (0.47) 2.24 0.04 2.82
operations
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Investment income - net N/A N/A N/A N/A
Realized gain on N/A N/A N/A N/A
investments - net
Net decrease in
net asset value
resulting from N/A N/A N/A N/A
dividends and
distributions
NET ASSET VALUE:
Total increase (decrease) in net
asset value (0.47) 2.24 0.04 2.82
Beginning of year 10.48 10.01 10.85 10.89
End of year $10.01 12.25 10.89 13.71
Number of shares
outstanding at 29,788 33,340 530,395 615,264
end of year
SIGNIFICANT RATIOS:
Total expenses to average net 0.77% 0.89% 1.09% 1.11%
assets
Investment income (loss) - net, to
average net assets 6.16% 7.11% 0.69% 0.32%
Portfolio turnover 24.45% 14.13% 234.81% 375.30%
Total Annual Return (3.29)% 22.38% 0.55% 25.90%
</TABLE>
THE COLLECTIVE TRUST'S 1995 ANNUAL REPORT TO UNITHOLDERS CONTAINS
ADDITIONAL PERFORMANCE INFORMATION THAT WILL BE MADE AVAILABLE, WITHOUT CHARGE,
UPON REQUEST TO CANANDAIGUA NATIONAL INVESTMENT DEPARTMENT, 72 SOUTH MAIN
STREET, CANANDAIGUA, NEW YORK 14424.
<PAGE>
THE COLLECTIVE TRUST
The Canandaigua National Collective Investment Fund for Qualified Trusts
(the "Collective Trust") is a trust established under the laws of the State of
New York by The Canandaigua National Bank and Trust Company, the Trustee, under
a Declaration of Trust dated September 9, 1992. The Collective Trust offers
two Retirement Portfolios, each with a different investment objective, for the
investment of retirement funds held in Qualified Trusts. Each Retirement
Portfolio is represented by a separate series of units of beneficial interest
in the Collective Trust.
Only Qualified Trusts can participate in the Collective Trust. Qualified
Trusts which have been admitted to the Collective Trust are referred to as
"Participating Trusts". An individual for whose benefit a Participating Trust
is maintained, or who may be entitled to receive benefits from a Participating
Trust, is referred to as a "Participant".
INVESTMENT OBJECTIVES AND POLICIES
RETIREMENT PORTFOLIOS
The Collective Trust offers two Retirement Portfolios, each with a
different investment objective. A Qualified Trust may invest in one or both
Retirement Portfolios and may transfer retirement funds from one Retirement
Portfolio to the other. Since each of the Retirement Portfolios will pursue
different types of investments, the risks of participating in the Collective
Trust will vary depending on the Retirement Portfolio or Portfolios chosen.
Although one of the Retirement Portfolios may provide greater stability of unit
value than the other, the unit value of each of the Portfolios is subject to
change. Before selecting a Retirement Portfolio or Portfolios, the risks
associated with the types of investments made by the Retirement Portfolios
should be assessed. There can be no assurance that the investment objective of
either Retirement Portfolio can be attained.
Current income earned by the Retirement Portfolios will be for reinvestment
and further accumulation of assets for retirement. Accordingly, no current
income will be distributed. Thus, current income will be reinvested by the
Retirement Portfolios and reflected in an increase in net asset value per unit.
This policy is unlike that of most investment companies which, unlike the
Collective Trust, would be taxed on all income not distributed to shareholders.
BOND PORTFOLIO
The Bond Portfolio seeks to earn a high level of current income with
consideration also given to safety of principal. Investment emphasis is on
fixed-income securities, primarily debt securities, such as bonds, notes and
debentures, issued by United States corporations, bonds and notes issued or
guaranteed by the United States Government or its agencies or instrumentalities
and preferred stock of United States corporations. Debt obligations issued or
guaranteed by the United States Government provide greater safety of principal
but also generally provide lower current income than debt obligations of
corporations. They include issues of the U.S. Treasury such as bills, notes
and bonds and issues of agencies and instrumentalities of the U.S. Government
which are established under the authorities of an act of Congress. They
include securities issued or guaranteed by the Government National Mortgage
Association, the Federal National Mortgage Association, the Farmers Home
Administration, Federal Farm Credit Banks, Federal Home Loan Banks, the
Federal Home Loan Mortgage Corporation and the Student Loan Marketing
Association. Some of these securities such as debenture obligations of the
Farmers Home Administration and securities of the Government National Mortgage
Association are supported by the full faith and credit of the U.S. Treasury;
others such as obligations of the Federal Home Loan Banks are supported by the
right of the issuer to borrow from the U.S. Treasury; others such as those of
the Federal Farm Credit Banks are supported by the discretionary authority of
the U.S. Government to purchase the agency's obligations. Still others such as
those of the Student Loan Marketing Association are supported only by the
credit of the instrumentality. No assurance can be given that the U.S.
Government would provide financial support to any of the foregoing when not
obligated to do so by law. The Bond Portfolio will invest in debt securities
of United States corporations only if at the time of purchase they carry a
rating of at least "Baa" from Moody's Investors Services, Inc. or "BBB" from
Standard & Poor's Corporation. Debt securities carrying a rating of "Baa" from
Moody's Investor Services Inc. or "BBB" from Standard & Poor's Corporation have
speculative characteristics. See "APPENDIX" for an explanation of the ratings.
A reduction below such rating for any debt security owned will not require
disposition of the security. The Bond Portfolio's investments in securities
other than debt of United States corporations and debt obligations issued or
guaranteed by the United States Government, its agencies or instrumentalities
(e.g., preferred stock and all securities of foreign issuers) will be in those
securities which, in the judgment of the Trustee, would be of comparable
quality to U.S. securities in which the Bond Portfolio may invest, i.e., those
securities having a rating of "Baa" or better by Moody's or "BBB" or better by
Standard & Poor's. This judgment may be based upon such considerations as the
issuer's financial strength, including its historic and current financial
condition, its historic and projected earnings and its present and anticipated
cash flow; the issuer's debt maturity schedules and current and future
borrowing requirements; and the issuer's continuing ability to meet its future
obligations. At least 65% of the value of the total assets of the Bond
Portfolio will, under normal market conditions, be invested in bonds or
debentures.
The only non-interest paying securities to be held in the Bond Portfolio
will be (a) zero-coupon obligations of corporations, and (b) obligations
evidencing ownership of future interest and principal payments on United States
Treasury Bonds. Such zero-coupon obligations pay no current interest. Zero-
coupon obligations are sold at prices discounted from par value, with that par
value to be paid to the holder at maturity. The return on the zero-coupon
obligation, when held to maturity, equals the difference between the par value
and the original purchase price. Zero-coupon obligations may be purchased if
the Trustee considers the yield spread between these obligations and coupon
issues of the United States government and United States corporations to be
advantageous, giving consideration to the differing durations of the zero
coupon obligations and the coupon issues. The Bond Portfolio will only
purchase zero-coupon obligations if at the time of purchase such investments
constitute less than 5% of the value of the Bond Portfolio's total assets.
Various forms of obligations exist to evidence future interest or principal
payments on Treasury securities. Typically such obligations take the form of
custodial receipts issued pursuant to a custody agreement which evidence
ownership of future interest and principal payments on treasury securities
deposited with the custodian. The interest and principal payments on the
underlying treasury securities are direct obligations of the United States.
The Bond Portfolio will not invest in securities of foreign issuers.
The Bond Portfolio will not invest in puts, calls or other futures
contracts.
A portion of the Bond Portfolio may be held in "cash equivalents." Except
when the Trustee, as investment manager of the Bond Portfolio, assumes a
temporary defensive position, the Portfolio's investment in cash equivalents
will not exceed 35% of the Portfolio's total assets. Cash equivalents are
short-term, interest-bearing instruments in which funds are invested
temporarily pending longer-term investment or in which funds are invested when
market conditions dictate a "defensive" investment strategy. The purpose of
cash equivalents is to provide income at money market rates while minimizing
the risk of decline in value to the maximum extent possible. The instruments
may include commercial paper, certificates of deposit, repurchase agreements,
bankers' acceptances and United States Treasury Bills.
The Bond Portfolio will invest primarily in fixed-income securities with a
maturity in excess of one (1) year. However, fixed-income securities can have
maturities as long as thirty (30) or more years. The average maturity of
securities in the Bond Portfolio will be based primarily upon the Trustee's
expectations for the future course of interest rates and then prevailing price
and yield levels in the fixed-income market, and it is expected that the dollar
weighted average maturity of the Bond Portfolio will not exceed ten (10) years.
The limitation of the average maturity of the Portfolio is expected to provide
a more stable net asset value than would be the case with a longer term
portfolio.
BOND PORTFOLIO RISK FACTORS. Changes in interest rates will cause the value of
securities held in the Bond Portfolio to vary inversely to changes in
prevailing interest rates. If, however, a security is held to maturity, no
gain or loss will be realized as a result of changes in prevailing rates. The
value of these securities will also be affected by general market and economic
conditions and by the creditworthiness of the issuer. Fluctuations in value of
the Bond Portfolio's securities will cause net asset value per unit to
fluctuate. By stressing current yield through fixed-income securities, the
Bond Portfolio may provide greater stability of unit value than the Equity
Portfolio. However, retirement funds invested in the Bond Portfolio should not
be expected to appreciate in value to the same extent as funds in the Equity
Portfolio since there will be minimal participation in the general equity
markets. See "RISK FACTORS" in PROSPECTUS SUMMARY.
EQUITY PORTFOLIO
The Equity Portfolio seeks long-term growth of asset values, through
capital appreciation and dividend income, by investing in a diversified group
of companies. Primary investment emphasis will be on common stocks. At least
65% of the value of the total assets of the Equity Portfolio will, under normal
market conditions, be invested in equity-based securities, which consist of
common stocks as well as debt securities and preferred stocks which are
convertible into common stocks. Normally, investments of the Equity Portfolio
in cash equivalents will not exceed 35% of its assets. However, when market
conditions dictate a temporary "defensive" investment strategy, the Trustee may
decide to hold a portion of the Equity Portfolio, without limitation on amount,
in cash equivalents. Such a decision, although not offering the opportunity
for capital appreciation, might be deemed prudent to protect net asset values.
See "INVESTMENT OBJECTIVES AND POLICIES -- BOND PORTFOLIO", for a definition of
"cash equivalents".
Equity securities of a company will be selected considering such factors as
the sales, growth and profitability prospects for the economic sector and
markets in which the company operates and for the products or services it
provides; the financial condition of the company and its ability to meet its
liabilities and to provide income in the form of dividends; the prevailing
price of the security; how that price compares to historical price levels of
the securities, to current price levels in the general market, and to the
prices of competing companies; projected earnings estimates and earnings growth
rate for the company and the relation of those figures to the current price.
It is expected that the volatility of the Equity Portfolio will be slightly
greater than that of the stock market as a whole. The Equity Portfolio is not
expected to be invested in initial public offerings, illiquid stocks or stocks
having a price of less than $5.00 per share.
In general, the Equity Portfolio will not invest in securities that have,
in the Trustee's judgment, a high level of debt as a percentage of their total
market capitalization. The Trustee will generally seek to purchase securities
that have lower price to earnings multiples than the market as a whole. Ratios
such as market price to book value, market price to cash flow, and price to
earnings will be considered in selecting securities for the Equity Portfolio.
In addition, factors such as institutional ownership positions and analyst
coverage (each in relation to market ratios) will be considered. In order to
limit the level of risk, the Portfolio will be invested in different industries
so that the value of the Portfolio's total assets invested in issuers
conducting their principal business activities in the same industry ordinarily
does not exceed twenty-five percent (25%) of the Portfolio at the time of the
purchase.
The Equity Portfolio will not invest in securities of foreign issuers.
The Equity Portfolio will not invest in puts, calls and other futures
contracts.
EQUITY PORTFOLIO RISK FACTORS. The Equity Portfolio will invest in securities
whose market values will fluctuate daily. Further, it is expected that the
Portfolio will have a dollar weighted volatility somewhat higher than the stock
market as a whole. Although the Trustee will seek to reduce the risks
associated with investing in equity securities through diversification, quality
criteria, and the other investment policies discussed herein, there can be no
assurance that the Equity Portfolio will achieve its objectives. Because the
Equity Portfolio will participate in the equity markets, it may provide greater
potential for capital appreciation and growth of current income over the long
term than the Bond Portfolio. However, the Equity Portfolio will generally
have a more volatile unit value and lower current yield than the Bond
Portfolio. See "RISK FACTORS" in PROSPECTUS SUMMARY.
OTHER INVESTMENT POLICIES
The Retirement Portfolios may each enter into repurchase agreements. Under
these agreements, a Retirement Portfolio purchases securities from a bank,
broker-dealer, savings and loan association or other recognized financial
institution with a concurrent obligation of the seller to repurchase them
within a specified time at a fixed price (equal to the purchase price plus
interest). Repurchase agreements are considered loans under the Investment
Company Act of 1940, as amended. Repurchase agreements maturing in more than
seven days will not exceed 10% of the value of the total assets of any
Retirement Portfolio. Repurchase agreements will be entered into only for
debt obligations issued or guaranteed by the United States Government, its
agencies or instrumentalities. Certificated securities must be placed in the
physical possession of the custodian of the assets of the Collective Trust.
Uncertificated securities, such as Treasury Bills and most agency issues, which
are recorded by book-entry on the records of the Federal Reserve Banks, must be
transferred to the custodian by appropriate entry in the Federal Reserve Bank's
records. If the value of the securities purchased should decline below the
sales price, additional securities sufficient to make the value of the
securities equal to the sales price must be deposited with the custodian. If
the seller defaults, the Investment Portfolio might incur a loss if the value
of the securities securing the repurchase agreement declines and might incur
disposition costs in connection with liquidating the securities. In addition,
if bankruptcy proceedings are commenced with respect to the seller, realization
upon the securities by the Retirement Portfolio may be delayed or denied.
Except after obtaining Unitholder approval, the Retirement Portfolios will
limit their total borrowing to 5% of the Portfolios' combined net assets.
Borrowing by a Retirement Portfolio will be done only for temporary purposes,
and all borrowings by a Portfolio will be repaid before additional investments
are made by that Portfolio.
In accordance with Section 5.2(c) of the Declaration of Trust and
applicable regulations of the Comptroller of the Currency, the Retirement
Portfolios' assets may be placed in deposits with Canandaigua National pending
investment or distribution.
The foregoing investment objectives and related policies are not
fundamental and may be changed by the Trustee without the approval of the
holders of a majority of the outstanding units of the affected Retirement
Portfolio or Portfolios.
INVESTMENT IN THE COLLECTIVE TRUST
ELIGIBILITY FOR ADMISSION (QUALIFIED TRUSTS)
Only Qualified Trusts are eligible to invest in the Collective Trust.
Qualified Trusts are:
- Individual retirement trust accounts established under trust agreements
with Canandaigua National as trustee and maintained in conformity with
Section 408(a) of the Internal Revenue Code ("Canandaigua National IRAs")
and
- Single or commingled pension or profit-sharing trusts, including
corporate pension or profit-sharing trusts and pension or profit-sharing
trusts benefiting one or more self-employed individuals (generally
referred to as HR 10 or Keogh plans) established under trust agreements
with Canandaigua National as trustee and maintained in conformity with
Section 401(a) of the Internal Revenue Code ("Canandaigua National
Pension Trusts").
