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, Inc.
(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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PROXY STATEMENT
VISION GROUP OF FUNDS, INC.
Vision New York Tax-Free Money Market Fund
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 21, 1998
A special meeting of the shareholders of Vision New York Tax-Free Money
Market Fund (the "Fund"), a portfolio of Vision Group of Funds, Inc. (the
"Corporation"), will be held at Federated Investors Tower, 19th Floor, 1001
Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779, at 2:00 p.m. (Eastern
time), on August 21, 1998, for the following purposes:
1. To approve or disapprove a Subadvisory Agreement among the Fund,
Manufacturers and Traders Trust Company ("M&T Bank"), and Federated
Investment Counseling;
2. To approve or disapprove a new Investment Advisory Contract between M&T
Bank and the Fund;
3. To revise the Fund's fundamental restrictions to create greater
investment flexibility:
(a) To approve or disapprove revisions to the Fund's fundamental investment
policy on selling short and buying on margin;
(b) To approve or disapprove revisions to the Fund's fundamental
investment policy on issuing senior securities and borrowing money;
(c) To approve or disapprove revisions to the Fund's fundamental
investment policy on pledging securities;
(d) To approve or disapprove revisions to the Fund's fundamental
investment policy on commodities, commodity contracts, or real
estate;
(e) To approve or disapprove revisions to the Fund's fundamental
investment policy on underwriting;
(f) To approve or disapprove revisions to the Fund's fundamental
investment policy on diversification of investments; and
(g) To approve or disapprove revisions to the Fund's fundamental
investment policy on concentration of investments.
4. To reclassify certain of the Fund's fundamental investment policies
to non-fundamental investment policies as permitted by recent
regulatory changes, and revise them to create greater investment
flexibility:
(a) To revise and to change from a fundamental to a non-fundamental
policy the Fund's ability to invest in the securities of other
investment companies;
(b) To revise and to change from fundamental to non-fundamental
policies the Fund's ability to invest in illiquid securities and
restricted securities;
(c) To revise and to change certain fundamental investment policies
to non-fundamental investment policies regarding: (1) temporary
investments; (2) when-issued and delayed delivery transactions;
(3) credit enhancement; (4) dealing in puts and calls; and (5)
purchasing securities to exercise control; and
(d) To revise and to change from fundamental to non-fundamental the
Fund's investment policy on credit guidelines.
5. To delete fundamental restrictions that are no longer necessary:
(a) To delete the Fund's fundamental investment policy on
investing in new issuers;
(b) To delete the Fund's fundamental investment policy on investing
in issuers whose securities are owned by officers and Directors
of the Corporation; and
(c) To delete the Fund's fundamental investment policy on voting
securities and revenue bonds.
6. Such other business as may properly come before the meeting or any
adjournment thereof.
The Board of Directors has fixed July 8, 1998, 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
July 17, 1998
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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>
23
VISION GROUP OF FUNDS, INC.
Vision New York Tax-Free Money Market Fund
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors
("Board" or "Directors") 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 Money Market 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 August 21, 1998, at 2:00 p.m. (Eastern
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. Shareholders also may
vote by touch tone phone by calling 1-800-690-6903. Please have your proxy
ballot in hand, enter your 12-digit control number found on your proxy ballot
and follow the simple recorded instructions. 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.
At its meeting on June 1, 1998, the Board reviewed and approved the
proposed Subadvisory Agreement and new Investment Advisory Contract. The Board
also separately reviewed and approved the proposed changes to investment
policies. All the changes are subject to shareholder approval. The purposes of
the Special Meeting are set forth in the accompanying Notice. The Directors know
of no business other than that mentioned in the Notice that will be presented
for consideration at the Special Meeting. Should other business properly be
brought before the Special Meeting, proxies will be voted in accordance with the
best judgment of the persons named as proxies.
Only shareholders of record of the Fund at the close of business on July
8, 1998, will be entitled to notice of and vote at the Special Meeting. On July
8, 1998, the Fund had 101,519,338 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 8, 1998, the following
shareholders of record owned 5% or more of the outstanding Shares of the Fund:
Tice & Co., Buffalo, New York, owned approximately 39,513,508 Shares (38.93%);
and National Financial Services Co., New York, New York, owned approximately
15,598,339 Shares (15.36%). Shares may be represented in person or by proxy. The
Directors propose to mail this proxy statement, the enclosed Notice of meeting
and proxy card on or about July 17, 1998.
<PAGE>
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 Subadvisory Agreement, Investment Advisory Contract
and all of the changes to the Fund's fundamental policies and limitations 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 Subadvisory Agreement, Investment
Advisory Contract and all of the changes to the Fund's fundamental policies and
limitations 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% or more of the voting
securities of the Fund present at such meeting, if the holders of more than 50%
of the outstanding voting securities of such Fund are present or represented by
proxy; or (B) more than 50% of the outstanding voting securities of such Fund.
The Annual Report for the Fund for the fiscal year ended April 30, 1998,
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
or in the Buffalo area 635-9368, and it will be sent by first-class mail within
three business days.
1. APPROVAL OR DISAPPROVAL OF A SUBADVISORY AGREEMENT AMONG THE FUND,
MANUFACTURERS AND TRADERS TRUST COMPANY, AND FEDERATED INVESTMENT COUNSELING
Effective July 1, 1998, all money market funds must conduct their
investment operations in accordance with recently enacted revisions to Rule
2a-7. The Securities and Exchange Commission ("SEC") amended this rule to
address concerns that it had about the ability of investment advisers to manage
money market fund investments consistent with their use of the "amortized cost
valuation method" of share pricing. Amortized cost valuation is an accounting
method used by money market funds to maintain a stable net asset value of $1 per
share. Among other things, the SEC revised the rule to address the propriety of
investing in newly developed instruments with more potential volatility than
other "more traditional" money market instruments. The SEC was concerned because
these new instruments were not specifically contemplated or adequately addressed
by the existing provisions of the rule and because these instruments had a
greater potential to disrupt a money market fund's ability to maintain a stable
net asset value. Accordingly, the SEC imposed greater restrictions and
compliance requirements on the eligibility of investments in general. The impact
is greatest on state tax-exempt money market funds. This impact is further
magnified because the imbalance of supply and demand of state (municipal)
securities has further impacted the availability of eligible instruments,
thereby making it more difficult to find acceptable investments while
maintaining competitive returns for shareholders.
M&T Bank has fully considered the impact that the amendments to Rule 2a-7
will have on its money market fund investment operations. It has determined that
the substantial changes to the rule will increase its cost of managing
investments, particularly with respect to the Fund. It has considered its
available personnel and resources and the need to increase staff and other
resources to continue performing its duties as investment adviser to this Fund.
It has explored the amount of advisory fee it has been voluntarily waiving on
this Fund and whether to reduce or eliminate such voluntary waiver to compensate
for the additional compliance and investment costs it anticipates as a result of
the revisions to Rule 2a-7. M&T Bank's analysis has resulted in a recommendation
to the Corporation's Board to hire Federated Investment Counseling ("FIC") as
sub-adviser to the Fund to manage the daily investment and compliance operations
for the Fund. M&T Bank would continue in an oversight capacity as investment
adviser to the Fund and would remain primarily liable to the Fund for the
advisory services performed by M&T Bank and FIC.
M&T Bank has determined that FIC can provide the necessary investment
expertise since it has the necessary staff, resources and economies of scale to
manage the Fund's investments in compliance with amended Rule 2a-7 without
sacrificing the quality of investment returns. In that regard, Federated has
developed FedPortS(TM), an automated trading and front-end compliance system
that helps FIC maintain compliance while achieving investment efficiencies.
There would be no change to the current contractual advisory fee (annual
rate of 0.50% of the Fund's average daily net assets) that the Fund is obligated
to pay M&T Bank. Instead, out of its fee, M&T Bank would pay a fee to FIC for
subadvisory services at an annualized rate of 0.20% on the first $100 million of
the Fund's average daily net assets, 0.18% on the next $100 million of the
Fund's average daily net assets, and 0.15% on assets over $200 million. A
proposed form of the Subadvisory Agreement is attached hereto as "Exhibit A."
The contractual advisory fee between the Fund and M&T Bank would not
change. M&T Bank would reduce its voluntary advisory fee waiver to take into
consideration the subadvisory fee it would pay (out of its advisory fee) to FIC
in place of the additional costs (noted above) M&T Bank would incur if it were
to continue the daily investment functions. Following is a table comparing the
Fund's current operating expenses (based on voluntary fee waivers by M&T Bank)
and the anticipated Fund operating expenses (assuming reduction of M&T Bank's
voluntary fee waivers as a result of hiring FIC as subadviser and adjustment of
other Fund expenses).
Comparative Fee Tables
Every money market fund incurs expenses in conducting operations, managing
investments and providing services to shareholders. The "Current" annual
operating expenses are for the fiscal year ended April 30, 1998, and the
"Proposed" annual operating expenses are estimated based on expenses expected
for the fiscal year ending April 30, 1999. The following summary breaks out the
Fund's expenses.
Annual Operating Expenses
(As a percentage of average net assets) ......Current........ Proposed
------- --------
Management Fee (after waiver)(1).... 0.22% 0.41%
12b-1 Fee ......................... None None
Other Expenses...................... 0.28% 0.24%
Shareholder Services Fee(2) 0.00% 0.00%
Total Operating Expenses (after waiver) (3) 0.50% 0.65%
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee by the adviser. The adviser may terminate this
voluntary waiver at any time at its sole discretion. The maximum management fee
is 0.50%.
(2) The Fund has no present intention of paying or accruing shareholder
servicing fees during the fiscal year ending April 30, 1999. If the Fund were
paying or accruing the shareholder servicing fees, it would be able to pay up to
0.25% of the Fund's average daily net assets.
(3) Absent the voluntary waiver of the Management Fee described in Note 1, the
Annual Total Operating Expenses were 0.78% (Current) for the year ended April
30, 1998 and are anticipated to be 0.74% (Proposed) for the year ending April
30, 1999.
The table can help you understand the various costs and expenses that a
shareholder in the Fund will bear, either directly or indirectly.
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return, (2) redemption at the end of each time period. The Fund charges
no redemption fees.
1 Year.............................. $5 $7
3 Years............................. $16 $21
5 Years............................. $28 $36
10 Years............................ $63 $81
The above example should not be considered a representation of past or future
expenses. Actual expenses may be higher or lower than those shown.
......It was represented to the Board that, after adjustment to other expenses
and the hiring of FIC as sub-adviser to the Fund, the overall expense ratio was
not expected to increase by more than 0.15%. The adjusted expense ratio reflects
anticipated changes in expenses and asset levels, the subadvisory fees paid to
FIC by M&T Bank out of the advisory fees M&T Bank receives from the Fund, and
additional costs that the Fund will incur for money market fund net asset value
guaranty policy. This policy has been authorized by the Board and is being made
available to the Fund as a result of hiring FIC as subadviser. It is designed to
insure the Fund against certain losses that could otherwise impact its ability
to maintain a stable $1.00 share value. M&T Bank believes that, notwithstanding
this increase, the advisory fee, expense ratio and yield is still competitive
with the Fund's peers.
......The Board carefully considered all of the above factors when it approved
the subadvisory contract described herein and recommended shareholder approval.
