SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No.______)
Filed by the Registrant [ XX ] Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[XX] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
VISION GROUP OF FUNDS, INC.
(Name of Registrant as Specified In Its Charter)
Federated Investors
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[XX] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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PRELIMINARY PROXY STATEMENT
VISION GROUP OF FUNDS, INC.
VISION NEW YORK TAX-FREE FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 29, 1997
A Special Meeting of the shareholders of Vision New York Tax-Free Fund,
a portfolio of Vision Group of Funds, Inc. (the "Corporation"), will be held at
the Corporation's principal offices on the 19th Floor of Federated Investors
Tower, Pittsburgh, Pennsylvania 15222-3779, on September 29, 1997, at 2:00 p.m.
(Eastern Daylight Savings Time). A form of Proxy and Proxy Statement for the
meeting are furnished together with this notice. The purpose of the Special
Meeting is to consider and vote on the following matters:
1. To approve or disapprove a revision to the Fund's fundamental investment
limitation that, under normal market conditions, currently requires the Fund to
invest at least 80% of its net assets in securities the interest on which is
exempt from federal income tax, including the federal alternative minimum tax;
and
2. Such other business as may properly come before the meeting or any
adjournment thereof.
The Board of Directors have fixed July 24, 1997, as the record date for
determination of shareholders entitled to vote at the meeting.
By Order of the Board of Directors
Victor R. Siclari
Secretary
August 6, 1997
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PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY
TO AVOID ADDITIONAL EXPENSE.
You can help the Corporation avoid the necessity and expense of sending
follow-up letters to ensure a quorum by promptly returning the enclosed Proxy.
If you are unable to attend the meeting, please mark, sign, date and return the
enclosed Proxy so that the necessary quorum may be represented at the Special
Meeting. The enclosed envelope requires no postage if mailed in the United
States.
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<PAGE>
VISION GROUP OF FUNDS, INC.
VISION NEW YORK TAX-FREE FUND
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors
("Board") of Vision Group of Funds, Inc. (the "Corporation"). The Corporation
was incorporated under the laws of the state of Maryland on February 23, 1988.
This proxy statement pertains to only one of the portfolios of the Corporation,
the Vision New York Tax-Free Fund (the "Fund").
The proxy is revocable at any time before it is voted by sending
written notice of the revocation to the Fund or by appearing personally at the
Special Meeting of shareholders to be held on September 29, 1997, at 2:00 p.m.
(Eastern Daylight Savings Time) (the "Special Meeting"). Proxy solicitations
will be made primarily by mail, but may also be made by telephone, telegraph, or
personal interview conducted by certain officers or employees of the
Corporation, Manufacturers and Traders Trust Company (the Corporation's
investment adviser) ("M&T Bank"), Federated Shareholder Services Company (the
Corporation's transfer agent), or Federated Administrative Services (the
Corporation's administrator). In the event that the shareholder signs, dates and
returns the proxy ballot, but does not indicate a choice as to the items on the
proxy ballot, the proxy attorneys will vote those shares in favor of the
proposals. The cost of preparing and mailing the notice of meeting, proxy cards,
this proxy statement and any additional proxy materials has been or will be
borne by [the Fund.]
On July 24, 1997, the Fund had outstanding the following number of shares
of common stock (the "Shares"), each Share being entitled to one vote and
fractional shares having proportionate voting rights: [TO BE PROVIDED ON 7/25]
Only shareholders of record of the Fund at the close of business on July
24, 1997, will be entitled to notice of and vote at the Special Meeting. Shares
may be represented in person or by proxy. The Board propose to mail this proxy
statement, the enclosed notice of meeting and proxy card on or about August 6,
1997.
