1933 Act File No. 33-20673
1940 Act File No. 811-5514
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. 22 ......... X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 23 ........................ X
VISION GROUP OF FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
Joseph M. Huber, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
X on June 5, 1996 pursuant to paragraph (b)
-- -------------
60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i).
75 days after filing pursuant to paragraph (a)(ii)
on pursuant to paragraph (a)(ii) of Rule 485.
-----------------
If appropriate, check the following box:
X This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has filed with the Securities and Exchange Commission a declaration
pursuant to Rule 24f-2 under the Investment Company Act of 1940, and:
filed the Notice required by that Rule on ; or
----------------
X intends to file the Notice required by that Rule on or about
June 16, 1996; or
during the most recent fiscal year did not sell any securities pursuant to
Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to
Rule 24f-2(b)(2), need not file the Notice.
Copies to: Matthew G. Maloney, Esquire
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
CROSS REFERENCE SHEET
This Amendment to the Registration Statement of VISION GROUP OF FUNDS,
INC., which consists of 7 portfolios: (1) Vision Money Market Fund, (2)
Vision Treasury Money Market Fund, (3) Vision New York Tax-Free Money Market
Fund, (4) Vision New York Tax-Free Fund, (5) Vision U.S. Government Securities
Fund, (6) Vision Growth and Income Fund, and (7) Vision Capital Appreciation
Fund, is comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page...............(1-7) Cover Page
Item 2. Synopsis.................(1-7) A Summary of the Funds' Expenses
Item 3. Condensed Financial
Information............(1-6) Financial Highlights; (1-7) How the
Funds Show Performance.
Item 4. General Description of
Registrant.............(1-7) Synopsis; (1-7) How the Funds Invest;
(1-7) Investment Objective; Investment
Policies; (1-7) Acceptable Investments; (1)
Risk Factors Associated with Foreign
Investments; (2,4) New York Municipal
Securities; (2,4) Investment Risks of New
York Municipal Securities; (2,4)
Concentration of Investments; (2,4) Types
of Municipal Securities; Temporary
Investments; (1-7) Common Fund Investment
Techniques, Features and Limitations.
Item 5. Management of the Fund...(1-7) Fund Management, Distribution, and
Administration; (1-7) Board of Directors;
(1-7) Investment Adviser; Distribution of
Fund Shares; (1-7) Administration of the
Funds; (4-7) Expenses of the Funds.
Item 6. Capital Stock and Other
Securities.............(1-7) Description of Fund Shares; (1-7)
Voting Rights and Other Information; (1-7)
Tax Information.
Item 7. Purchase of Securities Being
Offered................(1-7) How the Funds Value their Shares; (1-
7) What Fund Shares Cost; (1-7) How to Buy
Shares; (1-7) How to Exchange Shares.
Item 8. Redemption or Repurchase.(1-7) How to Redeem Shares.
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page...............(1-7) Cover Page.
Item 11. Table of Contents........(1-7) Table of Contents.
Item 12. General Information and
History................(1-7) General Information About the Fund.
Item 13. Investment Objectives and
Policies...............(1-7) Investment Objective and Policies;
(1-7) Investment Limitations.
Item 14. Management of the Fund...(1-7) Vision Group of Funds, Inc.
Management.
Item 15. Control Persons and Principal
Holders of Securities..Not applicable.
Item 16. Investment Advisory and
Other Services.........(1-7) Investment Advisory Services; (1-7)
Administrative Services.
Item 17. Brokerage Allocation.....(1-7) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities.............(1-7) Description of Fund Shares.
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered..........(1-7) Purchasing Shares; (1-7) Determining
Net Asset Value; (1-3) Redeeming Shares;
(4-5) Redeeming Fund Shares; (6-7) How to
Redeem Shares.
Item 20. Tax Status...............(1-7) Tax Status.
Item 21. Underwriters.............Not Applicable.
Item 22. Calculation of Performance
Data...................(1-7) Performance Comparisons; (1,3,5,7)
Yield; (2,4) Tax-Equivalent Yield; (1-6)
Effective Yield; (2, 4) Tax-Equivalency
Table; (4-7) Appendix.
Item 23. Financial Statements.....(1-6) Financial Statements (Filed in Part
A). (7) To be filed by Amendment.
[LOGO]
PROSPECTUS
VISION CAPITAL APPRECIATION FUND
(A PORTFOLIO OF VISION GROUP OF FUNDS, INC.)
PROSPECTUS DATED JUNE 5, 1996
Vision Group of Funds, Inc. (the "Corporation") is an open-end management
investment company (a mutual fund) that offers you a choice of seven separate
investment portfolios with distinct investment objectives and policies. This
prospectus relates to one of the seven portfolios, Vision Capital Appreciation
Fund ("Fund").
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
MANUFACTURERS AND TRADERS TRUST COMPANY, ARE NOT ENDORSED OR GUARANTEED BY
MANUFACTURERS AND TRADERS TRUST COMPANY, AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. THESE SHARES INVOLVE INVESTMENT RISKS INCLUDING POSSIBLE LOSS
OF PRINCIPAL.
This prospectus gives you information about the Fund, and can help you decide if
the Fund is a suitable investment for you. Please read the prospectus before you
invest and keep it for future reference.
You can find additional facts about the Fund in the Statement of Additional
Information dated June 5, 1996 which has also been filed with the Securities and
Exchange Commission. The information contained in the Statement of Additional
Information is incorporated by reference into this prospectus. To obtain a free
copy of the Statement of Additional Information or a paper copy of this
prospectus, if you have received it electronically, or make other inquiries
about the Fund, simply call or write Vision Group of Funds, Inc. at the
telephone number or address below.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
VISION GROUP OF FUNDS, INC.
P.O. Box 4556
Buffalo, New York 14240-4556
(800) 836-2211 (716) 842-4488
TABLE OF CONTENTS
Synopsis 3
A Summary of the Fund's Expenses 4
How the Fund Invests 5
Fund Management, Distribution
and Administration 12
Your Guide to Using the Fund 15
How the Fund Values Its Shares 15
What Fund Shares Cost 15
How to Buy Shares 18
How to Exchange Shares 19
How to Redeem Shares 21
Tax Information 23
Description of Fund Shares 23
How the Fund Shows Performance 24
Addresses 25
SYNOPSIS
INVESTMENT OBJECTIVES AND POLICIES
Vision Group of Funds, Inc. (the "Corporation") offers you a convenient,
affordable way to participate in seven separate, professionally managed
portfolios. This prospectus describes the Vision Capital Appreciation Fund.
VISION CAPITAL
APPRECIATION FUND
(THE "FUND") IS A DIVERSIFIED PORTFOLIO WHICH SEEKS
TO PRODUCE LONG-TERM CAPITAL APPRECIATION. THE FUND
PURSUES ITS INVESTMENT OBJECTIVE BY INVESTING IN A
DIVERSIFIED PORTFOLIO CONSISTING PRIMARILY OF COMMON
STOCKS THAT THE ADVISER BELIEVES OFFER OPPORTUNITY
FOR GROWTH OF CAPITAL, ALTHOUGH IT MAY ALSO INVEST IN
OTHER SECURITIES HAVING SOME OF THE CHARACTERISTICS
OF COMMON STOCKS, SUCH AS CONVERTIBLE PREFERRED
STOCKS, CONVERTIBLE BONDS AND WARRANTS.
BUYING AND REDEEMING FUND SHARES
You can conveniently buy and redeem Fund shares on almost any business day.
Shares of the Fund are sold at net asset value plus a sales charge and redeemed
at net asset value. The minimum initial investment in the Fund is $500 ($250 for
IRA accounts), and it may be waived or lowered from time to time. (See "Your
Guide to Using the Fund.")
FUND MANAGEMENT
The Fund's investment adviser is Manufacturers and Traders Trust Company ("M&T
Bank" or "Adviser"). M&T Bank is the primary banking subsidiary of First Empire
State Corporation, which also owns The East New York Savings Bank. (See
"Adviser's Background.")
SHAREHOLDER SERVICES
When you become a shareholder, you can easily get information about your account
by calling M&T Bank's Mutual Fund Services at (800) 836-2211 (in the Buffalo
area, phone 842-4488).
RISK FACTORS
An investment in the Fund may involve certain risks that are explained more
fully in the sections of this prospectus discussing the Fund's investment
techniques.
A SUMMARY OF THE FUND'S EXPENSES
Every mutual fund incurs expenses in conducting operations, managing investments
and providing services to shareholders. The following summary breaks out the
Fund's expenses. You should consider this expense information, along with other
information provided in this prospectus, in making your investment decision.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).............................................................. 4.50%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price).............................................................. None
Contingent Deferred Sales Load (as a percentage of original purchase price
or redemption proceeds, as applicable)........................................................... None
Redemption Fees (as a percentage of amount redeemed, if applicable)................................ None
Exchange Fee....................................................................................... None
ANNUAL OPERATING EXPENSES
(as a percentage of projected average net assets)
Management Fee..................................................................................... 0.85%
12b-1 Fee (1)...................................................................................... 0.00%
Other Expenses..................................................................................... 0.57%
Shareholder Servicing Fee (1)...................................................... 0.00%
Total Fund Operating Expenses (after waiver) (2)......................................... 1.42%
</TABLE>
(1) The Fund has no present intention of paying or accruing 12b-1 fees or
shareholder servicing fees during the fiscal year ending April 30, 1997. If
the Fund were paying or accruing 12b-1 fees or shareholder servicing fees,
the Fund would be able to pay up to 0.25% of its average daily net assets
for 12b-1 fees and up to 0.25% of its average daily net assets for
shareholder servicing fees. See "Fund Management, Distribution and
Administration."
(2) The Total Fund Operating Expenses absent the voluntary waiver of the
administrative fee by the Administrator are estimated to be 1.51% for the
year ending April 30, 1997. The Total Fund Operating Expenses in the table
above are based on expenses expected during the fiscal year ending April
30, 1997.
The Table above can help you understand the various costs and expenses that
a shareholder in the Fund will bear, either directly or indirectly. For
more complete descriptions of the various costs and expenses, see the
section "Fund Management, Distribution and Administration" on page .
Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
<S> <C> <C>
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return; (2) redemption at the end of each time period; and (3) payment
of the maximum sales load. The Fund charges no redemption fees................ $ 59 $ 88
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
HOW THE FUND INVESTS
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is to produce long-term capital
appreciation. This investment objective cannot be changed without approval of
the Fund's shareholders. While there is no assurance that the Fund will achieve
its investment objective, it endeavors to do so by following the investment
policies described in this prospectus.
INVESTMENT POLICIES
THE FUND PURSUES ITS INVESTMENT OBJECTIVE OF
LONG-TERM CAPITAL APPRECIATION BY INVESTING IN A
DIVERSIFIED PORTFOLIO COMPRISED PRIMARILY OF COMMON
STOCKS OR OTHER SECURITIES THAT HAVE SOME OF THE
CHARACTERISTICS OF COMMON STOCKS, SUCH AS CONVERTIBLE
PREFERRED STOCKS, CONVERTIBLE BONDS, AND WARRANTS.
THE PRINCIPAL FACTOR IN SELECTING CONVERTIBLE
SECURITIES WILL BE THE POTENTIAL OPPORTUNITY TO
BENEFIT FROM MOVEMENT IN STOCK PRICE.
CURRENT INCOME IS A SECONDARY, NON-
FUNDAMENTAL INVESTMENT CONSIDERATION. THE ADVISER
WILL GENERALLY SELECT COMMON STOCKS OF WELL-FINANCED
ISSUERS (E.G., ISSUERS THAT GENERATE SUFFICENT CASH
FLOW TO SUPPORT THEIR GROWTH NEEDS OR HAVE SUFFICENT
CREDIT QUALITY TO OBTAIN FINANCING TO SUPPORT THEIR
GROWTH) WHICH HAVE DEMONSTRATED PROFITABILITY IN THE
PAST OR HAVE THE POTENTIAL FOR PROFITABILITY IN THE
FUTURE, AND HAVE BEEN IN BUSINESS A MINIMUM OF THREE
YEARS. IT IS ANTICIPATED THAT THE FUND'S PORTFOLIO
SECURITIES IN THE AGGREGATE WILL HAVE AN AVERAGE
WEIGHTED MARKET CAPITALIZATION OF $1 BILLION TO $10
BILLION, WHICH COULD BE CONSIDERED THE
MID-CAPITALIZATION SECTOR OF THE MARKET. THE ADVISER,
MAY, HOWEVER, SELECT FOR PURCHASE COMMON STOCKS OF
WELL-KNOWN COMPANIES WITH INDIVIDUAL MARKET
CAPITALIZATIONS OF OVER $10 BILLION, AS WELL AS
COMPANIES THAT HAVE INDIVIDUAL MARKET
CAPITALIZATIONS AS LOW AS $250 MILLION, IF IT
BELIEVES SUCH COMMON STOCKS OFFER PARTICULAR
OPPORTUNITIES FOR LONG-TERM CAPITAL APPRECIATION.
In selecting investments, the Adviser will consider various financial
characteristics of the issuer, including historical sales and net income,
debt/equity and price/earnings ratios and growth rates. Certain qualitative
factors such as product dominance, management experience, and research and
development commitment will be evaluated. Investors should be aware that since
the major portion of the Fund's portfolio will normally be invested in common
stocks, the Fund's net asset value may be subject to greater fluctuation than a
portfolio containing a substantial amount of fixed income securities. There can
be no assurance that the objective of the Fund will be realized, that any income
will be earned, or that the Fund's portfolio will not decline in value.
Under normal market conditions, the Fund intends to have at least 75% of its
total assets invested in securities which the Adviser believes offer opportunity
for capital appreciation. Unless indicated otherwise, this policy and the other
investment policies of the Fund may be changed by the Directors without approval
of shareholders. Shareholders will be notified before any material changes in
these policies become effective.
ACCEPTABLE INVESTMENTS
The securities in which the Fund invests include:
.common or preferred stocks of U.S. companies which are either listed on the
New York or American Stock Exchange, or other domestic stock exchange, or
traded in the over-the-counter markets and are considered by the Adviser to
have an established market;
.convertible securities (as described below);
.investments in American Depository Receipts ("ADRs") of foreign companies
traded on the New York or American Stock Exchange, or other domestic stock
exchanges, or in the over-the-counter market. The Fund may not invest more
than 25% of its total assets in ADRs and not more than 5% of its total assets
in foreign securities directly (other than ADRs);
.domestic issues of corporate debt obligations (including convertible bonds
and debentures) rated, at the time of purchase, investment grade by a
nationally recognized statistical rating organization ("NRSRO") (e.g., Baa or
higher by Moody's Investors Service, Inc. ("Moody's"), or BBB or higher by
Standard and Poor's Ratings Group ("S&P") or Fitch Investors Service, Inc.
("Fitch")), or, if unrated, of comparable quality as determined by the
Adviser;
.U.S. government securities (as described below);
.for temporary defensive purposes, up to 25% of its total assets in money
market instruments, including commercial paper that, at the time of purchase,
are rated not less than P-1, A-1 or F-1, by Moody's, S&P or Fitch,
respectively, or, if unrated, are of comparable quality as determined by the
Adviser, time and savings deposits (including certificates of deposit) in
domestic and foreign commercial or savings banks, and bankers' acceptances;
and
.warrants.
In addition, the Fund may purchase the investments and engage in the investment
techniques described below. For additional information about the investments and
investment techniques, please refer to the Statement of Additional Information.
CONVERTIBLE SECURITIES
The Fund may invest in convertible securities. The Fund will exchange or convert
the convertible securities held in its portfolio into shares of the underlying
common stock when, in the opinion of the Adviser, the investment characteristics
of the underlying common shares will assist the Fund in achieving its investment
objectives. Otherwise the Fund may hold or trade convertible securities. In
selecting convertible securities for the Fund, the Adviser evaluates primarily
the investment potential of the underlying equity security for capital
appreciation and secondarily the investment characteristics of the convertible
security as a fixed income instrument. In evaluating these matters with respect
to a particular convertible security, the Adviser considers numerous factors,
including the economic and political outlook, the value of the security relative
to other investment alternatives, trends in the determinants of the issuer's
profits, and the issuer's management capability and practices.
CORPORATE DEBT OBLIGATIONS
The Fund may invest in corporate debt obligations, including corporate bonds,
notes, and debentures, which may have floating or fixed rates of interest. These
obligations will be rated at the time of purchase in the top four rating
categories (investment grade) by an NRSRO. If the obligations are unrated, they
will be of comparable quality as determined by the Adviser. If any security
purchased by the Fund is subsequently downgraded, securities will be evaluated
on a case by case basis by the Adviser. The Adviser will determine whether or
not the security continues to be an acceptable investment. If not, the security
will be sold. The lowest category of investment grade securities (e.g., Baa or
BBB) have speculative characteristics, and changes in economic conditions or
other circumstances are more likely to lead to a weakened capacity to pay
principal and interest payments on such obligations than higher rated
obligations. A description of the rating categories is contained in the Appendix
to the Statement of Additional Information.
FIXED RATE CORPORATE DEBT OBLIGATIONS
The Fund may invest in fixed rate securities, including fixed rate securities
with short-term characteristics. Fixed rate securities with short-term
characteristics are long-term debt obligations, but are treated in the market as
having short maturities because call features of the securities may make them
callable within a short period of time. A fixed rate security with short-term
characteristics would include a fixed income security priced close to call or
redemption price or a fixed income security approaching maturity, where the
expectation of call or redemption is high.
Fixed rate securities tend to exhibit more price volatility during times of
rising or falling interest rates than securities with floating rates of
interest. This is because floating rate securities, as described below, behave
like short-term instruments in that the rate of interest they pay is subject to
periodic adjustments based on a designated interest rate index. Fixed rate
securities pay a fixed rate of interest and are more sensitive to fluctuating
interest rates. In periods of rising interest rates, the value of a fixed rate
security is likely to fall. Fixed rate securities with short-term
characteristics are not subject to the same price volatility as fixed rate
securities without such characteristics. Therefore, they behave more like
floating rate securities with respect to price volatility.
