[LOGO OF VISION GROUP OF FUNDS, INC.]
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1995
----------------------------
VISION
Growth
and Income
Fund
----------------------------
Harbor Capital Management Company, Inc.
Sub-Adviser to the
VISION Growth and Income Fund
125 High Street
Boston, MA 02110
Federated Securities Corp.
Distributor
Federated Investors Tower
Pittsburgh, PA 15222-3779
Cusip 92830F604
GOO161-O1 (12/95)
[RECYCLED PAPER LOGO]
Manufacturers and Traders Trust Company
Investment Adviser to the Funds
One M&T Plaza
Buffalo, NY 14240-4556
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report of the Vision Growth and Income
Fund for the six-month period ended October 31, 1995. The report begins with an
investment review by the fund's portfolio manager, followed by a list of the
fund's stock holdings and complete financial information.
During the six-month period, the fund's portfolio of high-quality stocks (which
includes many household names you will recognize) delivered strong performance
to shareholders. The fund paid $0.06 per share in dividends, while its share
price rose from $10.35 at the beginning of the period to $11.80 at the period's
end. During the six-month period from May 1, 1995 to October 31, 1995, the fund
had a total return of 14.58%* based on net asset value.
By the end of the period, shareholders had invested a total of $48 million in
Vision Growth and Income Fund. Thank you for your continued confidence in the
fund. We welcome your questions and comments as we keep you informed about the
progress of your investment.
Sincerely,
Edward C. Gonzales
President
December 15, 1995
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost. Total return for the
period reflecting the fund's sales charge was 9.40%.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
FIRST HALF OF THE FISCAL YEAR--MAY 1, 1995 THROUGH OCTOBER 31, 1995
The securities markets continued to advance in the second fiscal quarter,
powered by strong corporate earnings as well as further declines in interest
rates. The positive momentum that was achieved in the prior quarter continued as
the Vision Growth & Income Fund (the "Fund") fully participated in this rally,
rising 14.58%* for the first six months of the fiscal year, versus a 14.5% gain
for the Standard & Poor's Daily Stock Price Index of 500 Common Stocks ("S&P
500")+. For the first nine months of the calendar year, the Fund appreciated
25.5% vs. the 29.7% return of the S&P 500.
The economic climate remains favorable for financial assets. Economic activity
and corporate profits continue to advance, albeit at a decelerating rate of
growth. Inflation and interest rate trends remain positive reflecting the
influence of global competition. While rancor surrounding budget politics may
persist, there remains optimism that progress will be made in addressing the
long-term, structural problem of the budget deficit. In such a slow growth
economy, however, many companies will be unable to meet aggressive earnings
expectations of Wall Street analysts. Avoiding these negative earnings surprises
is the focus and challenge of our analytical effort.
You will see in the attached portfolio asset statement that the fund has
positioned its investments in a manner which we believe is consistent with a
slow growth economic environment. Companies which produce consistent, above
average earnings gains will be favored.
Within the growth portion of the portfolio, our largest concentration is in
technology. During the third calendar quarter, overall sector results here were
favorable, while individual results were mixed. Although periodic bouts of
profit-taking are to be expected, we maintain substantial diversified holdings
in a broad range of technology companies i.e., Cisco (networking), BMC
(software), Motorola (wireless and semiconductors), Hewlett Packard (computers,
printers, etc.), IBM (computers and software), and Intel (semiconductors). The
U.S. is the world's technology leader, and the information/communication boom
has a long way to go in the U.S. and, more importantly, overseas.
A second area of growth stock portfolio concentration remains health care, and
our diversified holdings, United Healthcare (HMO), Pfizer (drugs), and Johnson &
Johnson (hospital supplies), all outperformed, as political concerns continue to
dissipate. Market participants refocused their attention on the ability of these
companies to deliver superior earnings growth. Finally, despite a continued
lackluster environment for consumer spending stocks, dominant companies such as
Walt Disney, Coca-Cola, and Mattel will continue to prosper, reflecting their
unique products and management strengths.
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost. Total return for the
period reflecting the Fund's sales charge was 9.40%.
+ The Standard & Poor's Daily Stock Price Index of 500 Common Stocks is a
composite index 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. This index
is unmanaged, and investments cannot be made in an index.
In the value portion of the portfolio, we have underweighted heavy cyclical
stocks and commodities, reflecting our outlook for only modest economic growth
and the possibility of earnings disappointments. Within the value universe, our
largest investments remain diversified in the financial area, i.e., Citicorp and
Chemical Banking Corp. (banking), Travelers (insurance and brokerage), American
Express (credit cards) and Fannie Mae (mortgage banking). Our outlook for lower
interest rates reinforces our attraction to these modestly priced equities.
In summary, we believe the Vision Growth & Income Fund is well-positioned for an
economic climate of continued modest growth and slightly lower interest rates.
VISION GROWTH AND INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
FOR THE SIX YEAR ENDED
MONTHS ENDED APRIL 30,
OCTOBER 31, 1995 ----------------------
(UNAUDITED) 1995 1994(a)
- ------------------------------------------------------------------------ ---------------- --------- ----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.35 $ 9.93 $ 10.00
- ------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------
Net investment income 0.06 0.21 0.07
- ------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.45 0.43 (0.08)
- ------------------------------------------------------------------------ --------- --------- ----------
Total from investment operations 1.51 0.64 (0.01)
- ------------------------------------------------------------------------ --------- --------- ----------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------
Distributions from net investment income (0.06) (0.22) (0.06)
- ------------------------------------------------------------------------ --------- --------- ----------
NET ASSET VALUE, END OF PERIOD $ 11.80 $ 10.35 $ 9.93
- ------------------------------------------------------------------------ --------- --------- ----------
TOTAL RETURN (B) 14.58% 6.61% (0.12%)
- ------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------
Expenses 1.20%(c) 0.47% 0.00%(c)
- ------------------------------------------------------------------------
Net investment income 1.03%(c) 2.16% 2.24%(c)
- ------------------------------------------------------------------------
Expense waiver/reimbursement (d) -- 0.96% 2.15%(c)
- ------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------
Net assets, end of period (000 omitted) $48,787 $39,358 $22,944
- ------------------------------------------------------------------------
Portfolio turnover 39% 79% 27%
- ------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from November 29, 1993 (date of initial
public investment) to April 30, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
VISION GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ----------- ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--94.2%
- --------------------------------------------------------------------------------------------------
AUTOMOBILE--2.6%
-------------------------------------------------------------------------------------
10,000 Chrysler Corp. $ 516,250
-------------------------------------------------------------------------------------
17,000 Magna International Inc. 735,250
------------------------------------------------------------------------------------- -------------
Total 1,251,500
------------------------------------------------------------------------------------- -------------
BANKING--7.3%
-------------------------------------------------------------------------------------
25,000 Chemical Banking Corp. 1,421,875
-------------------------------------------------------------------------------------
26,000 Citicorp 1,686,750
-------------------------------------------------------------------------------------
17,081 +First Republic Bancorp 211,377
-------------------------------------------------------------------------------------
7,000 UJB Financial Corp. 223,125
------------------------------------------------------------------------------------- -------------
Total 3,543,127
------------------------------------------------------------------------------------- -------------
BROADCASTING--1.9%
-------------------------------------------------------------------------------------
19,010 +Viacom, Inc. (non-voting) 950,500
------------------------------------------------------------------------------------- -------------
CHEMICALS--2.8%
-------------------------------------------------------------------------------------
10,000 DuPont (E.I.) de Nemours & Co. 623,750
-------------------------------------------------------------------------------------
27,000 Praxair, Inc. 729,000
------------------------------------------------------------------------------------- -------------
Total 1,352,750
------------------------------------------------------------------------------------- -------------
COMPUTER SOFTWARE--9.3%
-------------------------------------------------------------------------------------
28,000 +BMC Software, Inc. 997,500
-------------------------------------------------------------------------------------
11,000 +Cisco Systems, Inc. 852,500
-------------------------------------------------------------------------------------
20,000 International Business Machine 1,945,000
-------------------------------------------------------------------------------------
8,000 Hewlett Packard Co. 741,000
------------------------------------------------------------------------------------- -------------
Total 4,536,000
------------------------------------------------------------------------------------- -------------
CONSUMER GOODS-RETAIL--4.7%
-------------------------------------------------------------------------------------
39,531 Mattel, Inc. 1,136,516
-------------------------------------------------------------------------------------
30,500 +Office Max Inc. 754,875
-------------------------------------------------------------------------------------
</TABLE>
VISION GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ----------- ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
CONSUMER GOODS-RETAIL--CONTINUED
-------------------------------------------------------------------------------------
18,000 Warnaco Group Inc. $ 418,500
------------------------------------------------------------------------------------- -------------
Total 2,309,891
------------------------------------------------------------------------------------- -------------
DEFENSE--4.3%
-------------------------------------------------------------------------------------
10,000 Boeing Co. 656,250
-------------------------------------------------------------------------------------
16,000 General Dynamics Corp. 886,000
-------------------------------------------------------------------------------------
13,000 Raytheon Co. 567,125
------------------------------------------------------------------------------------- -------------
Total 2,109,375
------------------------------------------------------------------------------------- -------------
DRUGS--4.3%
-------------------------------------------------------------------------------------
14,000 Johnson & Johnson 1,141,000
-------------------------------------------------------------------------------------
17,000 Pfizer, Inc. 975,375
------------------------------------------------------------------------------------- -------------
Total 2,116,375
------------------------------------------------------------------------------------- -------------
ELECTRONICS--8.9%
-------------------------------------------------------------------------------------
20,500 General Electric Co. 1,296,625
-------------------------------------------------------------------------------------
23,500 Intel Corporation 1,642,065
-------------------------------------------------------------------------------------
21,000 Motorola, Inc. 1,378,125
------------------------------------------------------------------------------------- -------------
Total 4,316,815
------------------------------------------------------------------------------------- -------------
ENERGY--2.9%
-------------------------------------------------------------------------------------
4,500 Royal Dutch Petroleum Co., ADR 552,937
-------------------------------------------------------------------------------------
12,500 Texaco, Inc. 851,562
------------------------------------------------------------------------------------- -------------
Total 1,404,499
------------------------------------------------------------------------------------- -------------
ENTERTAINMENT--2.4%
-------------------------------------------------------------------------------------
20,000 Walt Disney Co. 1,152,500
------------------------------------------------------------------------------------- -------------
FINANCIAL--1.2%
-------------------------------------------------------------------------------------
15,000 American Express Co. 609,375
------------------------------------------------------------------------------------- -------------
FOOD AND BEVERAGE--1.6%
-------------------------------------------------------------------------------------
11,000 Coca Cola Co. 790,625
------------------------------------------------------------------------------------- -------------
</TABLE>
VISION GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ----------- ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
FOREST PRODUCTS--3.8%
-------------------------------------------------------------------------------------
27,000 Federal Paper Board Inc. $ 1,134,000
-------------------------------------------------------------------------------------
10,000 Kimberly-Clark Corp. 726,250
------------------------------------------------------------------------------------- -------------
Total 1,860,250
------------------------------------------------------------------------------------- -------------
HEALTH CARE--3.6%
-------------------------------------------------------------------------------------
24,000 +Horizon Healthcare Corp. 486,000
-------------------------------------------------------------------------------------
24,000 United Healthcare Corp. 1,275,000
------------------------------------------------------------------------------------- -------------
Total 1,761,000
------------------------------------------------------------------------------------- -------------
INDUSTRIAL PRODUCTS--5.1%
-------------------------------------------------------------------------------------
11,000 Harsco Corp. 580,250
-------------------------------------------------------------------------------------
7,000 ITT Corp. 857,500
-------------------------------------------------------------------------------------
20,000 +Thermo Electron Corp. 1,012,000
------------------------------------------------------------------------------------- -------------
Total 2,449,750
------------------------------------------------------------------------------------- -------------
INSURANCE--3.1%
-------------------------------------------------------------------------------------
18,200 +Allmerica Financial Corp. 457,275
-------------------------------------------------------------------------------------
12,500 American International Group, Inc. 1,054,687
------------------------------------------------------------------------------------- -------------
Total 1,511,962
------------------------------------------------------------------------------------- -------------
MANUFACTURING--1.7%
-------------------------------------------------------------------------------------
13,000 Eastman Kodak Co. 814,125
------------------------------------------------------------------------------------- -------------
MINING AND DEVELOPMENT--0.9%
-------------------------------------------------------------------------------------
18,000 Freeport McMoran Copper & Gold, Inc. 454,500
------------------------------------------------------------------------------------- -------------
MORTGAGE--2.0%
-------------------------------------------------------------------------------------
9,500 Federal National Mortgage Association 996,312
------------------------------------------------------------------------------------- -------------
OIL & GAS--2.5%
-------------------------------------------------------------------------------------
13,000 Triton Energy Corp. 606,125
-------------------------------------------------------------------------------------
24,000 Unocal Corp. 630,000
------------------------------------------------------------------------------------- -------------
Total 1,236,125
------------------------------------------------------------------------------------- -------------
</TABLE>
VISION GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ----------- ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
PACKAGING--2.7%
-------------------------------------------------------------------------------------
21,000 +Crown Cork and Seal $ 732,375
-------------------------------------------------------------------------------------
31,000 Riverwood International Corp. 589,000
------------------------------------------------------------------------------------- -------------
Total 1,321,375
------------------------------------------------------------------------------------- -------------
REAL ESTATE--2.9%
-------------------------------------------------------------------------------------
21,000 Nationwide Health Properties, Inc. 863,625
-------------------------------------------------------------------------------------
18,000 Post Properties, Inc. 540,000
------------------------------------------------------------------------------------- -------------
Total 1,403,625
------------------------------------------------------------------------------------- -------------
TOBACCO--2.1%
-------------------------------------------------------------------------------------
12,000 Philip Morris Cos., Inc. 1,014,000
------------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS--6.3%
-------------------------------------------------------------------------------------
15,000 Ameritech Corp. 810,000
-------------------------------------------------------------------------------------
6,000 A T & T Corp. 384,000
-------------------------------------------------------------------------------------
30,800 Ericsson (LM) Telephone Co., ADR 657,868
-------------------------------------------------------------------------------------
22,000 GTE Corp. 907,500
-------------------------------------------------------------------------------------
6,000 Nokia Corp., ADR 334,500
------------------------------------------------------------------------------------- -------------
Total 3,093,868
------------------------------------------------------------------------------------- -------------
TRANSPORTATION--1.2%
-------------------------------------------------------------------------------------
7,000 CSX Corp. 586,250
------------------------------------------------------------------------------------- -------------
WHOLESALE--2.1%
-------------------------------------------------------------------------------------
11,500 Alco Standard Corp. 1,017,750
------------------------------------------------------------------------------------- -------------
TOTAL COMMON STOCKS (IDENTIFIED COST, $37,882,795) 45,964,224
------------------------------------------------------------------------------------- -------------
CONVERTIBLE PREFERRED STOCKS--4.7%
- --------------------------------------------------------------------------------------------------
COMPUTER--1.1%
-------------------------------------------------------------------------------------
9,000 Storage Technology Corp. 517,500
------------------------------------------------------------------------------------- -------------
FINANCIAL--1.1%
-------------------------------------------------------------------------------------
9,000 Sunamerica Inc. 558,000
------------------------------------------------------------------------------------- -------------
</TABLE>
]VISION GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ----------- ------------------------------------------------------------------------------------- -------------
CONVERTIBLE PREFERRED STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
INSURANCE--2.5%
-------------------------------------------------------------------------------------
17,000 Travelers, Inc. $ 1,198,500
------------------------------------------------------------------------------------- -------------
TOTAL CONVERTIBLE PREFERRED STOCKS (IDENTIFIED COST, $2,414,714) 2,274,000
------------------------------------------------------------------------------------- -------------
MONEY MARKET MUTUAL FUND SHARES--1.9%
- --------------------------------------------------------------------------------------------------
$ 943,111 Seven Seas Money Market Fund (at net asset value) 943,111
------------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST, $41,240,620) $ 49,181,335++
------------------------------------------------------------------------------------- -------------
</TABLE>
+ Non-income producing.