Quorum and Voting Requirements
For purposes of determining the presence of a quorum and counting votes
on the matters presented, Shares represented by abstentions and "broker
non-votes" will be counted as present, but not as votes cast, at the Special
Meeting. Under the Investment Company Act of 1940 (the "1940 Act"), the
affirmative vote necessary to approve the matter under consideration is
determined with reference to a percentage of votes considered to be present at
the Special Meeting, which would have the effect of treating abstentions and
non-votes as if they were votes against the proposal. Shares of the Fund will be
counted as a single group of Shares for purposes of determining the presence of
a quorum and the requisite vote for the approval of the revision to the Fund's
fundamental investment limitation as described herein. The presence of a quorum
for the Fund will be determined by the presence, in person or by proxy, of 50%
of its outstanding Shares. The approval by shareholders of the Fund of the
revision to the fundamental investment limitation will be determined on the
basis of a vote of a "majority of the outstanding voting securities" of the
Fund, as defined in and required by the 1940 Act. This vote requires the lesser
of: (A) 67 per centum or more of the voting securities of the Fund present at
such meeting, if the holders of more than 50 per centum of the outstanding
voting securities of such Fund are present or represented by proxy; or (B) more
than 50 per centum of the outstanding voting securities of such Fund.
<PAGE>
The Annual Report for the Fund for the fiscal year ended April 30,
1997, has been previously mailed to shareholders. If you have not received this
Report, or would like to receive additional copies, free of charge, please write
the Corporation at the address above or call the Corporation at 1-800-836-2211,
and it will be sent by first-class mail within three business days.
APPROVAL OR DISAPPROVAL OF THE REVISION TO THE FUND'S FUNDAMENTAL
INVESTMENT LIMITATION
At its meeting on May 23, 1997, the Board unanimously approved, subject
to ratification by the shareholders of the Fund, to revise the Fund's
fundamental investment limitation. Upon shareholder approval of the revision,
the Board has authorized changing the Fund's name to "Vision New York Municipal
Income Fund."
Revise the Fund's Fundamental Investment Limitation
Currently, the Fund has a fundamental investment policy that requires,
under normal market conditions, at least 80% of its net assets be invested in
securities that pay interest exempt from federal income tax. For purposes of
this policy, the tax-free interest must not be a preference item for purposes of
computing the federal alternative minimum tax ("AMT"). According, the Fund
cannot own more than 20% of tax-exempt securities that generate income subject
to AMT.
The Board unanimously approved a revision to this fundamental
investment limitation so that the income is required to be exempt only from the
federal regular income tax, and not necessarily from AMT. This revision will
enable the Fund to have maximum flexibility to purchase a broader variety of
municipal securities, including municipal securities the interest on which may
be subject to AMT. This revision remains consistent with the Fund's investment
objective of providing current income which is exempt from federal income tax
and the personal income taxes imposed by the State of New York and New York
municipalities and is consistent with the preservation of capital. In reaching
its decision to revise this fundamental investment limitation of the Fund, the
Board considered the following factors: (1) the higher yield typically paid on
securities subject to AMT; (2) the comparable quality of such securities; (3)
the potentially higher total returns for shareholders of the Fund; and (4) the
negligible number of individuals who are subject to AMT on their federal income
tax returns.
The federal regular income tax is the normal income tax that all
taxpayers are accustomed to computing and paying each year. The AMT is a special
federal tax that applies to taxpayers who claim certain large regular income tax
deductions, which are referred to as tax preference items. Among these tax
preference items is the income earned on certain private activity municipal
bonds issued after August 7, 1986. (Unlike traditional government purpose
municipal securities, which may be used to finance public projects including
roads, schools, libraries, prisons, and other public facilities, private
activity municipal bonds provide benefits to private parties. Examples of
private activity bonds include corporate industrial development revenue bonds,
airport bonds, student loan revenue bonds, and housing revenue bonds.) Taxpayers
are required to compute their regular tax liability, then their AMT, and pay the
higher of the two.
The AMT is equal to 28% of alternative minimum taxable income for
individuals and 20% for corporations. Individual taxpayers compute the
alternative minimum tax by adding back these tax preference items to their
regular taxable income, subtracting certain adjustments and applying a tax rate
of up to 28% of income subject to the AMT. Internal Revenue Service ("IRS")
statistics indicate that only 0.29% and 0.32% of all individual tax returns had
AMT liability in 1993 and 1994, respectively. In the case of corporate
shareholders of the Fund, all dividends of the Fund which represent interest on
municipal bonds subject to AMT will become subject to the 20% corporate
alternative minimum tax because the dividends are included in a corporation's
"adjusted current earnings." The corporate alternative minimum tax treats 75% of
the corporate taxpayer's pre-tax "adjusted current earnings" in excess of its
alternative minimum taxable income as a tax preference item. "Adjusted current
earnings" is based upon the concept of a corporation's "earnings and profits."