A Qualified Trust may continue to participate in the Collective Trust only so
long as it continues to be a Qualified Trust. Maintenance of Qualified Trust
status is a prerequisite to all transactions with the Collective Trust
described below.
<PAGE>
CANANDAIGUA NATIONAL IRAS
An individual who wishes to participate in the Collective Trust through
an IRA but who does not have a Canandaigua National IRA must establish a
Canandaigua National IRA. The Canandaigua National IRA documents, which
consist of an IRA application, an IRA trust agreement with Canandaigua National
as trustee and an IRA disclosure statement describing eligibility for, amounts
of and deadlines for making contributions to, and rules regarding distributions
from, a Canandaigua National IRA, can be obtained from any Canandaigua National
branch or by calling 1-800-724-2621 (Ext. 216). Completed Canandaigua National
IRA applications can be returned in person to designated Canandaigua National
branches or by mail to the Canandaigua National Investment Department, 72 South
Main Street, Canandaigua, New York 14424. For further information, call
Canandaigua National at 1-800-724-2621 (Ext. 216).
Once an individual has established a Canandaigua National IRA, the
individual may elect to have all or part of his Canandaigua National IRA
invested in one or both of the Retirement Portfolios.
A Canandaigua National IRA under which Canandaigua National acts as
custodian rather than as trustee must be modified so that Canandaigua National
is acting as a trustee in order for the Canandaigua National IRA to be entitled
to invest in one or more of the Retirement Portfolios. Such a modification
entails no costs to the holder of the IRA.
CANANDAIGUA NATIONAL PENSION TRUSTS
A Canandaigua National Pension Trust will be entitled to invest in one or
both of the Retirement Portfolios if it contains an appropriate provision
authorizing the investment of all or a portion of its assets in a commingled
trust maintained by Canandaigua National, such as the Collective Trust.
Generally, each participant in a Canandaigua National Pension Trust may elect
to have all or part of his interest in the Canandaigua National Pension Trust
invested in one or both of the Retirement Portfolios. However, this may vary,
depending upon the terms of the Canandaigua National Pension Trust. For
example, the employer who established the Canandaigua National Pension Trust or
a committee appointed by the employer may have the power to decide whether to
invest in one or both of the Retirement Portfolios.
PURCHASES (ADMISSIONS)
A Qualified Trust which wishes to invest in one or both of the Retirement
Portfolios may purchase units of (will be admitted to) the Collective Trust by
indicating on a Keogh Participant Information form or an IRA
Application/Contribution- form that it wishes to invest in the Collective
Trust and, after the Canandaigua National Investment Department has
acknowledged receipt of the form, calling the Canandaigua National Investment
Department at 1-800-724-2621 (Ext. 216). In order for Canandaigua National to
invest all or a part of the assets of a Qualified Trust in the Collective
Trust, the amount to be so invested must have been previously received by
Canandaigua National as trustee of the Qualified Trust. Because a Canandaigua
National IRA may be cancelled within seven (7) days after it is set up, a
Qualified Trust may not invest in any Canandaigua National Investment
Department selection until this cancellation right no longer exists. Because a
cancellation is effective if mailed to Canandaigua National on the 7th day,
Canandaigua National will not permit the purchase of any Canandaigua National
Investment Department selections until ten (10) business days after a
Canandaigua National IRA has been opened. If a Qualified Trust has not
indicated on a Keogh Participant Information or IRA Application/Contribution
form that it wishes to invest in the Collective Trust, it may obtain a new
form, on which it may so indicate, from any Canandaigua National branch or by
calling 1-800-724-2621 (Ext. 216). Completed forms should be returned to the
Canandaigua National Investment Department, 72 South Main Street, Canandaigua,
New York 14424.
The minimum initial investment for the purchase of units of each
Retirement Portfolio is $250.00. Subsequent investments are subject to a
minimum of $50.00. All funds will be invested in full and fractional units.
The purchase price for units of each Retirement Portfolio will be the net asset
value per unit next determined following processing of instructions to invest
in the Collective Trust. Net asset value per unit of each Retirement Portfolio
is determined by dividing the total value of the Portfolio's assets, less any
liabilities, including the fee payable to the Trustee for advisory and other
services, by the number of units of the Portfolio outstanding. Net asset value
per unit is determined at 9:00 a.m. each day, eastern time, based on the data
available as of 4:15 p.m. the previous business day. Purchases of units are
subject to determination by the Trustee that the investment instructions are
complete.
Because units are not transferable, certificates representing units of
the Collective Trust will not be issued. All units purchased are confirmed to
Participating Trusts and credited to the accounts of the Participating Trusts
on the Collective Trust's records.
The Collective Trust reserves the right to its sole discretion to: (i)
suspend the availability of its units; and (ii) to reject requests for
purchases when in the judgment of the Trustee such suspension or rejection is
in the best interest of the Collective Trust.
WITHDRAWALS (REDEMPTIONS)
All or a portion of the units held in the Collective Trust can be
withdrawn (redeemed) at any time. A Qualified Trust can make withdrawals from
the Collective Trust for the purpose of changing to another available
investment option other than the Collective Trust by instructing Canandaigua
National to withdraw units on behalf of the Qualifying Trust. Payment for
units so withdrawn will be made to Canandaigua National as trustee of the
Qualified Trust. A withdrawal from the Collective Trust may also be made for
the purpose of making a distribution from the Qualified Trust which is invested
in the Collective Trust. However, the time or times at which distributions can
be made from a Qualified Trust will depend on the terms of the Qualified Trust.
CANANDAIGUA NATIONAL IRAS
If an individual who has established a Canandaigua National IRA which is
invested in the Collective Trust wishes to make a withdrawal in order to
receive a distribution from the Canandaigua National IRA, the individual must
also make an appropriate request to receive a distribution from the Canandaigua
National IRA. The payment by Canandaigua National from the Canandaigua
National IRA will be made on the next business day after Canandaigua National
as trustee of the Canandaigua National IRA receives the withdrawal from the
Collective Trust. (A request for a distribution from a Canandaigua National
IRA cannot be made by telephone. It can be made only by giving Canandaigua
National an appropriate distribution request form.)
CANANDAIGUA NATIONAL PENSION TRUSTS
A withdrawal from the Collective Trust by a Canandaigua National Pension
Trust which is invested in the Collective Trust may be made for the purpose of
making a distribution to a Participant under the Canandaigua National Pension
Trust. The payment by Canandaigua National from the Canandaigua National
Pension Trust will be made on the next business day after Canandaigua National
as trustee of the Canandaigua National Pension Trust receives the withdrawal
from the Collective Trust. (A request for a distribution from a Canandaigua
National Pension Trust cannot be made by telephone. It can be made only by
giving Canandaigua National an appropriate distribution request form and any
other documents which Canandaigua National reasonably requests.)
Distribution request forms can be obtained from any Canandaigua National
branch or by calling 1-800-724-2621 (Ext. 216). Completed forms and other
documents can be returned in person to designated Canandaigua National branches
or by mail to the Canandaigua National Investment Department, 72 South Main
Street, Canandaigua, New York 14424. For further information, call Canandaigua
National at 1-800-724-2621 (Ext. 216).
The withdrawal price will be the net asset value per unit next computed
after receipt of a withdrawal order. Net asset value per unit of each
Retirement Portfolio is determined by dividing the total value of the
Portfolio's assets, less any liabilities, including the fee payable to the
Trustee for advisory and other services, by the number of units of the
Retirement Portfolio outstanding. Withdrawals and distributions are subject to
determination by Canandaigua National that the investment instructions or the
distribution request form and other distribution documents, if any, are
complete. The value of a unit on withdrawal may be more or less than the value
upon purchase of the unit, depending upon the value at the time of withdrawal
of the assets in the Retirement Portfolio from which the units are withdrawn.
Payment to Canandaigua National as trustee of a Canandaigua National IRA
or a Canandaigua National Pension Trust for units withdrawn will normally be
made within one business day of receipt of instructions for withdrawal, but in
no event will payment be made more than seven calendar days after receipt of
instructions for withdrawal. Payment may also be delayed or the right of
withdrawal from either Retirement Portfolio suspended at times when: (a)
trading on the New York Stock Exchange is restricted or it is closed, for other
than customary weekends and holidays; (b) an emergency, as defined by rules of
the Securities and Exchange Commission, exists making disposal of portfolio
securities or determination of the value of the net assets of a Retirement
Portfolio not reasonably practicable; or (c) the Securities and Exchange
Commission has by order permitted such suspension.
The failure of a Canandaigua National IRA or Canandaigua National Pension
Trust to continue to qualify as a Qualified Trust could result from actions
taken by the Participant, in the case of a Canandaigua National IRA, or by the
administrators or fiduciaries of a Canandaigua National Pension Trust. In that
event, a determination of disqualification may be made by the Internal Revenue
Service or by a court. If at any time a Canandaigua National IRA or
Canandaigua National Pension Trust no longer qualifies as a Qualified Trust,
Canandaigua National as trustee of the Canandaigua National IRA or Canandaigua
National Pension Trust will withdraw all units of the Portfolio then held by
the Canandaigua National IRA or Canandaigua National Pension Trust at the net
asset value next determined after Canandaigua National is apprised of the
disqualification. Payment for units withdrawn upon disqualification will be
made in the same manner as described in the preceding paragraph for payment for
units withdrawn upon request.
EXCHANGE PRIVILEGE
Units in either Retirement Portfolio may be exchanged without cost for
units in the other Retirement Portfolio. Exchanges may be effected by calling
the Canandaigua National Investment Department at 1-800-724-2621 (Ext. 216).
Any exchange will be based on the respective net asset values of the
units involved next computed after receipt of an exchange order. Exchanges are
subject to determination by the Trustee that the investment instructions are
complete.
ADMINISTRATION OF THE COLLECTIVE TRUST
SUPERVISORY COMMITTEE
The business and affairs of the Collective Trust are managed under the
direction of the Supervisory Committee. The Supervisory Committee will perform
the duties and undertake the responsibilities of the board of directors of an
investment company.
THE TRUSTEE
Subject to the direction of the Supervisory Committee, The Canandaigua
National Bank and Trust Company, 72 South Main Street, Canandaigua, New York
14424, a wholly-owned subsidiary of Canandaigua National Corporation ("CNC"),
acts as the trustee of the Collective Trust and, as such, manages all of the
business and affairs of the Collective Trust, including investment management
and administration. Canandaigua National is a commercial bank offering a wide
range of banking services to its customers in the Canandaigua, New York area.
As of December 31, 1995, Canandaigua National had assets of $317.2 million,
loans of $207.8 million and deposits of $277.1 million, and provided personal,
corporate and institutional investment management services for accounts having
an aggregate market value of approximately $197.8 million.
The Collective Trust has been granted by The Canandaigua National Bank
and Trust Company the non-exclusive right to use the words "Canandaigua
National" while the Collective Trust is engaged in business as a registered
investment company, which right may be terminated by The Canandaigua National
Bank and Trust Company in the event it ceases to serve as Trustee of the
Collective Trust.
INVESTMENT MANAGEMENT
Under the Management Agreement, the Trustee as investment manager manages
the investment of the assets of each Retirement Portfolio in conformity with
the stated objective and policies of that Portfolio. It is the responsibility
of the Trustee to make investment decisions for the Retirement Portfolios and
to provide continuous supervision of their investment portfolios. Canandaigua
National provides these services principally through its Investment and Trust
Departments.
Within Canandaigua National's Investment and Trust Departments, Gregory
S. MacKay and Robert J. Swartout are portfolio managers, respectively, for the
Bond Portfolio and the Equity Portfolio, and have been such since the inception
of the Collective Trust. Mr. MacKay is a Senior Vice President of Canandaigua
National and a member of the Collective Trust's Supervisory Committee. Mr.
Swartout is Vice President and Investment Officer of Canandaigua National and a
member of the Collective Trust's Supervisory Committee. Both Mr. MacKay and
Mr. Swartout have been officers of Canandaigua National for the past five
years.
The investment management services of the Trustee to the Collective Trust
are not exclusive under the terms of the Management Agreement. The Trustee is
free to, and does, render investment advisory services to others. Included
among the Investment and Trust Departments' accounts are personal advisory
accounts, trusts and estates, and pension and profit-sharing funds for
corporations. These accounts have varying investment objectives.
The Investment Department of Canandaigua National has responsibility for
Canandaigua National's own investment portfolio, which is composed primarily of
United States Government and tax-exempt securities. In acting for customers'
accounts, the personnel of the Investment and Trust Departments independently
consider their investment recommendations, decisions or positions with respect
to such accounts. The Investment and Trust Departments will not execute any
transactions of the Collective Trust with Canandaigua National or its
affiliates and will only execute such transactions with unaffiliated dealers.
Although it is unlikely, it is possible that the commercial banking
division of the Trustee may have deposit, loan and other commercial banking
relationships with issuers of securities purchased by the Collective Trust,
including outstanding loans to such issuers which may be repaid in whole or in
part with the proceeds of securities purchased by the Collective Trust in
primary public offerings. The Collective Trust will not purchase securities in
any primary public offering when the prospectus discloses that the proceeds
will be used for this purpose. The Collective Trust and Canandaigua National
will not act jointly to cause the Collective Trust to make investments which
could benefit other commercial interests of Canandaigua National. The Trustee
has advised the Collective Trust that, in making investment decisions or
formulating investment recommendations, the Trust Department will not obtain or
use material inside information in the possession of any other division or
department of the Trustee or from CNC or its subsidiaries or affiliates. The
Trustee has also advised the Collective Trust that its investment personnel do
not disclose any material inside information in their possession to any other
division or department of Canandaigua National or to CNC or its subsidiaries or
affiliates.
COMPENSATION OF THE TRUSTEE; EXPENSES
The Trustee has paid and will pay or reimburse the Collective Trust for
all costs and expenses arising in connection with the organization of the
Collective Trust, including initial registration and qualification of the
Collective Trust and the units under the federal securities laws and under
other applicable regulatory requirements. The Trustee also pays all expenses
incurred by it in connection with acting as investment manager, other than
costs (including taxes and brokerage commissions, if any) of securities
purchased for the Retirement Portfolios. Expenses incurred by the Trustee in
connection with acting as investment manager include the costs of accounting,
data processing, bookkeeping and internal auditing services, other than costs
related to Unitholder account servicing, and rendering periodic and special
reports to the Supervisory Committee. The Trustee pays for all employees,
office space and facilities required by it to provide services under the
Management Agreement, except for specific items of expense referred to below.
As compensation for these services, the Trustee is paid with respect to
each Retirement Portfolio a monthly management fee at the annual rate of 1.00%
of the average daily net assets of such Retirement Portfolio. There is
currently no separate fee for establishing a Canandaigua National IRA or
Canandaigua National Pension Trust invested in the Collective Trust and no fees
or expenses for participation in the Collective Trust are charged directly to
the Participating Trusts. Canandaigua National reserves the right to seek
changes in the management fee and to charge separate establishment and
maintenance fees. Any such changes would be made only after prior notice and,
in the case of the monthly management fee, after approval by the Supervisory
Committee and by the Unitholders.