FEDERATED INVESTMENT COUNSELING
......Federated Investment Counseling, a Delaware business trust organized on
April 11, 1989, is a registered investment adviser under the Investment Advisers
Act of 1940. It is an indirect, wholly owned subsidiary of Federated Investors,
Inc. ("Federated"). FIC and other subsidiaries of Federated serve as investment
advisers to a number of investment companies and private accounts. As of
December 31, 1997, Federated's investment advisers managed more than $63.1
billion in assets across 51 money market funds including 22 municipal funds, 18
government funds, and 11 prime funds with assets of approximately $10.9 billion,
$35 billion and $17.1 billion, respectively. Since 1988 Federated Management, an
affiliate of FIC, has managed New York Municipal Cash Trust, a money market fund
with policies substantially similar to the Fund. ......Certain other
Federated subsidiaries also provide administrative services to a number of
investment companies.
......The Executive Officers of FIC are: John B. Fisher, President; William D.
Dawson, III, Henry A. Frantzen, and J. Thomas Madden, Executive Vice Presidents;
Joseph M. Balestrino, Drew J. Collins, Jonathan C. Conley, Deborah A.
Cunningham, Mark E. Durbiano, Sandra L. McInerney, J. Alan Minteer, Susan M.
Nason, Mary Jo Ochson, Robert J. Ostrowski, Charles A. Ritter, Senior Vice
Presidents; Stephen A. Keen, Secretary; and Thomas R. Donahue, Treasurer. The
Trustees of FIC are John F. Donahue, J. Christopher Donahue, John W. McGonigle
and Mark D. Olson.
......The business address of FIC and each of its Officers and Trustees except
for Mark D. Olson, is Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779. Mr. Olson's business address is 107 W.
Market Street, Georgetown, Delaware 19947.
......As of June 18, 1998, FIC is adviser/sub-adviser to 62 private/separate
accounts with assets totaling $2.3 billion.
FEDERATED INVESTORS, INC.
......Federated is one of the leading investment management companies in the
United States, managing and/or administering more than $120 billion in more than
300 mutual funds and separate accounts as of December 31, 1997. Financial
professionals nationwide invest in Federated's equity, international/global,
bond and money market mutual fund products on behalf of individual investors and
institutions. All of the Class A (voting) shares of Federated are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Director of
Federated Investors, Inc., Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Director of Federated Investors, Inc.
Federated recently completed the initial public offering of Class B non-voting
Common Stock, which trades on the New York Stock Exchange under the symbol FII.
......Edward C. Gonzales, Vice Chairman of Federated is also an Officer of the
Corporation and beneficially owns as of May 19, 1998, 1,637,826 shares of
Federated Investors, Inc. Class B Shares (Non-Voting). The shares owned by Mr.
Gonzales may include shares held jointly with his spouse or other family
members; shares held by family-owned partnerships or other business
organizations; shares held by his spouse and other family members; and/or shares
held in trust for one or more family members. Mr. Gonzales disclaims beneficial
ownership of shares held by his spouse, other family members and trusts, and by
his family-owned partnerships or other business organizations to the extent not
owned by him.
......THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS APPROVE THE
SUBADVISORY AGREEMENT WITH FIC
2. APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT ADVISORY CONTRACT BETWEEN
M&T BANK AND THE FUND
Current Investment Advisory Contract
......On April 25, 1988, the Corporation entered into an investment advisory
contract ("Present Contract") with M&T Bank that was approved by shareholders of
the Fund on June 1, 1988. See "Exhibit C" to this Proxy Statement.
......On June 1, 1998, the Directors approved a revised form of advisory
contract between M&T Bank and the Corporation on behalf of the Fund ("New
Contract"). See "Exhibit B" to this Proxy Statement. The Present Contract and
New Contract are collectively referred to as the "Contracts." The New Contract
is substantively similar to the Present Contract but is more reflective of
today's regulatory environment. The New Contract is based on the investment
advisory contract already in place for the other funds of the Corporation that
are not money market funds. The Directors would like the investment advisory
contracts for all of the portfolios of the Corporation under substantially the
same contract terms. While the contractual advisory fee for the Fund will not
change, shareholders are being asked to approve changes to the Present Contract
in the form of a New Contract to explicitly allow M&T Bank to hire a sub-adviser
to help manage the Fund as well as to update provisions that restrict investment
flexibility or are not reflective of common business practices in the mutual
fund industry and, therefore, could potentially put the Fund at a competitive
disadvantage.
Differences between the Present Contract and New Contract
......Under the terms of the Present Contract (Paragraph 3 (a) and (g)), M&T
Bank is not allowed to make loans to any persons for the purpose of purchasing
Fund shares or make loans to the Fund. The New Contract deletes these provisions
since bank and 1940 Act regulations already govern these types of transactions,
and the Fund and M&T Bank desire the flexibility to engage in these transactions
if and when regulatorily permitted. However, no changes are currently
anticipated to the Fund's operations as a result of this change.
......The provisions of Paragraph 3(c) under the Present Contract have been
deleted from the New Contract to delete references to Fairfield Group, Inc., the
Fund's initial distributor and administrator, and to clarify that the Fund and
M&T Bank may engage in affiliated transactions; however, any such transactions
must comply with exemptions under the 1940 Act. Paragraph 3(c) of the Present
Contract also contains language relating to the ability of the adviser to place
portfolio trades, and the factors that can be considered in selecting
broker/dealers to execute trades. This language has been deleted to give the
Board, the Fund and its investment advisers the flexibility to modify such
policies to react to regulatory changes without the expense and delay of a
shareholder meeting. In addition, this information already is disclosed in the
Fund's registration statement.
......The provisions of Paragraph 3(e) of the Present Contract regarding
confidentiality of Fund records have been deleted from the New Contract as no
longer necessary because banking and securities laws already dictate that
certain information must be kept confidential.
......The provisions of Paragraph 3(f) of the Present Contract regarding M&T
Bank maintaining its policies and practices independent of its Commercial
Department have been deleted under the New Contract since they are not required
to be contractual provisions and since they already are disclosed in the Fund's
registration statement.
......The second paragraph of Paragraph 7 of the Present Contract regarding
state expense limitations was deleted from the New Contract because of the
federal preemption of this state imposed-restriction under the National
Securities Markets Improvement Act of 1996 ("NSMIA"). In that regard, the Fund
has historically maintained its expenses well below the state expense cap that
previously existed.
......The provision in Paragraph 10 of the Present Contract requiring
shareholder approval of any amendment was deleted from the New Contract to allow
certain minor changes to be made by the Directors without shareholder approval
if and when permitted by the 1940 Act.
......The renewal and termination provisions of the Present Contract (Paragraph
9) and New Contract (Paragraphs 7 and 8) differ slightly in that the New
Contract does not contemplate annual shareholder approval in place of Board
approval, and allows M&T Bank to terminate the Contract on 60 days' written
notice prior to the Contract's anniversary date, rather than at any time. This
helps assure the continuity of Fund management during the year.
New Provisions in the New Contract
......The New Contract explicitly provides that M&T Bank may employ or contract
with such other person, persons, corporation, or corporations (including a
sub-adviser) at its own expense as it shall determine in order to assist it in
carrying out the contract, subject to any approval required under the 1940 Act
(Paragraph 9). This is implicitly, though not explicitly, contemplated by the
Present Contract. Notwithstanding the foregoing, M&T Bank shall be liable to the
Corporation for the acts and omission of any sub-investment adviser to the
extent that such sub-investment adviser is liable to M&T Bank for such acts or
omissions under any sub-advisory agreement.
......The New Contract contains new language that codifies in Paragraph 12 the
obligation of the Adviser to obtain the required regulatory review and approval
of Fund sales literature before use. The New Contract also clarifies in
Paragraph 13 that M&T Bank holds the proprietary and licensing rights to the use
of the term "Vision" by the Fund, such as in the Fund's name.
M&T BANK
......M&T Bank is the principal banking subsidiary of M&T Bank Corp. (formerly,
First Empire State Corporation), a $14 billion bank holding company, as of
December 31, 1997, headquartered in Buffalo, New York. M&T Bank was founded in
1856 and provides comprehensive banking and financial services to individuals,
governmental entities and businesses throughout New York State. As of December
31, 1997, M&T Bank has 177 offices throughout New York State and an office in
Nassau, The Bahamas. The Fund's investments are managed through the Trust &
Investment Services Division of M&T Bank. As of December 31, 1997, M&T Bank had
$4 billion in assets under management for which it has investment discretion
(which includes employee benefits, personal trusts, estates, agencies and other
accounts). M&T Bank has served as investment adviser to various funds of the
Corporation since 1988. As of December 31, 1997, M&T Bank managed over $1.2
billion in net assets of the Corporation's money market funds.
......For the services M&T Bank provides and the expenses it assumes as
investment adviser, M&T Bank is entitled to receive a fee from the Fund equal to
an annual rate of 0.50% of the Fund's average net assets. This fee is computed
daily and paid monthly. M&T Bank has agreed to pay all expenses it incurs in
connection with its advisory activities, other than the cost of securities
(including any brokerage commissions) purchased for the Fund. M&T Bank has been
voluntarily waiving part of its investment advisory fee.
The principal executive Officers and the Directors of M&T Bank are set forth
in the following tables. Unless otherwise noted, the position listed under Other
Substantial Business, Profession, Vocation or Employment is with M&T Bank.
<TABLE>
<CAPTION>
<S> <C> <C>
Other Substantial
Position with Business, Profession,
Name the Adviser Vocation or Employment
William F. Allyn Director President, Welch Allyn, Inc.
P.O. Box 50
Skaneateles Falls, NY 13153-0050
Brent D. Baird Director Private Investor
1350 One M&T Plaza
Buffalo, NY 14203-2396
Robert J. Bennett Director and Chairman, M&T Bank
P.O. Box 4983 Executive Officer Corporation and Vice
Syracuse, NY 13221-4983 Chairman, M&T Bank
C. Angela Bontempo Director President, Bontempo &
207 Commerce Drive Associates, LLC
Amherst, NY 14228-2302
Robert T. Brady Director Chairman, President and
East Aurora, NY 14052-0018 Chief Executive Officer,
Moog Inc.
Emerson L. Brumback Executive Officer Executive Vice President,
One M&T Plaza, 19th Floor M&T Bank Corporation and
Buffalo, NY 14203-2396 M&T Bank
Atwood Collins, III Executive Officer Executive Vice President, and
350 Park Avenue President and Chief Executive 6th Floor
New York, NY 10022-6022 Officer, New York City Division
of Manufacturers and Traders
Trust Company; and Executive
Vice President, M&T Bank
Corporation
Mark J. Czarnecki Executive Officer Executive Vice President,
One M&T Plaza Manufacturers and
9th Floor Traders Trust Company
Buffalo, NY 14203-2399
Richard E. Garman Director President and Chief
2544 Clinton Street Executive Officer,
Buffalo, NY 14224-1092 A.B.C. Paving Co., Inc.
and Buffalo Crushed
Stone, Inc.
James V. Glynn Director President,
151 Buffalo Avenue Maid of the Mist
Suite 204 Corporation
Niagara Falls, NY 14303-1288
Brian E. Hickey Executive Officer Executive Vice President
255 East Avenue and President, Rochester
3rd Floor Division-Manufacturers
Rochester, NY 14604-2624 and Traders Trust Company;
and Executive Vice President,
M&T Bank Corporation
Patrick W.E. Hodgson Director President, Cinnamon
60 Bedford Road Investments Limited
2nd Floor
Toronto, Ontario
Canada M5R2K2
James L. Hoffman Executive Officer Executive Vice President
700 Corporate Blvd. and President, Hudson
Suite 701 Valley Division-Manufacturers
Newburgh, NY 12550-6046 and Traders Trust Company; and
Executive Vice President, M&T
Bank Corporation
Samuel T. Hubbard, Jr. Director President & Chief Executive
1059 West Ridge Road Officer, The Alling & Cory
Rochester, NY 14615-2731 Company
Robert J. Irwin Advisory Director Chairman and Chief Executive
Ellicott Station Officer, ASA Limited
P.O. Box 1210
Buffalo, NY 14205-1210
Russell A. King Director Retired Partner and Chief
4910 Red Pine Road Executive Officer, King &
Manlius, NY 13104-1314 King Architects, Inc.
