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
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Pre-Effective Amendment No. ....................
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Post-Effective Amendment No. 41 ........................ X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. 42 ....................................... X
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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 _______________
pursuant to paragraph (b) 60 days after filing pursuant to paragraph (a) (i) X
on June 30, 2000 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
PROSPECTUS
VISION LARGE CAP CORE FUND
(a portfolio of Vision Group of Funds, Inc.)
CLASS A SHARES
CLASS B SHARES
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 (SEC) 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
Fund Goals, Strategies, Risks and
Performance 1
What are the Fund's Fees and
Expenses? 8
More Information on the Fund's
Strategies? 10
What are the Fund's Main Investments and Investment Techniques? 11
Specific Risks of Investing in the
Fund 13
What do Shares
Cost? 15
How is the Fund
Sold? 17
How to Purchase
Shares 18
How to Redeem
Shares 19
How to Exchange
Shares 20
Account and Share
Information 21
Who Manages the
Fund? 22
Financial
Information
23
JUNe 30, 2000
This Prospectus of the Vision Group of Funds, Inc. (the "Corporation") offers
Class A and Class B Shares of Vision Large Cap Core Fund. The Corporation also
offers other portfolios under a SEPARATE prospectus, each advised by the
investment professionals at Manufacturers and Traders Trust Company ("M&T Bank"
or "Adviser") including:
EQUITY FUNDS
o Vision Large Cap Value Fund
o Vision Large Cap Growth Fund
o Vision Mid Cap Stock Fund
INCOME FUNDS
o Vision U.S. Government Securities Fund
o Vision New York Municipal Income Fund
MONEY MARKET FUNDS
o Vision Treasury Money Market Fund
o Vision Money Market Fund
O Vision New York Tax-Free Money Market Fund
For more information on the Corporation's other portfolios (collectively with
the Fund, the "Vision Funds"), please call M&T Bank's Mutual Fund Services at
1-800-836-2211 (in the Buffalo area call 716-635-9368).
The following describes the investment goal (objective), strategies and
principal risks of the Fund. There can be no assurance that the Fund will
achieve its goal. However, the Fund endeavors to do so by following the
strategies and policies described in this prospectus.
FUND GOAL, STRATEGY, RISKS AND PERFORMANCE
GOAL
To provide long-term capital appreciation. Current income is a secondary,
non-fundamental investment consideration.
STRATEGY
The Fund invests primarily in a diversified portfolio of equity securities
(primarily common stocks) of companies that have a market capitalization of at
least $10 billion, which are generally considered "large cap" stocks. The
Adviser utilizes a blended style of investing by using a growth-based strategy
or value-based strategy (or both), as market conditions dictate. Under normal
market conditions, the Fund intends to invest at least 65% or its assets in
these large-cap equity securities that are expected to produce capital
appreciation. The Fund will also consider to a lesser extent whether a stock
offers the opportunity for income.
FUND RISKS
As with any investment, the Fund's Shares are subject to certain risks. The
Fund's Shares are not deposits or obligations of M&T Bank (Adviser), are not
endorsed or guaranteed by M&T Bank, and are not insured or guaranteed by the
U.S. government, the FDIC, the Federal Reserve Board, or any other government
agency. In addition, the Fund is subject to:
o STOCK MARKET RISKS, which are the risks posed by the fact that the value of
equity securities in which the Fund invests rise and fall.
o RISKS RELATING TO INVESTING FOR GROWTH, which are risks associated with
investing in growth-oriented stocks, which are typically more volatile than
value stocks because of their relatively high valuations.
o RISKS RELATING TO INVESTING FOR VALUE. Due to the Fund's value style of
investing, the Fund's share price may lag that of other funds using a
different investment style.
PERFORMANCE
A performance bar chart and total return information
for the Fund will be provided after the Fund has been in operation for a full
calendar year.
WHAT ARE THE FUND'S FEES AND EXPENSES?
VISION LARGE CAP CORE FUND
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Class A Shares and Class B Shares of the Fund.
<TABLE>
<CAPTION>
<S> <C> <C>
Class Class
A B
SHAREHOLDER FEES
FEES PAID DIRECTLY FROM YOUR INVESTMENT
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of 5.50% None
offering price)
Maximum Deferred Sales Charge (Load) (as a percentage of original None 5.00%
purchase price or redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other None None
Distributions) (as a percentage of offering price).
Redemption Fee (as a percentage of amount redeemed, if applicable) None None
Exchange Fee None None
ANNUAL FUND OPERATING EXPENSES (BEFORE WAIVERS) 1
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A PERCENTAGE OF AVERAGE
NET ASSETS)
Management Fee 0.85% 0.85%
Distribution (12b-1) Fee 2 0.25% 0.25%
Shareholder Services Fee 3 0.25% 0.75%
Other Expenses 0.92% 0.92%
----- -----
Total Annual Fund Operating Expenses 2.27% 2.77%
1 Although not contractually obligated to do so, the distributor and
shareholder services provider expect to waive certain amounts. These are shown
below along with the net expenses the Fund expects to ACTUALLY PAY for the
fiscal year ending April 30, 2001.
Total Waiver of Fund Expenses 0.50% 0.00%
Total Actual Annual Operating Expenses (After Waivers) 1.77% 2.77%
</TABLE>
2The Fund's Class A Shares does not expect to pay or accrue the distribution
(12b-1) fee during the fiscal year ending April 30, 2001. If the Fund's Class A
Shares were accruing or paying the distribution (12b-1) fee, they could pay up
to 0.25% of the Fund's Class A Shares average daily net assets. See "Fund
Management, Distribution and Administration."
3The Fund's Class A Shares does not expect to pay or accrue the shareholder
services fee during the fiscal year ending April 30, 2001. If the Fund's Class
A Shares were accruing or paying the shareholder services fee they could pay up
to 0.25% of the Fund's Class A Shares average daily net assets. See "Fund
Management, Distribution and Administration."
EXAMPLE
The following Example is intended to help you compare the cost of investing in
the Fund's Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the 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 the
Fund's Class A and B Shares operating expenses are shown in the table and remain
the same. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
SHARE CLASS 1 YEAR 3 YEARS
CLASS A SHARES $ 767$ 1,220
CLASS B SHARES
Expenses assuming redemption $ 780$ 1,159
Expenses assuming no redemption $ 280$ 859
MORE INFORMATION ON THE FUND'S STRATEGIES
The Fund pursues its goal by investing in a diversified portfolio of equity
securities (primarily common stocks) that are considered "large cap." It is
expected that the Fund, as a whole, will have the overall portfolio
characteristics that define it as "large cap core (blend)." Large capitalization
companies have a market capitalization of $10 billion or more at the time of
investment. The fund may also invest, to a lesser extent, in mid-cap or
small-cap companies which are generally companies with a market capitalization
under $10 billion.
The Fund's manager utilizes a strategy of "Risk Controlled, Thematic, GARP
(Growth at a Reasonable Price)." This strategy attempts to control portfolio
risk by utilizing investments that are larger components of the benchmark;
identify major macro forces (themes and trends) that will influence the economic
environment and buy stocks that are at attractive valuations relative to their
peers. The Adviser will also have the option of pursuing a growth-based or a
value-based strategy as market conditions dictate.
Growth stocks, in general, tend to be highly valued relative to their current
earnings. These companies may include those that the market is willing to pay
more for because they are recognized leaders or well-known household names with
the potential for powerful, consistent earnings growth and which may be worth
more in the future.
When looking for value stocks, the Adviser will attempt to identify similar
investments which, for whatever reason, are currently out of favor and selling
at a discount to their fair market value as defined by their disciplines. These
value companies' 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.
The Fund's adviser may sell an investment when:
o the stock realizes it's intrinsic value through price appreciation;
o there is a deviation of the original purchase rationale;
o a better investment opportunity arises elsewhere;
o the stock no longer meets the style's objectives;
o it is removed from the relative index; or
o there are significant tax implications.
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.
WHAT ARE THE FUND'S 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 Fund 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 Fund
invests.
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.
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.
PORTFOLIO TURNOVER
The Fund 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. The Fund does
not anticipate exceeding a portfolio turnover rate of 100%.
SPECIFIC RISKS OF INVESTING IN THE FUND
STOCK MARKET RISKS
The value of equity securities in the 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 Subadviser 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.
WHAT DO SHARES COST?
You can purchase, redeem, or exchange Shares any day the New York Stock Exchange
(NYSE) is open. Purchases and redemptions by wire will not be available on days
the Federal Reserve wire system is closed. The Fund offers two classes of
shares, Class A Shares and 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 Fund receives your transaction
request in proper form (as described in the prospectus), it is processed at the
next calculated net asset value (NAV) plus any applicable front-end sales charge
(public offering price).
The value of the Fund's Shares is generally determined based upon the market
value of portfolio securities. However, the Fund's Board may determine in good
faith that another method of valuing investments is necessary to appraise their
fair market value. If the Fund owns foreign securities that trade in foreign
markets on days the NYSE is closed, the value of a Fund's assets may change on
days you cannot purchase, redeem or exchange Shares.