Except for the expenses described above which have been assumed by the
Trustee or Canandaigua National, all expenses incurred in administration of the
Collective Trust are charged to the Collective Trust or a particular Retirement
Portfolio, as the case may be, including the management fee; fees and expenses
of members of the Supervisory Committee who are not affiliated with Canandaigua
National; interest charges; taxes; brokerage commissions; expenses of valuing
assets; expenses of continuing registration and qualification of the Collective
Trust and the units under federal and state law; expenses of issue, withdrawal
and exchange of units; fees and disbursements of independent accountants and
legal counsel; securities depositories, transfer agents and Unitholder account
servicing organizations; expenses of preparing, printing and mailing
prospectuses (except printing and mailing of prospectuses to persons who may
establish Participating Trusts which are paid by Canandaigua National),
reports, proxies, notices and statements sent to Participating Trusts; expenses
of meetings of Participating Trusts; association membership dues; and insurance
premiums. The Collective Trust is also liable for nonrecurring expenses,
including litigation to which the Collective Trust is a party. Expenses
incurred for the operation of a particular Retirement Portfolio, including the
expenses of communications to Participating Trusts, are paid by that Retirement
Portfolio. Expenses that are general liabilities of the Collective Trust are
allocated among the Retirement Portfolios in proportion to the total net assets
of each Retirement Portfolio in accordance with generally accepted accounting
principles.
The Trustee has agreed to reimburse the Collective Trust for the amount
by which the expenses of the Collective Trust (including the management fee,
but excluding interest, taxes, brokerage commissions and extraordinary
expenses) exceed the lower of: (1) 1.5% of the average daily value of the
Collective Trust's net assets during such year; or (ii) the most restrictive
expense limitation applicable to the Collective Trust imposed by the securities
laws of any state in which the Collective Trust is sold. Currently, no
limitation applicable to the Collective Trust under any state law is lower than
1.5%.
GLASS-STEAGALL ACT CONSIDERATIONS
The Comptroller of the Currency has to date approved the applications of
several national banks to establish and maintain collective investment funds,
similar to the Collective Trust, for the purpose of collectively investing
assets received by each bank as trustee of individual retirement account
trusts. In approving these applications, the Comptroller determined that the
commingling of retirement trust assets by a national bank is a traditional bank
fiduciary service explicitly authorized by the Comptroller's own regulations.
The Comptroller also found that commingling of individual retirement trust
assets by a bank through the vehicle of a collective investment fund was
expressly recognized and confirmed by Congress in enacting the Employee
Retirement Income Security Act of 1974; and that the commingling of individual
retirement trust assets as part of a bona fide fiduciary service is consistent
with the requirements of the Glass-Steagall Act as construed by the United
States Supreme Court's 1971 decision in INVESTMENT COMPANY INSTITUTE V. CAMP.
The Investment Company Institute ("ICI") filed lawsuits in the United
States District Court for the District of Columbia, the United States District
Court for the Northern District of California, the United States District Court
for the District of Connecticut and the United States District Court for the
Western District of North Carolina challenging the Comptroller's approval of
certain of the aforementioned applications. The ICI alleged, among other
things, that the Glass-Steagall Act prohibits a national bank from establishing
and maintaining a collective investment fund for the collective investment of
individual retirement trust account assets. The United States Court of Appeals
for the District of Columbia, for the Second Circuit and for the Ninth Circuit,
and the District Court for the Western District of North Carolina, each upheld
the Comptroller's approval of a collective investment fund. Thereafter, the
United States Supreme Court denied the ICI's request that the Supreme Court
review the issues raised in these lawsuits.
Canandaigua National has received an opinion of the Comptroller of the
Currency to the effect that the proposed activities of the Collective Trust
will not violate the Glass-Steagall Act. In addition, the Comptroller has
granted Canandaigua National permission to operate the Collective Trust and has
waived the provisions of the Comptroller's regulations (12 C.F.R 9.18(b)) to
the extent necessary to permit compliance by Canandaigua National and the
Collective Trust with the provisions of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended. Canandaigua National
believes that it may properly perform the investment advisory and
administrative services contemplated by the Portfolio's Declaration of Trust
and the Management Agreement and that Canandaigua National's personnel may
serve as members of the Supervisory Committee and as officers of the Collective
Trust without violating any section of the Glass-Steagall Act or other
applicable banking laws or regulations. The members of the Supervisory
Committee have advised Canandaigua National that they are willing to serve as
such in reliance on the views of the Comptroller of the Currency and
Canandaigua National. However, future administrative decisions or
interpretations of present statutes and regulations or changes in such statutes
or regulations could prevent Canandaigua National from continuing to perform
some or all of the services under the Collective Trust's Declaration of Trust
and the Management Agreement or prevent its personnel from serving in such
capacities.
If Canandaigua National personnel were prevented from serving as members
of the Supervisory Committee or as officers of the Collective Trust, the
Collective Trust would obtain non-Canandaigua National personnel to serve. If
the Comptroller's decisions approving the establishment of collective funds for
the purpose of collectively investing individual retirement trust assets were
ultimately to be reversed, or if Canandaigua National were otherwise prevented
from performing any of the services contemplated by the Declaration of Trust or
the Agreement, the Collective Trust could consider the situation at that time
and obtain another qualified person to perform the services or seek approval of
the Participating Trusts to discontinue the Collective Trust. In such case,
Canandaigua National has agreed to pay or reimburse the Collective Trust for
all out-of-pocket expenses of the Collective Trust associated with finding
another qualified person to perform services for the Collective Trust or to
discontinue the Collective Trust. If the Collective Trust is discontinued,
Participating Trusts will suffer no adverse tax consequences as long as assets
are not distributed from a Canandaigua National IRA or Canandaigua National
Pension Trust or, if a distribution is made, the distribution is reinvested in
another individual retirement account or qualified retirement plan. If the
Collective Trust is discontinued, a Participating Trust may realize a loss if
the amount received upon the discontinuance of the Collective Trust, which
would be based on the market value of the securities in the Retirement
Portfolio in which a Participating Trust is invested, is less than the amount
invested.
TAX INFORMATION
It is intended that the Collective Trust will be exempt from Federal
income tax under Section 408(e) of the Internal Revenue Code with respect to
interests in the Collective Trust which are attributable to individual
retirement trust accounts maintained in conformity with Section 408(e) of the
Internal Revenue Code and that the Collective Trust will be exempt from Federal
income tax under Section 501(a) of the Internal Revenue Code with respect to
interests in the Collective Trust which are attributable to pension or profit-
sharing trusts (including those benefiting self-employed individuals)
maintained in conformity with Section 401(a) of the Internal Revenue Code. It
is also intended that the Collective Trust will not be subject to taxation in
New York State. For federal income tax purposes, income earned by the
Collective Trust will not be taxable to Participating Trusts or Participants
until a Participant receives a distribution from the Collective Trust.
Withdrawals from the Collective Trust which are paid to Participating Trusts
can be made at any time by Participating Trusts without penalty and without the
amount withdrawn being subject to Federal income tax. Reference should be made
to "TAX INFORMATION" in the Statement of Additional Information for a more
complete description of certain federal tax laws applicable to Qualified Trusts
and the Collective Trust, including the effect of the Tax Reform Act of 1986 on
contributions to the Collective Trust and distributions from the Collective
Trust. Such information describes only certain federal tax considerations. It
does not describe other tax laws such as state or local taxes, and does not
describe fully taxation of distributions from a Qualified Trust. Participants
who maintain a Canandaigua National IRA should read carefully the Canandaigua
National IRA disclosure statement (the individual retirement account disclosure
statement required by Internal Revenue Service regulations) for more complete
information and should consult their individual tax advisers. The tax
consequences of participation in the Collective Trust will also depend, in
part, upon the facts and circumstances of the individual Participant or
Qualified Trust, and each Participant in the Qualified Trust.
PERFORMANCE DATA
From time to time the Collective Trust may include the average annual
total return on its Bond Portfolio or Equity Portfolio for various specified
time periods in advertisements or information furnished to present or
prospective unitholders. Average annual total return is computed in accordance
with formulas specified by the Securities and Exchange Commission (the
"Commission").
Average annual total return quotations for the specified period will be
computed by finding the average annual compounded rates of return (based on net
investment income and any realized and unrealized capital gains or losses on
portfolio investments over such periods) that would equate the initial amount
invested to the redeemable value of such investment at the end of each period.
Average annual total return will be computed assuming all dividends and
distributions are reinvested and taking into account all applicable recurring
and nonrecurring expenses.
The Collective Trust also may quote total return and aggregate total
return performance data on its Bond Portfolio or Equity Portfolio for various
specified time periods. Such data will be calculated substantially as
described above, except that the rates of return calculated will not be average
annual rates, but rather, actual annual, annualized or aggregate rates of
return. Actual annual or annualized total return data generally will be lower
than average annual total return data since the average annual rates of return
reflect compounding; aggregate total return data generally will be higher than
average annual total return data since the aggregate rates of return reflect
compounding over a longer period of time. Total return may be expressed either
as a percentage or as a dollar amount in order to illustrate such total return
on a hypothetical $1,000 investment at the beginning of each specified period.
Total return figures are based on the Collective Trust's historical
performance and are not intended to indicate future performance. The total
return on the Bond Portfolio and the Equity Portfolio will vary depending on
market conditions, the securities comprising the Collective Trust's portfolio,
the Collective Trust's operating expenses and the amount of realized and
unrealized net capital gains or losses during the period. The value of an
investment in the Collective Trust will fluctuate and a unitholder's shares,
when redeemed, may be worth more or less than their original cost.
On occasion, the Collective Trust may compare the performance of its Bond
Portfolio or Equity Portfolio to that of the Standard & Poor's 500 Composite
Stock Price Index, the Value Line Composite Index, the Lehman Brothers
Intermediate Government/Corporate Bond Index, the Dow Jones Industrial Average,
or other indices, or to data contained in publications such as LIPPER
ANALYTICAL SERVICES, INC., MORNINGSTAR PUBLICATIONS, INC., MONEY MAGAZINE, U.S.
NEWS & WORLD REPORT, BUSINESS WEEK, FORBES, FORTUNE and CDA INVESTMENT
TECHNOLOGY, INC. As with other performance data, performance comparisons
should not be considered representative of the relative performance of the Bond
Portfolio or Equity Portfolio for any future period.
GENERAL INFORMATION
DESCRIPTION OF VOTING RIGHTS
The Declaration of Trust provides that the Collective Trust may issue an
unlimited number of units of beneficial interest without par value which may be
divided into separate "classes" designated as Retirement Portfolios. The
classes are treated as series for the purposes of the Investment Company Act
and are referred to elsewhere in this Prospectus as Retirement Portfolios. The
Declaration of Trust permits the Trustee to create an unlimited number of
Retirement Portfolios and, with respect to each Retirement Portfolio, to issue
an unlimited number of full and fractional units of beneficial interest of that
Collective Trust. Each class of units designated as a separate Retirement
Portfolio represents a separate pool of assets. Currently the Collective Trust
is offering units of beneficial interest in two Retirement Portfolios: the Bond
Portfolio and the Stock Portfolio. The Trustee may classify or reclassify
units into one or more Retirement Portfolios so long as such classification or
re-classification does not have a material adverse effect on the Participating
Trusts which own the units.
The units of each Retirement Portfolio are fully paid and non-assessable
and have no preference as to conversion, exchange, dividends, retirement or
other features. The units of each Retirement Portfolio have no preemptive
rights. Each Participating Trust is entitled to exercise the voting rights of
the units registered in the name of the Participating Trust or the nominee
thereof. A Participating Trust is entitled to one vote for each full unit (and
a fractional vote for each fractional unit) outstanding on the records of the
Collective Trust in the name of the Participating Trust or the nominee thereof.
The units of each Retirement Portfolio have non-cumulative voting rights, which
means that the holders of more than 50% of the units voting for the election of
the Supervisory Committee can elect 100% of the Supervisory Committee if they
choose to do so. On any matter submitted to a vote of the Participating
Trusts, all units of the Collective Trust then issued and outstanding and
entitled to vote, irrespective of the class, will be voted in the aggregate and
not by class except: (i) when required by the Investment Company Act, units
shall be voted by individual classes; and (ii) when the matter affects an
interest of less than all classes, then only Participating Trusts which own
units of the affected class or classes shall be entitled to vote thereon.
Units vote in the aggregate on matters such as the election of directors;
whereas, units are voted by class on matters such as the approval of the
Management Agreement and changing certain investment restrictions.
As used in this Prospectus, when referring to the approvals to be
obtained from Participating Trusts in connection with matters affecting all of
the Retirement Portfolios, the term "majority" means the vote of the lesser of:
(1) 67% of the Collective Trust's outstanding units present at a meeting; or
(2) more than 50% of the Collective Trust's outstanding units. When referring
to the approvals to be obtained from Participating Trusts in connection with
matters affecting less than all of the Retirement Portfolios, the term
"majority" means the vote of the lesser of: (1) 67% of each Portfolio's
outstanding units present at a meeting: or (2) more than 50% of each
portfolio's outstanding units.
Voting rights will be exercised for all Participating Trusts as follows:
(i) for each Canandaigua National IRA, by the accountholder, and (ii) for all
other Participating Trusts, as directed in the governing instrument for the
Participating Trust.
The Collective Trust will hold annual meetings of Unitholders for the
purpose of electing Supervisory Committee members and such other purposes as
may be required by law or decided upon by the Supervisory Committee.
No document shall be issued evidencing any interest in the Collective
Trust. No Participating Trust shall have the power to sell, assign or transfer
any unit or all or any part of its equity or interest in the Collective Trust
or use it as security for a loan.
PARTICIPANT LIABILITY
Participating Trusts may be subject to liability for obligations of the
Collective Trust under the laws of some jurisdictions. Therefore, the
Declaration of Trust contains a disclaimer of liability of Participating Trusts
and requires notice of such disclaimer be given in each obligation entered into
or executed by the Trustee. It also provides for an indemnification out of
Collective Trust property for any Participating Trust held personally liable
for the obligations of the Collective Trust.
CUSTODIAN AND UNITHOLDER ACCOUNT SERVICE
The Northern Trust Company acts as custodian of the assets of the
Collective Trust. Canandaigua National acts as Unitholder account servicer.
Canandaigua National is not paid any fee for these services but is reimbursed
for the expenses which it incurs to perform them, including fees and expenses
of any subcustodians and securities depositories.
<PAGE>
APPENDIX
Description of Standard & Poor's Corporation's corporate bond ratings of BBB or
better:
AAA - Bonds rated AAA have the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely
strong.
AA - Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only to a small
degree.
A - Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds
in higher rated categories.
BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds
in higher rated categories.
Description of Moody's Investor Service, Inc.'s corporate bond ratings of Baa
or better:
AAA - Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt-edge". Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long
term risks appear somewhat larger than Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
BAA - Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
CANANDAIGUA NATIONAL COLLECTIVE INVESTMENT FUND FOR QUALIFIED TRUSTS
This Statement of Additional Information sets forth certain information
with respect to units offered by Canandaigua National Collective Investment
Fund for Qualified Trusts (the "Collective Trust"), an open-end diversified
management investment company.
