VISION GROUP OF FUNDS INC, 485APOS, 1999-06-23

VISION GROUP OF FUNDS INC
485APOS, 1999-06-23

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1933 Act File No. 33-20673
1940 Act File No. 811-5514

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
------

Pre-Effective Amendment No. .........................

Post-Effective Amendment No. 37 ............................. X
---- ------

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No. 38 ............................................ X
---- ------

VISION GROUP OF FUNDS, INC.

(Exact Name of Registrant as Specified in Charter)

5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7010

(Address of Principal Executive Offices)

(412) 288-1900

(Registrant's Telephone Number)

Victor R. Siclari, Esquire,

Federated Investors Tower,

1001 Liberty Avenue

Pittsburgh, Pennsylvania 15222-3779

(Name and Address of Agent for Service)

(Notices should be sent to the Agent for Service)

It is proposed that this filing will become effective:

_ _immediately upon filing pursuant to paragraph (b)
_ on June 1, 1999, pursuant to paragraph (b)

X 60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i)

_ 75 days after filing pursuant to paragraph (a)(ii) on _________________
pursuant to paragraph (a)(ii) of Rule 485.

If appropriate, check the following box:

This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

Copy to:

Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP

2101 L Street, N.W.
Washington, D.C. 20037

VISION GROUP OF FUNDS, INC.

PROSPECTUS

AUGUST __, 1999

<PAGE>

VISION TREASURY MONEY MARKET FUND

CLASS A SHARES

VISION MONEY MARKET FUND

CLASS A SHARES

VISION NEW YORK TAX-FREE MONEY MARKET FUND

CLASS A SHARES

VISION U.S. GOVERNMENT SECURITIES FUND

CLASS A SHARES

VISION NEW YORK MUNICIPAL INCOME FUND

CLASS A SHARES

VISION LARGE CAP VALUE FUND

(formerly Vision Equity Income Fund)

CLASS A SHARES AND CLASS B SHARES

VISION LARGE CAP GROWTH FUND

CLASS A SHARES AND CLASS B SHARES

VISION GROWTH & INCOME FUND

CLASS A SHARES

VISION CAPITAL APPRECIATION FUND

CLASS A SHARES

<PAGE>

MUTUAL FUND SHARES ARE NOT BANK DEPOSITS, NOT FDIC INSURED, NOT GUARANTEED AND
MAY LOSE VALUE.

As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.

CONTENTS [TO BE COMPLETED]

<PAGE>

FUND GOALS, STRATEGIES, RISKS AND PERFORMANCE

This Prospectus of the Vision Group of Funds, Inc. offers ten portfolios,
including three Money Market Funds, two Income Funds and five Equity Funds. The
following describes the investment goals (objectives), strategies and principal
risks of each Fund. There can be no assurance that a Fund will achieve its goal.
However, each Fund endeavors to do so by following the strategies and policies
described in this prospectus.

MONEY MARKET FUNDS

Money Market Funds are subject to strict regulatory limitations on their
permissible investments, which are designed to allow the funds to maintain a
stable share price of $1.00. These limitations govern diversification (how much
of their assets can be invested in any one issuer), credit quality, and length
of maturity. For example the securities in which the Funds invest must be rated
in one of the two highest short-term rating categories by one or more nationally
recognized rating services or be of comparable quality to securities having such
ratings.

VISION TREASURY MONEY MARKET FUND

GOAL: To seek current income with liquidity and stability of principal.

STRATEGY: The Fund pursues its goal by investing in a diversified portfolio of
direct obligations of the U.S. Treasury, such as Treasury bills and notes, and
repurchase agreements secured by these obligations. These obligations are high
quality, short-term investments that generally mature and come due for repayment
by the issuer in 397 days or less. The dollar-weighted average maturity of the
Fund will not exceed 90 days.

VISION MONEY MARKET FUND

GOAL: To seek current income with liquidity and stability of principal.

STRATEGY: The Fund pursues its goal by investing in a diversified portfolio of
high quality, short-term debt obligations issued by the U.S. government, banks
and corporations. These obligations generally mature and come due for repayment
by the issuer in 397 days or less. The dollar-weighted average maturity of the
Fund will not exceed 90 days.

VISION NEW YORK TAX-FREE MONEY MARKET FUND

GOAL: To seek a high level of current interest income that is exempt from
federal regular income tax as is consistent with liquidity and relative
stability of principal.

STRATEGY: The Fund pursues its goal by investing in a portfolio of high-quality,
short-term tax-exempt debt obligations (municipal securities) that generally
mature in 397 days or less from the time of investment. The dollar-weighted
average maturity of the Fund will not exceed 90 days. Under normal market
conditions, the Fund intends to invest at least 80% of its net assets in debt
obligations that pay interest exempt from federal regular income tax. When
possible, the Fund intends to invest, under normal market conditions, at least
80% of its net assets in securities issued by the State of New York and its
political subdivisions (New York municipal securities). If the Fund pays
dividends from interest it earns on its New York municipal securities
investments, the dividends will be exempt from federal regular income tax, as
well as New York State and New York City income taxes.

INCOME FUNDS

VISION U.S. GOVERNMENT SECURITIES FUND

GOAL: To seek current income. Capital appreciation is a secondary,
non-fundamental investment consideration.

STRATEGY: The Fund pursues its goal by investing, under normal market
conditions, at least 65% of its total assets in a diversified portfolio
consisting of securities that are guaranteed as to payment of principal and
interest by the U.S. government or its agencies or instrumentalities, including
mortgage-backed securities issued by U.S. government agencies. The Fund
anticipates that most of its assets will be invested in fixed income securities
having maturities greater than one year. Certain mortgage-backed securities,
including Adjustable Rate Mortgage Securities (ARMS) and Collateralized Mortgage
Obligations (CMOs) are included within the definition of "U.S. Government
Securities." The Fund may invest at times to a limited extent in other types of
debt obligations to enhance total return (e.g., corporate debt obligations,
taxable municipal securities, asset-backed securities, etc.).

VISION NEW YORK MUNICIPAL INCOME FUND

GOAL: To provide current income which is exempt from federal regular income tax
and the personal income taxes imposed by the State of New York and New York
municipalities and is consistent with the preservation of capital.

STRATEGY: The Fund pursues its goal by investing primarily in securities that
pay interest which is exempt from federal regular income tax and personal income
taxes imposed by the State of New York and New York municipalities. Under normal
market conditions, at least 80% of the Fund's net assets will be invested in
securities that pay interest which is exempt from federal regular income tax.
However, the interest on these securities may be subject to the federal
alternative minimum tax or "AMT." Under normal market conditions, at least 65%
of the value of the Fund's total assets will be invested in obligations issued
by or on behalf of the State of New York, its political subdivisions or agencies
that pay interest which is exempt from the personal income tax imposed by the
State of New York and New York municipalities.

EQUITY FUNDS

VISION LARGE CAP VALUE FUND

GOAL: To provide current income. Capital appreciation is a secondary,
non-fundamental consideration.

STRATEGY: The Fund pursues its goal by investing primarily in a diversified
portfolio of income-producing equity securities of large-sized U.S. companies.
Equity securities include common and preferred stocks, as well as convertible
securities. The Adviser uses a value-oriented approach to select those companies
with unrecognized or undervalued assets.

VISION LARGE CAP GROWTH FUND

GOAL: To provide capital appreciation.

STRATEGY: The Fund pursues its goal by investing in a diversified portfolio of
common stocks of the largest growth-oriented companies in the U.S. based upon
price to earnings ratio, price to book ratio, and estimated earnings growth.
These companies will have market capitalizations over $10 billion at the time of
investment.

VISION GROWTH & INCOME FUND

GOAL: To provide long-term growth of capital and income.

STRATEGY: The Fund pursues its goal by investing in a diversified portfolio of
equity securities (common and preferred stocks, convertible securities) and debt
securities (bonds, notes). The Fund invests in mid-sized companies (those with
market capitalizations of $1 billion to $10 billion at the time of purchase)
that in the Adviser's opinion are undervalued.

VISION CAPITAL APPRECIATION FUND

GOAL: To produce long-term capital appreciation. Current income is a
secondary, non-fundamental investment consideration.

STRATEGY: The Fund pursues its goal by investing primarily in a diversified
portfolio of common stocks of growth-oriented mid-sized companies (those with
market capitalizations of $1 billion to $10 billion at the time of purchase).
The primary factor in selecting securities will be the Adviser's assessment of
the stock's potential for price appreciation (i.e., growth). Prior to
investment, the Adviser will thoroughly research each company for its financial
strength and growth potential.

<PAGE>

PRINCIPAL RISKS OF THE FUNDS

The Shares offered by this prospectus are not deposits or obligations of M&T
Bank, are not endorsed or guaranteed by M&T Bank and are not insured or
guaranteed by the U.S. government, the Federal Deposit Insurance Corporation,
the Federal Reserve Board, or any other government agency. Although the Money
Market Funds attempt to preserve the value of your investment at $1.00 per
Share, it is possible to lose money by investing in any of the Vision Funds.
Following are additional risks associated with investments in the Funds.

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------- -------- ------- ------- ----------- --------- ------- ------- ------- -----------
TREASURY NY U.S. NY LARGE LARGE GROWTH CAPITAL
MONEY MONEY TAX-FREEGOVERNMENT MUNICIPAL CAP CAP & APPRECIATION
MARKET MARKET MONEY SECURITIES INCOME VALUE GROWTH INCOME FUND
RISKS FUND FUND MARKET FUND FUND FUND FUND FUND
FUND

RISKS(1)

SIZE(4)

RISKS(5)

RISKS(8)

NON-DIVERSIFICATION

(10)

---------------- -------- ------- ------- ----------- --------- ------- ------- ------- -----------
</TABLE>

1. The risk posed by the fact that the value of equity securities rise and
fall.

2. Due to their relatively high valuations, growth stocks are typically more
volatile than value stocks.

3. Due to their relatively low valuations, value stocks are typically less
volatile than growth stocks and therefore may lag behind growth stocks in
an up market.

4. The risk posed by mid- and small-market capitalization companies tending to
have fewer shareholders, less liquidity, more volatility, unproven track
records, limited product or service base and limited access to capital.

5. The risk posed by the fact that prices of fixed income securities rise and
fall in response to interest rate changes.

6. The possibility that an issuer will default on a security by failing to pay
interest or principal when due.

7. The possibility that an issuer may redeem a fixed income security before
maturity at a price below its current market price.

8. The risk posed by the relative volatility of mortgage-backed securities due
to the likelihood of prepayments which increase in a declining interest
rate environment and decrease in a rising interest rate environment.

9. Failure of a municipal security to meet certain legal requirements may
cause the interest received and distributed by the Fund to shareholders to
be taxable.

10. Since these Funds are non-diversified, there is a risk that any one issuer
may have a greater impact on the Fund's Share price and performance
compared to that of a diversified fund. In addition, these Funds emphasize
investments in New York and are more subject to events that may adversely
affect New York issuers.

<PAGE>

PERFORMANCE BAR CHARTS AND TOTAL RETURNS

On the following pages are performance information for each Fund and its Class A
Shares. This information gives you some indication of the risks of an investment
in a Fund by comparing each Fund's performance with a broad measure of market
performance. While past performance of a Fund does not necessarily predict
future performance, the following information provides you with the historical
performance information to assist you in analyzing how each Fund's investment
risks may be balanced by their potential rewards. For more current performance
information, including the current 7-Day Net Yields of the Money Market Funds,
call (800) 836-2211.

BAR CHARTS

The bar chart represents the (historical) calendar year performance of Class A
Shares of each Fund (which is the share class with the longest operating
history), without reflecting the applicable sales charge imposed on Class A
Shares. If these charges or fees had been included, the return would have been
lower. Following the bar chart is the year-to-date performance of Class A Shares
through the most recent calendar quarter, again, without reflecting any
applicable sales charge imposed on Class A Shares.

Also provided is the best and worst calendar quarter performance for Class A
Shares.

AVERAGE ANNUAL TOTAL RETURN

Following the bar chart is a performance table showing the Average Annual Total
Return for Class A Shares of the Funds as compared to an appropriate broad-based
securities market index for certain periods ended December 31, 1998. The Funds'
total return figures reflect the maximum sales charge that could apply (except
for the Money Market Funds, which do not impose a sales charge). The market
indices are unmanaged and are not adjusted for any sales charge, expenses or
other fees the SEC requires to be reflected in the Fund's performance. You
cannot invest directly in an index.

TREASURY MONEY MARKET FUND

ANNUAL TOTAL RETURN*

(CALENDAR YEAR 1998)

The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Class A Shares of Treasury Money Market Fund as of the
calendar year-end for each of10 years.

The `y' axis reflects the "% Total Return" beginning with "-5" and increasing in
increments of 5% up to 15%.

The `x' axis represents calculation periods for the last ten calendar years of
the Fund, beginning with the earliest year. The light gray shaded chart features
10 distinct vertical bars, each shaded in charcoal, and each visually
representing by height the total return percentages for the calendar year stated
directly at its base. The calculated total return percentage for the Fund for
each calendar year is stated directly at the top of each respective bar, for the
calendar years 1989 through 1998, The percentages noted are:8.38%, 7.51%, 5.27%,
3.37%, 2.84%, 3.72%, 5.45%, 4.83%, 4.94% and 4.80%.

The Fund's Class A Shares Total Return from January 1, 1999 to June 30, 1999 was
___%.

Best quarter (2Q89) 2.17%
Worst quarter (2Q93) 0.68%

7-DAY NET YIELD

(AS OF DECEMBER 31, 1998) 4.14%

AVERAGE ANNUAL TOTAL RETURN

(FOR THE PERIODS ENDED DECEMBER 31, 1998)

1 YEAR 5 YEARS 10 YEARS
- ------------------------------ ------------ ----------- ---------------
Class A Shares 4.80% 4.75% 5.10%
- ------------------------------ ------------ ----------- ---------------

*HISTORICALLY, THE FUND HAS MAINTAINED A CONSISTENT $1.00 NET ASSET VALUE
PER SHARE.

THE FUND'S SHARES ARE NOT SOLD SUBJECT TO A SALES CHARGE (LOAD). THE TOTAL
RETURNS DISPLAYED ABOVE ARE BASED UPON NET ASSET VALUE.

MONEY MARKET FUND

ANNUAL TOTAL RETURN*

(CALENDAR YEAR 1998)

The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Class A Shares of Money Market Fund as of the calendar
year-end for each of10 years.

The `y' axis reflects the "% Total Return" beginning with "-5" and increasing in
increments of 5% up to 15%.

The `x' axis represents calculation periods for the last ten calendar years of
the Fund, beginning with the earliest year. The light gray shaded chart features
10 distinct vertical bars, each shaded in charcoal, and each visually
representing by height the total return percentages for the calendar year stated
directly at its base. The calculated total return percentage for the Fund for
each calendar year is stated directly at the top of each respective bar, for the
calendar years 1989 through 1998, The percentages noted are:8.94%, 7.80%, 5.45%,
3.45%, 2.97%, 3.91%, 5.56%, 4.94%, 5.07%, 4.98%.

The Fund's Class A Shares Total Return from January 1, 1999 to June 30, 1999 was
___%.

Best quarter (2Q89) 2.31%
Worst quarter (2Q93) 0.71%

7-DAY NET YIELD
(AS OF DECEMBER 31, 1998) 4.53%

AVERAGE ANNUAL TOTAL RETURN

(FOR THE PERIODS ENDED DECEMBER 31, 1998)

1 YEAR 5 YEARS 10 YEARS
- ---------------------------- ------------ ------------ ----------------
Class A Shares 4.98% 4.89% 5.29%
- ---------------------------- ------------ ------------ ----------------

*HISTORICALLY, THE FUND HAS MAINTAINED A CONSISTENT $1.00 NET ASSET VALUE
PER SHARE.

THE FUND'S SHARES ARE NOT SOLD SUBJECT TO A SALES CHARGE (LOAD). THE TOTAL
RETURNS DISPLAYED ABOVE ARE BASED UPON NET ASSET VALUE.

NY TAX-FREE MONEY MARKET FUND

ANNUAL TOTAL RETURN*

(CALENDAR YEAR 1998)

The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Class A Shares of NY Tax-Free Money Market Fund as of
the calendar year-end for each of10 years.

The `y' axis reflects the "% Total Return" beginning with "-5" and increasing in
increments of 5% up to 15%.

The `x' axis represents calculation periods for the last ten calendar years of
the Fund, beginning with the earliest year. The light gray shaded chart features
10 distinct vertical bars, each shaded in charcoal, and each visually
representing by height the total return percentages for the calendar year stated
directly at its base. The calculated total return percentage for the Fund for
each calendar year is stated directly at the top of each respective bar, for the
calendar years 1989 through 1998, The percentages noted are:5.35%, 5.06%, 3.55%,
1.87%, 1.80%, 2.34%, 3.36%, 2.97%, 3.11% and 2.94%.

The Fund's Class A Shares Total Return from January 1, 1999 to June 30, 1999 was
___%.

Best quarter (2Q89) 1.37%
Worst quarter (2Q93) 0.38%

7-DAY NET YIELD
(AS OF DECEMBER 31, 1998) 2.96%

AVERAGE ANNUAL TOTAL RETURN

(FOR THE PERIODS ENDED DECEMBER 31, 1998)

1 YEAR 5 YEARS 10 YEARS
- ---------------------------- ------------ ------------ ----------------
Class A Shares 2.94% 2.95% 3.23%
- ---------------------------- ------------ ------------ ----------------

*HISTORICALLY, THE FUND HAS MAINTAINED A CONSISTENT $1.00 NET ASSET VALUE
PER SHARE.

THE FUND'S SHARES ARE NOT SOLD SUBJECT TO A SALES CHARGE (LOAD). THE TOTAL
RETURNS DISPLAYED ABOVE ARE BASED UPON NET ASSET VALUE.

U.S. GOVERNMENT SECURITIES FUND

ANNUAL TOTAL RETURN

(CALENDAR YEAR 1998)

The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Class A Shares of U.S. Government Securities Fund as of
the calendar year-end for each of 5 years.

The `y' axis reflects the "% Total Return" beginning with "-15" and increasing
in increments of 5% up to 35%.

The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's start of business through the calendar year
ended December 31, 1998. The light gray shaded chart features 5 distinct
vertical bars, each shaded in charcoal, and each visually representing by height
the total return percentages for the calendar year stated directly at its base.
The calculated total return percentage for the Fund for each calendar year is
stated directly at the top of each respective bar, for the calendar years 1994
through 1998, The percentages noted are: -4.95%, 18.25%, 2.14%, 8.91% and 8.30%.

The Fund's Class A Shares Total Return from January 1, 1999 to June 30, 1999 was
___%.

Best quarter (2Q95) 6.45%
Worst quarter (2Q94) -2.81%

AVERAGE ANNUAL TOTAL RETURN*

(FOR THE PERIODS ENDED DECEMBER 31, 1998)

1 YEAR 5 YEARS SINCE START
OF
PERFORMANCE**
- ------------------------------ ------------ ----------- ---------------
Class A Shares (after sales 2.94% 2.95% 3.23%
charge)
- ------------------------------ ------------ ----------- ---------------
Lehman Brothers Aggregate

Bond Index 6.27% 7.27% 6.92%
- ------------------------------ ------------ ----------- ---------------
* THE TABLE SHOWS THE FUND'S TOTAL RETURNS AVERAGED OVER A PERIOD OF YEARS
RELATIVE TO THE LEHMAN BROTHERS AGGREGATE BOND INDEX, A BROAD-BASED MARKET
INDEX. ** SEPTEMBER 22, 1993

NEW YORK MUNICIPAL INCOME FUND

ANNUAL TOTAL RETURN

The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Class A Shares of NY Municipal Income Fund.

The `y' axis reflects the "% Total Return" beginning with "-10" and increasing
in increments of 5% up to 25%.

The Fund's Class A Shares Total Return from January 1, 1999 to June 30, 1999 was
___%.

Best quarter (1Q95) 6.57%
Worst quarter (1Q94) -4.48%

AVERAGE ANNUAL TOTAL RETURN*

(FOR THE PERIODS ENDED DECEMBER 31, 1998)
(CALENDAR YEAR 1998)

1 YEAR 5 YEARS SINCE START OF
PERFORMANCE**

- ---------------------------- ------------ ------------ ----------------
Class A Shares 1.08% 4.78% 5.13%
- ---------------------------- ------------ ------------ ----------------
Lehman Brothers New York

Tax-Exempt Index 6.88% 6.49% 6.49%
- ---------------------------- ------------ ------------ ----------------
* THE TABLE SHOWS THE FUND'S TOTAL RETURNS AVERAGED OVER A PERIOD OF YEARS
RELATIVE TO THE LEHMAN BROTHERS NEW YORK TAX-EXEMPT INDEX, A BROAD-BASED MARKET
INDEX. ** SEPTEMBER 22, 1993

LARGE CAP VALUE FUND

ANNUAL TOTAL RETURN

(CALENDAR YEAR 1998)

The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Class A Shares of Large Cap Value Fund

The `y' axis reflects the "% Total Return" beginning with "-15" and increasing
in increments of 5% up to 35%.

The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's start of business through the calendar year
ended December 31, 1998. The light gray shaded chart features 1 distinct
vertical bar, shaded in charcoal, and visually representing by height the total
return percentage for the calendar year stated directly at its base. The
calculated total return percentage for the Fund for the calendar year is stated
directly at the top of the bar, for the calendar year 1998, The percentage noted
is: 15.19%

The Funds Class A Shares Total Return from January 1, 1999 to June 30, 1999 was
___%.

Best quarter (4Q98) 18.26%
Worst quarter (3Q98) -11.14%

AVERAGE ANNUAL TOTAL RETURN*

(FOR THE PERIODS ENDED DECEMBER 31, 1998)

1 YEAR SINCE START OF
PERFORMANCE**

- ---------------------------- ------------ ----------------
Class A Shares 8.84% 11.18%
- ---------------------------- ------------ ----------------
S&P 500 Index 28.61% 25.00%
- ---------------------------- ------------ ----------------
* THE TABLE SHOWS THE FUND'S TOTAL RETURNS AVERAGED OVER A PERIOD OF YEARS
RELATIVE TO THE S&P 500 INDEX, A BROAD-BASED MARKET INDEX. ** SEPTEMBER 26,
1997.

GROWTH & INCOME FUND

ANNUAL TOTAL RETURN

(CALENDAR YEAR 1998)

The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Class A Shares of Growth & Income Fund.

The `y' axis reflects the "% Total Return" beginning with "-15" and increasing
in increments of 5% up to 35%.

The Fund's Class A Shares Total Return from January 1, 1999 to June 30, 1999 was
___%.

Best quarter (4Q98) 22.15%
Worst quarter (3Q98) -25.98%

AVERAGE ANNUAL TOTAL RETURN*

(FOR THE PERIODS ENDED DECEMBER 31, 1998)

1 YEAR 5 YEARS SINCE START
OF
PERFORMANCE**
- ---------------------------- ------------ ---------------- ---------------
Class A Shares -16.02% 11.36% 11.35%
- ---------------------------- ------------ ---------------- ---------------
Russell Midcap Index 5.93% 17.34% 17.85%
- ---------------------------- ------------ ---------------- ---------------
S&P 500 Index 28.61% 23.89% 23.89%
- ---------------------------- ------------ ---------------- ---------------

* THE TABLE SHOWS THE FUND'S TOTAL RETURNS AVERAGED OVER A PERIOD OF YEARS
RELATIVE TO THE RUSSELL MIDCAP INDEX AND THE S&P 500 INDEX, BROAD-BASED MARKET
INDEXES OF U.S. SECURITIES.

** NOVEMBER 29, 1993.

CAPITAL APPRECIATION FUND

ANNUAL TOTAL RETURN

(CALENDAR YEAR 1998)

The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Class A Shares of Capital Appreciation Fund.

The `y' axis reflects the "% Total Return" beginning with "-10" and increasing
in increments of 5% up to 25%.

The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's start of business through the calendar year
ended December 31, 1998. The light gray shaded chart features 2 distinct
vertical bars, each shaded in charcoal, and each visually representing by height
the total return percentages for the calendar year stated directly at its base.
The calculated total return percentage for the Fund for each calendar year is
stated directly at the top of each respective bar, for the calendar years 1997
through 1998, The percentages noted are: 21.90% and -9.76%.

The Fund's Class A Shares Total Return from January 1, 1999 to June 30, 1999 was
___%.

Best quarter (3Q97) 23.33%
Worst quarter (3Q98) -23.21%

<PAGE>

AVERAGE ANNUAL TOTAL RETURN*

(FOR THE PERIODS ENDED DECEMBER 31, 1998)

1 YEAR SINCE START OF
PERFORMANCE**

- ---------------------------- ------------ ----------------
Class A Shares -14.70% 8.49%

- ---------------------------- ------------ ----------------
Russell Midcap Growth Index 12.33% 18.89%

- ---------------------------- ------------ ----------------

* THE TABLE SHOWS THE FUND'S TOTAL RETURNS AVERAGED OVER A PERIOD OF YEARS
RELATIVE TO THE RUSSELL MIDCAP GROWTH INDEX, A BROAD-BASED MARKET INDEXES OF
U.S. SECURITIES.

** JULY 2, 1996.

LARGE CAP GROWTH FUND

The performance bar chart and total returns for the Large Cap Growth Fund
are not provided since this Fund is a new Fund and therefore does not yet have a
full calendar year of performance.

SUMMARY OF FUND EXPENSES

These tables describe the fees and expenses that you may pay if you buy and
hold CLASS A SHARES AND CLASS B SHARES of the Funds.
<TABLE>
<CAPTION>

-----------------------------------------------------
TREASURY MONEY NY U.S. NY
MONEY MARKET TAX-FREE GOVERNMENTMUNICIPAL

MARKET FUND FUND MONEY SECURITIESINCOME
MARKET FUND FUND FUND

-----------------------------------------------------
CLASS A CLASS A CLASS A CLASS A CLASS A

SHAREHOLDER FEES

Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on

Purchases (as a percentage of None None None 4.50% 4.50%
offering price)
ANNUAL FUND OPERATING EXPENSES
(before waivers)(1)
Expenses That are Deducted From Fund
Assets
(as a percentage of average net assets)
Management Fee(2) 0.50% 0.50% 0.50% 0.70% 0.70%
Distribution (12b-1) Fee(3) None None None 0.25% 0.25%
Shareholder Services Fees 0.25% 0.25% 0.25% 0.25%(4) 0.25%(4)
Other Expenses 0.17% 0.18% 0.22% 0.27% 0.32%
- -----------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 0.92% 0.93% 0.97% 1.47% 1.52%
- -----------------------------------------------------------------------------------------------

(1) Although not contractually obligated to do so, the investment adviser, distributor and
shareholder services provider waived certain amounts during the past fiscal year. These
are shown below along with the net expenses the Funds ACTUALLY PAID for the fiscal year
ended April 30, 1999.
Total Waiver of Fund Expenses 0.33% 0.30% 0.39% 0.55% 0.70%
Total Actual Annual Fund Operating
Expenses 0.59% 0.63% 0.58% 0.82% 0.82%
(After Waivers)
</TABLE>

(2) The Adviser voluntarily waived a portion of the management fee. The Adviser
can terminate this voluntary waiver at any time. The management fee paid by
Treasury Money Market Fund, Money Market Fund, NY Tax-Free Money Market
Fund, U.S. Government Securities Fund and NY Municipal Income Fund (after
the voluntary waiver) was 0.42%, 0.45%, 0.36%, 0.65% and 0.50%,
respectively for the fiscal year ended April 30, 1999.