FLOATING RATE CORPORATE DEBT OBLIGATIONS
The Fund may invest in floating rate corporate debt obligations, including
increasing rate securities. Floating rate securities are generally offered at an
initial interest rate which is at or above prevailing market rates. The interest
rate paid on these securities is then reset periodically (commonly every 90
days) to an increment over some predetermined interest rate index. Commonly
utilized indices include the three-month Treasury bill rate, the 180-day
Treasury bill rate, the one-month or three-month London Interbank Offered Rate
(LIBOR), the prime rate of a bank, the commercial paper rates, or the
longer-term rates on U.S. Treasury securities.
U.S. GOVERNMENT SECURITIES
The Fund may invest in U.S. government securities which include:
.direct obligations of the U.S. Treasury such as U.S. Treasury bills, notes,
and bonds; and
.obligations of U.S. government agencies or instrumentalities such as the Farm
Credit System, including the National Bank for Cooperatives and Banks for
Cooperatives; Farmers Home Administration; Federal Home Loan Banks; The
Student Loan Marketing Association ("Sallie Mae"); Government National
Mortgage Association ("Ginnie Mae"); Federal Home Loan Mortgage Corporation
("Freddie Mac"); Housing and Urban Development; and Federal National Mortgage
Association ("Fannie Mae").
Some obligations issued or guaranteed by agencies or instrumentalities of the
U.S. government, such as Ginnie Mae participation certificates, are backed by
the full faith and credit of the U.S. Treasury. No assurances can be given that
the U.S. government will provide financial support to other agencies or
instrumentalities, since it is not obligated to do so. These instrumentalities
are supported by:
.the issuer's right to borrow an amount limited to a specific line of credit
from the U.S. Treasury;
.the discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
.the credit of the agency or instrumentality.
REPURCHASE AGREEMENTS
The Fund may engage in repurchase agreements, which are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell U.S.
government securities or other high quality, liquid securities to the Fund and
agree at the time of sale to repurchase them at a mutually agreed upon time and
price. To the extent that the original seller does not repurchase the securities
from the Fund, the Fund could receive less than the repurchase price on any sale
of such securities.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may purchase securities on a when-issued or delayed delivery basis.
These transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The seller's failure to
complete these transactions may cause the Fund to miss a price or yield
considered to be advantageous. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices. Accordingly, the Fund may pay
more/less than the market value of the securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the Adviser deems
it appropriate to do so. In addition, the Fund may enter into transactions to
sell its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at
later dates. The Fund may realize short-term profits or losses upon the sale of
such commitments.
ILLIQUID AND RESTRICTED SECURITIES
The Fund may invest up to 15% of its net assets in illiquid securities, which
may include restricted securities. Restricted securities are any securities in
which the Fund may otherwise invest pursuant to its investment objective and
policies, but which are subject to restriction on resale under federal
securities laws. To the extent these securities are deemed to be illiquid, the
Fund will limit its purchases, together with other securities not determined by
the Corporation's Board of Directors to be liquid, to 15% of its net assets.
INVESTING IN SECURITIES OF OTHER
INVESTMENT COMPANIES
The Fund may invest in the securities of other investment companies. The Fund
will limit its investment in other investment companies to not more than 3% of
the total outstanding voting stock of any investment company, will invest no
more than 5% of its total assets in any one investment company, and will invest
no more than 10% of its total assets in investment companies in general. In
order to comply with certain state restrictions, the Fund will limit its
investment in securities of other open-end investment companies to those with
sales loads of less than 1.00% of the offering price of such securities. The
Fund will purchase securities of closed-end investment companies only in open
market transactions involving only customary brokers' commissions. However,
these limitations are not applicable if the securities are acquired in a merger,
consolidation, reorganization, or acquisition of assets. While it is a policy to
waive advisory fees on Fund assets invested in securities of other open-end
investment companies, it should be noted that investment companies incur certain
expenses such as custodian and transfer agency fees and, therefore, any
investment by the Fund in shares of another investment company would be subject
to such duplicate expenses.
LENDING OF PORTFOLIO SECURITIES
In order to generate additional income, the Fund may lend portfolio securities
on a short-term or long-term basis or both up to one-third of the value of its
total assets to broker/dealers, banks, or other institutional borrowers of
securities. The Fund will only enter into loan arrangements with broker/dealers,
banks, or other institutions which the Adviser has determined are creditworthy
under guidelines established by the Corporation's Board of Directors and will
receive collateral in the form of cash or U.S. government securities equal to at
least 100% of the value of the securities loaned.
There is the risk that, when lending portfolio securities, the securities may
not be available to the Fund on a timely basis and the Fund may, therefore, lose
the opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities files for bankruptcy or becomes insolvent,
disposition of the securities may be delayed pending court action.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. This transaction is
similar to borrowing cash.
PUT AND CALL OPTIONS
The Fund may purchase put options on its portfolio securities as a hedge to
attempt to protect these securities against fluctuations in value. The Fund will
write put and call options on securities either held in its portfolio or which
the Fund has the right to obtain without payment of further consideration or for
which it has segregated cash in the amount of any such additional consideration.
The Fund also may purchase call options on securities to protect against price
movements in particular securities which the Fund intends to purchase. A call
option gives the Fund, in return for a premium, the right (but not the
obligation) to buy the underlying security from the seller at a pre-determined
price.
The Fund may generally purchase and write over-the-counter options on portfolio
securities in negotiated transactions with the buyers or writers of the options
since options on certain portfolio securities held by the Fund are not traded on
an exchange. The Fund purchases and writes options only with investment dealers
and other financial institutions (such as commercial banks or broker/dealers)
deemed creditworthy by the Adviser.
Over-the-counter options are two-party contracts with price and terms negotiated
between buyer and seller. In contrast, exchange-traded options are third party
contracts with standardized strike prices and expiration dates and are purchased
from a clearing corporation. Exchange-traded options have a continuous liquid
market while over-the-counter options may not.
If the Fund does not exercise an option it has purchased, then the Fund loses in
value the price it paid for the option premium. If the Fund writes (sells) an
option which is subsequently exercised, the premium received by the Fund from
the option purchaser may not exceed the increase (in the case of a call option)
or decrease (in the case of a put option ) in the value of the securities
underlying the option, in which case the difference represents a loss for the
Fund. However, if the option expires without being exercised, the Fund realizes
a gain in the amount of the premium it received.
FUTURES AND OPTIONS ON FUTURES
The Fund may purchase and sell financial and stock index futures contracts to
attempt to hedge all or a portion of its portfolio against changes in interest
rates or economic market conditions. Financial futures contracts generally
require the delivery of particular debt instruments at a certain time in the
future. The seller of the contract agrees to make delivery of the type of
instrument called for in the contract, and the buyer agrees to take delivery of
the instrument at the specified future time. Stock index futures contracts
generally involve cash settlement rather than delivery of the stocks comprising
the index.
The Fund may also write call options and purchase put options on financial or
stock index futures contracts as a hedge to attempt to protect securities in its
portfolio against decreases in value. When the Fund writes a call option on a
futures contract, it is undertaking the obligation of selling a futures contract
at a fixed price at any time during a specified period if the option is
exercised. Conversely, as purchaser of a put option on a futures contract, the
Fund is entitled (but not obligated) to sell a futures contract at the fixed
price during the life of the option.
Generally, the Fund may not purchase or sell futures contracts or related
options if immediately thereafter the sum of the amount of margin deposits on
the Fund's existing futures positions and premiums paid for related options
would exceed 5% of the market value of the Fund's total assets. When the Fund
purchases futures contracts, an amount of cash and cash equivalents equal to the
underlying commodity value of the futures contracts (less any related margin
deposits) will be deposited in a segregated account with the Fund's custodian
(or the broker, if legally permitted) to collateralize the position and thereby
insure that the use of such futures contract is unleveraged.
RISKS
When the Fund uses futures and options on futures as hedging devices, there is a
risk that the prices of the securities subject to the futures contracts may not
correlate with the prices of the securities in the Fund's portfolio. This may
cause the futures contract and any related options to react differently than the
portfolio securities to market changes. In addition, the Adviser could be
incorrect in its expectations about the direction or extent of market factors
such as interest rate movements. In these events, the Fund may lose money on the
futures contract or option.
It is not certain that a secondary market for positions in futures contracts or
for options will exist at all times. Although the Adviser will consider
liquidity before entering into futures or options transactions, there is no
assurance that a liquid secondary market on an exchange or otherwise will exist
for any particular futures contract or option at any particular time. The Fund's
ability to establish and close out futures and options positions depends on this
secondary market.
WARRANTS
The Fund has no present intent to invest more than 5% of its net assets in
warrants.
DERIVATIVE CONTRACTS AND SECURITIES
The term "derivative" has traditionally been applied to certain contracts
(including futures and option contracts) that "derive" their value from changes
in the value of an underlying security, currency, commodity or index. Certain
types of securities that incorporate the performance characteristics of these
contracts are also referred to as "derivatives." The term has also been applied
to securities "derived" from the cash flows from underlying securities,
mortgages or other obligations.
Derivative contracts and securities can be used to reduce or increase the
volatility of an investment portfolio's total performance. While the response of
certain derivative contracts and securities to market changes may differ from
traditional investments, such as stock and bonds, derivatives do not necessarily
present greater market risks than traditional investments. The Fund will only
use derivative contracts for the purposes disclosed in the applicable prospectus
sections above. To the extent that the Fund invests in securities that could be
characterized as derivatives, it will only do so in a manner consistent with its
investment objectives, policies and limitations.
INVESTMENT RISKS
As with other mutual funds that invest in equity securities, the Fund is subject
to market risks. That is, the possibility exists that common stocks will decline
over short or even extended periods of time, and the United States equity market
tends to be cyclical, experiencing both periods when stock prices generally
increase and periods when stock prices generally decrease.
Because the Fund may invest in small-to-
medium capitalization stocks, there are some additional risk factors associated
with investments in the Fund. In particular, although their potential for growth
may be greater, stocks in the small-to-medium capitalization sector of the
United States equity market tend to be slightly more volatile in price than
larger capitalization stocks, such as those included in the S&P 500 Index. This
is because, among other things, small-to-medium-sized companies have less
certain growth prospects than larger companies, have a lower degree of liquidity
in the equity market, and tend to have a greater sensitivity to changing market
conditions. Further, in addition to exhibiting slightly higher volatility, the
stocks of small-to-medium-sized companies may, to some degree, fluctuate
independently of the stocks of larger companies. That is, the stocks of
small-to-medium-sized companies may decline in price as the price of large
company stocks rises or vice versa. Therefore, investors should expect that the
Fund will be slightly more volatile than, and may fluctuate independently of,
broad stock market indices such as the S&P 500 Index.
With respect to the debt obligations which the Fund may purchase, their prices
move inversely to interest rates. A decline in market interest rates results in
a rise in the market prices of outstanding debt obligations. Conversely, an
increase in market interest rates results in a decline in market prices of
outstanding debt obligations. In either case, the amount of change in market
prices of debt obligations in response to changes in market interest rates
generally depends on the maturity of the debt obligations: the debt obligations
with the longest maturities will experience the greatest market price changes.
The market value of debt obligations, and therefore the Fund's net asset value,
will fluctuate due to changes in economic conditions and other market factors
such as interest rates which are beyond the control of the Adviser. The Adviser
could be incorrect in its expectations about the direction or extent of these
market factors. Although debt obligations with longer maturities offer
potentially greater returns, they have greater exposure to market price
fluctuation. Consequently, to the extent the Fund is significantly invested in
debt obligations with longer maturities, there is a greater possibility of
fluctuation in the Fund's net asset value.
INVESTMENT LIMITATIONS
The Fund will not:
.borrow money directly or through reverse repurchase agreements (arrangements
in which the Fund sells a portfolio instrument for a percentage of its cash
value with an agreement to buy it back on a set date) or pledge securities
except, under certain circumstances, the Fund may borrow up to one-third of
the value of its total assets and pledge up to 15% of the value of its total
assets to secure such borrowings; and
.with respect to 75% of the value of its total assets, invest more than 5% of
its total assets in securities of one issuer other than cash, cash items, or
securities issued or guaranteed by the government of the United States or its
agencies or instrumentalities and repurchase agreements collateralized by
such securities, or acquire more than 10% of the voting securities of any one
issuer.
The above investment limitations cannot be changed without shareholder approval.
The following limitation, however, may be changed by the Board of Directors
without shareholder approval. Shareholders will be notified before any material
change in this limitation becomes effective.
The Fund will not invest more than 15% of its net assets in illiquid securities.
FUND MANAGEMENT,
DISTRIBUTION AND
ADMINISTRATION
BOARD OF DIRECTORS
THE FUND IS MANAGED BY A BOARD OF DIRECTORS.
The Directors are responsible for managing the business affairs for the Fund and
for exercising all the Fund's powers except those reserved for the shareholders.
INVESTMENT ADVISER
INVESTMENT DECISIONS FOR THE FUND ARE MADE BY M&T
BANK, SUBJECT TO DIRECTION BY THE DIRECTORS.
The Adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase or sale of portfolio instruments, for
which it receives an annual fee from the Fund.
Both the Corporation and the Adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to the
Fund's shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Corporation's Board
of Directors and could result in severe penalties.
ADVISORY FEES
For the services M&T Bank provides and the expenses it assumes as investment
adviser, M&T Bank is entitled to receive a fee from the Fund, equal to an annual
rate of .85% of the Fund's average daily net assets. This fee is computed daily
and paid monthly. M&T Bank has agreed to pay all expenses it incurs in
connection with its advisory activities, other than the cost of securities
(including any brokerage commissions) purchased for the Fund. From time to time,
M&T Bank may voluntarily waive all or a portion of its advisory fees in order to
help the Fund maintain a competitive expense ratio or to meet state limitations
on expense ratios.
ADVISER'S BACKGROUND
M&T Bank is the primary banking subsidiary of First Empire State Corporation, a
$12 billion bank holding company, as of December 31, 1995, headquartered in
Buffalo, New York. M&T Bank had $10.2 billion in assets, as of December 31,
1995, has 121 offices throughout western New York State and New York's Southern
Tier, 22 offices in the Hudson Valley region of New York State, plus offices in
New York City, Albany, Syracuse, and Nassau, the Bahamas. First Empire State
Corporation also owns The East New York Savings Bank, which, as of Decem-
ber 31, 1995, has 16 offices throughout metropolitan New York City.
M&T Bank was founded in 1856 and provides comprehensive banking and financial
services to individuals, governmental entities and businesses throughout New
York State. The Fund's investments are managed through the Trust & Investment
Services Division of M&T Bank. As of December 31, 1995, M&T Bank had $1.8
billion in assets under management for which it has investment discretion (which
includes employee benefits, personal trusts, estates, agencies and other
accounts). M&T Bank has served as investment adviser to various funds of the
Corporation since 1988. As of December 31, 1995, M&T Bank managed over $884
million in assets of the Corporation's money market funds. As part of its
regular banking operations, M&T Bank may make loans to public companies. Thus,
it may be possible, from time to time, for the Fund to hold or acquire the
securities of issuers which are also lending clients of M&T Bank. The lending
relationship will not be a factor in the selection of securities.
The Fund is managed by John F. Moore. Mr. Moore joined M&T Bank in October, 1995
as Senior Vice President and Chief Investment Officer. His 18 years of
investment experience includes five years with Value Line Asset Management, New
York where he most recently was the Director of Asset Management and Senior
Portfolio Manager. Mr. Moore obtained his B.A. and M.B.A. from the University of
North Carolina.
DISTRIBUTION OF FUND SHARES
FEDERATED SECURITIES CORP. IS THE PRINCIPAL
DISTRIBUTOR FOR SHARES OF THE FUND.
Shares of the Fund are sold on a continuous basis by Federated Securities Corp.
It is a Pennsylvania corporation organized on November 14, 1969, and is also the
principal distributor for a number of other investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors, Pittsburgh,
Pennsylvania.
DISTRIBUTION PLAN
Under a distribution plan (referred to as the "Plan") adopted in accordance with
Rule 12b-1 promulgated under the Investment Company Act of 1940, the Fund may
pay to the distributor an amount computed at an annual rate of 0.25% of the
Fund's average daily net assets to finance any activity which is principally
intended to result in the sale of shares subject to the Plan. The distributor
may from time to time and for such periods as it deems appropriate, voluntarily
reduce its 12b-1 compensation under the Plan to the extent the expenses
attributable to shares of the Fund exceed such lower expense limitation as the
distributor may, by notice to the Corporation, voluntarily declare to be
effective. The Fund has no present intention of paying or accruing 12b-1 fees
during the fiscal year ending April 30, 1997.
Financial institutions will receive fees from the distributor based upon shares
owned by their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time by the
distributor. The Fund's Plan is a compensation type plan. As such, the Fund
makes no payments to the distributor except as described above. Therefore, the
Fund does not pay for unreimbursed expenses of the distributor, including
amounts expended by the distributor in excess of amounts received by it from the
Fund, interest, carrying or other financing charges in connection with excess
amounts expended, or the distributor's overhead expenses. However, the
distributor may be able to recover such amounts or may earn a profit from future
payments made by the Fund under the Plan.
The Glass-Steagall Act and other banking laws and regulations presently prohibit
a bank holding company registered under the Bank Holding Company Act of 1956 or
any affiliate thereof from sponsoring, organizing or controlling a registered,
open-end investment company continuously engaged in the issuance of its shares,
and from issuing, underwriting, selling or distributing securities in general.
Such laws and regulations do not prohibit such a holding company or affiliate
from acting as investment adviser, transfer agent, or custodian to such an
investment company or from purchasing shares of such a company as agent for and
upon the order of their customers.
Some entities providing services to the Fund are subject to such banking laws
and regulations. They believe that they may perform those services for the Fund
contemplated by any agreement entered into with the Fund without violating those
laws or regulations. Changes in either federal or state statutes and regulations
relating to the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of present or future statutes and regulations, could prevent
these entities from continuing to perform all or a part of the above services.
If this happens, the Directors would consider alternative means of continuing
available services. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these occurrences.
State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.
The distributor may select certain entities to provide sales and/or
administrative services as agents for holders of shares of the Fund. For a
description of administrative services, see "Administrative Arrangements" below.