Adam C. Kugler Executive Officer Executive Vice President and
350 Park Avenue Treasurer, M&T Bank
6th Floor Corporation and M&T Bank
New York, NY 10022-6022
Wilfred J. Larson Director Retired President and
200 Bahia Point Chief Executive Officer,
Naples, FL 34103-4368 Westwood-Squibb
Pharmaceuticals Inc.
Peter J. O'Donnell, Jr. Director President, Pine Tree
675 Highland Avenue Management Corporation
Clark Green, PA 18411-2502
Jorge G. Pereira Director Vice Chairman of the
350 Park Avenue Board, M&T Bank
6th Floor Corporation and
New York, NY 10022-6022 Manufacturers and
Traders Trust Company
John L. Pett Executive Officer Executive Vice President
One Fountain Plaza and Chief Credit Officer,
9th Floor Manufacturers and
Buffalo, NY 14203-1495 Traders Trust Company and
M&T Bank Corporation
Michael P. Pinto Executive Officer Executive Vice President
One M&T Plaza and Chief Financial
19th Floor Officer, Manufacturers
Buffalo, NY 14203-2399 and Traders Trust
Company and M&T Bank
Corporation
Melinda R. Rich Director President,
P.O. Box 245 Rich Entertainment
Buffalo, NY 14240-0245 Group
<PAGE>
Robert E. Sadler, Jr. Director and President, Manufacturers
One M&T Plaza Executive Officer and Traders Trust
19th Floor Company and
Buffalo, NY 14203-2399 Executive Vice President,
M&T Bank
Corporation
John L. Vensel Director Chairman and Chief Executive
P.O. Box 977 Officer, Crucible Materials
Syracuse, NY 13201-0977 Corporation
Herbert L. Washington Director President,
3280 Monroe Avenue H.L.W. Fast Track, Inc.
Rochester, NY 14618-4608
John L. Wehle, Jr. Director Chairman of the
445 St. Paul Street Board, President and
Rochester, NY 14605-1775 Chief Executive
Officer, Genessee
Corporation
Robert G. Wilmers Director and President and Chief
One M&T Plaza Executive Officer Executive Officer,
19th Floor M&T Bank Corporation;
Buffalo, NY 14203-2399 and Chairman of the Board
and Chief Executive Officer,
Manufacturers and Traders
Trust Company
</TABLE>
M&T Bank also acts as investment adviser to the other portfolios of the
Corporation. For the fiscal year ended April 30, 1998, M&T Bank received the
following investment advisory fees from the money market funds of the
Corporation. The approximate net assets (in millions) of the funds are as of
June 25, 1998:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Fund Name Advisory Fee Fee Paid Fee Waived Net Assets
Vision New York Tax-Free Money Market Fund 0.50% $389,766 $218,264 $99.3
Vision Money Market Fund ...... 0.50% $3,158,235 $336,623 $734.6
Vision Treasury Money Market Fund... 0.50% $2,304,815 $379,597 $453.9
</TABLE>
As of July 8, 1998, Officers and Directors of the Corporation owned less
than 1% of the Fund's outstanding shares.
For the fiscal year ended April 30, 1998, the Fund paid no commissions on
brokerage transactions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS APPROVE THE NEW
ADVISORY CONTRACT WITH M&T BANK
APPROVAL OR DISAPPROVAL OF CHANGES TO THE FUND'S
FUNDAMENTAL INVESTMENT POLICIES
The Investment Company Act of 1940 (the 1940 Act") requires investment
companies such as the Fund to adopt certain investment policies that can be
changed only by shareholder vote. An investment company may also elect to
designate other policies that may be changed only by shareholder vote. Both
types of policies are often referred to as "fundamental policies." Certain of
the Fund's fundamental policies have been adopted in the past to reflect
regulatory, business or industry conditions that are no longer in effect.
Accordingly, the Directors have approved, and have authorized the submission to
the Fund's shareholders for their approval, the deletion, amendment, and/or
reclassification of certain of the Fund's fundamental policies. These changes
are being requested since a shareholder meeting must be called to approve FIC as
sub-adviser, and the opportunity to address these revisions could also be made
at this time.
The proposed revisions would:
(i) simplify and modernize the policies that are required to be
fundamental by the 1940 Act;
(ii) reclassify as operating policies those fundamental policies that are
not required to be fundamental by the 1940 Act; and
(iii) delete those fundamental policies which are no longer required by
the securities laws of individual states as a result of NSMIA. NSMIA
is a federal law that preempted state regulation of mutual fund
operations.
By reducing to a minimum those policies that can be changed only by
shareholder vote, the Directors believe that the Fund would be able to minimize
the costs and delay associated with holding multiple shareholder meetings in the
future to change fundamental policies that adversely impact the investment
adviser's flexibility to manage the Fund competitively. The Directors also
believe that the investment adviser's ability to manage the Fund's assets in a
changing investment environment will be enhanced and that investment management
opportunities will be increased by these changes as current limitations are
unnecessarily restrictive.
The Board is proposing the following investment policy revisions to permit
any investment in securities, as long as such investment is consistent with the
Fund's investment objective and meets the standards of Rule 2a-7. These changes
are not expected to have any substantive impact on the daily management of the
Fund except to allow limited investments in other investment companies (Proposal
10), greater investments in restricted securities that are considered to have a
liquid trading market (Proposal 11), and investments in securities that meet the
top two (2) ratings criteria of Rule 2a-7 (Proposal 13).
In the event that the shareholders do not approve each of the revisions to
the fundamental investment policies listed below, such investment limitation(s)
will remain as presently stated in the Prospectus and /or Statement of
Additional Information.
3. TO APPROVE OR DISAPPROVE REVISIONS TO THE FUND'S FUNDAMENTAL
INVESTMENT POLICY ON SELLING SHORT AND BUYING ON MARGIN
The current fundamental investment limitation on Selling Short and Buying
on Margin reads:
"Selling Short and Buying on Margin
The Fund will not sell any securities short or purchase any securities on
margin, or participate on a joint or joint and several basis in any
securities trading account."
Since the 1940 Act already prohibits joint securities trading accounts
unless the SEC otherwise permits by rule, regulation or exemption that addresses
certain legislative and policy concerns, the Board is proposing amending the
investment limitation to delete the prohibition on joint securities trading
accounts. The investment limitation also will be revised to clarify that
short-term credits to clear trades are permissible. The revised limitation will
read:
"Selling Short and Buying on Margin
The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as may be necessary for
clearance of transactions."
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
4. TO APPROVE OR DISAPPROVE REVISIONS TO THE FUND'S FUNDAMENTAL INVESTMENT
POLICY ON ISSUING SENIOR SECURITIES AND BORROWING MONEY
The current investment limitations on Issuing Senior Securities and
Borrowing Money read as follows:
"Issuing Senior Securities
The Fund will not issue senior securities."
"Borrowing Money
The Fund may not borrow money or issue senior senior securities, except
under certain circumstances, the Fund may borrow from banks or enter into
reverse repurchase agreements for temporary purposes in amounts up to 10%
of the value of its total assets at the time of such borrowing. The Fund
may not purchase securities while its borrowings (including reverse
repurchase agreements) are outstanding. The Fund does not anticipate
entering into reverse repurchase agreements in excess of 5% of its net
assets." The prohibition on senior securities may be interpreted as
prohibiting borrowing. The 5% and 10% limits are unnecessarily restrictive
and need
not be included as part of the fundamental Borrowing Money limitation above.
Therefore, the Board is recommending the combination of the Issuing Senior
Securities and Borrowing Money investment limitations to clarify that the
prohibition on issuing senior securities does not prohibit borrowing and the
Board is establishing a separate, non-fundamental operating policy which will
continue to restrict the Fund's ability to borrow beyond what is permitted by
the fundamental investment limitation on borrowing. The amended fundamental
investment limitation will read as follows:
"Issuing Senior Securities and Borrowing Money
The Fund will not issue senior securities except that the Fund may borrow
money in amounts up to one-third of the value of its total assets,
including the amounts borrowed.
The separate, non-fundamental investment policy will read:
The Fund will not borrow money for investment leverage, but rather as a
temporary, extraordinary, or emergency measure or to facilitate management
of the portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio assets is deemed to be inconvenient or
disadvantageous. The Fund will not purchase any securities while
borrowings in excess of 5% of the value of its total assets are
outstanding."
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
5. TO APPROVE OR DISAPPROVE REVISIONS TO THE FUND'S FUNDAMENTAL INVESTMENT
POLICY ON PLEDGING SECURITIES
The current investment limitation on Pledging Securities reads:
"Pledging Securities
The Fund will not mortgage, pledge, or hypothecate any assets, except in
connection with any such borrowing and in amounts not in excess of the
lesser of dollar amounts borrowed or 10% of the value of the Fund's total
assets at the time of its borrowing. The Fund will not purchase securities
while its borrowings (including reverse repurchase agreements) are
outstanding."
The Board recommends the revision and deletion of the 10% limit and
prohibition on additional purchases in this fundamental policy since the Fund's
borrowing policy will be amended to limit borrowing for temporary purposes. The
amended investment limitation will read as follows:
"Pledging Securities
The Fund will not mortgage, pledge, or hypothecate any assets, except in
connection with any such borrowing."
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
6. TO APPROVE OR DISAPPROVE REVISIONS TO THE FUND'S FUNDAMENTAL INVESTMENT
POLICY ON COMMODITIES, COMMODITY CONTRACTS, OR REAL ESTATE
The Directors are recommending that the Fund's current investment policy
regarding investment in oil, gas, and minerals be revised by deleting the
restriction on investing in oil, gas, or mineral exploration or development
programs, since this language was state-imposed and has been pre-empted by
NSMIA. The Fund's ability to invest in these types of programs is already
prohibited by Rule 2a-7, so this will have no impact on the Fund's investment
approach. The current limitation reads:
"Investing in Commodities, Commodity Contracts, or Real Estate The Fund
will not invest in commodities, commodity contracts (including futures
contracts), real estate, oil, gas, or mineral exploration or development
programs, except that it may purchase marketable securities of companies
engaged in such activities."
The Board recommends that it be replaced with the following separate
investment limitations:
"Investing in Commodities
The Fund will not invest in commodities, commodity contracts or commodity
futures contracts. "
"Investing in Real Estate
The Fund will not purchase or sell real estate although it may invest in
securities of issuers whose business involves the purchase or sale of real
estate or in securities which are secured by real estate or interests in
real estate."
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
7. TO APPROVE OR DISAPPROVE REVISIONS TO THE FUND'S FUNDAMENTAL INVESTMENT
POLICY ON UNDERWRITING
The Directors are recommending that the Fund's current investment policy
regarding underwriting be revised to clarify the intent and scope of the
limitation as permitting the sale of securities the Fund is permitted to
purchase. The current policy reads as follows:
"Underwriting
The Fund will not engage in underwriting securities issued by others."