(3) The Funds did not pay or accrue the distribution (12b-1) fee during the
fiscal year ended April 30, 1999.

(4) The Funds did not pay or accrue the shareholder services fee during the
fiscal year ended April 30, 1999.

<PAGE>

---------------------------------------------------------------------
LARGE CAP LARGE CAP GROWTH & CAPITAL
VALUE FUND GROWTH FUND INCOME FUND APPRECIATION FUND

---------------------------------------------------------------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS A
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES

Fees Paid Directly From Your
Investment
Maximum Sales Charge (Load)

Imposed on Purchases (as a 5.50% None 5.50% None 5.50% 5.50%
percentage of offering price)

Maximum Deferred Sales Charge
(Load)

(as a percentage of original None 5.00% None 5.00% None None
purchase price or redemption
proceeds, as applicable)
ANNUAL FUND OPERATING EXPENSES
(before waivers)(1)
Expenses That are Deducted From
Fund Assets
(as a percentage of average net
assets)
Management Fee 0.70% 0.70% 0.85% 0.85% 0.70% 0.85%
Distribution (12b-1) Fee(2) 0.25% 0.75% 0.25% 0.75% 0.25% 0.25%
Shareholder Services Fees 0.25%(3) 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.32% 0.32% 0.69%(4)0.69%(4) 0.25% 0.40%
- ------------------------------------------------------------------------------------------------------
Total Annual Fund Operating 1.52% 2.02% 2.04% 2.54% 1.45% 1.75%
Expenses
- ------------------------------------------------------------------------------------------------------
</TABLE>

(1)Although not contractually obligated to do so, the investment adviser,
distributor and shareholder services provider waived certain amounts during
the past fiscal year. These are shown below along with the net expenses the
Large Cap Value Fund, Growth & Income Fund and Capital Appreciation Fund
ACTUALLY PAID for the fiscal year ended April 30, 1999. With respect to Large
Cap Growth Fund, although not contractually obligated to do so, the adviser
and distributor will waive certain amounts. These are shown below along with
the net expenses the Funds EXPECT TO PAY for the fiscal year ending April 30,
2000. Total Waiver of Fund Expenses 0.50% 0.00% 0.50% 0.00% 0.25% 0.25% Total
Actual Annual Fund 1.02% 2.02% 1.54% 2.54% 1.20% 1.50% Operating Expenses
(After Waiver)

(2) The Funds did not pay or accrue the distribution (12b-1) fee during the
fiscal year ended April 30, 1999. (3) The Large Cap Value Fund did not pay or
accrue the shareholder services fee during the fiscal year ended April 30, 1999.
(4) Other Expenses for the Large Cap Growth Fund are based on estimated amounts
for the fiscal year ending April 30, 2000. EXAMPLE

The following Example is intended to help you compare the cost of investing in
Shares of the Funds with the cost of investing in other mutual funds. The
Example assumes that you invest $10,000 in each Fund's Shares for the time
periods indicated and then redeem all of your Shares at the end of those
periods. Expenses assuming no redemption are shown for Class B Shares. The
Example also assumes that your investment has a 5% return each year and that
each Fund's Shares operating expenses are BEFORE WAIVERS as shown in the Tables
and remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:

------------------------------------------------------------------------
TREASURY MONEY MARKET NY TAX-FREE U.S. NY MUNICIPAL
MONEY MARKET FUND MONEY MARKET GOVERNMENT INCOME FUND

FUND FUND SECURITIES
FUND
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
CLASS A CLASS A CLASS A CLASS A CLASS A

- ------------------------------------------------------------------------------------------------------
1 YEAR $94 $95 $99 $593 $598
3 YEARS $293 $296 $309 $894 $909
5 YEARS $509 $515 $536 $1,217 $1,242
10 YEARS $1,131 $1,143 $1,190 $2,128 $2,181
- ------------------------------------------------------------------------------------------------------

<PAGE>

------------------------------------------------------------------------
LARGE CAP VALUE LARGE CAP GROWTH GROWTH & INCOME CAPITAL
FUND FUND FUND APPRECIATION FUND

- ------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS A

- ------------------------------------------------------------------------------------------------------
1 YEAR

Expenses assuming redemption $696 $ $ $ $689 $718
Expenses assuming no N/A $ N/A $ N/A N/A
redemption

- ------------------------------------------------------------------------------------
------------------------------------------------------------------------
3 YEARS

Expenses assuming redemption $1,004 $ $ $ $983 $1,071
Expenses assuming no N/A $ N/A $ N/A N/A
redemption

------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
5 YEARS

Expenses assuming redemption $1,333 $ $ $ $1,299 $1,447
Expenses assuming no N/A $ N/A $ N/A N/A
redemption

-------------------
- ------------------------------------------------------------------------------------
10 YEARS

Expenses assuming redemption $2,263 $ $ $ $2,190 $2,499
Expenses assuming no N/A $ N/A $ N/A N/A
redemption

- ------------------------------------------------------------------------------------------------------

</TABLE>

<PAGE>

WHAT ARE THE EQUITY FUNDS' INVESTMENT STRATEGIES?

VISION LARGE CAP VALUE FUND

The Fund pursues its investment objective by maintaining a diversified portfolio
consisting primarily of income-producing equity securities of domestic companies
(e.g., common and preferred stocks, convertible securities). The Fund will
attempt to provide a yield greater than the average yield offered by the S&P 500
Index and a lower level of price volatility, although there is no assurance that
it will be able to do so. The Adviser will invest in companies on the basis of
traditional research techniques, including assessment of company's earnings and
dividend growth prospects, risk/volatility of the company's industry, sound
management techniques, ability to finance expected growth, and on the basis of a
company's undervaluation relative to other companies in the same industry. These
companies may be categorized as "seasoned" or "well-established" companies,
although companies with less-established operating histories may be chosen for
investment if they present opportunities for income and capital appreciation.

Under normal market conditions, the Fund intends to invest at least 65% of the
value of its total assets in equity securities that are expected to produce
current income. In selecting investments, the Adviser intends to focus on large
capitalization (large-cap) companies which are those companies with a market
capitalization of at least $10 billion or more at the time of investment. The
Adviser also may invest, to a lesser extent, in medium capitalization (mid-cap)
or small capitalization (small-cap) companies which are generally companies with
a market capitalization under $10 billion.

The Adviser also will focus on stocks of companies with unrecognized or
undervalued assets. Such a value approach seeks companies whose stock prices do
not appear to reflect their underlying value as measured by assets, earnings,
cash flow, business franchises, or other quantitative or qualitative
measurements. Value stocks may be out of favor with or misunderstood by
investors for a variety of reasons, but are considered to have inherent value or
future prospects that are not currently reflected in their stock price.
Accordingly, value stocks may have a price/earnings ratio less than the S&P 500
Index, lower than average price to book value, and higher than average dividend
yields than competitors, and thereby offer greater income and growth potential.

VISION LARGE CAP GROWTH FUND

The Fund pursues its goal by investing in a diversified portfolio of equity
securities, primarily common stocks, of the largest growth-oriented companies
traded in the U.S. stock markets. The Fund's portfolio will hold between 40 and
75 stocks, and the primary universe for individual stock selection will be the
S&P 500 Index. It is anticipated that the Fund will maintain positions in many
of the stocks representing the largest holdings within the S&P 500 Index and S&P
Barra Growth Index. The Fund will attempt to be invested across all the major
economic sectors as defined by the S&P 500 Index. It is expected that the Fund
as a whole, will have the overall portfolio characteristics that define it as
"large cap growth." Large capitalization companies have a market capitalization
of $10 billion or more at the time of investment. The Adviser also may invest,
to a lesser extent, in mid-cap or small-cap companies which are generally
companies with a market capitalization under $10 billion. In selecting portfolio
investments, the Adviser will analyze each company's fundamentals with an
emphasis on factors pertaining to growth. In selecting investments for growth,
the Adviser will consider various financial characteristics of the issuer,
including historical sales and net income, debt/quality and price/earnings
ratios and growth rates. Certain qualitative factors such as product dominance,
management experience, and research and development commitment will be
evaluated. Portfolio securities will be sold when the Adviser determines they no
longer meet the Fund's objective, are removed from the S&P 500 index, or it the
Adviser determines that there is a better investment opportunity in other
stocks.

Under normal market conditions, the Fund intends to invest at least 65% of the
value of its total assets in large-cap equity securities that are expected to
produce growth or capital appreciation. The Fund will also consider to a lesser
extent whether the securities offer the opportunity for current income. VISION
GROWTH & INCOME FUND The Fund pursues its goal by investing in a diversified
portfolio consisting primarily of equity securities (e.g., common stock,
convertible securities) and debt securities (e.g. bonds, notes). The Adviser
will select equity securities to achieve growth and will select fixed-income,
convertible securities and other interest-paying debt securities to obtain
income. However, either category of equity or debt securities may be purchased
for growth of capital and/or income. The Adviser will invest in companies on the
basis of traditional research techniques, including assessment of companies'
earnings and dividend growth prospects, sound management techniques, ability to
finance expected growth, and on the basis of a company's undervaluation relative
to other companies in the same industry. These companies may be categorized as
"seasoned" or "well-established" companies, although companies with
less-established operating histories may be chosen for investment if they have
growth elements and present opportunities for income.

In selecting investments, the Adviser intends to invest at least 65% of the
Fund's total assets in mid-size (mid-cap) companies that are regarded as
"undervalued." It is anticipated that the Fund's portfolio securities in the
aggregate will have an average weighted market capitalization of $1 billion to
$10 billion at the time of investment, which could be considered the
mid-capitalization sector of the market. The Adviser also may invest in
large-cap companies and, to a lesser extent, small-small cap companies when
consistent with the Fund's goal of long-term growth of capital and income.

The Adviser also will focus on companies that are undervalued. A value approach
seeks companies whose stocks prices do not appear to reflect their underlying
value as measured by assets, earnings, cash flow, business franchises, or other
quantitative or qualitative measurements.

VISION CAPITAL APPRECIATION FUND

The Fund pursues its goal by investing in a diversified portfolio comprised
primarily of common stocks or other securities that have some of the
characteristics of common stocks, such as convertible preferred stocks,
convertible bonds, and warrants. The principal factor in selecting convertible
securities will be the potential opportunity to benefit from movement in stock
price (growth). Under normal market conditions, the Fund intends to have at
least 75% of its total assets invested in securities which the Adviser believes
offer opportunity for capital appreciation. The Adviser will generally select
common stocks of well-financed issuers (e.g., issuers that generate sufficient
cash flow to support their growth needs or have sufficient credit quality to
obtain financing to support their growth) which have demonstrated profitability
in the past or have the potential weighted market capitalization of $1 billion
to $10 billion at the time of investment, which could be considered the
mid-capitalization sector of the market. The Adviser, may, however, select for
purchase common stocks of well-known companies with individual market
capitalizations of over $10 billion, as well as companies that have individual
market capitalization as low as $250 million, if it believes such common stocks
offer particular opportunities for long-term capital appreciation (growth). At
least 65% of the Fund's total assets will be in mid-capitalization securities
that are regarded as having growth opportunities.

In selecting investments for growth, the Adviser will consider various financial
characteristics of the issuer, including historical sales and net income,
debt/quality and price/earnings ratios and growth rates. Certain qualitative
factors such as product dominance, management experience, and research and
development commitment will be evaluated.

WHAT ARE THE FUNDS' MAIN INVESTMENTS AND INVESTMENT TECHNIQUES?

EQUITY SECURITIES

Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. The Equity Funds cannot predict the income they
will receive from equity securities because issuers generally have discretion as
to the payment of any dividends or distributions. However, equity securities
offer greater potential for appreciation than many other types of securities,
because their value increases directly with the value of the issuer's business.
The following describes the principal types of equity securities in which the
Equity Funds may invest.

COMMON STOCKS

Common stocks are the most prevalent type of equity security. Common stocks
receive the issuer's earnings after the issuer pays its creditors and any
preferred stockholders. As a result, changes in an issuer's earnings
directly influence the value of its common stock.

<PAGE>

PREFERRED STOCKS

Preferred stocks have the right to receive specified dividends or
distributions before the issuer makes payments on its common stock. Some
preferred stocks also participate in dividends and distributions paid on
common stock. Preferred stocks may also permit the issuer to redeem the
stock. The Funds may also treat such redeemable preferred stock as a fixed
income security.

FIXED INCOME SECURITIES

Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities.

A security's yield measures the annual income earned on a security as a
percentage of its price. A security's yield will increase or decrease depending
upon whether it costs less (a discount) or more (a premium) than the principal
amount. If the issuer may redeem the security before its scheduled maturity, the
price and yield on a discount or premium security may change based upon the
probability of an early redemption. Securities with higher risks generally have
higher yields.

The following describes the principal types of fixed income securities in which
a Fund may invest.

TREASURY SECURITIES

Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded as having the lowest
credit risks.

AGENCY SECURITIES

Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a GSE). The
United States supports some GSEs with its full faith and credit. Other GSEs
receive support through federal subsidies, loans or other benefits. A few
GSEs have no explicit financial support, but are regarded as having implied
support because the federal government sponsors their activities. Agency
securities are generally regarded as having low credit risks, but not as low
as treasury securities.

The Fund treats mortgage backed securities guaranteed by GSEs as agency
securities. Although a GSE guarantee protects against credit risks, it does
not reduce the INTEREST RATE AND PREPAYMENT RISKS of these mortgage backed
securities.

CORPORATE DEBT SECURITIES

Corporate debt securities are fixed income securities issued by businesses.
Notes, bonds, debentures and commercial paper are the most prevalent types
of corporate debt securities. The Fund may also purchase interests in bank
loans to companies. The CREDIT RISKS of corporate debt securities vary
widely among issuers.

In addition, the credit risk of an issuer's debt security may vary based on
its priority for repayment. For example, higher ranking (senior) debt
securities have a higher priority than lower ranking (subordinated)
securities. This means that the issuer might not make payments on
subordinated securities while continuing to make payments on senior
securities. In addition, in the event of bankruptcy, holders of senior
securities may receive amounts otherwise payable to the holders of
subordinated securities. Some subordinated securities, such as trust
preferred and capital securities notes, also permit the issuer to defer
payments under certain circumstances. For example, insurance companies issue
securities known as surplus notes that permit the insurance company to defer
any payment that would reduce its capital below regulatory requirements.

MORTGAGE BACKED SECURITIES

Mortgage backed securities represent interests in pools of mortgages. The
mortgages that comprise a pool normally have similar interest rates,
maturities and other terms. Mortgages may have fixed or adjustable interest
rates. Interests in pools of adjustable rate mortgages are known as ARMs.

Mortgage backed securities come in a variety of forms. Many have extremely
complicated terms. The simplest form of mortgage backed securities are
pass-through certificates. An issuer of pass-through certificates gathers
monthly payments from an underlying pool of mortgages. Then, the issuer
deducts its fees and expenses and passes the balance of the payments onto
the certificate holders once a month. Holders of pass-through certificates
receive a pro rata share of all payments and pre-payments from the
underlying mortgages. As a result, the holders assume all the PREPAYMENT
RISKS of the underlying mortgages.

<PAGE>

COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS)

CMOs, including interests in real estate mortgage investment conduits
(REMICs), allocate payments and prepayments from an underlying
pass-through certificate among holders of different classes of mortgage
backed securities. This creates different PREPAYMENT AND INTEREST RATE
RISKS for each CMO class.

ASSET BACKED SECURITIES

Asset backed securities are payable from pools of obligations other than
mortgages. Most asset backed securities involve consumer or commercial debts
with maturities of less than ten years. However, almost any type of fixed
income assets (including other fixed income securities) may be used to
create an asset backed security. Asset backed securities may take the form
of commercial paper, notes, or pass through certificates. Asset backed
securities have PREPAYMENT RISKS.

BANK INSTRUMENTS

Bank instruments are unsecured interest bearing deposits with banks. Bank
instruments include bank accounts, time deposits, certificates of deposit and
banker's acceptances. Yankee instruments are denominated in U.S. dollars and
issued by U.S. branches of foreign banks. Eurodollar instruments are denominated
in U.S. dollars and issued by non-U.S. branches of U.S. or foreign banks.

CREDIT ENHANCEMENT

Credit enhancement consists of an arrangement in which a company agrees to
pay amounts due on a fixed income security if the issuer defaults. In some
cases the company providing credit enhancement makes all payments directly
to the security holders and receives reimbursement from the issuer.
Normally, the credit enhancer has greater financial resources and liquidity
than the issuer. For this reason, the Adviser usually evaluates the credit
risk of a fixed income security based solely upon its credit enhancement.

TAX EXEMPT SECURITIES

Tax exempt securities are fixed income securities that pay interest that is not
subject to regular federal income taxes. Typically, states, counties, cities and
other political subdivisions and authorities issue tax exempt securities. The
market categorizes tax exempt securities by their source of repayment. Interest
income on such securities may be subject to the federal alternative minimum tax
for individuals and corporations.

MUNICIPAL NOTES

Municipal notes are short-term tax exempt securities. Many municipalities
issue such notes to fund their current operations before collecting taxes or
other municipal revenues. Municipalities may also issue notes to fund
capital projects prior to issuing long-term bonds. The issuers typically
repay the notes at the end of their fiscal year, either with taxes, other
revenues or proceeds from newly issued notes or bonds.

REPURCHASE AGREEMENTS

Repurchase agreements are transactions in which the Fund buys a security from a
dealer or bank and agrees to sell the security back at a mutually agreed upon
time and price. The repurchase price exceeds the sale price, reflecting the
Fund's return on the transaction. This return is unrelated to the interest rate
on the underlying security. The Funds will enter into repurchase agreements only
with banks and other recognized financial institutions, such as securities
dealers, deemed creditworthy by the Adviser.

The Fund's custodian will take possession of the securities subject to
repurchase agreements. The Adviser will monitor the value of the underlying
security each day to ensure that the value of the security always equals or
exceeds the repurchase price.

Repurchase agreements are subject to CREDIT RISKS.

PORTFOLIO TURNOVER

Each Fund (other than the Money Market Funds) actively trades its portfolio
securities in an attempt to achieve its investment objective. Active trading
will cause the Fund to have an increased portfolio turnover rate, which is
likely to generate shorter-term gains (losses) for its shareholders, which are
taxed at a higher rate than longer-term gains (losses). Actively trading
portfolio securities increases the Fund's trading costs and may have an adverse
impact on the Fund's performance.

TEMPORARY DEFENSIVE INVESTMENTS

The NY Tax-Free Money Market Fund and the NY Municipal Income Fund may
temporarily depart from their principal investment strategies by investing their
assets in cash, cash items, and shorter-term, higher-quality debt securities and
similar obligations. It may do this to minimize potential losses and maintain
liquidity to meet shareholder redemptions during adverse market conditions. This
may cause the Fund to give up greater investment returns to maintain the safety
of principal, that is, the original amount invested by shareholders. Interest
income from temporary investments may be taxable to shareholders as ordinary
income.

INVESTMENT RATINGS FOR INVESTMENT GRADE SECURITIES

The Adviser will determine whether a security is investment grade based upon the
credit ratings given by one or more nationally recognized rating services. For
example, Standard and Poor's, a rating service, assigns ratings to investment
grade securities (AAA, AA, A, and BBB) based on their assessment of the
likelihood of the issuer's inability to pay interest or principal (default) when
due on each security. Lower credit ratings correspond to higher credit risk. If
a security has not received a rating, the Fund must rely entirely upon the
Adviser's credit assessment that the security is comparable to investment grade.

SPECIFIC RISKS OF INVESTING IN THE FUNDS

STOCK MARKET RISKS

The value of equity securities in each Equity Fund's portfolio will rise and
fall. These fluctuations could be a sustained trend or a drastic movement. The
Fund's portfolio will reflect changes in prices of individual portfolio stocks
or general changes in stock valuations. Consequently, the Fund's share price may
decline.

The Adviser attempts to manage market risk by limiting the amount the Fund
invests in each company's equity securities. However, diversification will not
protect the Fund against widespread or prolonged declines in the stock market.

RISKS RELATED TO INVESTING FOR GROWTH

Due to their relatively high valuations, growth stocks are typically more
volatile than value stocks. For instance, the price of a growth stock may
experience a larger decline on a forecast of lower earnings, a negative
fundamental development, or an adverse market development. Further, growth
stocks may not pay dividends or may pay lower dividends than value stocks. This
means they depend more on price changes for returns and may be more adversely
affected in a down market compared to value stocks that pay higher dividends.

RISKS RELATED TO INVESTING FOR VALUE

Due to their relatively low valuations, value stocks are typically less volatile
than growth stocks. For instance, the price of a value stock may experience a
smaller increase on a forecast of higher earnings, a positive fundamental
development, or positive market development. Further, value stocks tend to have
higher dividends than growth stocks. This means they depend less on price
changes for returns and may lag behind growth stocks in an up market.

RISKS RELATED TO COMPANY SIZE

Generally, the smaller the market capitalization of a company, the fewer the
number of shares traded daily, the less liquid its stock and the more volatile
its price. Market capitalization is determined by multiplying the number of its
outstanding shares by the current market price per share.

Companies with smaller market capitalizations also tend to have unproven track
records, a limited product or service base and limited access to capital. These
factors also increase risks and make these companies more likely to fail than
companies with larger market capitalizations.

INTEREST RATE RISKS

Prices of fixed income securities rise and fall in response to changes in the
interest rate paid by similar securities. Generally, when interest rates rise,
prices of fixed income securities fall. However, market factors, such as the
demand for particular fixed income securities, may cause the price of certain
fixed income securities to fall while the prices of other securities rise or
remain unchanged.

Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity of a
fixed income security to changes in interest rates.

CREDIT RISKS

Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, the Fund
will lose money.

Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investor Services, Inc. These services assign
ratings to securities by assessing the likelihood of issuer default. Lower
credit ratings correspond to higher credit risk. If a security has not received
a rating, the Fund must rely entirely upon the Adviser's credit assessment.

Fixed income securities generally compensate for greater credit risk by paying
interest at a higher rate. The difference between the yield of a security and
the yield of a U.S. Treasury security with a comparable maturity (the spread)
measures the additional interest paid for risk. Spreads may increase generally
in response to adverse economic or market conditions. A security's spread may
also increase if the security's rating is lowered, or the security is perceived
to have an increased credit risk. An increase in the spread will cause the price
of the security to decline.

Credit risk includes the possibility that a party to a transaction involving the
Fund will fail to meet its obligations. This could cause the Fund to lose the
benefit of the transaction or prevent the Fund from selling or buying other
securities to implement its investment strategy.

CALL RISKS

Call risk is the possibility that an issuer may redeem a fixed income security
before maturity (a call) at a price below its current market price. An increase
in the likelihood of a call may reduce the security's price. If a fixed income
security is called, the Fund may have to reinvest the proceeds in other fixed
income securities with lower interest rates, higher credit risks, or other less
favorable characteristics.

PREPAYMENT RISKS

Generally, homeowners have the option to prepay their mortgages at any time
without penalty. Homeowners frequently refinance high interest rate mortgages
when mortgage rates fall. This results in the prepayment of mortgage backed
securities with higher interest rates. Conversely, prepayments due to
refinancings decrease when mortgage rates increase. This extends the life of
mortgage backed securities with lower interest rates. Other economic factors can
also lead to increases or decreases in prepayments. Increases in prepayments of
high interest rate mortgage backed securities, or decreases in prepayments of
lower interest rate mortgage backed securities, may reduce their yield and
price. These factors, particularly the relationship between interest rates and
mortgage prepayments makes the price of mortgage backed securities more volatile
than many other types of fixed income securities with comparable credit risks.

Mortgage backed securities generally compensate for greater prepayment risk by
paying a higher yield. The difference between the yield of a mortgage backed
security and the yield of a U.S. Treasury security with a comparable maturity
(the spread) measures the additional interest paid for risk. Spreads may
increase generally in response to adverse economic or market conditions. A
security's spread may also increase if the security is perceived to have an
increased prepayment risk or perceived to have less market demand. An increase
in the spread will cause the price of the security to decline.

The Fund may have to reinvest the proceeds of mortgage prepayments in other
fixed income securities with lower interest rates, higher prepayment risks, or
other less favorable characteristics.

TAX RISKS

In order to be tax-exempt, municipal securities must meet certain legal
requirements. Failure to meet such requirements may cause the interest received
and distributed by the Fund to shareholders to be taxable.

Changes or proposed changes in federal tax laws may cause the prices of
municipal securities to fall.

RISKS OF NON-DIVERSIFICATION

The NY Money Market Fund and NY Municipal Income Fund are non-diversified.
Compared to diversified mutual funds, each Fund may invest a higher percentage
of its assets among fewer issuers of portfolio securities. This increases each
Fund's risk by magnifying the impact (positively or negatively) that any one
issuer has on the Fund's Share price and performance.

NEW YORK INVESTMENT RISKS

Yields on New York municipal securities depend on a variety of factors,
including: the general conditions of the short-term municipal note market and
the municipal bond market; the size of the particular offering; the maturity of
the obligations; and the rating of the issue. Further, any adverse economic
conditions or developments affecting the State, counties, municipalities or City
of New York could impact the NY Tax-Free Money Market Fund's or NY Municipal
Income Fund's portfolio. The ability of these Funds to achieve their investment
goals also depends on the continuing ability of the issuers of New York
municipal securities and participation interest, or the guarantors of either, to
meet their obligations for the payment of interest and principal when due.

YEAR 2000 READINESS

The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999 or experience other date-related problems. The Year 2000 problem may cause
systems to process information incorrectly and could disrupt businesses, such as
the Funds, that rely on computers.

While it is impossible to determine in advance all of the risks to the Funds,
the Funds could experience interruptions in basic financial and operational
functions. Fund shareholders could experience errors or disruptions in Fund
share transactions or Fund communications.

The Funds' service providers are making changes to their computer systems to fix
any Year 2000 problems. In addition, they are working to gather information from
third-party providers to determine their Year 2000 readiness.

Year 2000 problems would also increase the risks of the Funds' investments. To
assess the potential effect of the Year 2000 problem, the Adviser is reviewing
information regarding the Year 2000 readiness of issuers of securities the Funds
may purchase.

However, this may be difficult with certain issuers. For example, funds dealing
with foreign service providers or investing in foreign securities will have
difficulty determining the Year 2000 readiness of those entities. This is
especially true of entities or issuers in emerging markets.

The financial impact of these issues for the Funds is still being determined.
There can be no assurance that potential Year 2000 problems would not have a
material adverse effect on the Funds.

WHAT DO SHARES COST?