SHAREHOLDER SERVICING ARRANGEMENTS
The Fund has adopted a Shareholder Services Plan, which is administered by
Federated Administrative Services. Under the Plan, M&T Bank may act as a
shareholder servicing agent (the "Shareholder Servicing Agent") for the Fund.
The Fund may pay the Shareholder Servicing Agent a fee based on the average
daily net asset value of shares for which it provides shareholder services.
These shareholder services include, but are not limited to, distributing
prospectuses and other information, providing shareholder assistance and
communicating or facilitating purchases and redemptions of shares. This fee will
be equal to 0.25% of the Fund's average daily net assets for which the
Shareholder Servicing Agent provides services. The Fund will not accrue or pay
any shareholder servicing agent fees until a separate class of shares has been
created for the Fund or the prospectus is amended to reflect the imposition of
fees.
ADMINISTRATIVE ARRANGEMENTS
The distributor may select brokers and dealers to provide distribution and
administrative services. The distributor may also select administrators
(including depository institutions such as commercial banks and savings banks)
to provide administrative services that are not provided by Federated
Administrative Services (see below). These administrative services include
distributing prospectuses and other information, providing accounting assistance
and shareholder communications, or otherwise facilitating shareholder purchases
and redemptions (sales) of Fund shares. The administrators appointed could
include affiliates of the Adviser.
Brokers, dealers, and administrators will receive fees from the distributor
based upon shares owned by their clients or customers. The fees are calculated
as a percentage of the average aggregate net asset value of shareholder accounts
during the period for which the brokers, dealers, and administrators provide
services. If the distributor pays any fees for these services, the fees will be
reimbursed by the Adviser and not the Fund.
ADMINISTRATION OF THE FUND
FEDERATED ADMINISTRATIVE SERVICES, A SUBSIDIARY OF
FEDERATED INVESTORS, PROVIDES THE FUND WITH CERTAIN
ADMINISTRATIVE PERSONNEL AND SERVICES NECESSARY TO
OPERATE THE FUND.
ADMINISTRATIVE SERVICES
Such services include shareholder servicing and certain legal and accounting
services. Federated Administrative Services provides these services for an
annual fee as specified below:
<TABLE>
<CAPTION>
ADMINISTRATIVE AGGREGATE DAILY NET ASSETS OF
FEE VISION GROUP OF FUNDS, INC.
<C> <S>
.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>
The administrative fee received during any year shall be at least $50,000 for
the Fund. Federated Administrative Services may choose voluntarily to waive a
portion of its fee at any time.
YOUR GUIDE
TO USING
THE FUND
HOW THE FUND VALUES
ITS SHARES
THE FUND'S NET ASSET VALUE PER SHARE FLUCTUATES.
The net asset value for the Fund's shares is determined by adding the market
value of all securities and other assets of the Fund, subtracting the
liabilities of the Fund and dividing the remainder by the total number of the
Fund's shares outstanding.
MINIMUM INITIAL INVESTMENT
The minimum initial investment in the Fund is $500, unless the investment is in
an IRA account, in which case the minimum initial investment is $250. Subsequent
investments must be in amounts of at least $25. In addition, the minimum initial
and subsequent investment amounts may be waived or lowered from time to time,
such as for customers participating in the automatic investment services
described below.
WHAT FUND SHARES COST
Shares are sold at their net asset value next determined after an order is
received, plus a sales charge as follows:
<TABLE>
<CAPTION>
SALES CHARGE AS SALES CHARGE
A PERCENTAGE AS A PERCENTAGE
OF PUBLIC OF NET AMOUNT
AMOUNT OF TRANSACTION OFFERING PRICE INVESTED
<S> <C> <C>
Less than $100,000........ 4.50% 4.71%
$100,000 but less than
$250,000................ 3.75% 3.90%
$250,000 but less than
$500,000................ 3.00% 3.09%
$500,000 but less than $1
million................. 2.00% 2.04%
$1 million but less than
$2 million.............. 1.00% 1.01%
$2 million or more........ 0.00% 0.00%
</TABLE>
The net asset value is determined at the close of regular trading on the New
York Stock Exchange, which is generally 4:00 p.m. (Eastern time), Monday through
Friday, except on:
(i) days when the value of the Fund's
portfolio securities do not change sufficiently to materially affect the net
asset value;
(ii) days when no shares are tendered for
redemption by shareholders and no orders to purchase shares are received;
or
(iii) the following holidays: New Year's Day,
Martin Luther King Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
In connection with the sale of Fund shares, Federated Securities Corp. may from
time to time offer certain items of nominal value to any shareholder or
investor.
EXCHANGING SECURITIES FOR FUND SHARES
The Fund may accept securities in exchange for Fund shares. The Fund will allow
such exchanges only upon prior approval of the Fund and a determination by the
Fund and the Adviser that the securities to be exchanged are acceptable.
Any securities exchanged must meet the investment objective and policies of the
Fund, must have a readily ascertainable market value, and must be liquid. The
market value of any securities exchanged in an initial investment, plus any
cash, must be at least equal to the minimum investment in the Fund. The Fund
acquires the exchanged securities for investment and not for resale.
Any interest accrued or dividends declared but not paid on the securities prior
to the exchange will be considered in valuing the securities. All interest,
dividends, subscription or other rights attached to the securities become the
property of the Fund, along with the securities.
If an exchange is permitted, it will be treated as a sale for federal income
tax purposes. Depending upon the cost basis of the securities exchanged for
Fund shares, a gain or loss may be realized by the investor.
SALES CHARGE REALLOWANCE
For sales of shares of the Fund, a broker/dealer will normally receive up to 90%
of the applicable sales charge. Any portion of the sales charge not paid to a
broker/dealer will be retained by the distributor. However, the distributor will
uniformly and periodically offer to pay broker/dealers up to 100% of the sales
charge retained by it. Such payments may take the form of cash, items of
material value, or promotional incentives, such as payment of certain expenses
of qualified employees and their spouses to attend informational meetings about
the Fund or other special events at recreational-type facilities. In some
instances, these incentives will be made available only to broker/dealers whose
employees have sold or may sell significant amounts of shares.
The distributor may pay fees to financial institutions out of the sales charge
in exchange for sales and/or administrative services performed on behalf of
their customers in connection with the initiation of customer accounts and
purchases of shares of the Fund.
In addition, the distributor will offer to pay broker/dealers an amount of up to
1.00% of the net asset value of shares purchased for an account of their client
or customer in an amount of $2 million or more.
The distributor, M&T Bank or its affiliates, at their own expense and out of
their own assets, may also provide other compensation to financial institutions
in connection with sales of shares of the Fund or as financial assistance for
providing substantial marketing, sales and operational support. Compensation may
include, but is not limited to, financial assistance to financial institutions
in connection with conferences, sales, or training programs for their employees,
seminars for the public, advertising or sales campaigns, or other special
events. In some instances, this compensation may be predicated upon the amount
of shares sold and/or upon the type and nature of sales or operational support
they furnish. Dealers may not use sales of the Corporation's shares to qualify
for this compensation to the extent such may be prohibited by the laws of any
state or any self-regulatory agency, such as the National Association of
Securities Dealers, Inc. None of the aforementioned other compensation shall be
paid for by the Corporation, the Fund, or its shareholders, nor will it change
the price paid by investors for the purchase of Fund shares.
PURCHASES AT NET ASSET VALUE
Shares of the Fund may be purchased, subject to applicable law and regulation
from time to time, at net asset value, without a sales charge, by the following
investors, their spouses and their immediate relatives: (i) current and retired
employees and directors of M&T Bank, The East New York Savings Bank, First
Empire State Corporation and their subsidiaries; (ii) current and former
Directors of the Corporation; (iii) clients of the Trust & Investment Services
Division of M&T Bank; (iv) employees (including registered representatives) of a
dealer which has a selling group agreement with the Fund's distributor and
consents to such purchases; (v) current and retired employees of any sub-adviser
to the Vision Group of Funds, Inc.; and (vi) investors referred by any
sub-adviser to the Vision Group of Funds, Inc. Immediate relatives include
grandparents, parents, siblings, children, and grandchildren of a qualified
investor, and the spouse of any immediate relative.
Shares of the Fund may also be purchased, subject to applicable law and
regulation from time to time, at net asset value, without a sales charge, by
employees of clients of the Trust & Investment Services and Commercial Lending
Divisions of M&T Bank within an automatic deduction program. The distributor
will uniformly and periodically offer to pay cash payments as incentives to
broker/dealers whose customers or clients purchase shares of the Fund under this
"no-load" purchase provision. This payment will be made out of the distributor's
assets and not by the Corporation, the Fund, or its shareholders.
A special application form which is available from the Shareholder Servicing
Agent, must be submitted with the initial purchase.
PURCHASES WITH PROCEEDS FROM REDEMPTIONS OF MUTUAL FUND SHARES OR ANNUITIES
Investors may purchase shares of the Fund at net asset value, without a sales
charge, with the proceeds from either: (i) the redemption of shares of a mutual
fund which was sold with a sales charge or commission, or (ii) fixed or variable
rate annuities. The purchase must be made within 60 days of the redemption, and
M&T Bank's Mutual Fund Services must be notified by the investor in writing, or
by the investor's financial institution, at the time the purchase is made, and
must be presented with satisfactory evidence of the redemption. Redemptions of
mutual fund shares that are subject to a contingent deferred sales charge are
not eligible to purchase Fund shares under this method. The distributor will
uniformly and periodically offer to pay cash payments as incentives to
broker/dealers whose customers or clients purchase shares of the Fund under this
"no-load" purchase provision. This payment will be made out of the distributor's
assets and not by the Corporation, the Fund or its shareholders.
REDUCING THE SALES CHARGE
The sales charge can be reduced on the purchase of shares of the Fund through:
.quantity discounts and accumulated purchases;
.signing a 13-month letter of intent;
.using the reinvestment privilege; or
.concurrent purchases.
QUANTITY DISCOUNTS AND
ACCUMULATED PURCHASES
As shown in the table under "What Shares Cost," larger purchases reduce the
sales charge paid. The Fund will combine purchases made on the same day by the
investor, the investor's spouse, and the investor's children under age 21 when
it calculates the sales charge.
If an additional purchase of shares of the Fund is made, the Fund will consider
the previous purchases still invested in the Fund in calculating the applicable
sales charge rate. For example, if a shareholder already owns shares which were
purchased at the public offering price of $70,000 and then purchases $40,000
more at the current public offering price, the sales charge of the additional
purchase according to the schedule now in effect would be 3.75%, not 4.50%.
To receive the sales charge reduction, M&T Bank's Mutual Fund Services or the
distributor must be notified by the shareholder in writing at the time the
purchase is made that Fund shares are already owned or that purchases are being
combined. The Fund will reduce the sales charge after it confirms the purchase.
LETTER OF INTENT
If a shareholder intends to purchase shares of the Fund equal in value to at
least $100,000 over the next 13 months, the sales charge may be reduced by
signing a letter of intent to that effect. This letter of intent includes a
provision for a sales charge adjustment depending on the amount actually
purchased within the 13-month period and a provision for the Custodian to hold
4.50% of the total amount intended to be purchased in escrow (in shares of the
Fund) until such purchase is completed.
The 4.50% held in escrow will be applied to the shareholder's account at the end
of the 13-month period, unless the amount specified in the letter of intent is
not purchased. In this event, an appropriate number of escrowed shares may be
redeemed in order to realize the difference in the sales charge. This letter of
intent will not obligate the shareholder to purchase shares, but if the
shareholder does, each purchase during the period will be at the sales charge
applicable to the total amount intended to be purchased. This letter may be
dated as of a prior date to include any purchases made within the past 90 days;
however, these previous purchases will not receive the reduced sales charge.
REINVESTMENT PRIVILEGE
If shares in the Fund have been redeemed, the shareholder has a one-time right
to reinvest, within 90 days, the redemption proceeds in the Fund at the
next-determined net asset value without any sales charge. M&T Bank's Mutual Fund
Services or the distributor must be notified by the shareholder in writing or by
the shareholder's financial institution of the reinvestment
in order to eliminate the sales charge. If the shareholder redeems his or her
shares in the Fund, there may be tax consequences.
CONCURRENT PURCHASES
For purposes of qualifying for a sales charge reduction, a shareholder has the
privilege of combining concurrent purchases of two or more funds in the Vision
Group of Funds, Inc., the purchase price of which includes a sales charge. For
example, if a shareholder concurrently invested $70,000 in one of the funds with
a sales charge, and $40,000 in another fund with a sales charge, the sales
charge would be reduced to 3.75%.
To receive this sales charge reduction, M&T Bank's Mutual Fund Services or the
distributor must be notified by the agent placing the order at the time the
concurrent purchases are made. The sales charge will be reduced after the
purchase is confirmed.
HOW TO BUY SHARES
YOU CAN BUY SHARES OF THE FUND ON ANY BUSINESS DAY,
EXCEPT ON DAYS WHICH THE NEW YORK STOCK EXCHANGE OR
M&T BANK IS CLOSED OR ON HOLIDAYS WHEN WIRE TRANSFERS
ARE RESTRICTED (COLUMBUS DAY, VETERANS' DAY AND
MARTIN LUTHER KING DAY).
Shares may be purchased either by wire, mail or transfer. The Fund reserves the
right to reject any purchase request.
Texas residents must purchase shares through Federated Securities Corp. at
1-800-618-8573.
THROUGH THE BANK
You may purchase shares through M&T Bank. To do so, contact an account
representative at M&T Bank or those affiliates of M&T Bank which make shares
available (such as The East New York Savings Bank ("East New York")), or M&T
Bank's Mutual Fund Services at (800) 836-2211 (in the Buffalo area, phone
842-4488).
THROUGH M&T SECURITIES, INC.
You may purchase shares of the Fund through any representative of M&T
Securities, Inc. ("M&T Securities") at M&T Bank and East New York locations, as
well as at separate M&T Securities locations, or by calling 1-800-724-5445. M&T
Securities (member NASD and SIPC) is a wholly-owned registered broker-dealer
subsidiary of M&T Bank.
THROUGH AUTHORIZED BROKER/DEALERS
An investor may place an order through authorized brokers and dealers to
purchase shares of the Fund. For additional details, contact your broker.
PAYMENT
Payment may be made by either check or federal funds or by debiting a customer's
account at M&T Bank or any of its affiliate banks. Purchase orders must be
received by 4:00 p.m. (Eastern time) in order to be credited that same day. For
settlement of an order to occur, payment must be received on the next business
day following the order.
BUYING SHARES BY WIRE
You can purchase shares of the Fund by Federal Reserve wire. This is referred to
as wiring federal funds, and it simply means that your bank sends money to the
Fund's bank through the Federal Reserve System. To purchase shares by Federal
Reserve wire, call M&T Bank's Mutual Fund Services or any representative of M&T
Securities before 4:00 p.m. (Eastern time) to place your order. The order is
considered immediately received, provided payment by federal funds is received
before 3:00 p.m. (Eastern time) the next business day.
BUYING SHARES BY MAIL
To buy shares of the Fund for the first time by mail, complete and sign an
account application form and mail it, together with a check made payable to
"Vision Capital Appreciation Fund" in an amount of $500 (or $250 for IRA
accounts) or more, to the address below:
Vision Group of Funds, Inc.
P.O. Box 4556
Buffalo, New York 14240-4556
Current shareholders can purchase shares by mail by sending a check to the same
address. Orders by mail are considered received after payment by check has been
converted into federal funds. This is normally the next business day after the
check has been received.
BUYING SHARES BY TRANSFER
To purchase shares of the Fund by transferring money from a bank account, you
must maintain a checking or NOW deposit account at M&T Bank or any of its
affiliate banks. To place an order, call M&T Bank's Mutual Fund Services or any
representative of M&T Securities before 4:00 p.m. (Eastern time). The money will
be transferred from your checking or NOW deposit account to your Fund account by
the next business day and your purchase of shares will be effected on the day
the order is placed.
CUSTOMER AGREEMENTS
Shareholders normally purchase shares through different types of customer
accounts at M&T Bank and its affiliates. You should read this prospectus
together with any agreements between you and the institution to learn about the
services provided, the fees charged for those services, and any restrictions and
limitations imposed.
SYSTEMATIC INVESTMENT PROGRAM
Once you have opened a Fund account, you can add to your investment on a regular
basis in amounts of $25 or more through automatic deductions from your checking
or NOW deposit account. The money may be withdrawn periodically and invested in
Fund shares at the net asset value next calculated after your order is received
plus any applicable sales charge. To sign up for this program, please call M&T
Bank's Mutual Fund Services for an application.
DIVIDENDS AND CAPITAL GAINS
The Fund declares and pays dividends quarterly. Capital gains realized by the
Fund, if any, will be distributed at least once every 12 months. Dividends and
capital gains will be automatically reinvested in additional shares of the Fund
on payment dates at the ex-dividend date's net asset value without a sales
charge, unless payments are requested by writing to the Fund or M&T Bank's
Mutual Fund Services. Dividends and capital gains can also be reinvested in
shares of any other fund comprising the Vision Group of Funds, Inc., subject to
any applicable investment requirements.
RETIREMENT PLANS
Shares of the Fund can be purchased as an investment for IRA accounts. For
further details, contact the Fund and consult a tax adviser.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Shareholder Services Company maintains
a share account for each shareholder. The Fund will not issue certificates for
your shares unless you make a written request to the Fund. Federated Shareholder
Services Company is a subsidiary of Federated Investors.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Confirmations are sent to shareholders of the Fund to report
dividends paid during the quarter.
HOW TO EXCHANGE SHARES
ALL SHAREHOLDERS IN ANY OF THE FUNDS ARE SHAREHOLDERS
OF VISION GROUP OF FUNDS, INC. AND HAVE ACCESS TO THE
OTHER FUNDS OF THE CORPORATION (REFERRED TO AS "PAR-
TICIPATING FUNDS") THROUGH AN EXCHANGE PROGRAM. YOU
MAY EXCHANGE SHARES OF THE FUND FOR SHARES OF OTHER
PARTICIPATING FUNDS AT NET ASSET VALUE, PLUS ANY
APPLICABLE SALES CHARGE.