++ The cost of investments for federal tax purposes amounts to $41,240,620. The
net unrealized appreciation of investments on a federal tax basis amounts to
$7,940,715 which is comprised of $8,384,553 appreciation and $443,838
depreciation at October 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($48,786,686) at October 31, 1995.
The following abbreviation is used in this portfolio:
ADR--American Depositary Receipts
(See Notes which are an integral part of the Financial Statements)
VISION GROWTH AND INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Investments in securities, at amortized cost and value (identified cost $41,240,620) $ 49,181,335
- ---------------------------------------------------------------------------------------------------
Cash 1,891
- ---------------------------------------------------------------------------------------------------
Income receivable 62,377
- ---------------------------------------------------------------------------------------------------
Receivable for investments sold 482,971
- ---------------------------------------------------------------------------------------------------
Receivable for capital stock sold 21,361
- ---------------------------------------------------------------------------------------------------
Deferred expenses 2,015
- --------------------------------------------------------------------------------------------------- -------------
Total assets 49,751,950
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------------------
Payable for investments purchased $ 957,367
- ---------------------------------------------------------------------------------------
Payable for capital stock redeemed 1,008
- ---------------------------------------------------------------------------------------
Accrued expenses 6,889
- --------------------------------------------------------------------------------------- ----------
Total liabilities 965,264
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 4,134,171 shares outstanding $ 48,786,686
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid-in capital $ 42,456,677
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 7,940,715
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (1,619,634)
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income 8,928
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 48,786,686
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- ---------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($48,786,686 / 4,134,171 shares outstanding) $11.80
- --------------------------------------------------------------------------------------------------- -------------
Offering Price Per Share (100/95.50 of $11.80)* $12.36
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
*See "What Fund Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
VISION GROWTH AND INCOME FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $6,633) $ 463,904
- -------------------------------------------------------------------------------------------------------
Interest 42,075
- ------------------------------------------------------------------------------------------------------- ------------
Total investment income 505,979
- -------------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------------
Investment advisory fee $ 158,965
- -------------------------------------------------------------------------------------------
Administrative personnel and services fee 26,675
- -------------------------------------------------------------------------------------------
Custodian fees 14,720
- -------------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 17,224
- -------------------------------------------------------------------------------------------
Directors' fees 2,681
- -------------------------------------------------------------------------------------------
Auditing fees 5,982
- -------------------------------------------------------------------------------------------
Legal fees 3,126
- -------------------------------------------------------------------------------------------
Portfolio accounting fees 20,060
- -------------------------------------------------------------------------------------------
Capital stock registration costs 8,381
- -------------------------------------------------------------------------------------------
Printing and postage 7,921
- -------------------------------------------------------------------------------------------
Taxes 2,144
- -------------------------------------------------------------------------------------------
Insurance premiums 2,171
- -------------------------------------------------------------------------------------------
Miscellaneous 2,151
- ------------------------------------------------------------------------------------------- ----------
Total expenses 272,201
- -------------------------------------------------------------------------------------------
Deduct--
- -------------------------------------------------------------------------------------------
Waiver of investment advisory fee $ 541
- -------------------------------------------------------------------------------- ---------
Total waivers 541
- ------------------------------------------------------------------------------------------- ----------
Net expenses 271,660
- ------------------------------------------------------------------------------------------------------- ------------
Net investment income 234,319
- ------------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 798,697
- -------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments 4,781,058
- ------------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain (loss) on investments 5,579,755
- ------------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 5,814,074
- ------------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
VISION GROWTH AND INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
OCTOBER 31, 1995 ENDED
(UNAUDITED) APRIL 30, 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------
Net investment income (net of foreign withholding taxes of $6,633) $ 234,319 $ 664,314
- -------------------------------------------------------------------------
Net realized gain (loss) on investments ($798,697 net gain and $654,754
net loss, respectively, as computed for federal tax purposes) 798,697 (2,190,917)
- -------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments 4,781,058 3,816,948
- ------------------------------------------------------------------------- -------------------- ----------------
Change in net assets resulting from operations 5,814,074 2,290,345
- ------------------------------------------------------------------------- -------------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------------------
Distributions from net investment income (229,611) (680,851)
- ------------------------------------------------------------------------- -------------------- ----------------
CAPITAL STOCK TRANSACTIONS--
- -------------------------------------------------------------------------
Proceeds from sale of shares 6,234,461 16,862,460
- -------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 118,732 368,130
- -------------------------------------------------------------------------
Cost of shares redeemed (2,508,684) (2,426,603)
- ------------------------------------------------------------------------- -------------------- ----------------
Change in net assets resulting from capital stock transactions 3,844,509 14,803,987
- ------------------------------------------------------------------------- -------------------- ----------------
Change in net assets 9,428,972 16,413,481
- -------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------
Beginning of period 39,357,714 22,944,233
- ------------------------------------------------------------------------- -------------------- ----------------
End of period (including undistributed net investment income of $8,928
and $4,220, respectively) $ 48,786,686 $ 39,357,714
- ------------------------------------------------------------------------- -------------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
VISION GROWTH AND INCOME FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Vision Group of Funds, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as an open-end
management investment company. The Corporation consists of five diversified
portfolios and one non-diversified portfolio: Vision Money Market Fund ("Money
Market"), Vision Treasury Money Market Fund ("Treasury Money Market"), Vision
New York Tax-Free Money Market Fund ("New York Tax-Free Money Market"), Vision
Growth and Income Fund ("Growth and Income"), Vision New York Tax-Free Fund
("New York Tax-Free")*, and Vision U.S. Government Securities Fund ("U.S.
Government Securities"). The financial statements included herein present only
those of the Growth and Income Fund (the "Fund"). The financial statements of
the other portfolios are presented separately. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. All other securities are valued at
prices provided by an independent pricing service.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure the value of collateral at least equals
the repurchase price to be paid under the repurchase agreement transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Directors ("Directors").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less
than the repurchase price on the sale of collateral securities.
- ---------
* Non-diversified portfolio.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
Interest income and expenses are accrued daily. Bond premium and discount,
if applicable, are amortized as required by the Internal Revenue Code, as
amended (the "Code").
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
At April 30, 1995, the Fund , for federal tax purposes, had a capital loss
carryforward of $654,754, which will reduce the Fund's taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions
to shareholders which would otherwise be necessary to relieve the Fund of
any liability for federal tax. Pursuant to the Code, such capital loss
carryforward will expire in 2003.
Additionally, net capital losses of $1,557,739 attributable to security
transactions incurred after October 31, 1994 are treated as arising on May
1, 1995, the first day of the Fund's next taxable year.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
RECLASSIFICATION--During the year ended April 30, 1995, the Funds adopted
Statement of Position 93-2 Determination, Disclosure, and Financial
Statement Presentation of Income, Capital Gain, and Return of Capital
Distributions by Investment Companies ("SOP93-2"). Accordingly, permanent
book and tax differences have been reclassified between the accumulated net
realized loss account and the undistributed net investment income account.
These differences are primarily due to differing treatments for market
discount. Amounts as of April 30, 1995 have been reclassified to reflect
the following:
<TABLE>
<CAPTION>
INCREASE (DECREASE)
ACCUMULATED NET REALIZED GAIN/LOSS UNDISTRIBUTED NET INVESTMENT INCOME
<S> <C>
($528) $528
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this change.
OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At October 31, 1995, there were 1,000,000,000 shares of $0.001 par value capital
stock authorized. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
OCTOBER 31, YEAR ENDED
1995 APRIL 30,
(UNAUDITED) 1995
<S> <C> <C>
Shares sold 545,172 1,698,381
- --------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 10,239 37,166
- --------------------------------------------------------------------------------
Shares redeemed (222,109) (245,491)
- -------------------------------------------------------------------------------- -------------- --------------
Net change resulting from capital stock transactions 333,302 1,490,056
- -------------------------------------------------------------------------------- -------------- --------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Manufacturers & Traders Trust Company, the Fund's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to 0.70 of 1% of the Fund's average daily net
assets. The Adviser has entered into a sub-advisory contract with Harbor Capital
Management Company, Inc. (the"Sub-Adviser"). The Adviser shall pay Sub-Adviser
up to 0.50 of 1% of the Fund's average daily net assets up to $100 million and
0.40 of 1% of such assets in excess thereof. The Adviser and Sub-Adviser may
voluntarily choose to waive a portion or all of their fees and reimburse certain
operating expenses of the Fund. The Adviser and Sub-Adviser can modify or
terminate this voluntary waiver and reimbursement at any time at their sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Corporation for the period. FAS may
voluntarily choose to waive a portion of its fee. FAS can modify or terminate
voluntary waiver at any time at its sole discretion.
DISTRIBUTION AND SHAREHOLDER SERVICES FEE--The Fund has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the
Plan, the Fund will compensate Federated Securities Corp. ("FSC") , the
principal distributor, from the net assets of the Fund to finance activities
intended to result in the sale of the Fund's shares. The Plan provides that the
Fund may incur distribution expenses up to 0.25 of 1% of the average daily net
assets of the Fund, annually, to compensate FSC. The Fund did not pay or accrue
distribution expenses during the six months ended October 31, 1995.
Under the terms of a shareholder service agreement between FAS and M&T Bank, the
Fund will pay M&T Bank a fee to obtain certain services for shareholders and the
maintenance of shareholder accounts. The fee is based on the level of average
net assets of the Fund for the period.
The Fund did not pay or accrue any shareholder servicing agent fees for the six
months ended
October 31, 1995.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ") serves as transfer and dividend disbursing agent for the Fund
for which it receives a fee. The fee is based on the size, type, and number of
accounts and transactions made by shareholders.
ORGANIZATIONAL EXPENSES--Organizational expenses ($18,626) were initially borne
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following November 2, 1993 (date the Fund became
effective). For the fiscal year ended six months ended October 31, 1995, the
Fund paid $1,542 pursuant to this agreement.
Certain Officers of the Corporation are Officers and Directors or Trustees of
the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended October 31, 1995, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 21,159,894
- --------------------------------------------------------------------------------------------------- -------------
Sales $ 16,967,202
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
DIRECTORS OFFICERS
- -----------------------------------------------------------------------
<TABLE>
<S> <C>
Randall I. Benderson Edward C. Gonzales
Joseph J. Castiglia President and Treasurer
Daniel R. Gernatt, Jr. Charles L. Davis, Jr.
George K. Hambleton, Jr. Vice President and Assistant Treasurer
Victor R. Siclari
Secretary
C. Todd Gibson
Assistant Secretary
</TABLE>
Shares of the VISION Funds are not FDIC insured or otherwise protected by the
U.S. government, are not deposits or other obligations of, or guaranteed by,
Manufacturers and Traders Trust Company ("M & T Bank"), and are subject to
investment risks, including possible loss of the principal amount invested.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Fund's prospectus which contains facts concerning its
objective and policies, management fees, expenses and other information.
VISION
U.S. Government
Securities
Fund
Seeks current income by investing primarily in securities that are guaranteed
for payment of principal and interest by the U.S. Government, its agencies or
instrumentalities (Fund shares themselves are not guaranteed). Capital
appreciation is a secondary investment consideration.
- --------------------------------------------------------------------------------
VISION
New York Tax-Free
Fund
Seeks current income that is exempt from federal regular income tax, (some of
the income may be subject to the federal alternative minimum tax) and New York
State and New York City personal income taxes, and is consistent with
preservation of capital.
- --------------------------------------------------------------------------------
VISION
Growth and Income
Fund
Seeks to provide long-term growth of capital and income by investing in a
diversified portfolio consisting primarily of equity securities (common stock
and convertible securities) and debt securities (bonds and notes).
