Dear Unitholder:
What a difference a year makes. In 1994, only two of the 24 investment
categories tracked by CDA/Wiesenberger posted positive results while the
Standard and Poors 500 finished up a meager 1.3%. In 1995, all 24
categories had positive results with the worst performing group, Gold
and Precious Metals, up 2.0% and the best performing group, Health Care,
up 47.6% and the S&P 500 up 37.5%. In 1994 the Federal Reserve began a
series of upward movements on interest rates in an effort to curb
speculation in the credit markets. The success achieved by the Fed
caused the bond market to have the worst year since 1927. The U. S.
economy in 1995 provided the Fed with a low and sustainable growth rate
coupled with a low, and declining, rate of inflation. These factors led
the Fed to reverse its course of tightening monetary policy which fueled
both the equity and fixed income markets.
During 1996, we expect that the Fed will continue to trim short term
interest rates as evidence of a domestic economic slowdown continues and
inflation at the consumer and wholesale levels continues to decline.
Currently, the Fed Funds rate is at 5.25% and inflation is approximately
2.25% which translates to a real Fed Funds rate of 3%. The historical
average for real Fed Funds is around 1%. If we can expect that the real
Fed Funds rate will revert to its historical mean, then either inflation
is going to rise or the Fed has room to continue to lower the Fed Funds
target rate. Although commodity prices would appear to be rising, the
real driver of inflation is rising wage pressure which is not evident
and would appear to be declining as measured by unit labor costs.
Declining interest rates during the first half of 1996 should continue
to propel the equity markets higher. That's the good news. The bad
news is that we feel that the economic slowdown experienced in 1996
might become a recession in 1997. We also believe that earnings
disappointments at the tail end of a strong bull market often mean that
the share prices for the companies that disappoint Wall Street
expectations are treated rather harshly. As 1996 unfolds there will be
more declines in earnings estimates as well as an increase of negative
earnings surprises. This process is associated with a phenomenon known
as sector rotation. Sector rotation is defined by large flows of
investment capital exiting a particular economic or investment sector.
Technology issues suffered from a sector rotation in the final four
months of 1995. Mutual funds that concentrate their investment
objectives in technology were up on average 38.2% compared with 37.5%
for the S&P 500. However, technology stocks had fallen out of favor in
the final four months of 1995 and in a classic example of sector
rotation the S&P 500 outperformed technology mutual funds by 13.7
percentage points in only four months. The financial press is fond of
stating that this has been the longest bull market in history without a
correction in the Dow Jones Industrial Average (DJIA). We believe that
the sector rotation phenomenon over the past few years has to some
extent satisfied the need for a correction in the overall market.
Investment portfolio managers have only three decisions to make every
day of their professional lives. Do I buy, sell or hold on to a given
security? During a sector rotation, the portfolio manager must decide
if this rotation is a temporary anomaly due to the short-term
performance pressures placed on mutual fund portfolio managers; or is
this rotation out of a sector a fundamental change in the prospects for
that industry and for the individual companies that comprise the
industry. If the rotation is only temporary, then the portfolio manager
should buy more shares of this sector because the prices are low and
represent a relative bargain. If the rotation is of a more long-term
nature the portfolio manager must sell his shares and find another area
in which to invest.
We believe that the sector rotation out of technology stocks in the
final four months of 1995 was a temporary rotation which has provided
some outstanding bargains and we have accumulated significant positions
in the shares of some technology issues that we feel provide compelling
valuations.
The second area of caution for 1996 is when the market perceives that
the Fed is finished easing interest rates. 1994 was a good example of
how the financial markets react to a more restrictive monetary policy by
the Fed and 1995 was demonstrative of the positive impact of a more
lenient monetary policy. The inflection point for declining interest
rates to flatten or rise will have negative implications for both the
equity and the bond markets.