When exchanging into and out of Participating Funds with a sales charge and
Participating Funds without a sales charge, shareholders who have paid a sales
charge once upon purchasing shares of any Participating Fund, including those
shares acquired by the reinvestment of dividends, will not have to pay a sales
charge again on an exchange. Shares of Participating Funds with no sales charge
acquired by direct purchase may be exchanged for shares of other Participating
Funds with a sales charge at net asset value plus the applicable sales charge.
However, shares of Participating Funds with no sales charge that were acquired
by the reinvestment of dividends will not be subject to a sales charge upon an
exchange into shares of a Participating Fund with a sales charge. Instead, such
exchanges will be made at net asset value.
To be eligible for this exchange privilege, you must exchange shares with a net
asset value of at least the minimum initial investment required by the
Participating Fund into which you are exchanging if it is a new account. You may
exchange your shares only for shares of Participating Funds that may legally be
sold in your state of residence. Prior to any exchange, the shareholder must
receive a copy of the current prospectus of the Participating Fund into which an
exchange is to be made.
Once the transfer agent has received proper instructions and all necessary
supporting documents, shares submitted for exchange will be redeemed at the next
net asset value calculated. If you do not have an account in the Participating
Fund whose shares you want to acquire, you must establish a new account. Unless
you specify otherwise, this account will be registered in the same name and have
the same dividend and capital gains payment options as you selected with your
existing account. If the new account registration (name, address, and taxpayer
identification number) is not identical to your existing account, you must
provide a signature guarantee to verify your signature. Please see the
"Signature Guarantees" section later in this prospectus for more information
about signature guarantees.
Each exchange is considered a sale of shares of one fund and a purchase of
shares of another fund, and depending on the circumstances, may generate a short
or long-term capital gain or loss for federal income tax purposes.
The Fund reserves the right to modify or terminate the exchange privilege at any
time. Shareholders will be notified prior to any modification or termination.
To find out more about the exchange privilege, call M&T Bank's Mutual Fund
Services at the number listed below.
EXCHANGING SHARES BY TELEPHONE
You may exchange shares between Participating Funds by calling M&T Bank's Mutual
Fund Services at (800) 836-2211 (in the Buffalo area, phone 842-4488). To sign
up for telephone exchanges, you must select the telephone exchange option on the
new account application. It is recommended that you request this privilege on
your initial application. If you do not and later wish to take advantage of
telephone exchanges, you may call M&T Bank's Mutual Fund Services for
authorization forms.
You can only exchange shares by telephone between fund accounts with identical
shareholder registrations (names, addresses, and taxpayer identification
numbers).
Telephone exchange instructions must be received by M&T Bank's Mutual Fund
Services by 4:00 p.m. (Eastern time) and transmitted to Federated Shareholder
Services Company before 4:00 p.m. (Eastern time) for shares to be exchanged that
same day. You will not receive a dividend from the fund into which you are
exchanging on the date of the exchange.
You may have difficulty making exchanges by telephone in times of unusual
economic or market changes when the volume of telephone requests may be
exceptionally high. If you cannot contact M&T Bank's Mutual Fund Services by
telephone, please send a written exchange request by mail for next day delivery
to the Vision Group of Funds, Inc. at the address shown below.
If you have certificates for the shares you want to exchange, you cannot make a
telephone exchange. Instead, the certificates must be properly endorsed and
should be sent by registered or certified mail, along with your written exchange
request, to the Vision Group of Funds, Inc. at the address shown below. M&T
Bank's Mutual Fund Services will then forward the certificate to the transfer
agent, Federated Shareholder Services Company, and the shares will be deposited
into your account before the exchange is made.
Shareholders requesting the telephone exchange service authorize the
Corporation and its agents to act upon their telephonic instructions to
exchange shares from any account for which they have authorized such services.
Exchange instructions given by telephone may be electronically recorded for
your protection. If reasonable procedures are not followed by the Fund, it may
be liable for losses due to unauthorized or fraudulent telephone instructions.
EXCHANGING SHARES BY MAIL
You may exchange shares by mail by sending your written request to:
Vision Group of Funds, Inc.
P.O. Box 4556
Buffalo, New York 14240-4556
HOW TO REDEEM SHARES
THE FUND REDEEMS YOUR SHARES AT THE NET ASSET VALUE
PER SHARE NEXT CALCULATED AFTER THE FUND RECEIVES
YOUR REDEMPTION REQUEST. WHEN FUND SHARES ARE
REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THE
ORIGINAL COST.
You may redeem shares only on days when the Fund computes its net asset value.
You cannot redeem shares on days when the New York Stock Exchange or M&T Bank
are closed, or on holidays when wire transfers are restricted (Columbus Day,
Veterans' Day, and Martin Luther King Day). While you may redeem various amounts
by telephone or written request, you can close your account only by written
request.
TELEPHONE REDEMPTIONS
You may redeem your shares by calling M&T Bank's Mutual Fund Services at (800)
836-2211 (in the Buffalo area, phone 842-4488) before 4:00 p.m. (Eastern time).
The proceeds will be wired the next business day directly to your account at M&T
Bank or an affiliate or to another account you previously designated at a
domestic commercial bank that is a member of the Federal Reserve System. M&T
Bank reserves the right to charge a fee for a wire transfer from a customer
checking account, which may contain redemption proceeds, to another commercial
bank.
You will be automatically eligible for telephone redemptions, unless you check
the box on the new account application form to decline this privilege. It is
recommended that you provide the necessary information for the telephone/ wire
redemption option on your initial application. If you do not do this and later
wish to take advantage of telephone redemptions, you must call M&T Bank's Mutual
Fund Services for authorization forms.
You may have difficulty redeeming shares by telephone in times of unusual
economic or market changes when the volume of telephone requests may be
exceptionally high. If you cannot contact M&T Bank's Mutual Fund Services by
telephone, please send a written redemption request by mail for next day
delivery to the Vision Group of Funds, Inc. at the address shown below.
The Fund reserves the right to modify or terminate the telephone redemption
privilege at any time. Shareholders will be notified prior to any modification
or termination.
If you hold shares in certificate form or hold Fund shares through an IRA
account, you cannot redeem those shares by phone, but instead must redeem them
in writing as explained below.
Shareholders who accept the telephone redemption service authorize the
Corporation and its agents to act upon their telephonic instructions to redeem
shares from any account for which they have authorized such services. Redemption
instructions given by telephone may be electronically recorded for your
protection. If reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions.
REDEEMING SHARES BY MAIL
You may redeem shares by sending your written request to:
Vision Group of Funds, Inc.
P.O. Box 4556
Buffalo, New York 14240-4556
Please call M&T Bank's Mutual Fund Services for specific instructions before
redeeming by letter. Your written request must include your name, the Fund's
name, your account number, and the share or dollar amount you want to
redeem. If share certificates have been issued to you, those certificates must
be properly endorsed and should be sent by registered or certified mail along
with your redemption request.
SIGNATURE GUARANTEES
A signature guarantee verifies the authenticity of your signature. For your
protection, you must have your signature guaranteed on written redemption
requests in the following instances:
.if you are redeeming shares worth $50,000 or more;
.if you want a redemption of any amount sent to an address other than your
address on record with the Fund;
.if you want a redemption of any amount payable to someone other than yourself
as the shareholder of record; or
.if you want to transfer the registration of the Fund shares.
The signature guarantee must be provided by:
.a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
.a savings bank or savings associations whose deposits are insured by the
Savings Association Insurance Fund ("SAIF"), which also is administered by
the FDIC;
.a member firm of the New York, American, Boston, Midwest, or Pacific Stock
Exchange; or
.any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request, provided the Fund or its agents have received payment for shares from
the shareholder.
SYSTEMATIC WITHDRAWAL PROGRAM
If you own Fund shares worth $10,000 or more, you can have regular payments of
$50 or more sent from your Fund account to you, another person you designate or
your checking or NOW deposit account. Fund shares are redeemed to provide
periodic payments in the amount you specify.
Depending on the amount you are withdrawing, the amount of dividends or any
capital gains distributions paid on the Fund shares, and any possible
fluctuations in the Fund's net asset value per share, these redemptions may
reduce and eventually exhaust your investment in the Fund. For this reason, you
should not consider systematic withdrawal payments as yield or income received
from your investment in the Fund. Due to the fact that shares are sold subject
to sales charge, it may not be advisable for shareholders to be purchasing
shares while participating in this program.
For more information and an application form for the Systematic Withdrawal
Program, call M&T Bank's Mutual Fund Services.
INVOLUNTARY REDEMPTIONS
Because of the high cost of maintaining accounts with low balances, the Fund may
redeem your shares and send you the proceeds if your account balance falls below
a minimum value of $250 due to shareholder redemptions. Shareholders who make
large or frequent withdrawals may be particularly vulnerable to this involuntary
redemption process. However, before shares are redeemed to close an account, the
shareholder will be notified in writing and given 30 days to purchase additional
shares to meet the minimum balance requirement.
Further, the Fund reserves the right to redeem shares involuntarily or make
payment for redemptions in the form of securities if it appears appropriate to
do so in light of the Fund's responsibilities under the Investment Company Act
of 1940.
TAX INFORMATION
BELOW IS A GENERAL DISCUSSION OF TAX CONSIDERATIONS
FOR THE FUND. NO ATTEMPT HAS BEEN MADE TO PRESENT A
DETAILED EXPLANATION OF THE INCOME TAX TREATMENT OF
THE FUND OR ITS SHAREHOLDERS, AND THIS DISCUSSION IS
NOT INTENDED AS A SUBSTITUTE FOR CAREFUL TAX
PLANNING.
The tax consequences discussed here apply whether you receive dividends in cash
or reinvest them in additional shares. The Fund will send you tax information
annually regarding the federal income tax consequences of distributions made
during the year. You should definitely consult your own tax adviser about any
state or local taxes that may apply.
The Fund will be treated as a separate entity for federal income tax purposes.
Income earned by the Fund, including any capital gains or losses realized, is
not combined with income earned on the Corporation's other portfolios.
The Fund intends to qualify each year as a regulated investment company under
the Internal Revenue Code so that it is not required to pay federal income taxes
on the income and capital gains distributed to shareholders.
FEDERAL INCOME TAXES
Unless shareholders of the Fund are otherwise exempt from taxes, they are
required to pay federal income taxes on dividends and other distributions
received (including capital gains distributions, if any) from the Fund.
DESCRIPTION OF FUND SHARES
Vision Group of Funds, Inc. was organized as a Maryland corporation on February
23, 1988, and consists of seven available portfolios: Vision Money Market Fund,
Vision Treasury Money Market Fund, Vision New York Tax-Free Money Market Fund,
Vision U.S. Government Securities Fund, Vision Growth and Income Fund, Vision
Capital Appreciation Fund, and Vision New York Tax-Free Fund. The Corporation's
Articles of Incorporation permit the Corporation to offer separate series of
shares in these funds or other future portfolios.
Each Fund share represents an equal proportionate interest in the Fund with
other shares and participates equally in the dividends and any other
distributions that are declared at the discretion of the Corporation's Board of
Directors.
VOTING RIGHTS AND OTHER INFORMATION
SHAREHOLDERS OF THE FUND ARE ENTITLED TO ONE VOTE FOR
EACH FULL SHARE THEY HOLD AND TO FRACTIONAL VOTES FOR
ANY FRACTIONAL SHARES THEY HOLD.
Shareholders in the Fund generally vote in the aggregate and not by class,
unless the law expressly requires otherwise or the Corporation's Board of
Directors determines that the matter to be voted upon affects only the interests
of shareholders of a particular class. (See the "Description of Fund Shares" in
the Statement of Additional Information for examples of when the Investment
Company Act of 1940 requires that shareholders vote by class.)
The Fund is not required to hold annual shareholder meetings, unless matters
arise that require a vote of the shareholders under the Investment Company Act
of 1940. That law requires a vote of the shareholders to approve changes in the
Fund's investment advisory agreements, to replace the Fund's independent
certified public accountants and, under certain circumstances, to elect members
to the Board of Directors. Directors may be removed by the Board of Directors or
by a vote of shareholders at a special meeting. The Board of Directors will
promptly call a special meeting of shareholders upon the written request of
shareholders owning at least 10% of any Fund's outstanding shares.
As used in this prospectus, "assets belonging to the Fund" means the money
received by the Corporation upon the issuance or sale of shares in the Fund,
together with all income, earnings, profits, and proceeds derived from the
investment of that money. This includes any proceeds from the sale, exchange,
or liquidation of these investments, any funds or payments derived from the
reinvestment of these proceeds, and a portion of the general assets of the
Corporation that do not otherwise belong to the Fund.
Assets belonging to the Fund are charged with the direct expenses and
liabilities of the Fund and with a share of the general expenses and liabilities
of the Corporation. The general expenses and liabilities of the Corporation are
allocated in proportion to the relative asset values of all the Corporation's
portfolios at the time the expense or liability is incurred.
The management of the Corporation determines the Fund's direct and allocable
liabilities at the time the expense or liability is incurred as well as the
Fund's allocable share of any general assets at the time the asset is acquired.
These determinations are reviewed and approved annually by the Corporation's
Board of Directors and are conclusive.
HOW THE FUND SHOWS
PERFORMANCE
From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices. The Fund may advertise its performance in
terms of yield and total return, as defined below. Of course, yield and total
return figures are based on past results and are not an indication of future
performance.
YIELD
The yield of the Fund is determined by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Fund
over a thirty-day period by the maximum offering price per share of the Fund on
the last day of the period. This number is then annualized using semi-annual
compounding. This means that the amount of income generated during the
thirty-day period is assumed to be generated each month over a 12-month period
and is reinvested every six months. The yield does not necessarily reflect
income actually earned by the Fund because of certain adjustments required by
the Securities and Exchange Commission and, therefore, may not correlate to the
dividends or other distributions paid to shareholders.
TOTAL RETURN
The average annual total return of the Fund is the average compounded rate of
return for a given period that would equate a $1,000 initial investment to the
ending redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of shares owned at the end of the period by
the maximum offering price per share at the end of the period. The number of
shares owned at the end of the period is based on the number of shares purchased
at the beginning of the period with $1,000, less any applicable sales charge,
adjusted over the period by any additional shares, assuming the monthly
reinvestment of all dividends and distributions.
ADDRESSES
Vision Group of Funds, Inc.
P.O. Box 4556
Buffalo, New York 14240-4556
(800) 836-2211 (716) 842-4488
ADMINISTRATOR
Federated Administrative Services
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
INVESTMENT ADVISER
Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14240
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 1119
Boston, Massachusetts 02103
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Federated Shareholder Services Company
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
INDEPENDENT AUDITORS
Ernst & Young LLP
One Oxford Centre
Pittsburgh, Pennsylvania 15219
Vision
Capital Appreciation
Fund
---------------------------------------------
Prospectus dated
June 5, 1996
<TABLE>
<S> <C> <C>
FEDERATED SECURITIES CORP. MANUFACTURERS AND TRADERS
--------------------------------------------- TRUST COMPANY
Distributor ----------------------------------------------------
A subsidiary of FEDERATED INVESTORS Investment Adviser
FEDERATED INVESTORS TOWER A subsidiary of First Empire State Corporation
PITTSBURGH, PA 15222-3779 TRG01627-01 (6/96)
G01627-01 (6/96)
</TABLE>
..
VISION CAPITAL APPRECIATION FUND
(A PORTFOLIO OF VISION GROUP OF FUNDS, INC.)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information relates to the prospectus of one
portfolio of the Vision Group of Funds, Inc., referred to as the Vision
Capital Appreciation Fund (the "Fund") dated June 5, 1996.
This Statement of Additional Information is not a prospectus itself, but
should be read in conjunction with the Fund's current prospectus dated June
5, 1996. This Statement of Additional Information is incorporated into the
Fund's prospectus by reference. To receive a copy of the prospectus, or a
paper copy of this Statement of Additional Information, if you have
received it electronically, write to Vision Group of Funds, Inc., P.O. Box
4556, Buffalo, NY 14240-4556, or call (800) 836-2211 or (716) 842-4488.
Please retain this Statement of Additional Information for future
reference.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement of Additional Information dated June 5, 1996
GENERAL INFORMATION ABOUT THE FUND 3
INVESTMENT OBJECTIVE 1
INVESTMENT POLICIES 1
ACCEPTABLE INVESTMENTS 1
Corporate Debt Obligations 1
U.S. Government Securities 1
Money Market Instruments 2
Repurchase Agreements 2
When-Issued and Delayed Delivery
Transactions 2
Illiquid and Restricted Securities 3
Lending of Portfolio Securities 3
Reverse Repurchase Agreements 3
Futures and Options Transactions 4
Warrants 6
Portfolio Turnover 7
INVESTMENT LIMITATIONS 7
VISION GROUP OF FUNDS, INC. MANAGEMENT 9
Fund Ownership 11
Directors' Compensation 11
Director Liability 11
INVESTMENT ADVISORY SERVICES 12
Adviser to the Fund 12
Advisory Fees 12
OTHER SERVICES 12
BROKERAGE TRANSACTIONS 13
DESCRIPTION OF FUND SHARES 13
HOW TO BUY SHARES 14
HOW THE FUND VALUES ITS SHARES 14
HOW TO REDEEM SHARES 14
Redemption in Kind 14
DETERMINING NET ASSET VALUE 15
TAX STATUS 15
The Fund's Tax Status 15
Shareholders' Tax Status 15
TOTAL RETURN 15
YIELD 15
PERFORMANCE COMPARISONS 15
APPENDIX 18
GENERAL INFORMATION ABOUT THE FUND
The Fund is a portfolio in the Vision Group of Funds, Inc. (the
"Corporation"). The Corporation was established as a Maryland Corporation
under Articles of Incorporation dated February 23, 1988.
INVESTMENT OBJECTIVE
The investment objective of the Vision Capital Appreciation Fund (the "Fund")
is to provide long-term capital appreciation. The investment objective of the
Fund cannot be changed without approval of its shareholders.
INVESTMENT POLICIES
The prospectus discusses the Fund's investment policies. Supplemental
information is set out below concerning the types of securities and other
instruments in which the Fund may invest, the investment policies and
strategies that the Fund may utilize, and certain risks attendant to those
investments, policies and strategies.