You can purchase, redeem, or exchange Shares any day the New York Stock Exchange
(NYSE) is open. All of the Funds offer Class A Shares. Only Large Cap Value Fund
and Large Cap Growth Fund offer Class B Shares. The differences between the two
relate to the timing and amount of asset based sales charge an investor bears
directly or indirectly as a shareholder. When the Funds receive your transaction
request in proper form, it is processed at the next calculated net asset value
(NAV) plus any applicable front-end sales charge (public offering price). The
MONEY MARKET FUNDS do not charge front-end sales charges. Each Money Market Fund
attempts to stabilize the NAV of its Shares at $1.00 by valuing its portfolio
securities using the amortized cost method. The Money Market Funds cannot
guarantee that their NAV will always remain at $1.00 per Share.

The value of Shares of the INCOME AND EQUITY FUNDS is generally determined based
upon the market value of portfolio securities. However, the Funds' Board may
determine in good faith that another method of valuing investments is necessary
to appraise their fair market value.

NAV for the INCOME AND EQUITY FUNDS is determined at the end of regular trading
(normally 4:00 p.m. Eastern time) each day the NYSE is open. NAV for the MONEY
MARKET FUNDS is determined at 12:00 p.m. (Eastern time), 3:00 p.m. (Eastern
time) and at the end of regular trading (normally 4:00 p.m. Eastern time) each
day the NYSE is open.

Each Fund's current NAV and/or public offering price may be found in the mutual
funds section of certain local newspapers under Vision Funds.

The minimum initial investment in each Fund is $500 unless the investment is in
a retirement plan or an IRA account, in which case the minimum initial
investment is $250. Subsequent investments must be in amounts of at least $25.

The maximum front-end sales charge that you will pay on an investment in Class A
Shares is 5.50% on EQUITY FUNDS and 4.50% on the INCOME FUNDS. The MONEY MARKET
FUNDS have no front-end sales charge. The maximum contingent deferred sales
charge you will pay (at the time of redemption) on Class B Shares of Large Cap
Value Fund and Large Cap Growth Fund is 5.00%. Keep in mind that investment
professionals may charge you additional fees for their services in connection
with your Share transactions.

<PAGE>

SALES CHARGE WHEN YOU PURCHASE-CLASS A SHARES

Class A Shares of LARGE CAP VALUE FUND, LARGE CAP GROWTH FUND, GROWTH & INCOME
FUND AND CAPITAL APPRECIATION FUND are sold at their NAV next determined after
an order is received, plus a sales charge as follows:

<PAGE>

SALES CHARGE AS A

PURCHASE AMOUNT PERCENTAGE OF PUBLIC SALES CHARGE AS A
OFFERING PRICE PERCENTAGE OF NAV

Less than $50,000 5.50% 5.82%
$50,000 but less than $100,000 4.25% 4.44%
$100,000 but less than $250,000 3.25% 3.36%
$250,000 but less than $500,000 2.25% 2.30%
$500,000 but less than $1 million 2.00% 2.04%
$1 million or greater 0.00% 0.00%

Class A Shares of U.S. GOVERNMENT SECURITIES FUND AND NEW YORK MUNICIPAL INCOME
FUND are sold at their NAV next determined after an order is received, plus a
sales charge as follows:

<PAGE>

SALES CHARGE AS A
PURCHASE AMOUNT PERCENTAGE OF PUBLIC SALES CHARGE AS A
OFFERING PRICE PERCENTAGE OF NAV

Less than $100,000 4.50% 4.71%
$100,000 but less than $250,000 3.75% 3.90%
$250,000 but less than $500,000 3.00% 3.09%
$500,000 but less than $1 million 2.00% 2.04%
$1 million or greater 0.00% 0.00%

THE SALES CHARGE AT PURCHASE MAY BE REDUCED BY:

o purchasing Shares in greater quantities to reduce the applicable sales
charge;

o combining concurrent purchases of Shares:

- - by you, your spouse, and your children under age 21; or

- - of the same share class of two or more Vision Funds (other than money
market funds);

o accumulating purchases (in calculating the sales charge on an additional
purchase, include the current value of previous Share purchases still
invested in the Fund); or

o signing a letter of intent to purchase a specific dollar amount of Shares
within 13 months (call your investment professional or the Funds for more
information).

THE SALES CHARGE WILL BE ELIMINATED WHEN YOU PURCHASE SHARES:

o within 90 days of redeeming Shares of an equal or lesser amount;

o within 60 days of redeeming shares of a mutual fund which was sold with a
sales charge or commission or fixed or variable rate annuities of an equal
or lesser amount;

O by exchanging shares from the same share class of another Vision Fund (other
than a money market fund);

o through wrap accounts or other investment programs where you pay the
investment professional directly for services;

o through investment professionals that receive no portion of the sales
charge;

o as a current or retired Director or employee of the Fund, the Adviser, the
Distributor, the Sub-adviser and their affiliates, and the immediate family
members of these individuals;

o as an employee of a dealer which has a selling group agreement with the
Distributor;

o as an investor referred by any sub-adviser to the Funds.

If your investment qualifies for a reduction or elimination of the sales charge,
you or your investment professional must notify the Fund's Distributor,
Federated Securities Corp., or M&T Bank's Mutual Fund Services at the time of
purchase. If the Distributor or Mutual Fund Services is not notified, you will
receive the reduced sales charge only on additional purchases, and not
retroactively on previous purchases.

SALES CHARGE WHEN YOU REDEEM--CLASS B SHARES

Your redemption proceeds may be reduced by a sales charge, commonly referred to
as a contingent deferred sales charge (CDSC), as follows:

SHARES HELD UP TO: CDSC
1 year 5.00%
2 years 4.00%
3 years 3.00%
4 years 3.00%
5 years 2.00%
6 years 1.00%
7 years or more 0.00%

Class B Shares convert to Class A Shares (which pay lower ongoing expenses)
approximately eight years after purchase. This is a non-taxable event.

YOU WILL NOT BE CHARGED A CDSC WHEN REDEEMING CLASS B SHARES:

o purchased with reinvested dividends or capital gains;

o purchased within 90 days of redeeming Shares of an equal or lesser amount;

o that you exchanged into the same share class of another Vision Fund where
the shares were held for the applicable CDSC holding period (other than a
money market fund);

o purchased through investment professionals who did not receive advanced
sales payments;

O if, after you purchase Shares, you become disabled as defined by the IRS ;

o of Shares held by Directors, employees, and sales representatives of the
Funds, the Distributor, or affiliates of the Funds or Distributor, employees
of any investment professional that sells Shares of the Funds pursuant to a
sales agreement with the Distributor, and their immediate family members to
the extent that no payments were advanced for purchases made by these
persons;

o of Shares originally purchased through a bank trust department, a registered
investment adviser or retirement plans where the third party administrator
has entered into certain arrangements with the Distributor or its affiliates,
or any other investment professional, to the extent that no payments were
advanced for purchases made through such entities;

o if the redemption qualified under the Systematic Withdrawal Program;

o if the Fund redeems your Shares and closes your account for not meeting the
minimum balance requirement;

o if your redemption is a required retirement plan distribution;

o upon the death of the last surviving shareholder of the account.

If your redemption qualifies, you or your investment professional should notify
the Distributor at the time of redemption to eliminate the CDSC. If the
Distributor is not notified, the CDSC will apply.

TO KEEP THE SALES CHARGE AS LOW AS POSSIBLE, THE FUND REDEEMS YOUR SHARES IN
THIS ORDER:

o Shares that are not subject to a CDSC; and

o Shares held the longest (to determine the number of years your Shares have
been held, include the time you held Class B shares of other Vision Funds
that have been exchanged for Shares of this Fund).

The CDSC is then calculated using the share price at the time of purchase or
redemption, whichever is lower.

<PAGE>

HOW ARE THE FUNDS SOLD?

Treasury Money Market Fund and Money Market Fund offer two share classes:
Class A Shares and Class S Shares. NY Tax-Free Money Market Fund, U.S.
Government Securities Fund, NY Municipal Income Fund, Growth & Income Fund and
Capital Appreciation Fund offer one share class: Class A Shares. Large Cap Value
Fund and Large Cap Growth Fund offer two share classes: Class A Shares and Class
B Shares. Each class represents interests in a single portfolio of securities.

This prospectus relates only to Class A Shares and Class B Shares. Each share
class has different sales charges and other expenses, which affect their
performance. Contact your investment professional or call (800) 836-2211 for
more information concerning Class S Shares.

The Fund's Distributor markets the Shares described in this prospectus to
institutions or individuals, directly or through an investment professional that
has an agreement with the Distributor (Authorized Dealer). When the Distributor
receives sales charges and marketing fees, it may pay some or all of them to
investment professionals. The Distributor and its affiliates may pay out of
their assets other amounts (including items of material value) to investment
professionals for marketing and servicing Shares. The Distributor is a
subsidiary of Federated Investors, Inc. (Federated).

RULE 12B-1 PLANS

Each Fund (other than the Money Market Funds) has adopted a Rule 12b-1 Plan,
which allows it to pay marketing fees to the Distributor for the sale,
distribution and customer servicing of the Funds' Class A and Class B Shares. In
the case of Class B Shares, the Plan may also be used to compensate the
Distributor, the Adviser, their affiliates or investment professionals for
commissions advanced on the sale of Class B Shares. The Distributor may
voluntarily waive or reduce its fees. Because these Shares pay marketing fees on
an ongoing basis, your investment cost may be higher over time than other shares
with different sales charges and marketing fees. The Funds have no present
intention of paying or accruing 12b-1 fees on Class A Shares.

HOW TO PURCHASE SHARES

You may purchase Shares through M& T Bank, M&T Securities, Inc., or through
an Authorized Dealer at the NAV next determined after the purchase order is
received plus any applicable sales charge.

Payment may be made by check or federal funds wire or by debiting your account
at M&T bank or any of its affiliate banks.

Purchase orders for the MONEY MARKET FUNDS must be received by 11:00 a.m.
(Eastern time) to receive that day's dividend. For settlement of an order to
occur, payment must be received by wire by 3:00 p.m. (Eastern time) that same
day.

Purchase orders for the INCOME AND EQUITY FUNDS must be received by 4:00 p.m.
(Eastern time) in order to receive that day's NAV. Purchase orders through
Automated Clearing House (ACH) must be received by 3:00 p.m. (Eastern time). For
settlement of an order to occur, payment must be received on the next business
day following the order.

Where a Fund offers more than one Share Class and you do not specify the Class
choice on your form of payment, you automatically will receive Class A Shares.

The Funds reserve the right to reject any purchase request. The Funds do not
issue share certificates.

THROUGH M&T BANK

To purchase Shares through M&T Bank, contact an account representative at M&T
Bank or affiliates of M&T Bank which make Shares available, or M&T Bank's Mutual
Fund Services at (800) 836-2211 (in the Buffalo area call (716) 635-9368).

THROUGH M&T SECURITIES, INC.

To purchase Shares through a representative of M&T Securities, Inc. (M&T
Securities) call (800) 724-5445.

THROUGH AN AUTHORIZED DEALER

Contact your Authorized Dealer for specific instructions on how to purchase
Shares.

<PAGE>

PAYMENT BY CHECK

To purchase Shares of the Funds for the first time by mail using a check as
payment, complete and sign an account application form and mail it, together
with a check payable to (Name of the Fund and Class of Shares) to:

Vision Group of Funds, Inc.
P.O. Box 4556
Buffalo, New York, 14240-4556

Current shareholders can purchase Shares by mail by sending a check to the same
address. Orders by mail are considered received after payment by check has been
converted into federal funds. This is normally the next business day after the
check is received.

Shares of the Money Market Funds purchased by check begin earning dividends on
the day after the check is converted into federal funds.

PAYMENT BY WIRE

You may purchase Shares by Federal Reserve wire, whereby your bank sends money
to the Funds' bank through the Federal Reserve System.

MONEY MARKET FUNDS

Call M&T Bank's Mutual Fund Services or a representative of M&T Securities
before 11:00 a.m. (Eastern time) to place your order. The order is
considered immediately received, provided that payment by federal funds is
received that same day. Shares purchased by wire before 3:00 p.m. (Eastern
time) begin earning dividends that day.

INCOME AND EQUITY FUNDS

Call M&T Bank's Mutual Fund Services or a representative of M&T Securities
before 4:00 p.m. (Eastern time) to place your order. The order is considered
immediately received, provided that payment by federal funds is received
before 3:00 p.m. (Eastern time) the next business day.

PAYMENT BY TRANSFER

To purchase Shares of the Funds by transferring money from your bank
account, you must maintain a checking or NOW deposit account at M&T Bank or any
of its affiliate banks.

MONEY MARKET FUNDS

To place an order, call M&T Bank's Mutual Fund Services or a representative
of M&T Securities before 11:00 a.m. (Eastern time). The money will be
transferred from your checking or NOW deposit account to your Fund account
on that same day.

INCOME AND EQUITY FUNDS

To place an order, call M&T Bank's Mutual Fund Services or a representative
of M&T Securities before 4:00 p.m. (Eastern time). The money will be
transferred from your checking or NOW deposit account to your Fund account
on the next business day.

Your purchase of Shares will be effected on the day the order is placed.

CUSTOMER AGREEMENTS

Shareholders normally purchase Shares through different types of customer
accounts at M&T Bank and its affiliates. You should read this prospectus
together with any agreements between you and the Bank to learn about the
services provided, the fees charged for those services, and any restrictions and
limitations imposed.

SYSTEMATIC INVESTMENT PROGRAM

Once you have opened a Fund account, you can add to your investment on a regular
basis in amounts of $25 or more through automatic deductions from your checking
or NOW deposit account. The money may be withdrawn and periodically invested in
Fund Shares at the next NAV calculated after your order is received plus any
applicable sales charge. To sign up for this program, please call M&T Bank's
Mutual Fund Services for an application.

THROUGH AN EXCHANGE

You may purchase Shares of the Funds through an exchange from the same Share
class of another Vision Fund. You must meet the minimum initial investment
requirement for purchasing Shares and both accounts must have identical
registrations.

<PAGE>

RETIREMENT INVESTMENTS

Shares of the Funds can be purchased as an investment for retirement plans or
IRA accounts. You may be subject to an annual IRA account fee. NY Tax-Free Money
Market Fund and NY Municipal Income Fund are generally not appropriate for
retirement plans or IRA accounts. For further details, contact the Funds and
consult a tax adviser.

HOW TO REDEEM SHARES

Each Fund redeems Shares at its NAV next determined after the Fund receives the
redemption request in proper form less any applicable CDSC. Shares may be
redeemed directly from the Funds by telephone or by mail.

BY TELEPHONE

To redeem Shares by telephone, call M&T Bank's Mutual Fund Services at (800)
836-2211 (in the Buffalo area call (716) 635-9368). The proceeds will be wired
to your account at M&T Bank or an affiliate or to another account you previously
designated at a domestic commercial bank account that is a member of the Federal
Reserve System.

MONEY MARKET FUNDS

If you call before 11:00 a.m. (Eastern time) proceeds will be wired the same
day, but you will not receive that day's dividend. If you call after 11:00
a.m. (Eastern time), you will be paid that day's dividend but proceeds will
not be wired to your account until the following business day.

INCOME AND EQUITY FUNDS

If you call before 4:00 p.m. (Eastern time) you will receive a redemption
amount based on that day's NAV. The proceeds of your redemption request will be
wired to your account the next business day.

You are automatically eligible to make telephone redemptions unless you check
the box on your new account application form to decline the privilege. It is
recommended that you provide the necessary information for the telephone/wire
redemption option on your initial application. If you do not do this and later
wish to take advantage of the telephone redemption privilege, you must call M&T
Bank's Mutual Fund Services for authorization forms.

M&T Bank reserves the right to charge a fee for a wire transfer from a customer
checking account, which may contain redemption proceeds, to another commercial
bank.

Redemption requests for Shares held through an IRA account must be made by mail
and not by telephone.

The Funds reserve the right to modify or terminate the telephone redemption
privilege at any time. Shareholders will be notified prior to any modification
or termination. Your telephone instructions may be electronically recorded for
your protection.

Shareholders who accept the telephone redemption service authorize the Vision
Group of Funds, Inc. and its agents to act upon their telephonic instructions to
redeem Shares from any account for which they have authorized such services. If
reasonable procedures are not followed by the Funds, they may be liable for
losses due to unauthorized or fraudulent telephone transactions.

BY MAIL

You may redeem Shares by sending your written request to:

Vision Group of Funds, Inc.
P.O. Box 4556
Buffalo, New York 14240-4556

Your written request must include your name, the Fund's name and share class,
your account number, and the Share or dollar amount you wish to redeem. Please
call M&T Bank's Mutual Fund Services at (800) 836-2211 for specific instructions
before redeeming by mail.

Normally, a check for the proceeds is mailed within one business day but in no
event more than seven days, after receipt of a proper written redemption
request.

<PAGE>

ADDITIONAL CONDITIONS

SIGNATURE GUARANTEES

You must have a signature guarantee on written redemption requests:

o when you are requesting a redemption of $50,000 or more;

o when you want a redemption to be sent to an address other than the one you
have on record with the Fund; or o when you want the redemption payable to
someone other than the shareholder of record.

Your signature can be guaranteed by any federally insured financial institution
(such as a bank or credit union) or a broker-dealer that is a domestic stock
exchange member, BUT NOT BY A NOTARY PUBLIC.

LIMITATIONS ON REDEMPTION PROCEEDS

Redemption proceeds for Shares redeemed by mail are normally are mailed
within one business day after receiving a request in proper form. However,
payment may be delayed up to seven days:

o to allow your purchase payment to clear;
o during periods of market volatility; or

o when a shareholder's trade activity or amount adversely impacts a Fund's
ability to manage its assets.

SYSTEMATIC WITHDRAWAL PROGRAMS

CLASS A SHARES

You may automatically redeem Class A Shares in a minimum amount of $50 on a
regular basis. Your account must be worth at least $10,000 at the time the
program is established. This program may reduce, and eventually deplete, your
account. Payments should not be considered yield or income. Generally, it is not
advisable to continue to purchase Class A Shares subject to a sales charge while
redeeming Shares using this program. For more information and an application
form for this program call M&T Bank's Mutual Fund Services at (800) 836-2211.

CLASS B SHARES

You may automatically redeem Class B Shares without a sales charge in a
minimum amount of $__ on a regular basis. A CDSC will not be charged on SWP
redemptions of Class B Shares if:

o Shares redeemed are 12% or less of the account value in a single year;

o the account is at least one year old;

o all dividends and capital gains distributions are reinvested; and

o the account has at least a $10,000 balance when the SWP is established
(multiple Class B Share accounts cannot be aggregated to meet this minimum
balance).

You will be subject to a CDSC on redemption amounts that exceed the 12%
annual limit. In measuring the redemption percentage, your account is valued
when you establish the SWP and then annually at calendar year-end.

This program may reduce, and eventually deplete, your account. Payments should
not be considered yield or income. For more information and an application form
for this program call M&T Bank's Mutual Fund Services at (800) 836-2211.

CHECKWRITING

You may request checks to redeem Shares of the Money Market Funds. Your account
will continue to receive the daily dividend declared on the Shares being
redeemed until the check is presented for payment. The ability to redeem Shares
by check may not be available when establishing an account through an investment
professional. You should read this prospectus together with any applicable
agreement between you and the institution to learn about the services provided,
the fees charged for those services, and any restrictions or limitations that
may be imposed. For more information, contact M&T Bank's Mutual Fund Services.

REDEMPTION IN KIND

Although the Funds intend to pay Share redemptions in cash, each Fund reserves
the right to pay the redemption price in whole or in part by a distribution of
the Fund's portfolio securities.

REDEMPTION FROM RETIREMENT ACCOUNTS

In the absence of your specific instructions, 10% of the value of your
redemption from a retirement account in the Fund may be withheld for taxes. This
withholding only applies to certain types of retirement accounts.

<PAGE>

HOW TO EXCHANGE SHARES

You may exchange Shares of a Fund for the same share class of another Vision
Fund at the NAV next determined after the Funds receive the exchange in proper
form. You also would pay applicable sales charges when exchanging Shares from
one of the Money Market Funds into one of the Income or Equity Funds. In
addition, you may exchange Class A Shares of the Funds into Class A Shares of
Federated International Equity Fund at NAV plus any applicable sales charge.

In order to exchange Shares you must:

o meet the minimum initial investment requirements (if the exchange results in
the establishment of a new account); o establish an account into the Fund you
want to acquire if you do not have an account in that Fund; o ensure that the
account registrations are identical; o receive a prospectus for the Fund into
which you wish to exchange; and o only exchange into Funds that may be legally
sold in your state of residence.

An exchange is treated as a redemption and subsequent purchase and is a taxable
transaction.

For additional information about the exchange privilege, call M&T Bank's Mutual
Fund Services at (800) 836-2211.

CLASS A SHARE EXCHANGES

EXCHANGES AT NAV

If you exchange between Funds with different sales charges, the exchange will be
made at NAV.

If you paid a sales charge once (included Shares acquired through reinvestment
of dividends and capital gains) you will not have to pay the sales charge again
upon exchange. This is true even if you exchange out of a Fund with a sales
charge, then into a Fund without a sales charge and back into a Fund with a
sales charge.

EXCHANGES SUBJECT TO A SALES CHARGE

If you purchased into a Fund without a sales charge, and exchange into a Fund
with a sales charge, you will be assessed the applicable sales charge when you
make the exchange. However, the sales charge will not be applied to any Shares
that you acquired through reinvestment of dividends and capital gains.

CLASS B SHARE EXCHANGES

You may exchange Class B Shares from one Fund to another at NAV without any
sales charge. The time you held the original Class B Shares will be added to the
time you held the exchanged-for Class B Shares for purposes of calculating any
applicable CDSC when you ultimately redeem those Shares.

The Funds may modify or terminate the exchange privilege at any time, and
shareholders will be notified prior to any modification or termination. The
Funds' management or adviser may determine from the amount, frequency, and
pattern of exchanges that a shareholder is engaged in excessive trading that is
detrimental to a Fund and other shareholders. If this occurs, the Fund may
terminate the availability of exchanges to that shareholder and may bar that
shareholder from purchasing other Vision Funds.

EXCHANGING SHARES BY TELEPHONE

You may exchange Shares between Funds by calling M&T Bank's Mutual Fund Services
at (800) 836-2211 (in Buffalo, (716) 635-9368).

MONEY MARKET FUNDS

Your telephone instructions must be received by M&T Bank by 11:00 a.m.
(Eastern time) and transmitted to Federated Shareholder Services Company by
4:00 p.m. (Eastern time) for Shares to be exchanged that same day.

INCOME AND EQUITY FUNDS

Exchange instructions must be received by M&T Bank's Mutual Fund Services
and transmitted to Federated Shareholder Services Company by 4:00 p.m.
(Eastern time) for Shares to be exchanged that same day.

You will not receive a dividend from the Fund into which you are exchanging on
the date of the exchange.

You will automatically be eligible for telephone exchanges, unless you check the
box on the new account application form to decline this privilege. It is
recommended that you provide the necessary information for the telephone
exchange option on your initial application. If you do not do this and later
wish to take advantage of the privilege, you may call M&T bank's Mutual Fund
Services for authorization forms.

Shareholders who accept the telephone exchange service authorize the Vision
Group of Funds, Inc. and its agents to act upon their telephonic instructions to
exchange Shares from any account for which they have authorized such services.
If reasonable procedures are not followed by the Funds, they may be liable for
losses due to unauthorized or fraudulent telephone transactions.

EXCHANGING SHARES BY MAIL

You may exchange Shares by mail by sending your written request to:

Vision Group of Funds, Inc.
P.O. Box 4556
Buffalo, New York 14240-4556

All written requests must include your name, the Fund's name and Share
class, your account number, and the share or dollar amount you wish to exchange
and the name of the Fund into which the exchange is to be made.

SYSTEMATIC EXCHANGE PROGRAM

You may exchange Shares of a predetermined amount of at least $25 from one Fund
into another Fund on a monthly, quarterly or annual basis. Exchanges are subject
to investment minimums, limitations and any applicable sales charges as
described above. For more information and an application form for the Systematic
Exchange Program, call M&T Bank's Mutual Fund Services at (800) 836-2211.

ACCOUNT AND SHARE INFORMATION

CONFIRMATIONS AND ACCOUNT STATEMENTS

DIVIDENDS AND CAPITAL GAINS

- ----------------------------------------- ------------------------------------
FUND DIVIDENDS DECLARED/DIVIDENDS PAID

- ----------------------------------------- ------------------------------------
Money Market Funds and Income Funds Daily/Monthly

- ----------------------------------------- ------------------------------------
Capital Appreciation Fund Annually/Annually

- ----------------------------------------- ------------------------------------

Dividends (if any) are paid to shareholders invested in a Fund on the record
date.

The Money Market Funds do not expect to realize any capital gains or losses. If
capital gains or losses were to occur, they could result in an increase or
decrease in dividends. In addition, each Fund intends to pay any capital gains
at least annually. Your dividends and capital gains distributions will be
automatically reinvested in additional Shares without a sales charge, unless you
elect cash payments.

If you purchase shares just before a Fund declares a dividend (other than a Fund
that declares dividends daily) or capital gain distribution, you will pay the
full price for the shares and then receive a portion of the price back in the
form of a distribution, whether or not you reinvest the distribution in Shares.
Therefore, you should consider the tax implications of purchasing Shares shortly
before the Fund declares a dividend or capital gain.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining account with low balances, non-retirement
accounts may be closed if redemptions or exchanges cause the account balance to
fall below $250. Before an account is closed, you will be notified and allowed
30 days to purchase additional Shares to meet the minimum account balance
required.

TAX INFORMATION

The Funds send you an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in a Fund. Capital gains distributions are taxable at different rates
depending upon the length of time a Fund holds its assets.

Fund distributions for the Large Cap Growth Fund and Capital Appreciation Fund
are expected to be primarily capital gains. Fund distributions for the Large Cap
Value Fund and Growth & Income Fund are expected to be both dividends and
capital gains. Fund distributions for the Treasury Money Market Fund, Money
Market Fund and U.S. Government Securities Fund are expected to be primarily
dividends.

It is anticipated that distributions for the NY Tax-Free Money Market Fund and
the NY Municipal Income Fund will be primarily dividends that are exempt from
federal income tax, although a portion of each Fund's dividends may not be
exempt. Dividends may be subject to state and local taxes, although each Fund's
dividends will be exempt from New York state personal income tax to the extent
that they are derived from interest on obligations exempt from New York personal
income taxes. Capital gains and non-exempt dividends are taxable whether paid in
cash or reinvested in the Fund.

Redemptions and exchanges are taxable sales. Please consult your tax adviser
regarding your federal, state, and local tax liability.

WHO MANAGES THE FUNDS?

The Board of Directors governs the Funds. The Board selects and oversees the
Adviser, M&T Bank. The Adviser manages the Funds' assets, including buying and
selling portfolio securities. The Adviser's address is One M&T Plaza, Buffalo,
New York 14240.

The Adviser is the principal banking subsidiary of M&T Bank Corporation, a
regional bank holding company in existence since 1969. M&T Bank was founded in
1856 and provides comprehensive banking and financial services to individuals,
governmental entities and businesses through New York State. As of December 31,
1998, M&T Bank had over $4.5 billion in assets under management. M&T Bank has
served as investment adviser to the Funds since 1988. As of December 31, 1998,
M&T Bank managed $1.51 billion in net assets of money market funds. As part of
its regular banking operations, M&T Bank may make loans to public companies.
Thus, it may be possible, from time to time, for the Funds to hold or acquire
the securities of issuers which are also lending clients of M&T Bank. The
lending relationship will not be a factor in the selection of securities.