THE EQUITY PORTFOLIO
The Equity portfolio rose 25.90 % in 1995. Our peer group, funds with an
investment objective of long-term growth, average and the S&P 500 were
up 30.1% and 37.5%, respectively. Net assets in the portfolio grew by
almost $2.7 million or 46%. The portfolio suffered in January and
during the final quarter from sector rotations out of deep cyclical
issues and technology, respectively. We believe that the rotation out
of technology in the final quarter of 1995 was based on short-term
concerns of institutional investors rather than a meaningful change in
the future prospects for the group. We do anticipate that 1996
semiconductor earnings will be closer to a 20% growth rate rather than
the 45% experienced in 1995. However, we believe that the high quality
companies in an industry with a twenty percent growth rate deserve to
trade at least on a par with the market's price to earnings multiple.
There are several companies in our portfolio that are trading at
substantial discounts to the market but have significantly better growth
prospects for 1996.
As the market was rotating out of these issues, we made a conscious
effort to increase our exposure to the group and to take advantage of a
short-term aberration in the market's valuation for the group. This
decision had an adverse impact on the equity portfolio's overall
performance for 1995, but we feel was the correct strategy for 1996. We
are also weighted in telecommunications, credit card issuers and select
large capitalization companies that represent compelling individual
investments within their respective industries.
THE BOND PORTFOLIO
1995 was a great year for bond funds. Our portfolio was up 22.38%
compared with the average corporate bond fund in our peer group, up
15.8%, and the Lehman Brothers Intermediate Government/Corporate Bond
Index which was up 15.33%. Intermediate maturities saw the largest
decline in yield, and rise in price, with yield decreasing more than two
percent. This caused our bond portfolio to have a dramatic appreciation
in 1995. 1994's bond market rout caused a significant level of
redemptions from unitholders. Those redemptions caused us to sell
positions and thus enter 1996 with relatively few holdings. This
tightly concentrated portfolio coupled with the dramatic movement of the
intermediate portion of the yield curve caused the outstanding
performance for our current unitholders. Those of you who had the
patience to weather the storm in 1994 were pleasantly rewarded in 1995
by the bond portfolio's resurgence. The bond portfolio's average
maturity was shortened from the third quarter to year-end from 8 to 6.5
years and the weighted average coupon fell from 6.71% to 6.47%. We are
also beginning to more heavily weight the portfolio toward higher credit
rating issues, namely U.S. Treasury issues, in anticipation of a
weakening economy over the course of 1996 and early 1997.
Cordially,
Robert J. Craugh
Chairman, Supervisory Committee
Gregory S. MacKay
Treasurer
Robert J. Swartout
Secretary
<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE INVESTMENT
FUND FOR QUALIFIED TRUSTS
SUPERVISORY COMMITTEE
Robert J. Craugh, Canandaigua, New York
Chairman
Retired, former Senior Vice President-Operations
The Canandaigua National Bank and Trust Company
Robert N. Coe, Bloomfield, New York
President and co-owner, W.W. Coe and Sons, Inc.
(Independent insurance agency)
Donald C. Greenhouse, Canandaigua, New York
President and Owner, Seneca Point Associates, Inc.
(Business and consulting firm)
Gregory S. MacKay, Canandaigua, New York
Treasurer, Canandaigua National Corporation
Senior Vice President, The Canandaigua National Bank and Trust Company
Robert J. Swartout, Macedon, New York
Vice President and Investment Officer
The Canandaigua National Bank and Trust Company
OFFICERS:
Robert J. Craugh, Chairman
Gregory S. MacKay, Treasurer
Robert J. Swartout, Secretary
OFFICES OF CANANDAIGUA NATIONAL COLLECTIVE INVESTMENT FUND FOR QUALIFIED
TRUSTS:
72 South Main Street
Canandaigua, New York 14424
INVESTMENT ADVISOR AND TRANSFER AGENT OF ASSETS:
The Canandaigua National Bank and Trust Company
72 South Main Street
Canandaigua, New York 14424
CUSTODIAN OF ASSETS:
The Northern Trust Company
50 South La Salle Street
Chicago, Illinois 60675
LEGAL COUNSEL:
Stephen H. Waite, Esq.