It would be revised as follows:
"Underwriting
The Fund will not underwrite any issue of securities except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies and limitations."
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
8. TO APPROVE OR DISAPPROVE REVISIONS TO THE FUND'S FUNDAMENTAL INVESTMENT
POLICY ON DIVERSIFICATION OF INVESTMENTS
The Fund's current fundamental investment policy on diversification of its
investments is as follows:
"Diversification of Investments
The Fund will not purchase securities issued by any one issuer (other than
cash, cash items, or securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities, and repurchase agreements
collateralized by such securities) if as a result more than 5% of the
value of its total assets would be invested in the securities of that
issuer, except that up to 25% of the value of the Fund's total assets may
be invested without regard to this 5% limitation."
The Directors propose to revise the Fund's current diversification
policy to add the reference "securities of other investment companies" to
parallel statutory requirements of a "diversified" fund. The revised policy will
read as follows:
"Diversification of Investments
The Fund will not purchase securities issued by any one issuer (other than
cash, cash items, or securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities, repurchase agreements
collateralized by such securities, and securities of other investment
companies) if as a result more than 5% of the value of its total assets
would be invested in the securities of that issuer, except that up to 25%
of the value of the Fund's total assets may be invested without regard to
this 5% limitation."
The change will have no substantive effect on the Fund's operations since
the Fund must comply with the diversification requirements of Rule 2a-7. When
the SEC amended Rule 2a-7 under the 1940 Act in 1996, the amendments established
specific diversification requirements for money market funds which are more
restrictive than, and supersede, the Fund's current policies. The 1998
amendments to Rule 2a-7 imposed further diversification restrictions on the
Fund. Since the Fund is a money market fund which relies on amortized cost
valuation of its portfolio securities to attempt to maintain a $1.00 net asset
value, it has complied with the Rule 2a-7 diversification requirements since its
adoption and intends to continue to comply with them.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
9. TO APPROVE OR DISAPPROVE REVISIONS TO THE FUND'S FUNDAMENTAL INVESTMENT
POLICY ON CONCENTRATION
The Fund's current fundamental investment policy on concentration of
investments is as follows:
"Concentration of Investments
The Fund will not invest more than 25% of the value of its total assets in
issuers of the same industry.
The Fund may invest more than 25% of the value of its total assets in
obligations issued by any state, territory, or possession of the United
States, the District of Columbia or any of their authorities, agencies,
instrumentalities or political subdivisions, in cash or cash items
(including instruments issued by a U.S. branch of a domestic bank or
savings and loan association and bankers' acceptances), securities issued
or guaranteed by the U.S. government, its agencies or instrumentalities,
or instruments secured by these money market instruments (i.e., repurchase
agreements)."
The investment policy will be revised to exclude investment companies from
the 25% limit on issuers in the same industry and will read as follows:
"Concentration of Investments
The Fund will not invest more than 25% of the value of its total assets in
issuers of the same industry, except that it may invest more than 25% of
the value of its total assets in obligations issued by any state,
territory, or possession of the United States, the District of Columbia or
any of their authorities, agencies, instrumentalities or political
subdivisions, in cash or cash items (including instruments issued by a
U.S. branch of a domestic bank or savings association and bankers'
acceptances), securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities, instruments secured by these money market
instruments (i.e., repurchase agreements), or in securities of other
investment companies."
As noted in the next Proposal 10, this change is desired to give the Fund
the flexibility to invest in other money market funds when appropriate for cash
management purposes. However, the Fund has no intent to concentrate in other
investment companies.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
10. TO AMEND AND TO CHANGE FROM A FUNDAMENTAL TO A NON-FUNDAMENTAL (OR
OPERATING) POLICY THE FUND'S ABILITY TO INVEST IN THE SECURITIES OF OTHER
INVESTMENT COMPANIES
The Fund currently has a fundamental investment policy prohibiting
investment in the securities issued by any other investment company, except as
part of a merger, consolidation, reorganization or acquisition of assets. This
prohibition unnecessarily limits the Fund's investments in other mutual funds.
Amending this policy would expand the investment opportunities available
to the Fund, particularly by allowing the Fund to invest temporary cash reserves
in shares of other money market funds. These cash reserves typically arise from
the receipt of dividend and interest income from portfolio securities, the
receipt of payment for sale of portfolio securities, defensive cash positions
and the decision to hold cash to meet redemptions or make anticipated dividend
payments. Further, by changing the policy from fundamental to a non-fundamental
(or operating) policy, the Directors believe that maximum flexibility will be
afforded to the Fund to amend the policy as appropriate in the future to reflect
regulatory changes without the burden and delay to the Fund and its shareholders
of holding a special meeting.
The money market funds in which the Fund may invest pay an advisory fee.
However, the investment adviser and the Directors believe that the benefits
derived from having the cash invested outweigh any reduction in the amount
earned as a result of such a fee. The ability to purchase shares of money market
funds would be beneficial because it would provide the Fund investment
opportunities late in each business day, when opportunities to acquire
acceptable money market instruments are limited. Otherwise, the Fund could be
forced to leave some of its cash uninvested resulting in little or no investment
income.
Under an SEC exemption, the Fund is permitted to invest in affiliated
money market funds, subject to certain SEC imposed conditions. If shareholders
approve the proposed changes in the fundamental policy, then the Fund would
reserve the right to invest in affiliated money market funds for cash management
purposes.
If shareholders approve this item, the new operating policy will read and
be disclosed as follows in (a) the Prospectus and (b) the Statement of
Additional Information:
(a) "Investing in Securities of Other Investment Companies
The Fund may invest its assets in securities of other investment companies
as an efficient means of carrying out its investment policies. It should
be noted that investment companies incur certain expenses, such as
management fees, and, therefore, any investment by the Fund in shares of
other investment companies may be subject to such duplicate expenses."
(b) "Investing in Securities of Other Investment Companies
The Fund may invest in the securities of affiliated money market funds as
an efficient means of managing the Fund's uninvested cash."
<PAGE>
If shareholders do not approve the operating policy change on investing in
securities of other investment companies, the Fund will continue not to invest
in the securities of other investment companies, except as part of a merger,
consolidation, reorganization or acquisition of assets.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
11. TO AMEND AND TO CHANGE FROM FUNDAMENTAL TO NON-FUNDAMENTAL POLICIES THE
FUND'S ABILITY TO INVEST IN ILLIQUID SECURITIES AND RESTRICTED SECURITIES
Investment companies, such as the Fund, are required to meet a
shareholder's redemption request at the current net asset value within seven
days of receiving the request for redemption. In order to do this, some portion
of the securities in the Fund's portfolio must be "liquid" so that the
securities can be sold in sufficient time to obtain the necessary cash to meet
redemption requests. The SEC has taken the position that money market funds,
such as the Fund, must have 90% of their portfolios in liquid securities in
order to ensure that redemptions can be honored within the necessary time frame.
The Fund's policy on illiquid securities currently reads:
"The Fund may not enter into repurchase agreements providing for
settlement more than seven days after notice, if such an investment,
together with any other illiquid securities in the Fund, exceeds 10% of
the Fund's net assets."
When the Fund's policy was adopted, it was classified as fundamental
although there was no requirement to do so. A few years ago, the SEC changed its
position regarding mutual fund liquidity requirements, allowing non-money market
funds and money market funds to invest in illiquid securities up to 15% and 10%
of net assets, respectively. There is no indication that the Commission intends
to change its position regarding liquidity, but should it do so, the Directors
believe they should have the flexibility to make such a change immediately,
without having to incur the delay and expense of a shareholder meeting.
As required by its current policy, the Fund will continue to limit its
investments in illiquid securities to 10% of net assets. If there are future
regulatory changes, the Directors will determine whether it is in the best
interest of shareholders, and in keeping with the Fund's investment objective,
to permit the Fund to invest a higher percentage of its assets in illiquid
securities.
The Fund's current policy on restricted securities reads as follows:
"The Fund will not invest in securities subject to certain legal or
contractual restrictions."
This policy was adopted because historically, restricted securities were
viewed as illiquid since they could not be sold within seven days. It is
important to note that due to regulatory and market trading changes, many
restricted securities are, in fact, quite liquid, and can be purchased without
jeopardizing the liquidity of the Fund's portfolio.
Certain state securities regulators previously required mutual funds to
have (in addition to an illiquid securities policy) a separate fundamental
policy limiting investment in restricted securities. Since the enactment of
NSMIA, states no longer have such jurisdiction. Futhermore, rules adopted by the
SEC have substantially increased the number of restricted securities that can
now be considered liquid and, in addition, have given to the Directors the
ability to establish specific guidelines for determining when a restricted
security may be deemed liquid. The Directors may delegate this determination to
the investment adviser provided the adviser's determination of liquidity is made
in accordance with the guidelines established and monitored by the Directors.
The Fund's current policy prevents the Fund from acquiring any restricted
security even if it may be viewed by the adviser as liquid. The Fund is
proposing to eliminate the prohibition on acquiring restricted securities and
create a new policy which incorporates the ability to invest in restricted
securities into its illiquid policy so that there is one, non-fundamental
illiquid investment limitation. If this proposal is approved, the Fund will be
able to invest to an unlimited extent in restricted securities as long as they
meet the Directors' guidelines for liquidity. The Fund's operating policy on
investing in restricted and illiquid securities will read and be disclosed as
follows in (a) the Prospectus and (b) the Statement of Additional Information:
(a) "Restricted and Illiquid Securities
The Fund may invest in restricted securities. Restricted securities are
any securities in which the Fund may invest pursuant to its investment
objective and policies but which are subject to restrictions on resale
under federal securities law. Under criteria established by the Directors,
certain restricted securities are determined to be liquid. To the extent
that restricted securities are not determined to be liquid, the Fund will
limit their purchase together with other illiquid securities (including
repurchase agreements providing for settlement in more than seven days
after notice) to 10% of its net assets."
(b) "Restricted and Illiquid Securities
The ability of the Directors to determine the liquidity of certain
restricted securities is permitted under a Securities and Exchange
Commission staff position set forth in the adopting release for Rule 144A
under the Securities Act of 1933. The Directors consider the following
criteria in determining the liquidity of certain restricted securities:
o the frequency of trades and quotes for the security;
o the number of dealers willing to purchase or sell the security and
the number of other potential buyers;
o dealer undertakings to make a market in the security; and
o the nature of the security and the nature of the marketplace trades.
Investing in Restricted and Illiquid Securities
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities, including repurchase agreements providing for
settlement in more than seven days after notice, and restricted securities
that have not been determined to be liquid under criteria established by
the Corporation's Directors."
Accordingly, if a restricted security is determined not to be liquid, the
purchase of that security, together with other illiquid securities, may not
exceed 10% of the Fund's net assets.
If shareholders do not approve the removal of the policy on restricted
securities, the Fund will continue to be prohibited from investing in securities
subject to legal or contractual restrictions, and thereby be at a competitive
disadvantage to its peers.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
12. TO APPROVE OR DISAPPROVE RECLASSIFYING CERTAIN OF THE FUND'S
FUNDAMENTAL INVESTMENT POLICIES TO NON-FUNDAMENTAL INVESTMENT POLICIES
After considering the factors described below, the Directors have
unanimously approved, subject to shareholder approval, that the following
fundamental investment policies (which are described in the Fund's prospectus
and SAI on the identified pages) be reclassified from fundamental to
non-fundamental policies. No other changes are being made to these policies.
Prospectus SAI
Page No. Page No.