- --------------------------------------------------------------------------------
VISION
Money Market
Fund
Seeks current income with liquidity and stability of principal by investing in
high-quality money market instruments.
- --------------------------------------------------------------------------------
VISION
Treasury Money Market
Fund
Primarily seeks current income with liquidity and stability of principal by
investing in direct obligations of the U.S. Treasury, which are guaranteed by
the U.S. Government for timely payment of principal and interest, (Fund shares
themselves are not guaranteed), and repurchase agreements secured by these
obligations.
- --------------------------------------------------------------------------------
VISION
New York Tax-Free
Money Market
Fund
Seeks as high a level of current interest income that is exempt from federal
regular income tax (some of the income may be subject to the federal
alternative minimum tax) as is consistent with liquidity and relative stability
of principal. In addition, the Fund seeks to provide income that is exempt from
New York State and New York City personal income taxes.
- --------------------------------------------------------------------------------
[LOGO OF VISION GROUP OF FUNDS, INC.]
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1995
-------------------------
VISION
New York
Tax-Free
Fund
-------------------------
Harbor Capital Management Company, Inc.
Sub-Adviser to the
VISION Growth and Income Fund
125 High Street
Boston, MA 02110
Federated Securities Corp.
Distributor
Federated Investors Tower
Pittsburgh, PA 15222-3779
Cusip 92830F505
GOO156-O1 (12/95)
[RECYCLED PAPER LOGO]
Manufacturers and Traders Trust Company
Investment Adviser to the Funds
One M&T Plaza
Buffalo, NY 14240-4556
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report of the Vision New York Tax-Free
Fund for the six-month period ended October 31, 1995. The report begins with an
investment review by the fund's portfolio manager, followed by a list of the
fund's municipal bond holdings and complete financial information.
As a shareholder, you are pursuing monthly, double-tax-free income
(triple-tax-free income if you are a New York City resident).*
During the six-month period, the fund's portfolio of high-quality, New York
municipal bonds paid $656,403, or $0.23 per share. The fund's net asset value
rose from $9.67 at the beginning of the period to $10.09 at the period's end.
By the end of the period, tax-sensitive residents had invested a total of $29.3
million in Vision New York Tax-Free Fund. Thank you for your continued
confidence in the fund. We welcome your questions and comments as we keep you
informed about the progress of your investment.
Sincerely,
Edward C. Gonzales
Edward C. Gonzales
President
December 15, 1995
* Income may be subject to the federal alternative minimum tax.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Yields on municipal securities generally fell during the first six months of the
Vision New York Tax-Free Fund's (the "Fund") fiscal year. On May 1, 1995, the
municipal bond market, as measured by the Bond Buyer 40 Bond Index+ (yield to
par basis), was 6.43%. The yield fell to 5.86% on June 6, 1995, rose to 6.64% on
August 15, 1995, and ended the period at 5.99% on October 31, 1995.
The Fund largely anticipated the interest rate movements in 1995, providing a
total return for the May 1, 1995 to October 31, 1995 period of 6.73%*, based on
net asset value, nearly matching the 7.0% return of the Lehman New York
Tax-Exempt Index.+ This return was accomplished even though the Fund maintained
a higher credit profile than the index. The net asset value of the Fund rose
from $9.67 on May 1, 1995 to $10.09 on October 31, 1995.
Municipal yields (as measured by the Bond Buyer 40 Bond Index) were as high as
96.2% of Treasury Bond yields on September 27, 1995 and as low as 87.6% on April
28, 1995. This relationship was 94.5% on October 31st, reflecting continued
fears of the possibility of a flat tax. Municipal yields as a percentage of
Treasury yields are near historical peak levels. We feel that a flat tax is
already priced into the market and view the municipal market optimistically.
+ The Bond Buyer 40 Bond Index is comprised of 40 actively quoted and traded
long-term municipal bonds. The Lehman Brothers New York Tax-Exempt Index is a
total return performance benchmark for the New York long-term, investment
grade, tax-exempt bond market. These indices are unmanaged and investments
cannot be made in them.
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost. Total return for the
period reflecting the Fund's sales charge was 1.89%.
VISION NEW YORK TAX-FREE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED YEAR ENDED
OCTOBER 31, 1995 APRIL 30,
(UNAUDITED) 1995 1994(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.67 $ 9.61 $ 10.00
- --------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------
Net investment income 0.23 0.46 0.20
- --------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.42 0.06 (0.39)
- -------------------------------------------------------------------- ------- --------- -----------
Total from investment operations 0.65 0.52 (0.19)
- --------------------------------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------
Distributions from net investment income (0.23) (0.46) (0.20)
- -------------------------------------------------------------------- ------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 10.09 $ 9.67 $ 9.61
- -------------------------------------------------------------------- ------- --------- -----------
TOTAL RETURN (B) 6.73% 5.58% (1.22%)
- --------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------
Expenses 1.08%(c) 0.40% 0.00%
- --------------------------------------------------------------------
Net investment income 4.53%(c) 4.80% 4.79%(c)
- --------------------------------------------------------------------
Expense waiver/reimbursement (d) .37%(c) 1.12% 1.78%(c)
- --------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 29,371 $27,346 $ 25,225
- --------------------------------------------------------------------
Portfolio turnover 92% 51% 21%
- --------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from September 22, 1993 (date of initial
public investment) to April 30, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
VISION NEW YORK TAX-FREE FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------ ----------- -------------
LONG-TERM MUNICIPAL SECURITIES--97.4%
- --------------------------------------------------------------------------------------
$ 100,000 Amherst, NY, GO UT Bonds, 4.625% (Public Improvements)/
(FGIC Insured), 3/1/2003 AAA $ 100,799
------------------------------------------------------------------------
100,000 Hamburg, NY, Central School District, GO UT Bonds, 6.10%
(AMBAC Insured), 5/15/2004 AAA 109,862
------------------------------------------------------------------------
1,300,000 Housing, NY, Refundable Corporate Revenue Bonds, 5.00% 11/1/2013 AA 1,155,466
------------------------------------------------------------------------
1,425,000 Jamestown, NY, Housing Authority Mortgage Revenue Bonds, 6.125% (Bradmar
Village Project)/(HUD Section 8 Insured), 7/1/2010 A- 1,445,078
------------------------------------------------------------------------
1,000,000 Metropolitan Transportation Authority, NY, Refunding Revenue Bonds
(Series M), 6.00% (AMBAC Insured),
7/1/2014 AAA 1,031,340
------------------------------------------------------------------------
50,000 New Paltz, NY, Central School District, 6.00% (AMBAC Insured), 6/15/2008 AAA 54,513
------------------------------------------------------------------------
845,000 New York State Dormitory Authority, (Series A), 5.40% (Upstate Community
Colleges), 7/1/2009 BBB- 810,947
------------------------------------------------------------------------
1,200,000 New York State Dormitory Authority, 5.75% (Department of Health),
7/1/2006 BBB 1,210,368
------------------------------------------------------------------------
1,000,000 New York State Dormitory Authority, 5.90% (Univ. Rochester Strong
Memorial Hospital)/(GO of Univ. Insured), 7/1/2017 A1 1,001,470
------------------------------------------------------------------------
1,000,000 New York State Dormitory Authority, (Series 1993 A), 6.00% 7/1/2020 BBB 1,008,270
------------------------------------------------------------------------
1,010,000 New York State Energy Research & Development Authority, (Series A),
7.75% (Con Edison Co.), 1/1/2024 A1 1,086,144
------------------------------------------------------------------------
1,300,000 New York State Energy Research & Development Authority, PCR Bonds,
(Series A), 5.95% (New York State Electric & Gas Corp.), 12/1/2027 BBB 1,230,749
------------------------------------------------------------------------
</TABLE>
VISION NEW YORK TAX-FREE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------ ----------- -------------
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- --------------------------------------------------------------------------------------
$ 800,000 New York State Environmental Facility, PCR Bonds, (Series E), 6.50%
(State Water Revolving Fund), 6/15/2014 Aa $ 854,784
------------------------------------------------------------------------
1,000,000 New York State HFA, (Series A), 6.25%, 9/15/2010 BBB 1,032,080
------------------------------------------------------------------------
1,000,000 New York State Local Government Assistance Corp., GO Revenue Refunding
Bonds (Series E), 6.00% (GO of Corp. Insured), 4/1/2014 A 1,047,310
------------------------------------------------------------------------
1,400,000 New York State Medical Care Facilities Finance Agency, (Series B), 6.00%
(Hospital and Nursing Home Imps.)/(FHA 242 Insured), 8/15/2014 AAA 1,427,706
------------------------------------------------------------------------
1,000,000 New York Medical Care Facilities Finance Agency, (Series D), 6.35%
(Hospital and Nursing Home Imps.)/(FHA 242 Insured), 2/15/2012 AA 1,087,150
------------------------------------------------------------------------
1,300,000 New York State Medical Care Facilities Finance Agency, (Series A),
6.375% (Hospital and Nursing Home Imps.)/
(FHA 242 Insured), 8/15/2024 AA 1,344,434
------------------------------------------------------------------------
1,000,000 New York State Medical Care Facilities Finance Agency, (Series A), 6.70%
(NY Downtown Hospital), 2/15/2012 BBB 1,036,750
------------------------------------------------------------------------
1,000,000 New York State Mortgage Agency, Revenue Bonds (Series 41-A), 6.45%
10/1/2014 Aa 1,034,020
------------------------------------------------------------------------
955,000 New York State Power Authority, General Purpose Revenue Bonds (Series
Y), 6.75% 1/1/2018 AA- 1,037,006
------------------------------------------------------------------------
750,000 New York State Thruway Authority, Local Highway and Bridge Bonds (Series
A), 5.50% (MBIA Insured), 4/1/2015 AAA 741,585
------------------------------------------------------------------------
1,000,000 New York State Urban Development Correctional Facility, Refunding Bonds
(Series A), 5.50% 1/1/2009 BBB 975,700
------------------------------------------------------------------------
50,000 North Tonawanda City, NY, GO UT Bonds, 6.05% (FGIC Insured), 10/1/2006 AAA 54,748
------------------------------------------------------------------------
2,000,000 Onondaga County, NY, IDA Revenue Bonds, 5.75% (Bristol-
Meyers Squibb), 3/1/2024 AAA 1,994,260
------------------------------------------------------------------------
</TABLE>
VISION NEW YORK TAX-FREE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------ ----------- -------------
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- --------------------------------------------------------------------------------------
$ 1,120,000 Oneonta, NY, Housing Development Refunding Revenue Bonds (Series A),
5.45% (MBIA FHA 221 D 3 Insured),
7/1/2022 AAA $ 1,049,742
------------------------------------------------------------------------
765,000 Puerto Rico Electric Power Authority, (Series O), 5.00%
7/1/2012 A- 707,426
------------------------------------------------------------------------
1,000,000 Puerto Rico Electric Power Authority, (Series S), 6.125%
(CGIC Insured), 7/1/2008 AAA 1,092,740
------------------------------------------------------------------------
100,000 Sweet Home Central School District, NY, GO UT Bonds, 4.75% (AMBAC
Insured), 1/15/2005 AAA 99,735
------------------------------------------------------------------------
100,000 Tonawanda Town, NY, GO UT Bonds, 4.20% 3/1/2003 A 96,591
------------------------------------------------------------------------
100,000 Webster, NY, Central School District, 4.70% (FGIC Insured), 6/15/2002 AAA 101,101
------------------------------------------------------------------------
1,500,000 Westchester County, NY, IDA Resource Recovery Revenue Bonds (Series A),
5.75% (Resco Co.)/(AMBAC Insured),
7/1/2009 AAA 1,550,010
------------------------------------------------------------------------ -------------
TOTAL LONG-TERM MUNICIPAL SECURITIES
(IDENTIFIED COST, $27,822,951) 28,609,884
------------------------------------------------------------------------ -------------
SHORT-TERM MUNICIPAL SECURITIES--.7%
- --------------------------------------------------------------------------------------
200,000 New York City, NY, City Municipal Water Authority, Monthly VRDN (Series
C), (FGIC Insured) (at amortized cost) VMIG1 200,000
------------------------------------------------------------------------ -------------
TOTAL MUNICIPAL SECURITIES
(IDENTIFIED COST, $28,022,951) $ 28,809,884+
------------------------------------------------------------------------ -------------
</TABLE>
* Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings. Current credit ratings are unaudited.
+ The cost of investments for federal tax purposes amounts to $28,022,951. The
net unrealized appreciation on a federal tax basis amounts to $786,933, which
is comprised of $795,017 appreciation and $8,084 depreciation at October 31,
1995.
Note: The categories of investments are shown as a percentage of net assets
($29,371,465) at October 31, 1995.
VISION NEW YORK TAX-FREE FUND
- --------------------------------------------------------------------------------
The following abbreviations are used in this portfolio:
AMBAC--American Municipal Bond Assurance Corporation
CGIC--Capital Guarantee Insurance Corp.