For its services under an Advisory Contract, the Adviser receives an annual
Advisory Fee from each Fund, equal to a percentage of each Fund's average daily
net assets as follows:

- ---------------------------------- --------------

FUND NAME ADVISORY FEE

- ---------------------------------- --------------
Each Money Market Fund 0.50%

- ---------------------------------- --------------
- ---------------------------------- --------------
Each Income Fund 0.70%

- ---------------------------------- --------------
- ---------------------------------- --------------
Large Cap Value Fund 0.70%

- ---------------------------------- --------------
- ---------------------------------- --------------
Large Cap Growth Fund 0.85%

- ---------------------------------- --------------
- ---------------------------------- --------------
Growth & Income Fund 0.70%

- ---------------------------------- --------------
- ---------------------------------- --------------
Capital Appreciation Fund 0.85%

- ---------------------------------- --------------

The Adviser may voluntarily waive a portion of its fee or reimburse the Funds
for certain operating expenses.

SUB-ADVISER

The Adviser has delegated daily management of the NY Tax-Free Money Market Fund
to the sub-adviser, Federated Investment Management Company (FIMCO). FIMCO has
complete discretion to manage portfolio securities of the Fund, subject to the
Fund's investment objective, policies and limitations. FIMCO is a registered
investment adviser and a subsidiary of Federated. FIMCO and other subsidiaries
of Federated advise more than 175 mutual funds and separate accounts, which
total approximately $111 billion in assets as of December 31, 1998. For its
services FIMCO receives a fee based upon a percentage of each Fund's average
daily net assets which is paid by the Adviser and not by the Fund. The
sub-adviser's address is Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, PA 15222-3779.

PORTFOLIO MANAGERS

The U.S. Government Securities Fund and New York Municipal Income Fund are
managed by Thomas R. Pierce. Mr. Pierce has been the portfolio manager of the
U.S. Government Securities Fund and New York Municipal Income Fund since March
1995. Mr. Pierce joined M&T Bank in January 1995 as Vice President from Merit
Investment Advisors where he acted as Director of Fixed Income Product and
Trading since 1993. For the period from 1987 to 1993, Mr. Pierce served as Fixed
Income Manager at ANB Investment Management Company, where he directed the
management of $3.5 billion of active and passive fixed income portfolios. Mr.
Pierce is a Chartered Financial Analyst and has a B.A. in Economics from
Washington University, and an MBA from the University of Chicago.

Robert J. Truesdell has supervised the investment management of the U.S.
Government Securities Fund and New York Municipal Income Fund since their
inception. From August 1994 through February 1995, he also served as the
portfolio manager of these Funds. In addition to his responsibilities with
respect to these Funds, Mr. Truesdell manages individual investment accounts and
oversees the investment activities of M&T Bank's money market and fixed income
products as well as the money market funds in the Vision Group of Funds, Inc.
Mr. Truesdell joined M&T Bank as Vice President and Fixed Income Manager in
1988. In addition to the Vision money market funds, he also manages individual
investment management accounts. Mr. Truesdell holds an MBA in Accounting from
the State University of New York at Buffalo.

The Growth & Income Fund, Capital Appreciation Fund and Large Cap Growth Fund
are managed by John J. Clark, III. Mr. Clark has been the portfolio manager of
the Growth & Income Fund since September 1998, of the Capital Appreciation Fund
since June 1999 and of the Large Cap Growth Fund since its inception in May
1999. Mr. Clark joined M&T Bank as Vice President and Senior Portfolio Manager
of M&T Capital Advisors Group in April 1998. Most of his 16-plus years of
investment experience took place at Cornell University where he was part of the
in-house investment organization where he helped to manage the University's
endowment. Immediately prior to joining M&T Bank, Mr. Clark was with Marine
Midland Bank as a Senior Portfolio Manager from 1994 to April 1998. Mr. Clark
obtained his BS from Cornell University and MBA from Virginia Commonwealth
University and is also a Chartered Financial Analyst.

The Large Cap Value Fund has been managed since its inception in September
1997 by John E. Leslie III. Mr. Leslie joined M&T Bank in February 1996 as Vice
President and Senior Portfolio Manager. His investment experience includes two
years with Value Line Asset Management, New York where he was a Senior Portfolio
Manager (1994- 1996). From 1992 to 1994, Mr. Leslie was an independent
consultant designing quantitative equity valuation models and structured
investment products. Mr. Leslie obtained his B.A.

in Finance from Suffolk University, his MBA from Babson College and is a
Chartered Financial Analyst.

FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS

The following financial highlights are intended to help you understand each
Fund's financial performance for its past five fiscal years, or since inception,
if the life of a Fund is shorter. Some of the information is presented on a per
share basis. Total returns represent the rate an investor would have earned (or
lost) on an investment in a Fund, assuming reinvestment of all dividends and
capital gains.

This information has been audited by [Ernst & Young, LLP] whose report,
along with the Funds' audited financial statements, is included in the Annual
Report which is
available upon request.. TO BE FILED BY AMENDMENT

<PAGE>

VISION TREASURY MONEY MARKET FUND

CLASS A SHARES

VISION MONEY MARKET FUND

CLASS A SHARES

VISION NEW YORK TAX-FREE MONEY MARKET FUND

CLASS A SHARES

VISION U.S. GOVERNMENT SECURITIES FUND

CLASS A SHARES

VISION NEW YORK MUNICIPAL INCOME FUND

CLASS A SHARES

VISION LARGE CAP VALUE FUND

CLASS A SHARES AND CLASS B SHARES

VISION LARGE CAP GROWTH FUND

CLASS A SHARES AND CLASS B SHARES

VISION GROWTH & INCOME FUND

CLASS A SHARES

VISION CAPITAL APPRECIATION FUND

CLASS A SHARES

Portfolios of The Vision Group of Funds, Inc.

A Statement of Additional Information (SAI) dated August __, 1999, is
incorporated by reference into this prospectus. Additional information about
each Fund's investments is available in the Funds' annual and semi-annual
reports to shareholders. The annual report discusses market conditions and
investment strategies that significantly affected each Fund's performance during
their last fiscal year. To obtain the SAI, the annual and semi-annual reports
and other information without charge call (800) 836-2211.

You can obtain information about the Funds by visiting or writing the Public
Reference Room of the Securities and Exchange Commission in Washington, DC
20549-6009 or from the Commission's Internet site at http://www.sec.gov. You can
call 1-800-SEC-0330 for information on the Public Reference Room's operations
and copying charges.

Cusips
Product Code (8/99)
SEC File No. 811-5514

VISION GROUP OF FUNDS, INC.

PROSPECTUS

AUGUST __, 1999

VISION TREASURY MONEY MARKET FUND

VISION MONEY MARKET FUND

CLASS S SHARES

MUTUAL FUND SHARES ARE NOT BANK DEPOSITS, NOT FDIC INSURED, NOT GUARANTEED AND
MAY LOSE VALUE.

CONTENTS [TO BE COMPLETED]

<PAGE>

FUND GOALS, STRATEGIES, RISKS AND PERFORMANCE

The Vision Group of Funds, Inc. offers ten portfolios, including three Money
Market Funds, two Income Funds and five Equity Funds. The following describes
the investment goals, strategies and principal risks of two of the Money Market
Funds: Vision Treasury Money Market Fund and Vision Money Market Fund. There can
be no assurance the a Fund will achieve its goal, however, each Fund endeavors
to do so by following the strategies and policies described in this prospectus.

VISION TREASURY MONEY MARKET FUND

GOAL: To seek current income with liquidity and stability of principal.

STRATEGY: The Fund pursues its goal by investing in direct obligations of the
U.S. Treasury, such as Treasury bills and notes, and repurchase agreements
secured by these obligations. These obligations generally mature and come due
for repayment by the issuer in 397 days or less. The dollar-weighted average
maturity of the Fund will not exceed 90 days.

VISION MONEY MARKET FUND

GOAL: To seek current income with liquidity and stability of principal by
investing in high quality money market instruments.

STRATEGY: The Fund pursues its goal by investing in a broad range of
short-term debt obligations issued by the U.S. government, banks and
corporations. These obligations generally mature and come due for repayment by
the issuer in 397 days or less. The dollar-weighted average maturity of the Fund
will not exceed 90 days.

INVESTMENT STRATEGIES, RATINGS AND LIMITATIONS

PRINCIPAL RISKS OF THE FUNDS

The Class S Shares offered by this prospectus are not deposits or obligations of
M&T Bank, are not endorsed or guaranteed by M&T Bank and are not insured or
guaranteed by the U.S. government, the Federal Deposit Insurance Corporation,
the Federal Reserve Board, or any other government agency. Although the Funds
attempt to preserve the value of your investment at $1.00 per Share, it is
possible to lose money by investing in the Funds.

MONEY MARKET RISKS

Prices of fixed income securities rise and fall in response to interest rate
changes for similar securities. Generally, when interest rates rise, prices of
fixed income securities fall.

Interest rate changes have a greater effect on the price of fixed income
securities with longer maturities. Money market funds try to minimize this risk
by purchasing short-term securities.

A Fund can also be affected by the credit quality of the securities in its
portfolio. The credit quality of a security is based upon the ability of the
issuer to repay the security. Money market funds attempt to minimize this risk
by investing in securities with high credit quality.

Any of these risks may have an adverse effect on a Fund's total return and
yield.

PERFORMANCE BAR CHARTS AND TOTAL RETURNS

On the following pages are performance information for the Funds. While past
performance of a Fund does not necessarily predict future performance, the
following information provides you with the historical performance information
to assist you in analyzing how each Fund's investment risks may be balanced by
their potential rewards. For more current performance information, including the
current 7-Day Net Yields, call (800) 836-2211.

BAR CHARTS

The bar chart represents the calendar year performance of Class A Shares of each
Fund (which is the share class with the longest operating history). Also
provided is the best and worst calendar quarter performance for Class A Shares.

TOTAL RETURN

Following the bar chart is a performance table showing the Average Annual Total
Return for Class A Shares of the Funds for certain periods ended December 31,
1998.

<PAGE>

TREASURY MONEY MARKET FUND

ANNUAL TOTAL RETURN*

(CALENDAR YEAR 1998)

The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Class S Shares of Treasury Money Market Fund as of the
calendar year-end for each of10 years.

The `y' axis reflects the "% Total Return" beginning with "-5" and increasing in
increments of 5% up to 15%.

The Fund's Class A Shares Total Return from January 1, 1999 to June 30, 1999 was
___%.

Best quarter (2Q89) 2.17%
Worst quarter (2Q93) 0.68%

7-DAY NET YIELD

(AS OF DECEMBER 31, 1998) 4.14%

AVERAGE ANNUAL TOTAL RETURN

(FOR THE PERIODS ENDED DECEMBER 31, 1998)

*HISTORICALLY, THE FUND HAS MAINTAINED A CONSISTENT $1.00 NET ASSET VALUE
PER SHARE.

THE FUND'S SHARES ARE NOT SOLD SUBJECT TO A SALES CHARGE (LOAD). THE TOTAL
RETURNS DISPLAYED ABOVE ARE BASED UPON NET ASSET VALUE.

THE TOTAL RETURN INFORMATION IS GIVEN FOR THE FUND'S CLASS A SHARES WHICH ARE
NOT OFFERED IN THIS PROSPECTUS. THE FUND'S CLASS S SHARES WOULD HAVE HAD SIMILAR
ANNUAL RETURNS TO THOSE SHOWN BECAUSE THE SHARES ARE INVESTED IN THE SAME
PORTFOLIO OF SECURITIES. THE ANNUAL RETURNS FOR CLASS A SHARES WOULD BE LOWER
BECAUSE THEY BEAR CERTAIN ADDITIONAL EXPENSES.

MONEY MARKET FUND

ANNUAL TOTAL RETURN*

(CALENDAR YEAR 1998)

The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Class A Shares of Money Market Fund as of the calendar
year-end for each of10 years.

The `y' axis reflects the "% Total Return" beginning with "-5" and increasing in
increments of 5% up to 15%.

The `x' axis represents calculation periods for the last ten calendar years of
the Fund, beginning with the earliest year. The light gray shaded chart features
10 distinct vertical bars, each shaded in charcoal, and each visually
representing by height the total return percentages for the calendar year stated
directly at its base. The calculated total return percentage for the Fund for
each calendar year is stated directly at the top of each respective bar, for the
calendar years 1989 through 1998, The percentages noted are:8.94%, 7.80%, 5.45%,
3.45%, 2.97%, 3.91%, 5.56%, 4.94%, 5.07%, 4.98%.

The Fund's Class A Shares Total Return from January 1, 1999 to June 30, 1999 was
___%.

Best quarter (2Q89) 2.31%
Worst quarter (2Q93) 0.71%

7-DAY NET YIELD

(AS OF DECEMBER 31, 1998) 4.53%

AVERAGE ANNUAL TOTAL RETURN

(FOR THE PERIODS ENDED DECEMBER 31, 1998)

*HISTORICALLY, THE FUND HAS MAINTAINED A CONSISTENT $1.00 NET ASSET VALUE
PER SHARE.

THE FUND'S SHARES ARE NOT SOLD SUBJECT TO A SALES CHARGE (LOAD). THE TOTAL
RETURNS DISPLAYED ABOVE ARE BASED UPON NET ASSET VALUE.

SUMMARY OF FUND EXPENSES

These tables describe the fees and expenses that you may pay if you buy and hold
CLASS S SHARES of the Funds.

------------------------------
TREASURY MONEY MARKET
MONEY MARKET FUND

FUND

------------------------------
CLASS S CLASS S

- ---------------------------------------------------------
- ------------------------------------------- ----------------
SHAREHOLDER FEES

Fees Paid Directly From Your Investment
Maximum Sales Charge (Load) Imposed on

Purchases (as a percentage of None None
offering price)
ANNUAL FUND OPERATING EXPENSES
(before waivers)(1)
Expenses That are Deducted From Fund
Assets
(as a percentage of average net assets)
Management Fee 0.50% 0.50%
Distribution (12b-1) Fee 0.25% 0.25%
Shareholder Services Fees 0.25% 0.25%
Other Expenses % %
- ------------------------------------------------------------------------
Total Annual Fund Operating Expenses % %

- ------------------------------------------------------------------------

(1)Although not contractually obligated to do so, the investment adviser and
distributor waived certain amounts during the past fiscal year. These are
shown below along with the net expenses the Funds ACTUALLY PAID for the
fiscal year ended April 30, 1999. Waiver of Fund Expenses % % Total Actual
Annual Fund Operating Expenses % % (After Waivers)

EXAMPLE

The following Example is intended to help you compare the cost of investing in
Class S Shares of the Funds with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in each Fund's Shares for the time
periods indicated and then redeem all of your Shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that each Fund's Shares operating expenses are BEFORE WAIVERS as shown in
the Tables and remain the same.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

------------------------------
MONEY TREASURY
MARKET FUND MONEY MARKET

FUND

- ------------------------------------------------------------------------
CLASS S CLASS S

- ------------------------------------------------------------------------
1 YEAR $ $
3 YEARS $ $
5 YEARS $ $
10 YEARS $ $
- ------------------------------------------------------------------------

WHAT ARE THE FUNDS' MAIN INVESTMENTS AND INVESTMENT TECHNIQUES?

FIXED INCOME SECURITIES

The following describes the principal types of fixed income securities in which
a Fund may invest.

TREASURY SECURITIES

Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded as having the lowest
credit risks.

AGENCY SECURITIES

CORPORATE DEBT SECURITIES

BANK INSTRUMENTS

CREDIT ENHANCEMENT

REPURCHASE AGREEMENTS

Repurchase agreements are subject to CREDIT RISKS.

SPECIFIC RISKS OF INVESTING IN THE FUNDS

INTEREST RATE RISKS

CREDIT RISKS

Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, the Fund
will lose money.

CALL RISKS

PREPAYMENT RISKS

The Fund may have to reinvest the proceeds of mortgage prepayments in other
fixed income securities with lower interest rates, higher prepayment risks, or
other less favorable characteristics.

YEAR 2000 READINESS

The financial impact of these issues for the Funds is still being determined.
There can be no assurance that potential Year 2000 problems would not have a
material adverse effect on the Funds.

WHAT DO SHARES COST?

You can purchase, redeem, or exchange Shares any day the New York Stock Exchange
(NYSE) is open. When the Funds receive your transaction request in proper form,
it is processed at the next calculated net asset value (NAV). The Funds do not
charge front-end sales charges. Each Fund attempts to stabilize the NAV of its
Shares at $1.00 by valuing its portfolio securities using the amortized cost
method. The Funds cannot guarantee that their NAV will always remain at $1.00
per Share.

NAV for the Funds is determined at 12:00 p.m. (Eastern time), 3:00 p.m.
(Eastern time) and at the end of regular trading (normally 4:00 p.m. Eastern
time) each day the NYSE is open.

The minimum initial investment in each Fund is $500 unless the investment
is in a retirement plan or an IRA account, in which case the minimum initial
investment is $250. Subsequent investments must be in amounts of at least $25.

The minimum initial and subsequent investment amounts may be waived or lowered
from time to time. An institutional investor's minimum investment will be
calculated by combining all accounts it maintains with the Funds. Keep in mind
that investment professionals may charge you additional fees for their services
in connection with your Share transactions.

HOW ARE THE FUNDS SOLD?

The Funds offer two share classes: Class A Shares and Class S Shares. Each class
represents interests in a single portfolio of securities. This prospectus
relates only to Class S Shares. Each share class has different expenses, which
affect their performance. Contact your investment professional or call (800)
836-2211 for more information concerning Class A Shares.

The Funds' Distributor markets the Shares described in this prospectus to
institutions and individuals and to customers who purchase Shares through cash
management services, such as a Sweep Account offered by M&T Bank, any of its
affiliates and certain other financial service organizations, such as banks or
broker-dealers (Service Organizations). If you invest in Class S Shares through
a Sweep Account you will receive Sweep Account materials describing the various
features and operations of the Sweep Account from M&T Bank or your Service
Organization. The Sweep Account materials should be reviewed in conjunction with
this prospectus.

When the Distributor receives marketing fees, it may pay some or all of them to
investment professionals. The Distributor and its affiliates may pay out of
their assets other amounts (including items of material value) to investment
professionals for marketing and servicing Shares. The Distributor is a
subsidiary of Federated Investors, Inc. (Federated).

RULE 12B-1 PLANS

Each Fund has adopted a Rule 12b-1 Plan, which allows it to pay marketing fees
to the Distributor, the Adviser, their affiliates or investment professionals
for the sale, distribution and customer servicing of the Funds' Class S Shares.
The Distributor may voluntarily waive or reduce its fees. Because these Shares
pay marketing fees on an ongoing basis, your investment cost may be higher over
time than other shares with different sales charges and marketing fees.

HOW TO PURCHASE SHARES

You may purchase Shares through M& T Bank or M&T Securities, Inc., at the NAV
next determined after the purchase order is received.

To make an initial investment in Class S Shares of the Funds, you must open an
account by completing the account application form. Sweep Account customers will
also need to complete a Cash Sweep Agreement. Information needed to open your
account may be taken over the telephone. To apply by phone or to get help in
completing the enclosed application, call M&T Bank's Mutual Fund Services at
(800) 836-2211 (in the Buffalo area, phone (716) 635-9368). Sweep Account
customers may telephone (800) 724-2240.

Payment may be made by check or federal funds wire or by debiting your account
at M&T Bank or any of its affiliate banks.

Purchase orders for the Funds must be received by 11:00 a.m. (Eastern time)
to receive that day's dividend. For settlement of an order to occur, payment
must be received that same day.

The Funds reserve the right to reject any purchase request.

THROUGH M&T BANK

THROUGH M&T SECURITIES, INC.

To purchase Shares through a representative of M&T Securities, Inc. call
(800) 724-5445.

PAYMENT BY CHECK

Vision Group of Funds, Inc.
P.O. Box 4556
Buffalo, New York, 14240-4556

Shares of the Funds purchased by check begin earning dividends on the day after
the check is converted into federal funds.

PAYMENT BY WIRE

You may purchase Shares by Federal Reserve wire, whereby your bank sends money
to the Funds' bank through the Federal Reserve System.

Call M&T Bank's Mutual Fund Services or a representative of M&T Securities
before 11:00, a.m. (Eastern time) to place your order. The order is considered
immediately received, provided that payment by federal funds is received that
same day. Shares of purchased by wire before 3:00 p.m. (Eastern time) begin
earning dividends that day.

PAYMENT BY TRANSFER

To purchase Shares of the Funds by transferring money from your bank
account, you must maintain a checking or NOW deposit account at M&T Bank or any
of its affiliate banks.

To place an order, call M&T Bank's Mutual Fund Services or a representative of
M&T Securities before11:00 a.m. (Eastern time). The money will be transferred
from your checking or NOW deposit account to your Fund account on that same day.
Sweep Account customers should refer to their Cash Sweep Agreement.

Your purchase of Shares will be effected on the day the order is placed.

CUSTOMER AGREEMENTS

SYSTEMATIC INVESTMENT PROGRAM

Once you have opened a Fund account, you can add to your investment on a regular
basis in amounts of $25 or more through automatic deductions from your checking
or NOW deposit account. The money may be withdrawn and periodically invested in
Fund Shares at the next NAV calculated after your order is received. To sign up
for this program, please call M&T Bank's Mutual Fund Services for an
application.

THROUGH AN EXCHANGE

RETIREMENT INVESTMENTS

Shares of the Funds can be purchased as an investment for retirement plans
or IRA accounts. You may be subject to an annual IRA account fee. For further
details, contact the Funds and consult a tax adviser.

HOW TO REDEEM SHARES

Each Fund redeems Shares at its NAV next determined after the Fund receives the
redemption request in proper form. Shares may be redeemed directly from the
Funds by telephone or by mail. Sweep Account customers should refer to their
Cash Sweep Agreement.

BY TELEPHONE

If you call before 11:00 a.m. (Eastern time) proceeds will be wired the same
day, but you will not receive that day's dividend. If you call after 11:00 a.m.
(Eastern time), you will be paid that day's dividend but proceeds will not be
wired to your account until the following business day.

M&T Bank reserves the right to charge a fee for a wire transfer from a customer
checking account, which may contain redemption proceeds, to another commercial
bank.

Redemption requests for Shares held through an IRA account must be made by mail
and not by telephone.

BY MAIL

You may redeem Shares by sending your written request to:

Vision Group of Funds, Inc.
P.O. Box 4556
Buffalo, New York 14240-4556

Normally, a check for the proceeds is mailed within one business day but in no
event more than seven days, after receipt of a proper written redemption
request.

ADDITIONAL CONDITIONS

SIGNATURE GUARANTEES

You must have a signature guarantee on written redemption requests:

o when you are requesting a redemption of $50,000 or more;

o when you want a redemption to be sent to an address other than the one you
have on record with the Fund; or o when you want the redemption payable to
someone other than the shareholder of record.

LIMITATIONS ON REDEMPTION PROCEEDS

Redemption proceeds for Shares redeemed by mail are normally are mailed
within one business day after receiving a request in proper form. However,
payment may be delayed up to seven days:

o to allow your purchase payment to clear;
o during periods of market volatility; or

o when a shareholder's trade activity or amount adversely impacts a Fund's
ability to manage its assets.

SYSTEMATIC WITHDRAWAL PROGRAMS

You may automatically redeem Class S Shares in a minimum amount of $50 on a
regular basis. Your account must be worth at least $10,000 at the time the
program is established. This program may reduce, and eventually deplete, your
account. Payments should not be considered yield or income. For more information
and an application form for this program call M&T Bank's Mutual Fund Services at
(800) 836-2211.

CHECKWRITING

You may request checks to redeem Shares of the Funds. Your account will continue
to receive the daily dividend declared on the Shares being redeemed until the
check is presented for payment. Checkwriting privileges are not available to
Sweep Account customers. The ability to redeem Shares by check may not be
available when establishing an account through an investment professional. You
should read this prospectus together with any applicable agreement between you
and the institution to learn about the services provided, the fees charged for
those services, and any restrictions or limitations that may be imposed. For
more information, contact M&T Bank's Mutual Fund Services.

REDEMPTION IN KIND

Although the Funds intend to pay Share redemptions in cash, each Fund reserves
the right to pay the redemption price in whole or in part by a distribution of
the Fund's portfolio securities.

REDEMPTION FROM RETIREMENT ACCOUNTS

HOW TO EXCHANGE SHARES

You may exchange Class S Shares of a Fund for the same share class of another
Vision Fund at the NAV next determined after the Fund receives the exchange
request in proper form. Presently, the only Vision Funds which offer Class S
Shares are the Treasury Money Market Fund and the Money Market Fund.

In order to exchange Shares you must:

An exchange is treated as a redemption and subsequent purchase and is a taxable
transaction.

For additional information about the exchange privilege, call M&T Bank's Mutual
Fund Services at (800) 836-2211.

EXCHANGING SHARES BY TELEPHONE

You may exchange Shares between Funds by calling M&T Bank's Mutual Fund Services
at (800) 836-2211 (in Buffalo, (716) 635-9368).

Your telephone instructions must be received by M&T Bank by 11:00 a.m. (Eastern
time) and transmitted to Federated Shareholder Services Company by 4:00 p.m.
(Eastern time) for Shares to be exchanged that same day.

You will not receive a dividend from the Fund into which you are exchanging on
the date of the exchange.

EXCHANGING SHARES BY MAIL

You may exchange Shares by mail by sending your written request to:

Vision Group of Funds, Inc.
P.O. Box 4556
Buffalo, New York 14240-4556

SYSTEMATIC EXCHANGE PROGRAM

You may exchange Shares of a predetermined amount of at least $25 from one Fund
into another Fund on a monthly, quarterly or annual basis. Exchanges are subject
to investment minimums and limitations as described above. For more information
and an application form for the Systematic Exchange Program, call M&T Bank's
Mutual Fund Services at (800) 836-2211.

ACCOUNT AND SHARE INFORMATION

CONFIRMATIONS AND ACCOUNT STATEMENTS

You will receive confirmation of purchases, redemptions and exchanges (except
systematic transactions). In addition, you will receive periodic statements
reporting all account activity, including systematic transactions, dividends and
capital gains paid. The Funds declare dividends daily and pay them monthly.
Dividends (if any) are paid to shareholders invested in a Fund on the record
date.

The Funds do not expect to realize any capital gains or losses. If capital gains
or losses were to occur, they could result in an increase or decrease in
dividends. In addition, each Fund intends to pay any capital gains at least
annually. Your dividends and capital gains distributions will be automatically
reinvested in additional Shares without a sales charge, unless you elect cash
payments.

ACCOUNTS WITH LOW BALANCES

TAX INFORMATION

Fund distributions for the Funds are expected to be primarily dividends.
Redemptions and exchanges are taxable sales. Please consult your tax adviser
regarding your federal, state, and local tax liability.

WHO MANAGES THE FUNDS?

For its services under an Advisory Contract, the Adviser receives an annual
Advisory Fee from the Funds, equal to 0.50% of each Fund's average daily net
assets.

FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS

This information has been audited by Ernst & Young, LLP whose report, along with
the Funds' audited financial statements, is included in the Annual Report which
is available upon request.

TO BE FILED BY AMENDMENT

<PAGE>

VISION TREASURY MONEY MARKET FUND
VISION MONEY MARKET FUND

CLASS S SHARES

Portfolios of The Vision Group of Funds, Inc.

Cusips
Product Code (8/99)
SEC File No. 811-5514

VISION GROUP OF FUNDS, INC.

STATEMENT OF ADDITIONAL INFORMATION

AUGUST __, 1999

<PAGE>

VISION TREASURY MONEY MARKET FUND

CLASS A SHARES AND CLASS S SHARES

VISION MONEY MARKET FUND

CLASS A SHARES AND CLASS S SHARES

VISION NEW YORK TAX-FREE MONEY MARKET FUND

CLASS A SHARES

VISION U.S. GOVERNMENT SECURITIES FUND

CLASS A SHARES

VISION NEW YORK MUNICIPAL INCOME FUND

CLASS A SHARES

VISION LARGE CAP VALUE FUND

(formerly Vision Equity Income Fund)

CLASS A SHARES AND CLASS B SHARES

VISION LARGE CAP GROWTH FUND

CLASS A SHARES AND CLASS B SHARES

VISION GROWTH & INCOME FUND

CLASS A SHARES

VISION CAPITAL APPRECIATION FUND

CLASS A SHARES

<PAGE>

This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectuses for the Funds dated August __, 1999.

This SAI incorporates by reference the Funds' Annual Reports. Obtain the
prospectuses or the Annual Reports without charge by calling (800) 836-2211 (in
the Buffalo area call (716) 635-9368).

CONTENTS

TO COME

CUSIPS 000000000

PRODUCT CODE (8/99)

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HOW ARE THE FUNDS ORGANIZED?

Each Fund is a diversified portfolio of Vision Group of Funds, Inc.
(Corporation) except for NY Tax-Free Money Market Fund and NY Municipal Income
Fund which are non-diversified portfolios of the Corporation. The Corporation is
an open-end, management investment company that was established as a Corporation
under the laws of the State of Maryland on February 23, 1988. The Corporation
may offer separate series of shares representing interests in separate
portfolios of securities.

The Board of Directors (the Board) has established three of shares of the Funds,
known as Class A Shares, Class B Shares and Class S Shares (Shares). This SAI
relates to all three classes of Shares. Only Large Cap Value Fund and Large Cap
Growth Fund offer Class B Shares. Only Treasury Money Market Fund and Money
Market Fund offer Class S Shares. NY Municipal Income Fund changed its name from
the Vision New York Tax Free Fund on September 29, 1997. The Large Cap Value
Fund changed its name from the Vision Equity Income Fund on August ____, 1999.
The Funds' investment adviser is Manufacturers and Traders Trust Company (M&T
Bank) (Adviser).

SECURITIES IN WHICH THE FUNDS INVEST

In pursuing its investment strategy, each Fund may invest in the following types
of securities for any purpose that is consistent with the Fund's investment
goal. Following is a table that indicates which types of securities are a:

P = Principal investment of a Fund;

A = Acceptable (but not principal) investment of a Fund; or N = Not an
acceptable investment of a Fund.

MONEY MARKET FUNDS AND INCOME FUNDS
<TABLE>
<CAPTION>

- ------------------------------------- --------------- ------------ -------------- ------------ --------------
TREASURY MONEY NY TAX-FREE GOVERNMENT NY MUNICIPAL
MONEY MARKET MARKET FUND MONEY MARKET SECURITIES INCOME FUND
FUND FUND FUND
<S> <C> <C> <C> <C> <C>
- ------------------------------------- --------------- ------------ -------------- ------------ --------------
FIXED INCOME SECURITIES P P P P A

INVESTMENT COMPANIES

- ------------------------------------- --------------- ------------ -------------- ------------ --------------
</TABLE>

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EQUITY FUNDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ------------------------------------- ---------------- ---------------- ---------------- ---------------
LARGE CAP LARGE CAP GROWTH & CAPITAL
VALUE FUND GROWTH FUND INCOME FUND APPRECIATION

FUND

- ------------------------------------- ---------------- ---------------- ---------------- ---------------
EQUITY SECURITIES P P P P

INVESTMENT COMPANIES

- ------------------------------------- ---------------- ---------------- ---------------- ---------------

</TABLE>

1. Rated in the top four rating categories (with respect to the Money Market
Funds, rated in the top two rating categories) of an NRSRO, or, if unrated,
of comparable quality as determined by the Adviser or sub-adviser.

2. With respect to the Income Funds, rated at the time of purchase no less than
P-1, A-1 or F-1 by Moody's, S&P or Fitch, respectively, or, if unrated, of
comparable quality as determined by the Adviser. With respect to the Money
Market Funds, rated at the time of purchase A-2 or better by S&P or Prime-2
or better by Moody's or, if not rated, of comparable quality as determined
by the Adviser or sub-adviser.

3. With respect to the Government Fund, rated at the time of purchase Aaa, Aa,
or A by Moody's Investors Service, or AAA, AA, or A by Standard & Poor's or
by Fitch IBCA, Inc., or, if unrated, of comparable quality as determined by
the Adviser.

4. Government Securities Fund and Large Cap Value Fund may invest in
asset-backed securities which, at the time of purchase, are rated in the top
three rating categories by an NRSRO, and the Growth & Income Fund may invest
in such securities, which, at the time of purchase, are rated in the top
four rating categories by an NRSRO.

5. The Money Market Fund may make interest-bearing savings deposits in
commercial banks and savings banks not in excess of 5% of the Fund's total
assets. The Money Market Fund may not invest more than 25% of the value of
its total assets at the time of purchase in U.S. dollar-denominated
obligations of foreign banks and foreign branches of U.S. banks.

6. Which are in one of the top four rating categories of a nationally
recognized statistical rating organization (NRSRO) (top two with resepct to
New York Tax-Free Money Market Fund).

7. The Income and Equity Funds do not intend to engage in such transactions to
an extent that would cause the segregation of more than 20% of the total
value of the Funds' assets. Under normal market conditions, the Money Market
Funds will not purchase such securities in excess of 25% of the value of
their total assets.

8. The Funds, except Capital Appreciation Fund, do not have a present intent to
invest more than 5% or its net assets in warrants. 9. The Large Cap Value Fund
may invest up to 35% of the value of its total assets in debt obligations. 10.
The Equity Funds may invest in convertible securities rated below investment
grade. See "Risks Associated with Non-investment Grade Securities" herein. 11.
The Growth & Income Fund, Capital Appreciation Fund and Large Cap Value Fund may
not invest more than 25% of its total assets in ADRs. The Growth & Income Fund
and

Large Cap Value Fund may invest up to 20% of its total assets in other
securities of foreign issuers (Non-ADRs) and the Capital Appreciation Fund
may not invest more than 5% of its total assets in Non-ADRs.

SECURITIES DESCRIPTIONS AND TECHNIQUES

Following are descriptions of securities and techniques that each Fund may or
may not pursue, as noted in the preceding table.

EQUITY SECURITIES

Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. A Fund cannot predict the income it will
receive from equity securities because issuers generally have discretion as to
the payment of any dividends or distributions. However, equity securities offer
greater potential for appreciation than many other types of securities, because
their value increases directly with the value of the issuer's business. The
following describes the types of equity securities in which a Fund invests.

COMMON STOCKS

PREFERRED STOCKS

Preferred stocks have the right to receive specified dividends or
distributions before the issuer makes payments on its common stock. Some
preferred stocks also participate in dividends and distributions paid on
common stock. Preferred stocks may also permit the issuer to redeem the
stock. A Fund may also treat such redeemable preferred stock as a fixed
income security.

REAL ESTATE INVESTMENT TRUSTS (REITS)

REITs are real estate investment trusts that lease, operate and finance
commercial real estate. REITs are exempt from federal corporate income tax
if they limit their operations and distribute most of their income. Such tax
requirements limit a REIT's ability to respond to changes in the commercial
real estate market.

WARRANTS

Warrants give a Fund the option to buy the issuer's equity securities at a
specified price (the exercise price) at a specified future date (the
expiration date). The Fund may buy the designated securities by paying the
exercise price before the expiration date. Warrants may become worthless if
the price of the stock does not rise above the exercise price by the
expiration date. This increases the MARKET RISKS of warrants as compared to
the underlying security. Rights are the same as warrants, except companies
typically issue rights to existing stockholders.

FIXED INCOME SECURITIES

The following describes the types of fixed income securities in which a Fund may
invest.

TREASURY SECURITIES

Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded as having the lowest
credit risks.

AGENCY SECURITIES

The Fund treats mortgage backed securities guaranteed by GSEs as agency
securities. Although a GSE guarantee protects against credit risks, it does
not reduce the MARKET AND PREPAYMENT RISKS of these mortgage backed
securities.

CORPORATE DEBT SECURITIES

COMMERCIAL PAPER

Commercial paper is an issuer's obligation with a maturity of less than nine
months. Companies typically issue commercial paper to pay for current
expenditures. Most issuers constantly reissue their commercial paper and use
the proceeds (or bank loans) to repay maturing paper. If the issuer cannot
continue to obtain liquidity in this fashion, its commercial paper may
default. The short maturity of commercial paper reduces both the market and
credit risks as compared to other debt securities of the same issuer.

DEMAND INSTRUMENTS

Demand instruments are corporate debt securities that the issuer must repay
upon demand. Other demand instruments require a third party, such as a
dealer or bank, to repurchase the security for its face value upon demand.
The Fund treats demand instruments as short-term securities, even though
their stated maturity may extend beyond one year.

MUNICIPAL SECURITIES

Municipal securities are issued by states, counties, cities and other
political subdivisions and authorities. Although many municipal securities
are exempt from federal income tax, a Fund may invest in taxable municipal
securities.

MORTGAGE BACKED SECURITIES

COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS)

SEQUENTIAL CMOS

In a sequential pay CMO, one class of CMOs receives all principal
payments and prepayments. The next class of CMOs receives all
principal payments after the first class is paid off. This process
repeats for each sequential class of CMO. As a result, each class of
sequential pay CMOs reduces the prepayment risks of subsequent
classes.

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PACS, TACS AND COMPANION CLASSES

More sophisticated CMOs include planned amortization classes (PACs)
and targeted amortization classes (TACs). PACs and TACs are issued
with companion classes. PACs and TACs receive principal payments and
prepayments at a specified rate. The companion classes receive
principal payments and prepayments in excess of the specified rate.
In addition, PACs will receive the companion classes' share of
principal payments, if necessary, to cover a shortfall in the
prepayment rate.

This helps PACs and TACs to control prepayment risks by increasing
the risks to their companion classes.

IOS AND POS

CMOs may allocate interest payments to one class (Interest Only or
IOs) and principal payments to another class (Principal Only or POs).
POs increase in value when prepayment rates increase. In contrast,
IOs decrease in value when prepayments increase, because the
underlying mortgages generate less interest payments. However, IOs
tend to increase in value when interest rates rise (and prepayments
decrease), making IOs a useful HEDGE against INTEREST RATE RISKS.

FLOATERS AND INVERSE FLOATERS

Another variant allocates interest payments between two classes of
CMOs. One class (Floaters) receives a share of interest payments
based upon a market index such as LIBOR. The other class (Inverse
Floaters) receives any remaining interest payments from the
underlying mortgages. Floater classes receive more interest (and
Inverse Floater classes receive correspondingly less interest) as
interest rates rise. This shifts PREPAYMENT AND INTEREST RATE RISKS
from the Floater to the Inverse Floater class, reducing the price
volatility of the Floater class and increasing the price volatility
of the Inverse Floater class.

Z CLASSES AND RESIDUAL CLASSES

CMOs must allocate all payments received from the underlying
mortgages to some class. To capture any unallocated payments, CMOs
generally have an accrual (Z) class. Z classes do not receive any
payments from the underlying mortgages until all other CMO classes
have been paid off. Once this happens, holders of Z class CMOs
receive all payments and prepayments. Similarly, REMICs have residual
interests that receive any mortgage payments not allocated to another
REMIC class.

The degree of increased or decreased prepayment risks depends upon
the structure of the CMOs. However, the actual returns on any type of
mortgage backed security depend upon the performance of the
underlying pool of mortgages, which no one can predict and will vary
among pools.

ASSET BACKED SECURITIES

BANK INSTRUMENTS

ZERO COUPON SECURITIES

Zero coupon securities do not pay interest or principal until final maturity
unlike debt securities that provide periodic payments of interest (referred
to as a coupon payment). Investors buy zero coupon securities at a price
below the amount payable at maturity. The difference between the purchase
price and the amount paid at maturity represents interest on the zero coupon
security. Investors must wait until maturity to receive interest and
principal, which increases the MARKET AND CREDIT RISKS of a zero coupon
security.

There are many forms of zero coupon securities. Some are issued at a
discount and are referred to as zero coupon or capital appreciation bonds.
Others are created from interest bearing bonds by separating the right to
receive the bond's coupon payments from the right to receive the bond's
principal due at maturity, a process known as coupon stripping. Treasury
STRIPS, IOS AND POS are the most common forms of stripped zero coupon
securities. In addition, some securities give the issuer the option to
deliver additional securities in place of cash interest payments, thereby
increasing the amount payable at maturity. These are referred to as
pay-in-kind or PIK securities.

CREDIT ENHANCEMENT

Common types of credit enhancement include guarantees, letters of credit,
bond insurance and surety bonds. Credit enhancement also includes
arrangements where securities or other liquid assets secure payment of a
fixed income security. If a default occurs, these assets may be sold and the
proceeds paid to security's holders. Either form of credit enhancement
reduces credit risks by providing another source of payment for a fixed
income security.

CONVERTIBLE SECURITIES

Convertible securities are fixed income securities that a Fund has the option to
exchange for equity securities at a specified conversion price. The option
allows the Fund to realize additional returns if the market price of the equity
securities exceeds the conversion price. For example, the Fund may hold fixed
income securities that are convertible into shares of common stock at a
conversion price of $10 per share. If the market value of the shares of common
stock reached $12, the Fund could realize an additional $2 per share by
converting its fixed income securities.

Convertible securities have lower yields than comparable fixed income
securities. In addition, at the time a convertible security is issued the
conversion price exceeds the market value of the underlying equity securities.
Thus, convertible securities may provide lower returns than non-convertible
fixed income securities or equity securities depending upon changes in the price
of the underlying equity securities. However, convertible securities permit the
Fund to realize some of the potential appreciation of the underlying equity
securities with less risk of losing its initial investment. The Equity Funds may
invest in commercial paper rated below investment grade. See "Risks Associated
with Non-investment Grade Securities" herein.

The Funds treat convertible securities as both fixed income and equity
securities for purposes of its investment policies and limitations, because of
their unique characteristics.

TAX EXEMPT SECURITIES

GENERAL OBLIGATION BONDS

General obligation bonds are supported by the issuer's power to exact
property or other taxes. The issuer must impose and collect taxes sufficient
to pay principal and interest on the bonds. However, the issuer's authority
to impose additional taxes may be limited by its charter or state law.

SPECIAL REVENUE BONDS

Special revenue bonds are payable solely from specific revenues received by
the issuer such as specific taxes, assessments, tolls, or fees. Bondholders
may not collect from the municipality's general taxes or revenues. For
example, a municipality may issue bonds to build a toll road, and pledge the
tolls to repay the bonds.

Therefore, a shortfall in the tolls normally would result in a default on
the bonds.

PRIVATE ACTIVITY BONDS

Private activity bonds are special revenue bonds used to finance private
entities. For example, a municipality may issue bonds to finance a new
factory to improve its local economy. The municipality would lend the
proceeds from its bonds to the company using the factory, and the
company would agree to make loan payments sufficient to repay the bonds.
The bonds would be payable solely from the company's loan payments, not
from any other revenues of the municipality. Therefore, any default on
the loan normally would result in a default on the bonds.

The interest on many types of private activity bonds is subject to the
federal alternative minimum tax (AMT). A Fund may invest in bonds subject to
AMT.

TAX INCREMENT FINANCING BONDS

Tax increment financing (TIF) bonds are payable from increases in taxes or
other revenues attributable to projects financed by the bonds. For example,
a municipality may issue TIF bonds to redevelop a commercial area. The TIF
bonds would be payable solely from any increase in sales taxes collected
from merchants in the area. The bonds could default if merchants' sales, and
related tax collections, failed to increase as anticipated.

MUNICIPAL NOTES

VARIABLE RATE DEMAND INSTRUMENTS

Variable rate demand instruments are tax exempt securities that require the
issuer or a third party, such as a dealer or bank, to repurchase the
security for its face value upon demand. The securities also pay interest at
a variable rate intended to cause the securities to trade at their face
value. The Funds treat demand instruments as short-term securities, because
their variable interest rate adjusts in response to changes in market rates,
even though their stated maturity may extend beyond thirteen months.

MUNICIPAL LEASES

Municipalities may enter into leases for equipment or facilities. In order
to comply with state public financing laws, these leases are typically
subject to annual appropriation. In other words, a municipality may end a
lease, without penalty, by not providing for the lease payments in its
annual budget. After the lease ends, the lessor can resell the equipment or
facility but may lose money on the sale.

A Fund may invest in securities supported by pools of municipal leases. The
most common type of lease backed securities are certificates of
participation (COPs). However, a Fund may also invest directly in individual
leases.

FOREIGN SECURITIES

Foreign securities are securities of issuers based outside the United States.
The Funds consider an issuer to be based outside the United States if:

| it is organized under the laws of, or has a principal office located in,
another country;

| the principal trading market for its securities is in another country; or

| it (or its subsidiaries) derived in its most current fiscal year at least
50% of its total assets, capitalization, gross revenue or profit from goods
produced, services performed, or sales made in another country.

Foreign securities are primarily denominated in foreign currencies. Along with
the risks normally associated with domestic securities of the same type, foreign
securities are subject to CURRENCY RISKS AND RISKS OF FOREIGN INVESTING.

DEPOSITARY RECEIPTS

Depositary receipts represent interests in underlying securities issued by a
foreign company. Depositary receipts are not traded in the same market as
the underlying security. The foreign securities underlying American
Depositary Receipts (ADRs) are traded in the United States. ADRs provide a
way to buy shares of foreign-based companies in the United States rather
than in overseas markets. ADRs are also traded in U.S. dollars, eliminating
the need for foreign exchange transactions.

FOREIGN GOVERNMENT SECURITIES

Foreign government securities generally consist of fixed income securities
supported by national, state or provincial governments or similar political
subdivisions. Foreign government securities also include debt obligations of
supranational entities, such as international organizations designed or
supported by governmental entities to promote economic reconstruction or
development, international banking institutions and related government
agencies. Examples of these include, but are not limited to, the
International Bank for Reconstruction and Development (the World Bank), the
Asian Development Bank, the European Investment Bank and the Inter-American
Development Bank.

Foreign government securities also include fixed income securities of
quasi-governmental agencies that are either issued by entities owned by a
national, state or equivalent government or are obligations of a political
unit that are not backed by the national government's full faith and credit.
Further, foreign government securities include mortgage-related securities
issued or guaranteed by national, state or provincial governmental
instrumentalities, including quasi-governmental agencies.

DERIVATIVE CONTRACTS

Derivative contracts are financial instruments that require payments based upon
changes in the values of designated (or underlying) securities, currencies,
commodities, financial indices or other assets. Some derivative contracts (such
as futures, forwards and options) require payments relating to a future trade
involving the underlying asset. Other derivative contracts (such as swaps)
require payments relating to the income or returns from the underlying asset.
The other party to a derivative contract is referred to as a counterparty.

Many derivative contracts are traded on securities or commodities exchanges. In
this case, the exchange sets all the terms of the contract except for the price.
Investors make payments due under their contracts through the exchange. Most
exchanges require investors to maintain margin accounts through their brokers to
cover their potential obligations to the exchange. Parties to the contract make
(or collect) daily payments to the margin accounts to reflect losses (or gains)
in the value of their contracts. This protects investors against potential
defaults by the counterparty. Trading contracts on an exchange also allows
investors to close out their contracts by entering into offsetting contracts.

For example, the Fund could close out an open contract to buy an asset at a
future date by entering into an offsetting contract to sell the same asset on
the same date. If the offsetting sale price is more than the original purchase
price, the Fund realizes a gain; if it is less, the Fund realizes a loss.
Exchanges may limit the amount of open contracts permitted at any one time. Such
limits may prevent the Fund from closing out a position. If this happens, the
Fund will be required to keep the contract open (even if it is losing money on
the contract), and to make any payments required under the contract (even if it
has to sell portfolio securities at unfavorable prices to do so). Inability to
close out a contract could also harm the Fund by preventing it from disposing of
or trading any assets it has been using to secure its obligations under the
contract.

The Funds may also trade derivative contracts over-the-counter (OTC) in
transactions negotiated directly between the Fund and the counterparty. OTC
contracts do not necessarily have standard terms, so they cannot be directly
offset with other OTC contracts. In addition, OTC contracts with more
specialized terms may be more difficult to price than exchange traded contracts.

Depending upon how the Fund uses derivative contracts and the relationships
between the market value of a derivative contract and the underlying asset,
derivative contracts may increase or decrease a Fund's exposure to MARKET AND
CURRENCY RISKS, and may also expose the Fund to LIQUIDITY AND LEVERAGE RISKS.
OTC contracts also expose the Fund to CREDIT RISKS in the event that a
counterparty defaults on the contract.

The Funds (other than the Money Market Funds) may trade in the following types
of derivative contracts.

FUTURES CONTRACTS

Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of an underlying asset at a specified
price, date, and time. Entering into a contract to buy an underlying asset
is commonly referred to as buying a contract or holding a long position in
the asset. Entering into a contract to sell an underlying asset is commonly
referred to as selling a contract or holding a short position in the asset.
Futures contracts are considered to be commodity contracts. Futures
contracts traded OTC are frequently referred to as forward contracts.

The Funds may buy/sell financial futures contracts. Growth & Income Fund,
Capital Appreciation Fund and Large Cap Value Fund may also buy/sell stock
index futures contracts.

OPTIONS

Options are rights to buy or sell an underlying asset for a specified price
(the exercise price) during, or at the end of, a specified period. A call
option gives the holder (buyer) the right to buy the underlying asset from
the seller (writer) of the option. A put option gives the holder the right
to sell the underlying asset to the writer of the option. The writer of the
option receives a payment, or premium, from the buyer, which the writer
keeps regardless of whether the buyer uses (or exercises) the option.

The Funds may:

| Buy call options on portfolio securities in anticipation of an increase in
the value of the underlying asset;

| Buy put options on portfolio securities in anticipation of a decrease in
the value of the underlying asset.

Each Fund may also write call options on all or any portion of its portfolio
securities and on financial or stock index futures contracts (as permitted)
to generate income from premiums, and in anticipation of a decrease or only
limited increase in the value of the underlying asset. If a call written by
the Fund is exercised, the Fund foregoes any possible profit from an
increase in the market price of the underlying asset over the exercise price
plus the premium received.

Each Fund may also write put options on all or a portion of its portfolio
securities and on financial or stock index futures contracts (as permitted)
to generate income from premiums, and in anticipation of an increase or only
limited decrease in the value of the underlying asset. In writing puts,
there is a risk that the Fund may be required to take delivery of the
underlying asset when its current market price is lower than the exercise
price.

When the Fund writes options on futures contracts, it will be subject to
margin requirements similar to those applied to futures contracts.

<PAGE>

INVESTMENT RATINGS FOR MONEY MARKET FUNDS

A nationally recognized rating service's two highest rating categories are
determined without regard for sub-categories and gradations. For example,
securities rated SP-1+, SP-1, or SP-2 by Standard & Poor's Ratings Group
("S&P"), MIG-1 or MIG-2 by Moody's Investors Service, Inc. ("Moody's"), or F-1+,
F-1, or F-2 by Fitch Investors Service, Inc. ("Fitch") are all considered rated
in one of the two highest short-term rating categories. The Money Market Funds
will follow applicable regulations in determining whether a security rated by
more than one rating service can be treated as being in one of the two highest
short-term rating categories; currently, such securities must be rated by two
rating services in one of their two highest rating categories. See "Regulatory
Compliance."

SPECIAL TRANSACTIONS

REPURCHASE AGREEMENTS

Repurchase agreements are transactions in which the Fund buys a security
from a dealer or bank and agrees to sell the security back at a mutually
agreed upon time and price. The repurchase price exceeds the sale price,
reflecting the Fund's return on the transaction. This return is unrelated to
the interest rate on the underlying security. A Fund will enter into
repurchase agreements only with banks and other recognized financial
institutions, such as securities dealers, deemed creditworthy by the
Adviser.

The Funds' custodian or subcustodian will take possession of the securities
subject to repurchase agreements. The Adviser or subcustodian will monitor
the value of the underlying security each day to ensure that the value of
the security always equals or exceeds the repurchase price.

Repurchase agreements are subject to CREDIT RISKS.

REVERSE REPURCHASE AGREEMENTS

Reverse repurchase agreements are repurchase agreements in which the Fund is
the seller (rather than the buyer) of the securities, and agrees to
repurchase them at an agreed upon time and price. A reverse repurchase
agreement may be viewed as a type of borrowing by the Fund. Reverse
repurchase agreements are subject to CREDIT risks. In addition, reverse
repurchase agreements create LEVERAGE RISKS because the Fund must repurchase
the underlying security at a higher price, regardless of the market value of
the security at the time of repurchase.

DELAYED DELIVERY TRANSACTIONS

Delayed delivery transactions, including when issued transactions, are
arrangements in which the Fund buys securities for a set price, with payment
and delivery of the securities scheduled for a future time. During the
period between purchase and settlement, no payment is made by the Fund to
the issuer and no interest accrues to the Fund. The Fund records the
transaction when it agrees to buy the securities and reflects their value in
determining the price of its shares. Settlement dates may be a month or more
after entering into these transactions so that the market values of the
securities bought may vary from the purchase prices. Therefore, delayed
delivery transactions create INTEREST RATE RISKS for the Fund. Delayed
delivery transactions also involve CREDIT RISKS in the event of a
counterparty default.

TO BE ANNOUNCED SECURITIES (TBAS)

As with other delayed delivery transactions, a seller agrees to issue a
TBA security at a future date. However, the seller does not specify the
particular securities to be delivered. Instead, the Fund agrees to
accept any security that meets specified terms. For example, in a TBA
mortgage backed transaction, the Fund and the seller would agree upon
the issuer, interest rate and terms of the underlying mortgages. The
seller would not identify the specific underlying mortgages until it
issues the security. TBA mortgage backed securities increase INTEREST
RATE RISKS because the underlying mortgages may be less favorable than
anticipated by the Fund.

SECURITIES LENDING

The Fund may lend portfolio securities to borrowers that the Adviser deems
creditworthy. In return, the Fund receives cash or liquid securities from
the borrower as collateral. The borrower must furnish additional collateral
if the market value of the loaned securities increases. Also, the borrower
must pay the Fund the equivalent of any dividends or interest received on
the loaned securities.

The Fund will reinvest cash collateral in securities that qualify as an
acceptable investment for the Fund. However, the Fund must pay interest to the
borrower for the use of cash collateral.