_____________________________
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS.
THE INFORMATION HEREIN SHOULD BE READ IN CONJUNCTION WITH
THE COLLECTIVE TRUST'S PROSPECTUS DATED APRIL 29, 1996,
A COPY OF WHICH MAY BE OBTAINED BY CALLING
THE CANANDAIGUA NATIONAL
INVESTMENT DEPARTMENT
AT
1-800-724-2621
(EXT. 216).
April 29, 1996
<PAGE>
TABLE OF CONTENTS
PAGE NO.
THE COLLECTIVE TRUST..............................................3
INVESTMENT RESTRICTIONS...........................................3
OTHER INVESTMENT POLICIES.........................................5
ADMINISTRATION OF THE COLLECTIVE TRUST............................5
Supervisory Committee and Officers................................5
Compensation of the Supervisory Committee..................6
The Trustee.......................................................6
Investment Management......................................6
Administration and Account Services........................7
Compensation of the Trustee; Expenses......................7
Term of the Management Agreement...........................8
VALUATION OF UNITS................................................8
TAX INFORMATION...................................................9
Participating Trusts..............................................9
Canandaigua National IRAs..................................9
Retirement Plans for Self-Employed Individuals............11
The Collective Trust.............................................12
PORTFOLIO TRANSACTIONS...........................................13
GENERAL INFORMATION..............................................14
Termination of the Collective Trust..............................14
Custodian and Unitholder Account Servicer........................14
Principal Holders of Units.......................................14
COUNSEL AND INDEPENDENT ACCOUNTANTS..............................14
REPORT OF INDEPENDENT ACCOUNTANTS................................15
STATEMENT OF ASSETS AND LIABILITIES..............................18
<PAGE>
THE COLLECTIVE TRUST
The Canandaigua National Collective Investment Fund for Qualified Trusts
(the "Collective Trust"), also known as the Canandaigua National Bank
Retirement Portfolios, is registered with the Securities and Exchange
Commission as an open-end diversified management investment company. The
Canandaigua National Bank and Trust Company is the Trustee (in such capacity,
the "Trustee", otherwise "Canandaigua National") of the Collective Trust. For
purposes of the Securities Act of 1933, Canandaigua National may be considered
by the Securities and Exchange Commission to be the principal underwriter for
the Collective Trust.
Generally, for Federal income tax purposes, money invested in the
Collective Trust and income earned by the Collective Trust will not be taxable
to an investor until such investor receives a distribution from the Collective
Trust. Since January 1, 1987, contributions by certain investors to individual
retirement accounts have not been deductible. However, the income earned on
such contributions has not been taxable to the investor until the investor
receives a distribution from the Participating Trust. The Collective Trust
consists of two Retirement Portfolios, each with a different investment
objective, for investment of retirement funds held in certain Qualified Trusts.
"Qualified Trusts" include individual retirement trust accounts established
under trust agreements with Canandaigua National as trustee ("Canandaigua
National IRAs"), and single or commingled pension or profit-sharing trusts,
including corporate pension or profit-sharing trusts and pension or profit-
sharing trusts benefiting one or more self-employed individuals (generally
referred to as HR 10 or Keogh plans), established under trust agreements with
Canandaigua National as trustee ("Canandaigua National Pension Trusts).
Qualified Trusts may select one or more Retirement Portfolios and may transfer
retirement funds from one Retirement Portfolio to another.
The BOND PORTFOLIO seeks to earn a high level of current income with
consideration also given to safety of principal.
The EQUITY PORTFOLIO seeks long term growth of asset values through
capital appreciation and dividend income.
INVESTMENT RESTRICTIONS
The following restrictions and fundamental policies cannot be changed for
any Retirement Portfolio without the approval of the holders of a majority of
the outstanding units of the affected Retirement Portfolio or Retirement
Portfolios. The Collective Trust may not:
(a) Purchase securities of any issuer (except securities issued or
guaranteed as to principal or interest by the United States Government, its
agencies or instrumentalities) for a Retirement Portfolio if as a result more
than 5% of the value of the total assets of that Retirement Portfolio would be
invested in the securities of such issuer or all Retirement Portfolios together
would own more than 10% of the outstanding voting securities of such issuer;
for purposes of this limitation, identification of the "issuer" will be based
on a determination of the source of assets and revenues committed to meeting
interest and principal payments of each security;
(b) Invest in companies for the purpose of exercising control;
(c) Borrow money in any Retirement Portfolio except for temporary
purposes and then only in an amount not exceeding 5% of the value of the total
assets of that Retirement Portfolio. The Collective Trust will repay all
borrowings in any Retirement Portfolio before making additional investments for
that Retirement Portfolio and interest paid on such borrowings will reduce
income;
(d) Pledge, mortgage or hypothecate the assets of any Retirement
Portfolio to any extent greater than 10% of the value of the total assets of
that Retirement Portfolio;
(e) Issue senior securities;
(f) Underwrite any issue of securities;
(g) Purchase or sell real estate or real estate mortgage loans, but
this shall not prevent investments in instruments secured by real estate or
interests therein or in marketable securities in real estate operations;
(h) Make loans to other persons, except the Collective Trust may make
time or demand deposits with banks, may purchase bonds, debentures or similar
obligations that are publicly distributed, may loan portfolio securities in a
Retirement Portfolio not in excess of 10% of the value of the total assets of
that Retirement Portfolio and may enter into repurchase agreements as long as
repurchase agreements maturing in more than seven days entered into for a
particular Retirement Portfolio do not exceed 10% of the value of the total
assets of the Retirement Portfolio;
(i) Purchase on margin or sell short;
(j) Purchase or retain securities of an issuer if those members of the
Supervisory Committee, each of whom owns more than 1/2 of 1% of such
securities, together own more than 5% of the securities of such issuer;
(k) Purchase or sell commodities or commodity contracts;
(l) Invest its assets in securities of other investment companies
except as part of a merger, consolidation, reorganization or purchase of assets
approved by the Participants;
(m) Except as may be permitted by clause (k), invest in or sell put,
call, straddle or spread options or interests in oil, gas or other mineral
exploration or development programs;
(n) Purchase any securities for a Retirement Portfolio that would cause
more than 25% of the value of that Retirement Portfolio's total assets at the
time of such purchase to be invested in the securities of one or more issuers
conducting their principal activities in the same industry except that there is
no limitation with respect to obligations issued or guaranteed by the United
States Government, its agencies or instrumentalities;
(o) Invest the assets of any Retirement Portfolio in nonmarketable
securities (including repurchase agreements and time deposits maturing in more
than seven days but excluding master demand notes and other securities payable
on demand) to any extent greater than 10% of the value of the total assets of
that Retirement Portfolio. If through the appreciation of nonmarketable
securities, or the depreciation of marketable securities, a Retirement
Portfolio has more than 10% of its assets invested in nonmarketable securities,
the Retirement Portfolio will reduce its holdings of nonmarketable securities
to 10% or less of its total assets as soon as practicable;
(p) Purchase securities of any issuer that has a record of less than
three years continuous operation if such purchase would cause more than 5% of
the value of that Retirement Portfolio's total assets at the time of such
purchase to be invested in securities of such issuers.
(q) Purchase securities of foreign issuers; or
(r) Purchase puts, calls or engage in other futures contracts.
If a percentage restriction is adhered to at the time of investment, then
except as noted in (i) above, a later increase or decrease in percentage
resulting from a change in values or assets will not constitute a violation of
that restriction.
OTHER INVESTMENT POLICIES
The Collective Trust will not invest in securities which are subject to
restrictions on resale because they have not been registered under the
Securities Act of 1933, as amended, or which are not readily marketable, except
for master demand notes, other securities payable upon demand, repurchase
agreements and instruments evidencing loans of securities. Such securities
may, however, become a part of a Retirement Portfolio's assets through a
merger, exchange or recapitalization involving securities already held in a
Retirement Portfolio.
Neither of the Retirement Portfolios plans to purchase securities solely
for the purpose of short-term trading. The turnover rate for a Retirement
Portfolio will not be a factor preventing sale or purchase when the Trustee
believes investment considerations warrant such sale or purchase. The
Collective Trust expects that the annual portfolio turnover rate over a term of
years will not exceed 100% for any Retirement Portfolio, although the rate may
exceed 100% in some years. This does not include short-term securities.
Any Retirement Portfolio may, to the extent consistent with its
investment objectives, invest in master demand notes. A master demand note is
a facility, typically maintained by a bank, pursuant to which monies are lent
on a daily basis to a corporate borrower by a group of purchasers in amounts
and at rates negotiated daily. The loan is payable on demand. As with other
debt obligations, there is a risk that the borrower will fail to repay the
obligation.
The foregoing investment objectives and policies are not fundamental and
may be changed by the Trustee without the approval of the holders of a majority
of the outstanding units of the affected Retirement Portfolio or Portfolios.
ADMINISTRATION OF THE COLLECTIVE TRUST
SUPERVISORY COMMITTEE AND OFFICERS
The members of the Supervisory Committee, officers of the Collective
Trust, their principal occupations for the last five years and their
affiliations, if any, with Canandaigua National are as follows (an asterisk
indicates that such person is an interested person of the Collective Trust
within the meaning of the Investment Company Act); Mr. Craugh is not deemed to
be an interested person within the meaning of the Investment Company Act, but
is deemed an interested person by the United States Comptroller of the
Currency);
ROBERT N. COE MEMBER OF THE SUPERVISORY COMMITTEE. President
31189 Oakmount and co-owner of W.W. Coe & Son, Inc., an
Road independent insurance agency founded in 1862,
Holcomb, NY 14469 Canandaigua, NY (W.W. Coe & Son, Inc. owns 50
shares of common stock of CNC constituting
0.06% of CNC's outstanding stock. Mr. Coe has
waived his interest in such shares.)
ROBERT J. CRAUGH CHAIRMAN OF THE SUPERVISORY COMMITTEE. Retired
25 Deerfield Drive since 1987; prior thereto Senior Vice
Canandaigua, NY President- Operations of Canandaigua National.
14424 (Mr. Craugh owns 535 shares of common stock of
CNC, his spouse owns 540 shares and he and
spouse jointly own 172 shares. Such shares
altogether constitute 1.56% of CNC's common
stock.)
DONALD C. MEMBER OF THE SUPERVISORY COMMITTEE. Since
GREENHOUSE November, 1989, President and owner of Seneca
108 Cliffside Point Associates, Inc., a business consulting
Drive firm in Canandaigua, NY; prior thereto
Canandaigua, NY Executive Vice President, Voplex Corporation;
14424 Rochester, NY.
GREGORY S. MACKAY TREASURER, MEMBER OF THE SUPERVISORY
5151 Laura Lane COMMITTEE. Treasurer CNC and Senior Vice
Canandaigua, NY President of Canandaigua National.*
14424
ROBERT J. SWARTOUT SECRETARY, MEMBER OF THE SUPERVISORY
1280 Fairway 7 COMMITTEE. Vice President and Investment
Macedon, NY 14502 Officer, Canandaigua National.*
The members of the Supervisory Committee and the officers of the
Collective Trust, as a group, own less than 1% of the outstanding units of the
Collective Trust.
COMPENSATION OF THE SUPERVISORY COMMITTEE. Members of the Supervisory
Committee who are not officers of Canandaigua National receive $200.00 from the
Collective Trust and reasonable expenses for each Supervisory Committee meeting
attended. Members of the Supervisory Committee who are officers of Canandaigua
National receive no compensation from the Collective Trust.
THE TRUSTEE
Subject to the direction of the Supervisory Committee, The Canandaigua
National Bank and Trust Company, 72 South Main Street, Canandaigua, New York
14424, a wholly-owned subsidiary of the Canandaigua National Corporation
("CNC"), acts as the Trustee of the Collective Trust and, as such, manages all
of the business and affairs of the Collective Trust.
INVESTMENT MANAGEMENT. The Management Agreement dated as of October 6,
1992, between Canandaigua National and the Collective Trust (the "Management
Agreement") was approved by the Supervisory Committee on October 6, 1992 and by
the initial Participating Trust on October 7, 1992. Under the Management
Agreement, the Trustee as investment manager manages the investment of the
assets of each Retirement Portfolio in conformity with the stated objective and
policies of that Portfolio. It is the responsibility of the Trustee to make
investment decisions for the Retirement Portfolios and to provide continuous
supervision of their investment portfolios.
The investment management services of the Trustee to the Collective Trust
are not exclusive under the terms of the Management Agreement. The Trustee is
free to, and does, render investment advisory services to others. Included
among the Trust Department's accounts are personal advisory accounts, trusts
and estates, and pension and profit-sharing funds for corporations, as well as
commingled trust funds, registered investment companies and a broad spectrum of
institutional accounts. These accounts have varying investment objectives.
Under the terms of the Management Agreement, the Trustee is obligated to
manage the Retirement Portfolios in accordance with applicable laws and
regulations, including the regulations and rulings of the United States
Comptroller of the Currency relating to fiduciary powers of national banks. In
accordance with these regulations, the Trustee will not invest the Retirement
Portfolios' assets in stock or obligations of, or property acquired from,
Canandaigua National, its affiliates or directors, officers or employees or
other persons with substantial connections with Canandaigua National, and
assets of the Retirement Portfolios shall not be sold or transferred, by loan
or otherwise, to Canandaigua National or persons connected with Canandaigua
National as described above, except that in accordance with Section 5.2(c) of
the Declaration of Trust and applicable regulations of the Comptroller of the
Currency, the Retirement Portfolios' assets may be placed in deposits with
Canandaigua National pending investment or distribution.
ADMINISTRATION AND ACCOUNT SERVICES. The Trustee also performs certain
administration and account servicing functions under the Management Agreement.
These services include preparation and distribution of communications to the
Participating Trusts, accounting and recordkeeping. The Trustee pays the cost
of supplying necessary employees, office space and facilities for these
services.
COMPENSATION OF THE TRUSTEE; EXPENSES. The Trustee has paid and will pay
or reimburse the Collective Trust for all costs and expenses arising in
connection with the organization of the Collective Trust, including initial
registration and qualification of the Collective Trust and the units under the
Federal securities laws and under other applicable regulatory requirements.
The Trustee also pays all expenses incurred by it in connection with acting as
investment manager, other than costs (including taxes and brokerage
commissions, if any) of securities purchased for the Retirement Portfolios.
Expenses incurred by the Trustee in connection with acting as investment
manager include the costs of accounting, data processing, bookkeeping and
internal auditing services, other than costs related to Unitholder account
servicing, and rendering periodic and special reports to the Supervisory
Committee. The Trustee pays for all employees, office space and facilities
required by it to provide services under the Management Agreement, except for
specific items of expense referred to below. Canandaigua National pays for all
marketing and advertising expenses of the Collective Trust. The Collective
Trust's assets are not used to pay the costs of distribution.
For its services under the Management Agreement, the Trustee is paid with
respect to each Retirement Portfolio a monthly management fee at the annual
rate of 1.00%. There is currently no separate fee for establishing a
Canandaigua National IRA or Canandaigua National Pension Trust whose assets are
invested in the Collective Trust, and no fees or expenses are charged directly
to the Participating Trusts for participation in the Collective Trust.