NAV for the Fund is determined at the end of regular trading (normally 4:00 p.m.
Eastern time) each day the NYSE is open.
The 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 the 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 all of the Vision Funds.
The maximum front-end sales charge that you will pay on an investment in Class A
Shares is 5.50% The maximum contingent deferred sales charge you will pay (at
the time of redemption) on Class B Shares is 5.00%. Keep in mind that investment
professionals may charge you additional fees for their services in connection
with your Share transactions.
SALES CHARGE WHEN YOU PURCHASE--CLASS A SHARES
Class A Shares of the Fund are sold at their NAV next determined after an order
is received, plus a sales charge as follows:
SALES CHARGE
AS A PERCENTAGE SALES CHARGE
OF PUBLIC AS A PERCENTAGE
PURCHASE AMOUNT OFFERING PRICE 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%
THE SALES CHARGE AT PURCHASE MAY BE REDUCED BY:
(gamma) . purchasing Shares in greater quantities to reduce the applicable sales
(gamma) charge;
(gamma) . 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);
(gamma) . 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 (gamma) . signing a letter of intent to purchase a
specific dollar amount of Shares
within 13 months (call your investment professional or the Fund for more
information).
THE SALES CHARGE MAY BE ELIMINATED WHEN YOU PURCHASE SHARES:
(gamma) . within 90 days of redeeming Shares of an equal or lesser amount of the
redemption; (gamma) . within 60 days of redeeming shares of any other mutual
fund which was sold
with a sales charge or commission or fixed or variable rate annuities of an
equal or lesser amount;
(gamma) . by exchanging shares from the same share class of another Vision Fund
(other
than a money market fund);
(gamma) . through wrap accounts or other investment programs where you pay the
investment professional directly for services;
(gamma) . through investment professionals that receive no portion of the sales
charge;
(gamma) . as a current or retired Director or employee of the Fund, the
Adviser, the
Distributor, the Subadviser and their affiliates, and the immediate family
members of these individuals;
(gamma) . as an employee of a dealer which has a selling group agreement with
the
Distributor;
(gamma) . as an investor referred by any subadviser to the Vision Funds.
If your investment qualifies for a reduction or elimination of the sales charge,
you or your investment professional should 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)
eight years after purchase. This is a non-taxable event.
YOU WILL NOT BE CHARGED A CDSC WHEN REDEEMING CLASS B SHARES:
(gamma) . purchased with reinvested dividends or capital gains; . you reinvested
within 90 days of a previous redemption; (gamma) . 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);
(gamma) . purchased through investment professionals who did not receive
advanced
sales payments;
(gamma) . if, after you purchase Shares, you become disabled as defined by the
IRS;
(gamma) . of Shares held by Directors, employees, and sales representatives of
the
Vision Funds, the Distributor, or affiliates of the Vision Funds or Distributor,
employees
of any investment professional that sells Shares of the Vision 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;
(gamma) . 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;
(gamma) . if the redemption qualified under the Systematic Withdrawal Program;
(gamma) . if the Fund redeems your Shares and closes your account for not
meeting the
minimum balance requirement;
(gamma) . if your redemption is a required retirement plan distribution; (gamma)
. 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:
(gamma) . Shares that are not subject to a CDSC; and
(gamma) . 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.
HOW IS THE FUND SOLD?
This prospectus relates only to Class A Shares and Class B Shares of Large Cap
Core Fund. 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 the other Vision Funds.
Federated Securities Corp., 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 marketing fees and sales charges, 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
The Fund has adopted a Rule 12b-1 Plan,
which allows it to pay marketing fees to the Distributor for the sale and
distribution of the Fund's 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, a
subadviser, 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 Fund has no present intention of paying or
accruing 12b-1 fees on Class A Shares.
SHAREHOLDER SERVICES
The Fund has adopted a Shareholder Services Plan on behalf of each class of
Shares, which is administered by Federated Administrative Services. M&T Bank
acts as shareholder servicing agent for the Fund, providing shareholder
assistance, communicating or facilitating purchases and redemptions of Shares,
and distributing prospectuses and other information. The Fund has no present
intention of paying or accruing shareholder servicing 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 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.
If you do not specify the Class choice on your form of payment, you will
automatically receive Class A Shares. The Fund reserves the right to reject any
purchase request. The Fund does 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.
PAYMENT BY CHECK
To purchase Shares of the Fund 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.
PAYMENT BY WIRE
You may purchase Shares by Federal Reserve wire, whereby your bank sends money
to the Fund's bank through the Federal Reserve System. Wire orders will only be
accepted on days on which the Fund, M&T Bank and the Federal Reserve wire system
are open.
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 BANK ACCOUNT TRANSFER
To purchase Shares of the Fund 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 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 Fund 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. You should request and read the prospectus for the Vision Fund in
which you wish to invest. To request a prospectus, call M&T Bank's Mutual Fund
Services.
RETIREMENT INVESTMENTS
Shares of the Fund 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 Fund and consult a tax adviser.
HOW TO REDEEM SHARES
The 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 Fund 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. Redemptions by wire can only be made on days the Federal Reserve
wire system, M&T Bank and the Fund is open for business.
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 Fund reserves 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 Fund 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 Fund, 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.
ADDITIONAL CONDITIONS
SIGNATURE GUARANTEES
You must have a signature guarantee on written redemption requests:
(gamma) . when you are requesting a redemption of $50,000 or more;
(gamma) . when you want a redemption to be sent to an address other than the
one you
have on record with the Fund; or
(gamma) . 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 mailed within one
business day after receiving a request in proper form. However, payment may be
delayed up to seven days:
(gamma) . to allow your purchase payment to clear;
(gamma) . during periods of market volatility; or
(gamma) . when a shareholder's trade activity or amount adversely impacts the
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
A CDSC will not be charged on Systematic Withdrawal Program redemptions of Class
B Shares if:
(gamma) . Shares redeemed are 12% or less of the account value in a single year;
(gamma) . the account is at least one year old; (gamma) . all dividends and
capital gains distributions are reinvested; and (gamma) . the account has at
least a $10,000 balance when the Systematic Withdrawal Program 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 Systematic Withdrawal Program 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.
REDEMPTION IN KIND
Although the Fund intends to pay Share redemptions in cash, the 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.
HOW TO EXCHANGE SHARES
You may exchange Shares of the Fund for the same share class of another Vision
Fund at the NAV next determined after the Fund receives the exchange in proper
form. In addition, you may exchange Class A Shares of the Fund into Class A
Shares of Federated International Equity Fund at NAV plus any applicable sales
charge.
In order to exchange Shares you must:
(gamma) . meet the minimum initial investment requirements (if the exchange
results in
the establishment of a new account);
(gamma) . establish an account into the Fund you want to acquire if you do not
have an
account in that Fund;
(gamma) . ensure that the account registrations are identical; (gamma) . receive
a prospectus for the Fund into which you wish to exchange; and (gamma) . 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 the Fund to another Vision Fund 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 Fund may modify or terminate the exchange privilege at any time, and
shareholders will be notified prior to any modification or termination. The
Fund's 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). 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 Fund 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 Fund, 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
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.
DIVIDENDS AND CAPITAL GAINS
Dividends (if any) are paid to shareholders invested in a Fund on the record
date, and are declared and paid quarterly.
If capital gains or losses were to occur, they could result in an increase or
decrease in dividends. In addition, the 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 the Fund declares a dividend 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 accounts 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 Fund sends 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 the Fund holds its assets.
Fund distributions for the Large Cap Core Fund are expected to be both dividends
and capital gains.
Redemptions and exchanges are taxable sales. Please consult your tax adviser
regarding your federal, state, and local tax liability.
WHO MANAGES THE FUND?
The Board of Directors governs the Fund. The Board selects and oversees the
Adviser, M&T Bank. The Adviser has overall responsibility for managing the
Fund's 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 throughout New York State. As of December 31, 1999, M&T Bank had over
$6 billion in assets under management. M&T Bank has served as investment adviser
to the Funds since 1988. As of December 31, 1999, M&T Bank managed $1.8 billion
in net assets of money market fund and $300 million in net assets of fluctuating
mutual 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 the Fund, equal to 0.85% of the Fund's average daily net
assets.
The Adviser may voluntarily waive a portion of its fee or reimburse the Fund for
certain operating expenses.
PORTFOLIO MANAGER
JOHN J. CLARK, III
John J. Clark, III has been the portfolio manager of the Fund since its
inception. 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 B.S. from Cornell University and MBA from Virginia Commonwealth
University and is also a Chartered Financial Analyst.
FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
Financial highlights are not presented for Vision Large Cap Core Fund since it
did not have any operations prior to the date of this Prospectus.
VISION LARGE CAP CORE FUND
(a portfolio of Vision Group of Funds, Inc.)
CLASS A SHARES
CLASS B SHARES
A Statement of Additional Information (SAI) dated June 30, 2000, is incorporated
by reference into this prospectus. To obtain the SAI and other information
without charge, and make inquiries, call (800) 836-2211.