Since "earnings and profits" generally includes the full amount of any Fund's
dividend, and alternative minimum taxable income does not include the portion of
the Fund's dividend attributable to municipal bonds which are not private
activity bonds, the difference will be included in the calculation of the
corporation's alternative minimum tax.
<PAGE>
The revision enabling the purchase of AMT municipal securities may
cause some shareholders to pay additional taxes in the form of AMT. Although
having preference items such as private activity bond interest does not
automatically cause additional shareholder tax liability, private activity bond
interest, as a factor in the AMT calculation, may combine with other preferences
and adjustments in the unique circumstances of a particular shareholder to
subject it to AMT tax liability. Shareholders should consult their tax advisor
for further information on their particular tax status. Nevertheless, as noted
above, IRS data indicates that a relatively nominal percentage of investors have
had AMT liability. The Fund's investment adviser believes that the disadvantages
of having a limited number of shareholders subject to additional AMT liability
is outweighed by the potentially higher yields that all Fund shareholders may
realize if the Fund can purchase a higher percentage of municipal obligations
subject to AMT. However, there can be no assurance that AMT municipal
obligations will continue to offer incremental yields over non-AMT municipal
obligations. Of course, shareholders who are subject to AMT tax liability retain
the option of redeeming their shares before any AMT dividends are declared or
paid by the Fund, although a redemption may result in a taxable gain or loss.
Upon approval of the shareholders, the Fund intends to implement
immediately the revised investment limitation. Accordingly, it is proposed that
the Fund's present fundamental investment limitation, stated as:
Under normal market conditions, at least 80% of the Fund's net assets will
be invested in securities that pay interest exempt from federal income tax. (For
purposes of this policy, the tax-free interest must be a preference item for
purposes of computing the federal alternative minimum tax.)
be revised as follows:
Under normal market conditions, at least 80% of the Fund's net assets
will be invested in securities the interest on which is exempt from federal
regular income tax.
Change the Fund's Name
The Staff of the Securities and Exchange Commission has taken the
position that AMT municipal securities should not be characterized as "tax-free"
or "tax-exempt." Therefore, it is the Staff's position that a mutual fund with a
name using the words "tax-free" or "tax-exempt," which implies that most of its
distributions will be exempt from all federal income taxes, must limit to 20% of
its net assets the amount of AMT municipal securities that it purchases or
ensure that no more than 20% of its income will be subject to AMT tax.
As a consequence of the Fund's desire to have the ability to invest in
AMT municipal securities without being subject to the 20% limit, the Fund must
eliminate tax-free from its name to be consistent with Securities and Exchange
Commission Staff policy. Accordingly, the Board unanimously authorized an
amendment to the Corporation's Articles of Incorporation to change the name of
the Fund from "Vision New York Tax-Free Fund" to "Vision New York Municipal
Income Fund."
Under Maryland corporations law, the Board is authorized to change the
Fund's name without shareholder approval. If shareholders approve the revision
to the Fund's fundamental investment limitation, the Fund's name and investment
limitation will be changed after the meeting date. If shareholders do not
approve the revision to the investment limitation, the Fund's name and
investment limitation will remain as currently stated.
THE BOARD RECOMMENDS SHAREHOLDER APPROVAL OF THE REVISION TO THE
FUND'S FUNDAMENTAL INVESTMENT LIMITATION
<PAGE>
INFORMATION ABOUT THE FUND'S SERVICE PROVIDERS
The Fund's investment adviser is Manufacturers and Traders Trust
Company, One M&T Plaza, Buffalo, New York 14240. Federated Administrative
Services ("FAS"), Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh,
Pennsylvania 15222-3779, is the Fund's administrator. Federated Securities Corp.