ACCEPTABLE INVESTMENTS
CORPORATE DEBT OBLIGATIONS
The Fund may invest in corporate debt obligations. Corporate debt obligations
may bear fixed, fixed and contingent, or variable rates of interest. They may
involve equity features such as conversion or exchange rights, warrants for
the acquisition of common stock of the same or a different issuer,
participations based on revenues, sales, or profits, or the purchase of common
stock in a unit transaction (where corporate debt securities and common stock
are offered as a unit).
Increasing rate securities, which currently do not make up a significant share
of the market in corporate debt obligations, are generally offered at an
initial interest rate which is at or above prevailing market rates. Interest
rates are reset periodically (most commonly every 90 days) at different levels
on a predetermined scale. These levels of interest are ordinarily set at
progressively higher increments over time. Some increasing rate securities
may, by agreement, revert to a fixed rate status. These securities may also
contain features which allow the issuer the option to convert the increasing
rate of interest to a fixed rate under such terms, conditions, and limitations
as are described in each issuer's prospectus.
U.S. GOVERNMENT SECURITIES
The types of U.S. government securities in which the Fund may invest generally
include direct obligations of the U.S. Treasury (such as U.S. Treasury bills,
notes, and bonds) and obligations issued or guaranteed by U.S. government
agencies or instrumentalities. These securities are backed by:
o the full faith and credit of the U.S. Treasury;
o the issuer's right to borrow from the U.S. Treasury;
o the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
o the credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:
o Farm Credit Banks;
o The Student Loan Marketing Association;
o Federal Home Loan Banks;
o Federal Home Loan Mortgage Corporation; and
o Federal National Mortgage Association.
MONEY MARKET INSTRUMENTS
The Fund may invest in money market instruments such as:
oinstruments of domestic and foreign banks and savings associations if
they have capital, surplus, and undivided profits of over $100,000,000,
or if the principal amount of the instrument is federally insured;
ocommercial paper rated, at the time of purchase, not less than A-1 by
Standard & Poor's Ratings Group ("S&P"), Prime-1 by Moody's Investors
Services, Inc. ("Moody's"), or F-1 by Fitch Investors Service, Inc.
("Fitch"), or if not rated are determined to be of comparable quality
by the Fund's Adviser (see Appendix for a description of the basis of
those ratings);
otime and savings deposits (including certificates of deposit) in
commercial or savings banks whose accounts are insured by the Bank
Insurance Fund ("BIF"), or institutions whose accounts are insured by
the Savings Association Insurance Fund ("SAIF"), including certificates
of deposit issued by, and other time deposits in, foreign branches of
BIF-insured banks which, if negotiable, mature in six months or less or
if not negotiable, either mature in ninety days or less, or are
withdrawable upon notice not exceeding ninety days; and
obankers' acceptances.
SECURITIES OF FOREIGN ISSUERS
The Fund may invest in securities of foreign issuers. Securities of foreign
issuers may include debt obligations of supranational entities, which include
international organizations designed or supported by governmental entities to
promote economic reconstruction or development, and international banking
institutions and related government agencies. Examples of these include, but
are not limited to, the International Bank for Reconstruction and Development
(World Bank), European Investment Bank and InterAmerican Development Bank.
Securities of a foreign issuer may present greater risks than investments in
U.S. securities, including higher transaction costs as well as the imposition
of additional taxes by foreign government,. In addition, investments in
foreign issuers may include additional risks associated with less complete
financial information about the issuers, less market liquidity, and political
instability. Future political and economic developments, the possible
imposition of withholding taxes on interest income, the possible seizure or
nationalization of foreign holdings, the possible establishment of exchange
controls, or the adopt of other governmental restrictions, might adversely
affect the payment of principal and interest on securities of foreign issuers.
As a matter of practice, the Fund will not invest in the securities of a
foreign issuer if any risk appears to the Adviser to be substantial.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements. Repurchase agreements are
arrangements in which banks, broker/ dealers, and other recognized financial
institutions sell U.S. government securities or certificates of deposit to the
Fund and agree at the time of sale to repurchase them at a mutually agreed
upon time and price within one year from the date of acquisition. The Fund or
its custodian will take possession of the securities subject to repurchase
agreements and these securities will be marked to market daily. To the extent
that the original seller does not repurchase the securities from the Fund, the
Fund could receive less than the repurchase price on any sale of such
securities. In the event that such a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by the Fund might be delayed
pending court action. The Fund believes that under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor
of the Fund and allow retention or disposition of such securities. The Fund
may only enter into repurchase agreements with banks and other recognized
financial institutions such as broker/dealers which are found by the Adviser
to be creditworthy pursuant to guidelines established by the Board of
Directors.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price or yield for the Fund. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of the Fund sufficient
to make payment for the securities to be purchased are segregated on the
Fund's records at the trade date. These assets are marked to market daily and
are maintained until the transaction has been settled. The Fund does not
intend to engage in when-issued and delayed delivery transactions to an extent
that would cause the segregation of more than 20% of the total value of its
assets.
ILLIQUID AND RESTRICTED SECURITIES
The Fund may invest in illiquid and restricted securities. The ability of the
Board of Directors to determine the liquidity of certain restricted securities
is permitted under a Securities and Exchange Commission staff position set
forth in the adopting release for Rule 144A under the Securities Act of 1933
(the "Rule"). The Rule is a non-exclusive, safe-harbor for certain secondary
market transactions involving securities subject to restrictions on resale
under federal securities laws. The Rule provides an exemption from
registration for resales of otherwise restricted securities to qualified
institutional buyers. The Rule was expected to further enhance the liquidity
of the secondary market for securities eligible for resale under the Rule. The
Fund believes that the staff of the Securities and Exchange Commission has
left the question of determining the liquidity of all restricted securities
(eligible for resale under the Rule) to the Corporation's Board.
Under the criteria currently established by the Directors, the Adviser must
consider the following factors in determining the liquidity of restricted
securities: (i) the frequency of trades and quotes for the security; (ii) the
volatility of quotations and trade prices for the security; (iii) the number
of dealers willing to purchase or sell the security and the number of
potential purchasers; (iv) dealer undertakings to make a market in the
security; (v) the nature of the security and the nature of the marketplace
trades; (vi) the rating of the security and the financial condition and
prospects of the issuer of the security; and (vii) such other factors as may
be relevant to a Fund's ability to dispose of the security.
The Fund may invest in commercial paper issued in reliance on the exemption
from registration afforded by Section 4(2) of the Securities Act of 1933.
Section 4(2) commercial paper is restricted as to disposition under federal
securities law, and is generally sold to institutional investors, such as the
Fund, who agree that they are purchasing the paper for investment purposes and
not with a view to public distribution. Any resale by the purchaser must be in
an exempt transaction. Section 4(2) commercial paper is normally resold to
other institutional investors like the Fund through or with the assistance of
the issuer or investment dealers who make a market in Section 4(2) commercial
paper, thus providing liquidity. The Fund believes that Section 4(2)
commercial paper and possibly certain other restricted securities which meet
the criteria for liquidity established by the Directors are quite liquid. The
Fund intends, therefore, to treat the restricted securities which meet the
criteria for liquidity established by the Directors, including Section 4(2)
commercial paper, as determined by the Adviser, as liquid and not subject to
the investment limitation applicable to illiquid securities. In addition,
because Section 4(2) commercial paper is liquid, the Fund intends to not
subject such paper to the limitation applicable to restricted securities.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be
valued daily and, should the market value of the loaned securities increase,
the borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any interest paid
on such securities. Loans are subject to termination at the option of the Fund
or the borrower. The Fund may pay reasonable administrative and custodial fees
in connection with a loan and may pay a negotiated portion of the interest
earned on the cash or equivalent collateral to the borrower or placing broker.
The Fund does not have the right to vote securities on loan, but would
terminate the loan and regain the right to vote if that were considered
important with respect to the investment.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. This transaction
is similar to borrowing cash. In a reverse repurchase agreement, the Fund
transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate. The use of
reverse repurchase agreements may enable the Fund to avoid selling portfolio
instruments at a time when a sale may be deemed to be disadvantageous, but the
ability to enter into reverse repurchase agreements does not ensure that the
Fund will be able to avoid selling portfolio instruments at a disadvantageous
time.
When effecting reverse repurchase agreements, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated on the Fund's records at the trade date. These assets are
marked to market daily and are maintained until the transaction is settled.
FUTURES AND OPTIONS TRANSACTIONS
As a means of reducing fluctuations in the net asset value of shares of the
Fund, the Fund may attempt to hedge all or a portion of its portfolio by
buying and selling futures contracts, buying put options on portfolio
securities and listed put options on futures contracts, and writing call
options on futures contracts. The Fund may also write covered call options on
portfolio securities to attempt to increase current income.
The Fund will maintain its position in securities, options and segregated cash
subject to puts and calls until the options are exercised, closed, or have
expired. An option position of futures transactions may be closed out over-
the-counter or on a nationally recognized exchange which provides a secondary
market for options of the same series. The Fund currently does not intend to
invest more than 5% of its total assets in options transactions.
FUTURES CONTRACTS
The Fund may purchase and sell financial futures contracts to hedge
against the effects of changes in the value of portfolio securities due
to anticipated changes in interest rates and market conditions without
necessarily buying or selling the securities. The Fund also may purchase
and sell stock index futures to hedge against changes in prices. The Fund
will not engage in futures transactions for speculative purposes. A
futures contract is a firm commitment by two parties: the seller who
agrees to make delivery of the specific type of security called for in
the contract ("going short") and the buyer who agrees to take delivery of
the security ("going long") at a certain time in the future.
For example, in the fixed income securities market, prices move inversely
to interest rates. A rise in rates means a drop in price. Conversely, a
drop in rates means a rise in price. In order to hedge its holdings of
fixed income securities against a rise in market interest rates, the Fund
could enter into contracts to deliver securities at a predetermined price
(i.e., "go short") to protect itself against the possibility that the
prices of its fixed income securities may decline during the Fund's
anticipated holding period. The Fund would "go long" (i.e., agree to
purchase securities in the future at a predetermined price) to hedge
against a decline in market interest rates.
Stock index futures contracts are based on indices that reflect the
market value of common stock of the issuers included in the indices. An
index futures contract is an agreement pursuant to which two parties
agree to take or make delivery of an amount of cash equal to the
differences between the value of the index at the close of the last
trading day of the contract and the price at which the index contract was
originally written.
"MARGIN" IN FUTURES TRANSACTIONS
Unlike the purchase or sale of a security, the Fund does not pay or
receive money upon the purchase or sale of a futures contract. Rather,
the Fund is required to deposit an amount of "initial margin" in cash or
U.S. Treasury bills with its custodian (or the broker, if legally
permitted). The nature of initial margin in futures transactions is
different from that of margin in securities transactions in that futures
contract initial margin does not involve the borrowing of funds by the
Fund to finance the transactions. Initial margin is in the nature of a
performance bond or good faith deposit on the contract which is returned
to the Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied.
A futures contract held by the Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day the Fund
pays or receives cash, called "variation margin," equal to the daily
change in value of the futures contract. This process is known as
"marking to market." Variation margin does not represent a borrowing or
loan by the Fund but is instead settlement between the Fund and the
broker of the amount one would owe the other if the futures contract
expired. In computing its daily net asset value, the Fund will mark-to-
market its open futures positions. The Fund is also required to deposit
and maintain margin when it writes call options on futures contracts.
The Fund will comply with the following restrictions when purchasing and
selling futures contracts. First, the Fund will not participate in
futures transactions if the sum of its initial margin deposits on open
contracts and options on premiums will exceed 5% of the market value of
the Fund's net assets, after taking into account the unrealized profits
and losses on those contracts it has entered into. Second, the Fund will
not enter into these contracts for speculative purposes. Third, since the
Fund does not constitute a commodity pool, it will not market itself as
such, nor serve as a vehicle for trading in the commodities futures or
commodity options markets. Connected with this, the Fund will disclose to
all prospective investors the limitations on its futures and options
transactions, and make clear that these transactions are entered into
only for bona fide hedging purposes, or other permissible purposes
pursuant to regulations promulgated by the Commodity Futures Trading
Commission ("CFTC"). Finally, because the Fund will submit to the CFTC
special calls for information, the Fund will not register as a
commodities pool operator.
PUT OPTIONS ON FINANCIAL AND STOCK INDEX FUTURES CONTRACTS
The Fund may purchase listed put options on financial and stock index
futures contracts. The Fund would purchase put options on futures
contracts to protect portfolio securities against decreases in value
resulting from an anticipated increase in market interest rates or
changes in stock prices. Unlike entering directly into a futures
contract, which requires the purchaser to buy a financial instrument on a
set date at a specified price, the purchase of a put option on a futures
contract entitles (but does not obligate) its purchaser to decide on or
before a future date whether to assume a short position at the specified
price.
Generally, if the hedged portfolio securities decrease in value during
the term of an option, the related futures contracts will also decrease
in value and the option will increase in value. In such an event, the
Fund will normally close out its option by selling an identical option.
If the hedge is successful, the proceeds received by the Fund upon the
sale of the second option will be large enough to offset both the premium
paid by the Fund for the original option plus the decrease in value of
the hedged securities.
Alternatively, the Fund may exercise its put option to close out the
position. To do so, it would simultaneously enter into a futures contract
of the type underlying the option (for a price less than the strike price
of the option) and exercise the option. The Fund would then deliver the
futures contract in return for payment of the strike price. If the Fund
neither closes out nor exercises an option, the option will expire on the
date provided in the option contract, and the premium paid for the
contract will be lost.
CALL OPTIONS ON FINANCIAL AND STOCK INDEX FUTURES CONTRACTS
In addition to purchasing put options on futures, the Fund may write
listed call options on financial and stock index futures contracts to
hedge its portfolio against an increase in market interest rates or
changes in stock market conditions. When the Fund writes a call option on
a futures contract, it is undertaking the obligation of assuming a short
futures position (selling a futures contract) at the fixed strike price
at any time during the life of the option if the option is exercised. As
market interest rates rise or market conditions change, causing the
prices of futures to go down, the Fund's obligation under a call option
on a future (to sell a futures contract) costs less to fulfill, causing
the value of the Fund's call option position to increase.
In other words, as the underlying futures price goes down below the
strike price, the buyer of the option has no reason to exercise the call,
so that the Fund keeps the premium received for the option. This premium
can offset the drop in value of the Fund's fixed income portfolio which
is occurring as interest rates rise.
Prior to the expiration of a call written by the Fund, or exercise of it
by the buyer, the Fund may close out the option by buying an identical
option. If the hedge is successful, the cost of the second option will be
less than the premium received by the Fund for the initial option. The
net premium income of the Fund will then offset the decrease in value of
the hedged securities.
The Fund will not maintain open positions in futures contracts it has
sold or call options it has written on futures contracts if, in the
aggregate, the value of the open positions (marked to market) exceeds the
current market value of its securities portfolio plus or minus the
unrealized gain or loss on those open positions, adjusted for the
correlation of volatility between the hedged securities and the futures
contracts. If this limitation is exceeded at any time, the Fund will take
prompt action to close out a sufficient number of open contracts to bring
its open futures and options positions within this limitation.
PURCHASING PUT OPTIONS ON PORTFOLIO SECURITIES
The Fund may purchase put options on portfolio securities to protect
against price movements in particular securities in their portfolios. A
put option gives the Fund, in return for a premium, the right to sell the
underlying security to the writer (seller) at a specified price during
the term of the option. The Fund may purchase these put options as long
as the underlying stocks are held in its portfolio.
WRITING COVERED CALL OPTIONS ON PORTFOLIO SECURITIES
The Fund may also write covered call options on securities either held in
its portfolio or which it has the right to obtain without payment of
further consideration or for which it has segregated cash in the amount
of any additional consideration. As the writer of a call option, the Fund
has the obligation upon exercise of the option during the option period
to deliver the underlying security upon payment of the exercise price.
Covered call options generally do not present investment risks different
from those associated with a security purchase. For example, a security
may be sold before it reaches its maximum potential value, or it may be
retained even though its current market price has dropped below its
purchase price. Similarly, a covered call option presents these risks.
For example, when the option purchaser acquires the security at the
predetermined exercise price, the Fund could be giving up any capital
appreciation above the exercise price that is not offset by the option
premium paid by the option purchaser to the Fund. Conversely, if the
underlying security decreases in price and the option purchaser decides
not to carry out the transaction, the Fund keeps the premium and the Fund
can sell the security or hold onto it for future price appreciation. The
Fund may only sell call options either on securities held in its
portfolio or on securities which it has the right to obtain without
payment of further consideration or for which it has segregated cash in
the amount of any additional consideration. Writing of call options by
the Fund is intended to generate income for the Fund and thereby protect
against price movements in particular securities in the Fund's portfolio.
OVER-THE-COUNTER OPTIONS
The Fund may purchase and write over-the-counter options on portfolio
securities in negotiated transactions with the buyer or writers of the
options for those options on portfolio securities held by the Funds and
not traded on an exchange.
STOCK INDEX OPTIONS
The Fund may purchase put options on stock indices listed on national
securities exchanges or traded in the over-the-counter market. A stock
index fluctuates with changes in the market values of the stock included
in the index.
The effectiveness of purchasing stock index options will depend upon the
extent to which price movements in the Fund's portfolio correlate with
price movements of the stock index selected. Because the value of an
index option depends upon movements in the level of the index rather than
the price of a particular stock, whether the Fund will realize a gain or
loss from the purchase of options on an index depends upon movements in
the level of stock prices in the stock market generally or, in the case
of certain indices, in an industry or market segment, rather than
movements in the price of a particular stock. Accordingly, successful use
by the Fund of options on stock indices will be subject to the ability of
the Adviser to predict correctly movements in the direction of the stock
market generally or of a particular industry. This requires different
skills and techniques than predicting changes in the price of individual
stocks.