You can obtain information about the Fund (including the SAI) by writing to or
visiting the Public Reference Room in Washington, DC. You may also access fund
information from the EDGAR Database on the SEC's Internet site at
http://www.sec.gov. You can purchase copies of this information by contacting
the SEC by email at [email protected] or by writing to the SEC's Public
Reference Section, Washington, DC 20549-0102. Call 1-202-942-8090 for
information on the Public Reference Room's operations and copying fees.
SEC File No. 811-5514
Cusip _______
Cusip _______
______ (4/00)
VISION GROUP OF FUNDS, INC.
STATEMENT OF ADDITIONAL INFORMATION
JUNE 30, 2000
VISION LARGE CAP CORE FUND
CLASS A SHARES AND CLASS B SHARES
This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectus for the Fund dated June 30, 2000.
Obtain the prospectus without charge by calling (800) 836-2211 (in the Buffalo
area call (716) 635-9368).
CONTENTS
HOW IS THE FUND ORGANIZED? 1
SECURITIES IN WHICH THE FUND INVESTS 1
SECURITIES DESCRIPTIONS AND TECHNIQUES 2
INVESTMENT RISKS 7
FUNDAMENTAL INVESTMENT OBJECTIVE 10
INVESTMENT LIMITATIONS 10
DETERMINING MARKET VALUE OF SECURITIES 11
WHAT DO SHARES COST? 11
HOW IS THE FUND SOLD? 13
EXCHANGING SECURITIES FOR SHARES 13
SUBACCOUNTING SERVICES 14
REDEMPTION IN KIND 14
ACCOUNT AND SHARE INFORMATION 14
TAX INFORMATION 14
WHO MANAGES AND PROVIDES SERVICES TO THE FUND? 14
HOW DOES THE FUND MEASURE PERFORMANCE? 17
INVESTMENT RATINGS 19
ADDRESSES BACK COVER PAGE
CUSIP ________
CUSIP ________
_______ (4/00)
28
HOW IS THE FUND ORGANIZED?
The Fund is a diversified portfolio of Vision Group of Funds, Inc.
(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 two classes of shares of the
Fund, known as Class A Shares and Class B Shares (Shares). This SAI relates to
both classes of Shares. The Fund's investment adviser is Manufacturers and
Traders Trust Company (M&T Bank) (Adviser).
SECURITIES IN WHICH THE FUND INVESTS
In pursuing its investment strategy, the 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 the Fund;
A = Acceptable (but not principal) investment of the Fund; or N = Not an
acceptable investment of the Fund.
- --------------------------------------------------------------------
LARGE CAP CORE FUND
- --------------------------------------------------------------------
EQUITY SECURITIES P
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Common Stocks P
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Preferred Stocks P
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Real Estate Investment Trusts A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Warrants3 A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
FIXED INCOME SECURITIES A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Treasury Securities A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Agency Securities A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Corporate Debt Securities1 A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Commercial Paper A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Demand Instruments A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Mortgage Backed Securities A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Asset Backed Securities1 A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Zero Coupon Securities A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Bank Instruments A
- --------------------------------------------------------------------
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CONVERTIBLE SECURITIES4 A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
TAX EXEMPT SECURITIES1 A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Variable Rate Demand Instruments A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
FOREIGN SECURITIES A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
American Depositary Receipts A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
DERIVATIVE CONTRACTS A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Futures Contracts A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Options A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
SPECIAL TRANSACTIONS A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Repurchase Agreements A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Reverse Repurchase Agreements A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Delayed Delivery Transactions2 A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Securities Lending A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Asset Coverage A
- --------------------------------------------------------------------
- --------------------------------------------------------------------
INVESTING IN SECURITIES OF OTHER INVESTMENT A
COMPANIES
- --------------------------------------------------------------------
1. Rated in the top four rating categories of an NRSRO, or, if unrated, of
comparable quality as determined by the Adviser or sub-adviser.
2. The Fund does not intend to engaged in such transactions to an extent that
would cause the segregation of more than 20% of the total value of its
assets.
3. The Fund does not have a present intent to invest more than 5% or its net
assets in warrants.
4. The Fund may invest in convertible securities rated below investment grade.
See "Risks Associated with Non-investment Grade Securities" herein.
SECURITIES DESCRIPTIONS AND TECHNIQUES
EQUITY SECURITIES
Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. The 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 the Fund invests.
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.
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 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
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 types of fixed income securities in which the 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 market 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.
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.
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.
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.
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.
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
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.
CONVERTIBLE SECURITIES
Convertible securities are fixed income securities that the 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 Fund may invest
in commercial paper rated below investment grade. See "Risks Associated with
Non-investment Grade Securities" herein.
The Fund treats 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
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.
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 Fund 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.
FOREIGN SECURITIES
Foreign securities are securities of issuers based outside the United
States. The Fund considers an issuer to be based outside the United States
if:
o it is organized under the laws of, or has a principal office located in,
another country;
o the principal trading market for its securities is in another country; or
o 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. Trading
in certain foreign markets is also subject to liquidity risks.
AMERICAN DEPOSITARY RECEIPTS
American Depository 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.
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 Fund 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 the 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 Fund 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 Fund may buy/sell financial futures contracts. The 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 Fund 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.
The 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.
The 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.
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. The Fund 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 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 Fund 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 its investment policies and managing its uninvested cash.
INVESTMENT RISKS
There are many factors which may affect an investment in the Fund. The Fund's
principal risks are described in the prospectus. Additional risk factors are
outlined below.
STOCK MARKET RISKS
The value of equity securities in the 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.
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 the Fund's portfolio holdings to a particular sector, the
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.
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
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 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. For example, medium capitalization stocks may be less liquid and more
volatile than stocks of larger, well-known companies. 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.
RISKS OF INVESTING IN AMERICAN DEPOSITARY RECEIPTS
Because the Fund may invest in American Depositary Receipts issued by foreign
companies, the Fund's share price may be more affected by foreign economic and
political conditions, taxation policies, and accounting and auditing standards,
than would otherwise be the case.
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 the Fund's risk of loss and potential for gain.
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.
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.
RISKS ASSOCIATED WITH NONINVESTMENT GRADE SECURITIES
The convertible securities in which the Fund 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.
FUNDAMENTAL INVESTMENT OBJECTIVE
The Fund's investment objective is to provide long-term capital appreciation.
Current income is a secondary, non-fundamental investment consideration. The
investment objective may not be changed by the Fund's Directors without
shareholder approval.
INVESTMENT LIMITATIONS
The Fund may, in the future, seek to achieve the Fund's investment objective by
investing all of the Fund's assets in a no-load, open-end management investment
company having substantially the same investment objective as the Fund. The
Fund's investment policies permit such an investment. Shareholders will receive
prior written notice with respect to any such investment.
DIVERSIFICATION
With respect to securities comprising 75% of the value of its total assets, the
Fund will not purchase securities of any one issuer (other than cash; cash
items; securities issued or guaranteed by the government of the United States or
its agencies or instrumentalities and repurchase agreements collateralized by
such U.S. government 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, or the Fund would own more than 10% of the
outstanding voting securities of that issuer.
CONCENTRATION
The Fund will not make investments that will result in the concentration of its
investments in the securities of issuers primarily engaged in the same industry.
For purposes of this restriction, the term concentration has the meaning set
forth in the 1940 Act, any rule or order thereunder, or any SEC staff
interpretation thereof. Government securities and municipal securities will not
be deemed to constitute an industry.
UNDERWRITING
The Fund may not underwrite the securities of other issuers, except that the
Fund may engage in transactions involving the acquisition, disposition or resale
of its portfolio securities, under circumstances where it may be considered to
be an underwriter under the Securities Act of 1933.
INVESTING IN COMMODITIES
The Fund may not purchase or sell physical commodities, provided that the Fund
may purchase securities of companies that deal in commodities. For purposes of
this restriction, investments in transactions involving futures contracts and
options, forward currency contracts, swap transactions and other financial
contracts that settle by payment of cash are not deemed to be investments in
commodities.
INVESTING IN REAL ESTATE
The Fund may not purchase or sell real estate, provided that this restriction
does not prevent the Fund from investing in issuers which invest, deal, or
otherwise engage in transactions in real estate or interests therein, or
investing in securities that are secured by real estate or interests therein.
The Fund may exercise its rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be liquidated
in an orderly manner.
BORROWING MONEY AND ISSUING SENIOR SECURITIES
The Fund may borrow money, directly or indirectly, and issue senior securities
to the maximum extent permitted under the 1940 Act, any rule or order
thereunder, or any SEC staff interpretation thereof.
LENDING
The Fund may not make loans, provided that this restriction does not prevent the
Fund from purchasing debt obligations, entering into repurchase agreements,
lending its assets to broker/dealers or institutional investors and investing in
loans, including assignments and participation interests.