FGIC--Financial Guaranty Insurance Company
FHA--Federal Housing Administration
GO--General Obligations
HFA--Housing Finance Authority
HUD--Housing & Urban Development
MBIA--Municipal Bond Investors Assurance
PCR--Pollution Control Revenue
UT--Unlimited Tax
VRDN--Variable Rate Demand Note
(See Notes which are an integral part of the Financial Statements)
VISION NEW YORK TAX-FREE FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Investments in securities, at amortized cost and value
(identified cost $28,022,951) $ 28,809,884
- ---------------------------------------------------------------------------------------------------
Cash 162,441
- ---------------------------------------------------------------------------------------------------
Income receivable 485,310
- ---------------------------------------------------------------------------------------------------
Receivable for capital stock sold 127,139
- ---------------------------------------------------------------------------------------------------
Deferred expenses 14,272
- --------------------------------------------------------------------------------------------------- -------------
Total assets 29,599,046
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------------------
Income distribution payable $ 19,730
- ---------------------------------------------------------------------------------------
Payable for investments purchased 108,055
- ---------------------------------------------------------------------------------------
Payable for capital stock redeemed 81,918
- ---------------------------------------------------------------------------------------
Accrued expenses 17,878
- --------------------------------------------------------------------------------------- ----------
Total liabilities 227,581
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 2,908,356 shares outstanding $ 29,371,465
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSISTS OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 29,238,466
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 786,933
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (660,323)
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income 6,389
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 29,371,465
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- ---------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($29,371,465 / 2,908,356 shares outstanding) $10.09
- --------------------------------------------------------------------------------------------------- -------------
Offering Price Per Share (100/95.50 of $10.09)* $10.57
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
*See "What Fund Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
VISION NEW YORK TAX-FREE FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest $ 816,329
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------
Investment advisory fee $ 101,698
- ----------------------------------------------------------------------------------------
Administrative personnel and services fee 25,138
- ----------------------------------------------------------------------------------------
Custodian fees 12,157
- ----------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 16,348
- ----------------------------------------------------------------------------------------
Directors' fees 2,015
- ----------------------------------------------------------------------------------------
Auditing fees 5,982
- ----------------------------------------------------------------------------------------
Legal fees 3,338
- ----------------------------------------------------------------------------------------
Portfolio accounting fees 23,830
- ----------------------------------------------------------------------------------------
Capital stock registration costs 7,417
- ----------------------------------------------------------------------------------------
Printing and postage 5,027
- ----------------------------------------------------------------------------------------
Taxes 1,884
- ----------------------------------------------------------------------------------------
Insurance premiums 2,186
- ----------------------------------------------------------------------------------------
Miscellaneous 3,534
- ---------------------------------------------------------------------------------------- ----------
Total expenses 210,554
- ----------------------------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------------------------------------
Waiver of investment advisory fee $ 47,943
- -----------------------------------------------------------------------------
Waiver of administrative personnel and services fee 5,863
- ----------------------------------------------------------------------------- ---------
Total waivers 53,806
- ---------------------------------------------------------------------------------------- ----------
Net expenses 156,748
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income 659,581
- ---------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (123,142)
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments 1,359,427
- ---------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain (loss) on investments 1,236,285
- ---------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 1,895,866
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
VISION NEW YORK TAX-FREE FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
OCTOBER 31, 1995 APRIL 30,
(UNAUDITED) 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------
Net investment income $ 659,581 $ 1,232,715
- ---------------------------------------------------------------------------
Net realized gain (loss) on investments ($123,142 net loss and $389,666 net
loss, respectively, as computed for federal tax purposes) (123,142) (398,183)
- ---------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments 1,359,427 577,826
- --------------------------------------------------------------------------- -------------------- ---------------
Change in net assets resulting from operations 1,895,866 1,412,358
- --------------------------------------------------------------------------- -------------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------------------
Distributions from net investment income (656,403) (1,232,715)
- --------------------------------------------------------------------------- -------------------- ---------------
CAPITAL STOCK TRANSACTIONS--
- ---------------------------------------------------------------------------
Proceeds from sale of shares 4,645,173 10,308,652
- ---------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of distributions declared 521,674 1,015,067
- ---------------------------------------------------------------------------
Cost of shares redeemed (4,381,317) (9,382,067)
- --------------------------------------------------------------------------- -------------------- ---------------
Change in net assets resulting from capital stock transactions 785,530 1,941,652
- --------------------------------------------------------------------------- -------------------- ---------------
Change in net assets 2,024,993 2,121,295
- ---------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------
Beginning of period 27,346,472 25,225,177
- --------------------------------------------------------------------------- -------------------- ---------------
End of period (Including undistributed net investment income
of $6,389 and $3,212, respectively) $ 29,371,465 $ 27,346,472
- --------------------------------------------------------------------------- -------------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
VISION NEW YORK TAX-FREE FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Vision Group of Funds, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as an open-end,
management investment company. The Corporation consists of five diversified
portfolios and one non-diversified portfolio: Vision Money Market Fund ("Money
Market"), Vision Treasury Money Market Fund ("Treasury Money Market"), Vision
New York Tax-Free Money Market Fund ("New York Tax-Free Money Market"), Vision
Growth and Income Fund ("Growth and Income"), Vision New York Tax-Free Fund
("New York Tax-Free")*, and Vision U.S. Government Securities Fund ("U.S.
Government Securities"). The financial statements included herein present only
those of the New York Tax-Free Fund (the "Fund"). The financial statements of
the other portfolios are presented separately. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. All other securities are valued at
prices provided by an independent pricing service.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Distributions to
shareholders are recorded on the ex-dividend date. Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue Code, as amended (the
"Code").
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
At April 30, 1995, the Fund, for federal tax purposes, had a capital loss
carryforward of $389,666, which will reduce the Fund's taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions
to shareholders which would otherwise be necessary to relieve the Fund of
any liability for federal tax. Pursuant to the Code, such capital loss
carryforward will expire in 2003.
- ---------
* Non-diversified portfolio.
VISION NEW YORK TAX-FREE FUND
- --------------------------------------------------------------------------------
Additionally, net capital losses of $147,516 attributable to security
transactions incurred after October 31, 1994 are treated as arising on May
1, 1995, the first day of the Fund's next taxable year.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
RECLASSIFICATION--During the year ended April 30, 1995, the Fund adopted
Statement of Position 93-2 Determination, Disclosure, and Financial
Statement Presentation of Income, Capital Gain, and Return of Capital
Distributions by Investment Companies ("SOP93-2"). Accordingly, permanent
book and tax differences have been reclassified between the accumulated net
realized loss account and the undistributed net investment income account.
These differences are primarily due to differing treatments for market
discount. Amounts as of April 30, 1995 have been reclassified to reflect
the following:
<TABLE>
<CAPTION>
INCREASE (DECREASE)
ACCUMULATED NET REALIZED GAIN/LOSS UNDISTRIBUTED NET INVESTMENT INCOME
<S> <C>
($3,212) $3,212
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this change.
OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At October 31, 1995, there were 1,000,000,000 shares of $0.001 par value capital
stock authorized. Transactions in capital stock were as follows:
VISION NEW YORK TAX-FREE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
OCTOBER 31, YEAR ENDED
1995 APRIL 30,
(UNAUDITED) 1995
<S> <C> <C>
Shares sold 468,626 1,082,499
- ----------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 52,415 107,204
- ----------------------------------------------------------------------------------
Shares redeemed (440,837) (986,616)
- ---------------------------------------------------------------------------------- -------------- --------------
Net change resulting from capital stock transactions 80,204 203,087
- ---------------------------------------------------------------------------------- -------------- --------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Manufacturers & Traders Trust Company, the Fund's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to 0.70 of 1% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion of its fee and
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Corporation for the period. FAS may
voluntarily choose to waive a portion of its fee. FAS can modify or terminate
this voluntary waiver and reimbursement at any time at its sole discretion.
DISTRIBUTION AND SHAREHOLDER SERVICES FEE--The Fund has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the
Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Fund to finance activities intended to
result in the sale of the Fund's shares. The Plan provides that the Fund may
incur distribution expenses up to 0.25 of 1% of the average daily net assets of
the Fund, annually, to compensate FSC. The Fund did not pay or accrue
distribution expenses during the six months ended October 31, 1995.
Under the terms of a shareholder services agreement between FAS and M&T Bank,
the Fund will pay M&T Bank a fee to obtain certain personal services for
shareholders and the maintenance of shareholder accounts. The fee is based on
the level of average net assets of the Fund for the period. The Fund did not pay
or accrue any shareholder servicing fees for the six months ended October 31,
1995.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ") serves as transfer and dividend disbursing agent for the Fund
for which it receives a fee. The fee is based on the size, type and number of
accounts and transactions made by shareholders.
VISION NEW YORK TAX-FREE FUND
- --------------------------------------------------------------------------------
ORGANIZATIONAL EXPENSES--Organizational expenses ($27,242) were initially borne
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following August 16, 1993 (date the Fund became
effective). For the six months ended October 31, 1995, the Fund paid $2,001,
pursuant to this agreement.
Certain of the Officers of the Corporation are Officers and Directors or
Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended October 31, 1995 were as follows:
<TABLE>
<CAPTION>
<S> <C>
PURCHASES $ 26,775,533
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 25,864,984
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(6) CONCENTRATION OF RISK
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers in
that state than would be a comparable general tax-exempt mutual fund. In order
to reduce the credit risk associated with such factors, at October 31, 1995, 47%
of the securities in the portfolio of investments are backed by letters of
credit or bond insurance of various financial institutions and financial
guaranty assurance agencies. The value of investments insured or supported
(backed) by a letter of credit for any one institution or agency did not exceed
5.4% of total investments.
DIRECTORS OFFICERS
- -----------------------------------------------------------------------
<TABLE>
<S> <C>
Randall I. Benderson Edward C. Gonzales
Joseph J. Castiglia President and Treasurer
Daniel R. Gernatt, Jr. Charles L. Davis, Jr.
George K. Hambleton, Jr. Vice President and Assistant Treasurer
Victor R. Siclari
Secretary
C. Todd Gibson
Assistant Secretary
</TABLE>
Shares of the VISION Funds are not FDIC insured or otherwise protected
by the U.S. government, are not deposits or other obligations of, or
guaranteed, by Manufacturers and Traders Trust Company ("M & T Bank"),
and are subject to investment risks, including possible loss of the
principal amount invested.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
VISION
U.S. Government
Securities
Fund
Seeks current income by investing primarily in securities that are guaranteed
for payment of principal and interest by the U.S. Government, its agencies or
instrumentalities (Fund shares themselves are not guaranteed). Capital
appreciation is a secondary investment consideration.
- -------------------------------------------------------------------------------
VISION
New York Tax-Free
Fund
Seeks current income that is exempt from federal regular income tax, (some of
the income may be subject to the federal alternative minimum tax) and New York
State and New York City personal income taxes, and is consistent with
preservation of capital.
- -------------------------------------------------------------------------------
VISION
Growth and Income
Fund
Seeks to provide long-term growth of capital and income by investing in a
diversified portfolio consisting primarily of equity securities (common stock
and convertible securities) and debt securities (bonds and notes).
- -------------------------------------------------------------------------------
VISION
Money Market
Fund
Seeks current income with liquidity and stability of principal by investing in
high-quality money market instruments.
- -------------------------------------------------------------------------------
VISION
Treasury Money Market
Fund
Primarily seeks current income with liquidity and stability of principal by
investing in direct obligations of the U.S. Treasury, which are guaranteed by
the U.S. Government for timely payment of principal and interest, (Fund shares
themselves are not guaranteed), and repurchase agreements secured by these
obligations.
- -------------------------------------------------------------------------------
VISION
New York Tax-Free
Money Market
Fund
Seeks as high a level of current interest income that is exempt from federal
regular income tax (some of the income may be subject to the federal
alternative minimum tax) as is consistent with liquidity and relative stability
of principal. In addition, the Fund seeks to provide income that is exempt from
New York State and New York City personal income taxes.
- -------------------------------------------------------------------------------
[LOGO OF VISION GROUP OF FUNDS, INC.]
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1995
------------------------
VISION
U.S. Government
Securities
Fund
------------------------
Harbor Capital Management Company, Inc.
Sub-Adviser to the
VISION Growth and Income Fund
125 High Street
Boston, MA 02110
Federated Securities Corp.
Distributor
Federated Investors Tower
Pittsburgh, PA 15222-3779
Cusip 92830F406
GOO143-O2 (12/95)
[RECYCLED PAPER LOGO]
Manufacturers and Traders Trust Company
Investment Adviser to the Funds
One M&T Plaza
Buffalo, NY 14240-4556
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report of the Vision U.S. Government
Securities Fund for the six-month period ended October 31, 1995. The report
begins with an investment review by the fund's portfolio manager, followed by a
list of the fund's government security holdings and complete financial
information.
During the six-month period, the fund's portfolio of U.S. government securities
paid $855,489, or $0.26 per share. The fund's net asset value rose from $9.09 at
the beginning of the period to $9.60 at the period's end. During the six-month
period between April 30, 1995 and October 31, 1995, the fund had total return
figures of 8.55% based on net asset value and 3.65% based on maximum offering
price.*
By the end of the period, shareholders had invested a total of $32 million in
Vision U.S. Government Securities Fund. Thank you for your continued confidence
in the fund. We welcome your questions and comments as we keep you informed
about the progress of your investment.
Sincerely,
Edward C. Gonzales
Edward C. Gonzales
President
December 15, 1995
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Yields on U.S. Treasury 10 Year Notes were 7.0% at the beginning of the U.S.
Government Securities Fund's (the "Fund") fiscal year on May 1, 1995. Yields
drifted lower over the next six months, but not in a straight line. The yield on
the 10 year Treasury fell to 6.04% on June 22, 1995, before rebounding to 6.60%
on August 23, 1995. This rebound was the result of fears of increased economic
activity which proved to be premature. Yields fell to 5.97% on October 13, 1995,
before ending the six month period at 6.03%.
The Fund enjoyed above average total returns during this period for several
reasons. We were expecting lower interest rates during 1995 and had positioned
the portfolio accordingly by extending our average maturity. We reduced the
average maturity of the portfolio in July and subsequently took advantage of the
August rise in rates by lengthening the portfolio during the middle and late
part of August.
For the first six months of the Fund's year, which began on May 1, 1995 and
ended on October 31, 1995, the Fund's total return was 8.55%*, based on net
asset value, exceeding the Lehman Aggregate Bond Index+ return of 8.1%.
Contributing to this return was an increase in the Fund's net asset value from
$9.09 on May 1, 1995 to $9.60 on October 31, 1995.
As we enter 1996, we remain convinced that interest rates have further room to
fall, but concerned about the bullish sentiment in the market after a
substantial rally in 1995.
The trend downward in rates has been fueled by modest domestic economic growth
and low inflation. We see no change on the horizon to these positive factors.