Underberg & Kessler LLP
1800 Chase Square
Rochester, New York 14604
INDEPENDENT AUDITORS:
Morga Jones & Hufsmith, P.C.
25 North Street
Canandaigua, New York 14424
<PAGE>
BOND PORTFOLIO SINCE INCEPTION
HOW A $10,000 INVESTMENT HAS GROWN
<TABLE>
<CAPTION>
BOND LEHMAN INT GOV/CORP BOND FUND AVG CPI
<S> <C> <C> <C> <C>
OCT-92 10000 10000 10000 10000
9998 9962 9991 9962
10060 10095 10121 10095
10100 10292 10300 10292
10150 10454 10479 10454
10120 10496 10527 10496
10100 10580 10598 10580
10050 10557 10600 10557
10160 10722 10778 10722
10130 10749 10838 10749
10310 10919 11025 10919
10360 10964 11063 10964
10340 10994 11111 10994
10280 10932 11026 10932
DEC-93 10320 10982 11084 10982
10460 11104 11221 11104
10320 10940 11043 10940
10060 10760 10818 10760
9930 10686 10725 10686
9870 10694 10710 10694
9950 10695 10687 10695
10220 10849 10832 10849
10210 10883 10857 10883
9980 10783 10751 10783
9960 10781 10736 10781
9930 10732 10701 10732
DEC-94 9980 10770 10738 10770
10200 10952 10884 10952
10450 11179 11094 11179
10730 11243 11166 11243
10980 11382 11315 11382
11430 11726 11688 11726
11530 11805 11759 11805
11460 11806 11745 11806
11630 11914 11865 11914
11740 12000 11974 12000
11870 12134 12109 12134
12080 12293 12265 12293
DEC-95 12160 12422 12421 12422
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE
EQUITY PORTFOLIO SINCE INCEPTION
HOW A $10,000 INVESTMENT HAS GROWN
<TABLE>
<CAPTION>
CNB EQUITY S&P 500 GROWTH FUND CPI
AVG
<S> <C> <C> <C> <C>
OCT-92 9870 9870 9870 9870
10140 10194 10348 9884
10250 10322 10539 9874
10060 10419 10672 9926
10130 10554 10543 9960
10330 10776 10851 9995
10180 10527 10542 10023
10320 10791 10924 10037
10270 10824 10955 10051
10080 10791 10941 10051
10510 11188 11385 10079
10530 11102 11493 10100
10910 11342 11657 10141
10670 11221 11447 10148
DEC-93 10840 11360 11780 10148
11430 11755 12138 10176
11120 11428 11981 10211
10690 10931 11431 10246
10660 11083 11481 10260
10840 11247 11522 10267
10660 10973 11151 10302
11130 11345 11444 10329
11410 11798 11967 10371
10930 11507 11757 10399
11140 11775 11925 10406
10700 11337 11483 10420
DEC-94 10900 11503 11597 10420
10580 11810 11677 10462
11070 12264 12110 10503
11480 12627 12438 10538
11840 13009 12691 10573
12230 13510 13050 10594
12580 13826 13567 10615
13450 14292 14201 10615
13640 14315 14317 10643
13770 14916 14710 10663
13760 14871 14464 10698
14040 15511 14990 10709
DEC-95 13710 15812 15084 10720
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE
<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
<S> <C> <C> <C>
INVESTMENT FUND FOR QUALIFIED TRUSTS
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
Portfolio
Bond Equity Total
ASSETS
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>
<PAGE>
<TABLE>
<CAPTION>
CANANDAIGUA NATIONAL COLLECTIVE
<S> <C> <C> <C>
INVESTMENT FUND FOR QUALIFIED TRUSTS
STATEMENT OF OPERATIONS
For the Year Ended
December 31, 1995
Portfolio
Bond Equity Total
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>
<PAGE>
<TABLE>
<CAPTION>
CANANDAIGUA NATIONAL COLLECTIVE
<S> <C> <C> <C>
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:
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>
<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
* Non-income producing securities
</TABLE>
<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
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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
(a) - For the period from inception (September 9, 1992) through December 31, 1992.
(b) - Insignificant
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