THE ABOVE LIMITATIONS CANNOT BE CHANGED UNLESS AUTHORIZED BY THE BOARD AND BY
THE "VOTE OF A MAJORITY OF ITS OUTSTANDING VOTING SECURITIES," AS DEFINED BY THE
INVESTMENT COMPANY ACT OF 1940 (1940 ACT). THE FOLLOWING LIMITATIONS, HOWEVER,
MAY BE CHANGED BY THE BOARD WITHOUT SHAREHOLDER APPROVAL. SHAREHOLDERS WILL BE
NOTIFIED BEFORE ANY MATERIAL CHANGE IN THESE LIMITATIONS BECOMES EFFECTIVE.
ILLIQUID SECURITIES
The Fund will not purchase securities for which there is no readily available
market, or enter into repurchase agreements or purchase time deposits maturing
in more than seven days, if immediately after and as a result, the value of such
securities would exceed, in the aggregate, 15% of the Fund's net assets.
INVESTING IN OTHER INVESTMENT COMPANIES
The Fund may invest its assets in securities of other investment companies as an
efficient means of carrying out its investment policies. It should be noted that
investment companies incur certain expenses, such as management fees, and,
therefore, any investment by the Fund in shares of other investment companies
may be subject to such duplicate expenses. At the present time, the Fund expects
that its investments in other investment companies may include shares of money
market funds, including funds affiliated with the Fund's investment adviser.
PURCHASES ON MARGIN
The Fund will not purchase securities on margin, provided that the Fund may
obtain short-term credits necessary for the clearance of purchases and sales of
securities, and further provided that the Fund may make margin deposits in
connection with its use of financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any of its assets, provided
that this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
In applying the Fund's concentration restriction: (a) utility companies will be
divided according to their services, for example, gas, gas transmission,
electric and telephone will each be considered a separate industry; (b)
financial service companies will be classified according to the end users of
their services, for example, automobile finance, bank finance and diversified
finance will each be considered a separate industry; and (c) asset-backed
securities will be classified according to the underlying assets securing such
securities. To conform to the current view of the SEC that only domestic bank
instruments may be excluded from industry concentration limitations, as a matter
of non-fundamental policy, the Fund will not exclude foreign bank instruments
from industry concentration limits as long as the policy of the SEC remains in
effect. In addition, investments in bank instruments, and investments in certain
industrial development bonds funded by activities in a single industry, will be
deemed to constitute investment in an industry, except when held for temporary
defensive purposes. The investment of more than 25% of the value of the Fund's
total assets in any one industry will constitute "concentration."
For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings association having capital, surplus and undivided profits in excess
of $100,000,000 at the time of investment to be "cash items." Except with
respect to borrowing money, if a percentage limitations 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
limitation.
DETERMINING MARKET VALUE OF SECURITIES
Market values of the Fund's 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.
WHAT DO SHARES COST?
The 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 Fund's 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 FUND
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, Federated Investors, Inc. 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 Fund's distributor and consents to such
purchases;
| current and retired employees of any sub-adviser to the M&T Funds, Inc.;
and
| investors referred by any sub-adviser to the M&T Funds, Inc. 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 the Fund 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 the
Fund under this "no-load" purchase provision. This payment will be made out of
the distributor's assets and not by the Corporation, the Fund or the 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 Fund's 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;
| 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;
| 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;
| which are involuntary redemptions processed by the Fund because the
accounts do not meet the minimum balance requirements; and
| which are qualifying redemptions of Class B Shares under a Systematic
Withdrawal Program.
HOW IS THE FUND 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 Class A 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 PLAN
As a compensation type plan, the Rule 12b-1 Plans are designed to pay the
Distributor (who may then pay investment professionals such as banks,
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 Fund achieve economies of scale, reduce per share expenses, and
provide cash for orderly portfolio management and Share redemptions. In
addition, the Fund's service providers that receive asset-based fees also
benefit from stable or increasing Fund assets.
The Fund 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 Fund 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 (such as broker-dealers or banks) may be paid
significant amounts of fees out of the assets of the Distributor (these fees do
not come out of Fund assets). The Distributor may be reimbursed by the Adviser
or its affiliates.
Investment professionals receive such fees for providing distribution-related
and/or shareholder services, such as advertising, providing incentives to their
sales personnel, sponsoring other activities intended to promote sales, and
maintaining shareholder accounts. These payments may be based upon such factors
as the amount of Shares the investment professional sells or may sell; the
amount of client assets invested; and/or 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 Fund reserves the right to determine whether to accept
your securities and the minimum market value to accept. The Fund 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 the Fund intends to pay Share redemptions in cash, they reserves the
right, as described below, to pay the redemption price in whole or in part by a
distribution of the Fund's portfolio securities.
Because the Fund has elected to be governed by Rule 18f-1 under the Investment
Company Act of 1940, the 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 Fund's 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 Fund's 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 the 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.
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
The 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.
The 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.
WHO MANAGES AND PROVIDES SERVICES TO THE FUND?
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, 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
BIRTH DATE 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 (construction).
Birth date: January
12, 1955
DIRECTOR
- -------------------------------------------------------------- ------------
JOSEPH J. CASTIGLIA Director, New York State Electric & $8,000
Roycroft Campus Gas Corp.; Sevenson Environmental
21 South Grove Services, Inc.; Blue Cross & Blue
Street, Suite 291 Shield of Western New York; and Former
East Aurora, NY President, Chief Executive Officer and
14052 Vice Chairman, Pratt & Lambert United,
Birth date: July Inc. (manufacturer of paints and
20, 1934 chemical specialties).
DIRECTOR
- ---------------------
- -------------------------------------------------------------- ------------
DANIEL R. GERNATT, President and CFO of Gernatt Asphalt $7,500
JR. Products, Inc.; Executive Vice
Richardson & Taylor President, Dan Gernatt Gravel
Hollow Roads Products, Inc.; Vice President,
Collins, NY Countryside Sand & Gravel, Inc.
Birth date: July
14, 1940
DIRECTOR
- -------------------------------------------------------------- ------------
GEORGE K. President, Brand Name Sales, Inc. $8,000
HAMBLETON, JR. (catalog showroom business);
670 Young Street President, Hambleton & Carr, Inc.
Tonawanda, NY (catalog showroom business).
Birth date:
February 8, 1933
DIRECTOR
- -------------------------------------------------------------- ------------
President, Executive Vice President $0
EDWARD C. GONZALES and Treasurer of other funds
Federated Investors distributed by Federated Securities
Tower Corp.; Vice Chairman, Federated
Pittsburgh, PA Investors, Inc.; Trustee, Federated
Birth date: October Administrative Services;
22, 1930 formerly: Trustee or Director of other
funds distributed by Federated
PRESIDENT AND Securities Corp.; CEO and Chaiman,
TREASURER Federated Administrative Services;
Vice President, Federated Investment
Management Company, Federated
Investment Counseling, Federated
Global Investment Management Corp. and
Passport Research, Ltd.; Director and
Executive Vice President, Federated
Securities Corp.; Director, Federated
Services Company; Trustee, Federated
Shareholder Services Company.
---
- --------------------- ---------------------------------------- ------------
BETH S. BRODERICK Vice President, Mutual Fund Services $0
Federated Investors Division, Federated Services Company.
Tower
Pittsburgh, PA
Birth date: August
2, 1965
VICE PRESIDENT AND
ASSISTANT TREASURER
- -------------------------------------------------------------- ------------
VICTOR R. SICLARI Senior Corporate Counsel and Vice $0
Federated Investors President, Federated Administrative
Tower Services; formerly Attorney, Morrison
Pittsburgh, PA & Foerster (law firm).
Birth date:
November 17, 1961
SECRETARY
- -------------------------------------------------------------- ------------
INVESTMENT ADVISER
The Adviser conducts investment research and makes investment decisions for the
Fund.
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.
CODE OF ETHICS RESTRICTIONS ON PERSONAL TRADING
As required by SEC rules, the Fund, its Adviser, and its Distributor have
adopted codes of ethics. These codes govern securities trading activities of
investment personnel, Fund Directors, and certain other employees. Although they
do permit these people to trade in securities, including those that the Fund
could buy, they also contain significant safeguards designed to protect the Fund
and its shareholders from abuses in this area, such as requirements to obtain
prior approval for, and to report, particular transactions.
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 and sub-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 and sub-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 and sub-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 and sub-adviser makes decisions
on portfolio transactions and selects brokers and dealers subject to review by
the Fund's 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 or sub-adviser in advising other accounts.
To the extent that receipt of these services may replace services for which the
Adviser or sub-adviser or its affiliates might otherwise have paid, it would
tend to reduce their expenses. The Adviser or sub-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.
Investment decisions for the Fund are made independently from those of other
accounts managed by the Adviser. When the Fund 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 Fund, it is
possible that this procedure could adversely impact the price paid or received
and/or the position obtained or disposed of by the Fund.
ADMINISTRATOR, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Administrative Services (FAS) provides the Fund with certain
administrative personnel and services necessary to operate the Fund. Federated
Services Company (FSC) and its affiliate, Federated Shareholder Services Company
(FSSC), a registered transfer agent, provide the Fund 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 ADMINISTRATIVE ASSETS OF THE VISION GROUP
FEE OF FUNDS, INC.