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost. Total return for the
period reflecting the Fund's sales charge was 3.65%.
+ The Lehman Brothers Aggregate Bond Index is a total return index measuring
both the capital price changes and income provided by the underlying universe
of securities, weighted by market value outstanding. This index is unmanaged,
and investments cannot be made in an index.
VISION U.S. GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED YEAR ENDED
OCTOBER 31, 1995 APRIL 30,
(UNAUDITED) 1995 1994(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.09 $ 9.25 $ 10.00
- ---------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------
Net investment income 0.27 0.56 0.34
- ---------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.50 (0.16) (0.75)
- --------------------------------------------------------------------- ---------- --------- -----------
Total from investment operations 0.77 0.40 (0.41)
- --------------------------------------------------------------------- ---------- --------- -----------
LESS DISTRIBUTIONS
- ---------------------------------------------------------------------
Distributions from net investment income (0.26) (0.56) (0.34)
- --------------------------------------------------------------------- ---------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 9.60 $ 9.09 $ 9.25
- --------------------------------------------------------------------- ---------- --------- -----------
TOTAL RETURN (B) 8.55% 4.59% (4.23%)
- ---------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------
Expenses 1.18%(c) 0.43% 0.00%(c)
- ---------------------------------------------------------------------
Net investment income 5.47%(c) 6.20% 6.11%(c)
- ---------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.18%(c) 1.01% 1.86%(c)
- ---------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------
Net assets, end of period (000 omitted) $32,100 $29,573 $24,468
- ---------------------------------------------------------------------
Portfolio turnover 70% 78% 320%
- ---------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from September 22, 1993 (date of initial
public investment) to April 30, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
VISION U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
LONG-TERM OBLIGATIONS--96.7%
- --------------------------------------------------------------------------------------------------
ASSET BACKED MORTGAGES--3.1%
-----------------------------------------------------------------------------------
$ 1,000,000 Green Tree Financial Corp., 1995-D, Class A2, 6.25%, 9/15/2025 (identified cost,
$999,633) $ 1,001,160
----------------------------------------------------------------------------------- -------------
COLLATERALIZED MORTGAGE OBLIGATIONS--15.7%
-----------------------------------------------------------------------------------
5,000,000 Federal National Mortgage Association REMIC, 6.50%, Series 1993-135PE, 2/25/2007
(identified cost, $4,722,867) 5,038,150
----------------------------------------------------------------------------------- -------------
U.S. TREASURY NOTES--60.6%
-----------------------------------------------------------------------------------
11,450,000 6.75%, 5/31/1999 11,815,255
-----------------------------------------------------------------------------------
3,200,000 6.75%, 6/30/1999 3,304,096
-----------------------------------------------------------------------------------
4,000,000 7.25%, 5/15/2004 4,327,240
----------------------------------------------------------------------------------- -------------
Total U.S. Treasury Notes (identified cost, $19,122,531) 19,446,591
----------------------------------------------------------------------------------- -------------
U.S. TREASURY BONDS--17.3%
-----------------------------------------------------------------------------------
2,250,000 11.75%, 11/15/2014 3,386,970
-----------------------------------------------------------------------------------
2,000,000 7.125%, 2/15/2023 2,178,840
----------------------------------------------------------------------------------- -------------
Total U.S. Treasury Bonds (identified cost, $5,203,750) 5,565,810
----------------------------------------------------------------------------------- -------------
TOTAL LONG-TERM OBLIGATIONS (IDENTIFIED COST, $30,048,781) 31,051,711
----------------------------------------------------------------------------------- -------------
</TABLE>
VISION U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
*REPURCHASE AGREEMENT--1.1%
- --------------------------------------------------------------------------------------------------
$ 358,000 Morgan Guaranty Trust Co., 5.875%, dated 10/31/1995, due 11/1/1995 (at amortized
cost) $ 358,000
----------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST, $30,406,781) $ 31,409,711+
----------------------------------------------------------------------------------- -------------
</TABLE>
* The repurchase agreement is fully collateralized by U.S. Treasury obligations
based on market prices at the date of the portfolio.
+ The cost of investments for federal tax purposes amounts to $30,406,781. The
unrealized appreciation of investments on a federal tax basis amounts to
$1,002,930, which is comprised of $1,002,930 appreciation at October 31, 1995.
The following abbreviation is used in this portfolio:
REMIC--Real Estate Mortgage Investment Conduit
Note: The categories of investments are shown as a percentage of net assets
($32,100,434) at October 31, 1995.
(See Notes which are an integral part of the Financial Statements)
VISION U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------------------------
Investments in repurchase agreement $ 358,000
- -----------------------------------------------------------------------------------
Investments in securities 31,051,711
- ----------------------------------------------------------------------------------- -------------
Total Investments, at amortized cost and value
(identified cost $30,406,781) $ 31,409,711
- --------------------------------------------------------------------------------------------------
Cash 3,700
- --------------------------------------------------------------------------------------------------
Income receivable 714,202
- --------------------------------------------------------------------------------------------------
Receivable for capital stock sold 45,791
- --------------------------------------------------------------------------------------------------
Deferred expenses 7,396
- -------------------------------------------------------------------------------------------------- -------------
Total assets 32,180,800
- --------------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------------------------
Income distribution payable $ 67,806
- -----------------------------------------------------------------------------------
Payable for capital stock redeemed 2,596
- -----------------------------------------------------------------------------------
Accrued expenses 9,964
- ----------------------------------------------------------------------------------- -------------
Total liabilities 80,366
- -------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 3,342,294 shares outstanding $ 32,100,434
- -------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSISTS OF:
- --------------------------------------------------------------------------------------------------
Paid in capital $ 32,123,892
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 1,002,930
- --------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (1,050,801)
- --------------------------------------------------------------------------------------------------
Undistributed net investment income 24,413
- -------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 32,100,434
- -------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- --------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($32,100,434 / 3,342,294 shares outstanding) $9.60
- -------------------------------------------------------------------------------------------------- -------------
Offering Price Per Share (100/95.50 of $9.60)* $10.05
- -------------------------------------------------------------------------------------------------- -------------
</TABLE>
*See "What Fund Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
VISION U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest $ 1,039,933
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------
Investment advisory fee $ 109,133
- ----------------------------------------------------------------------------------------
Administrative personnel and services fee 25,136
- ----------------------------------------------------------------------------------------
Custodian fees 9,682
- ----------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 16,017
- ----------------------------------------------------------------------------------------
Directors' fees 2,681
- ----------------------------------------------------------------------------------------
Auditing fees 5,982
- ----------------------------------------------------------------------------------------
Legal fees 3,318
- ----------------------------------------------------------------------------------------
Portfolio accounting fees 20,361
- ----------------------------------------------------------------------------------------
Capital stock registration costs 7,851
- ----------------------------------------------------------------------------------------
Printing and postage 4,525
- ----------------------------------------------------------------------------------------
Taxes 2,765
- ----------------------------------------------------------------------------------------
Insurance premiums 2,177
- ----------------------------------------------------------------------------------------
Miscellaneous 3,016
- ---------------------------------------------------------------------------------------- ----------
Total expenses 212,644
- ----------------------------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------------------------------------
Waiver of investment advisory fee $ 23,386
- -----------------------------------------------------------------------------
Waiver of administrative personnel and services fee 4,814
- ----------------------------------------------------------------------------- ---------
Total waivers 28,200
- ---------------------------------------------------------------------------------------- ----------
Net expenses 184,444
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income 855,489
- ---------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (385,064)
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments 2,054,725
- ---------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain (loss) on investments 1,669,661
- ---------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 2,525,150
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
VISION U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
OCTOBER 31, 1995 APRIL 30,
(UNAUDITED) 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------
Net investment income $ 855,489 $ 1,706,372
- -----------------------------------------------------------------------------
Net realized gain (loss) on investments ($385,064 net loss and $582,574 net
loss, respectively, as computed for federal tax
purposes) (385,064) (263,316)
- -----------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments 2,054,725 (134,186)
- ----------------------------------------------------------------------------- -------------------- -------------
Change in net assets resulting from operations 2,525,150 1,308,870
- ----------------------------------------------------------------------------- -------------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------------------
Distributions from net investment income (855,489) (1,706,372)
- ----------------------------------------------------------------------------- -------------------- -------------
CAPITAL STOCK TRANSACTIONS--
- -----------------------------------------------------------------------------
Proceeds from sale of shares 2,919,937 9,446,746
- -----------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of distributions declared 455,874 932,736
- -----------------------------------------------------------------------------
Cost of shares redeemed (2,518,444) (4,876,091)
- ----------------------------------------------------------------------------- -------------------- -------------
Change in net assets resulting from capital stock
transactions 857,367 5,503,391
- ----------------------------------------------------------------------------- -------------------- -------------
Change in net assets 2,527,028 5,105,889
- -----------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------
Beginning of period 29,573,406 24,467,517
- ----------------------------------------------------------------------------- -------------------- -------------
End of period (Including undistributed net investment income
of $24,413) $ 32,100,434 $ 29,573,406
- ----------------------------------------------------------------------------- -------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
VISION U.S. GOVERNMENT SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Vision Group of Funds, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as an open-end
management investment company. The Corporation consists of five diversified
portfolios and one non-diversified portfolio: Vision Money Market Fund ("Money
Market"), Vision Treasury Money Market Fund ("Treasury Money Market"), Vision
New York Tax-Free Money Market Fund ("New York Tax-Free Money Market"), Vision
Growth and Income Fund ("Growth and Income"), Vision New York Tax-Free Fund
("New York Tax-Free")*, and Vision U.S. Government Securities Fund ("U.S.
Government Securities"). The financial statements included herein present only
those of the U.S. Government Securities Fund (the "Fund"). The financial
statements of the other portfolios are presented separately. The assets of each
portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. All other securities are valued at
prices provided by an independent pricing service. Investments in other
open-end regulated investment companies are valued at net asset value.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require a custodian
bank to take possession, to have legally segregated in the Federal Reserve
Book Entry System, or to have segregated within the custodian bank's vault,
all securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Fund to monitor, on a
daily basis, the market value of each repurchase agreement's collateral to
ensure that the value of collateral at least equals the repurchase price to
be paid under the repurchase agreement transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Directors ("Directors").
- ---------
* Non-diversified portfolio.
VISION U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less
than the repurchase price on the sale of collateral securities.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS-- Distributions to
shareholders are recorded on the ex-dividend date. Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue Code, as amended (the
"Code").
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At October 31, 1995, there were 1,000,000,000 shares of $0.001 par value capital
stock authorized. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
OCTOBER 31, APRIL 30,
1995 1995
<S> <C> <C>
Shares sold 309,116 1,052,919
- ----------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 48,098 104,428
- ----------------------------------------------------------------------------------
Shares redeemed (267,235) (550,862)
- ---------------------------------------------------------------------------------- -------------- --------------
Net change resulting from capital stock transactions 89,979 606,485
- ---------------------------------------------------------------------------------- -------------- --------------
</TABLE>
VISION U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Manufacturers & Traders Trust Company, the Fund's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to 0.70 of 1% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion or all of its fees
and reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Corporation for the period. FAS may
voluntarily choose to waive a portion of its fee. FAS can modify or terminate
this voluntary waiver at any time at its sole discretion.
DISTRIBUTION AND SHAREHOLDER SERVICES FEE--The Fund has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the
Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Fund to finance activities intended to
result in the sale of the Fund's shares. The Plan provides that the Fund may
incur distribution expenses up to 0.25 of 1% of the average daily net assets of
the Fund, annually, to compensate FSC. The Fund did not pay or accrue
distribution expenses during the six months ended October 31, 1995.
Under the terms of a shareholder service agreement between FAS and M&T Bank, the
Fund will pay M&T Bank a fee obtain certain personal services for shareholders
and the maintenance of shareholder accounts. The fee is based on the level of
average net assets of the Fund for the period. The Fund did not pay or accrue
shareholder servicing agent fees for the six months ended October 31, 1995.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company serves as transfer and dividend disbursing agent for the Fund for which
it receives a fee. The fee is based on the size, type, and number of accounts
and transactions made by shareholders.
ORGANIZATIONAL EXPENSES--Organizational expenses ($21,313) were initially borne
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following August 16, 1993 (date the Fund became
effective). For the six months ended October 31, 1995, the Fund paid $1,707
pursuant to this agreement.
Certain Officers and Directors of the Corporation are Officers and Directors or
Trustees of the above companies.
VISION U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended October 31, 1995, were as follows:
<TABLE>
<CAPTION>
<S> <C>
PURCHASES $ 23,822,906
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 19,948,203
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
DIRECTORS OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Randall I. Benderson Edward C. Gonzales
Joseph J. Castiglia President and Treasurer
Daniel R. Gernatt, Jr. Charles L. Davis, Jr.
George K. Hambleton, Jr. Vice President and Assistant Treasurer
Victor R. Siclari
Secretary
C. Todd Gibson
Assistant Secretary
</TABLE>
Shares of the VISION Funds are not FDIC insured or otherwise protected by the
U.S. government, are not deposits or other obligations of, or guaranteed by,
Manufacturers and Traders Trust Company ("M & T Bank"), and are subject to
investment risks, including possible loss of the principal amount invested.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
VISION
U.S. Government
Securities
Fund
Seeks current income by investing primarily in securities that are guaranteed
for payment of principal and interest by the U.S. Government, its agencies or
instrumentalities (Fund shares themselves are not guaranteed). Capital
appreciation is a secondary investment consideration.
- -------------------------------------------------------------------------------
VISION
New York Tax-Free
Fund
Seeks current income that is exempt from federal regular income tax, (some of
the income may be subject to the federal alternative minimum tax) and New York
State and New York City personal income taxes, and is consistent with
preservation of capital.
- -------------------------------------------------------------------------------
VISION
Growth and Income
Fund
Seeks to provide long-term growth of capital and income by investing in a
diversified portfolio consisting primarily of equity securities (common stock
and convertible securities) and debt securities (bonds and notes).