(a) temporary investments 15 2
(b) when-issued and delayed delivery transactions 17 3
(c) credit enhancement 18 3
(d) dealing in puts and calls - - 6
(e) purchasing securities to exercise control - - 6
Fundamental policies may be changed by the Directors only with shareholder
approval while non-fundamental investment policies may be changed by the
Directors without shareholder approval. Aside from reclassifying the policies,
no change to the language or substance of the policies will or are expected to
be made.
These proposed reclassifications will provide the Fund with greater
flexibility in responding to market, economic and regulatory developments
without the necessity of seeking further shareholder approval that would entail
the cost to the Fund of preparing, printing, and mailing proxies. Shareholders
are required to vote on each change as a separate item. If you would like
another copy of the prospectus and/or SAI, please call the Corporation at
1-800-836-2211 or in the Buffalo area 635-9368.
In the event that the shareholders do not approve the reclassification of
any of these fundamental investment policies, such investment policies will
remain fundamental and unchanged.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
13. TO AMEND AND TO CHANGE THE FUND'S FUNDAMENTAL INVESTMENT POLICY ON
CREDIT GUIDELINES TO A NON-FUNDAMENTAL POLICY
The Fund's current fundamental investment policy on credit guidelines is
as follows:
"Credit Guidelines
The Fund invests only in municipal securities that are determined by M&T
Bank, the Fund's investment adviser, to present minimal credit risks and
that are considered to be of "high quality," as defined below, at the time
of purchase. This includes securities that are: o rated within the two
highest rating categories by Moody's Investors Service, Inc. ("Moody's")
(Aaa or Aa) or Standard & Poor's ("S&P") (AAA or AA), in the cases of
bonds;
o rated SP-1 by S&P or MIG-1 by Moody's, in the case of notes;
o rated VMIG-1 by Moody's, in the case of variable rate municipal
securities;
o rated A-1 or higher by S&P or Prime-1 by Moody's, in the case of
tax-exempt commercial paper; and
o securities that are not rated at the time of purchase but that are
determined to be of comparable quality to the above ratings by M&T Bank.
M&T Bank uses guidelines approved by the Corporation's Board of Directors
to make these quality determination.
The Board recommends deleting the above fundamental credit guidelines
policy and replacing it with a non-fundamental policy to comply with recently
amended Rule 2a-7. The investment policy will read as follows:
"The Fund will invest only in municipal securities that qualify as
"Eligible Securities" as defined by rule 2a-7 under the Investment Company
Act of 1940."
This will allow the Fund to invest in securities that are rated in the top
two (2) categories, and not necessarily just the top category, provided Rule
2a-7 otherwise permits.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
DELETION OF CERTAIN OF THE FUND'S
FUNDAMENTAL INVESTMENT POLICIES
The Directors have determined that certain of the current fundamental
investment policies are no longer necessary and should be deleted. Until NSMIA,
the securities laws of several states had prohibited an investment company whose
shares would be sold in those states from investing in certain securities. As a
consequence of those restrictions, the Fund adopted as fundamental the
investment policies described below. Since these prohibitions are no longer
required under state law, the management of the Fund has recommended, and the
Directors have determined, that these policies should be deleted. The deletion
of these policies would provide greater flexibility in the management of the
Fund by permitting the Fund to purchase a broader range of permitted
investments, provided they are consistent with the Fund's investment objective
and policies and amended Rule 2a-7. If the removal of any policy is not approved
by shareholders, then that policy will remain in effect as currently disclosed.
14. TO DELETE THE FUND'S FUNDAMENTAL INVESTMENT POLICY ON
INVESTING IN NEW ISSUERS (UNSEASONED ISSUERS)
The Directors have determined that the Fund's current policy on investment
in new issuers is no longer necessary. New issuers are those issuers that are
considered "unseasoned" because they have been in operation for less than three
years. Therefore, the Directors are recommending that the following policy be
deleted:
"The Fund will not invest more than 10% of the value of its total assets
in securities of issuers which have records of less than three years of
continuous operation, including the operation of any predecessor."
If approved, the Fund will be able to invest in unseasoned companies
without limit subject to the credit evaluation and quality requirements of Rule
2a-7.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
15. TO DELETE THE FUND'S FUNDAMENTAL INVESTMENT POLICY ON INVESTING IN
ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND DIRECTORS OF THE CORPORATION
The Directors have determined that the Fund's current policy on investment
in issuers whose securities are owned by Officers and Directors of the
Corporation is no longer necessary and are recommending that it be removed by
deleting the following:
"The Fund will not purchase or retain in its portfolio securities issued
by any issuer if the Officers or Directors of the Corporation or the
Fund's investment owning beneficially more than one-half of 1% of the
issuer's securities together own beneficially more than 5% of such
securities."
If approved, the Fund will be able to invest in issuers without regard to
whether the Officers or Directors of the Fund or its adviser own any securities
of those issuers. However, because of the types of securities purchased by the
Fund, it is highly unlikely that the Fund will purchase securities of any
issuers whose securities are owned in material amounts by Officers or Directors
of the Fund or its adviser.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
16. TO DELETE THE FUND'S FUNDAMENTAL INVESTMENT POLICY ON
COMMON STOCKS AND VOTING SECURITIES
The Directors have determined that the Fund's current policy on common
stocks and voting securities is unnecessary since most municipal money market
instruments do not carry voting rights and are not common stock. Therefore, the
Directors are recommending that the following policy be deleted:
"The Fund will not buy common stocks or voting securities of state,
municipal or industrial revenue bond issuers."
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
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 Securities Corp. ("FSC") 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. Under contract with Federated Services
Company, Federated Administrative Services ("FAS") is the Fund's administrator.
FAS, FSC, Federated Services Company and Federated Shareholder Services Company
are affiliates of FIC and indirect, wholly owned subsidiaries of Federated
Investors, Inc. and all share the address of Federated Investors Tower, 1001
Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779.
For services provided to the Fund for the period May 1, 1997 through
November 30, 1997, Federated Services Company received fees in the amount of
$23,517, Federated Shareholder Services Company received fees in the amount of
$14,081, and FAS received fees in the amount of $44,109. From the period
December 1, 1997 through April 30, 1998, Federated Shareholder Services Company,
Federated Services Company and FAS received fees in the aggregate in the amount
of $47,089.
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
July 17, 1998
CUSIP 92830F208
G01265-04(7/98)
<PAGE>
A-6
EXHIBIT A
PROPOSED FORM OF SUBADVISORY AGREEMENT
This Subadvisory Agreement (this "Agreement") is entered into as of the
1st day of September, 1998, by and among the Vision Group of Funds, Inc., a
Maryland corporation (the "Company"), Manufacturers and Traders Trust Company, a
New York bank and trust company (the "Adviser"), and Federated Investment
Counseling, a Delaware business trust ("FIC").
RECITALS:
A. The Company and the Adviser have entered into an advisory agreement dated
August ___, 1998 (the "Advisory Agreement"), pursuant to which the Adviser
provides portfolio management services to, among others, the portfolio
series of the Company set forth on Schedule 1 to this Agreement (each a
"Fund" and collectively the "Funds");
B. The Advisory Agreement contemplates that the Adviser may fulfill its
portfolio management responsibilities under the Advisory Agreement by
engaging one or more subadvisers; and
C. The Adviser and the Board of Directors (the "Board") of the Company desire
to retain FIC to render portfolio management services in the manner and on
the terms set forth in this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, the Company, the Adviser and FIC agree as follows:
SECTION 1. APPOINTMENT OF SUBADVISER.
The Adviser hereby appoints FIC as subadviser for each Fund. The Adviser
authorizes FIC, in its discretion and without prior consultation with the
Adviser, to invest and manage each Fund's portfolio of Securities according to
such Fund's stated investment objective to the fullest extent permitted by:
(a) the Fund's investment policies, limitations, procedures and guidelines
set forth in the documents listed on Schedules 2 and 3 to this Agreement;
(b) any additional objectives, policies or guidelines established by the
Adviser or by the Board that have been furnished in writing to FIC;
(c) the provisions of the Investment Company Act of 1940 (the "1940 Act")
and the rules and regulations thereunder applicable to the Fund, including
rule 2a-7 promulgated thereunder ("Rule 2a-7"); and
(d) the provisions of Subchapter M of the Internal Revenue Code applicable
to "regulated investment companies."
For purposes of this Agreement, "Securities" include all investments and
investment techniques permitted under the foregoing policies, limitations,
procedures, guidelines, laws or regulations. Subject to the supervision of the
Adviser and the Board, FIC shall determine the structure and composition of the
Fund's portfolio, including the purchase, retention and disposition of, and
exercise of all rights pertaining to, the Securities comprising the portfolio.
SECTION 2 REPRESENTATIONS AND WARRANTIES.
SECTION 2.1. REPRESENTATIONS AND WARRANTIES OF FIC
FIC represents and warrants to Adviser as follows:
(a) FIC is a business trust duly organized, validly existing, and in good
standing under the laws of the State of Delaware.
(b) This Agreement constitutes the legal, valid, and binding obligation of
FIC, enforceable against FIC in accordance with its terms. FIC has the
absolute and unrestricted right, power, and authority to execute and
deliver this and to perform its obligations under this Agreement.
(c) Neither the execution and delivery of this Agreement by FIC nor the
performance of any of its obligations hereunder will give any person the
right to prevent, delay, or otherwise interfere with the performance of
such obligations pursuant to:
(i) any provision of FIC's Declaration of Trust or By-Laws;
(ii) any resolution adopted by the board of Trustees or the
shareholders of FIC;
(iii) any law, regulation or administrative or court order to which
FIC may be subject; or
(iv) any contract to which FIC is a party or by which FIC may be
bound.
FIC is not and will not be required to obtain any consent from any person
in connection with the execution and delivery of this Agreement or the
performance of any obligations hereunder.
(d) FIC is registered with the Securities and Exchange Commission ("SEC")
as an investment adviser under the Investment Advisers Act of 1940 (the
"Advisers Act") and is registered or licensed as an investment adviser
under the laws of all jurisdictions in which its activities require it to
be so registered or licensed, except where the failure to be so licensed
would not have a material adverse effect on its business.
(e) FIC has furnished to the Adviser true and complete copies of all the
documents listed on Schedule 3 to this Agreement.
SECTION 2.2. REPRESENTATIONS AND WARRANTIES OF THE ADVISER
The Adviser represents and warrants to FIC as follows:
(a) The Adviser is a bank and trust company duly organized, validly
existing, and in good standing under the laws of the State of New
York.
(b) This Agreement constitutes the legal, valid, and binding obligation of
the Adviser, enforceable against the Adviser in accordance with its terms.
The Adviser has the absolute and unrestricted right, power, and authority
to execute and deliver this and to perform its obligations under this
Agreement.
(c) Neither the execution and delivery of this Agreement by the Adviser
nor the performance of any of its obligations hereunder will give any
person the right to prevent, delay, or otherwise interfere with the
performance of such obligations pursuant to:
(i) any provision of the Adviser's Articles of Incorporation or
By-Laws;
(ii) any resolution adopted by the board of directors or the
shareholders of the Adviser;
(iii)any law, regulation or administrative or court order to which the
Adviser may be subject; or
(iv) the Advisory Agreement or any other contract to which the Adviser
is a party or by which the Adviser may be bound.
Except for the approval of the Board and of each Fund's shareholders as
required by Section 15 of the 1940 Act, the Adviser is not and will not be
required to obtain any consent from any person in connection with the
execution and delivery of this Agreement or the performance of any
obligations hereunder.