0.140% on the first $1.4 billion
0.100% on the next $750 million
0.070% on assets in excess of
$2.15 billion
CUSTODIAN
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Fund. Foreign instruments purchased by the Fund are
held by foreign banks participating in a network coordinated by State Street
Bank.
INDEPENDENT AUDITORS
The independent auditor for the Fund, Ernst & Young LLP, plans and performs its
audit so it may provide an opinion as to whether the Fund's financial statements
and financial highlights are free of material misstatement.
HOW DOES THE FUND MEASURE PERFORMANCE?
The Fund 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 the 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 Fund 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 does 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.
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 Fund's 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 Fund; and
| information about the mutual fund industry from sources such as the
Investment Company Institute.
The Fund may compare its performance, or performance for the types of securities
in which it invests, to a variety of other investments, including federally
insured bank products such as bank savings accounts, certificates of deposit,
and Treasury bills.
The Fund 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 Fund uses 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.
| 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.
| 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.
| 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 in 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.
| CONSUMER PRICE INDEX is generally considered to be a measure of inflation.
| 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.
| 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.
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.
INVESTMENT 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.
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.
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.
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.
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.)
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.
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.
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.
COMMERCIAL PAPER 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.
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.
FITCH IBCA, INC./FITCH INVESTORS SERVICE, L.P.
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.
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.
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.
LONG-TERM DEBT RATINGS
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.
OTHER CONSIDERATIONS
Among the factors considered by Moody's in assigning bond, note and commercial
paper ratings are the following: (i) evaluation of the management of the issuer;
(ii) economic evaluation of the issuer's industry or industries and an appraisal
of speculative-type risks which may be inherent in certain areas; (iii)
evaluation of the issuer's products in relation to competition and customer
acceptance; (iv) liquidity; (v) amount and quality of long-term debt; (vi) trend
of earnings over a period of 10 years; (vii) financial strength of a parent
company and the relationships which exist with the issuer; and (viii)
recognition by management of obligations which may be present or may arise as a
result of public interest questions and preparations to meet such obligations.
Among the factors considered by S&P in assigning bond, note and commercial paper
ratings are the following: (i) trend of earnings and cash flow with allowances
made for unusual circumstances, (ii) stability of the issuer's industry, (iii)
the issuer's relative strength and position within the industry and (iv) the
reliability and quality of management.
ADDRESSES
VISION LARGE CAP CORE FUND
Class A Shares and Class B Shares
INVESTMENT ADVISER
Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, NY 14203
ADMINISTRATOR
Federated Administrative Services
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
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
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 8609
Boston, MA 02266-8609
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; 25
(vi) Conformed Copy of Articles Supplementary effective June 1, 1999;
25
(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)
25. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 37 on Form N-1A filed June 23, 1999, (File Nos. 33-20673 and
811-5514)
(vi) Conformed copy of Exhibit D to the Investment Advisory
Contract; 28 (vii) Conformed copy of Exhibit E to the
Investment Advisory Contract; 28 (viii)Conformed copy of
Assignment of Sub-Advisory Agreement for Vision
New York Tax-Free Money Market Fund; 28
(ix) Conformed copy of Subadvisory Agreement for the Vision Mid
Cap Stock Fund; 28
(x) Conformed copy of Subadvisory Agreement for the Vision Large
Cap Growth Fund. +
(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; 25
(vi) Conformed Copy of Exhibits G & H to the Distributor's Contract; 26
(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 Amendment #2 to Exhibit A to Amended and Restated
Shareholder Services Plan; 26
(xi) Conformed copy of Amended and Restated Shareholder Services Agreement;
13
(xii) Copy of Amendment No. 1 to Exhibit A to Shareholder Services
Agreement; 14
(xiii) Conformed Copy of Amendment No. 2 to Exhibit A to
Shareholder Services Agreement; 28
(xiv) Conformed copy of Amendment No. 1 to Exhibit A to Amended and
Restated Shareholder Services Plan; 24
(xv) Conformed copy of Amendment No. 3 to Exhibit A to
Shareholder Services Agreement; 28
(xvi) Conformed copy of Amendment No. 4 to Exhibit A to
Shareholder Services Agreement; 28
(xvii) Conformed copy of Exhibit I to the Distributor's
Contract; 28
(xviii) Conformed copy of Amendment No. 3 to Exhibit A to
Amended and Restated Shareholder Services Plan. 28
(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)
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)
24. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 36 on Form N-1A filed June 11, 1999, (File Nos. 33-20673 and
811-5514)
25. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 37 on Form N-1A filed June 23, 1999, (File Nos. 33-20673 and
811-5514)
26. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 38 on Form N-1A filed August 20, 1999, (File Nos. 33- 20673
and 811-5514)
28. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 40 on Form N-1A filed February 29, 2000 (File Nos. 33- 20673
and 811-5514)
(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;
25
(vi) Conformed copy of Amendment No. 5 to Exhibit A to Custodian Contract;
26
(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 Amendment #3 to Exhibit 1 to the Agreement
for Fund Accounting Services and Transfer Agency Services;
26
(vii) Conformed copy of Recordkeeping Agreement including exhibits A-C; 23
(viii) Conformed copy of Amendment #1 to Exhibit A to the Recordkeeping
Agreement; 28
(ix) Conformed copy of Sub-Transfer Agency Agreement; 23
(x) Conformed copy of Amendment No. 1 to Exhibit A of the Sub-Transfer Agency
Agreement; 26
(xi) Conformed copy of Amendment No. 2 to Exhibit A to the Recordkeeping
Agreement;
27
(xii) Conformed copy of Amendment No. 4 to Exhibit 1 to the Agreement for Fund
Accounting Services and Transfer Agency Services. 28
- ----------------------------------
+ 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's Post-Effective
Amendment No. 36 on Form N-1A filed June 11, 1999, (File Nos. 33-20673 and
811-5514)
25. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 37 on Form N-1A filed June 23, 1999, (File Nos. 33-20673 and
811-5514)
26. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 38 on Form N-1A filed August 20, 1999, (File Nos. 33-20673
and 811-5514)
27. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 39 on Form N-1A filed October 21, 1999, (File Nos. 33-20673
and 811-5514)
28. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 40 on Form N-1A filed February 29, 2000 (File Nos. 33-
20673 and 811-5514)
(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 12b-1 Plan for Class B Shares and
Exhibit A; 26
(iii) Conformed copy of Exhibit B to Rule 12b-1 Plan; 14 (iv)
Conformed copy of Exhibit C to Rule 12b-1 Plan; 20
(v)Conformed copy of Exhibit D to Rule 12b-1 Agreement;22 (vi)
Copy of Rule 12b-1 Agreement; 7 (vii) Copy of Exhibit B to
Rule 12b-1 Agreement; 14 (viii) Copy of Exhibit C to Rule
12b-1 Agreement; 18 (ix)Amended and Restated Plan with
conformed copy of Exhibit D; 22
(x) Copy of Dealer (Sales) Agreement; 7 (xi) Conformed copy of Exhibit E to Rule
12b-1 Plan; 24 (xii) Conformed copy of Exhibit F to Rule 12b-1 Plan; 26
(xiii) Conformed copy of Exhibit B to the Class B Shares Rule 12b-1 Plan; 28
(n) (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; 26 (iii) Conformed copy of Exhibit D to
the Multiple Class Plan; 28
(o) Conformed copy of Power of Attorney; 14
(p) (i) Copy of Code of Ethics for Access Persons
(Manufacturers and Traders Trust Company); +
(ii)Copy of Code of Ethics of Vision Group of Funds,
Inc.; +
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)
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)
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)
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)
26. Response is incorporated by reference to Registrant' Post-Effective
Amendment No. 38 on Form N-1A filed August 20, 1999, (File Nos. 33- 20673
and 811-5514)
28. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 40 on Form N-1A filed February 29, 2000 (File Nos. 33- 20673
and 811-5514)
Item 25. INDEMNIFICATION: 7
----------------
Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER:
-----------------------------------------------------
(a) Manufacturers & Traders Trust Company ("M&T Bank") performs
investment advisory services for the Registrant. M&T Bank is the
principal banking subsidiary of M&T Bank Corporation, a $20.6
billion bank holding company, as of December 31, 1998, headquartered
in Buffalo, New York. As of December 31, 1998, M&T Bank had over 247
offices throughout New York State and Pennsylvania, and an office in
Nassau, The Bahamas.
M&T Bank was founded in 1856 and provides comprehensive banking and
financial services to individuals, governmental entities and
businesses throughout western New York and Pennsylvania. As of
December 31, 1998, M&T Bank had over $4.5 billion in assets under
management for which it has investment discretion (which includes
employee benefits, personal trusts, estates, agencies and other
accounts). As of December 3l, 1998, M&T Bank managed $1.51 billion
in VISION money market mutual fund assets and $317.9 million in net
assets of fluctuating mutual funds. Except for Vision Group of
Funds, Inc., M&T Bank does not presently provide investment advisory
services to any other registered investment companies.