- -------------------------------------------------------------------------------
VISION
Money Market
Fund
Seeks current income with liquidity and stability of principal by investing in
high-quality money market instruments.
- -------------------------------------------------------------------------------
VISION
Treasury Money Market
Fund
Primarily seeks current income with liquidity and stability of principal by
investing in direct obligations of the U.S. Treasury, which are guaranteed by
the U.S. Government for timely payment of principal and interest, (Fund shares
themselves are not guaranteed), and repurchase agreements secured by these
obligations.
- -------------------------------------------------------------------------------
VISION
New York Tax-Free
Money Market
Fund
Seeks as high a level of current interest income that is exempt from federal
regular income tax (some of the income may be subject to the federal
alternative minimum tax) as is consistent with liquidity and relative stability
of principal. In addition, the Fund seeks to provide income that is exempt from
New York State and New York City personal income taxes.
[LOGO OF VISION GROUP OF FUNDS, INC.]
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1995
Vision
Money Market
Fund
--------------------------
Vision
Treasury
Money Market
Fund
--------------------------
Vision
New York Tax-Free
Money Market
Fund
Harbor Capital Management Company, Inc.
Sub-Adviser to the
VISION Growth and Income Fund
125 High Street
Boston, MA 02110
Federated Securities Corp.
Distributor
Federated Investors Tower
Pittsburgh, PA 15222-3779
Cusip 92830F307
Cusip 92830F109
Cusip 92830F208
1112503 (12/95)
[RECYCLED PAPER LOGO]
Manufacturers and Traders Trust Company
Investment Adviser to the Funds
One M&T Plaza
Buffalo, NY 14240-4556
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report of the Vision Money Market Funds
for the six-month period ended October 31, 1995. The report provides you with
complete financial information--including an investment review by the portfolio
manager and a complete list of investments for--Vision Money Market Fund, Vision
Treasury Money Market Fund, and Vision New York Tax-Free Money Market Fund.
Please note the following highlights for the six-month reporting period:
VISION MONEY MARKET FUND paid dividends totaling $12.2 million, or $0.03 per
share. Assets reached $458 million at the end of the period.
VISION TREASURY MONEY MARKET FUND paid dividends totaling $7.7 million, or $0.03
per share. Assets rose significantly, from $210 million at the beginning of the
period to $308 million at the end of the period.
VISION NEW YORK TAX-FREE MONEY MARKET FUND paid double-tax-free dividends
(triple-tax-free dividends to New York City residents) totaling $773,900, or
$0.02 per share.* Assets reached $55 million at the end of the period.
Thank you for putting your cash to work--every day--through the Vision Money
Market Funds. We will continue to keep you up to date on your investment, and
provide your account with the highest level of service.
Sincerely,
Edward C. Gonzales
Edward C. Gonzales
President
December 15, 1995
* Income may be subject to the federal alternative minimum tax.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
MONEY MARKET FUND
The Vision Group of Funds' Money Market Fund has enjoyed good growth in assets
and relative stability in interest rates over the last six months. Our primary
goal continues to be stability of principal*, but, over the past year, our
yields have consistently outperformed the comparable Donoghue's+ money fund
averages. This has been the case, not only for the last six months, but for most
of our seven and one-half year history.**
The most important event affecting the Fund over the last six months was the
Federal Reserve Board's (the "Fed") decision to lower short-term interest rates
25 basis points on July 6, 1995. This reduction in short-term rates was a
reaction by the Fed to the economy's sluggish growth and relatively low rate of
inflation. We anticipated this reduction and lengthened our portfolio's average
maturity prior to the rate cut.
Our current interest rate forecast is for the Fed to again lower interest rates
once a satisfactory agreement is reached by the President and Congress on a plan
for balancing the Federal budget. Given our outlook, we continue to keep our
average maturity somewhat longer than normal.
TREASURY MONEY MARKET FUND
The Vision Group of Funds' Treasury Money Market Fund has enjoyed good growth in
assets and relative stability in interest rates over the last six months. Our
primary goal continues to be stability of principal*, but our yields have
consistently outperformed the comparable Donoghue's money fund averages.** This
has been the case, not only for the last six months, but for most of our seven
and one-half year history.
The most important event affecting the Fund over the last six months was the
Fed's decision to lower short-term interest rates 25 basis points on July 6,
1995. This reduction in short-term rates was a reaction by the Fed to the
economy's sluggish growth and relatively low rate of inflation. We anticipated
this reduction and lengthened our portfolio's average maturity prior to the rate
cut.
Our current interest rate forecast is for the Fed to again lower interest rates
once a satisfactory agreement is reached by the President and Congress on a plan
for balancing the Federal budget. Given our outlook, we continue to keep our
average maturity somewhat longer than normal.
* Although money market funds seek to maintain a stable net asset value of
$1.00 per share, there is no assurance that they will be able to do so. An
investment in the funds is neither insured nor guaranteed by the U.S.
government.
** Performance quoted represents past performance. Yields will vary.
+ Donoghue's Money Fund Report publishes annualized yields of hundreds of money
market funds on a weekly basis and through its Money Market Insight
publication reports monthly and year-to-date investment results for the same
money funds.
NEW YORK TAX-FREE MONEY MARKET FUND
The Vision Group of Funds' New York Tax-Free Money Market Fund has enjoyed
substantial growth and relative stability in interest rates over the last six
months. While our primary goal continues to be stability of principal*, we are
proud that we have been able to consistently exceed the comparable Donoghue's
New York tax-free money fund yields for the last several years.**
In response to a sluggish domestic economy and modest inflation, the Fed lowered
short-term interest rates on July 6, 1995. While this affected the short-term
tax-free yields negatively, it was a more important event for taxable money
market funds. The New York tax-free market continues to be influenced just as
much by supply and demand factors as monetary policy.
We continue to focus on managing the portfolio conservatively while taking
advantage of opportunities in the market whenever they arise. Credit quality
remains an area to which we devote substantial resources, as we monitor issuer
and guarantor credit quality with the objective of controlling the Fund's
exposure to risk.
We expect to extend the portfolio's average maturity over the next few months in
anticipation of another reduction in short-term rates by the Fed.
* Although money market funds seek to maintain a stable net asset value of
$1.00 per share, there is no assurance that they will be able to do so. An
investment in the funds is neither insured nor guaranteed by the U.S.
government.
** Performance quoted represents past performance. Yields will vary.
VISION MONEY MARKET FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
Distributions to
Net Asset Shareholders
Value, Net from Net Net Asset
Year Ended beginning of investment Investment Value, end of Total
April 30, period income Income period return(b)
<S> <C> <C> <C> <C> <C>
<CAPTION>
MONEY MARKET FUND
<S> <C> <C> <C> <C> <C>
1989(a) $ 1.00 0.07 (0.07) $ 1.00 7.52%
1990 $ 1.00 0.08 (0.08) $ 1.00 8.58%
1991 $ 1.00 0.07 (0.07) $ 1.00 7.21%
1992 $ 1.00 0.05 (0.05) $ 1.00 4.60%
1993 $ 1.00 0.03 (0.03) $ 1.00 3.21%
1994 $ 1.00 0.03 (0.03) $ 1.00 3.01%
1995 $ 1.00 0.05 (0.05) $ 1.00 4.77%
1995* $ 1.00 0.03 (0.03) $ 1.00 2.76%
<CAPTION>
TREASURY MONEY MARKET FUND
<S> <C> <C> <C> <C> <C>
1989(a) $ 1.00 0.07 (0.07) $ 1.00 7.08%
1990 $ 1.00 0.08 (0.08) $ 1.00 8.17%
1991 $ 1.00 0.07 (0.07) $ 1.00 6.96%
1992 $ 1.00 0.04 (0.04) $ 1.00 4.54%
1993 $ 1.00 0.03 (0.03) $ 1.00 3.05%
1994 $ 1.00 0.03 (0.03) $ 1.00 2.88%
1995 $ 1.00 0.04 (0.04) $ 1.00 4.57%
1995* $ 1.00 0.03 (0.03) $ 1.00 2.72%
<CAPTION>
NEW YORK TAX-FREE MONEY MARKET FUND
<S> <C> <C> <C> <C> <C>
1989(a) $ 1.00 0.04 (0.04) $ 1.00 4.55%
1990 $ 1.00 0.05 (0.05) $ 1.00 5.24%
1991 $ 1.00 0.05 (0.05) $ 1.00 4.73%
1992 $ 1.00 0.03 (0.03) $ 1.00 2.99%
1993 $ 1.00 0.02 (0.02) $ 1.00 1.68%
1994 $ 1.00 0.02 (0.02) $ 1.00 1.88%
1995 $ 1.00 0.03 (0.03) $ 1.00 2.84%
1995* $ 1.00 0.02 (0.02) $ 1.00 1.65%
</TABLE>
* For the six months ended October 31, 1995 (unaudited).
(a) Reflects operations for the period from June 1, 1988 (date of initial public
offering) to April 30, 1989.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
VISION MONEY MARKET FUNDS
FINANCIAL HIGHLIGHTS--CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Assets,
Net end of
Year Ended invesment Expense Waiver/ period (000
April 30, Expenses income Reimbursement(d) omitted)
<S> <C> <C> <C> <C>
<CAPTION>
MONEY MARKET FUND
<S> <C> <C> <C> <C>
1989(a) 0.74%(c) 8.00%(c) 0.29%(c) $ 84,668
1990 0.72% 8.19% 0.25% $ 121,227
1991 0.81% 6.99% 0.09% $ 86,973
1992 0.75% 4.40% 0.06% $ 143,670
1993 0.36% 3.13% 0.39% $ 226,298
1994 0.28% 2.98% 0.42% $ 266,626
1995 0.51% 4.80% 0.19% $ 431,316
1995* 0.57%(c) 5.40%(c) 0.11%(c) $ 458,245
<CAPTION>
TREASURY MONEY MARKET FUND
<S> <C> <C> <C> <C>
1989(a) 0.68%(c) 7.48%(c) 0.34%(c) $ 31,388
1990 0.86% 7.88% 0.25% $ 32,986
1991 0.75% 6.52% 0.06% $ 91,682
1992 0.75% 4.38% 0.04% $ 100,373
1993 0.40% 2.98% 0.39% $ 128,825
1994 0.31% 2.86% 0.43% $ 197,521
1995 0.51% 4.53% 0.19% $ 210,526
1995* 0.56%(c) 5.33%(c) 0.10%(c) $ 308,735
<CAPTION>
NEW YORK TAX-FREE MONEY MARKET FUND
<S> <C> <C> <C> <C>
1989(a) 0.68%(c) 4.83%(c) 0.45%(c) $ 8,309
1990 0.83% 5.11% 0.65% $ 8,494
1991 0.69% 4.66% 0.87% $ 9,445
1992 0.95% 2.92% 0.65% $ 7,028
1993 0.71% 1.67% 0.63% $ 17,899
1994 0.41% 1.88% 0.58% $ 40,180
1995 0.40% 2.76% 0.52% $ 41,238
1995* 0.48%(c) 3.24%(c) 0.38%(c) $ 55,477
</TABLE>
* For the six months ended October 31, 1995 (unaudited).