(d) The Adviser is registered with the SEC or is otherwise exempt from
registration as an investment adviser under the Advisers Act and is
registered or licensed or is otherwise exempt from registration or
licensing as an investment adviser under the laws of all jurisdictions in
which its activities require it to be so registered or licensed, except
where the failure to be so licensed would not have a material adverse
effect on its business.
(e) The Adviser has furnished to FIC true and complete copies of all
the documents listed on Schedule 2 to this Agreement.
SECTION 3. CONDITIONS TO AGREEMENT.
FIC's and the Adviser's obligations under this Agreement are subject to
the satisfaction of the following conditions precedent:
(a) Receipt by FIC of satisfactory evidence that (i) this Agreement and
the Advisory Agreement have been approved by the vote of a majority of the
directors, who are not interested persons of FIC or the Adviser, cast in
person at a meeting of the Board called for the purpose of voting on such
approval, and (ii) this Agreement and the Advisory Agreement have been
approved by the vote of a majority of the outstanding voting securities of
the Fund;
(b) Receipt by FIC of copies of instructions from each Fund to its
custodian designating the persons specified by FIC as "Authorized Persons"
under the Fund's custody agreement and the custodian's agreement to
provide such persons with cash balances and similar information necessary
to manage each Fund;
(c) The Company's execution and delivery of a limited power of attorney in
favor of FIC, in a form mutually acceptable to FIC, the Adviser and the
Board;
(d) Receipt by FIC and the Adviser of an endorsement adding the Funds as
named insureds to FIC's Money Market Net Asset Value Guaranty Policy at
the Funds' expense;
(e) Receipt by FIC of Board resolutions adopting all procedures and
guidelines listed on Schedule 3 to this Agreement and identified as
required by Rule 2a-7 or any other exemptive rule or order that is or will
become applicable to any Fund;
(f) Receipt by FIC of complete copies of all other policies procedures,
guidelines, and codes listed on Schedule 2 to this Agreement; and
(g) Any other documents, certificates or other instruments that FIC or the
Adviser may reasonably request from the Fund.
SECTION 4. COMPENSATION.
For the services provided under this Agreement, the Adviser shall pay to
FIC an annual fee equal to the percentage(s) of a Fund's average daily net
assets set forth opposite such Fund's name on Schedule 1. Such fee accrues daily
and shall be paid monthly. If this Agreement is effective for only a portion of
a month, the fee will be prorated for the portion of such month during which
this Agreement is in effect.
SECTION 5. INFORMATION AND REPORTS.
(a) The Adviser shall promptly notify FIC of any (i) change in the
Advisory Agreement or (ii) material change in any of the investment
objectives, policies, limitations, guidelines or procedures set forth in
the documents listed on Schedules 2 and 3 to this Agreement, and shall
provide FIC with copies of any such modified document; provided, however,
that the Adviser shall provide FIC with such notice at least fifteen days
in advance of any proposed change in an objective, policy, limitation,
guideline or procedure specified in paragraphs(a) and (b) of Section 1.
(b) The Adviser shall also provide FIC with a list, to the best of the
Adviser's knowledge, of all affiliated persons of Adviser (and any
affiliated person of such an affiliated person) and shall promptly update
the list whenever the Adviser becomes aware of any additional affiliated
persons.
(c) FIC shall maintain separate books and detailed records of all matters
pertaining to all securities transactions on behalf of each Fund hereunder
as required by the 1940 Act, the Advisers Act, or as reasonably requested
in writing by the Adviser (a "Fund's Books and Records"). Each Fund's
Books and Records shall be available to the Adviser at any time upon
reasonable request and shall be available for telecopying to the Adviser
during any day that a Fund is open for business.
(d) From time to time as the Adviser or the Board may reasonably request,
FIC shall furnish to the Adviser and to the Board, reports of portfolio
transactions and reports on Securities held by a Fund, and such other
reports regarding FIC's management of any Fund as the Adviser or the Board
may reasonably request, all in such detail and form as the Adviser, the
Board, and FIC mutually agree. FIC will also inform the Adviser and the
Board on a current basis of changes in the investment strategy or in the
portfolio manager(s) for any Fund.
SECTION 6. NONEXCLUSIVE AGREEMENT; ALLOCATION OF TRANSACTIONS.
(a) The investment management services provided by FIC hereunder are not
to be deemed to be exclusive, and nothing in this Agreement shall prohibit
FIC from rendering similar services to other advisers, investment
companies, and other types of clients. The Adviser and the Company
acknowledge that the investment objectives of the Fund and those of other
FIC clients may be similar and that the investment performance of the
respective portfolios of these clients and the Funds may differ.
(b) To the extent consistent with applicable law, FIC may aggregate
purchase or sell orders for a Fund with contemporaneous purchase or sell
orders of other clients of FIC or its affiliated persons. In such event,
allocation of the Securities so purchased or sold, as well as the expenses
incurred in the transaction, shall be made by FIC in the manner FIC
considers to be the most equitable and consistent with its and its
affiliates' fiduciary obligations to the Fund and to such other clients.
The Adviser hereby acknowledges that such aggregation of orders may not
result in a more favorable price or lower brokerage commissions in all
instances.
(c) FIC will place orders with or through such banks, brokers, dealers,
futures commission merchants and other firms ("Brokers") in accordance
with the policy regarding brokerage set forth in a Fund's registration
statement or as the Board may direct from time to time. Bearing in mind a
Fund's best interest at all times, FIC shall use its best efforts to
obtain the most favorable price and execution for the Fund's transactions
available, considering all factors FIC deems relevant, including by way of
illustration, the size of the transaction, the nature of the market for
the security and the difficulty expected to be encountered in executing
the transaction, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the reputation,
experience and financial stability of the Broker involved and the quality
of service rendered by the Broker in other transactions. Subject to such
policies as the Board may determine, FIC shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of having caused the Fund to pay a Broker that
provides brokerage and research services to FIC or the Adviser (or to
their respective affiliated persons) an amount of commission for effecting
a Fund's transaction that is greater than the amount of commission that
another Broker would have charged for effecting that transaction. FIC may
enter into transactions on behalf of a Fund with Brokers that are
affiliated persons of FIC, provided such transactions are exempt from the
provisions of Sections 17(a), (d) and (e) of the 1940 Act. The Company
agrees that any change in the policies referred to in this paragraph shall
be subject to the proviso in Section 5(a) of this Agreement.
SECTION 7. FUND EXPENSES.
FIC shall bear its own costs of providing services hereunder; provided
that, nothing in this Agreement shall require FIC to pay, and each Fund shall
pay or reimburse FIC for, all of the Fund's own expenses and its allocable share
of the Company's expenses incurred in managing its portfolio of Securities,
including all commissions, mark-ups, transfer fees, registration fees, ticket
charges, transfer taxes, custodian fees and similar expenses. Each Fund shall
promptly reimburse FIC for any expense as may be reasonably incurred by FIC on
behalf of the Fund; provided, however, that FIC shall not incur any
extraordinary expense on behalf of the Fund without the prior written consent of
the Adviser. FIC shall keep and provide to the Company and the Adviser adequate
records of all expenses incurred by FIC on behalf of the Fund.
SECTION 8. LIMITATION OF LIABILITY.
(a) In the absence of willful misfeasance, bad faith or gross negligence
on the part of FIC, or of reckless disregard by FIC of its obligations and
duties hereunder, FIC shall not be subject to any liability to the
Adviser, the Fund, the Company, any shareholder of the Fund, or to any
person, firm or organization. Without limiting the foregoing, FIC shall
not have any liability whatsoever for any investment losses incurred by a
Fund, or arising from transactions by a Fund, prior to the date on which
FIC assumes responsibility for the management of the Fund's portfolio.
(b) The Adviser, the Company, and the Fund are hereby expressly put on
notice of the limitation of liability as set forth in the Declaration of
Trust of FIC and agree that the obligations assumed by FIC pursuant to
this Agreement shall be limited in any case to FIC and its assets and the
Adviser, the Company, and the Fund shall not seek satisfaction of any such
obligation from the shareholders of FIC, the Trustees of FIC, officers,
employees or agents of FIC, or any of them.
SECTION 9. PRICING.
The Adviser, the Company and the Fund hereby acknowledge that FIC is not
responsible for pricing portfolio Securities, and that the Adviser and FIC will
rely on the Amortized Cost Procedures listed in Schedule 3.
SECTION 10. TERM.
This Agreement shall begin as of the date of its execution and shall
continue in effect for a period of two years from the date hereof and thereafter
for successive periods of one year, subject to the provisions for termination
and all of the other terms and conditions hereof if such continuance is
specifically approved at least annually in conformity with the requirements of
the 1940 Act; provided, however, that this Agreement may be terminated by a Fund
at any time, without the payment of any penalty, by the Board or by vote of a
majority of the outstanding voting securities (as defined in the 1940 Act) of a
Fund, or by the Adviser or FIC at any time, without the payment of any penalty,
on not less than 60 days' written notice to the other parties. This Agreement
shall terminate automatically in the event of its assignment or upon termination
of the Advisory Agreement. In the event of termination, FIC shall immediately
cease all activity on behalf of the Fund and with respect to its Securities,
except as expressly directed by the Adviser. In addition, FIC shall deliver the
Fund's Books and Records to the Adviser by such means and in accordance with
such schedule, and shall otherwise cooperate, as reasonably directed by the
Adviser, in the transition of managing the Fund's portfolio of Securities to any
successor of FIC, including the Adviser. Any reasonable third party expenses
incurred in connection with the termination shall be paid by the Fund.
Termination of the Agreement shall not relieve the Fund, the Adviser or FIC of
any liability previously incurred hereunder.
SECTION 11. GENERAL PROVISIONS
SECTION 11.1. NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
FIC: Federated Investment Counseling
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
Attention: Carol Kayworth
Facsimile No.: (412) 288-8230
Adviser: Manufacturers Traders & Trust Company
One M&T Plaza
Buffalo, New York 14203
Attention: Robert J. Truesdell
Facsimile No.: (716) 842-5894
Company: Vision Group of Funds, Inc.
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
Attention: Secretary
Facsimile No.: (412) 288-8141
SECTION 11.2. FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
SECTION 11.3. WAIVER
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege.
SECTION 11.4. ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This Agreement
may not be amended except by a written agreement executed by the party to be
charged with the amendment.
SECTION 11.5. ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Subject to Section 10, this Agreement will apply to, be binding in all
respects upon, and inure to the benefit of the successors and permitted assigns
of the parties. Nothing expressed or referred to in this Agreement will be
construed to give any person other than the parties to this Agreement any legal
or equitable right, remedy, or claim under or with respect to this Agreement or
any provision of this Agreement. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and assigns.
SECTION 11.6. SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
SECTION 11.7. SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms. Any
terms defined in the 1940 Act, and not otherwise defined in this Agreement, are
used with the same meaning in this Agreement.
SECTION 11.8. GOVERNING LAW
This Agreement will be governed by the laws of the Commonwealth of
Pennsylvania without regard to conflicts of laws principles.
SECTION 11.9. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
signed on their behalf by their duly authorized officers as of the date first
above written.
MANUFACTURERS AND TRADERS TRUST FEDERATED INVESTMENT COUNSELING
COMPANY
By: By:
Name: Name:
Title: Title:
THE VISION GROUP OF FUNDS, INC.