Loans are subject to termination at the option of the Fund or the borrower.
The Fund will not have the right to vote on securities while they are on
loan, but it will terminate a loan in anticipation of any important vote.
The Fund may pay administrative and custodial fees in connection with a loan
and may pay a negotiated portion of the interest earned on the cash
collateral to a securities lending agent or broker.

Securities lending activities are subject to INTEREST RATE RISKS AND CREDIT
RISKS.

ASSET COVERAGE

In order to secure its obligations in connection with derivatives contracts
or special transactions, the Fund will either own the underlying assets,
enter into an offsetting transaction or set aside readily marketable
securities with a value that equals or exceeds the Fund's obligations.
Unless the Fund has other readily marketable assets to set aside, it cannot
trade assets used to secure such obligations without entering into an
offsetting derivative contract or terminating a special transaction. This
may cause the Fund to miss favorable trading opportunities or to realize
losses on derivative contracts or special transactions.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Funds may invest its assets in securities of other investment companies,
including the securities of affiliated money market funds, as an efficient means
of carrying out their investment policies and managing any uninvested cash.

INVESTMENT RISKS

There are many factors which may affect an investment in the Funds. The Funds'
principal risks are described in the prospectus. Additional risk factors are
outlined below.

STOCK MARKET RISKS

The value of equity securities in a Fund's portfolio will rise and fall. These
fluctuations could be a sustained trend or a drastic movement. A Fund's
portfolio will reflect changes in prices of individual portfolio stocks or
general changes in stock valuations. Consequently, the Fund's share price may
decline.

SECTOR RISKS

Companies with similar characteristics may be grouped together in broad
categories called sectors. Sector risk is the possibility that a certain sector
may underperform other sectors or the market as a whole. As the Adviser
allocates more of a Fund's portfolio holdings to a particular sector, a Fund's
performance will be more susceptible to any economic, business or other
developments which generally affect that sector.

LIQUIDITY RISKS

Trading opportunities are more limited for equity securities that are not widely
held. This may make it more difficult to sell or buy a security at a favorable
price or time. Consequently, the Fund may have to accept a lower price to sell a
security, sell other securities to raise cash or give up an investment
opportunity, any of which could have a negative effect on the Fund's
performance. Infrequent trading of securities may also lead to an increase in
their price volatility.

Trading opportunities are more limited for fixed income securities that have not
received any credit ratings, have received ratings below investment grade or are
not widely held.

Trading opportunities are more limited for CMOs that have complex terms or that
are not widely held. These features may make it more difficult to sell or buy a
security at a favorable price or time. Consequently, the Fund may have to accept
a lower price to sell a security, sell other securities to raise cash or give up
an investment opportunity, any of which could have a negative effect on the
Fund's performance. Infrequent trading of securities may also lead to an
increase in their price volatility.

Liquidity risk also refers to the possibility that the Fund may not be able to
sell a security or close out a derivative contract when it wants to. If this
happens, the Fund will be required to continue to hold the security or keep the
position open, and the Fund could incur losses.

OTC derivative contracts generally carry greater liquidity risk than
exchange-traded contracts.

RISKS RELATED TO INVESTING FOR GROWTH

<PAGE>

RISKS RELATED TO INVESTING FOR VALUE

RISKS RELATED TO COMPANY SIZE

CURRENCY RISKS

Exchange rates for currencies fluctuate daily. The combination of currency risk
and market risk tends to make securities traded in foreign markets more volatile
than securities traded exclusively in the U.S.

The Adviser attempts to manage currency risk by limiting the amount the Fund
invests in securities denominated in a particular currency. However,
diversification will not protect the Fund against a general increase in the
value of the U.S. dollar relative to other currencies.

EURO RISKS

The Euro is the new single currency of the European Monetary Union (EMU). With
the advent of the Euro, the participating countries in the EMU can no longer
follow independent monetary policies. This may limit these countries' ability to
respond to economic downturns or political upheavals, and consequently reduce
the value of their foreign government securities.

RISKS OF FOREIGN INVESTING

Foreign securities pose additional risks because foreign economic or political
conditions may be less favorable than those of the United States. Securities in
foreign markets may also be subject to taxation policies that reduce returns for
U.S. investors.

Foreign companies may not provide information (including financial statements)
as frequently or to as great an extent as companies in the United States.
Foreign companies may also receive less coverage than United States companies by
market analysts and the financial press. In addition, foreign countries may lack
uniform accounting, auditing and financial reporting standards or regulatory
requirements comparable to those applicable to U.S. companies. These factors may
prevent the Fund and its Adviser from obtaining information concerning foreign
companies that is as frequent, extensive and reliable as the information
available concerning companies in the United States.

Foreign countries may have restrictions on foreign ownership of securities or
may impose exchange controls, capital flow restrictions or repatriation
restrictions which could adversely affect the liquidity of a Fund's investments.

LEVERAGE RISKS

Leverage risk is created when an investment exposes the Fund to a level of
risk that exceeds the amount invested. Changes in the value of such an
investment magnify a Fund's risk of loss and potential for gain.

INTEREST RATE RISKS

CREDIT RISKS

Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, the Fund
will lose money.

CALL RISKS

If a fixed income security is called, the Fund may have to reinvest the proceeds
in other fixed income securities with lower interest rates, higher credit risks,
or other less favorable characteristics.

PREPAYMENT RISKS

The Fund may have to reinvest the proceeds of mortgage prepayments in other
fixed income securities with lower interest rates, higher prepayment risks, or
other less favorable characteristics.

RISKS ASSOCIATED WITH NONINVESTMENT GRADE SECURITIES

The convertible securities in which the Equity Funds may invest may be rated
below investment grade. Convertible securities rated below investment grade may
be subject to the same risks as those inherent in corporate debt obligations
that are rated below investment grade, also known as junk bonds. Junk bonds
generally entail greater market, credit and liquidity risks than investment
grade securities. For example, their prices are more volatile, economic
downturns and financial setbacks may affect their prices more negatively, and
their trading market may be more limited.

RISKS ASSOCIATED WITH COMPLEX CMOS

CMOs with complex or highly variable prepayment terms, such as companion
classes, IOs, POs, Inverse Floaters and residuals, generally entail greater
market, prepayment and liquidity risks than other mortgage backed securities.
For example, their prices are more volatile and their trading market may be more
limited.

TAX RISKS

Changes or proposed changes in federal tax laws may cause the prices of
municipal securities to fall.

<PAGE>

INVESTMENT LIMITATIONS

SELLING SHORT AND BUYING ON MARGIN

The Income Funds and Equity Funds will not sell any securities short nor
purchase any securities on margin, except as described below and other than in
connection with buying financial futures contracts, put options on financial
futures, put options on portfolio securities, and writing covered call options,
but may obtain such short-term credits as are necessary for clearance of
purchases and sales of securities.

The deposit or payment by the Income and Equity Funds of initial or variation
margin in connection with financial futures contracts or related options
transactions is not considered the purchase of a security on margin.

No Income Fund or Equity Fund will sell securities short unless the Fund (1)
owns, or has a right to acquire, an equal amount of such securities, or (2) has
segregated an amount of its other assets equal to the lesser of the market value
of the securities sold short or the amount required to acquire such securities.
The segregated amount will not exceed 25% of the respective Fund's net assets.
While in a short position, each Fund will retain the securities, rights, or
segregated assets.

Each Income Fund and Equity Fund may purchase and dispose of U.S.
government securities and CMOs before they are issued and may also purchase and
dispose of them on a
delayed delivery basis.

The Money Market Fund and Treasury Money Market 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.

The Tax-Free Money Market 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.

ISSUING SENIOR SECURITIES AND BORROWING MONEY

The Income Funds and Equity Funds will not issue senior securities except that
the Funds may borrow money and engage in reverse repurchase agreements in
amounts up to one-third of the value of their net assets, including the amounts
borrowed. The Funds will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary, extraordinary, or
emergency measure to facilitate management of the portfolio by enabling the
Funds to meet redemption requests when the liquidation of portfolio securities
is deemed to be inconvenient or disadvantageous. The Funds will not purchase any
securities while borrowings (including reverse repurchase agreements) in excess
of 5% of their respective total assets are outstanding.

The Money Market Fund and Treasury Money Market Fund may borrow funds for
temporary purposes by entering into reverse repurchase agreements in accordance
with the terms described in the prospectuses. The Money Market Fund and Treasury
Money Market Fund will not issue senior securities. Neither Fund anticipates
entering into reverse repurchase agreements in excess of 5% of its net assets.

The Tax-Free Money Market 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.

As an operating policy, the Tax-Free Money Market Fund does not anticipate
entering into reverse repurchase agreements in excess of 5% of its net assets.

PLEDGING ASSETS

The Income and Equity Funds will not mortgage, pledge, or hypothecate any assets
except to secure permitted borrowings. In those cases, the Funds may mortgage,
pledge, or hypothecate assets having a market value not exceeding the lesser of
the dollar amounts borrowed or 15% of the value of total assets at the time of
the borrowing. For purposes of this limitation, the following are not deemed to
be pledges: margin deposits for the purchase and sale of futures contracts and
related options and segregation or collateral arrangements made in connection
with options activities or the purchase of securities on a when-issued basis.

The Money Market Fund and Treasury Money Market 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 the dollar amounts borrowed or 10% of the
value of the Fund's total assets at the time of its borrowing.

The Tax-Free Money Market Fund will not mortgage, pledge, or hypothecate any
assets, except in connection with any such borrowing.

<PAGE>

UNDERWRITING

The Income and Equity Funds and the NY Tax-Free Money Market Fund will not
underwrite any issue of securities except as they may be deemed to be an
underwriter under the Securities Act of 1933 in connection with the sale of
securities in accordance with their investment objectives, policies, and
limitations.

The Money Market Fund and Treasury Money Market Fund will not engage in
underwriting securities issued by others.

INVESTING IN REAL ESTATE

The Income and Equity Funds will not purchase or sell real estate including
limited partnership interests although they may invest in securities of
companies whose business involves the purchase or sale of real estate or in
securities which are secured by real estate or interests in real estate.

The Money Market Fund and Treasury Money Market Fund will not invest in real
estate, oil, gas, or mineral exploration or development programs, except that it
may purchase marketable securities of companies engaged in such activities.

The Tax-Free Money Market 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.

LENDING CASH OR SECURITIES

The Income and Equity Funds will not lend any of their assets except portfolio
securities, the market value of which does not exceed one-third of the value of
the Funds' respective total assets. This shall not prevent the Funds from
purchasing or holding U.S. government obligations, money market instruments,
variable rate demand notes, bonds, debentures, notes, certificates of
indebtedness, or other debt securities, entering into repurchase agreements, or
engaging in other transactions where permitted by the Funds' respective
investment objectives, policies, and limitations.

The Money Market Funds will not make loans, except that each Fund may purchase
or hold debt instruments, including repurchase agreements, in accordance with
its investment objective and policies.

INVESTING IN COMMODITIES

The Funds will not purchase or sell commodities, commodity contracts, or
commodity futures contracts except that the Funds may purchase and sell futures
contracts and related options.

The Money Market Fund and Treasury Money Market Fund will not invest in
commodities, commodity contracts (including futures contracts) except that it
may purchase marketable securities of companies engaged in such activities.

The Tax-Free Money Market Fund will not invest in commodities, commodity
contracts or commodity futures contracts.

CONCENTRATION OF INVESTMENTS

The Income and Equity Funds will not invest 25% or more of the value of their
total assets in any one industry, except that the Government Fund, Growth &
Income Fund, Capital Appreciation Fund, Large Cap Value Fund, and Large Cap
Growth Fund and, for temporary defensive purposes, the NY Municipal Income Fund
may invest 25% or more of the value of its total assets in cash or cash items
(including instruments issued by a U.S. branch of a domestic bank or savings and
loan association and bankers' acceptances), securities issued or guaranteed by
the U.S. government, its agencies, or instrumentalities, and repurchase
agreements collateralized by such securities.

In addition, the NY Municipal Income 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.

The Money Market Fund will not invest more than 25% of the value of its total
assets in issuers in the same industry.

With respect to the Money Market Fund, utilities will be divided according to
their services; for example, gas, gas transmissions, electric and gas, electric,
and telephone will each be considered a separate industry. Wholly-owned finance
companies will be considered to be in the industries of their parents if their
activities are primarily related to the financing activities of their parents.

The Money Market 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 Tax-Free Money Market 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.

DIVERSIFICATION OF INVESTMENTS

With respect to securities comprising 75% of the value of its total assets, the
Income and Equity Funds (other than the NY Municipal Income Fund) will not
purchase securities issued by any one issuer (other than cash, cash items,
securities of other investment companies (in the case of Large Cap Growth Fund),
securities issued or guaranteed by the government of the United States or its
agencies or instrumentalities and repurchase agreements collateralized by such
securities) if as a result more than 5% of the value of its total assets would
be invested in the securities of that issuer. Also, the Funds will not acquire
more than 10% of the outstanding voting securities of any one issuer.

The Money Market 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 NY Tax-Free Money Market 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.

INVESTING IN EXEMPT-INTEREST OBLIGATIONS

The NY Municipal Income Fund and NY Tax-Free Money Market Fund will not invest
less than 80% of their net assets in securities the interest on which is exempt
from federal regular income tax, except during temporary defensive periods. AMT
obligations are not counted as securities the interest on which is exempt from
federal regular income tax.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Money Market Fund and Treasury Money Market Fund will not invest in
securities issued by any other investment company, except as part of a merger,
consolidation, reorganization, or acquisition of assets.

INVESTING IN RESTRICTED SECURITIES

The Money Market Fund and Treasury Money Market Fund will not invest in
securities subject to legal or contractual restrictions.

INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND DIRECTORS
OF THE CORPORATION

The Money Market Fund and Treasury Money Market Fund will not purchase or retain
the securities of any issuer if the officers or Directors of the Corporation or
the Funds' investment adviser owning beneficially more than one-half of 1% of
the issuer's securities together own beneficially more than 5% of such
securities.

DEALING IN PUTS AND CALLS

The Money Market Fund and Treasury Money Market Fund will not write or purchase
put or call options.

INVESTING IN NEW ISSUERS

The Money Market Fund and Treasury Money Market Fund will not invest more than
10% of the value of its total assets in the securities of issuers which have
records of less than three years of continuous operation, including the
operation of any predecessor.

VOTING SECURITIES AND REVENUE BONDS

The Money Market Fund and Treasury Money Market Fund will not buy common stocks
or voting securities of state, municipal or industrial revenue bond issuers.

PURCHASING SECURITIES TO EXERCISE CONTROL

The Money Market Fund and Treasury Money Market Fund will not invest in any
issuer for purposes of exercising control or management.

THE ABOVE INVESTMENT LIMITATIONS CANNOT BE CHANGED WITHOUT SHAREHOLDER APPROVAL.
THE FOLLOWING LIMITATION, HOWEVER, MAY BE CHANGED BY THE DIRECTORS WITHOUT
SHAREHOLDER APPROVAL. SHAREHOLDERS WILL BE NOTIFIED BEFORE ANY MATERIAL CHANGE
IN THESE LIMITATIONS BECOMES EFFECTIVE.

INVESTING IN RESTRICTED AND ILLIQUID SECURITIES

The Funds will not invest more than 15% of the value of their respective net
assets in illiquid securities including certain restricted securities not
determined to be liquid under criteria established by the Directors
non-negotiable time deposits and repurchase agreements providing for settlement
in more than seven days after notice.

Each Money Market 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.

DEALING IN PUTS AND CALLS

The Tax-Free Money Market Fund will not write or purchase put or call options.

PURCHASING SECURITIES TO EXERCISE CONTROL

The Tax-Free Money Market Fund will not invest in any issuer for purposes of
exercising control or management.

BORROWING MONEY

The Tax-Free Money Market 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.

Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction. None of the Funds has any present intent to borrow money in excess
of 5% of the value of its net assets during the coming fiscal year.

For purposes of its policies and limitations, the Funds consider certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings and loan having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment to be "cash items."

For purposes of the Funds' concentration policy, the Adviser may classify
issuers by industry based on classifications that distinguish between various
economic characteristics. For instance, the telecommunications industry may be
separated into cable companies, cellular companies and other types of
telecommunications companies, and be regulated or unregulated companies.

REGULATORY COMPLIANCE

Many of the Money Market Funds' investment policies are fundamental, cannot be
changed without vote of shareholders, and were constructed so as to comply with
Rules promulgated by the Securities and Exchange Commission (SEC) governing
mutual funds' use of the amortized cost method of accounting, as they were in
effect at the time a Fund was created.

The SEC has subsequently revised Rule 2a-7 under the Investment Company Act of
1940 which governs money market funds' use of the amortized cost method of
accounting. As a result of the revisions, the Funds will adhere to certain
nonfundamental operating policies that are more restrictive in order to comply
with revised Rule 2a-7. Since the Funds may follow such operating policies
without violating their fundamental investment policies and limitations, the
Funds do not presently intend to ask for shareholder approval of changes to a
Fund's investment policies or limitations.

The Money Market Funds will invest in money market instruments rated in one of
the two highest short-term rating categories by nationally recognized
statistical rating organizations ("NRSROs") or of comparable quality to
securities having such rating.

The Funds will follow applicable regulations in determining whether a security
rated by NRSROs can be treated as being in the two highest short-term rating
categories.

The Funds will invest more than 5% of their respective total assets in any one
issuer only under circumstances permitted by Rule 2a-7. The Funds will also
determine the effective maturity of their investments, as well as their ability
to consider a security as having received the requisite short-term ratings by
NRSROs, according to Rule 2a-7. The Fund may change these operating policies to
reflect changes in the laws and regulations without the approval of their
shareholders, unless such changes are more permissive than the Funds'
fundamental policies.

DETERMINING MARKET VALUE OF SECURITIES

MONEY MARKET FUNDS

The Trustees have decided that the best method for determining the value of
portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization of
premium or accumulation of discount rather than at current market value.
Accordingly, neither the amount of daily income nor the net asset value is
affected by any unrealized appreciation or depreciation of the portfolio. In
periods of declining interest rates, the indicated daily yield on shares of the
Fund computed by dividing the annualized daily income on the Fund's portfolio by
the net asset value computed as above may tend to be higher than a similar
computation made by using a method of valuation based upon market prices and
estimates. In periods of rising interest rates, the opposite may be true.

The Fund's use of the amortized cost method of valuing portfolio instruments
depends on its compliance with certain conditions in Rule 2a-7 (the "Rule")
promulgated by the Securities and Exchange Commission under the Investment
Company Act of 1940. Under the Rule, the Trustees must establish procedures
reasonably designed to stabilize the net asset value per share, as computed for
purposes of distribution and redemption, at $1.00 per share, taking into account
current market conditions and the Fund's investment objective. The procedures
include monitoring the relationship between the amortized cost value per share
and the net asset value per share based upon available indications of market
value. The Trustees will decide what, if any, steps should be taken if there is
a difference of more than 0.5 of 1% between the two values. The Trustees will
take any steps they consider appropriate (such as redemption in kind or
shortening the average portfolio maturity) to minimize any material dilution or
other unfair results arising from differences between the two methods of
determining net asset value.

INCOME AND EQUITY FUNDS

Market values of the Income and Equity Funds' portfolio securities are
determined as follows:

P. for equity securities, according to the last sale price in the market in
which they are primarily traded (either a national securities exchange or the
over-the-counter market), if available;

P. in the absence of recorded sales for equity securities, according to the
mean between the last closing bid and asked prices;

P. for bonds and other fixed income securities, at the last sale price on a
national securities exchange, if available, otherwise, as determined by an
independent pricing service;

| futures contracts and options are valued at market values established by the
exchanges on which they are traded at the close of trading on such exchanges.
Options traded in the over-the-counter market are valued according to the
mean between the last bid and the last asked price for the option as provided
by an investment dealer or other financial institution that deals in the
option. The Board may determine in good faith that another method of valuing
such investments is necessary to appraise their fair market value;

P. for short-term obligations, according to the mean between bid and asked
prices as furnished by an independent pricing service, except that short-term
obligations with remaining maturities of less than 60 days at the time of
purchase may be valued at amortized cost or at fair market value as
determined in good faith by the Board; and

P. for all other securities at fair value as determined in good faith by the
Board.

Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities. TRADING IN FOREIGN
SECURITIES Trading in foreign securities may be completed at times which vary
from the closing of the New York Stock Exchange (NYSE). In computing its NAV,
the Fund values foreign securities at the latest closing price on the exchange
on which they are traded immediately prior to the closing of the NYSE. Certain
foreign currency exchange rates may also be determined at the latest rate prior
to the closing of the NYSE. Foreign securities quoted in foreign currencies are
translated into U.S. dollars at current rates. Occasionally, events that affect
these values and exchange rates may occur between the times at which they are
determined and the closing of the NYSE. If such events materially affect the
value of portfolio securities, these securities may be valued at their fair
value as determined in good faith by the Funds' Board, although the actual
calculation may be done by others.

WHAT DO SHARES COST?

Each Equity and Income Fund's net asset value (NAV) per Share fluctuates and is
based on the market value of all securities and other assets of the Fund.

The NAV for each class of Shares may differ due to the variance in daily net
income realized by each class. Such variance will reflect only accrued net
income to which the shareholders of a particular class are entitled.

REDUCING OR ELIMINATING THE FRONT-END SALES CHARGE-CLASS A SHARES You can reduce
or eliminate the applicable front-end sales charge, as follows:

QUANTITY DISCOUNTS

Larger purchases of the same Share class reduce the sales charge you pay. You
can combine purchases of Shares made on the same day by you, your spouse and
your children under age 21. In addition, purchases made at one time by a trustee
or fiduciary for a single trust estate or a single fiduciary account can be
combined.

ACCUMULATED PURCHASES

If you make an additional purchase of Shares, you can count previous Share
purchases still invested in the Fund in calculating the applicable sales charge
on the additional purchase.

CONCURRENT PURCHASES

You can combine concurrent purchases of the same share class of two or more
Vision Funds in calculating the applicable sales charge.

LETTER OF INTENT

You can sign a Letter of Intent committing to purchase a certain amount of the
same class of Shares within a 13-month period to combine such purchases in
calculating the sales charge. The Funds' custodian will hold Shares in escrow
equal to the maximum applicable sales charge. If you complete the Letter of
Intent, the Custodian will release the Shares in escrow to your account. If you
do not fulfill the Letter of Intent, the Custodian will redeem the appropriate
amount from the Shares held in escrow to pay the sales charges that were not
applied to your purchases.

REINVESTMENT PRIVILEGE

You may reinvest, within 90 days, your Share redemption proceeds at the next
determined NAV without any sales charge.

PURCHASES BY AFFILIATES OF THE FUNDS

The following individuals and their immediate family members may buy Shares
at NAV without any sales charge because there are nominal sales efforts
associated with their purchases:

| current and retired employees and directors of M&T Bank, M&T Bank
Corporation and their subsidiaries;

| current and former Directors of the Corporation;

| clients of the M&T Capital Advisers and Trust Groups of M&T Bank;

| employees (including registered representatives) of a dealer which has a
selling group agreement with the Funds' distributor and consents to such
purchases;

| current and retired employees of any sub-adviser to the Vision Funds; and

| investors referred by any sub-adviser to the Vision Funds. Immediate
relatives include grandparents, parents, siblings, children, and
grandchildren of a qualified investor, and the spouse of any immediate
relative.

PURCHASES WITH PROCEEDS FROM REDEMPTIONS OF MUTUAL FUND SHARES OR ANNUITIES

Investors may purchase Class A Shares of each of the Funds at net asset value,
without a sales charge, with the proceeds from either: (i) the redemption of
shares of a mutual fund which was sold with a sales charge or commission; or
(ii) fixed or variable rate annuities. The purchase must be made within 60 days
of the redemption, and M&T Bank's Mutual Fund Services must be notified by the
investor in writing, or by the investor's financial institution, at the time the
purchase is made, and must be presented satisfactory evidence of the redemption.
Redemptions of mutual fund shares that are subject to a contingent deferred
sales charge are not eligible to purchase Fund Shares under this method. The
distributor will uniformly and periodically offer to pay cash payments as
incentives to broker/dealers whose customers or clients purchase Shares of a
Fund under this "no-load" purchase provision. This payment will be made out of
the distributor's assets and not by the Corporation, the Funds or a Fund's
shareholders.

REDUCING OR ELIMINATING THE CONTINGENT DEFERRED SALES CHARGE-CLASS B SHARES

These reductions or eliminations are offered because: no sales commissions have
been advanced to the investment professional selling Shares; the shareholder has
already paid a Contingent Deferred Sales Charge (CDSC); or nominal sales efforts
are associated with the original purchase of Shares.

Upon notification to the Distributor or the Funds' transfer agent, no CDSC will
be imposed on redemptions:

| following the death or post-purchase disability, as defined in Section
72(m)(7) of the Internal Revenue Code of 1986, of the last surviving
shareholder;

| representing minimum required distributions from an Individual Retirement
Account or other retirement plan to a shareholder who has attained the age
of 70 1/2;

| which are involuntary redemptions processed by a Fund because the accounts
do not meet the minimum balance requirements;

| which are qualifying redemptions of Class B Shares under a Systematic
Withdrawal Program;

| of Shares that represent a reinvestment within 90 days of a previous
redemption;

| of Shares held by the Directors, employees, and sales representatives of the
Fund, the Adviser, the Distributor and their affiliates; employees of any
investment professional that sells Shares according to a sales agreement
with the Distributor; and the immediate family members of the above persons;
and

| of Shares originally purchased through a bank trust department, a registered
investment adviser or retirement plans where the third party administrator
has entered into certain arrangements with the Distributor or its
affiliates, or any other investment professional, to the extent that no
payments were advanced for purchases made through these entities.

HOW ARE THE FUNDS SOLD?

Under the Distributor's Contract with the Fund, the Distributor (Federated
Securities Corp.) offers Shares on a continuous, best-efforts basis.

FRONT-END SALES CHARGE REALLOWANCES

The Distributor receives a front-end sales charge on certain Share sales. The
Distributor generally pays up to 90% (and as much as 100%) of this charge to
investment professionals for sales and/or administrative services. Any payments
to investment professionals in excess of 90% of the front-end sales charge are
considered supplemental payments. The Distributor retains any portion not paid
to an investment professional.

RULE 12B-1 PLANS

As compensation type plans, the Rule 12b-1 Plans are designed to pay the
Distributor (who may then pay investment professionals such as banks (including
M&T Bank and its affiliates), broker/dealers, trust departments of banks, and
registered investment advisers) for marketing activities (such as advertising,
printing and distributing prospectuses, and providing incentives to investment
professionals) to promote sales of Shares so that overall Fund assets are
maintained or increased. This helps the Funds achieve economies of scale, reduce
per share expenses, and provide cash for orderly portfolio management and Share
redemptions. In addition, the Funds' service providers that receive asset-based
fees also benefit from stable or increasing Fund assets.

The Funds may compensate the Distributor more or less than its actual
marketing expenses. In no event will the Fund pay for any expenses of the
Distributor that exceed the maximum Rule 12b-1 Plan fee.

For some classes of Shares, the maximum Rule 12b-1 Plan fee that can be paid in
any one year may not be sufficient to cover the marketing-related expenses the
Distributor has incurred. Therefore, it may take the Distributor a number of
years to recoup these expenses.