(a) Reflects operations for the period from June 1, 1988 (date of initial
public offering) to April 30, 1989.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
VISION MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- --------------
*CORPORATE OBLIGATIONS--68.4%
- -------------------------------------------------------------------------------------------------
BANKING--11.8%
----------------------------------------------------------------------------------
$ 9,185,000 **Atlas Iron Processors Inc., 5.97%, 11/7/1995 $ 9,185,000
----------------------------------------------------------------------------------
10,000,000 **Bank One Milwaukee, 5.84%, 11/1/1995 9,996,743
----------------------------------------------------------------------------------
20,000,000 PHH Corp., 5.72%, 12/5/1995 19,891,956
----------------------------------------------------------------------------------
15,000,000 Toronto Dominion Holdings, 5.69%, 1/8/1996 14,838,783
---------------------------------------------------------------------------------- --------------
Total 53,912,482
---------------------------------------------------------------------------------- --------------
CHEMICALS--4.2%
----------------------------------------------------------------------------------
20,000,000 Du Pont (E.I.) de Nemours & Co., 5.43%, 3/28/1996 19,553,533
---------------------------------------------------------------------------------- --------------
ELECTRONIC EQUIPMENT--4.3%
----------------------------------------------------------------------------------
20,000,000 General Electric Co., 5.70%, 12/27/1995 19,822,667
---------------------------------------------------------------------------------- --------------
FINANCE-AUTOMOTIVE--3.2%
----------------------------------------------------------------------------------
15,000,000 Ford Motor Credit Corp., 5.73%, 11/20/1995 14,942,700
---------------------------------------------------------------------------------- --------------
FINANCE-COMMERCIAL--14.1%
----------------------------------------------------------------------------------
20,000,000 American Express Credit Corp., 5.70%, 11/20/1995 19,939,833
----------------------------------------------------------------------------------
14,900,000 Apreco, Inc., 5.71%, 1/24/1996 14,701,482
----------------------------------------------------------------------------------
20,000,000 John Deere Capital Corp., 5.68%, 12/20/1995 19,845,378
----------------------------------------------------------------------------------
10,000,000 Transamerica Finance Group Inc., 5.80%, 11/1/1995 10,000,000
---------------------------------------------------------------------------------- --------------
Total 64,486,693
---------------------------------------------------------------------------------- --------------
FINANCE-RETAIL--4.9%
----------------------------------------------------------------------------------
4,486,000 **Associates Corporation of North America, 5.71%, 11/1/1995 4,486,000
----------------------------------------------------------------------------------
18,000,000 Beneficial Corp., 5.71%, 11/13/1995 17,965,740
---------------------------------------------------------------------------------- --------------
Total 22,451,740
---------------------------------------------------------------------------------- --------------
FOOD--3.3%
----------------------------------------------------------------------------------
15,000,000 Heinz, (H.J.) Co., 5.77%, 11/17/1995 14,961,533
---------------------------------------------------------------------------------- --------------
INSURANCE--7.6%
----------------------------------------------------------------------------------
20,000,000 American General Finance Corp., 5.62%, 1/23/1996 19,740,856
----------------------------------------------------------------------------------
</TABLE>
VISION MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- --------------
*CORPORATE OBLIGATIONS--CONTINUED
- -------------------------------------------------------------------------------------------------
INSURANCE--CONTINUED
----------------------------------------------------------------------------------
$ 15,000,000 Prudential Funding Corp., 5.66%, 11/7/1995 $ 14,985,850
---------------------------------------------------------------------------------- --------------
Total 34,726,706
---------------------------------------------------------------------------------- --------------
OIL & OIL FINANCE--3.3%
----------------------------------------------------------------------------------
15,000,000 Texaco Inc., 5.67%, 11/29/1995 14,933,850
---------------------------------------------------------------------------------- --------------
PHARMACEUTICALS--2.6%
----------------------------------------------------------------------------------
12,000,000 Eli Lilly & Co., 5.80%, 1/16/1996 11,853,067
---------------------------------------------------------------------------------- --------------
RETAIL--4.4%
----------------------------------------------------------------------------------
20,000,000 Melville Corp., 5.72%, 11/3/1995 19,993,644
---------------------------------------------------------------------------------- --------------
TELECOMMUNICATIONS--4.7%
----------------------------------------------------------------------------------
22,000,000 American Telephone & Telegraph Co., 5.71%, 1/16/1996 21,734,802
---------------------------------------------------------------------------------- --------------
TOTAL CORPORATE OBLIGATIONS 313,373,417
---------------------------------------------------------------------------------- --------------
U.S. GOVERNMENT AGENCY--13.1%
- -------------------------------------------------------------------------------------------------
10,000,000 Federal Home Loan Bank, 5.62%, 11/13/1995 9,981,267
----------------------------------------------------------------------------------
25,000,000 Federal Home Loan Mortgage Corp., 5.57%, 12/4/1995 24,872,353
----------------------------------------------------------------------------------
20,000,000 Federal Home Loan Mortgage Corp., 4.87%, 3/11/1996 19,947,449
----------------------------------------------------------------------------------
5,000,000 Student Loan Marketing Association, 5.63%, 5/14/1996 5,000,000
---------------------------------------------------------------------------------- --------------
TOTAL U.S. GOVERNMENT AGENCY 59,801,069
---------------------------------------------------------------------------------- --------------
U.S. TREASURY BILLS--18.8%
- -------------------------------------------------------------------------------------------------
88,000,000 U.S. Treasury Bills, 11/16/1995-8/22/1996 86,050,283
---------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS, AT AMORTIZED COST AND VALUE $ 459,224,769+
---------------------------------------------------------------------------------- --------------
</TABLE>
* Each issue, with the exception of variable rate securities, shows the coupon
or rate of discount at the time of purchase, if applicable.
** Denotes variable rate securities which show current rate and next demand
date.
Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($458,245,471) at October 31, 1995.
(See Notes which are an integral part of the Financial Statements)
VISION TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- --------------
*U.S. TREASURY OBLIGATIONS--46.8%
- -------------------------------------------------------------------------------------------------
$ 147,000,000 U.S. Treasury Bills, 11/2/1995-6/27/1996 $ 144,562,677
--------------------------------------------------------------------------------- --------------
*REPURCHASE AGREEMENTS--53.8%
- -------------------------------------------------------------------------------------------------
76,174,000 J. P. Morgan Securities, Inc., NY, 5.875%, dated 10/31/1995,
due 11/1/1995 76,174,000
---------------------------------------------------------------------------------
10,000,000 Morgan Stanley Co., 5.72%, dated 10/31/1995, due 11/1/1995 10,000,000
---------------------------------------------------------------------------------
65,000,000 Nomura Securities International, Inc., 5.875%, dated 10/31/1995, due 11/1/1995 65,000,000
---------------------------------------------------------------------------------
15,000,000 State Street Bank and Trust Co. 5.85%, dated 10/31/1995,
due 11/1/1995 15,000,000
--------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 166,174,000
--------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS, AT AMORTIZED COST $ 310,736,677+
--------------------------------------------------------------------------------- --------------
</TABLE>
*The repurchase agreements are fully collateralized by U.S. Treasury obligations
based on market prices at the date of the portfolio.
+Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($308,734,537) at October 31, 1995.
(See Notes which are an integral part of the Financial Statements)
VISION NEW YORK TAX-FREE MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------ ---------- -------------
SHORT-TERM MUNICIPAL SECURITIES--101.7%
- --------------------------------------------------------------------------------------
NEW YORK--99.0%
------------------------------------------------------------------------
$ 2,000,000 Auburn, NY, City School District, TANs, 4.10% 11/15/1995 NR $ 2,000,225
------------------------------------------------------------------------
600,000 Broome County, NY, IDA, Weekly VRDNs, (Bing Realty)/ (Meridian Bank LOC) VMIG1 600,000
------------------------------------------------------------------------
1,264,000 Canisteo, NY, BANs (Series B), 4.54% 5/8/1996 NR 1,264,822
------------------------------------------------------------------------
1,000,000 Chautauqua County, NY, TANs, 5.50% 12/21/1995 NR 1,000,641
------------------------------------------------------------------------
975,000 Dobbs Ferry, NY, School District, TANs, 4.25% 2/14/1996 NR 976,378
------------------------------------------------------------------------
600,000 Erie County, NY, Water Authority Water Revenue (Series A) Weekly VRDNs,
(AMBAC Insured) VMIG1 600,000
------------------------------------------------------------------------
300,000 Erie County, NY, Water Authority Water Revenue (Series B) Weekly VRDNs,
(AMBAC Insured) VMIG1 300,000
------------------------------------------------------------------------
1,000,000 Great Neck North, NY, Water Authority (Series A) Weekly VRDNs, (FGIC
Insured) VMIG1 1,000,000
------------------------------------------------------------------------
1,645,000 Guilderland, NY, Central School District, TANs, 4.00% (ST Aid
Withholding Insured), 11/21/1995 NR 1,645,154
------------------------------------------------------------------------
1,000,000 Nassau County, NY, BANs (Series B), 5.25% 11/15/1995 MIG1 1,000,509
------------------------------------------------------------------------
500,000 Nassau County, NY, BANs (Series C), 5.00% 11/15/1995 MIG1 500,162
------------------------------------------------------------------------
500,000 New York City, NY, (Series B) Daily VRDNs, (FGIC Insured) VMIG1 500,000
------------------------------------------------------------------------
500,000 New York City, NY, (Series B-4) Daily VRDNs,
(Union Bank of Switzerland LOC) VMIG1 500,000
------------------------------------------------------------------------
1,000,000 New York City, NY, HDC (Series A) Weekly VRDNs,
(Upper Fifth Ave.)/(Bankers Trust Co. LOC) VMIG1 1,000,000
------------------------------------------------------------------------
1,300,000 New York City, NY, HDC (Series A) Weekly VRDNs,
(East 96th Street)/(Mitsubishi Ltd. LOC) VMIG1 1,300,000
------------------------------------------------------------------------
1,700,000 New York City, NY, HDC (Series A) Daily VRDNs,
(E. 17th Street)/(Chemical Bank LOC) A-1 1,700,000
------------------------------------------------------------------------
</TABLE>
VISION NEW YORK TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------ ---------- -------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- --------------------------------------------------------------------------------------
NEW YORK--CONTINUED
------------------------------------------------------------------------
$ 1,400,000 New York City, NY, HDC (Series A) Weekly VRDNs, (Columbus
Gardens)/(Citibank LOC) A-1+ $ 1,400,000
------------------------------------------------------------------------
1,000,000 New York City, NY, Water Financial Authority & Sewer
System Revenue (Series C) Daily VRDNs, (FGIC Insured) VMIG1 1,000,000
------------------------------------------------------------------------
1,200,000 New York City, NY, Water Financial Authority & Sewer
System Revenue (Series C) Daily VRDNs, (FGIC Insured) VMIG1 1,200,000
------------------------------------------------------------------------
1,950,000 New York City, NY, IDA Weekly VRDNs, (Childrens
Oncology Society)/(Barclays Bank of New York LOC) A-1+ 1,950,000
------------------------------------------------------------------------
1,700,000 New York City, NY, Cultural Resources Revenue Bonds
(Series B) Weekly VRDNs, (American Museum of Natural
History)/(MBIA Insured)) A-1+ 1,700,000
------------------------------------------------------------------------
1,000,000 New York State Energy Research and Development
Authority (Series A) Weekly VRDNs, (Long Island
Lighting Co.)/(Union Bank of Switzerland LOC) VMIG1 1,000,000
------------------------------------------------------------------------
1,800,000 New York State Energy Research and Development
Authority, Monthly VRDNs, (Rochester Gas & Electric
Co.)/(Union Bank of Switzerland LOC) P-1 1,800,000
------------------------------------------------------------------------
200,000 New York State Energy Research & Development Authority, (Series A) Daily
VRDNs, (Niagara Mohawk Power Corp.)/ (Toronto Dominion Bank LOC) A-1+ 200,000
------------------------------------------------------------------------
1,300,000 New York State Energy Research & Development Authority, (Series B) Daily
VRDNs, (Niagara Mohawk Power Corp.)/ (Toronto Dominion Bank LOC) Aa2 1,300,000
------------------------------------------------------------------------
700,000 New York State Energy Research & Development Authority, (Series B) Daily
VRDNs, (Niagara Mohawk Power Corp.)/ (Morgan Guaranty LOC) A-1+ 700,000
------------------------------------------------------------------------
600,000 New York State Energy Research & Development Authority, Daily VRDNs,
(Niagara Mohawk Power Corp.)/(Morgan
Guaranty LOC) A-1+ 600,000
------------------------------------------------------------------------
</TABLE>
VISION NEW YORK TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------ ---------- -------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- --------------------------------------------------------------------------------------
NEW YORK--CONTINUED
------------------------------------------------------------------------
$ 1,600,000 New York State Energy Research & Development Authority, (Series D) Daily
VRDNs, (New York Electric & Gas)/(Union Bank of Switzerland LOC) VMIG1 $ 1,600,000
------------------------------------------------------------------------
1,900,000 New York State Environmental Facilities Corp., (Series A), 3.65% CP
(General Electric Co.), 12/11/1995 P-1 1,900,000
------------------------------------------------------------------------
1,800,000 New York State, HFA (Series A) Weekly VRDNs,
(Sloan Kettering) A-1+ 1,800,000
------------------------------------------------------------------------
800,000 New York State, HFA Weekly VRDNs, (Normandie Court)/ (Societe Generale
LOC) VMIG1 800,000
------------------------------------------------------------------------
500,000 New York State Local Government Assistance Corp.,
(Series D) Weekly VRDNs, (Societe Generale LOC) VMIG1 500,000
------------------------------------------------------------------------
2,000,000 New York State Local Government Assistance Corp.,
(Series E) Weekly VRDNs, (Canadian Imperial Bank LOC) VMIG1 2,000,000
------------------------------------------------------------------------
1,000,000 New York State Medical Care Facility Financial Agency, (Series II-A)
Weekly VRDNs, (Chemical Bank LOC) VMIG1 1,000,000
------------------------------------------------------------------------
600,000 New York State Power Authority, 3.85% (General Purpose), 3/1/1996 VMIG1 600,000
------------------------------------------------------------------------
700,000 New York State Power Authority, 3.85% (General Purpose), 3/1/1996 VMIG1 700,000
------------------------------------------------------------------------
500,000 New York State Power Authority, 3.50% CP, (Various LOCs), 12/8/1995 VMIG1 500,000
------------------------------------------------------------------------
2,100,000 Niagara Falls, NY, Bridge Commission (Series A) Weekly VRDNs, (FGIC
Insured) VMIG1 2,100,000
------------------------------------------------------------------------
1,050,000 Onondaga County, NY, BANs, 4.125% 3/25/1996 NR 1,051,744
------------------------------------------------------------------------
1,000,000 Onondaga County, NY, IDA (Series B) Monthly VRDNs, (Pass & Seymour,
Inc.)/(Banque National de Paris LOC) A-1 1,000,000
------------------------------------------------------------------------
1,000,000 Port Authority of New York & New Jersey, Weekly VRDNs, (Deutsche Bank
LOC) VMIG1 1,000,000
------------------------------------------------------------------------
</TABLE>
VISION NEW YORK TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------ ---------- -------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- --------------------------------------------------------------------------------------
NEW YORK--CONTINUED
------------------------------------------------------------------------
$ 900,000 Port Authority of New York & New Jersey, 3.60% CP,
11/16/1995 A-1 $ 900,000
------------------------------------------------------------------------
1,000,000 Rensselaer County, NY, TANs (Series B), 4.25% 2/29/1996 NR 1,001,446
------------------------------------------------------------------------
1,400,000 St. Lawrence County, NY, IDA Daily VRDNs,
(Bank of Nova Scotia LOC) P-1 1,400,000
------------------------------------------------------------------------
545,000 Southampton Town, NY, BANs (Series B), 4.125% 10/10/1996 MIG1 545,109
------------------------------------------------------------------------
1,000,000 Tarrytowns, NY, School District, TANs, 4.25% 4/10/1996 NR 1,002,565
------------------------------------------------------------------------
400,000 Tompkins County, NY, BANs (Series A), 4.25% 4/12/1996 NR 400,784
------------------------------------------------------------------------
350,000 Triborough Bridge & Tunnel Authority, NY, (Series I), 7.625% (General
Purpose)/(Prerefunded), 1/1/1996 AAA 353,870
------------------------------------------------------------------------
1,925,000 Watertown, NY, City School District, BANs, 4.00% 11/13/1995 NR 1,925,122
------------------------------------------------------------------------
2,000,000 Yonkers, NY, IDA Weekly VRDNs, (AMBAC Insured) VMIG1 2,000,000
------------------------------------------------------------------------ -------------
Total 54,818,531
------------------------------------------------------------------------ -------------
PUERTO RICO--2.7%
------------------------------------------------------------------------
1,500,000 Commonwealth of Puerto Rico Development Bank,
3.40% CP, 12/8/1995 A-1 1,500,000
------------------------------------------------------------------------ -------------
TOTAL INVESTMENTS (AT AMORTIZED COST) $ 56,318,531+
------------------------------------------------------------------------ -------------
</TABLE>
* Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings. Current credit ratings are unaudited.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($55,477,345) at October 31, 1995.
