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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[XX] 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
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.
<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) or, if
necessary, a commercial firm retained for this purpose. 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 3,703,072 outstanding number
of shares of common stock (the "Shares"), each Share being entitled to
one vote and fractional shares having proportionate voting rights. As
of July 24, 1997, the following shareholder of record owned 5% or more
of the outstanding Shares of the Fund: Tice & Co., Buffalo, New York,
owned approximately 511,761 Shares (13.82%).
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
G01265-02(8/97)
[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
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
VISION NEW YORK TAX-FREE FUND
VOTE ON PROPOSAL
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