The principal executive Officers and the Directors of M&T Bank are
set forth in the following tables. Unless otherwise noted, the
position listed under Other Substantial Business, Profession,
Vocation or Employment is with M&T Bank.
(b)
Other Substantial
Position with Business, Profession,
NAME THE ADVISER VOCATION OR EMPLOYMENT
William F. Allyn Director President, Welch Allyn, Inc.
P.O. Box 50
Skaneateles Falls, NY 13153-0050
Brent D. Baird Director Private Investor
1350 One M&T Plaza
Buffalo, NY 14203-2396
Robert J. Bennett Director and Chairman, M&T Bank
P.O. Box 4983 Executive Officer Corporation and Vice
Syracuse, NY 13221-4983 Chairman, M&T Bank
C. Angela Bontempo Director President, Bontempo &
207 Commerce Drive Associates, LLC
Amherst, NY 14228-2302
Robert T. Brady Director Chairman, President and
East Aurora, NY 14052-0018 Chief Executive Officer,
Moog Inc.
Emerson L. Brumback Executive Officer Executive Vice
One M&T Plaza, 19th Floor President, M&T Bank
Buffalo, NY 14203-2396 Corporation and
M&T Bank
- ---------------------
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)
Atwood Collins, III Executive Officer Executive Vice
350 Park Avenue President, and
6th Floor President and Chief
New York, NY 10022-6022 Executive Officer, New
York City Division
of Manufacturers and
Traders Trust Company;
and Executive Vice
President, M&T Bank
Corporation
Mark J. Czarnecki Executive Officer Executive Vice
One M&T Plaza President,
9th Floor Manufacturers and
Buffalo, NY 14203-2399 Traders Trust Company
Richard E. Garman Director President and Chief
2544 Clinton Street Executive Officer,
Buffalo, NY 14224-1092 A.B.C. Paving Co., Inc.
and Buffalo Crushed Stone, Inc.
James V. Glynn Director President,
151 Buffalo Avenue Maid of the Mist
Suite 204 Corporation
Niagara Falls, NY 14303-1288
Brian E. Hickey Executive Officer Executive Vice President
255 East Avenue and President, Rochester
3rd Floor Division-Manufacturers
Rochester, NY 14604-2624 and Traders Trust
Company; and Executive
Vice President,
M&T Bank Corporation
Patrick W.E. Hodgson Director President, Cinnamon
60 Bedford Road Investments Limited
2nd Floor
Toronto, Ontario
Canada M5R2K2
James L. Hoffman Executive Officer Executive Vice President
700 Corporate Blvd. and President, Hudson
Suite 701 Valley Division-Newburgh, NY
12550-6046 Manufacturers
and Traders Trust
Company; and
Executive Vice
President, M&T Bank Corporation
Samuel T. Hubbard, Jr. Director President & Chief
1059 West Ridge Road Executive Officer, The
Rochester, NY 14615-2731 Alling & Cory
Company
Robert J. Irwin Advisory Director Chairman and Chief
Executive Officer,
Ellicott Station ASA Limited
P.O. Box 1210
Buffalo, NY 14205-1210
Russell A. King Director Retired Partner and
4910 Red Pine Road Chief Executive Officer,
Manlius, NY 13104-1314 King & King Architects,
Inc.
Adam C. Kugler Executive Officer Executive Vice President 350 Park
Avenue and Treasurer, M&T Bank
6th Floor Corporation and M&T Bank
New York, NY 10022-6022
Wilfred J. Larson Director Retired President and
200 Bahia Point Chief Executive Officer,
Naples, FL 34103-4368 Westwood-Squibb
Pharmaceuticals Inc.
Peter J. O'Donnell, Jr. Director President, Pine Tree
675 Highland Avenue Management Corporation
Clark Green, PA 18411-2502
Jorge G. Pereira Director Vice Chairman of the
350 Park Avenue Board, M&T Bank
6th Floor Corporation and
New York, NY 10022-6022 Manufacturers and
Traders Trust Company
John L. Pett Executive Officer Executive Vice President
One Fountain Plaza and Chief Credit
9th Floor Officer,
Buffalo, NY 14203-1495 Manufacturers and
Traders Trust Company
and M&T Bank Corporation
Michael P. Pinto Executive Officer Executive Vice President
One M&T Plaza and Chief Financial
19th Floor Officer, Manufacturers
Buffalo, NY 14203-2399 and Traders Trust
Company and M&T Bank
Corporation
Melinda R. Rich Director President,
P.O. Box 245 Rich Entertainment
Buffalo, NY 14240-0245 Group
Robert E. Sadler, Jr. Director and President, Manufacturers
One M&T Plaza Executive Officer and Traders Trust
19th Floor Company and
Buffalo, NY 14203-2399 Executive Vice
President, M&T Bank
Corporation
John L. Vensel Director Chairman and Chief Executive
P.O. Box 977 Officer, Crucible Materials
Syracuse, NY 13201-0977 Corporation
Herbert L. Washington Director President,
3280 Monroe Avenue H.L.W. Fast Track, Inc.
Rochester, NY 14618-4608
John L. Wehle, Jr. Director Chairman of the
445 St. Paul Street Board, President and
Rochester, NY 14605-1775 Chief Executive
Officer, Genessee
Corporation
Robert G. Wilmers Director and President and Chief
One M&T Plaza Executive Officer Executive Officer,
19th Floor M&T Bank Corporation;
Buffalo, NY 14203-2399 and Chairman of the
Board and Chief Executive Officer,
Manufacturers and Traders Trust Company
Item 27. PRINCIPAL UNDERWRITERS:
-----------------------
(a)...Federated Securities Corp. the Distributor for shares of the
Registrant, acts as principal underwriter for the following open-end investment
companies, including the Registrant:
Cash Trust Series II; Cash Trust Series, Inc.; CCB Funds; Edward D. Jones & Co.
Daily Passport Cash Trust; Federated Adjustable Rate U.S. Government Fund, Inc.;
Federated American Leaders Fund, Inc.; Federated ARMs Fund; Federated Core
Trust; Federated Equity Funds; Federated Equity Income Fund, Inc.; Federated
Fixed Income Securities, Inc.;
Federated Fund for U.S. Government Securities, Inc.; Federated GNMA Trust;
Federated Government Income Securities, Inc.; Federated High Income Bond Fund,
Inc.; Federated High Yield Trust; Federated Income Securities Trust; Federated
Income Trust; Federated Index Trust; Federated Institutional Trust; Federated
Insurance Series; Federated Investment Series Funds, Inc.; Federated Managed
Allocation Portfolios; Federated Municipal Opportunities Fund, Inc.; Federated
Municipal Securities Fund, Inc.; Federated Municipal Securities Income Trust;
Federated Short-Term Municipal Trust; Federated Stock and Bond Fund, Inc.;
Federated Stock Trust; Federated Tax-Free Trust; Federated Total Return Series,
Inc.; Federated U.S. Government Bond Fund; Federated U.S. Government Securities
Fund: 1-3 Years; Federated U.S. Government Securities Fund: 2-5 Years; Federated
U.S. Government Securities Fund: 5-10 Years; Federated Utility Fund, Inc.;
FirstMerit Funds; Hibernia Funds; Independence One Mutual Funds; Intermediate
Municipal Trust;
International Series, Inc.; Marshall Funds, Inc.; Money Market Obligations
Trust; Regions Funds; RIGGS Funds; SouthTrust Funds;
Tax-Free Instruments Trust; The Wachovia Funds; The Wachovia Municipal Funds;
Vision Group of Funds, Inc.; and World Investment Series, Inc.;
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
Richard B. Fisher Chairman, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Arthur L. Cherry Director, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John B. Fisher President-Institutional Sales --
Federated Investors Tower and Director,
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas R. Donahue Director, Executive Vice --
Federated Investors Tower Vice President and Assistant
1001 Liberty Avenue Secretary,
Pittsburgh, PA 15222-3779 Federated Securities Corp.
James F. Getz President-Broker/Dealer and --
Federated Investors Tower Director,
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
David M. Taylor Executive Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ronald M. Petnuch Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John M. Albert Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ernest G. Anderson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Matthew W. Brown Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David J. Callahan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark Carroll Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Steven R. Cohen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Marc C. Danile Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert J. Deuberry Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark A. Gessner Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
G. Tad Gullickson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Dayna C. Haferkamp Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Anthony J. Harper Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Charlene H. Jennings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael W. Koenig Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President,
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Christopher A. Layton Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael H. Liss Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael R. Manning Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Amy Michalisyn Vice President,
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Alec H. Neilly Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas A. Peter III Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Larry Sebbens Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward J. Segura Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Colin B. Starks Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert W. Bauman Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Beth C. Dell Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Donald C. Edwards Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John T. Glickson Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Renee L. Martin Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Kirk A. Montgomery Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Denis McAuley, III Treasurer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Timothy S. Johnson Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Victor R. Siclari Assistant Secretary, Secretary
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(c) Not applicable
Item 28. LOCATION OF ACCOUNTS AND RECORDS:
---------------------------------
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:
Vision Group of Funds, Inc. Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
(Notices should be sent to the Agent for Service at the above address)
5800 Corporate Drive,
Pittsburgh, Pennsylvania 15237-7010
Federated Shareholder P.O. Box 8600
Services Company Boston, Massachusetts 02266-8600
("Transfer Agent, Dividend
Disbursing Agent")
Federated Administrative Services Federated Investors Tower
("Administrator") 1001 Libery Avenue
Pittsburgh, Pennsylvania 15222-3779
Manufacturers and Traders Trust One M&T Plaza
Company Buffalo, New York 14240
("Adviser")
Federated Investment Management Company Federated Investors Tower
("Sub-Adviser" to the Vision New 1001 Liberty Avenue
York Tax-Free Money Market Fund only) Pittsburgh, Pennsylvania 15222-3779
Independence Investment Associates, Inc. 53 State Street
("Sub-Adviser" to the Vision Mid Cap Boston, Massachusetts 02109
Stock Fund only)
Montag & Caldwell, Inc. 3455 Peachtree Road, N.E.