By:
Name:
Title:
<PAGE>
SCHEDULE 1 - FUNDS AND SUBADVISORY FEES
Name of Series Subadvisory
Fees
Vision New York Tax-Free Money Market
Fund .20%
- - first $100 million average daily net .18%
assets .15%
- - next $100 million average daily net
assets
- - average daily net assets over $200
million
<PAGE>
SCHEDULE 2 - FUND DOCUMENTATION
1. Company's Articles of Incorporation and Bylaws.
2. Currently effective registration statement for each class of each Fund's
shares and any pending amendments to such registration statement.
3. Any supplements to any prospectus or statement of additional information for
any class of any Fund's shares.
4. Custody Agreement between the Company and State Street Bank and Trust
Company, as Custodian for each Fund's securities, including information as
to:
each Fund's nominee,
the Federal tax identification numbers of each Fund and its nominee,
all routing, bank, participant and account numbers and other information
necessary to provide proper instructions for transfer and delivery of
Securities to each Fund's accounts at the Custodian,
the name, address, phone and fax number of the Custodian's employees
responsible for each Fund's accounts, and each Fund's pricing service and
contact persons.
5. All SEC exemptive orders applicable to any Fund, and all procedures and
guidelines adopted by the Board under the terms of such orders.
6. All procedures and guidelines adopted by the Board or the Adviser
regarding: Transactions with affiliated persons,
Evaluating the liquidity of securities, including restricted securities,
municipal leases and stripped U.S. government securities, Segregation of
liquid assets in connection with firm commitments and standby
commitments, Derivative contracts and securities, Rule 10f-3 (relating to
affiliated underwriting syndicates), Rule 17a-7 (relating to interfund
transactions), Rule 17e-1 (relating to transactions with affiliated
Brokers), and Release No. IC-22362 (granting exemptions for investments
in money market funds).
7. Any master agreements that the Company has entered into on behalf of any
Fund, including: Master Repurchase Agreement, Master Futures and Options
Agreements, Master Foreign Exchange Netting Agreements, and Master Swap
Agreements.
8. CFTC Rule 4.5 letter.
9. Schedule of the current year's Board meetings, and any reports needed by the
Board.
10. Names, addresses, phone numbers and contacts for entities responsible for
performance calculations.
<PAGE>
SCHEDULE 3 - SUBADVISER DOCUMENTATION
1. Part II of FIC's Form ADV most recently filed with the SEC.
2. Guidelines and procedures required by Rule 2a-7, consisting of: Forms of
resolutions authorizing use of the amortized cost method, Amortized Cost
Procedures, and Federated Investment Adviser Guidelines
3. Procedures and checklists required by the following exemptive rules and
orders under the 1940 Act: Rule 17f-4 (relating to securities held in
securities depositories), Rule 17j-1 (relating to a code of ethics), and
Release No. IC-19816 (granting exemptions for transactions with
"affiliated banks").
4. Policies regarding the allocation of securities among clients with common
investment objectives.
<PAGE>
B-5
PROPOSED FORM OF INVESTMENT ADVISORY CONTRACT-EXHIBIT B
This Contract is made this 1st day of September 1998, between MANUFACTURERS
AND TRADERS TRUST COMPANY ("M&T Bank"), a New York state bank and trust company,
having its principal place of business in Buffalo, New York (the "Adviser"), and
VISION GROUP OF FUNDS, INC., a Maryland corporation having its principal place
of business in Pittsburgh, Pennsylvania (the "Corporation").
WHEREAS the Corporation is an open-end management investment company as
that term is defined in the Investment Company Act of 1940, as amended
("1940 Act"), and is registered as such with the Securities and Exchange
Commission; and
WHEREAS Adviser is engaged in the business of rendering investment advisory
and management services.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. The Corporation hereby appoints Adviser as Investment Adviser for each
of the portfolios ("Funds") of the Corporation which executes an exhibit to this
Contract, and Adviser accepts the appointments. Subject to the direction of the
Directors of the Corporation, Adviser shall provide investment research and
supervision of the investments of the Funds and conduct a continuous program of
investment evaluation and of appropriate sale or other disposition and
reinvestment of each Fund's assets.
2. Adviser, in its supervision of the investments of each of the Funds will
be guided by each of the Fund's investment objective and policies and the
provisions and restrictions contained in the Articles of Incorporation and
By-Laws of the Corporation and as set forth in the Registration Statements and
exhibits as may be on file with the Securities and Exchange Commission.
3. Each Fund shall pay or cause to be paid all of its own expenses and its
allocable share of Corporation expenses, including, without limitation, the
expenses of organizing the Corporation and continuing its existence; fees and
expenses of Directors and officers of the Corporation; fees for investment
advisory services and administrative personnel and services; expenses incurred
in the distribution of its shares ("Shares"), including expenses of
administrative support services; fees and expenses of preparing and printing its
Registration Statements under the Securities Act of 1933 and the 1940 Act, and
any amendments thereto; expenses of registering and qualifying the Corporation,
the Funds, and Shares of the Funds under federal and state laws and regulations;
expenses of preparing, printing, and distributing prospectuses (and any
amendments thereto) to shareholders; interest expense, taxes, fees, and
commissions of every kind; expenses of issue (including cost of Share
certificates), purchase, repurchase, and redemption of Shares, including
expenses attributable to a program of periodic issue; charges and expenses of
custodians, transfer agents, dividend disbursing agents, shareholder servicing
agents, and registrars; printing and mailing costs, auditing, accounting, and
legal expenses; reports to shareholders and governmental officers and
commissions; expenses of meetings of Directors and shareholders and proxy
solicitations therefor; insurance expenses; association membership dues and such
nonrecurring items as may arise, including all losses and liabilities incurred
in administering the Corporation and the Funds. Each Fund will also pay its
allocable share of such extraordinary expenses as may arise including expenses
incurred in connection with litigation, proceedings, and claims and the legal
obligations of the Corporation to indemnify its officers and Directors and
agents with respect thereto.
4. Each of the Funds shall pay to Adviser, for all services rendered to
each Fund by Adviser hereunder, the fees set forth in the exhibits attached
hereto.
5. The net asset value of each Fund's Shares as used herein will be
calculated to the nearest 1/10th of one cent.
6. The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation (and, if appropriate, assume expenses of one
or more of the Funds) to the extent that any Fund's expenses exceed such lower
expense limitation as the Adviser may, by notice to the Fund, voluntarily
declare to be effective.
7. This Contract shall begin for each Fund as of the date of execution of
the applicable exhibit and shall continue in effect with respect to each Fund
presently set forth on an exhibit (and any subsequent Funds added pursuant to an
exhibit during the initial term of this Contract) for two years from the date of
this Contract set forth above and thereafter for successive periods of one year,
subject to the provisions for termination and all of the other terms and
conditions hereof if: (a) such continuation shall be specifically approved at
least annually by the vote of a majority of the Directors of the Corporation,
including a majority of the Directors who are not parties to this Contract or
interested persons of any such party cast in person at a meeting called for that
purpose; and (b) Adviser shall not have notified a Fund in writing at least
sixty (60) days prior to the anniversary date of this Contract in any year
thereafter that it does not desire such continuation with respect to that Fund.
If a Fund is added after the first approval by the Directors as described above,
this Contract will be effective as to that Fund upon execution of the applicable
exhibit and will continue in effect until the next annual approval of this
Contract by the Directors and thereafter for successive periods of one year,
subject to approval as described above.
8. Notwithstanding any provision in this Contract, it may be terminated at
any time with respect to any Fund, without the payment of any penalty, by the
Directors of the Corporation or by a vote of the shareholders of that Fund on
sixty (60) days' written notice to Adviser.
9. This Contract may not be assigned by Adviser and shall automatically
terminate in the event of any assignment. Adviser may employ or contract with
such other person, persons, corporation, or corporations (including a
sub-adviser) at its own cost and expense as it shall determine in order to
assist it in carrying out this Contract, subject to any approval required under
the 1940 Act. Notwithstanding the foregoing, the Adviser shall be liable to the
Corporation for the acts and omissions of any sub-investment adviser to the
extent that such sub-investment adviser is liable to the Adviser for such acts
or omissions under any sub-advisory agreement.
10. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the obligations or duties under this Contract on the part
of Adviser, Adviser shall not be liable to the Corporation or to any of the
Funds or to any shareholder for any act or omission in the course of or
connected in any way with rendering services or for any losses that may be
sustained in the purchase, holding, or sale of any security.
11. This Contract may be amended at any time by agreement of the parties
provided that the amendment shall be approved both by the vote of a majority of
the Directors of the Corporation, including a majority of the Directors who are
not parties to this Contract or interested persons of any such party to this
Contract (other than as Directors of the Corporation) cast in person at a
meeting called for that purpose, and, to the extent required by the 1940 Act, on
behalf of a Fund by a majority of the outstanding voting securities of such
Fund.
12. The Adviser acknowledges that all sales literature for investment
companies (such as the Corporation) are subject to strict regulatory oversight.
The Adviser agrees to submit any proposed sales literature for the Corporation
(or any Fund) or for itself or its affiliates which mentions the Corporation (or
any Fund) to the Corporation's distributor for review and filing with the
appropriate regulatory authorities prior to the public release of any such sales
literature, provided, however, that nothing herein shall be construed so as to
create any obligation or duty on the part of the Adviser to produce sales
literature for the Corporation (or any Fund). The Corporation agrees to cause
its distributor to promptly review all such sales literature to ensure
compliance with relevant requirements, to promptly advise Adviser of any
deficiencies contained in such sales literature, to promptly file complying
sales literature with the relevant authorities, and to cause such sales
literature to be distributed to prospective investors in the Corporation.
13. The parties hereto acknowledge that M&T Bank has reserved the right to
grant the non-exclusive use of the name "Vision" or any derivative thereof to
any other investment company, investment company portfolio, investment adviser,
distributor or other business enterprise, and to withdraw from the Corporation
and one or more of the Funds the use of the name "Vision." The parties also
acknowledge that the investment management services furnished by the Adviser are
not to be deemed exclusive and the Adviser shall be free to furnish similar
services to others whether or not for compensation so long as its services under
this Agreement are not impaired thereby.
14. This Contract shall be construed in accordance with and governed by the
laws of the Commonwealth of Pennsylvania.
15. This Contract will become binding on the parties hereto upon their
execution of the attached exhibits to this Contract.
<PAGE>
16. In compliance with the requirements of the 1940 Act, the Adviser hereby
agrees that all records which it maintains for the Corporation are the property
of the Corporation and further agrees to surrender promptly to the Corporation
any of such records upon the Corporation's request. The Adviser further agrees
to preserve for the periods prescribed by the 1940 Act the records required to
be maintained under the 1940 Act.
MANUFACTURERS AND TRADERS TRUST COMPANY
By:
Name:
Title:
VISION GROUP OF FUNDS, INC.
By:
Name:
Title:
<PAGE>
EXHIBIT A
to the
Investment Advisory Contract
Vision New York Tax-Free Money Market Fund
For all services rendered by Adviser hereunder, the above-named Fund(s) of
the Corporation shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment advisory
fee equal to .50 of 1% of the average daily net assets of the Fund(s).
The portion of the fee based upon the average daily net assets of the
Fund(s) shall be accrued at the rate of 1/365th of .50 of 1% applied to the
daily net assets of the Fund(s).
The advisory fee so accrued shall be accrued daily and paid to the Adviser
monthly.
Witness the due execution hereof this 1st day of September, 1998.
MANUFACTURERS AND TRADERS TRUST COMPANY
By:
Name:
Title:
VISION GROUP OF FUNDS, INC.