Except for the expenses described above which have been assumed by the
Trustee or Canandaigua National, all expenses incurred in administration of the
Collective Trust are charged to the Collective Trust or a particular Retirement
Portfolio, as the case may be, including the management fee; fees and expenses
of members of the Supervisory Committee who are not officers of Canandaigua
National; interest charges; taxes; brokerage commissions; expenses of valuing
assets; expenses of continuing registration and qualification of the Collective
Trust and the units under federal and state law; expenses of issue, withdrawal
and exchange of units; fees and disbursements of independent accountants and
legal counsel; fees and expenses of custodians, including subcustodians and
securities depositories, transfer agents and Unitholder account servicing
organizations; expenses of preparing, printing and mailing prospectuses (except
printing and mailing of prospectuses to persons who may establish Participating
Trusts), reports, proxies, notices and statements sent to Participating Trusts;
expenses of meetings of Participating Trusts; association membership dues; and
insurance premiums. The Collective Trust is also liable for nonrecurring
expenses, including litigation to which the Collective Trust is a party.
Expenses incurred for the operation of a particular Retirement Portfolio
including the expenses of communications to Participating Trusts, are paid by
that Retirement Portfolio. Expenses that are general liabilities of the
Collective Trust are allocated among the Retirement Portfolios in proportion to
the total net assets of each Retirement Portfolio.
The Trustee has agreed to reimburse the Collective Trust for the amount
by which the expenses of the Collective Trust (including the management fee,
but excluding interest, taxes, brokerage commissions and extraordinary
expenses) exceed the lower of (i) 1.5% of the average daily value of the
Collective Trust's net assets during such year or (ii) the most restrictive
expense limitation applicable to the Collective Trust imposed by the securities
laws of any state in which the Collective Trust is sold. Currently, no
limitation applicable to the Collective Trust under any state law is lower than
1.5%.
TERM OF THE MANAGEMENT AGREEMENT. The Management Agreement will remain
in effect as to each Retirement Portfolio until April 30, 1997 and from year to
year thereafter if its continuance is approved annually either by the
Supervisory Committee or by the vote of a majority of the outstanding units of
such Retirement Portfolio and by a majority of the members of the Supervisory
Committee who are not parties to the Agreement or "interested persons" of a
party. The Agreement can be terminated as to any Retirement Portfolio on 60
days' notice given at any time and will terminate automatically if it is
assigned.
VALUATION OF UNITS
Net asset value per unit of each Retirement Portfolio is determined by
dividing the total value of the Retirement Portfolio's assets, less any
liabilities including the fee payable to the Trustee for advisory and other
services, by the number of units of the Retirement Portfolio outstanding.
The Trustee determines the value of the assets held in each Retirement
Portfolio at 9:00 a.m. each day, eastern time, based on the data available as
of 4:15 p.m. the previous business day. (The following days are holidays on
the New York Stock Exchange: January 1 New Year's Day, February (third Monday)
Washington's Birthday, March or April (Friday before Easter) Good Friday, May
(last Monday) Memorial Day, July 4 Independence Day, September (first Monday)
Labor Day, November (fourth Thursday) Thanksgiving Day, December 25 Christmas
Day.) Except for debt securities with remaining maturities of 60 days or less,
assets for which market quotations are available are valued as follows: (a)
each listed security is valued at its closing price obtained from the
respective primary exchange on which the security is listed, or, if there were
no sales on that day, at its last reported current bid price; (b) each unlisted
security is valued at the last current bid price obtained from the NASDAQ; (c)
United States Government and agency obligations are valued based upon bid
quotations from the Federal Reserve Bank for identical or similar obligations;
(d) short-term money market instruments (such as certificates of deposit,
bankers' acceptances and commercial paper) are most often valued by bid
quotation or by reference to bid quotations of available yields for similar
instruments of issuers with similar credit ratings. The Supervisory Committee
has determined that the values obtained using the procedures described in (c)
and (d) represent the fair values of the securities valued by such procedures.
All of these prices are obtained by the Collective Trust from services which
collect and disseminate such market prices. Bid quotations for short-term
money market instruments reported by such a service are the bid quotations
reported to it by the major dealers.
Debt securities with remaining maturities of 60 days or less are valued
on the basis of amortized cost. Under this method of valuation, the security
is initially valued at cost on the date of purchase or, in the case of
securities purchased with more than 60 days remaining to maturity, the market
value on the 61st day prior to maturity. Thereafter the Collective Trust
assumes a constant proportionate amortization in value until maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the security, unless the Supervisory Committee determines
that amortized cost no longer represents fair value.
When approved by the Supervisory Committee, certain securities may be
valued on the basis of valuations provided by an independent pricing service
when such prices are believed by the Supervisory Committee to reflect the fair
value of such securities. These securities would normally be those which have
no available recent market value, have few outstanding shares and therefore
infrequent trades, or for which there is a lack of consensus on the value, with
quoted prices covering a wide range. The lack of consensus would result from
relatively unusual circumstances such as no trading in the security for long
periods of time, or a company's involvement in merger or acquisition activity,
with widely varying valuations placed on the company's assets or stock. Prices
provided by an independent pricing service may be determined without exclusive
reliance on quoted prices and may take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data.
In the absence of an ascertainable market value, assets are valued at
their fair value as determined by the Trustee using methods and procedures
reviewed and approved by the Supervisory Committee.
The Collective Trust does not declare and pay dividends of its investment
income or distribute gains, if any, from the sale of securities. Income earned
on assets in a Retirement Portfolio is included in the total value of such
Portfolio's assets. Interest income on debt securities is accrued and added to
asset value daily. Dividend income is recognized and added to asset value on
the ex-dividend date.
TAX INFORMATION
PARTICIPATING TRUSTS
CANANDAIGUA NATIONAL IRAS
The Internal Revenue Code of 1986 (the "Code") permits a personal income
tax deduction for contributions made under an IRA which is maintained in
conformity with Section 408(a) of the Code. The Code also allows a tax-free
rollover of certain distributions from, or a tax-free transfer of certain
interests in, another individual retirement account or individual retirement
annuity or a tax-free rollover of certain distributions from a qualified
retirement plan to an IRA.
Only the person establishing an IRA can own the IRA. No part of a
Participant's interest under an IRA can be forfeited. Except in the case of a
transfer to a Participant's spouse in connection with a divorce, a
Participant's interest in his or her IRA cannot be transferred to another
person. The Code also provides rules for distributions if the Participant dies
before his or her entire interest in the IRA has been distributed.
CONTRIBUTIONS. Subject to the limitations described below, under the Tax
Reform Act of 1986 an individual can deduct from federal gross income the
amount of contributions to an IRA made for a tax year, whether or not other
deductions are itemized. The maximum amount of the contributions deductible for
each tax year to an IRA is 100% of the individual's compensation, or earned
income in the case of a self-employed person, for that year up to $2,000.
Amounts transferred or rolled over from another individual retirement account
or individual retirement annuity or from a qualified retirement plan into the
IRA are not subject to this limit on deductible contributions. (The Code also
permits annual deductions for contributions to an IRA on behalf of an
individual and his or her spouse under separate IRAs of up to $2,250, but no
more than 100% of the working spouse's compensation or earned income and no
more than $2,000 may be allocated each year to either spouse's IRA. This
deduction is permitted if the individual's spouse either has no compensation
or, for purposes of IRA deductions, elects to be treated as if he or she has no
compensation.) In cases where both spouses work, each can contribute to a
separate IRA and deduct up to the maximum of 100% of his or her compensation or
earned income up to $2,000 each tax year.
Contributions to an IRA are deductible for a tax year if made up to the
deadline for filing a federal income tax return for that tax year (excluding
extensions). Except with respect to a simplified employee pension program
(described further below), no deduction for contributions is allowed for the
tax year in which an individual becomes age 70 1/2 or any later tax year.
Under the Tax Reform Act of 1986, for tax years beginning after December
31, 1986, if an individual or an individual's spouse is an active participant
in an employer maintained retirement plan, the individual and his spouse may be
unable to deduct all or a portion of their IRA contributions. The deduction
will be totally eliminated if the individual's adjusted gross income exceeds
$35,000 ($50,000 for married couples filing a joint return). If the
individual's adjusted gross income is between $25,000 and $35,000 (between
$40,000 and $50,000 for married couples filing a joint return), the individual
and the individual's spouse will be able to deduct a portion of their IRA
contributions. However, in either case, to the extent that an IRA contribution
is not fully deductible, and subject to the limitations described above on the
maximum permissible IRA contribution, an individual will be able to make a non-
deductible IRA contribution. If the individual's adjusted gross income is less
than $25,000 (less than $40,000 for married couples filing a joint return),
both the individual and the individual's spouse will be able to deduct their
entire IRA contribution. An employer maintained retirement plan is generally
any qualified pension, profit sharing, or stock bonus plan, a Section 403(b)
annuity plan, a SEP or a plan established for its employees by the United
States, by State or political subdivision or by any agency or instrumentality
of the United States or a State or political division.
EXCESS CONTRIBUTIONS. If contributions for a year exceed the $2,000/100%
of compensation limit described above, an individual is subject to a 6% penalty
tax on the amount of the contribution which is in excess of the limits. This
penalty tax can be avoided by withdrawing the excess amount and any earnings on
the excess amount before the deadline for filing the individual's federal
income tax return for the tax year for which the excess contribution was made.
DISTRIBUTIONS. For federal income tax purposes, retirement funds
invested in the Collective Trust through a Qualified Trust which is a
Canandaigua National IRA and the income earned by the Collective Trust will not
be taxable to the Canandaigua National IRA. Additionally, the income earned by
the Collective Trust will not be taxable to the Participant until the
Participant receives a distribution from the Canandaigua National IRA.
Distributions from an IRA are taxed as ordinary income when received. If a
distribution other than for death or disability is made before a Participant is
age 59 1/2 , the amount of the distribution may be subject to a penalty tax, as
will be the failure to commence distribution by April 1 of the calendar year
following the calendar year in which the Participant attains age 70 1/2 or the
failure of a Participant to receive certain minimum distributions in years
following the calendar year in which the Participant attains age 70 1/2 .
Under the Tax Reform Act of 1986, there will generally be imposed a 15%
penalty tax to the extent that annual benefit payments from an individual's IRA
and any retirement plans exceed $150,000. However, this penalty tax will not
apply to certain excess benefits accrued before August 1, 1986.
In addition, if a Participant engages in any transaction with his or her
Canandaigua National IRA which is prohibited under the Code, such Participant's
IRA may lose its status as an IRA and the assets held in the Canandaigua
National IRA will be deemed under the Code to have been distributed to the
Participant and be includible in gross income. If any Participant should
pledge all or any portion of his or her Canandaigua National IRA as security
for a loan, the portion pledged is deemed under the Code to have been
distributed to the Participant and is includible in gross income.
TRANSFER AND ROLLOVER CONTRIBUTIONS. An individual can make a tax-free
transfer into an IRA of all or a portion of the individual's interest in
another individual retirement account or individual retirement annuity. An
individual can also make a tax-free rollover contribution of all or a portion
of a distribution from another individual retirement account or individual
retirement annuity. However, once a rollover contribution has been made to an
IRA, a rollover contribution may not be made with respect to a subsequent
distribution from that IRA for a period of 12 months.
An individual may also make a rollover contribution into an IRA of all or
a portion of a lump sum distribution or of certain partial distributions (other
than a distribution of nondeductible employee contributions) from a qualified
retirement plan. However, once an election has been made to rollover a lump sum
distribution from a qualified retirement plan, the amount rolled over is no
longer eligible for any special tax treatment generally associated with lump
sum distributions from qualified retirement plans.
The Canandaigua National IRA will accept a transfer or rollover
contribution from an individual retirement account or annuity that consists of
amounts which were deductible as contributions to the retirement account or
annuity (and any earnings thereon). The Canandaigua National IRA will also
accept a rollover contribution of all or a portion of a lump sum distribution
or of certain partial distributions (other than a distribution of nondeductible
employee contributions) from a qualified retirement plan. A rollover
contribution must be received by the Canandaigua National IRA within 60 days of
the date of receipt of the distribution from the other individual retirement
account or annuity or from the qualified retirement plan.
SIMPLIFIED EMPLOYEE PENSION PROGRAMS. If an employer has established a
simplified employee pension program (SEP), the employer can make contributions
to the IRA for each eligible employee under the SEP.
Under a SEP an employer can contribute to an employee's IRA for the
employee's tax year an amount equal to 15% of the employee's compensation
(determined without taking into account the employer's contribution to the SEP)
up to a maximum of $30,000. Whether or not the employer contributes the
maximum, the employee may contribute up to the standard maximum individual IRA
contribution limit (to the extent that the employee did not use up the limit
for contributions to IRAs outside the employer's SEP program). However, the
employee's deduction may be reduced or eliminated based upon the limits
described above because as a Participant in a SEP, the employee is considered
to be covered by an employer retirement plan. If the employer's SEP program
takes into consideration more than $100,000 of a person's compensation (but
never more than $200,000), adjusted for inflation, then the employer must
contribute on behalf of each person covered under the SEP at a rate of at least
equal to 7.5% of compensation from that employer.
Under the Tax Reform Act of 1986, effective for years beginning after
December 31, 1986, a SEP may permit an employee to elect to have contributions
made to the SEP on the employee's behalf or to receive the contributions in
cash. The election will be available only if the employer has 25 or fewer
eligible employees at any time during the preceding taxable year. All
employees of the employer must be eligible to make such an election and at
least 50 percent of the eligible employees must elect to have amounts
contributed to the SEP. The election can apply to only $7,000 (adjusted for
inflation) of the contributions which would otherwise be made to the SEP on the
employee's behalf.
An employer can contribute and an employee can take a deduction for the
employer's contribution made on his behalf under the SEP even if the employee
is over age 70 1/2 when the contribution is made.
RETIREMENT PLANS FOR SELF-EMPLOYED INDIVIDUALS
Self-employed persons and partners of partnerships can establish a self-
employed retirement plan (the "Plan") which, in order to receive favorable
treatment under the Code, must be maintained in conformity with Section 401(a)
of the Code. A Qualified Trust forms part of the Plan.
CONTRIBUTIONS. A Plan may provide for annual employer tax deductible
contributions up to the maximum allowed in each tax year. For all self-
employed individuals, the maximum tax deductible contribution to a profit
sharing Plan is 15% of his or her "earned income" as defined in the Code, from
the trade or business for which the Plan is established, up to a maximum of
$30,000. The maximum tax deductible contribution to a money purchase pension
Plan, or to both a profit sharing Plan, and a money purchase pension Plan, is
25% of "earned income", up to a maximum of $30,000. Generally the amount of
"earned income" which may be taken into account in determining the maximum tax
deductible contributions is limited to $200,000 and is determined net of the
Plan contributions. A self-employed person must also make contributions for or
otherwise take into account under the Plan his or her employees who are not
self-employed.
Additional special limits on contributions apply to any self-employed
individual who participates in more than one self-employed retirement plan or
who controls another trade or business. And there is an overall limit on the
total amount of contributions and benefits under all tax deferred plans in
which a person participates.