RISKS
When the Fund uses futures and options on futures as hedging devices,
there is a risk that the prices of the securities subject to the futures
contracts may not correlate with the prices of the securities in the
Fund's portfolio. This may cause the futures contract and any related
options to react differently than the portfolio securities to market
changes. In addition, the Adviser could be incorrect in its expectations
about the direction or extent of market factors such as stock price
movements. In these events, the Fund may lose money on the futures
contract or option.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the Adviser
will consider liquidity before entering into these transactions, there is
not assurance that a liquid secondary market on an exchange or otherwise
will exist for any particular futures contract or option at any
particular time. The Fund's ability to establish and close out futures
and options positions depends on this secondary market. The inability to
close out these positions could have an adverse effect on the Fund's
ability to effectively hedge its portfolio.
To minimize risks, the Fund may not purchase or sell futures contracts or
related options if immediately thereafter the sum the amount of margin
deposits on the Fund's existing futures positions and premiums paid for
related options would exceed 5% of the market value of the Fund's net
assets. When the Fund purchases futures contracts, an amount of cash and
cash equivalents, equal to the underlying commodity value of the futures
contracts (less any related margin deposits), will be deposited in a
segregated account with the Fund's custodian (or the broker, if legally
permitted) to collateralize the position and thereby insure that the use
of such futures contract is unleveraged. When the Fund sells futures
contracts, it will either own or have the right to receive the underlying
future or security, or will make deposits to collateralize the position
as discussed above.
WARRANTS
The Fund may invest in warrants. Warrants are basically options to purchase
common stock at a specific price (usually at a premium above the market value
of the optioned common stock at issuance) valid for a specific period of time.
Warrants may have a life ranging from less than a year to twenty years or may
be perpetual. However, most warrants have expiration dates after which they
are worthless. In addition, if the market price of the common stock does not
exceed the warrant's exercise price during the life of the warrant, the
warrant will expire as worthless. Warrants have no voting rights, pay no
dividends, and have no rights with respect to the assets of the corporation
issuing them. The percentage increase or decrease in the market price of the
warrant may tend to be greater than the percentage increase or decrease in the
market price of the optioned common stock.
PORTFOLIO TURNOVER
The Fund will not attempt to set or meet a portfolio turnover rate since any
turnover would be incidental to transactions undertaken in an attempt to
achieve its investment objective. The Adviser does not anticipate that the
Fund's annual portfolio rate will exceed 100% under normal market conditions.
Securities in its portfolio will be sold whenever the Adviser believes it is
appropriate to do so in light of the Fund's investment objectives, without
regard to the length of time a particular security may have been held.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund may sell securities short, but will not purchase any securities
on margin, other than in connection with buying futures contracts and put
options, and writing covered call options, but may obtain such short-term
credits as are necessary for clearance of purchases and sales of
securities.
The deposit or payment by the Fund of initial or variation margin in
connection with futures contracts or related options transactions is not
considered the purchase of a security on margin.
The Fund may purchase and dispose of U.S. government securities before
they are issued and may also purchase and dispose of them on a delayed
delivery basis.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money and engage in reverse repurchase agreements in amounts up to one-
third of the value of its net assets, including the amounts borrowed. The
Fund will not borrow money or engage in reverse repurchase agreements for
investment leverage, but rather as a temporary, extraordinary, or
emergency measure to facilitate management of the portfolio by enabling
the Fund to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous. The Fund will
not purchase any securities while borrowings (including reverse
repurchase agreements) in excess of 5% of its total assets are
outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, the Fund may mortgage,
pledge, or hypothecate assets having a market value not exceeding the
lesser of the dollar amounts borrowed or 15% of the value of its total
assets at the time of the borrowing. For purposes of this limitation, the
following are not deemed to be pledges: margin deposits for the purchase
and sale of futures contracts and related options and segregation or
collateral arrangements made in connection with options, futures, options
on futures, reverse repurchase agreements, lending of portfolio
securities, or the purchase of securities on a when-issued basis.
UNDERWRITING
The Fund will not underwrite any issue of securities except as they may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its investment
objective, policies, and limitations.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate including limited
partnership interests although it may invest in securities of companies
whose business involves the purchase or sale of real estate or in
securities which are secured by real estate or interests in real estate.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets except portfolio securities, the
market value of which does not exceed one-third of the value of the
Fund's total assets. This shall not prevent the Fund from purchasing or
holding U.S. government obligations, money market instruments, variable
rate demand notes, bonds, debentures, notes, certificates of
indebtedness, or other debt securities, entering into repurchase
agreements, or engaging in other transactions where permitted by the
Fund's investment objective, policies, and limitations.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts except that the Fund may purchase and sell
futures contracts and related options.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in
any one industry, except that the Fund may invest 25% or more of the
value of its total assets in cash or cash items (including instruments
issued by a U.S. branch of a domestic bank or savings and loan
association and bankers' acceptances), securities issued or guaranteed by
the U.S. government, its agencies, or instrumentalities, and repurchase
agreements collateralized by such securities.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities issued by any one issuer
(other than cash, cash items or securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities and
repurchase agreements collateralized by such securities) if as a result
more than 5% of the value of its total assets would be invested in the
securities of that issuer. The Fund will not acquire more than 10% of the
outstanding voting securities of any one issuer.
The above investment limitations are fundamental policies of the Fund and
cannot be changed without shareholder approval. The following limitations,
however, may be changed by the Directors without shareholder approval.
Shareholders will be notified before any material change in these limitations
becomes effective.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND DIRECTORS OF
THE CORPORATION
The Fund will not purchase or retain the securities of any issuer if the
Officers and Directors of the Corporation or the Fund's Adviser, owning
individually more than 1/2 of 1% of the issuer's securities, together own
more than 5% of the issuer's securities.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of its net assets in illiquid
securities, including repurchase agreements providing for settlement in
more than seven days after notice, over-the-counter options, certain
restricted securities not determined by the Directors to be liquid, and
non-negotiable time deposits with maturities over seven days.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
securities where the principal and interest are the responsibility of
companies (or guarantors, where applicable) with less than three years of
continuous operations, including the operation of any predecessor.
INVESTING IN MINERALS
The Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, although they may purchase
the securities of issuers which invest in or sponsor such programs.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
In order to comply with the investment restrictions imposed by certain
states, the Fund will limit investments in the securities of other
investment companies to those with sales charges not exceeding 1.00% of
the offering price of such securities. The Fund may amend this investment
policy without notice to shareholders in the event that the state
restriction on this type of investment is amended.
PURCHASING SECURITIES TO EXERCISE CONTROL
The Fund will not purchase securities of a company for purposes of
exercising control or management.
INVESTING IN PUT OPTIONS
The Fund will not purchase put options on securities, other than put
options on stock indices, unless the underlying securities are held in
the Fund's portfolio and not more than 5% of the value of the Fund's
total assets would be invested in premiums on open put options.
WRITING COVERED CALL OPTIONS
The Fund will not write call options on securities unless the underlying
securities are held in a Fund's portfolio, or unless the Fund is entitled
to them in deliverable form without further payment or after segregating
cash in the amount of any further payment.
INVESTING IN WARRANTS
The Fund will not invest more than 5% of its assets in warrants, including
those acquired in units or attached to other securities. To comply with
certain state restrictions, the Fund will limit its investment in such
warrants not listed on nationally recognized stock exchanges to 2% of its
total assets. (If state restrictions change, this latter restriction may be
revised without notice to shareholders.) For purposes of this investment
restriction, warrants acquired by the Fund in units or attached to securities
may be deemed to be without value.
Except with respect to borrowing money, if a percentage limitation is adhered
to at the time of investment, a later increase or decrease in percentage
resulting from any change in value or net assets will not result in a
violation of such restriction. The Fund has no present intent to borrow money
in excess of 5% of the value of its net assets during the coming fiscal year.
In order to permit the sale of the Fund's shares in certain states, the Fund
may make commitments more restrictive than the investment limitations
described above. To comply with registration requirements in certain states,
the Fund (1) will limit short sales of securities of any class of any one
issuer to 20% of the Fund's net assets, and (2) will make short sales only on
securities listed on recognized stock exchanges. The latter restrictions,
however, do not apply to short sales of securities the Fund holds or has a
right to acquire without the payment of further consideration. (If state
requirements change, these restrictions may be revised without shareholder
notification.)
For purposes of its policies and limitations, the Fund considers certificates
of deposit and demand and time deposits issued by a U.S. branch of a domestic
bank or savings associations having capital, surplus, and undivided profits in
excess of $100,000,000 at the time of investment to be "cash items."
VISION GROUP OF FUNDS, INC. MANAGEMENT
Officers and Directors are listed with their addresses, present positions with
Vision Group of Funds, Inc., and principal occupations.
Randall I. Benderson
570 Delaware Avenue
Buffalo, NY
Birthdate: January 12, 1955
Director
Senior Vice President and Chief Operating Officer, Benderson Development
Company, Inc.
Joseph J. Castiglia
Roycroft Campus
21 South Grove Street, Suite 291
East Aurora, NY 14052
Birthdate: July 20, 1934
Director
Director, New York State Electric & Gas Corp.; Secewsow Environmental
Services, Inc.; Blue Cross & Blue Shield of Western New York; Buffalo Branch,
Federal Reserve Bank of New York; and Former President, Chief Executive
Officer and Vice Chairman, Pratt & Lambert United, Inc.
Daniel R. Gernatt, Jr.
Richardson & Taylor Hollow Roads
Collins, NY
Birthdate: July 14, 1940
Director
President and CFO of Gernatt Asphalt Products, Inc.; Executive Vice President,
Dan Gernatt Gravel Products, Inc.; Vice President, Countryside Sand & Gravel,
Inc.
George K. Hambleton, Jr.
670 Young Street
Tonawanda, NY
Birthdate: February 8, 1933
Director
President, Brand Name Sales, Inc.; President, Hambleton & Carr, Inc.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
President and Treasurer
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated
Research Corp., Federated Global Research Corp., and Passport Research, Ltd.;
Executive Vice President and Director, Federated Securities Corp.; Trustee,
Federated Shareholder Services Company; Trustee or Director of other funds
distributed by Federated Securities Corp.; President, Executive Vice President
and Treasurer of other funds distributed by Federated Securities Corp.
Charles L. Davis, Jr.
Federated Investors Tower
Pittsburgh, PA
Birthdate: March 23, 1960
Vice President and Assistant Treasurer
Vice President, Federated Administrative Services; Vice President and
Assistant Treasurer of other funds distributed by Federated Securities Corp.
Victor R. Siclari
Federated Investors Tower
Pittsburgh, PA
Birthdate: November 17, 1961
Secretary
Corporate Counsel, Federated Services Company; formerly Attorney, Morrison &
Foerster (law firm).
FUND OWNERSHIP
Officers and Directors own less than 1% of the Fund's outstanding shares.
DIRECTORS' COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM
CORPORATION CORPORATION*#
Randall I. Benderson,
Director $10,473.50
Joseph J. Castiglia,
Director $9,973.50
Daniel R. Gernatt, Jr.,
Director $10,473.50
George K. Hambleton, Jr.,
Director $10,473.50
*Information is furnished for the fiscal year ended April 30, 1995. The
Corporation is the only investment company in the Fund Complex.
#The aggregate compensation is provided for the Corporation which is comprised
of seven portfolios.
DIRECTOR LIABILITY
With respect to the removal of a Director of the Corporation, the
Corporation's By-Laws provide, in accordance with applicable law, that a
Director may be removed from the Board at a meeting of shareholders called for
that purpose upon the majority vote of the shareholders of the Corporation
entitled to vote at such meeting. Such a meeting shall be called by the
President or the Board of Directors or at the request in writing of
shareholders entitled to cast at least ten percent (10%) of the votes entitled
to be cast at such meeting. Such shareholders' request shall state the purpose
of the proposed meeting, and the Corporation shall inform those shareholders
of the reasonably estimated cost of preparing and mailing a notice of the
meeting to the other shareholders and, on payment of these costs, shall notify
each shareholder entitled to notice of the meeting.
INVESTMENT ADVISORY SERVICES
ADVISER TO THE FUND
Investment advisory services are provided to the Fund by Manufacturers and
Traders Trust Company ("M&T Bank"). The advisory services provided and the
expenses assumed by M&T Bank, as well as the advisory fees payable to it, are
described in the Fund's prospectus.
The investment advisory agreement provides that M&T Bank shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Fund in connection with its performance under the advisory agreement, except a
loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of M&T Bank in the performance of its
duties, or from reckless disregard by it of its duties and obligations
thereunder. Because of internal controls maintained by M&T Bank to restrict
the flow of non-public information, Fund investments are typically made
without any knowledge of M&T Bank's or its affiliates' lending relationships
with an issuer.
Unless sooner terminated, the advisory agreement between the Fund and M&T Bank
will continue in effect from year to year if such continuance is approved at
least annually by the Corporation's Board of Directors, or by vote of a
majority of the outstanding shares of a Fund (as defined in the Prospectus),
and by a majority of the Directors who are not parties to the advisory
agreement or interested persons (as defined in the Investment Company Act of
1940) of any party to the advisory agreement, by vote cast in person at a
meeting called for such purpose. The advisory agreement is terminable at any
time on sixty days' written notice without penalty by the Directors, by vote
of a majority of the outstanding shares of a Fund, or by M&T Bank. The
advisory agreement also terminates automatically in the event of its
assignment, as defined in the Investment Company Act of 1940.
ADVISORY FEES
For its advisory services, M&T Bank receives an annual investment advisory fee
from the Fund as described in the Prospectus.
STATE EXPENSE LIMITATIONS
M&T Bank has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses)
exceed 2-1/2% per year of the first $30 million of average net assets, 2%
per year of the next $70 million of average net assets, and 1-1/2% per
year of the remaining average net assets, M&T Bank will reimburse the
Fund for its expenses over the limitation. If the Fund's monthly
projected operating expenses exceed this limitation, the investment
advisory fee paid will be reduced by the amount of the excess, subject to
an annual adjustment. If the expense limitation is exceeded, the amount
to be reimbursed by M&T Bank will be limited by the amount of the
investment advisory fee.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
OTHER SERVICES
ADMINISTRATIVE SERVICES
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for a fee set forth in the
prospectus.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for
the securities and cash of the Fund and provides certain accounting and
recordkeeping services with respect to the Fund's portfolio investments.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Shareholder Services Company, Pittsburgh, Pennsylvania, the Fund's
registered transfer agent, maintains all necessary shareholder records.
INDEPENDENT AUDITORS
The independent auditors for the Fund are Ernst & Young LLP, Pittsburgh,
Pennsylvania
BROKERAGE TRANSACTIONS
Pursuant to the Fund's Advisory Contract, M&T Bank determines which securities
are to be sold and purchased by the Fund and which brokers are to be eligible
to execute its portfolio transactions. Portfolio securities of the Fund are
normally purchased directly from the issuer or from an underwriter or market
maker for the securities. Purchases from dealers serving as market makers may
include the spread between the bid and asking price. While M&T Bank generally
seeks competitive spreads or commissions, the Fund may not necessarily pay the
lowest spread or commission available on each transaction for reasons
discussed below.
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Adviser looks for prompt execution of the order at
a favorable price. In working with dealers, the Adviser will generally use
those who are recognized dealers in specific portfolio instruments, except
when a better price and execution of the order can be obtained elsewhere. The
Adviser makes decisions on portfolio transactions and selects brokers and
dealers subject to guidelines established by the Directors. The Adviser may
select brokers and dealers who offer brokerage and research services. These
services may be furnished directly to the Fund or to the Adviser and may
include: advice as to the advisability of investing in securities; security
analysis and reports; economic studies; industry studies; receipt of
quotations for portfolio evaluations; and similar services. Research services
provided by brokers and dealers may be used by the Adviser or its affiliates
in advising the Fund and other accounts. To the extent that receipt of these
services may supplant services for which the Adviser or its affiliates might
otherwise have paid, it would tend to reduce their expenses. The Adviser and
its affiliates exercise reasonable business judgment in selecting brokers who
offer brokerage and research services to execute securities transactions. They
determine in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research services
provided.
Although investment decisions for the Fund are made independently from those
of the other accounts managed by the Adviser, investments of the type the Fund
may make may also be made by those other accounts. When the Fund and one or
more other accounts managed by the Adviser are prepared to invest in, or
desire to dispose of, the same security, available investments or
opportunities for sales will be allocated in a manner believed by the Adviser
to be equitable to each. In some cases, this procedure may adversely affect
the price paid or received by the Fund or the size of the position obtained or
disposed of by the Fund. In other cases, however, it is believed that
coordination and the ability to participate in volume transactions will be to
the benefit of the Fund.
DESCRIPTION OF FUND SHARES
The Corporation's Articles of Incorporation authorize the Board of Directors
to issue up to ten billion full and fractional shares of Common Stock, of
which seven billion shares have been classified into seven classes of one
billion shares each. Three billion shares remain unclassified at this time.
Shares of Classes A, B, C, D, E, F and G Common Stock represent interests in
Vision Money Market Fund, Vision Treasury Money Market Fund, Vision New York
Tax-Free Money Market Fund, Vision U.S. Government Securities Fund, Vision New
York Tax-Free Fund, Vision Growth and Income Fund, and Vision Capital
Appreciation Fund, respectively.
The Board of Directors may classify or reclassify any unissued shares of the
Corporation into one or more additional classes by setting or changing in any
one or more respects their respective preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption.
Shares have no subscription or pre-emptive rights and only such conversion or
exchange rights as the Board may grant in its discretion. When issued for
payment as described in the Fund's prospectus and this Statement of Additional
Information, the Fund's shares will be fully paid and non-assessable. In the
event of a liquidation or dissolution of the Corporation, shares of the Fund
are entitled to receive the assets available for distribution belonging to the
Fund, and a proportionate distribution, based upon the relative asset values
of that Fund and the Corporation's other portfolios, of any general assets not
belonging to any particular portfolio which are available for distribution.