("Sub-Adviser" to the Vision Large Suite 1200
Cap Growth Fund only) Atlanta, GA 30326-3248
State Street Bank and Trust Company P.O. Box 8609
("Custodian") Boston, Massachusetts 02266-8609
Item 29. MANAGEMENT SERVICES: Not applicable.
--------------------
Item 30. UNDERTAKINGS:
-------------
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees/Directors and the calling of special shareholder meetings
by shareholders.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, VISION GROUP OF FUNDS, INC., has
duly caused this Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Pittsburgh
and Commonwealth of Pennsylvania, on the 14th day of April, 2000.
VISION GROUP OF FUNDS, INC.
BY: /s/Victor R. Siclari
Victor R. Siclari, Secretary
Attorney in Fact for Edward C. Gonzales
April 14, 2000
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:
NAME TITLE DATE
---- ----- ----
By: /s/ Victor R. Siclari
Victor R. Siclari Attorney In Fact April 14, 2000
SECRETARY For the Persons
Listed Below
NAME TITLE
Edward C. Gonzales* President and Treasurer
(Chief Executive Officer
and Principal Financial and
Accounting Officer)
Randall I. Benderson* Director
Joseph J. Castiglia* Director
Daniel R. Gernatt, Jr.* Director
George K. Hambleton, Jr.* Director
* By Power of Attorney
Exhibit (d)(x) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SUBADVISORY AGREEMENT
This Subadvisory Agreement ("Agreement") is entered into as of March 1, 2000 by
and among the Vision Group of Funds, a Maryland corporation (the "Company"),
Manufacturers and Traders Trust Company, a New York State chartered bank and
trust company (the "Adviser" or "M&T Bank"), and Montag & Caldwell, Inc. (the
"Subadviser").
RECITALS:
The Company is an open-end investment management company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), and has eight
portfolios, including the Vision Large Cap Growth Fund (the "Fund");
The Company and the Adviser have entered into an advisory agreement dated as of
June 1, 1993 (the "Advisory Agreement") as amended, pursuant to which the
Adviser provides portfolio management services to the Fund and the other
portfolios of the Company;
The Advisory Agreement contemplates that the Adviser may fulfill its portfolio
management responsibilities under the Advisory Agreement by engaging one or more
subadvisers; and
The Adviser and the Board of Directors of the Company ("Directors") desire to
retain the Subadviser to act as sub-investment manager of the Fund and to
provide certain other services, and the Subadviser desires to perform such
services under the terms and conditions hereinafter set forth.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, the Company, the Adviser and the Subadviser agree as
follows:
1. DELIVERY OF DOCUMENTS. The Company has furnished the Subadviser with
copies, properly certified or otherwise authenticated, of each of the
following:
(a) The Company's articles of incorporation ("Articles of Incorporation");
(b) By-Laws of the Company as in effect on the date hereof;
(c) Resolutions of the Directors selecting the Subadviser as the investment
subadviser to the Fund and approving the form of this Agreement;
(d) Resolutions of the Directors selecting the Adviser as investment adviser
to the Fund and approving the form of the Investment Advisory Agreement
and resolutions adopted by the initial shareholder of the Fund approving
the form of the Investment Advisory Agreement;
(e) The Adviser's Investment Advisory Agreement; and
(f) The Company's registration statement, including the Fund's prospectus and
statement of additional information (collectively called the
"Prospectus").
The Adviser will furnish the Subadviser from time to time with copies, properly
certified or otherwise authenticated, of all amendments of or supplements to the
foregoing, if any. The Adviser will also furnish the Subadviser with copies of
the documents listed on Schedule 1 to this Agreement, and shall promptly notify
the Subadviser of any material change in any of the Fund's investment
objectives, policies, limitations, guidelines or procedures set forth in any of
the documents listed in Schedule 1.
The Subadviser has furnished the Adviser with a copy of the Subadviser's
approved list of securities for equity portfolios, its Form ADV most recently
filed with the Securities and Exchange Commission, the code of ethics
established by the Subadviser pursuant to Rule 17j-1 of the 1940 Act
("Subadviser's Code of Ethics"), and the Subadviser's policies regarding
allocation of securities among clients with common investment objectives, soft
dollars and brokerage selection. The Subadviser will promptly furnish the
Adviser with copies of any amendments to such documents.
The Subadviser will also provide Adviser with a list and specimen signatures of
the parties who are authorized to act on behalf of the Subadviser and will
promptly notify Adviser in writing of any changes thereto.
2. INVESTMENT SERVICES. Subject to the supervision and review of the Adviser and
the Directors, the Subadviser will manage the investments of the Fund on a
discretionary basis, including the purchase, retention and disposition of
securities, in accordance with the investment policies, objectives and
restrictions of the Fund as set forth in the Fund's Prospectus, and in
conformity with the 1940 Act, the Internal Revenue Code of 1986, as amended
(including the requirements for qualification as a regulated investment
company), all other applicable laws and regulations, instructions and directions
received in writing from the Adviser or the Board of Directors, and the
provisions contained in the documents delivered to the Subadviser pursuant to
Section 1 above, as each of the same may from time to time be amended or
supplemented, and copies delivered to the Subadviser.
The Subadviser will discharge its duties under this Agreement with the care,
skill, prudence, and diligence under the circumstances then prevailing that a
prudent person acting in the capacity of an investment adviser to a registered
investment company and familiar with such matters would use. The Subadviser
will, at its own expense:
(a) Manage on a discretionary basis the Fund's investments and determine from
time to time what securities will be purchased, retained, sold or loaned
by the Fund, and what portion of the Fund's assets will be invested or
held uninvested as cash.
(b) Place orders with or through such persons, brokers or dealers to carry out
the policy with respect to brokerage as set forth in the Fund's Prospectus
or as the Directors may direct from time to time, subject to the
Subadviser's duty to obtain best execution.
In using its best efforts to obtain for the Fund best execution, the
Subadviser, bearing in mind the Fund's best interests at all times, shall
consider all factors it deems relevant, including by way of illustration,
price, the size of the transaction, the nature of the market for the
security, the amount of the commission, the timing of the transaction,
taking into account market prices and trends, the reputation, experience
and financial stability of the broker or dealer involved and the quality
of service rendered by the broker or dealer in other transactions. Subject
to such policies as the Directors of the Company may determine, the
Subadviser shall not be deemed to have acted unlawfully or to have
breached a duty created by this Agreement or otherwise, solely by reason
of its having caused the Fund to pay a broker or dealer that provides
brokerage and research services to the Subadviser or the Adviser an amount
of commission for effecting a Fund investment transaction that is greater
than the amount of commission that another broker or dealer would have
charged for effecting the transaction.
(c) Submit such reports relating to the valuation of the Fund's securities as
the Adviser may reasonably request.
(d) Maintain detailed books and records of all matters pertaining to the Fund
(the "Fund's Books and Records"), including, without limitation, a daily
ledger of such assets and liabilities relating thereto, and brokerage and
other records of all securities transactions. The Fund's Books and Records
shall be available to the Adviser at any time upon request and shall be
available for telecopying without delay to the Adviser during any day that
the Fund is open for business.
(e) Comply with all requirements of Rule 17j-1 under the 1940 Act ("Rule
17j-1") including the requirement to submit its Code of Ethics and any
material changes thereto to the Directors for approval. The Subadviser will
submit any material change in its Code of Ethics to the Directors promptly,
but in no later than sixty days, after the adoption of such change. The
Subadviser will promptly report any significant violations of its Code of
Ethics or procedures and any related sanctions to the Directors and will
provide a written report to the Directors at least annually in accordance
with the requirements of Rule 17j-1. The Subadviser will also require that
its Access Persons (as such term is defined in Rule 17j-1) provide the
Subadviser with quarterly personal investment transaction reports and
initial and annual holdings reports, and otherwise require such of those
persons as is appropriate to be subject to the Subadviser's Code of Ethics.
(f) From time to time, as the Adviser or the Directors may reasonably request,
furnish the Adviser and to each of the Directors reports of Fund
transactions and reports on securities held in the Fund's portfolio, all
in such detail as the Adviser or the Directors may reasonably request.