SHAREHOLDER SERVICES

The Funds may pay M&T Bank for providing shareholder services and maintaining
shareholder accounts. M&T Bank may select others to perform these services for
their customers and may pay them fees.

SUPPLEMENTAL PAYMENTS

Investment professionals may be paid fees out of the assets of the
Distributor (but not out of Fund assets) or Adviser. The Distributor may be
reimbursed by the Adviser or its affiliates.

Investment professionals receive such fees for providing distribution-related or
shareholder services such as sponsoring sales, providing sales literature,
conducting training seminars for employees, and engineering sales-related
computer software programs and systems. Also, investment professionals may be
paid cash or promotional incentives, such as reimbursement of certain expenses
relating to attendance at informational meetings about the Fund or other special
events at recreational-type facilities, or items of material value. These
payments will be based upon the amount of Shares the investment professional
sells or may sell and/or upon the type and nature of sales or marketing support
furnished by the investment professional.

EXCHANGING SECURITIES FOR SHARES

You may contact the Distributor to request a purchase of Shares in exchange for
securities you own. The Funds reserve the right to determine whether to accept
your securities and the minimum market value to accept. The Funds will value
your securities in the same manner as it values its assets. This exchange is
treated as a sale of your securities for federal tax purposes.

SUBACCOUNTING SERVICES

Certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professionals holding Shares in a fiduciary, agency,
custodial, or similar capacity may charge or pass through subaccounting fees as
part of or in addition to normal trust or agency account fees. They may also
charge fees for other services that may be related to the ownership of Shares.
This information should, therefore, be read together with any agreement between
the customer and the investment professional about the services provided, the
fees charged for those services, and any restrictions and limitations imposed.

REDEMPTION IN KIND

Although each Fund intends to pay Share redemptions in cash, it reserves
the right, as described below, to pay the redemption price in whole or in part
by a distribution of a Fund's portfolio securities.

Because the Funds have elected to be governed by Rule 18f-1 under the Investment
Company Act of 1940, each Fund is obligated to pay Share redemptions to any one
shareholder in cash only up to the lesser of $250,000 or 1% of the net assets
represented by such Share class during any 90-day period.

Any Share redemption payment greater than this amount will also be in cash
unless the Funds' Board determines that payment should be in kind. In such a
case, the Fund will pay all or a portion of the remainder of the redemption in
portfolio securities, valued in the same way as the Fund determines its NAV. The
portfolio securities will be selected in a manner that the Funds' Board deems
fair and equitable and, to the extent available, such securities will be readily
marketable.

Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving the portfolio securities and selling them before
their maturity could receive less than the redemption value of the securities
and could incur certain transaction costs.

ACCOUNT AND SHARE INFORMATION

VOTING RIGHTS

Each Share of a Fund gives the shareholder one vote in Director elections and
other matters submitted to shareholders for vote.

All Shares of the Corporation have equal voting rights, except that in
matters affecting only a particular Fund or class, only Shares of that Fund or
class are entitled to vote.

Directors may be removed by the Board or by shareholders at a special meeting. A
special meeting of shareholders will be called by the Board upon the written
request of shareholders who own at least 10% of the Corporation's outstanding
shares of all series entitled to vote.

As of [DATE], the following shareholders owned of record, beneficially, or
both, 5% or more of outstanding Shares: [Name & Address of Shareholder, % and
Name of Share Class Owned.] TO COME.

Shareholders owning 25% or more of outstanding Shares may be in control and be
able to affect the outcome of certain matters presented for a vote of
shareholders.

TAX INFORMATION

FEDERAL INCOME TAX

Each Fund intends to meet requirements of Subchapter M of the Internal Revenue
Code applicable to regulated investment companies. If these requirements are not
met, it will not receive special tax treatment and will pay federal income tax.

Each Fund will be treated as a single, separate entity for federal income tax
purposes so that income earned and capital gains and losses realized by the
Corporation's other portfolios will be separate from those realized by the Fund.

FOREIGN INVESTMENTS

If a Fund purchases foreign securities, their investment income may be subject
to foreign withholding or other taxes that could reduce the return on these
securities. Tax treaties between the United States and foreign countries,
however, may reduce or eliminate the amount of foreign taxes to which the Fund
would be subject. The effective rate of foreign tax cannot be predicted since
the amount of Fund assets to be invested within various countries is uncertain.
However, the Funds intend to operate so as to qualify for treaty-reduced tax
rates when applicable.

Distributions from a Fund may be based on estimates of book income for the year.
Book income generally consists solely of the coupon income generated by the
portfolio, whereas tax-basis income includes gains or losses attributable to
currency fluctuation. Due to differences in the book and tax treatment of
fixed-income securities denominated in foreign currencies, it is difficult to
project currency effects on an interim basis. Therefore, to the extent that
currency fluctuations cannot be anticipated, a portion of distributions to
shareholders could later be designated as a return of capital, rather than
income, for income tax purposes, which may be of particular concern to simple
trusts.

If a Fund invests in the stock of certain foreign corporations, they may
constitute Passive Foreign Investment Companies (PFIC), and the Fund may be
subject to Federal income taxes upon disposition of PFIC investments.

NEW YORK TAXES

Under existing New York laws, shareholders of the New York Municipal Income Fund
and New York Tax-Free Money Market Fund will not be subject to New York State or
New York City personal income taxes on dividends to the extent that such
dividends qualify as "exempt interest dividends" under the Internal Revenue Code
of 1986 and represent interest income attributable to obligations of the State
of New York and its political subdivisions, as well as certain other
obligations, the interest on which is exempt from New York State and New York
City personal income taxes, such as, for example, certain obligations of the
Commonwealth of Puerto Rico. To the extent that distributions are derived from
other income, such distributions will be subject to New York State or New York
City personal income tax.

The New York Municipal Income Fund and NY Tax-Free Money Market Fund cannot
predict in advance the exact portion of their dividends that will be exempt from
New York State and New York City personal income taxes. However, the Funds will
report to shareholders at least annually what percentage of the dividends they
actually paid is exempt from such taxes.

Dividends paid by the New York Municipal Income Fund and New York Tax-Free Money
Market Fund are exempt from the New York City unincorporated business tax to the
same extent that they are exempt from the New York City personal income tax.

Dividends paid by the Fund are not excluded from net income in determining New
York State or New York City franchise taxes on corporations or financial
institutions.

Income from the New York Municipal Income Fund and New York Tax-Free Money
Market Fund is not necessarily free from taxes in states other than New York.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.

Dividends paid by the New York Municipal Income Fund and New York Tax-Free Money
Market Fund that are attributable to the net interest earned on some temporary
and any realized net short-term capital gains are taxed as ordinary income.

WHO MANAGES AND PROVIDES SERVICES TO THE FUNDS?

BOARD OF DIRECTORS

The Board is responsible for managing the Corporation's business affairs and for
exercising all the Corporation's powers except those reserved for the
shareholders. Information about each Board member is provided below and includes
each person's: name, address, birthdate, present position(s) held with the
Corporation, principal occupations for the past five years and positions held
prior to the past five years, and total compensation received as a Director from
the Corporation for its most recent fiscal year. The Corporation is comprised of
ten funds and is the only investment company in the Fund Complex.

- -------------------------------------------------------------------------- --------------
NAME TOTAL
BIRTHDATE COMPENSATION
ADDRESS PRINCIPAL OCCUPATIONS FROM
POSITION WITH FOR PAST FIVE YEARS CORPORATION
CORPORATION

RANDALL I. BENDERSON President and Chief Operating Officer, $8,000
570 Delaware Avenue Benderson Development Company, Inc.
Buffalo, NY
Birthdate: January 12,

1955

DIRECTOR

- -------------------------------------------------------------------------- --------------
JOSEPH J. CASTIGLIA Director, New York State Electric & Gas $8,000 Roycroft
Campus Corp.; Sevenson Environmental Services, Inc.; 21 South Grove Street, Blue
Cross & Blue Shield of Western New York; Suite 291 and Former President, Chief
Executive Officer East Aurora, NY 14052 and Vice Chairman, Pratt & Lambert
United, Birthdate: July 20, 1934 Inc.

DIRECTOR

- -------------------------
-------------------------------------------------- --------------
DANIEL R. GERNATT, JR. President and CFO of Gernatt Asphalt $7,500
Richardson & Taylor Products, Inc.; Executive Vice President, Dan Hollow Roads
Gernatt Gravel Products, Inc.; Vice Collins, NY President, Countryside Sand &
Gravel, Inc.

Birthdate: July 14, 1940

DIRECTOR

- -------------------------------------------------------------------------- --------------
GEORGE K. HAMBLETON, JR. President, Brand Name Sales, Inc.; President, $8,000
670 Young Street Hambleton & Carr, Inc.

Tonawanda, NY
Birthdate: February 8,

1933

DIRECTOR

- -------------------------------------------------------------------------- --------------
EDWARD C. GONZALES Trustee or Director of other funds $0
Federated Investors distributed by Federated Securities Corp.;
Tower President, Executive Vice President and
Pittsburgh, PA Treasurer of other funds distributed by
Birthdate: October 22, Federated Securities Corp.; Vice Chairman,
1930 Federated Investors, Inc.; Vice President,
Federated Advisers, Federated Management,

PRESIDENT AND TREASURER Federated Research, Federated Research Corp.,

Federated Global Research Corp., and Passport
Research, Ltd.; Executive Vice President and
Director, Federated Securities Corp.;
Trustee, Federated Shareholder Services

Company.

----
- ------------------------- ----------------------------------------------- --------------
BETH S. BRODERICK Assistant Vice President & Client Services $0
Federated Investors Officer, Mutual Fund Services Division,

Tower Federated Services Company.
Pittsburgh, PA

Birthdate: August 2,
1965

VICE PRESIDENT AND
ASSISTANT TREASURER

- -------------------------------------------------------------------------- --------------
VICTOR R. SICLARI Senior Corporate Counsel and Vice President, $0
Federated Investors Federated Administrative Services; formerly
Tower Attorney, Morrison & Foerster (law firm).

Pittsburgh, PA
Birthdate: November 17,

1961

SECRETARY

- -------------------------------------------------------------------------- --------------
</TABLE>

As of August __, 1999 the Funds' Board and Officers as a group owned less than
1% of each Fund's outstanding Shares.

INVESTMENT ADVISER

The Adviser conducts investment research and makes investment decisions for the
Funds.

The Adviser shall not be liable to the Corporation or any Fund shareholder for
any losses that may be sustained in the purchase, holding, or sale of any
security or for anything done or omitted by it, except acts or omissions
involving willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties imposed upon it by its contract with the Corporation.

SUB-ADVISER

The Adviser has delegated daily management of the NY Tax-Free Money Market Fund
to the sub-adviser, Federated Investment Management Company. On August __, 1999,
Federated Investment Counseling (FIC) transferred its Sub-Advisory Contract to
its affiliate, Federated Investment Management Company. FIC served as
sub-adviser since September 8, 1998.

For its services under the Sub-Advisory Agreement, the sub-adviser receives an
allocable portion of the advisory fee the Adviser receives from the NY Tax-Free
Money Market Fund. The allocation is based on the amount of securities which the
sub-adviser manages for the Fund. This fee is paid by the Adviser out of the
fees it receives and is not a Fund expense. The sub-adviser is paid by the Fund
as follows:

SUB-ADVISORY FEE

- --------------------- ----------------------------------------------
0.20% on the first $100 million average daily net
assets;
- --------------------- ----------------------------------------------
0.18% on the next $100 million average daily net
assets; and
- --------------------- ----------------------------------------------
0.15% on average daily net assets over $200
million.
- --------------------- ----------------------------------------------

BROKERAGE TRANSACTIONS

When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. The Adviser will generally use those who are recognized dealers in
specific portfolio instruments, except when a better price and execution of the
order can be obtained elsewhere. The Adviser may select brokers and dealers
based on whether they also offer research services (as described below). In
selecting among firms believed to meet these criteria, the Adviser may give
consideration to those firms which have sold or are selling Shares of the Fund
and other funds distributed by the Distributor and its affiliates. The Adviser
makes decisions on portfolio transactions and selects brokers and dealers
subject to review by the Funds' Board.

RESEARCH SERVICES

Research services may include advice as to the advisability of investing in
securities; security analysis and reports; economic studies; industry studies;
receipt of quotations for portfolio evaluations; and similar services. Research
services may be used by the Adviser in advising other accounts. To the extent
that receipt of these services may replace services for which the Adviser or its
affiliates might otherwise have paid, it would tend to reduce their expenses.
The Adviser and its affiliates exercise reasonable business judgment in
selecting those brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such persons are reasonable in relationship to the value of the brokerage and
research services provided.

For the fiscal year ended, April 30, 1999 the Funds' Adviser directed
brokerage transactions to certain brokers due to research services they
provided. The total amount of these transactions was $_______ for which the Fund
paid $_______ in brokerage commissions. TO COME

On April 30, 1999 the Funds owned securities of the following regular
broker/dealers: [identify issuer name and aggregate dollar amount of debt and
equity securities held by Fund]. TO COME

Investment decisions for the Funds are made independently from those of other
accounts managed by the Adviser. When the Funds and one or more of those
accounts invests in, or disposes of, the same security, available investments or
opportunities for sales will be allocated among the Fund and the account(s) in a
manner believed by the Adviser to be equitable. While the coordination and
ability to participate in volume transactions may benefit the Funds, it is
possible that this procedure could adversely impact the price paid or received
and/or the position obtained or disposed of by the Funds.

ADMINISTRATOR, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Federated Administrative Services (FAS) provides the Funds with certain
administrative personnel and services necessary to operate the Funds. Federated
Services Company (FSC) and its affiliate, Federated Shareholder Services Company
(FSSC), a registered transfer agent, provides the Funds with certain financial,
administrative, transfer agency and fund accounting services. FAS, FSC and FSSC
are indirect wholly owned subsidiaries of Federated Investors, Inc. These
services are provided for an aggregate annual fee as specified below:

AVERAGE AGGREGATE DAILY NET

MAXIMUM FEE ASSETS OF THE VISION GROUP OF
FUNDS, INC.

0.140 of 1% on the first $1.4 billion
0.100 of 1% on the next $750 million
0.070 of 1% on assets in excess of $2.15
billion

Prior to December 1, 1997, FAS was paid an administrative fee by the Funds based
on the following schedule:

AVERAGE AGGREGATE DAILY NET

MAXIMUM ADMINISTRATIVE FEE ASSETS OF THE VISION GROUP OF
FUNDS, INC.

0.150 of 1% on the first $250 million
0.125of 1% on the next $250 million
0.100 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750
million

The minimum administrative fee received during any year was $50,000 per Fund.

CUSTODIAN

State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Funds. Foreign instruments purchased by a Fund are
held by foreign banks participating in a network coordinated by State Street
Bank.

INDEPENDENT AUDITORS

Ernst & Young LLP is the independent auditor for the Funds.

<PAGE>

FEES PAID BY THE FUNDS FOR SERVICES
<S> <C> <C> <C>
- ------------------- --------------------------- ---------------------------- ----------------------------
ADVISORY FEE PAID/ BROKERAGE ADMINISTRATIVE FEE PAID/
ADVISORY FEE WAIVED COMMISSIONS PAID ADMINISTRATIVE FEE WAIVED

---------------------------- ----------------------------
--------------------------- ---------------------------- ----------------------------
FUNDS FOR THE FISCAL YEAR ENDED FOR THE FISCAL YEAR ENDED FOR THE FISCAL YEAR ENDED
APRIL 30, APRIL 30, APRIL 30,

--------------------------- ---------------------------- ----------------------------
--------------------------------------------------------------------------------------
1999 1998 1997 1999 1998 1997 1999 1998(D) 1997
--------------------------------------------------------------------------------------
- -------------------
TREASURY MONEY $ $2,304,815$2,296,16$0 $0 $0 $ $543,332 $478,882
MARKET FUND $ $379,597 $448,656 $ $27,570 $11,635
- -------------------
- ---------------------------------------------------------------------------------------------------------
MONEY MARKET FUND $ $2,862,55$0 $0 $0 $ $735,499 $598,092
$ $555,870 $ $0 $0
- -------------------
- ---------------------------------------------------------------------------------------------------------
NY TAX-FREE MONEY $ $389,766 $355,253 $0 $0 $0 $ $91,198 $74,362
MARKET FUND $ $218,264 $250,546 $ $5,988 $2,303
$(g)

- ---------------------------------------------------------------------------------------------------------
- -------------------
U.S. GOVERNMENT $ $378,409 $258,550 $ $0 $0 $ $64,007 $50,000
SECURITIES FUND $ $45,997 $61,752 $ $571 $11,168
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
NY MUNICIPAL $ $227,041 $279,035 $ $0 $0 $ $52,701 $50,000
INCOME FUND $ $117,123 $115,657 $ $6,213 $14,660
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
GROWTH & INCOME $ $968,660 $308,825($) $259,177 $304,622 $ $160,835 $90,371
FUND $ $0 $0 $ $0 $0
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
CAPITAL $ $453,674 $137,485($) $113,127 $62,973(e)$ $65,857 $41,371(e)
APPRECIATION FUND $ $0 $63,215(b) $ $2,685 $24,932
- ---------------------------------------------------------------------------------------------------------
LARGE CAP VALUE $ $83,847(c)N/A $ $46,309(fN/A $ $21,621 N/A
FUND $ $53,453(c)N/A $ $8,630
- ---------------------------------------------------------------------------------------------------------

</TABLE>

(a) Prior to January 1, 1997, Harbor Capital Management served as the Fund's
sub-adviser. For the period from April 30, 1996 to December 31, 1996, Harbor
earned $297,904.

(b) For the period from July 3, 1996 (date of initial public investment) to
April, 30, 1997. (c) For the period from September 25, 1997 (date of initial
public investment) to April 30, 1998.

(d) Prior to December 1, 1997 FAS was paid on a different fee schedule. See
"Administrator" above. The fees paid by the Funds for the period from
December 1, 1997 to April 30, 1998 under the new fee structure were
$301,148; $367,315; $47,088; $33,699; $23,384; $78,952; $35,341 and $12,991,
respectively. The fees paid by the Funds for the period from May 1, 1997 to
November 30, 1997 under the old fee structure were $242,184; $368,544;
$44,110; $30,378; $29,317; $90,371; $30,516; and $8,630 (for the period from
September 25, 1997 (date of initial public investment) to November 30,
1997), respectively.

(e) For the period from July 3, 1996 (date of initial public investment) to
April 30, 1997. (f) For the period from September 25, 1997 (date of initial
public investment) to April 30, 1998.

(g) Amount paid in Sub-Advisory fees by the Adviser to Federated Investment
Counseling for the periods from September 8, 1998 to April 30, 1999.

- ------------------ ------------- --------------- ------------- ----------- -------- ------------ ---------
FEES PAID FOR TREASURY MONEY MARKET U.S. NY GROWTH CAPITAL LARGE
THE FISCAL YEAR MONEY FUND GOVERNMENT MUNICIPAL & APPRECIATION CAP
ENDED APRIL 30, MARKET FUND SECURITIES INCOME INCOME FUND VALUE
1999 FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------------- --------------- ------------- ----------- -------- ------------ ---------
------ ------ ------- ------- ------ ------ ----------- -------- ------------ ---------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS A CLASS A CLASS A CLASS A

A S A S A S

- ------------------ ------ ------ ------- ------- ------ ------ ----------- -------- ------------ ---------
12b-1 Fees Paid $0 $ $0 $ $0 $ $0 $0 $0 $0
- ------------------ ------ ------ ------- ------- ------ ------ ----------- -------- ------------ ---------
Shareholder $ $ $ $ $ $ $ $ $ $
Services Fees
Paid
- ------------------ ------ ------ ------- ------- ------ ------ ----------- -------- ------------ ---------
</TABLE>

HOW DO THE FUNDS MEASURE PERFORMANCE?

The Funds may advertise Share performance by using the Securities and Exchange
Commission's (SEC) standard method for calculating performance applicable to all
mutual funds. The SEC also permits this standard performance information to be
accompanied by non-standard performance information.

Share performance reflects the effect of non-recurring charges, such as maximum
sales charges, which, if excluded, would increase the total return and yield.
The performance of Shares depends upon such variables as: portfolio quality;
average portfolio maturity; type and value of portfolio securities; changes in
interest rates; changes or differences in a Fund's or any class of Shares'
expenses; and various other factors.

Share performance fluctuates on a daily basis largely because net earnings
fluctuate daily. Both net earnings and offering price per Share are factors in
the computation of yield and total return.

TOTAL RETURN

Total return represents the change (expressed as a percentage) in the value
of Shares over a specific period of time, and includes the investment of income
and capital gains distributions.

The average annual total return for Shares is the average compounded rate of
return for a given period that would equate a $1,000 initial investment to the
ending redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of Shares owned at the end of the period by
the NAV per Share at the end of the period. The number of Shares owned at the
end of the period is based on the number of Shares purchased at the beginning of
the period with $1,000, less any applicable sales charge, adjusted over the
period by any additional Shares, assuming the annual reinvestment of all
dividends and distributions.

When Shares of a Fund are in existence for less than a year, the Fund may
advertise cumulative total return for that specific period of time, rather than
annualizing the total return.

YIELD

The yield of Shares of the Income and Equity Funds is calculated by dividing:
(i) the net investment income per Share earned by the Shares over a 30-day
period; by (ii) the maximum offering price per Share on the last day of the
period. This number is then annualized using semi-annual compounding. This means
that the amount of income generated during the 30-day period is assumed to be
generated each month over a 12-month period and is reinvested every six months.
The yield of Shares of the Money Market Funds is based upon the seven days
ending on the day of the calculation, called the "base period." This yield is
calculated by: determining the net change in the value of a hypothetical account
with a balance of one Share at the beginning of the base period, with the net
change excluding capital changes but including the value of any additional
Shares purchased with dividends earned from the original one Share and all
dividends declared on the original and any purchased Shares; dividing the net
change in the account's value by the value of the account at the beginning of
the base period to determine the base period return; and multiplying the base
period return by 365/7. The effective yield of the Money Market Funds is
calculated by compounding the unannualized base-period return by: adding one to
the base-period return, raising the sum to the 365/7th power; and subtracting
one from the result. The tax-equivalent yield of Shares of NY Tax-Free Money
Market Fund and NY Municipal Income Fund is calculated similarly to the yield,
but is adjusted to reflect the taxable yield that Shares would have had to earn
to equal the actual yield, assuming a specific tax rate. The yield, effective
yield and tax-equivalent yield do not necessarily reflect income actually earned
by Shares because of certain adjustments required by the SEC and, therefore, may
not correlate to the dividends or other distributions paid to shareholders.

To the extent investment professionals and broker/dealers charge fees in
connection with services provided in conjunction with an investment in Shares,
the Share performance is lower for shareholders paying those fees.

AVERAGE ANNUAL TOTAL RETURNS AND YIELD*
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- ------------------- --------------------------------- --------------------------------- ---------------
FOR THE FOLLOWING TREASURY MONEY MARKET FUND MONEY MARKET FUND NY TAX-FREE
PERIODS ENDED MONEY MARKET
APRIL 30, 1999 FUND
- ------------------- --------------------------------- --------------------------------- ---------------
- -------------------
CLASS A CLASS S CLASS A CLASS S CLASS A
- ------------------- ---------------- ---------------- ---------------- ---------------- ---------------
TOTAL RETURN

- ------------------- ---------------- ---------------- ---------------- ---------------- ---------------
- ------------------- ---------------- ---------------- ---------------- ---------------- ---------------
1 Year % % % % %
- ------------------- ---------------- ---------------- ---------------- ---------------- ---------------
- ------------------- ---------------- ---------------- ---------------- ---------------- ---------------
5 Years % N/A % N/A %
- ------------------- ---------------- ---------------- ---------------- ---------------- ---------------
- ------------------- ---------------- ---------------- ---------------- ---------------- ---------------
Since Inception %(a) %(b) %(a) %(b) %(a)

- ------------------- ---------------- ---------------- ---------------- ---------------- ---------------
(a) June 1, 1988; (b) May 1, 1998

* No performance is given for Large Cap Growth Fund since it did not offer its
shares during the periods noted in the table.

- ------------------- ---------------- ---------------- ---------------- ---------------- ---------------
FOR THE FOLLOWING U.S. NY MUNICIPAL GROWTH & CAPITAL LARGE CAP
PERIODS ENDED GOVERNMENT INCOME FUND INCOME FUND APPRECIATION VALUE FUND
APRIL 30, 1999 SECURITIES FUND FUND

- ------------------- ---------------- ---------------- ---------------- ---------------- ---------------
CLASS A CLASS A CLASS A CLASS A CLASS A**
- ------------------- ---------------- ---------------- ---------------- ---------------- ---------------
TOTAL RETURN

- ------------------- ---------------- ---------------- ---------------- ---------------- ---------------
- ------------------- ---------------- ---------------- ---------------- ---------------- ---------------
1 Year % % % % %
- ------------------- ---------------- ---------------- ---------------- ---------------- ---------------
- ------------------- ---------------- ---------------- ---------------- ---------------- ---------------
5 Years % % N/A N/A N/A
- ------------------- ---------------- ---------------- ---------------- ---------------- ---------------
- ------------------- ---------------- ---------------- ---------------- ---------------- ---------------
Since Inception %(a) %(a) %(b) %(c) %(d)

- ------------------- ---------------- ---------------- ---------------- ---------------- ---------------

</TABLE>

(a) September 22, 1993; (b) November 29, 1993; (c) July 3, 1996; (d) September
25, 1997.

** Performance is for Class A Shares only since Class B Shares were not offered
prior to the date of this prospectus.

TAX EQUIVALENCY TABLE

Set forth below is a sample of a tax-equivalency table that may be used in
advertising and sales literature. This table is for illustrative purposes only
and is not representative of past or future performance of the NY Tax-Free Money
Market Fund and NY Municipal Income Fund. The interest earned by the municipal
securities owned by the Funds generally remains free from federal regular income
tax and is often free from state and local taxes as well. However, some of the
Funds' income may be subject to the federal alternative minimum tax and state
and/or local taxes. The tax-equivalent yield for the NY Tax-Free Money Market
Fund for the 7-day period ended April 30, 1999 was ___%. The tax-equivalent
yield for the NY Municipal Income Fund for the 30-day period ended April 30,
1999 was ___%.