Rule 18f-2 under the Investment Company Act of 1940 provides that any matter
required to be submitted to the holders of the outstanding voting securities
of an investment company such as the Corporation shall not be deemed to have
been effectively acted upon unless approved by the holders of a majority of
the outstanding shares of each portfolio affected by the matter. A portfolio
is not affected by a matter unless it is clear that the interests of each
portfolio in the matter are identical, or that the matter does not affect any
interest of the portfolio. Under Rule 18f-2, the approval of an investment
advisory agreement or any change in a fundamental investment policy would be
effectively acted upon with respect to a portfolio only if approved by a
majority of the outstanding shares of such portfolio. However, Rule 18f-2
provides that the ratification of independent certified public accountants,
the approval of principal underwriting contracts and the election of Directors
may be effectively acted upon by shareholders of the Corporation voting
without regard to class.
Notwithstanding any provision of Maryland law requiring a greater vote of the
Corporation shares (or of any class voting as a class) in connection with any
corporate action, unless otherwise provided by law (for example, by Rule 18f-
2) or by the Corporation's Articles of Incorporation, the Corporation may take
or authorize such action upon the favorable vote of the holders of more than
50% of the outstanding common stock of the Fund and the Corporation's other
portfolios (voting together without regard to class).
HOW TO BUY SHARES
Shares of the Fund are sold at net asset value plus an applicable sales charge
on days on which the New York Stock Exchange, M&T Bank, and the Federal
Reserve Wire System are open for business. The procedure for purchasing shares
of the Fund is explained in the prospectus under "How to Buy Shares."
HOW THE FUND VALUES ITS SHARES
The market value of the Fund's portfolio securities are determined as follows:
o for equity securities, according to the last sales price on a national
securities exchange, if applicable;
o in the absence of recorded sales for equity securities, according to the
mean between the last closing bid and asked prices;
o for bond and other fixed income securities, as determined by an
independent pricing service;
o for short-term obligations, according to the mean between bid and asked
prices as furnished by an independent pricing service or, for short-term
obligations with remaining maturities of 60 days or less at the time of
purchase, at amortized cost; or
o for all other securities, at fair value as determined in good faith by
the Directors.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may reflect: institutional trading in
similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics, and other market data.
The Fund will value futures contracts, options on portfolio securities and
options on futures at their market values established by the applicable
exchanges at the close of trading on such exchanges, unless the Directors
determine in good faith that another method of valuing these positions is
necessary to appraise their fair value.
HOW TO REDEEM SHARES
The Fund redeems shares at the net asset value next calculated after the Fund
receives the redemption request. Redemption procedures are explained in the
prospectus under "How to Redeem Shares."
REDEMPTION IN KIND
Although the Fund intends to redeem shares in cash, it reserves the right
under certain circumstances to pay the redemption price in whole or in part by
a distribution of securities from the Fund's portfolio. To the extent
available, such securities will be readily marketable.
Redemption in kind will be made in conformity with applicable Securities and
Exchange Commission rules, taking such securities at the same value employed
in determining net asset value and selecting the securities in a manner the
Directors determine to be fair and equitable.
Redemption in kind is not as liquid as a cash redemption. If redemption is
made in kind, shareholders receiving their securities and selling them before
their maturity could receive less than the redemption value of their
securities and could incur transaction costs.
DETERMINING NET ASSET VALUE
Net asset value generally changes each day. The days on which net asset value
is calculated for shares of the Fund are described in the prospectus.
TAX STATUS
THE FUND'S TAX STATUS
The Fund will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment, a Fund must, among
other requirements:
o derive at least 90% of its gross income from dividends, interest, and
gains from the sale of securities;
o derive less than 30% of its gross income from the sale of securities held
less than three months;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income earned
during the year.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends received as cash
or additional shares. The dividends received deduction for corporations will
apply to ordinary income distributions to the extent the distribution
represents amounts that would qualify for the dividends received deduction to
the Fund if the Fund were a regular corporation, and to the extent designated
by the Fund as so qualifying. Otherwise, these dividends, and any short-term
capital gains are taxable as ordinary income.
CAPITAL GAINS
Capital gains experienced by the Fund could result in an increase in
dividends. Capital losses could result in a decrease in dividends. If the Fund
realizes net long-term capital gains, it will distribute them at least once
every 12 months.
TOTAL RETURN
The average annual total return for the Fund is the average compounded rate of
return for a given period that would equate a $1,000 initial investment to the
ending redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of shares owned at the end of the period by
the maximum offering price per share at the end of the period. The number of
shares owned at the end of the period is based on the number of shares
purchased at the beginning of the period with $1,000, less any applicable
sales charge, adjusted over the period by any additional shares, assuming the
monthly reinvestment of all dividends and distributions. Any applicable
redemption fee is deducted from the ending value of the investment based on
the lesser of the original purchase price or the net asset value of shares
redeemed.
YIELD
The yield for the Fund is determined by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the
Fund over a thirty-day period by the maximum offering price per share of the
Fund on the last day of the period. This value is then annualized using semi-
annual compounding. This means that the amount of income generated during the
thirty-day period is assumed to be generated each month over a twelve-month
period and is reinvested every six months. The yield does not necessarily
reflect income actually earned by the Fund because of certain adjustments
required by the Securities and Exchange Commission and, therefore, may not
correlate to the dividends or other distributions paid to shareholders. To the
extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in the
Fund, performance will be reduced for those shareholders paying those fees.
PERFORMANCE COMPARISONS
The performance of shares of the Fund depends upon such variables as:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested;
o changes in interest rates and market value of portfolio securities;
o changes in a Fund's expenses; and
o various other factors.
The Fund's performance fluctuates on a daily basis largely because net
earnings and offering price per share fluctuate daily. Both net earnings and
offering price per share are factors in the computation of yield and total
return as described above.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance, investors
should consider all relevant factors such as the composition of any index
used, prevailing market conditions, portfolio compositions of other funds, and
methods used to value portfolio securities and compute offering price. The
financial publications and/or indices which the Fund uses in advertising may
include:
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories
by making comparative calculations using total return. Total return
assumes the reinvestment of all capital gains distributions and income
dividends and takes into account any change in net asset value over a
specific period of time. From time to time, the Fund will quote its
Lipper rankings in the growth and mid-cap categories in advertising and
sales literature.
o DOW JONES INDUSTRIAL AVERAGE ("DJIA") represents share prices of selected
blue chip industrial corporations. The DJIA indicates daily changes in
the average price of stock of these corporations. Because it represents
the top corporations of America, the DJIA index is a leading economic
indicator for the stock market as a whole.
o STANDARD & POOR'S DAILY STOCK PRICE INDICES OF 500 AND 400 COMMON STOCKS
are composite indices of common stocks in industry, transportation, and
financial and public utility companies that can be used to compare to the
total returns of funds whose portfolios are invested primarily in common
stocks. In addition, the Standard & Poor's indices assume reinvestment of
all dividends paid by stocks listed on its indices. Taxes due on any of
these distributions are not included, nor are brokerage or other fees
calculated in the Standard & Poor's figures.
o RUSSELL 1000 GROWTH INDEX consists of those Russell 1000 securities with
a greater-than-average growth orientation. Securities in this index tend
to exhibit higher price-to-book and price-earnings ratios, lower dividend
yields and higher forecasted growth values.
o RUSSELL 2000 SMALL STOCK INDEX is a broadly diversified index consisting
of approximately 2,000 small capitalization common stocks that can be
used to compare to the total returns of funds whose portfolios are
invested primarily in small capitalization common stocks.
o WILSHIRE 5000 EQUITY INDEX consists of nearly 5,000 common equity
securities, covering all stocks in the U.S. for which daily pricing is
available, and can be used to compare to the total returns of funds whose
portfolios are invested primarily in common stocks.
o CONSUMER PRICE INDEX is generally considered to be a measure of
inflation.
o NEW YORK STOCK EXCHANGE COMPOSITE INDEX is a market value weighted index
which relates all NYSE stocks to an aggregate market value as of December
31, 1965, adjusted for capitalization changes.
o VALUE LINE COMPOSITE INDEX consists of approximately 1,700 common equity
securities. It is based on a geometric average of relative price changes
of the component stocks and does not include income.
o NASDAQ OVER-THE-COUNTER COMPOSITE INDEX covers 4,500 stocks traded over
the counter. It represents many small company stocks but is heavily
influenced by about 100 of the largest NASDAQ stocks. It is a value-
weighted index calculated on price change only and does not include
income.
o AMEX MARKET VALUE INDEX covers approximately 850 American Stock Exchange
stocks and represents less than 5% of the market value of all US stocks.
The AMEX is a value-weighted index calculated on price change only and
does not include income.
o MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than l,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Advertisements and other sales literature for a Fund's shares may quote total
returns which are calculated on non-standardized base periods. These total
returns also represent the historic change in the value of an investment in a
Fund's shares based on monthly reinvestment of dividends over a specified
period of time.
From time to time as it deems appropriate, the Fund may advertise the
performance of its shares using charts, graphs and descriptions, compared to
federally insured bank products including certificates of deposit and time
deposits and to money market funds using the Lipper Analytical Services money
market instruments average. Unlike federally insured bank products, the shares
of the Fund are not insured. Unlike money market funds, which attempt to
maintain a stable offering price, the offering price of the Fund's shares
fluctuates. Advertisements may quote performance information which does not
reflect the effect of the sales charge.
APPENDIX
STANDARD & POOR'S RATINGS GROUP BOND RATINGS
AAA-Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA-Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A-Debt rated "A" has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB-Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits 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
debt in this category than in higher rated categories.
NR-Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate
a particular type of obligation as a matter of policy.
Plus (+) or minus (-): The ratings from AA to BBB may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
MOODY'S INVESTORS SERVICE, INC. BOND RATINGS
AAA-Bonds which are rated AAA are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." 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 in 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.
NR-Not rated by Moody's.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through Baa in its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end of its generic rating category.
FITCH INVESTORS SERVICE, INC. LONG-TERM DEBT RATINGS
AAA-Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA-Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated F-1+.
A-Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions
and circumstances than bonds with higher ratings.
BBB-Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds,
and therefore, impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.
NR-NR indicates that Fitch does not rate the specific issue.
Plus (+) or Minus (-): Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus
and minus signs, however, are not used in the AAA category.
MOODY'S INVESTORS SERVICE, INC. SHORT-TERM LOAN RATINGS
MIG 1/VMIG 1-This designation denotes best quality. There is a present strong
protection by established cash flows, superior liquidity support or
demonstrated broad based access to the market for refinancing.
MIG 2/VMIG 2-This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
FITCH INVESTORS SERVICE, INC. SHORT-TERM DEBT RATINGS
F-1+-Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1-Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-
1+.
F-2-Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great for issues assigned F-1+ and F-1 ratings.
STANDARD & POOR'S RATINGS GROUP COMMERCIAL PAPER RATINGS
A-1-This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess strong safety
characteristics are denoted with a plus sign (+) designation.
A-2-Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
MOODY'S INVESTORS SERVICE, INC. COMMERCIAL PAPER RATINGS
PRIME1-Issuers rated PRIME-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. PRIME-1
repayment capacity will normally be evidenced by the following
characteristics: Leading market positions in well established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earning
coverage of fixed financial charges and high internal cash generation; well-
established access to a range of financial markets and assured sources of
alternate liquidity.
PRIME-2-Issuers (or related supporting institutions) rated PRIME-2 have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
Cusip 92830F703
G01627-02 (6/96)
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) (Portfolios 1-6) Filed in Part A. (Portfolio 7) To be
filed by Amendment.
(b) Exhibits:
(1) Conformed copy of Articles of Incorporation of the Registrant
(11);
(i) Conformed Copy of Articles Supplementary (8);
(2) Copy of By-Laws of the Registrant (11);
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of Capital Stock of
the Registrant (8);
(5) (i) Conformed Copy of Investment Advisory Contract of the
Registrant (9);
(ii) Conformed Copy of Sub-Advisory Contract (10);
(iii) Form of Exhibit B to Investment Advisory Contract;+
(6) (i) Conformed Copy of Distributor's Contract of the Registrant
(9);
(a) Conformed copy of Distribution Plan of the
Registrant (9);
(ii) Conformed Copy of Administrative Services Agreement of the
Registrant (9);
(iii)................Conformed Copy of Shareholder Services
Plan of Registrant (9);
(iv)................Form of Exhibit C to Distributor's
Contract;+
(v) Copy of Amendment No. 1 to Exhibit A to Shareholder
Services Plan;+
(vi)................Conformed Copy of Amended and Restated
Shareholder Services Plan;+
(vii)................Form of Amendment No. 1 to Exhibit A to
Shareholder Services Agreement;+
(7) Not applicable;
+ All Exhibits have been filed electronically.
5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 4 on Form N-1A filed August 10, 1990. (File Nos. 33-20673
and 811-5514)
6. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 5 on Form N-1A filed August 30, 1990. (File Nos. 33-20673
and 811-5514)
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 9 on Form N-1A filed June 17, 1993. (File Nos. 33-20673
and 811-5514)
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. ll on Form N-lA filed September 3, l993. (File Nos. 33-
20673 and 8ll-5514)
9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed December 27, 1993 (File Nos. 33-20673
and 811- 5514)
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 17 on Form N-1A filed March 31, 1994. (File Nos. 33-20673
and 811-5514)
11. Response is incorporated by reference to Registrant's Post Effective
Amendment No. 19 on Form N-1A filed June 27, 1994. (File Nos. 33-20673
and 811-5514)
(8) Conformed Copy of Custodian Agreement of the Registrant (12);
(i) Form of Amendment to Exhibit A to Custodian
Contract;+
(9) Conformed Copy of Assignment of Transfer Agency and Service
Agreement of the Registrant (11);
(i) Form of Amendment No. 2 to Exhibit A to
Transfer Agency and Service Agreement;+
(10) Conformed copy of Opinion and Consent of Counsel as to
legality of shares being registered (11);
(11) Not applicable;
(12) Not applicable;
(13) Conformed copy of Initial Capital Understanding (11);
(14) Not applicable;
(15) (i) Copy of Rule 12b-1 Plan (7);
(ii) Copy of Rule 12b-1 Agreement (7);
(iii) Copy of Dealer (Sales) Agreement (7);
(iv) Form of Exhibit B to Rule 12b-1 Plan;+
(16) Copy of Schedule for Computation of Fund Performance Data (12);
(17) Not applicable;
(18) Conformed Copy of Power of Attorney (11);
Item 25. Persons Controlled by or Under Common Control with Registrant
None
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of April 26, 1996
Shares of capital stock
($0.001 per Share par value)
Vision Money Market Fund 7,409
Vision New York Tax-Free Money Market Fund 431
Vision Treasury Money Market Fund 639
Vision U.S. Government Securities Fund 1,206
Vision New York Tax-Free Fund 1,586
Vision Growth and Income Fund 4,004
Vision Capital Appreciation Fund 0
.........................
+ All Exhibits have been filed electronically.
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 9 on Form N-1A filed June 17, 1993. (File Nos. 33-20673
and 811-5514)
11. Response is incorporated by reference to Registrant's Post Effective
Amendment No. 19 on Form N-1A filed June 27, 1994. (File Nos. 33-20673
and 811-5514)
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 20 on Form N-1A filed June 26, 1995 (File Nos. 33-20673 and
811-5514)
Item 27. Indemnification: (7)
Item 28. Business and Other Connections of Investment Adviser:
(a) Manufacturers & Traders Trust Company ("M&T Bank") performs
investment advisory services for the Registrant. M&T Bank is the
primary banking subsidiary of First Empire State Corporation, a $12
billion bank holding company, as of December 31, 1995, headquartered
in Buffalo, New York. As of December 3l, l995, M&T Bank had $10.2
billion in assets under management for which it has investment
discretion (which includes employee benefits, personal trusts,
estates, agencies and other accounts). As of April 30, 1995, M&T
Bank manages over $634 million in VISION money market mutual fund
assets, and has 121 offices throughout New York state and New York's
southern tier, 22 offices in the Hudson Valley region of New York
state, pluc offices in New York City, Albany, Syracuse, and Nassau,
the Bahamas.
M&T Bank was founded in 1856 and provides comprehensive banking and
financial services to individuals, governmental entities and
businesses throughout western New York. Except for Vision Group of
Funds, Inc., M&T Bank does not presently provide investment advisory
services to any other registered investment companies. The Funds'
investments are managed through the Trust & Investment Services
Division of M&T Bank.
The principal executive Officers and Directors of M&T Bank are set
forth in the following tables. Unless otherwise noted, the position
listed under Other Substantial Business, Profession, Vocation or
Employment is with M&T Bank.
(b)
Other Substantial
Position with Business, Profession,
Name the Adviser Vocation or Employment
Brent D. Baird Director Private Investor
1350 One M&T Plaza
Buffalo, NY 14203-2396
C. Angela Bontempo Director Senior V.P. & Exec. Dir.
Elm & Carlton Streets Roswell Park Cancer
Buffalo, NY 14263-0001 Institute
Robert T. Brady Director President and C.E.O.
East Aurora, NY 14052-0018 Moog, Inc.
William A. Buckingham Executive Officer Executive Vice President
One M&T Plaza First Empire State
Buffalo, NY 14203-2399 Corporation and
Manufacturers and
Traders Trust Company
David N. Campbell Director Former Chairman of the
11 Summer St.,Suite 2 Board and Chief
Buffalo, NY 14209-2280 Executive Officer
Computer Task Group, Inc
Other Substantial
Position with Business, Profession,
Name the Adviser Vocation or Employment Atwood
Collins, III Executive Officer Executive Vice President
350 Park Avenue and Chief Executive
6th Floor Officer The East New
New York, NY 10022-6022 York Savings Bank
Barber B. Conable, Jr. Director Former Member of
P.O. Box 218 Congress; Retired
Alexander, NY 14005-0218 President
The World Bank
Richard E. Garman Director President and Chief
2544 Clinton Street Executive Officer
Buffalo, NY 14224-1092 Buffalo Crushed Stone,
Inc.
James V. Glynn Director President
151 Buffalo Avenue Maid of the Mist
Suite 204 Corporation
Niagara Falls, NY 14303-1288
Brian E. Hickey Executive Officer President - Rochester
44 Exchange Street Division-Manufacturers
Rochester, NY 14614 and Traders Trust
Company
Patrick W.E. Hodgson Director Chairman of the Board
BCE Place, 181 Bay St. Scott's Hospitality Inc.