DISTRIBUTIONS. Income or gains on contributions to a Plan are not
subject to federal income tax until a Participant receives a distribution of
benefits from the Plan. Benefits must commence by the first day of April of
the calendar year following the calendar year in which the Participant attains
age 70 1/2 . However, if the Participant attained age 70 1/2 before January 1,
1988, special transitional rules will apply. If the Plan permits contributions
by or on behalf of a sole proprietor or 5% or more owner in any year after the
calendar year in which he or she attains age 70 1/2 , benefits provided by
those contributions must start by the end of the calendar year in which the
contributions are made.
There will be imposed a penalty tax on the Plan if the Participant fails
to receive certain minimum distributions in years following the calendar year
in which the Participant attains age 70 1/2 . Further, effective for years
beginning after December 31, 1986, there will generally be imposed a 15%
penalty tax to the extent that annual benefit payments from a plan and the
individual's IRA exceed $150,000. However, this penalty tax will not apply to
certain excess benefits accrued before August 1, 1986.
A taxpayer will be permitted a one-time election of five-year income tax
averaging for a lump sum distribution received after he or she attains age
59 1/2 . Further, a Participant who had attained age 50 by January 1, 1986
will be permitted to make one election of five-year income tax averaging (with
the five-year averaging being computed at the income tax rates in effect at the
date of the distribution) or ten-year income tax averaging (with the ten-year
income tax averaging being computed at the income tax rates in effect prior to
the Tax Reform Act) with respect to a lump sum distribution even though the
Participant has not attained age 59 1/2 . Such a Participant may also retain
the capital gain character of the pre-1974 portion of the distribution with
such capital gain portion being taxed at a rate of 20%.
All or any portion of a lump sum distribution which qualifies for the
special lump sum distribution tax treatment discussed above (except the
requirement that the Participant have participated in the Plan for at least
five tax years) and all or any portion of certain partial distributions will
also qualify for a tax-deferred rollover into an individual retirement account
or annuity if the Participant completes the rollover within 60 days of the date
he or she receives the lump sum or partial distribution. In addition, any
distribution of a Participant's entire interest in the Plan on account of the
termination of the Plan may also be rolled over on a tax-deferred basis to an
individual retirement account or annuity.
If a Participant receives an amount from the Plan before he or she
attains age 59 1/2 , the amount received will be subject to an early withdrawal
penalty tax of 10% of such amount unless the Participant is disabled, the
amount is distributed to a beneficiary on or after the Participant's death, the
amount is rolled over into an individual retirement account or annuity, or the
withdrawal is made after the Participant has attained age 55, has separated
from service and has satisfied the conditions for early retirement under the
Plan. The penalty tax will also not apply if the withdrawal is in the form of
an annuity payable over the life or life expectancy of the Participant (or over
the lives or joint life and last survivor expectancy of the Participant and the
Participant's beneficiary), is used for the payment of medical expenses to the
extent deductible under Section 213 of the Code or is paid pursuant to a
qualified domestic relations order.
THE COLLECTIVE TRUST
The Collective Trust has received the opinion of Underberg & Kessler,
legal counsel to the Collective Trust, that the Collective Trust is a
commingled trust which is exempt from taxation (i) under Section 408(e) of the
Code with respect to funds derived from Participating Trusts which are IRAs
maintained in conformity with Section 408(a) of the Code and (ii) under Section
501(a) of the Code with respect to funds derived from Participating Trusts
which are pension and profit-sharing trusts maintained in conformity with
Section 401(a) of the Code. In order for the Portfolio to maintain its tax
exempt status, only Qualified Trusts may participate in the Collective Trust.
In addition, all investments and income belonging to any Qualified Trust must
be used exclusively for the benefit of the Participants under that Qualified
Trust; no Participating Trust may assign any part
<PAGE>
of its interest in the Collective Trust; the Collective Trust must at all times
be maintained as a domestic trust in the United States; and there must be a
separate accounting for the interest of each Participating Trust in the
Collective Trust.
Excess contributions by a Participant to a Qualified Trust which are then
invested in the Collective Trust and the timing of withdrawals from the
Collective Trust by a Participating Trust do not affect the exemption of the
Collective Trust's income from federal income tax. In addition, timing of
withdrawals from the Collective Trust alone will not affect a Participant's tax
exemption for retirement funds invested in the Collective Trust. Retirement
funds invested in the Collective Trust and the income of the Collective Trust
are subject to federal income tax when a Participant receives, or is deemed
under a federal tax law to have received, a distribution from a Participating
Trust.
The Collective Trust does not intend to declare or pay dividends from its
net investment income or to make distributions of any gains realized from sales
of portfolio securities. Income on portfolio securities of each Investment
Portfolio will be added to the total asset value of the assets of such
Investment Portfolio.
The foregoing describes only certain federal tax considerations. It does
not describe other tax laws such as state or local taxes, and does not describe
fully taxation of distributions from a Qualified Trust. Participants who
maintain a Canandaigua National IRA should read carefully the Canandaigua
National IRS Fact Book or other disclosure statement for more complete
information and should consult their individual tax advisers. However, the tax
consequences of participation in the Collective Trust will also depend, in
part, upon the facts and circumstances of the individual Participant or
Qualified Trust, and each Participant in the Qualified Trust.
PORTFOLIO TRANSACTIONS
In placing orders with brokers or dealers the Trustee will have the
objective of obtaining a combination of the most favorable commission and the
best price obtainable on each transaction, taking into consideration the
quality of execution. The Trustee will also consider in the allocation of
investment transactions the research and investment information provided by
brokers and dealers. These research and investment information services make
available to the Trustee, for its analysis and consideration as investment
manager to the Collective Trust, and its other accounts, the views and
information of individuals and research staffs of many securities firms. Such
research and investment information may include advice concerning the value of
securities; the advisability of investing in, purchasing or selling securities;
the availability of securities or the purchasers or sellers of securities;
analyses and reports concerning issuers, industries, securities, economic
factors and trends, portfolio strategy and performance of accounts. The
information may benefit or relate to other accounts to which the Trustee
provides investment advice. The Trustee may occasionally engage in soft dollar
trades under its arrangements with Northern Trust Company, which is sub-
custodian for the Collective Trust. Such trades have been infrequent and
insubstantial and are expected to be so in the future.
Collective Trust securities may not be purchased from or sold to the
Trustee or any affiliated person (as defined in the Investment Company Act) of
the Trustee except as may be permitted by the Securities and Exchange
Commission and subject to the rules and regulations of the Comptroller of the
Currency. Affiliated persons of the Collective Trust include Canandaigua
National, CNC and each of their subsidiaries, their officers and directors.
See "Administration of the Collective Trust." These limitations, in the
opinion of the Supervisory Committee, will not significantly affect the
Collective Trust's ability to pursue its present objectives. However, in the
future in other circumstances, the Collective Trust may be at a disadvantage
because of this limitation in comparison to other funds with similar investment
objectives but not subject to such limitations.
Certain investments may be appropriate for the Collective Trust and also
for other clients advised by the Trustee. Investment decisions for the
Collective Trust and other clients are made with a view to achieving their
respective investment objectives and after consideration of such factors as
their current holdings, availability of cash for investment and the size of
their investments generally. Frequently, a particular security may be bought
or sold for one or more clients in different amounts. In such event, and to
the extent permitted by applicable law and regulations, such transactions will
be allocated among the clients in a manner believed to be equitable to each.
Ordinarily, such allocation will be made on the basis of the weighted average
price of such transactions effected during a trading day, and if all orders for
the same security could be only partially executed during a trading day, then
securities will be allocated proportionally on the basis of the sizes of the
orders. In some cases, this procedure could have an adverse effect on the
price and amount of the securities purchased or sold by the Collective Trust.
GENERAL INFORMATION
TERMINATION OF THE COLLECTIVE TRUST
The Collective Trust has been established to continue for such time as
may be necessary to accomplish the purposes for which it was created. Subject
to approval of the Participating Trusts which own at least a majority of the
outstanding units of any Retirement Portfolio, the Trustee may (1) sell the
assets of such Retirement Portfolio to another Retirement Portfolio or to
another trust or corporation in exchange for cash or securities of such trust
or corporation, and distribute such cash or securities, ratably among the
Participating Trusts which own the units of such Retirement Portfolio; and (2)
sell and convert into money the assets of such Retirement Portfolio and
distribute the proceeds or such assets ratably among the Participating Trusts
which own the units of such Retirement Portfolio. In addition, the Trustee may
sell and convert into money the assets of any Retirement Portfolio upon 60
days' notice to the Participating Trusts owning units of such Retirement
Portfolio in the event the net asset value of the units of such Retirement
Portfolio is less than $5,000,000. In such an event, the proceeds would be
distributed ratably among the Participating Trusts which own the Units of such
Retirement Portfolio.
Upon completion of the distribution of the remaining proceeds or the
remaining assets of any Retirement Portfolio, the Collective Trust will
terminate as to that Retirement Portfolio and the Trustee will be discharged of
any and all further liabilities and duties and the right, title and interest of
all parties will be cancelled and discharged, except that the Trustee will not
be discharged with respect to any liability arising from willful misfeasance,
bad faith, gross negligence or reckless disregard.
CUSTODIAN AND UNITHOLDER ACCOUNT SERVICER
Canandaigua National acts as custodian of the assets of the Collective
Trust and acts as Unitholder account Servicer. Canandaigua National is not paid
any fee for these services but is reimbursed for the expenses which it incurs
to perform them, including fees and expenses of any subcustodians and
securities depositories.
PRINCIPAL HOLDERS OF UNITS
As of February 13, 1996 no person beneficially owned 5% or more of the
outstanding units of either Portfolio of the Collective Trust, except Willard
B. Becker of Canandaigua, New York,who owned 9.83% of the Bond Portfolio,
Anthony J. Brindisi of Canandaigua, New York, who owned 5.87% of the Bond
Portfolio, and John E. Tyo of Shortsville, New York, who owned 5.02% of the
Bond Portfolio. Canandaigua National, as trustee or various IRA accounts and
other Qualified Trusts, is the record owner of 100% of the outstanding units of
the Collective Trust. The officers and members of the Supervisory Committee of
the Collective Trust, as a group, beneficially own no units of the Collective
Trust.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Underberg & Kessler, as counsel for the Collective Trust, has rendered
its opinion as to certain legal matters regarding the due authorization and
valid issuance of the units of beneficial interest in the Collective Trust.
Morga Jones & Hufsmith, P.C. (formerly Walsh, Morga & Company, P.C.),
independent accountants, have been selected to examine the annual financial
statements of the Collective Trust and render a report thereon.
<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
FINANCIAL STATEMENTS AS OF
DECEMBER 31, 1995
TOGETHER WITH
INDEPENDENT AUDITORS' REPORT
<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
TABLE OF CONTENTS
PAGE
Independent Auditors' Report 1
Statement of Assets and Liabilities 2
Statement of Operations 3
Statement of Changes in Net Assets 4
Schedule of Portfolio Investments 5
Notes to Financial Statements 7
Selected Per-Share Data and Ratios 10
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Canandaigua National Collective Investment
Fund for Qualified Trusts:
We have audited the accompanying statement of assets and liabilities of
the Canandaigua National Collective Investment Fund for Qualified Trusts
including the schedule of portfolio investments, as of December 31, 1995,
and the related statement of operations for the year then ended, the
statement of changes in net assets for the years ended December 31, 1995
and 1994 and the selected per-share data and ratios for the years ended
December 31, 1995, 1994 and 1993, and for the period from inception
(September 9, 1992) through December 31, 1992. These financial statements
and per-share data and ratios are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements and per-share data and ratios based on our audits.
We conducted our audit 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 per-share data and ratios 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 December 31, 1995, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements and selected per-share data and
ratios referred to above present fairly, in all material
respects, the financial position of the Canandaigua National
Collective Investment Fund for Qualified Trusts as of December 31, 1995,
the results of its operations for the year then ended, the changes in its
net assets for the years ended December 1995 and 1994, and the
selected per-share data and ratios for the years ended December 31,
1995, 1994 and 1993 and for the period from inception (September 9,
1992) through December 31, 1992, in conformity with generally
accepted accounting principles.
/s/MORGA JONES & HUFSMITH, P.C.
Canandaigua, New York
January 19, 1996
<PAGE>
<TABLE>
<CAPTION>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
Portfolio
Bond Equity Total
ASSETS
<S> <C> <C> <C>
INVESTMENT SECURITIES AT MARKET (bond portfolio cost - $388,051 $8,335,087 $8,723,138
$383,499; equity portfolio cost - $8,164,241)
CASH AND CASH EQUIVALENT 32,899 93,192 126,091
RECEIVABLES FOR:
Dividends and accrued interest 7,637 11,438 19,075
Total assets 428,587 8,439,717 8,868,304
LIABILITIES
PAYABLES FOR:
Purchases of investments (19,971) 0 (19,971)
Management fee (171) (7,148) (7,319)
Total liabilities (20,142) (7,148) (27,290)
NET ASSETS AT DECEMBER 31, 1995 - Equivalent to $12.25
per unit for bond portfolio and $13.71 per
unit for equity portfolio, based on 33,340
units and 615,264 units outstanding for bond
and equity portfolios, respectively $408,445 $8,432,569 $8,841,014
</TABLE>
The accompanying notes are anintegral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
STATEMENT OF OPERATIONS
For the Year Ended
December 31, 1995
Portfolio
Bond Equity Total
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $20,992 $5,682 $26,674
Dividend income 1,322 94,969 96,291
Miscellaneous income 4,413 1,848 6,261
26,727 102,499 129,226
EXPENSES:
Investment management fee (1,653) (70,751) (72,404)
Custodial fees (1,061) (2,719) (3,780)
Auditing and accounting fees (261) (5,863) (6,124)
Taxes - other 0 (45) (45)
(2,975) (79,378) (82,353)
Net investment income 23,752 23,121 46,873
REALIZED GAIN (LOSS) AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) (665) 1,254,685 1,254,020
Net unrealized gain (loss) 42,615 269,048 311,663
Net realized gain (loss) and unrealized gain 41,950 1,523,733 1,565,683
(loss) on investments
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $65,702 $1,546,854 $1,612,556
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended
December 31, 1995 and 1994
Portfolio
Bond Equity Total
FOR THE YEAR ENDED DECEMBER 31, 1995:
<S> <C> <C> <C>
OPERATIONS:
Net investment income $23,752 $23,121 $46,873
Net realized gain (loss) on investments (665) 1,254,685 1,254,020
Net unrealized gain (loss) on investments 42,615 269,048 311,663
Net increase (decrease) in net assets resulting from 65,702 1,546,854 1,612,556
operations
DISTRIBUTIONS TO UNIT HOLDERS (46,524) (555,722) (602,246)
UNIT SHARE TRANSACTIONS:
Proceeds from units sold 91,141 1,664,731 1,755,872
TOTAL INCREASE (DECREASE) IN NET ASSETS 110,319 2,655,863 2,766,182
NET ASSETS:
Beginning of year 298,126 5,776,706 6,074,832
End of year $408,445 $8,432,569 $8,841,014
FOR THE YEAR ENDED DECEMBER 31, 1994:
OPERATIONS:
Net investment income $25,805 $35,063 $60,868
Net realized gain (loss) on investments (14,147) 45,149 31,002
Net unrealized gain (loss) on investments (35,140) (74,640) (109,780)
Net increase (decrease) in net assets
resulting from operations (23,482) 5,572 (17,910)
DISTRIBUTIONS TO UNIT HOLDERS (332,758) (462,796) (795,554)
UNIT SHARE TRANSACTIONS:
Proceeds from units sold 99,222 3,121,640 3,220,862
TOTAL INCREASE (DECREASE) IN NET ASSETS (257,018) 2,664,416 2,407,398
NET ASSETS:
Beginning of year 555,144 3,112,290 3,667,434
End of year $298,126 $5,776,706 $6,074,832
</TABLE>
The accompanying notes are an integral part of these financila statements.