By:
Name:
Title:
<PAGE>
CURRENT INVESTMENT ADVISORY AGREEMENT - EXHIBIT C
VISION GROUP OF FUNDS, INC.
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of April 25, 1988 between VISION GROUP OF FUNDS, INC., a
Maryland corporation (the "Fund"), and M&T BANK, a national banking association
with its principal offices in Buffalo, New York (the "Investment Adviser").
WHEREAS, the Fund is registered as an open-end, diversified, management
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Fund desires to retain the Investment Adviser to furnish
investment advisory and administrative services with respect to each of the
portfolios offered by the Fund, and the Investment Adviser is willing to so
furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints the Investment Adviser to act as
investment adviser to the Fund for the period and on the terms set forth in this
Agreement. The Investment Adviser accepts such appointment and agrees to furnish
the services herein set forth for the compensation herein provided.
2. Delivery of Documents. The Fund has furnished the Investment Adviser
with copies properly certified or authenticated of each of the following:
(a) The Fund's Articles of Incorporation, as filed with the
Secretary of State of Maryland on February 23, 1988, and all amendments
thereto;
(b) The Fund's By-Laws and amendments thereto, as presently in
effect and as they shall from time to time be amended (the "By-Laws");
(c) Resolutions of the Fund's Board of Directors authorizing
the appointment of the Investment Adviser and approving this Agreement;
(d) The Fund's Notification of Registration on Form N-8A under
the 1940 Act as filed with the Securities and Exchange Commission on March
14, 1988;
(e) The Fund's Registration Statement on Form N-1A under the
Securities Act of 1933 as amended ("1933 Act") (File No. 33-20673) and
under the 1940 Act as filed with the Securities and Exchange Commission
and all amendments thereto; and
(f) The Fund's most recent prospectus (such prospectus, as
presently in effect and all amendments and supplements thereto, are herein
called the "Prospectus").
The Fund will furnish the Investment Adviser from time to time with copies
of all amendments of or supplements to the foregoing.
3. Management. Subject to the supervision of the Fund's Board of
Directors, the Investment Adviser will provide a continuous investment program
for the Fund, including investment research and management with respect to all
securities and investments and cash equivalents in the portfolio. The Investment
Adviser will determine from time to time what securities and other investments
will be purchased, retained or sold by the Fund. The Investment Adviser will
provide the services under this Agreement in accordance with the Fund's
investment objective, policies and restrictions as stated in the Prospectus and
resolutions of the Fund's Board of Directors. The Investment Adviser further
agrees that it:
(a) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and will in addition conduct its
activities under this Agreement in accordance with any regulations of the
Comptroller of the Currency pertaining to the investment advisory
activities of national banks;
(b) will not make loans to any persons for the purpose of purchasing
Fund shares or make loans to the Fund;
(c) will place orders pursuant to the investment determinations for
the Fund either directly with the issuer or with a broker or dealer. In
placing orders with brokers and dealers the Investment Adviser will
attempt, under the circumstances, to obtain the execution of orders in an
effective manner at the most favorable price. Consistent with this
obligation, when the execution and price offered by two or more brokers or
dealers are comparable, the Investment Adviser may, in its discretion,
purchase and sell portfolio securities to and from brokers and dealers who
provide the Investment Adviser with research advice and other services. In
no instance will portfolio securities be purchased from or sold to the
Fairfield Group, Inc., M&T Bank, or any affiliated person of either the
Fund, the Fairfield Group, Inc., or M&T Bank.
(d) will, together with any sub-advisers, maintain all books and
records with respect to the Fund's securities transactions and will
furnish the Fund's Board of Directors such periodic and special reports as
the Board may request;
(e) will treat confidentially and as proprietary information of the
Fund all records and other information relative to the Fund and prior,
present or potential shareholders, and will not use such records and
information for any purpose other than performance of its responsibilities
and duties hereunder, except after prior notification to, and approval in
writing by, the Fund, which approval shall not be unreasonably withheld
and may not be withheld where the Investment Adviser may be exposed to
civil or criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted authorities, or
when so requested by the Fund; and
(f) will maintain its policy and practice of conducting its Trust
Investment Division independently of its Commercial Department. In making
investment recommendations of the Fund, Trust Division personnel will not
inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Fund's account are customers of the
Commercial Department. In dealing with commercial customers, the
Commercial Department will not inquire or take into consideration whether
securities of those customers are held by the Fund; and
(g) will not purchase shares of the Fund for itself.
4. Services Not Exclusive. The investment management services furnished by
the Investment Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser shall be free to furnish similar services to others whether
or not for compensation so long as its services under this Agreement are not
impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Investment Adviser hereby agrees that all records which
it maintains for the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund any of such records upon the Fund's request. The
Investment Adviser further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required by Rule 31a-1 to be maintained
under the 1940 Act.
6. Expenses. During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Fund.
7. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, effective as of the date of the initial public sale
of shares of the Fund, the Fund will pay the Investment Adviser and the
Investment Adviser will accept as full compensation therefor a fee, computed
daily and paid monthly, at an annual rate of .50% of the average net assets held
by the Fund.
If in any fiscal year the aggregate expenses of the Fund (as defined
under the securities regulations of any state having jurisdiction over the Fund)
exceed the expense limitations of any such state, the Investment Adviser will
reimburse the Fund for a portion of such excess expenses equal to such excess
times the ratio of the fees otherwise payable to the Investment Adviser
hereunder to the aggregate fees otherwise payable to the Investment Adviser
hereunder and to Fairfield Group, Inc. under an Administration Agreement between
it and the Fund. The obligation of the Investment Adviser to reimburse the Fund
hereunder is limited in any fiscal year to the amount of its fee hereunder for
such fiscal year, provided, however, that notwithstanding the foregoing, the
Investment Adviser shall reimburse the Fund for such proportion of such excess
expenses regardless of the amount of fees paid to it during such fiscal year to
the extent that the securities regulations of any state having jurisdiction over
the Fund so require. Such expense reimbursement, if any, will be estimated daily
and reconciled and paid on a monthly basis.
8. Limitation of Liability. The Investment Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with he performance of this Agreement, except a loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Investment Adviser in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement. Notwithstanding the foregoing, the Investment Adviser shall be liable
to the Fund for the acts and omissions of any sub-investment adviser to the
extent that such sub-investment adviser is liable to the Investment Adviser for
such acts or omission under any sub-advisory agreement.
9. Duration and Termination. This Agreement becomes effective April 25,
1988, provided that it shall have been approved by the shareholders of the Fund,
in accordance with the requirements under the 1940 Act, and, unless sooner
terminated as provided herein, shall continue in effect until April 25, 1990.
Thereafter, if not terminated, this Agreement shall continue in effect for
successive periods of twelve months each ending on April 25th each year,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Fund's Board of Directors or by vote of a majority of the
outstanding voting securities of the Fund. Notwithstanding the foregoing, this
Agreement may be terminated any time, without the payment of any penalty, by the
Fund (by vote of the Fund's Board of Directors or by vote of a majority of the
outstanding voting securities of the Fund) or by the Investment Adviser on sixty
days' written notice. This Agreement will immediately terminate in the event of
its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" shall have
the same meaning of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective until approved by vote of a majority of the outstanding voting
securities of the Fund.
11. Severability. In the event that his Agreement is not approved by the
majority of the outstanding voting securities of a portfolio of the Fund, such
disapproval shall not render this Agreement invalid or unenforceable with
respect to other portfolios of the Fund for which shareholder approval of this
Agreement has been obtained.
<PAGE>
12. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Pennsylvania law.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the date and year first above
written.
VISION GROUP OF FUNDS, INC.
By: /s/ Francis J. Bruzda
As its President
M&T BANK
By: /s/ William J. Newman
As its Chief Investment Officer and
Senior Vice President
[LOGO]
[Account Number]
VISION NEW YORK TAX-FREE MONEY MARKET FUND
Proxy for Special Meeting of Shareholders - August 21, 1998
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of Vision
New York Tax-Free Money Market Fund (the "Fund"), a portfolio of Vision Group of
Funds, Inc. (the "Corporation") hereby appoint Victor R. Siclari, C. Todd
Gibson, Patricia F. Conner, Leanne C. O'Brien and Cristina Rice, or any one of
them, true and lawful attorneys, with the power of substitution of each, to vote
all shares of Vision New York Tax-Free Money Market Fund which the undersigned
may be entitled to vote at the Special Meeting of Shareholders to be held on
August 21, 1998, at Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh,
Pennsylvania at 2:00 p.m., and at any adjournment thereof.
The attorneys named will vote the shares represented by this proxy in accordance
with the choices made on this ballot. If no choice is indicated as to the item,
this proxy will be voted affirmatively on the matters. The matters being
proposed are related to, but not conditioned, on the approval of, each other.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Special Meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF VISION GROUP OF
FUNDS, INC. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" THE PROPOSALS.
Proposal 1 To approve a Subadvisory Agreement among the Fund, Manufacturers
and Traders Trust Company ("M&T Bank"), and Federated Investment Counseling
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 2 To approve a new Investment Advisory Contract between M&T Bank
and the Fund
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 3 To approve revisions to the Fund's fundamental investment policy
on selling short and buying on margin
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 4 To approve revisions to the Fund's fundamental investment policy
on issuing senior securities and borrowing money
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 5 To approve revisions to the Fund's fundamental investment policy
on pledging securities
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 6 To approve revisions to the Fund's fundamental investment policy
on commodities, commodity contract, or real estate
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 7 To approve revisions to the Fund's fundamental investment policy
on underwriting
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 8 To approve revisions to the Fund's fundamental investment policy
on diversification of investments
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 9 To approve revisions to the Fund's fundamental investment policy
on concentration of investments
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 10 To approve amending and changing from fundamental to a
non-fundamental investment policy the Fund's ability to invest in the securities
of other investment companies
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 11 To approve amending and changing from fundamental to a
non-fundamental investment policy the Fund's ability to invest in illiquid
securities and restricted securities
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 12(a) To approve reclassifying from fundamental to non-fundamental
the Fund's investment policies regarding temporary investments
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
<PAGE>
Proposal 12(b) To approve reclassifying from fundamental to non-fundamental
the Fund's investment policies regarding when-issued and delayed
delivery transactions
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 12(c) To approve reclassifying from fundamental to non-fundamental
the Fund's investment policies regarding credit enhancement
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 12(d) To approve reclassifying from fundamental to non-fundamental
the Fund's investment policies regarding dealing in puts and calls
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 12(e) To approve reclassifying from fundamental to non-fundamental
the Fund's investment policies regarding purchasing securities to exercise
control
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 13 To amend and to change from fundamental to
non-fundamental the Fund's investment policy regarding
credit guidelines FOR [ ] AGAINST [ ] ABSTAIN [ ]
Proposal 14 To approve the deletion of the Fund's fundamental investment policy
on investing in new issuers
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 15 To approve the deletion of the Fund's fundamental investment
policy on investing in issuers whose securities are owned by Officers and
Directors of the Corporation
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 16 To approve the deletion of the Fund's fundamental
investment policy on voting securities and revenue bonds
FOR [ ] AGAINST [ ] ABSTAIN [ ]
<PAGE>
YOUR VOTE IS IMPORTANT
Please complete, sign and return ________________________
this card as soon as possible. Date
Mark with an X in the box.
Shareholders may also vote by touch ________________________ tone phone by
calling 1-800-690-6903.
Signature
------------------------
Signature (Joint Owners)