Suite 1500
P.O. Box 810
Toronto, Ontario
CANADA M5J 273
James L. Hoffman Executive Officer President-Hudson Valley
700 Corporate Blvd. Division
Suite 701 Manufacturers and Newburgh, NY
12552-6046 Traders Trust Company
Samual T. Hubbard, Jr. Director President & CEO
1059 West Ridge Road The Alling & Cory
Rochester, NY 14615-2731 Company
Robert J. Irwin Advisory Director Chairman and CEO
Ellicott Station ASA Limited
P.O. Box 1210
Buffalo, NY 14205-1210
Other Substantial
Position with Business, Profession,
Name the Adviser Vocation or Employment
----
Wilfred J. A. Larson Director Retired President and
100 Forest Avenue Chief Executive Officer
Buffalo, NY 14213-1091 Westwood-Squibb
Pharmaceuticals Inc.
Barbara L. Laughlin Executive Officer Executive Vice President
One M&T Plaza First Empire State
Buffalo, NY 14203-2399 Corportion and
Manufacturers and
Traders Trust Company
Jorge G. Pereira Director Vice Chairman of the
350 Main St Board First Empire State
6th Floor Corporation and
New York, NY 10022-6022 Manufacturers and
Traders Trust Company
Donald P. Quinlan Director Retired Chairman of the
P.O. Box 1271 Board and Chief
Buffalo, NY 14240-1271 Executive Officer Graphic
Controls
Corporation
William C. Rappolt Executive Officer Executive Vice President
One M&T Plaza and Treasurer
Buffalo, NY 14203-2399 First Empire State
Corporation and
Manufacturers and
Traders Trust Company
Melinda R. Rich Director President
One West Ferry Street Rich Entertainment
Buffalo, NY 14240-0245 Group;
V.P. Corporate Services
Rich Products Corp.
Robert E. Sadler, Jr. Executive Officer Executive Vice President
One M&T Plaza First Empire State
Buffalo, NY 14203-2399 Corporation and
Manufacturers and
Traders Trust Company
Harry R. Stainrook Executive Officer Executive Vice President
One M&T Plaza First Empire State
Buffalo, NY 14203-2399 Corportion and
Manufacturers and
Traders Trust Company
Other Substantial
Position with Business, Profession,
Name the Adviser Vocation or Employment
----
Raymond D. Stevens, Jr. Director Chairman of the Board
P.O. Box 22 Pratt & Lambert, Inc.
Buffalo, NY 14240-0022
Richard D. Trent Director President Emeritus
62 Midwood St. Medgar Evers College
Brooklyn, NY 11225-5004
James L. Vardon Executive Officer Executive Vice President
One M&T Plaza and Chief Financial
19th Floor Officer First Empire
Buffalo, NY 14203-2399 State Corporation and
Manufacturers and
Traders Trust Company
John L. Wehle, Jr. Director Chairman of the
445 St. Paul Street Board, President &
Rochester, NY 14605-1775 Chief Executive
Officer, Genessee
Corporation
Robert G. Wilmers Director and Chairman of the Board,
One M&T Plaza Executive Officer President and Chief
19th Floor Executive Officer
Buffalo, NY 14203-2399 First Empire State
Corporation and
Manufacturers and
Traders Trust Company
The information required by this item with regard to the Corporation's sub-
adviser, Harbor Capital Management Company, Inc., is incorporated by reference
to Form ADV #801-14882, which was filed on March 27, 1993 by Harbor Capital
Management Company, Inc.
Item 29. Principal Underwriters:
(a) Federated Securities Corp., the Distributor for shares of the
Registrant, also acts as principal underwriter for the following
open-end investment companies: American Leaders Fund, Inc.;
Annuity Management Series; Arrow Funds; Automated Government
Money Trust; BayFunds; The Biltmore Funds; The Biltmore
Municipal Funds; Blanchard Funds; Blanchard Precious Metals Fund,
Inc.; Cash Trust Series, Inc.; Cash Trust Series II; DG Investor
Series; Edward D. Jones & Co. Daily Passport Cash Trust;
Federated ARMs Fund; Federated Equity Funds; Federated GNMA
Trust; Federated Government Trust; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust;
Federated Index Trust; Federated Institutional Trust; Federated
Master Trust; Federated Municipal Trust; Federated Short-Term
Municipal Trust; Federated Short-Term U.S. Government Trust;
Federated Stock Trust; Federated Tax-Free Trust; Federated Total
Return Series, Inc.; Federated U.S. Government Bond Fund;
Federated U.S. Government Securities Fund: 1-3 Years; Federated
U.S. Government Securities Fund: 3-5 Years; Federated
U.S. Government Securities Fund: 5-10 Years;First Priority Funds;
Fixed Income Securities, Inc.; Fortress Adjustable Rate U.S.
Government Fund, Inc.; Fortress Municipal Income Fund, Inc.;
Fortress Utility Fund, Inc.; Fund for U.S. Government Securities,
Inc.; Government Income Securities, Inc.; High Yield Cash Trust;
Independence One Mutual Funds; Insurance Management Series;
Intermediate Municipal Trust; International Series Inc.;
Investment Series Funds, Inc.; Investment Series Trust; Liberty
Equity Income Fund, Inc.; Liberty High Income Bond Fund, Inc.;
Liberty Municipal Securities Fund, Inc.; Liberty U.S. Government
Money Market Trust; Liberty Utility Fund, Inc.; Liquid Cash
Trust; Managed Series Trust; Marshall Funds, Inc.; Money Market
Management, Inc.; Money Market Obligations Trust; Money Market
Trust; The Monitor Funds; Municipal Securities Income Trust;
Newpoint Funds; 111 Corcoran Funds; Peachtree Funds; The Planters
Funds; RIMCO Monument Funds; SouthTrust Vulcan Funds; Star Funds;
The Starburst Funds; The Starburst Funds II; Stock and Bond Fund,
Inc.; Targeted Duration Trust; Tax-Free Instruments Trust; Tower
Mutual Funds; Trust for Financial Institutions; Trust for
Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; The Virtus
Funds; Vision Group of Funds, Inc.; and World Investment Series,
Inc.
Federated Securities Corp. also acts as principal underwriter for
the following closed-end investment company: Liberty Term Trust,
Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief --
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779Operating Officer, Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive ViceExecutive Vice
Federated Investors Tower President, Federated, President
Pittsburgh, PA 15222-3779 Securities Corp.
John W. McGonigle Director, Federated Executive Vice
Federated Investors Tower Securities Corp. President and
Pittsburgh, PA 15222-3779 Secretary
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust, Federated
Pittsburgh, PA 15222-3779 Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Byron F. Bowman Vice President, Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securites Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Michael D. Fitzgerald Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joeseph Kenedy Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Steven A. La Versa Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John C. Shelar, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jamie M. Teschner Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charlene H. Jennings Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Timothy Radcliff Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Thomas R. Donahue Asstistant Secretary, --
Federated Investors Tower Assistant Treasurer,
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Joseph M. Huber Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David M. Taylor Assistant Secretary, Treasurer
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(c) Not applicable.
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:
Vision Group of Funds, Inc. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Federated Services Company Federated Investors Tower
("Transfer Agent, Dividend Pittsburgh, Pennsylvania 15222-3779
Disbursing Agent and Portfolio
Recordkeeper")
Federated Administrative Services Federated Investors Tower
("Administrator") Pittsburgh, Pennsylvania 15222-3779
Manufacturers and Traders TrustOne M&T Plaza
Company Buffalo, New York 14240
("Adviser")
Harbor Capital Management 125 High Street
Company, Inc. Boston, Massachusetts 02110-2701
("Sub-Adviser" to the Vision
Growth and Income Fund)
State Street Bank and Trust Company P.O. Box 8604
("Custodian") Boston, Massachusetts 02266-8604
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees/Directors and the calling of special shareholder meetings
by shareholders.
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
Registrant hereby undertakes to file a post-effective amendment,
using financial statements which need not be certified, within four
to six months from the effective date of this Post-Effective
amendment.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, VISION GROUP OF FUNDS, INC.,
certifies that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Pittsburgh and Commonwealth of Pennsylvania, on the
3rd day of May, 1996.
VISION GROUP OF FUNDS, INC.
BY: /s/Victor R. Siclari
Victor R. Siclari, Secretary
Attorney in Fact for Edward C. Gonzales
May 3, 1996
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:
NAME TITLE DATE
By:/s/ Victor R. Siclari
Victor R. Siclari Attorney In Fact May 3, 1996
SECRETARY For the Persons
Listed Below
NAME TITLE
Edward C. Gonzales* President and Treasurer
(Chief Executive Officer
and Principal Financial and
Accounting Officer)
Randall I. Benderson* Director
Joseph J. Castiglia* Director
Daniel R. Gernatt, Jr.* Director
George K. Hambleton, Jr.* Director
Exhibit (15)(iv) on Form N-1A
Exhibit 10 under Item 601/Reg. S-K
EXHIBIT B
to the
Plan, dated June 1, 1993
VISION GROUP OF FUNDS, INC.
VISION CAPITAL APPRECIATION FUND
This Plan is adopted by VISION GROUP OF FUNDS, INC. with respect to the
Class of Shares of the portfolio(s) of the Corporation set forth above.
In compensation for the services provided pursuant to this Plan, FSC will
be paid a monthly fee computed at the annual rate of .25 of 1% of the average
aggregate net asset value of Vision Capital Appreciation Fund during the
month.
Witness the due execution hereof this 1st day of , 1996.
----
VISION GROUP OF FUNDS, INC.
By:
President
Exhibit 5(iii) on Form N-1A
Exhibit 10 under Item 601/Reg S-K
EXHIBIT B
to the
Investment Advisory Contract
between Manufacturer's and Traders Trust Company and Vision Group of Funds,
Inc.,
dated June 1, 1993
VISION CAPITAL APPRECIATION FUND
For all services rendered by Adviser hereunder, the above-named Fund(s) of
the Corporation shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment
advisory fee equal to .85 of 1% of the average daily net assets of the
Fund(s).
The portion of the fee based upon the average daily net assets of the
Fund(s) shall be accrued at the rate of 1/365th of .85 of 1% applied to the
daily net assets of the Fund(s).
The advisory fee so accrued shall be paid to Adviser at least monthly.
Witness the due execution hereof this 1st day of , 1996.
-----
Attest: MANUFACTURERS AND TRADERS
TRUST COMPANY
By:
Assistant Secretary
Executive Vice President
Attest: VISION GROUP OF FUNDS, INC.
By:
Assistant Secretary
Vice President
EXHIBIT (6)(VI) ON FORM N-1A
EXHIBIT 10 UNDER ITEM 601/REG. S-K
VISION GROUP OF FUNDS, INC.
Amended and Restated Shareholder Services Plan
This Shareholder Services Plan ("Plan"), as adopted on June 1, 1993, is
hereby amended and restated as of this 8th day of November, 1995, by the Board
of Directors of VISION GROUP OF FUNDS, INC. (the "Fund"), a Maryland
Corporation with respect to certain classes of shares ("Classes") of the
portfolios of the Fund set forth in exhibits hereto.
1. This Plan is adopted to allow the Fund to make payments as
contemplated herein to obtain certain personal services for shareholders
and/or the maintenance of shareholder accounts ("Services").
2. This Plan is designed to compensate broker/dealers and other
participating financial institutions and other persons ("Providers") for
providing services to the Fund and its shareholders. The Plan will be
administered by Federated Administrative Services, ("FAS"). In compensation
for the services provided pursuant to this Plan, Providers will be paid a
monthly fee in respect of the Classes set forth on the applicable exhibit,
computed at the annual rate not to exceed . 25 of 1% of the average aggregate
net asset value of the shares of such Classes of the Fund held during the
month.
3. Any payments made by the Funds to any Provider pursuant to this Plan
will be made pursuant to the "Shareholder Services Agreement" entered into by
FAS on behalf of the Fund and the Provider.
4. The Fund has the right (i) to select, in its sole discretion, the
Providers to participate in the Plan and (ii) to terminate without cause and
in its sole discretion any Shareholder Services Agreement.
5. Quarterly in each year that this Plan remains in effect, FAS shall
prepare and furnish to the Board of Directors of the Fund, and the Board of
Directors shall review, a written report of the amounts expended under the
Plan.
6. This Plan shall become effective with respect to each Class (i) after
approval by majority votes of: (a) the Fund's Board of Directors; and (b) the
Disinterested Directors of the Fund; and (ii) upon execution of an exhibit
adopting this Plan.
7. All material amendments to this Plan must be approved by a vote of the
Board of Directors of the Fund and of the Disinterested Directors.
8. This Plan may be terminated with respect to a particular Class at any
time by: (a) a majority vote of the Directors; or (b) a vote of a majority of
the outstanding voting securities of the Fund as defined in Section 2(a)(42)
of the Act.
9. All agreements with any person relating to the implementation of this
Plan shall be in writing and any agreement related to this Plan shall be
subject to termination, without penalty, pursuant to the provisions of
Paragraph 8 herein.
10. This Plan shall be construed in accordance with and governed by the
laws of the Commonwealth of Pennsylvania.
2
Witness the due execution hereof this 8th day of November, 1995.
Vision Group of Funds Inc.
By: /s/ E. C. Gonzales
President
Exhibit (8)(I) on Form N-1A
Exhibit 10 under Item 6, Reg. S-K
AMENDMENT NO. 2
to
Exhibit A
Custodian Contract
between
VISION GROUP OF FUNDS, INC.
and
STATE STREET BANK AND TRUST COMPANY
dated July 5, 1990
PORTFOLIOS OF VISION GROUP OF FUNDS, INC.
VISION GROUP OF FUNDS, INC. (the "Fund") consists of the following
portfolios (the "Portfolios") effective as of the dates set forth below:
Name Date
Vision Money Market Fund June 1, 1988
Vision New York Tax-Free Money June 1, 1988
Market Fund
Vision Treasury Money Market Fund June 1, 1988
Vision U.S. Government Securities Fund August 16, 1993
Vision New York Tax-Free Fund August 16, 1993
Vision Growth and Income Fund November 2, 1993
Vision Capital Appreciation Fund
Exhibit 6(iv) on Form N-1A
Exhibit 10 under Item 601/Reg S-K
Exhibit C
to the
Distributor's Contract
VISION GROUP OF FUNDS, INC.
VISION CAPITAL APPRECIATION FUND
The following provisions are hereby incorporated and made part of the
Distributor's Contract dated the 1st day of , 1996, between VISION GROUP
-----
OF FUNDS, INC. and FEDERATED SECURITIES CORP. with respect to Classes of the
Funds set forth above.
1. The Corporation hereby appoints FSC to engage in activities
principally intended to result in the sale of shares of the above-listed
Classes ("Shares"). Pursuant to this appointment, FSC is authorized to select
a group of Broker/Dealers or Financial Institutions ("Institutions") to sell
Shares at the current offering price thereof as described and set forth in the
respective prospectuses of the Corporation, and to render sales related
services to the Corporation and its shareholders.
2. During the term of this Agreement, the Corporation will pay FSC for
services pursuant to this Agreement, a monthly fee computed at the annual rate
of .25 of 1% of the average aggregate net asset value of the shares of the
Vision Capital Appreciation Fund held during the month. For the month in
which this Agreement becomes effective or terminates, there shall be an
appropriate proration of any fee payable on the basis of the number of days
that the Agreement is in effect during the month.
3. FSC may from time-to-time and for such periods as it deems appropriate
reduce its compensation to the extent any Classes' expenses exceed such lower
expense limitation as FSC may, by notice to the Corporation, voluntarily
declare to be effective.
4. FSC will enter into separate written agreements with various firms to
provide certain of the services set forth in Paragraph 1 herein. FSC, in its
sole discretion, may pay Institutions a periodic fee in respect of Shares
owned from time to time by their clients or customers. The schedules of such
fees and the basis upon which such fees will be paid shall be determined from
time to time by FSC in its sole discretion.
5. FSC will prepare reports to the Board of Directors of the Corporation
on a quarterly basis showing amounts expended hereunder including amounts paid
to Institutions and the purpose for such payments.
In consideration of the mutual covenants set forth in the Distributor's
Contract dated the 1st day of , 1996 between Vision Group of Funds, Inc.
------
and Federated Securities Corp., Vision Group of Funds, Inc. executes and
delivers this Exhibit on behalf of the Funds, and with respect to the separate
Classes of Shares thereof, first set forth in this Exhibit.
Witness the due execution hereof this 1st day of , 1996.
------
2
ATTEST: VISION GROUP OF FUNDS, INC.
By:
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
By:
Secretary President
(SEAL)
Exhibit (6)(vii) on Form N-1A
Exhibit 10 under Item 601/Reg. S-K
Amendment No. 1 to
EXHIBIT A
to Shareholder Services Agreement with
the Vision Group of Funds, Inc. (the "Funds")
dated November 9, 1995
Funds covered by this Agreement:
Vision U.S. Government Securities Fund
Vision New York Tax-Free Fund
Vision Growth and Income Fund
Vision Capital Appreciation Fund
Shareholder Service Fees
1. During the term of this Agreement, the Funds will pay Provider a
quarterly fee. This fee will be computed at the annual rate of .25% of the
average net asset value of shares of the Funds held during the quarter in
accounts for which the Provider provides Services under this Agreement, so
long as the average net asset value of Shares in the Funds during the quarter
equals or exceeds such minimum amount as the Funds shall from time to time
determine and communicate in writing to the Provider.
2. For the quarterly period in which the Shareholder Services Agreement
becomes effective or terminates, there shall be an appropriate proration of
any fee payable on the basis of the number of days that the Agreement is in
effect during the quarter.
Dated: , 1996
Exhibit (6)(v) on Form N-1A
Exhibit 10 under Item 601/Reg. S-K
Amendment No. 1 to
EXHIBIT A
to Amended and Restated Shareholder Services Plan of
the Vision Group of Funds, Inc. (the "Fund")
dated November 8, 1995
Classes covered by this Plan :
Vision Money Market Fund
Vision New York Tax-Free Money Market Fund
Vision Treasury Money Market Fund
Vision U.S. Government Securities Fund
Vision New York Tax-Free Fund
Vision Growth and Income Fund
Vision Capital Appreciation Fund