VISION NEW YORK TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
The following abbreviations are used in this portfolio:
AMBAC--American Municipal Bond Insurance Corporation
BANs--Bond Anticipation Notes
CP--Commercial Paper
FGIC--Financial Guaranty Insurance Corporation
HDC--Housing Development Corporation
HFA--Housing Finance Agency
IDA--Industrial Development Authority
LOC(s)--Letter(s) of Credit
MBIA--Municipal Bond Investors Assurance
VRDNs--Variable Rate Demand Notes
TANs--Tax Anticipation Notes
(See Notes which are an integral part of the Financial Statements)
VISION MONEY MARKET FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK
TREASURY TAX-FREE
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND Fund
<S> <C> <C> <C>
ASSETS:
- ------------------------------------------------------
Investments in securities $ 459,224,769 $ 144,562,677 $ 56,318,531
- ------------------------------------------------------
Investments in repurchase agreements -- 166,174,000 --
- ------------------------------------------------------
Total investments, at amortized cost 459,224,769 310,736,677 56,318,531
- ------------------------------------------------------
Cash 659,972 295 4,563
- ------------------------------------------------------
Income receivable 443,434 36,599 347,722
- ------------------------------------------------------
Receivable for capital stock sold 511,022 59,826 67,107
- ------------------------------------------------------
Receivable for investments sold -- -- 100,000
- ------------------------------------------------------
Prepaid Expenses 58,358 -- --
- ------------------------------------------------------ ------------------ ------------------ ------------------
Total assets 460,897,555 310,833,397 56,837,923
- ------------------------------------------------------ ------------------ ------------------ ------------------
LIABILITIES:
- ------------------------------------------------------
Income distribution payable 1,494,878 1,088,992 88,209
- ------------------------------------------------------
Payable for capital stock redeemed 1,157,206 1,000,000 6,700
- ------------------------------------------------------
Payable for investments purchased -- -- 1,264,822
- ------------------------------------------------------
Accrued expenses -- 9,868 847
- ------------------------------------------------------ ------------------ ------------------ ------------------
Total liabilities 2,652,084 2,098,860 1,360,578
- ------------------------------------------------------ ------------------ ------------------ ------------------
NET ASSETS $ 458,245,471 $ 308,734,537 $ 55,477,345
- ------------------------------------------------------ ------------------ ------------------ ------------------
NET ASSET VALUE, Offering Price and Redemption
Proceeds Per Share: $1.00 $1.00 $1.00
- ------------------------------------------------------ ------------------ ------------------ ------------------
Shares Outstanding: 458,245,471 308,734,537 55,477,345
- ------------------------------------------------------ ------------------ ------------------ ------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
VISION MONEY MARKET FUNDS
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK
TREASURY TAX-FREE
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
<S> <C> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------
Interest $ 13,515,691 $ 8,554,312 $ 889,093
- ------------------------------------------------------
EXPENSES:
- ------------------------------------------------------
Investment advisory fee 1,129,814 723,674 118,992
- ------------------------------------------------------
Administrative personnel and services fees 264,773 169,429 27,909
- ------------------------------------------------------
Custodian fees 27,710 11,163 9,804
- ------------------------------------------------------
Transfer and dividend disbursing agent fees and
expenses 17,646 12,679 11,069
- ------------------------------------------------------
Directors' fees 2,681 2,681 2,681
- ------------------------------------------------------
Auditing fees 7,540 5,982 5,982
- ------------------------------------------------------
Legal fees 3,317 3,067 3,167
- ------------------------------------------------------
Portfolio accounting fees 40,973 17,596 17,526
- ------------------------------------------------------
Capital stock registration costs 20,476 471 1,167
- ------------------------------------------------------
Printing and postage 6,133 1,408 3,067
- ------------------------------------------------------
Taxes 8,863 4,223 458
- ------------------------------------------------------
Insurance premiums 6,657 3,067 2,318
- ------------------------------------------------------
Miscellaneous 6,076 42 1,420
- ------------------------------------------------------ ------------------ ------------------ ------------------
TOTAL EXPENSES 1,542,659 955,482 205,560
- ------------------------------------------------------ ------------------ ------------------ ------------------
Deduct--
- ------------------------------------------------------
Waiver of investment advisory fee 262,001 143,269 90,434
- ------------------------------------------------------
Waiver of administrative personnel and services fees -- -- --
- ------------------------------------------------------ ------------------ ------------------ ------------------
TOTAL WAIVERS 262,001 143,269 90,434
- ------------------------------------------------------ ------------------ ------------------ ------------------
NET EXPENSES 1,280,658 812,213 115,126
- ------------------------------------------------------ ------------------ ------------------ ------------------
NET INVESTMENT INCOME $ 12,235,033 $ 7,742,099 $ 773,967
- ------------------------------------------------------ ------------------ ------------------ ------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
VISION MONEY MARKET FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY NEW YORK TAX-FREE
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR
OCTOBER 31, ENDED OCTOBER 31, ENDED OCTOBER 31, ENDED
1995 APRIL 30, 1995 APRIL 30, 1995 APRIL 30,
(UNAUDITED) 1995 (UNAUDITED) 1995 (UNAUDITED) 1995
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE)
IN NET ASSETS
- -------------------------
OPERATIONS--
- -------------------------
Net investment income $ 12,235,033 $ 15,706,276 $ 7,742,099 $ 10,129,125 $ 773,967 $ 1,218,875
- ------------------------- ------------ -------------- ------------- -------------- ------------- ------------
DISTRIBUTIONS TO
SHAREHOLDERS--
- -------------------------
Distributions from net
investment income (12,235,033) (15,706,276) (7,742,099) (10,129,125) (773,967) (1,218,875)
- ------------------------- ------------ -------------- ------------- -------------- ------------- ------------
CAPITAL STOCK
TRANSACTIONS--
- -------------------------
Proceeds from sale of
shares 671,072,211 1,284,695,422 1,063,358,073 1,074,024,951 63,603,677 105,625,034
- -------------------------
Net asset value of
shares issued to
shareholders in payment
of distributions
declared 3,543,707 2,892,649 886,565 788,369 216,425 207,338
- -------------------------
Cost of shares redeemed (647,686,808) (1,122,898,022) (966,036,486) (1,061,808,189) (49,580,815) (104,774,319)
- ------------------------- ------------ -------------- ------------- -------------- ------------- ------------
Change in net assets
from capital stock
transactions 26,929,110 164,690,049 98,208,152 13,005,131 14,239,287 1,058,053
- ------------------------- ------------ -------------- ------------- -------------- ------------- ------------
Change in net
assets 26,929,110 164,690,049 98,208,152 13,005,131 14,239,287 1,058,053
- -------------------------
NET ASSETS:
- -------------------------
Beginning of period 431,316,361 266,626,312 210,526,385 197,521,254 41,238,058 40,180,005
- ------------------------- ------------ -------------- ------------- -------------- ------------- ------------
End of period $458,245,471 $ 431,316,361 $ 308,734,537 $ 210,526,385 $55,477,345 $ 41,238,058
- ------------------------- ------------ -------------- ------------- -------------- ------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
VISION MONEY MARKET FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Vision Group of Funds, Inc. ("the Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as an open-end
management investment company. The Corporation consists of five diversified
portfolios and one non-diversified portfolio: Vision Money Market Fund ("Money
Market"), Vision Treasury Money Market Fund ("Treasury Money Market"), Vision
New York Tax-Free Money Market Fund ("New York Tax-Free Money Market"), Vision
Growth and Income Fund ("Growth and Income"), Vision New York Tax-Free Fund
("New York Tax-Free")*, and Vision U.S. Government Securities Fund ("U.S.
Government Securities"). The financial statements included herein present only
those of Money Market, Treasury Money Market and New York Tax-Free Money Market
(individually referred to as a "Fund", or collectively as the "Funds"). The
financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Funds' use of the amortized cost method to value
their portfolio securities is in accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS--It is the policy of the Funds to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement transactions. Additionally, procedures have been
established by the Funds to monitor, on a daily basis, the market value of
each repurchase agreement's collateral to ensure that the value of
collateral at least equals the repurchase price to be paid under the
repurchase agreement transactions.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to guidelines and/or
standards reviewed or established by the Board of Directors ("Directors").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Funds could receive
less than the repurchase price on the sale of collateral securities.
- ---------
* Non-diversified portfolio.
VISION MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Distributions to
shareholders are recorded on the ex-dividend date. Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue Code, as amended, (the
"Code").
FEDERAL TAXES--It is the Funds' policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of their income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At October 31, 1995, there were 1,000,000,000 shares of $0.001 par value capital
stock authorized with respect to each Fund. Capital paid-in for Money Market
aggregated $457,787,226, par value was $458,245; Treasury Money Market
aggregated $308,423,513, par value was $311,024; New York Tax-Free Money Market
aggregated $55,421,767 par value was $55,578. Transactions in capital stock were
as follows:
<TABLE>
<CAPTION>
NEW YORK TAX-FREE
MONEY MARKET TREASURY MONEY MARKET MONEY MARKET
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR
OCTOBER 31, ENDED OCTOBER 31, ENDED OCTOBER 31, ENDED
1995 APRIL 30, 1995 APRIL 30, 1995 APRIL 30,
(UNAUDITED) 1995 (UNAUDITED) 1995 (UNAUDITED) 1995
<S> <C> <C> <C> <C> <C> <C>
Shares sold 671,072,211 1,284,695,422 1,063,358,073 1,074,024,951 63,603,677 105,625,034
- -----------------------------
Shares issued to shareholders
in payment of distributions
declared 3,543,707 2,892,649 886,565 788,369 216,425 207,338
- -----------------------------
Shares redeemed (647,686,808) (1,122,898,022) (966,036,486) (1,061,808,189) (49,580,815) (104,774,319)
- ----------------------------- ----------- ------------- ------------- ------------- ----------- -----------
Net change resulting from
capital stock transactions 26,929,110 164,690,049 98,208,152 13,005,131 14,239,287 1,058,053
- ----------------------------- ----------- ------------- ------------- ------------- ----------- -----------
</TABLE>
VISION MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Manufacturers & Traders Trust Company, the Funds'
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to 0.50 of 1% of each Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion of its fees. The
Adviser can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Funds
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Funds for the period. FAS may
voluntarily choose to waive a portion of its fee.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ") serves as transfer and dividend disbursing agent for the Funds
for which it receives a fee. The fee is based on the size, type and number of
accounts and transactions made by shareholders.
Certain of the Officers of the Corporation are Officers and Directors or
Trustees of the above companies.
(5) CONCENTRATION OF RISK
Since New York Tax-Free Money Market invests a substantial portion of its assets
in issuers located in one state, it will be more susceptible to factors
adversely affecting issuers in state than would be a comparable tax-exempt
mutual fund. In order to reduce the credit risk associated with such factors, at
October 31, 1995, 67.0% of the securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The value of investments insured or
supported (backed) by a letter of credit for any one institution or agency does
not exceed 3.7% of total investments.
Directors Officers
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Randall I. Benderson Edward C. Gonzales
Joseph J. Castiglia President and Treasurer
Daniel R. Gernatt, Jr. Charles L. Davis, Jr.
George K. Hambleton, Jr. Vice President and Assistant Treasurer
Victor R. Siclari
Secretary
C. Todd Gibson
Assistant Secretary
</TABLE>
Shares of the VISION Funds are not FDIC insured or otherwise protected
by the U.S. government, are not deposits or other obligations of, or
guaranteed by, Manufacturers and Traders Trust Company ("M & T Bank"),
and are subject to investment risks, including possible loss of the
principal amount invested.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds' prospectus which contains facts
concerning their objective and policies, management fees, expenses and other
information.
VISION
U.S. Government
Securities
Fund
Seeks current income by investing primarily in securities that are guaranteed
for payment of principal and interest by the U.S. Government, its agencies or
instrumentalities (Fund shares themselves are not guaranteed). Capital
appreciation is a secondary investment consideration.
- ------------------------------------------------------------------------------
VISION
New York Tax-Free
Fund
Seeks current income that is exempt from federal regular income tax,
(some of the income may be subject to the federal alternative minimum tax) and
New York State and New York City personal income taxes, and is consistent with
preservation of capital.
- ------------------------------------------------------------------------------
VISION
Growth and Income
Fund
Seeks to provide long-term growth of capital and income by investing in a
diversified portfolio consisting primarily of equity securities (common stock
and convertible securities) and debt securities (bonds and notes).
- ------------------------------------------------------------------------------
VISION
Money Market
Fund
Seeks current income with liquidity and stability of principal by investing in
high- quality money market instruments.
- ------------------------------------------------------------------------------
VISION
Treasury Money Market
Fund
Primarily seeks current income with liquidity and stability of principal by
investing in direct obligations of the U.S. Treasury, which are guaranteed by
the U.S. Government for timely payment of principal and interest, (Fund shares
themselves are not guaranteed), and repurchase agreements secured by these
obligations.
- ------------------------------------------------------------------------------
VISION
New York Tax-Free
Money Market
Fund
Seeks as high a level of current interest income that is exempt from federal
regular income tax (some of the income may be subject to the federal
alternative minimum tax) as is consistent with liquidity and relative stability
of principal. In addition, the Fund seeks to provide income that is exempt from
New York State and New York City personal income taxes.