<PAGE>
<TABLE>
<CAPTION>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1995
BOND PORTFOLIO
<S> <C> <C>
Market
Cost Value
CASH AND CASH EQUIVALENT:
Canandaigua National Bank and Trust Company Investment Cash $32,899 $32,899
U.S. GOVERNMENT NOTES & BONDS:
10,000 US Treasury Note (2 year), 5.875%, July 1997 9,985 10,100
15,000 US Treasury Note (2 year), 5.750%, September 1997 14,969 15,135
10,000 US Treasury Note (2 year), 5.25%, January 1998 9,992 9,992
10,000 US Treasury Note, (3 year) 6.125%, May 1998 9,989 10,197
15,000 US Treasury Note, 6.250%, August 2000 14,924 15,520
25,000 US Treasury Note (5 year), 6.125%, September 2000 24,983 25,759
10,000 US Treasury Note (5 year), 5.500%, January 2001 9,978 9,978
10,000 US Treasury Bond (10 year), 5.875%, November 2005 9,981 10,222
104,801 106,903
CORPORATE BONDS:
10,000 McDonnell Douglas Corp., 8.625%, April 1997 10,613 10,325
15,000 Salomon, Inc., 6.700%, December 1998 15,119 15,110
30,000 General Motors Acceptance Corp., 7.000%, March 2000 30,991 31,181
10,000 Ford Motor CR Co., 6.850%, August 2000 10,004 10,367
15,000 Lockheed Corp., 6.750%, March 2003 15,900 15,666
20,000 Coca Cola Co., 6.000%, July 2003 19,962 20,081
25,000 RJR Nabisco, Inc., 7.625%, September 2003 24,406 24,656
25,000 Eastman Chemical, 6.375%, January 2004 25,141 25,328
25,000 Sears Roebuck & Co., 6.250%, January 2004 23,680 25,031
20,000 Pacific Bell, 6.250%, March 2005 19,600 20,200
30,000 Citicorp, 6.750%, August 2005 30,853 31,059
30,000 Merrill Lynch & Co., 6.250%, August 2008 29,681 29,419
255,950 258,423
PREFERRED STOCK:
900 Bear Stearns Class B 22,748 22,725
EXCESS OF PAYABLES OVER RECEIVABLES (12,505) (12,505)
$403,893 $408,445
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1995
EQUITY PORTFOLIO
<S> <C> <C>
Market
Cost Value
CASH AND CASH EQUIVALENT:
Canandaigua National Bank and Trust Company Investment Cash $93,192 $93,192
COMMON STOCK:
8,500 Airtouch Communications 239,039 239,062*
9,500 Applied Materials 442,786 374,063*
12,000 Bear Stearn's Co. 244,958 238,500
12,500 Canandaigua Wine Company Class A 403,677 407,813*
12,500 Cap 1 Financial 334,018 298,437*
6,500 Dean Witter, Discover & Co. 333,673 305,500
12,600 Deere & Co. 364,732 444,150
6,000 Disney (Walt) Co. 271,587 353,250
6,000 Eastman Chemical Co. 364,863 374,250
4,000 Eastman Kodak Co. 274,605 268,000
13,000 Frontier Corp. 357,666 390,000
4,000 Goodyear Tire & Rubber Co. 174,739 181,500
5,000 Hewlett Packard Co. 394,368 418,750
5,000 Horizons/CMS Healthcare Corp. 114,984 126,250*
6,000 Intel Corp. 374,643 340,500
15,000 LCI International, Inc. 266,452 307,500*
6,000 Merck & Co., Inc. 321,214 393,750
9,600 Molex Inc. 331,218 304,800
3,000 Motorola, Inc. 167,506 171,000
20,000 National Semiconductor Corp. 510,184 442,500*
6,000 Officemax, Inc. 124,113 134,250*
2,500 Owens Corning Fiberglass Corp. 107,184 112,187
12,500 Petsmart, Inc. 374,099 387,500*
7,000 Staples, Inc. 160,134 170,625*
6,300 Texas Instruments, Inc. 354,737 324,450
5,000 U.S. Robotics 416,777 438,750
11,000 World Communications 340,286 387,750*
8,164,242 8,335,087
EXCESS OF RECEIVABLES OVER PAYABLES 4,290 4,290
$8,261,724 $8,432,569
</TABLE>
* Non-income producing securities
The accompanying notes are an integral part of these financial statements.
<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(1) ORGANIZATION
Canandaigua National Collective Investment Fund for Qualified Trusts
(the Collective Trust) is registered under the Investment Company Act of
1940 as an open-end, diversified management investment company. The
Collective Trust is designed for the investment of retirement funds
held in certain qualified trusts. It was formed in September, 1992.
The Canandaigua National Bank and Trust Company (the Company) is
trustee of the Collective Trust (see Note 3).
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
VALUATION OF SECURITIES AND INCOME RECOGNITION -
Investment securities are stated at market value based upon closing
sales prices reported on recognized securities exchanges on the last
business day of the year or, for listed securities having no sales reported
and for unlisted securities, upon last reported bid prices on that date.
Short-term securities with 60 days or less to maturity are amortized
to maturity based on their cost to the Collective Trust if acquired
within 60 days of maturity or, if already held by the Collective Trust on
the 60th day, based on the value determined on the 61st day. Securities
for which quotations are not readily available are valued at fair value
as determined in good faith by the Supervisory Committee of the
Collective Trust.
As is customary in the industry, securities transactions are
accounted for on the date the securities are purchased or sold. Interest
income is reported on the accrual basis. Dividend income is recorded on
the ex-dividend date (see Note 4).
INCOME TAXES -
It is the policy of the Collective Trust to comply with applicable
requirements of the Internal Revenue Code. The Collective Trust is
exempt from Federal income tax under Section 408 (e) of the Internal
Revenue Code with respect to interests in the Collective Trust which
are attributable to individual retirement trust accounts maintained in
conformity with Section 408 (e) of the Internal Revenue Code, and
exempt from Federal income tax under Section 501 (a) of the Internal Revenue
Code with respect to interests in the Collective Trust which are
attributable to pension or profit-sharing trusts (including those
benefiting self-employed individuals) maintained in conformity with
Section 401 (a) of the Internal Revenue Code. The Collective Trust
is also not subject to taxation in New York State. For Federal income
tax purposes, income earned by the Collective Trust is not taxable to
participating trusts or participants until a participant receives a
distribution from the Collective Trust. Withdrawals from the
Collective Trust which are paid to participating trusts can be made at
any time by participating trusts without penalty and without the amount
withdrawn being subject to Federal income tax.
<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31,1995
(3) AGREEMENTS
The Company is the trustee of the Collective Trust under a
Declaration of Trust dated September 9, 1992. Subject to the direction of the
Supervisory Committee of the Collective Trust, which performs the
duties and undertakes the responsibilities of the Board of Directors of an
investment company, the Company manages all of the business and
affairs of the Collective Trust.
The Collective Trust has entered into an Investment Management
Agreement with the Company dated October 6, 1992. The Company will manage the
investment of the assets of each retirement portfolio in conformity
with the stated objectives and policies of that portfolio. For these
services, the Collective Trust will pay investment management fees to
the Company, at the rate of 1% of assets annually. During 1994 the
Supervisory Committee authorized a reduction of this fee for the bond
portfolio to .5%.
The Company will be responsible for certain other expenses incurred
in the administration of the Collective Trust. The Company will
reimburse the Collective Trust for the amount by which the expenses exceed the
lower of (1) 1.5% of the average daily value of the Collective
Trust's net assets during its fiscal year or (2) the most restrictive expense
limitation applicable to the Collective Trust imposed by the
securities laws of any state in which the units of the Collective
Trust are sold.
(4) OTHER DISCLOSURES
SECURITIES PURCHASES AND SALES -
During the year ended December 31, 1995, purchases and sales of
investment securities, excluding cash and cash equivalent, amounted
to the following:
PORTFOLIO
BOND EQUITY
Purchases $129,532 $27,972,953
Sales $ 47,214 $26,750,589
The following is a summary of investment activity since June 30,
1995:
BOND EQUITY
Purchases $ 99,965 $16,692,226
Sales - cost $ 31,060 $14,734,312
gain - 949,628
Total proceeds $ 31,060 $15,683,940
Maturities $ 19,578 $ -
<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31,1995
(4) OTHER DISCLOSURES (continued)
UNREALIZED GAINS (LOSSES) ON INVESTMENTS -
Gross unrealized gains (losses) on investments are as follows as of
December 31, 1995:
PORTFOLIO
BOND EQUITY
Gross unrealized gains (losses) $ 4,601 $ 170,846
<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
SELECTED PER-SHARE DATA AND RATIOS
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolios
Bond Equity
1995 1994 1993 1992 (a) 1995 1994 1993 1992(a)
(restated) (restated)
PER-SHARE INCOME AND CAPITAL
CHANGES (for a share outstanding
throughout each year):
Investment income $0.91 $0.70 $0.53 (b) $0.18 $0.19 $0.30 (b)
Expenses (0.10) (0.08) (0.11) (b) (0.14) (0.12) (0.12) (b)
Net investment income 0.81 0.62 0.42 (b) 0.04 0.07 0.18 (b)
Net realized and unrealized
gain (loss) on investments 1.43 (1.09) 0 (b) 2.78 (0.03) 0.41 (b)
Net increase (decrease)
in net asset
value 2.24 (0.47) 0.42 (b) 2.82 0.04 0.59 (b)
Net asset value:
Beginning of year 10.01 10.48 10.06 0 10.89 10.85 10.26 0
End of year $12.25 $10.01 $10.48 $10.06 $13.71 $10.89 $10.85 $10.26
RATIOS OF EXPENSES TO AVERAGE
NET ASSETS 0.89% 0.77% 1.14% (b) 1.11% 1.09% 1.18% (b)
RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS 7.11% 6.16% 4.18% (b) 0.32% 0.69% 1.70% (b)
PORTFOLIO TURNOVER 14.13% 24.45% 62.96% (b) 375.30% 234.81% 165.68% (b)
NUMBER OF SHARES OUTSTANDING
AT END OF YEAR 33,340 29,788 52,972 6,088 615,264 530,395 286,395 9,086
</TABLE>
(a) - For the period from inception (September 9, 1992) through December
31, 1992.
(b) - Insignificant
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits.
(a) FINANCIAL STATEMENTS:
Included in Prospectus:
None
Included in Statement of Additional Information:
Report of Independent Accountants
Statement of Assets and Liabilities
(b) EXHIBITS:
EXHIBIT
NUMBER DOCUMENT
1* Declaration of Trust Dated September 9, 1992
2* Rules and Procedures of the Supervisory Committee
3-4 None
5* Investment Management Agreement Dated October 6, 1992 between
the Registrant and The Canandaigua National Bank and Trust
Company
6-7 None
8 (See Investment Management Agreement, Exhibit No. 5)
9 None
10* Opinion of Underberg & Kessler
11.1** Consent of Morga Jones & Hufsmith, P.C.
11.2* Consent of Underberg & Kessler (Included in Exhibit No. 10)
12 None
13* Agreements with initial Participating Trusts
14.1* The Canandaigua National Bank and Trust Company's IRA Trust
Agreement and Disclosure Statement
14.2 None
15 None
16 None
ITEM 25. Persons Controlled by or Under Common Control with Registrant
None
ITEM 26. Number of Holders of Securities.
At April 11, 1996, the number of Unitholders for each Retirement
Portfolio was as follows:
Bond Portfolio: 82
Equity Portfolio: 633
______________________________
* Previously filed
** Filed herewith
ITEM 27. Indemnification.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to members of the
Supervisory Committee, officers and controlling persons of the
Registrant and the Trustee pursuant to the foregoing provisions
or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a member of
the Supervisory Committee, officer, or controlling person of the
Registrant and the Trustee in connection with the successful
defense of any action, suit or proceeding) is asserted against
the Registrant by such member of the Supervisory Committee,
officer or controlling person or the Trustee in connection with
the shares being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
The Declaration of Trust provides with regard to indemnification
that:
(a) The Collective Trust shall indemnify any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of
the Collective Trust) by reason of the fact that he is or
was a Trustee, employee of the Trustee performing the
duties of the Trustee, member of the Supervisory Committee
or officer of the Collective Trust or is or was serving at
the request of the Collective Trust as a director or
officer of another corporation, or was an official of a
partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action,
suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to,
the best interests of the Collective Trust, and, with
respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create
a presumption that the person did not act in good faith
and in a manner which he reasonable believed to be in, or
not opposed to, the best interests of the Collective
Trust, and, with respect to any criminal action or
proceedings that he had reasonable cause to believe that
is conduct was unlawful.
(b) The Collective Trust shall indemnify any person who was
or is a party or is threatened to be made a party to any
threatened, pending or complete action or suit by or in
the right of the Collective Trust to procure a judgment in
its favor by reason of the fact that he is or was a
Trustee, employee of the Trustee performing the duties of
the Trustee, member of the Supervisory Committee or
officer of the Collective Trust or is or was serving at
the request of the Collective Trust as a director or
officer of another corporation, or as an official of a
partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense
or settlement of such action or suit if he acted in good
faith and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the Collective Trust
except, however, that no indemnification shall be made in
respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to
the Collective Trust unless and only to the extent that an
appropriate court shall determine upon application that,
despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which
the court shall deem proper.
(c) To the extent that a Trustee, employee of the Trustee
performing the duties of the Trustee, member of the
Supervisory Committee or officer of the collective Trust
has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in
subsection (a) or (b) or in defense of any claim, issue or
matter therein, he shall be indemnified, against expenses
(including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Except as provided in subsection (c), any indemnification
under subsection (a) or (b) (unless ordered by a court)
shall be made by the Collective Trust only as permitted
under any applicable provisions of Title I of the Employee
Retirement Income Security Act of 1974, as amended, and as
authorized in the specific case upon a determination that
indemnification of a Trustee, employee of the Trustee
performing the duties of the Trustee, member of the
Supervisory Committee or officer is proper in the
circumstances because he has met the applicable standard
of conduct set forth in subsection (a), (b) or (h). Such
determination shall be made (1) by the Supervisory
Committee by a majority vote of a quorum consisting of
members who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or,
even if such a quorum is obtainable and such quorum so
directs, by independent legal counsel in a written
opinion.