TAXABLE YIELD EQUIVALENT FOR 1999 - STATE OF NEW YORK
<TABLE>
<CAPTION>

TAX BRACKET:
<S> <C> <C> <C> <C> <C>
FEDERAL 15.00% 28.00% 31.00% 36.00% 39.60%

COMBINED FEDERAL AND STATE 21.850% 34.850% 37.850% 42.850% 46.450%
- -------------------------------------------------------------------------------------------------
Joint Return $1-43,050 $43,051-104,05$104,051-158,550$158,551-283,150 Over
283,150
Single Return $1-25,750 $25,751-62,450$62,451-130,250 $130,251-283,150 Over
283,150
TAX EXEMPT YIELD: TAXABLE YIELD EQUIVALENT:

1.50% 1.92% 2.30% 2.41% 2.62% 2.80%
2.00% 2.56% 3.07% 3.22% 3.50% 3.73%
2.50% 3.20% 3.84% 4.02% 4.37% 4.67%
3.00% 3.84% 4.60% 4.83% 5.25% 5.60%
3.50% 4.48% 5.37% 5.63% 6.12% 6.54%
4.00% 5.12% 6.14% 6.44% 7.00% 7.47%
4.50% 5.76% 6.91% 7.24% 7.87% 8.40%
5.00% 6.40% 7.67% 8.05% 8.75% 9.34%
5.50% 7.04% 8.44% 8.85% 9.62% 10.27%
6.00% 7.68% 9.21% 9.65% 10.50% 11.20%

</TABLE>

NOTE: THE MAXIMUM MARGINAL TAX RATE FOR EACH BRACKET WAS USED IN CALCULATING THE
TAXABLE YIELD EQUIVALENT. FURTHERMORE, ADDITIONAL STATE AND LOCAL TAXES PAID ON
COMPARABLE TAXABLE INVESTMENTS WERE NOT USED TO INCREASE FEDERAL DEDUCTIONS.

PERFORMANCE COMPARISONS

Advertising and sales literature may include:

| references to ratings, rankings, and financial publications and/or
performance comparisons of Shares to certain indices;

| charts, graphs and illustrations using the Funds' returns, or returns in
general, that demonstrate investment concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment;

| discussions of economic, financial and political developments and their
impact on the securities market, including the portfolio manager's views on
how such developments could impact the Funds; and

| information about the mutual fund industry from sources such as the
Investment Company Institute.

The Funds may compare their performance, or performance for the types of
securities in which they invest, to a variety of other investments, including
federally insured bank products such as bank savings accounts, certificates of
deposit, and Treasury bills.

The Funds may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.

You may use financial publications and/or indices to obtain a more complete view
of Share performance. When comparing performance, you should consider all
relevant factors such as the composition of the index used, prevailing market
conditions, portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial publications
and/or indices which the Funds use in advertising may include:

| LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific period
of time. From time to time, the Government Fund and the NY Municipal Income
Fund will quote their Lipper rankings in the "General U.S. Government
Funds" and the "New York Municipal Bond Funds" categories, respectively, in
advertising and sales literature. (All Funds)

| DOW JONES INDUSTRIAL AVERAGE ("DJIA") represents share prices of selected
blue chip industrial corporations. The DJIA indicates daily changes in the
average price of stock of these corporations. Because it represents the top
corporations of America, the DJIA index is a leading economic indicator for
the stock market as a whole.

(Equity Funds)

| LEHMAN BROTHERS GOVERNMENT (LT) INDEX is an index composed of bonds issued
by the U.S. government or its agencies which have at least $1 million
outstanding in principal and which have maturities of ten years or longer.
Index figures are total return figures calculated monthly. (Government
Fund)

| LEHMAN BROTHERS GOVERNMENT/CORPORATE TOTAL INDEX is comprised of
approximately 5,000 issues which include non-convertible bonds publicly
issued by the U.S. government or its agencies; corporate bonds guaranteed
by the U.S. government and quasi-federal corporations; and publicly issued,
fixed-rate, non-convertible domestic bonds of companies in industry, public
utilities, and finance. Tracked by Lehman Brothers, the index has an
average maturity of nine years. It calculates total returns for one month,
three months, twelve months, and ten year periods, and year-to-date.
(Government Fund)

| LEHMAN BROTHERS AGGREGATE BOND INDEX is a total return index measuring both
the capital price changes and income provided by the underlying universe of
securities, weighted by market value outstanding. The Aggregate Bond Index
is comprised of the Lehman Brothers Government Bond Index, Corporate Bond
Index, Mortgage-Backed Securities Index and the Yankee Bond Index. These
indices include: U.S. Treasury obligations, including bonds and notes; U.S.
agency obligations, including those of the Farm Credit System, including the
National Bank for Cooperatives and Banks for Cooperatives; foreign
obligations, U.S. investment-grade corporate debt and mortgage-backed
obligations. All corporate debt included in the Aggregate Bond Index has a
minimum rating of BBB by S&P or Fitch, or a minimum rating of Baa by
Moody's.

(Government Fund)

P. MERRILL LYNCH CORPORATE AND GOVERNMENT INDex is an unmanaged index
comprised of approximately 4,821 issues which include corporate debt
obligations rated BBB or better and publicly issued, non-convertible
domestic debt of the U.S. government or any agency thereof. These quality
parameters are based on composites of ratings assigned by Standard and
Poor's Ratings Group and Moody's Investors Service, Inc. Only notes and
bonds with a minimum maturity of one year are included. (Government Fund)

P. AMEX MARKEt less than $10 million at the start and at the close of the
performance measurement period. Corporate instruments must be rated by S&P
or by Moody's as investment grade issues (i.e., BBB/Baa or better).
(Government Fund)

| MERRILL LYNCH DOMESTIC MASTER INDEX includes issues which must be in the
form of publicly placed, nonconvertible, coupon-bearing domestic debt and
must carry a term to maturity of at least one year. Par amounts outstanding
must be no less than $10 million at the start and at the close of the
performance measurement period. The Domestic Master Index is a broader index
than the Merrill Lynch Corporate and Government Index and includes, for
example, mortgage related securities. The mortgage market is divided by
agency, type of mortgage and coupon and the amount outstanding in each
agency/type/coupon subdivision must be no less than $200 million at the
start and at the close of the performance measurement period. Corporate
instruments must be rated by S&P or by Moody's as investment grade issues
(i.e., BBB/Baa or better). (Government Fund)

| SALOMON BROTHERS AAA-AA CORPORATE INDEX calculates total returns of
approximately 775 issues which include long-term, high grade domestic
corporate taxable bonds, rated AAA-AA with maturities of twelve years or
more and companies in industry, public utilities, and finance. (Government
Fund)

| SALOMON BROTHERS LONG-TERM HIGH GRADE CORPORATE BOND INDEX is an unmanaged
index of long-term high grade corporate bonds issued by U.S. corporations
with maturities ranging from 10 to 20 years. (Government Fund)

| LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX is an unmanaged
index comprised of all the bonds issued by the Lehman Brothers
Government/Corporate Bond Index with maturities between 1 and 9.99 years.
Total return is based on price appreciation/depreciation and income as a
percentage of the original investment.

Indices are rebalanced monthly by market capitalization. (Government Fund)

| THE SALOMON BROTHERS TOTAL RATE-OF-RETURN INDEX for mortgage pass-through
securities reflects the entire mortgage pass-through market and reflects
their special characteristics. The index represents data aggregated by
mortgage pool and coupon within a given sector. A market-weighted portfolio
is constructed considering all newly created pools and coupons. (Government
Fund)

| THE MERRILL LYNCH TAXABLE BOND INDICES include U.S. Treasury and agency
issues and were designed to keep pace with structural changes in the fixed
income market. The performance indicators capture all rating changes, new
issues, and any structural changes of the entire market. (Government Fund)

| LEHMAN BROTHERS GOVERNMENT INDEX is an unmanaged index comprised of all
publicly issued, non-convertible domestic debt of the U.S. government, or
any agency thereof, or any quasi-federal corporation and of corporate debt
guaranteed by the U.S. government. Only notes and bonds with a minimum
outstanding principal of $1 million and a minimum maturity of one year are
included. (Government Fund)

| STANDARD & POOR'S DAILY STOCK PRICE INDICES of 500 And 400 Common Stocks are
composite indices of common stocks in industry, transportation, and
financial and public utility companies that can be used to compare to the
total returns of funds whose portfolios are invested primarily in common
stocks. In addition, the Standard & Poor's indices assume reinvestment of
all dividends paid by stocks listed on its indices. Taxes due on any of
these distributions are not included, nor are brokerage or other fees
calculated in the Standard & Poor's figures. (Equity Funds)

| RUSSELL 1000 GROWTH INDEX consists of those Russell 1000 securities with a
greater-than-average growth orientation. Securities in this index tend to
exhibit higher price-to-book and price-earnings ratios, lower dividend
yields and higher forecasted growth values. (Capital Appreciation Fund)

| RUSSELL 2000 SMALL STOCK INDEX is a broadly diversified index consisting of
approximately 2,000 small capitalization common stocks that can be used to
compare to the total returns of funds whose portfolios are invested
primarily in small capitalization common stocks. (Growth & Income Fund and
Capital Appreciation Fund)

| WILSHIRE 5000 EQUITY INDEX consists of nearly 5,000 common equity
securities, covering all stocks in the U.S. for which daily pricing is
available, and can be used to compare to the total returns of funds whose
portfolios are invested primarily in common stocks. (Growth & Income Fund
and Capital Appreciation Fund)

| CONSUMER PRICE INDEX is generally considered to be a measure of inflation.
(All Funds)

| NEW YORK STOCK EXCHANGE COMPOSITE INDEX is a market value weighted index
which relates all NYSE stocks to an aggregate market value as of December
31, 1965, adjusted for capitalization changes. (Equity Funds)

| VALUE LINE COMPOSITE INDEX consists of approximately 1,700 common equity
securities. It is based on a geometric average of relative price changes of
the component stocks and does not include income. (Equity Funds)

| NASDAQ OVER-THE-COUNTER COMPOSITE INDEX covers 4,500 stocks traded over the
counter. It represents many small company stocks but is heavily influenced
by about 100 of the largest NASDAQ stocks. It is a value-weighted index
calculated on price change only and does not include income. (Growth &
Income Fund and Capital Appreciation Fund)VALUE INDEX covers approximately
850 American Stock Exchange stocks and represents less than 5% of the market
value of all US stocks. The AMEX is a value-weighted index calculated on
price change only and does not include income. (Growth & Income Fund and
Capital Appreciation Fund)

| LEHMAN BROTHERS NEW YORK TAX-EXEMPT INDEX is a total return performance
benchmark for the New York long-term, investment grade, tax-exempt bond
market. Returns and attributes for this index are calculated semi-monthly
using approximately 22,000 municipal bonds classified as general obligation
bonds (state and local), revenue bonds (excluding insured revenue bonds),
insured bonds (includes all bond insurers with Aaa/AAA ratings), and
prerefunded bonds. (NY Municipal Income Fund)

P. SALOMON 30-DAY TREASURY BILL INDEX is a weekly quote of the most
representative yields for selected securities issued by the U.S. Treasury
maturing in 30 days.

P. BANK RATE MONITOR NATIONAL INDEX, Miami Beach, Florida, is a financial
reporting service which publishes weekly average rates of 50 leading banks
and thrift institution money market deposit accounts. The rates published in
the index are an average of the personal account rates offered on the
Wednesday prior to the date of publication by ten of the largest banks and
thrifts in each of the five largest Standard Metropolitan Statistical Areas.
Account minimums range upward from $2,500 in each institution and
compounding methods vary. If more than one rate is offered, the lowest rate
is used. Rates are subject to change at any time specified by the
institution.

P. DONOGHUE'S MONEY FUND REPOrt publishes annualized yields of hundreds of
money market funds on a weekly basis and through itS MONEY MARKET INSIGht
publication reports monthly and year-to-date investment results for the same
money funds.

P. MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly MUTUAL FUND VALUEs. MUTUAL FUND VALUes rates more than l,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks. (All Funds)

From time to time, the Money Market Funds will quote their Lipper rankings in
the "money market instrument funds" category in advertising and sales
literature. Investors may use such a reporting service in addition to the Funds'
prospectuses to obtain a more complete view of the Funds' performance before
investing. Of course, when comparing Fund performance to any reporting service,
factors such as composition of the reporting service and prevailing market
conditions should be considered in assessing the significance of such
comparisons.

Advertising and other promotional literature may include charts, graphs and
other illustrations using the Funds' returns, or returns in general, that
demonstrate basic investment concepts such as tax-deferred compounding,
dollar-cost averaging and systematic investment. In addition, a Fund can compare
its performance, or performance for the types of securities in which it invests,
to a variety of other investments, such as federally insured bank products,
including time deposits, bank savings accounts, certificates of deposit, and
Treasury bills, and to money market funds using the Lipper Analytical Services
money market instruments average. Unlike federally insured bank products, the
Shares of the Funds are not insured. Unlike money market funds, which attempt to
maintain a stable net asset value, the net asset value of the Income and Equity
Funds' Shares fluctuates. Advertisements may quote performance information which
does not reflect the effect of any applicable sales charges.

MUTUAL FUND MARKET

Thirty-seven percent of American households are pursuing their financial goals
through mutual funds. These investors, as well as businesses and institutions,
have entrusted over $5 trillion to the more than 7,300 funds available according
to the Investment Company Institute.

FINANCIAL INFORMATION

TO BE FILED BY AMENDMENT

<PAGE>

INVESTMENT RATINGS

STANDARD & POOR'S SHORT-TERM MUNICIPAL OBLIGATION RATINGS

A Standard & Poor's (S&P) note rating reflects the liquidity concerns and market
access risks unique to notes.

SP-1--Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a plus
sign (+) designation.

SP-2--Satisfactory capacity to pay principal and interest.

VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS

S&P assigns dual ratings to all long-term debt issues that have as part of their
provisions a variable rate demand feature. The first rating (long-term rating)
addresses the likelihood of repayment of principal and interest when due, and
the second rating (short-term rating) describes the demand characteristics.
Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the
long-term and the short-term ratings are provided below.)

COMMERCIAL PAPER (CP) RATINGS

An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.

A-1--This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.

A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.

LONG-TERM DEBT RATINGS

AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.

AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the highest-rated issues only in small degree.

A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.

MOODY'S INVESTORS SERVICE, INC., SHORT-TERM MUNICIPAL OBLIGATION RATINGS

Moody's Investor Service, Inc. (Moody's) short-term ratings are designated
Moody's Investment Grade (MIG or VMIG). (See below.) The purpose of the MIG or
VMIG ratings is to provide investors with a simple system by which the relative
investment qualities of short-term obligations may be evaluated.

MIG1--This designation denotes best quality. There is present strong protection
by established cash flows, superior liquidity support or demonstrated broad
based access to the market for refinancing.

MIG2--This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.

VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS

Short-term ratings on issues with demand features are differentiated by the use
of the VMIG symbol to reflect such characteristics as payment upon periodic
demand rather than fixed maturity dates and payment relying on external
liquidity. In this case, two ratings are usually assigned, (for example,
Aaa/VMIG-1); the first representing an evaluation of the degree of risk
associated with scheduled principal and interest payments, and the second
representing an evaluation of the degree of risk associated with the demand
feature. The VMIG rating can be assigned a 1 or 2 designation using the same
definitions described above for the MIG rating.

COMMERCIAL PAPER (CP) RATINGS

P-1--Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics: leading
market positions in well established industries, high rates of return on funds
employed, conservative capitalization structure with moderate reliance on debt
and ample asset protection, broad margins in earning coverage of fixed financial
charges and high internal cash generation, well-established access to a range of
financial markets and assured sources of alternate liquidity.

P-2--Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

LONG-TERM DEBT RATINGS

AAA--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

AA--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.

A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

NR--Indicates that both the bonds and the obligor or credit enhancer are not
currently rated by S&P or Moody's with respect to short-term indebtedness.
However, management considers them to be of comparable quality to securities
rated A-1 or P-1.

NR(1)--The underlying issuer/obligor/guarantor has other outstanding debt rated
AAA by S&P or Aaa by Moody's.

NR(2)--The underlying issuer/obligor/guarantor has other outstanding debt rated
AA by S&P or Aa by Moody's.

NR(3)--The underlying issuer/obligor/guarantor has other outstanding debt rated
A by S&P or Moody's.

FITCH INVESTORS SERVICE, L.P. SHORT-TERM DEBT RATING DEFINITIONS

F-1+--Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.

F-1--Very Strong Credit Quality. Issues assigned this rating reflect an
assurance for timely payment, only slightly less in degree than issues rated
F-1+.

F-2--Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as great
as for issues assigned F-1+ and F-1 ratings.

STANDARD AND POOR'S LONG-TERM DEBT RATING DEFINITIONS

AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher-rated issues only in small degree.

BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.

BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.

B--Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.

CCC--Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B rating.

CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.

C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.

MOODY'S INVESTORS SERVICE, INC. LONG-TERM BOND RATING DEFINITIONS

AAA--Bonds which are rated AAA are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as gilt
edged. Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

AA--Bonds which are rated AA are judged to be of high quality by all standards.
Together with the AAA group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in AAA securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in AAA securities.

BAA--Bonds which are rated BAA are considered as medium-grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

BA--Bonds which are BA are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

CAA--Bonds which are rated CAA are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

CA--Bonds which are rated CA represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C--Bonds which are rated C are the lowest-rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

FITCH IBCA, INC. LONG-TERM DEBT RATING DEFINITIONS

AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.

AA--Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.

A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.

BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.

B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.

CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.

CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C--Bonds are imminent default in payment of interest or principal.

MOODY'S INVESTORS SERVICE, INC. COMMERCIAL PAPER RATINGS

PRIME-1--Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:

o Leading market positions in well-established industries;

o High rates of return on funds employed;

o Conservative capitalization structure with moderate reliance on debt and
ample asset protection;

o Broad margins in earning coverage of fixed financial charges and high
internal cash generation; and

o Well-established access to a range of financial markets and assured sources
of alternate liquidity.

PRIME-2--Issuers rated Prime-1 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.

STANDARD AND POOR'S COMMERCIAL PAPER RATINGS

A-1--This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.

A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.

FITCH IBCA, INC. COMMERCIAL PAPER RATING DEFINITIONS

FITCH-1--(Highest Grade) Commercial paper assigned this rating is regarded as
having the strongest degree of assurance for timely payment.

FITCH-2--(Very Good Grade) Issues assigned this rating reflect an assurance of
timely payment only slightly less in degree than the strongest issues.

<PAGE>

ADDRESSES

VISION TREASURY MONEY MARKET FUND

Class A Shares and Class S Shares

VISION MONEY MARKET FUND

Class A Shares and Class S Shares

VISION NEW YORK TAX-FREE MONEY MARKET FUND

Class A Shares

VISION U.S. GOVERNMENT SECURITIES FUND

Class A Shares

VISION NEW YORK MUNICIPAL INCOME FUND

Class A Shares

VISION LARGE CAP VALUE FUND

(formerly Vision Equity Income Fund)
Class A Shares and Class B Shares

VISION LARGE CAP GROWTH FUND

Class A Shares and Class B Shares

VISION GROWTH & INCOME FUND

Class A Shares

VISION CAPITAL APPRECIATION FUND

Class A Shares

DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Tower
Pittsburgh, PA 15222-3779

INVESTMENT ADVISER

Manufacturers and Traders Trust Company
One M&T Plaza

Buffalo, NY 14203

SUB-ADVISER TO VISION NEW YORK TAX-FREE MONEY MARKET FUND

Federated Investment Management Company
Federated Investors Tower
1001 Liberty Avenue

Pittsburgh, PA 15222-3779

CUSTODIAN

State Street Bank and Trust Company
P.O. Box 8609

Boston, MA 02266-8609

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Federated Shareholder Services Company
P.O. Box 8600

Boston, MA 02266-8600

INDEPENDENT AUDITORS

Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116-5072

PART C. OTHER INFORMATION.
Item 23.

(a) (i) Conformed copy of Amended Articles of Incorporation of
the Registrant; 21 (ii) Conformed copy of Articles
Supplementary; 8 (iii) Conformed copy of Articles
Supplementary dated May 29, 1996; 15

(iv) Conformed copy of Articles Supplementary dated April 20, 1998; 21 (v)
Conformed Copy of Articles of Amendment effective June 1, 1999; + (vi) Conformed
Copy of Articles Supplementary effective June 1, 1999; +

(b) (i) Copy of By-Laws of the Registrant; 11
(ii) Copy of Amendment No. 1 to Bylaws; 21
(c) (i) Copy of Specimen Certificate for Shares of Capital
Stock of the Registrant; 8
(ii) Copy of Specimen Certificate for Shares of Capital
Stock of the Vision Capital Appreciation Fund; 15
(d) (i) Conformed copy of Investment Advisory Contract of
the Registrant; 9

(ii) Conformed copy of Sub-advisory Agreement for the Vision
New York Tax-Free Money Market Fund; 23
(iii) Conformed copy of Exhibit B to Investment Advisory
Contract; 14
(iv) Conformed copy of Exhibit C to Investment Advisory Contract; 19

(v) Conformed copy of Investment Advisory Contract for
the Vision New York Tax-Free Money Market Fund including
Exhibit A; 23

+ All Exhibits have been filed electronically.

8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 11 on Form N-1A filed September 3, l993. (File Nos. 33-20673
and 811-5514)

9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed December 27, 1993 (File Nos. 33-20673
and 811-5514)

11. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 19 on Form N-1A filed June 27, 1994. (File Nos. 33-20673 and
811-5514)

14. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 23 on Form N-1A filed June 27, 1996. (File Nos. 33-20673 and
811-5514)

15. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 24 on Form N-1A filed December 20, 1996. (File Nos. 33-20673
and 811-5514)

19. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 29 on Form N-1A filed September 24, 1997 (File Nos. 33-20673
and 811-5514)

21. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 31 on Form N-1A filed April 22, 1998 (File Nos. 33-20673 and
811-5514)

23. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 34 on Form N-1A filed March 12, 1999, (File Nos. 33-20673 and
811-5514)

<PAGE>

(vi) Form of Exhibit D to the Investment Advisory
Contract; + (e) (i) Conformed copy of Distributor's Contract of
the Registrant; 9

(ii) Conformed copy of Exhibit C to Distributor's Contract;
14 (iii) Conformed copy of Exhibit D to the Distributor's
Contract; 20

(iv) Conformed copy of Exhibit E to the Distributor's Contract; 22
(v) Conformed Copy of Exhibit F to the Distributor's Contract; +

(vii) Conformed copy of Administrative Services Agreement of
the Registrant; 9 (viii) Conformed copy of Shareholder
Services Plan of Registrant; 9 (ix) Conformed copy of
Exhibit A to Amended and Restated Shareholder Services Plan;
22 (x) Conformed copy of Amended and Restated Shareholder
Services Agreement; 13 (xi) Copy of Amendment No. 1 to
Exhibit A to Shareholder Services Agreement; 14

(xii) Copy of Amendment No. 2 to Exhibit A to Shareholder
Services Agreement; 18
(xiii) Conformed copy of Amendment #1 to Exhibit A to Amended and Restated
Shareholder Services Plan; 24 (xiv) Form of Amendment No. 1 (dated June 1, 1999)
to Exhibit A to Shareholder Services Agreement; +

(f) Not applicable;

+ All Exhibits have been filed electronically.

9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed December 27, 1993 (File Nos. 33-20673
and 811-5514)

13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 19 on Form N-1A filed May 3, 1996. (File Nos. 33-20673 and
811-5514)

14. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 23 on Form N-1A filed June 27, 1996. (File Nos. 33-20673 and
811-5514)

18. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 28 on Form N-1A filed August 6, 1997. (File Nos. 33-20673 and
811-5514)

20. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 30 on Form N-1A filed December 22, 1997. (File Nos. 33-20673
and 811-5514)

22. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 32 on Form N-1A filed July 8, 1998. (File Nos. 33-20673 and
811-5514)

23. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 34 on Form N-1A filed March 12, 1999, (File Nos. 33-20673 and
811-5514)

24. Response is incorporated by reference to Registrant' Post-Effective
Amendment No. 36 on Form N-1A filed June 11, 1999, (File Nos. 33-20673 and
811-5514)

<PAGE>

(g) (i) Conformed copy of Custodian Agreement of the Registrant; 12
(ii) Copy of Amendment No. 2 to Exhibit A to

Custodian Contract; 14

(iii) Copy of Amendment No. 3 to Exhibit A to Custodian
Contract; 18
(iv) Conformed copy of State Street Domestic Custody Fee Schedule; 20
(v) Conformed copy of Amendment No. 4 to Exhibit A to Custodian Contract; +

(h) (i) Conformed copy of Agreement for Fund Accounting
Services and Transfer Agency Services; 16
(ii) Copy of Exhibit 1 to Agreement for Fund Accounting Services and
Transfer Agency Services; 18
(iii) Conformed copy of Amendment to Administrative Services Agreement and
the Agreement for Fund Accounting Services and Transfer Agency
Services; 20
(iv) Conformed copy of Amendment No. 1 to Exhibit 1 to Agreement for Fund
Accounting Services and Transfer Agency Services; 22
(v) Conformed copy of Amendment #2 to Exhibit 1 to the Agreement for Fund
Accounting Services and Transfer Agency Services; 24
(vi) Conformed copy of Recordkeeping Agreement including exhibits A-C; 23
(vii) Form of Amendment #1 to Exhibit A to the Recordkeeping Agreement; +
(viii) Conformed copy of Sub-Transfer Agency Agreement; 23
(ix) Form of Amendment No. 1 to Exhibit A of the Sub-Transfer Agency
Agreement; +
- ----------------------------------
+ All Exhibits have been filed electronically.

12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 20 on Form N-1A filed June 26, 1995. (File Nos. 33-20673 and
811-5514)

14. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 23 on Form N-1A filed June 27, 1996. (File Nos. 33-20673 and
811-5514)

16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 26 on Form N-1A filed June 20, 1997. (File Nos. 33-20673 and
811-5514)

18. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 28 on Form N-1A filed August 6, 1997. (File Nos. 33-20673 and
811-5514)

20. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 30 on Form N-1A filed December 22, 1997. (File Nos. 33-20673
and 811-5514)

22. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 32 on Form N-1A filed July 8, 1998. (File Nos. 33-20673 and
811-5514)

23. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 34 on Form N-1A filed March 12, 1999, (File Nos. 33-20673 and
811-5514)

24. Response is incorporated by reference to Registrant' Post-Effective
Amendment No. 36 on Form N-1A filed June 11, 1999, (File Nos. 33-20673 and
811-5514)

<PAGE>

(i) Conformed copy of Opinion and Consent of Counsel as to
legality of shares being registered; 11
(j) Not applicable;
(k) Not applicable;
(l) Conformed copy of Initial Capital Understanding; 11
(m) (i) Copy of Rule 12b-1 Plan; 7
(ii) Conformed copy of Exhibit B to Rule 12b-1 Plan; 14

(iii) Conformed copy of Exhibit C to Rule 12b-1 Plan; 20

(iv)Conformed copy of Exhibit D to Rule 12b-1
Agreement;22; (v) Copy of Rule 12b-1 Agreement; 7 (vi)
Copy of Exhibit B to Rule 12b-1 Agreement; 14 (vii) Copy
of Exhibit C to Rule 12b-1 Agreement; 18 (viii)Amended and
Restated Plan with conformed copy of Exhibit D; 22

(ix) Copy of Dealer (Sales) Agreement; 7
(x) Conformed copy of Exhibit E to Rule 12b-1 Plan; 24

(n) Not Applicable.

(o) (i) Conformed copy of the Registrant's Multiple
Class Plan with conformed copies of
Exhibits A and B;22
(ii) Conformed copy of Exhibit C to the Multiple Class Plan; 24
(p) Conformed copy of Power of Attorney; 14

Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT:

None

- ----------------------------------
+ All Exhibits have been filed electronically.

7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 9 on Form N-1A filed June 17, 1993. (File Nos. 33-20673 and
811-5514)