("FSC"), Federated Investors Tower, Pittsburgh, PA 15222-3779, is the principal
distributor for shares of the Fund. Federated Services Company is the
Corporation's fund accountant and Federated Shareholder Services Company is the
Corporation's transfer agent. FAS, FSC, Federated Services Company and Federated
Shareholder Services Company are subsidiaries of Federated Investors.
If you do not expect to attend the Special Meeting, please sign your proxy
card promptly and return it in the enclosed envelope to avoid unnecessary
expense and delay. No postage is necessary.
By Order of the Board of Directors
Victor R. Siclari
Secretary
August 6, 1997
[LOGO]
[Account Number]
VISION NEW YORK TAX-FREE FUND
Proxy for Special Meeting of Shareholders - September 29, 1997
The undersigned hereby appoints Victor R. Siclari, C. Todd Gibson,
Patricia F. Conner, Leanne C. O'Brien and Anne M. Dombrowski as proxies to vote
and act at the Special Meeting of Shareholders of the Vision New York Tax-Free
Fund (the "Fund"), a portfolio of Vision Group of Funds, Inc.. (the
"Corporation"), to be held at the Corporation's principal office, Federated
Investors Tower, 19th Floor, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779 at
2:00 p.m. on September 29, 1997 and at all adjournments thereof, in respect of
all Shares of the Fund as to which the undersigned may be entitled to vote or
act. Each proxy shall have power of substitution and a majority of said proxies
or their substitutes, or any one if only one be present and acting, shall have
all powers hereby granted.
The proxies are hereby authorized and instructed to vote upon the
matters specified in the notice of meeting as set forth on this side of this
proxy. If no choice is indicated as to a proposal, the proxies shall vote FOR
such proposal. Each of the matters is proposed by the Fund, and none of the
matters are related to or conditioned on the approval of any other matter,
except as noted. The proxies may vote in their discretion on any other matter
which may properly come before the meeting.
Please sign and return.
The proxies are hereby instructed to vote as specified.
NOTE: Signature(s) should agree with name(s) as printed hereon. All joint
owners should sign. Fiduciaries please indicate their titles.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
FUND. Please sign and return promptly in the enclosed envelope.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS.
KEEP THIS PORTION FOR YOUR RECORDS
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
VISION NEW YORK TAX-FREE FUND
Vote on Proposals
Approval of the revision to the Fund's fundamental investment limitation
(1) Proposal to approve the revision to the Fund's FOR AGAINST ABSTAIN
fundamental investment limitation that, under ___ ___ ___
normal market conditions, requires the Fund to invest at least 80% of its net
assets in securities the interest on which is exempt from federal income tax,
including the federal alternative minimum tax.
x_________________________________ _______ x__________________________
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
VISION GROUP OF FUNDS, INC.
Federated Investors
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
(412) 288-1900
July 11, 1997
EDGAR Operations Branch
Securities and Exchange Commission
Division of Investment Management
450 Fifth Street, Northwest
Washington, DC 20549
RE: VISION GROUP OF FUNDS, INC. (the "Corporation")
1933 Act File No. 33-20673
1940 Act File No. 811-5514
Dear Sir or Madam:
Enclosed are the preliminary Proxy Statement and form of proxy for the
above-referenced Corporation. Definitive copies of these proxy materials are
expected to be released to shareholders on or about August 6, 1997.
The purpose of this meeting is to have shareholders of Vision New York
Tax-Free Fund, a portfolio of the Corporation (the "Fund"), approve a revision
to the Fund's fundamental investment limitation that, under normal market
conditions, currently requires the Fund to invest at least 80% of its net assets
in securities the interest on which is exempt from federal income tax, including
the federal alternative minimum tax. If shareholders approve the revision to the
Fund's fundamental investment limitation, the Fund will change its name to
Vision New York Municipal Income Fund.
If the Fund is not alerted by the Staff of the Commission within ten
(10) days (July 20, 1997) of the filing of this statement concerning comments on
the information disclosed in it, the Fund will consider itself free to mail
definitive proxy materials to its shareholders without waiting to hear from the
Staff.
If you have any questions on the enclosed material, please contact me
at (412) 288-7420.
Very truly yours,
/s/ Antoinette D. Brkovich
Antoinette D. Brkovich
Compliance Specialist
Enclosure