(e) Expenses (including attorneys' fees) incurred in
defending a civil or criminal action, suit or proceeding
may be paid by the Collective Trust in advance of the
final disposition of such action, suit or proceeding as
authorized by the Supervisory Committee upon receipt of an
undertaking by or on behalf of the Trustee, employee of
the Trustee performing the duties of the Trustee, member
of the Supervisory Committee or officer to repay such
amount unless it shall ultimately be determined that he is
entitled to be indemnified by the Collective Trust as
authorized in this Article; provided that such an
undertaking must be secured by a surety bond or other
suitable insurance.
(f) The indemnification provided by this Article shall not be
deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any rule,
agreement, vote of the Participating Trusts or
disinterested members of the Supervisory Committee or
otherwise, both as to action in his official capacity and
as to action in any capacity while holding such office,
and shall continue as to a person who has ceased to be a
Trustee, employee of the Trustee performing the duties of
the Trustee, member of the Supervisory Committee or
officer and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(g) The Collective Trust may purchase and maintain insurance
on behalf of any person who is or was a Trustee, employee
of the Trustee performing the duties of the Trustee,
member of the Supervisory Committee or officer of the
Trust, or is or was serving at the request of the
Collective Trust as a director or officer of another
corporation, or as an official of a partnership, joint
venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such
capacity, or arising out of his status as such; provided,
however, that the Collective Trust shall not purchase or
maintain any such insurance in contravention of any
applicable provision of Title I of the Employee Retirement
Income Security Act of 1974, as amended.
(h) Anything to the contrary in the foregoing subsections (a)
through (g) notwithstanding, no Trustee, employee of the
Trustee performing the duties of the Trustee, member of
the Supervisory Committee or officer shall be indemnified
against any liability to the Trust or the Participating
Trusts to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct
of his office, and no Trustee, member of the Supervisory
Committee or officer shall be indemnified in any other
case in which the Investment Company Act would restrict or
prohibit such indemnification.
The Declaration of Trust also provides that:
In case any Participating Trust or former Participating Trust
shall be held to be personally liable solely by reason of its
being or having been a Participating Trust and not because of
its acts or omissions or for some other reason, the
Participating Trust or former Participating Collective Trust or
its successor shall be entitled out of the Trust estate to be
held harmless from and indemnified against all loss and expense
arising from such liability. The Collective Trust shall, upon
request by the Participating Trust, assume the defense of any
claim made against any Participating Trust for any act or
obligation of the Collective Trust and satisfy any judgment
thereon.
With respect to members of the Supervisory Committee who are not
interested persons within the meaning of the Investment Company
Act, The Canandaigua National Bank and Trust Company has agreed
to indemnify and hold such persons harmless, in connection with
any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative,
brought against such persons in their capacity as members of the
Supervisory Committee against expenses (including attorneys'
fees) actually and reasonably incurred by such persons in
connection with the defense of such action, suit or proceeding,
provided such persons acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best
interests of the Collective Trust, and, with respect to any
criminal action or proceeding, had no reasonable cause to
believe that their conduct was unlawful. The Canandaigua
National Bank and Trust Company has no obligation to indemnify
such persons for any judgment, fine, or amount imposed on or
payable by such persons as a result of any determination of
liability in connection with any such action, suit or proceeding
or for any amount paid in settlement thereof.
The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that
such persons did not act in good faith and in a manner which they
reasonably believed to be in or not opposed to the best interests
of the Collective Trust, and, with respect to any criminal act or
proceeding, had reasonable cause to believe that their conduct was
unlawful.
ITEM 28. Business and Other Connections of Investment Advisers.
See "ADMINISTRATION OF THE COLLECTIVE TRUST" in the Prospectus and
"ADMINISTRATION OF THE COLLECTIVE TRUST" in the Statement of
Additional Information for a description of the investment manager.
The following are, for the investment adviser, the directors and
senior officers who are or have been, at any time during the past
two fiscal years, engaged in any other business, profession,
vocation or employment of a substantial nature for their own
account or in the capacity of director, officer, employee, partner
or trustee and a description of such business, profession, vocation
or employment of a substantial nature and, if engaged in the
capacity of director, officer, employee, partner or trustee, the
name and principal business address of the company with which the
person specified is so connected and the nature of such connection:
<PAGE>
<TABLE>
<CAPTION>
OTHER BUSINESS,
POSITION WITH PROFESSION OR
NAME ADVISOR VOCATION
<S> <C> <C>
GEORGE W. HAMLIN, IV President, Chief Executive President and
Officer, Trust Officer Director of CNC
and Director
PATRICIA A. BOLAND Director Executive Director,
Granter Homestead;
Director of CNC
DAVID HAMLIN, JR. Director Farmer, Director of CNC
FRANK H. HAMLIN Director Director of CNC
STEPHEN D. HAMLIN Director President and Director,
World Alliances Corp.;
President and Director,
IMBO Bonsai;
Director of CNC
PAUL R. KELLOGG Director Owner, Kellogg's Pan-Tree
Motor Inn;
Director of CNC
ELDRED M. SALE Director Director of CNC
ROBERT G. SHERIDAN Senior Vice President, Secretary and Director
Cashier and Director of CNC
CAROLINE C. SHIPLEY Director Educator and Area II Director,New
York State School Board
Association, sinceJanuary 1991;
prior thereto Business Manager,
WCGR/WLKA Radio Station;
Director of CNC
ALAN J. STONE Director and Managing Partner,
Chairman of the Stone Properties;
Board Director of CNC
WILLIS F. WEEDEN, M.D. Director Director of CNC
</TABLE>
ITEM 29. Principal Underwriters.
(a) The Securities and Exchange Commission may regard The
Canandaigua National Bank and Trust Company, 72 South
Main Street, Canandaigua, New York 14424 as the
Registrant's statutory principal underwriter.
(b) Information with respect to each director and senior
officer of The Canandaigua National Bank and Trust
Company is furnished in the following table:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS WITH POSITIONS WITH
BUSINESS ADDRESS UNDERWRITER REGISTRANT
<S> <C> <C>
GEORGE W. HAMLIN, IV President, Chief Executive None
CANANDAIGUA, NY Officer, Trust Officer and
Director
PATRICIA A. BOLAND Director None
CANANDAIGUA, NY
DAVID HAMLIN, JR. Director None
BLOOMFIELD, NY
FRANK H. HAMLIN Director None
CANANDAIGUA, NY
STEPHEN D. HAMLIN Director None
CANANDAIGUA, NY
PAUL R. KELLOGG Director None
CANANDAIGUA, NY
ELDRED M. SALE Director None
CANANDAIGUA, NY
ROBERT G. SHERIDAN Senior Vice President, None
CANANDAIGUA, NY Cashier and Director
CAROLINE C. SHIPLEY Director None
CANANDAIGUA, NY
ALAN J. STONE Director and None
HONEOYE, NY Chairman of the Board
WILLIS F. WEEDEN, M.D. Director None
CANANDAIGUA, NY
JAMES C. MINGES Senior Vice President None
CANANDAIGUA, NY
GREGORY S. MACKAY Senior Vice President Treasurer and Member
CANANDAIGUA, NY of the
Supervisory Committee
RICHARD M. HAWKS, JR. Senior Vice President None
CANANDAIGUA, NY and Trust Officer
DAVID R. MORROW Senior Vice President None
CANANDAIGUA, NY
</TABLE>
(c) Not applicable.
ITEM 30. Location of Accounts and Records.
The Collective Trust, or The Canandaigua National Bank and
Trust Company, 72 South Main Street, Canandaigua, New York
14424 on the Collective Trust's behalf, will maintain
physical possession of each account, book or other document
of the Collective Trust.
ITEM 31. Management Services.
Not applicable
ITEM 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 and by authorization of a power of attorney
filed with the Securities and Exchange Commission, the Registrant hereby
certifies that this Post-Effective Amendment meets all of the requirements for
effectiveness pursuant to paragraph (b) of Rule 485 of the Commission's
Regulation C and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized as attorney-in-fact for
the officers and members of the Supervisory Committee of the Registrant, in the
City of New York and the State of New York on the 26th day of April, 1996.
CANANDAIGUA NATIONAL
COLLECTIVE INVESTMENT FUND
FOR QUALIFIED TRUSTS
By: /s/ Robert J. Swartout
Robert J. Swartout, Secretary of the
Supervisory Committee and as attorney-in-fact
for Robert J. Craugh, Chairman of the
Supervisory
Committee, Gregory S. MacKay, Treasurer and
member of the Supervisory Committee, and
Robert N. Coe and Donald C. Greenhouse,
members of the Supervisory Committee.
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DOCUMENT
99.B1* Declaration of Trust Dated September 9, 1992
99.B2* Rules and Procedures of the Supervisory
Committee
99.B5* Investment Management Agreement Dated October
6, 1992 between the Registrant and The
Canandaigua National Bank and Trust Company
99.B8 (See Investment Management Agreement,
Exhibit No. 5)
99.B10* Opinion of Underberg & Kessler
99.B11.1** Consent of Morga Jones & Hufsmith, P.C.
99.B11.2* Consent of Underberg & Kessler (Included in
Exhibit No. 10)
99.B13* Agreements with initial Participating Trusts
99.B14.1* The Canandaigua National Bank and Trust
Company's IRA Trust Agreement and Disclosure
Statement
27** Financial Data Schedule (filed only with
EDGAR submission per Reg. S-K, Rule
601(c)(1)(v)
______________________________
* Previously filed
** Filed herewith
Exhibit 11.1
INDEPENDENT AUDITORS' CONSENT
The Canandaigua National Collective Investment Fund for Qualified Trusts
We hereby consent to the use of our report included herein on the
Canandaigua National Collective Investment Fund for Qualified Trusts dated
January 19, 1996 related to the statement of assets and liabilities of the
Canandaigua National Collective Investment Fund for Qualified Trusts as of
December 31, 1995.
/s/ Morga Jones & Hufsmith, P.C.
Canandaigua, New York
April 8, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
1995 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
STATEMENTS.
</LEGEND>
<CIK> 0000893730
<NAME> CANANDAIGUA NATIONAL COLLECTIVE INVESTMENT FUND FOR QUALIFIE
<SERIES>
<NUMBER> 1
<NAME> EQUITY PORTFOLIO
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1.00
<INVESTMENTS-AT-COST> $8,164
<INVESTMENTS-AT-VALUE> $8,335
<RECEIVABLES> $11
<ASSETS-OTHER> $0
<OTHER-ITEMS-ASSETS> $0
<TOTAL-ASSETS> $8,440
<PAYABLE-FOR-SECURITIES> $0
<SENIOR-LONG-TERM-DEBT> $0
<OTHER-ITEMS-LIABILITIES> $7
<TOTAL-LIABILITIES> $7
<SENIOR-EQUITY> $0
<PAID-IN-CAPITAL-COMMON> $0
<SHARES-COMMON-STOCK> 615
<SHARES-COMMON-PRIOR> 530
<ACCUMULATED-NII-CURRENT> $103
<OVERDISTRIBUTION-NII> $0
<ACCUMULATED-NET-GAINS> $1,255
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> $269
<NET-ASSETS> $8,433
<DIVIDEND-INCOME> $95
<INTEREST-INCOME> $6
<OTHER-INCOME> $2
<EXPENSES-NET> $79
<NET-INVESTMENT-INCOME> $23
<REALIZED-GAINS-CURRENT> $1,255
<APPREC-INCREASE-CURRENT> $269
<NET-CHANGE-FROM-OPS> $1,547
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> $0
<DISTRIBUTIONS-OF-GAINS> $0
<DISTRIBUTIONS-OTHER> $0
<NUMBER-OF-SHARES-SOLD> 130
<NUMBER-OF-SHARES-REDEEMED> 45
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> $1,547
<ACCUMULATED-NII-PRIOR> $35
<ACCUMULATED-GAINS-PRIOR> $45
<OVERDISTRIB-NII-PRIOR> $0
<OVERDIST-NET-GAINS-PRIOR> $0
<GROSS-ADVISORY-FEES> $78
<INTEREST-EXPENSE> $0
<GROSS-EXPENSE> $87
<AVERAGE-NET-ASSETS> $7,125
<PER-SHARE-NAV-BEGIN> $10.89
<PER-SHARE-NII> $.04
<PER-SHARE-GAIN-APPREC> $2.78
<PER-SHARE-DIVIDEND> $0
<PER-SHARE-DISTRIBUTIONS> $0
<RETURNS-OF-CAPITAL> $0
<PER-SHARE-NAV-END> $13.71
<EXPENSE-RATIO> 1.11
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
1995 FINANCIAL STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
STATEMENTS.
</LEGEND>
<CIK> 0000893730
<NAME> CANANDAIGUA NATIONAL COLLECTIVE INVENSTMENT FUND FOR QUALIFI
<SERIES>
<NUMBER> 2
<NAME> BOND PORTFOLIO
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1.00
<INVESTMENTS-AT-COST> $384
<INVESTMENTS-AT-VALUE> $388
<RECEIVABLES> $8
<ASSETS-OTHER> $33
<OTHER-ITEMS-ASSETS> $0
<TOTAL-ASSETS> $429
<PAYABLE-FOR-SECURITIES> $20
<SENIOR-LONG-TERM-DEBT> $0
<OTHER-ITEMS-LIABILITIES> $0
<TOTAL-LIABILITIES> $20
<SENIOR-EQUITY> $0
<PAID-IN-CAPITAL-COMMON> $0
<SHARES-COMMON-STOCK> 33
<SHARES-COMMON-PRIOR> 30
<ACCUMULATED-NII-CURRENT> $27
<OVERDISTRIBUTION-NII> $0
<ACCUMULATED-NET-GAINS> $(1)
<OVERDISTRIBUTION-GAINS> $0
<ACCUM-APPREC-OR-DEPREC> $43
<NET-ASSETS> $408
<DIVIDEND-INCOME> $1
<INTEREST-INCOME> $21
<OTHER-INCOME> $4
<EXPENSES-NET> $3
<NET-INVESTMENT-INCOME> $24
<REALIZED-GAINS-CURRENT> $(1)
<APPREC-INCREASE-CURRENT> $43
<NET-CHANGE-FROM-OPS> $66
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> $0
<DISTRIBUTIONS-OF-GAINS> $0
<DISTRIBUTIONS-OTHER> $0
<NUMBER-OF-SHARES-SOLD> 8
<NUMBER-OF-SHARES-REDEEMED> 4
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> $66
<ACCUMULATED-NII-PRIOR> $26
<ACCUMULATED-GAINS-PRIOR> $(14)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> $2
<INTEREST-EXPENSE> $0
<GROSS-EXPENSE> $3
<AVERAGE-NET-ASSETS> $334
<PER-SHARE-NAV-BEGIN> $10.01
<PER-SHARE-NII> $.81
<PER-SHARE-GAIN-APPREC> $2.24
<PER-SHARE-DIVIDEND> $0
<PER-SHARE-DISTRIBUTIONS> $0
<RETURNS-OF-CAPITAL> $0
<PER-SHARE-NAV-END> $12.25
<EXPENSE-RATIO> .89
<AVG-DEBT-OUTSTANDING> $0
<AVG-DEBT-PER-SHARE> $0
</TABLE>