(g) Inform the Adviser and the Directors of changes in investment strategy or
tactics or in key personnel of the Subadviser (including any changes in
the personnel who manage the investments of the Fund).
(h) Make its officers and employees available to meet with the Directors and
the Adviser at such times and with such frequency as the Directors or the
Adviser reasonably requests, on due notice to the Subadviser, but at least
quarterly, to review the Fund's investments in light of current and
prospective market conditions.
(i) Furnish to the Directors such information as may be reasonably necessary
in order for the Directors to evaluate this Agreement or any proposed
amendments thereto for the purpose of casting a vote pursuant to Section
11 or 12 hereof. Furnish to the Adviser such information as may be
reasonably necessary in order for the Adviser to evaluate this Agreement
and the Subadviser's performance hereunder.
(j) The Subadviser will advise the Adviser, and, if instructed by the Adviser,
the Fund's custodian, on a prompt basis each day by electronic
communication of each confirmed purchase and sale of a Fund security
specifying the name of the issuer, the full description of the security
including its class, and amount or number of shares of the security
purchased or sold, the market price, commission, government charges and
gross or net price, trade date, settlement date, and identity of the
effecting broker or dealer and, if different, the identity of the clearing
broker.
(k) Cooperate generally with the Fund and the Adviser to provide information in
the possession of the Subadviser, or reasonably available to it, necessary
for the preparation of registration statements and periodic reports to be
filed by the Fund or the Adviser with the Securities and Exchange
Commission, including Form N-1A, semi-annual reports on Form N-SAR,
periodic statements, shareholder communications and proxy materials
furnished to holders of shares of the Fund, filings with state "blue sky"
authorities and with United States agencies responsible for tax matters,
and other reports and filings of like nature.
(l) Allow Adviser, its representatives, internal or external auditors and
regulators to visit and audit Subadviser's operations relating to
Subadviser's services under this Agreement at such times and frequencies
as Adviser reasonably requests, at reasonable times and upon reasonable
notice, but at least annually.
3. EXPENSES PAID BY THE SUB-ADVISOR. The Subadviser will pay the cost of
maintaining the staff and personnel necessary for it to perform its obligations
under this Agreement, the expenses of office rent, telephone, telecommunications
and other facilities it is obligated to provide in order to perform the services
specified in Section 2, and any other costs and expenses incurred by it in
connection with the performance of its duties hereunder.
4. EXPENSES OF THE FUND NOT PAID BY THE SUBADVISER. The Subadviser will not be
required to pay any expenses which this Agreement does not expressly state shall
be payable by the Subadviser. In particular, and without limiting the generality
of the foregoing, the Subadviser will not be required to pay under this
Agreement:
(a) the compensation and expenses of Directors and of independent advisers,
independent contractors, consultants, managers and other agents employed
by the Company or the Fund other than through the Subadviser;
(b) legal, accounting and auditing fees and expenses of the Company or the
Fund;
(c) the fees and disbursements of custodians and depositories of the Company
or the Fund's assets, transfer agents, disbursing agents, plan agents and
registrars;
(d) taxes and governmental fees assessed against the Company or the Fund's
assets and payable by the Company or the Fund;
(e) the cost of preparing and mailing dividends, distributions, reports,
notices and proxy materials to shareholders of the Company or the Fund
except that the Subadviser shall bear the costs of providing the
information referred to in Section 2(k) to the Adviser;
(f) brokers' commissions and underwriting fees; and
(g) the expense of periodic calculations of the net asset value of the shares
of the Fund.
5. REGISTRATION AS AN ADVISER. The Subadviser hereby represents and warrants
that it is registered as an investment adviser under the Investment Advisers Act
of 1940, as amended (the "Advisers Act"), and covenants that it will remain so
registered for the duration of this Agreement. Subadviser shall notify the
Adviser immediately in the event that Subadviser ceases to be registered as an
investment adviser under the Adviser's Act.
6. COMPENSATION OF THE SUBADVISER. For all services to be rendered, facilities
furnished and expenses paid or assumed by the Subadviser as herein provided for
the Fund, the Adviser will pay the Subadviser an annual fee equal to 0.50% on
the first $50 million of the Fund's average daily net assets, 0.40% on the next
$50 million of the Fund's average daily net assets, 0.30% on the next $100
million of the Fund's average daily net assets, and 0.20% of such assets in
excess thereof. Such fee shall accrue daily and be paid monthly. The "average
daily net assets" of the Fund shall be determined on the basis set forth in the
Fund's Prospectus or, if not described therein, on such basis as is consistent
with the 1940 Act and the regulations promulgated thereunder. The Subadviser
will receive a pro rata portion of such monthly fee for any periods in which the
Subadviser advises the Fund less than a full month. The Subadviser understands
and agrees that neither the Company nor the Fund has any liability for the
Subadviser's fee hereunder. Calculations of the Subadviser's fee will be based
on average net asset values as provided by the Adviser or the Company.
In addition to the foregoing, the Subadviser may from time to time agree in
writing not to impose all or a portion of its fee otherwise payable hereunder
(in advance of the time such fee or portion thereof would otherwise accrue)
and/or undertake to pay or reimburse the Fund for all or a portion of its
expenses not otherwise required to be borne or reimbursed by the Subadviser. Any
such fee reduction or undertaking may be discontinued or modified by the
Subadviser at any time.
7. OTHER ACTIVITIES OF THE SUBADVISER AND ITS AFFILIATES. Nothing herein
contained shall prevent the Subadviser or any of its affiliates or associates
from engaging in any other business or from acting as investment adviser or
investment manager for any other person or entity, whether or not having
investment policies or a portfolio similar to the Fund. It is specifically
understood that officers, directors and employees of the Subadviser and those of
its affiliates may engage in providing portfolio management services and advice
to other investment advisory clients of the Subadviser or of its affiliates.
8. AVOIDANCE OF INCONSISTENT POSITION. In connection with purchases or sales of
portfolio securities for the account of the Fund, neither the Subadviser nor any
of its directors, officers or employees will act as principal or agent or
receive any commission, except in compliance with applicable law and the
relevant procedures of the Fund. The Subadviser shall not knowingly recommend
that the Fund purchase, sell or retain securities of any issuer in which the
Subadviser has a financial interest without obtaining prior approval of the
Adviser prior to the execution of any such transaction.
Nothing herein contained shall limit or restrict the Subadviser or any of its
officers, affiliates or employees from buying, selling or trading in any
securities for its or their own account or accounts. The Company and Fund
acknowledge that the Subadviser and its officers, affiliates and employees, and
its other clients may at any time have, acquire, increase, decrease or dispose
of positions in investments which are at the same time being acquired or
disposed of by the Fund. The Subadviser shall have no obligation to acquire with
respect to the Fund, a position in any investment which the Subadviser, its
officers, affiliates or employees may acquire for its or their own accounts or
for the account of another client if, in the sole discretion of the Subadviser,
it is not feasible or desirable to acquire a position in such investment on
behalf of the Fund. Nothing herein contained shall prevent the Subadviser from
purchasing or recommending the purchase of a particular security for one or more
funds or clients while other funds or clients may be selling the same security.
The Subadviser expressly acknowledges and agrees, however, that in any of the
above described transactions, and in all cases, the Subadviser is obligated to
fulfill its fiduciary duty as Subadviser to the Fund and it shall require such
of its Access Persons as is appropriate to comply with the requirements of the
Subadviser's Code of Ethics.
When a security proposed to be purchased or sold for the Fund is also to be
purchased or sold for other accounts managed by the Subadviser at the same time,
the Subadviser shall make such purchase or sale on a pro-rata, rotating or other
equitable basis so as to avoid any one account being preferred over any other
account. The Subadviser shall disclose to the Adviser and to the Directors the
method used to allocate purchases and sales among the Subadviser's investment
advisory clients.
9. NO PARTNERSHIP OR JOINT VENTURE. The Company, the Fund, the Adviser and the
Subadviser are not partners of or joint venturers with each other and nothing
herein shall be construed so as to make them such partners or joint venturers or
impose any liability as such on any of them.
10. LIMITATION OF LIABILITY AND INDEMNIFICATION.
(a) In the absence of willful misfeasance, bad faith or gross negligence on the
part of the Subadviser, or reckless disregard of its obligations and duties
hereunder, the Subadviser shall not be subject to any liability to the Adviser,
the Company, the Fund, any shareholder of the Fund, or to any person, firm or
organization, for any act or omission in the course of or connected with,
rendering services hereunder. Nothing herein, however, shall derogate from the
Subadviser's obligations under federal and state securities laws. Any person,
even though also employed by the Subadviser, who may be or become an employee of
and paid by the Company or the Fund shall be deemed, when acting within the
scope of his employment by the Company or the Fund, to be acting in such
employment solely for the Company or the Fund and not as the Subadviser's
employee or agent. Subadviser will maintain appropriate fidelity bond insurance
coverage in a reasonable amount and shall provide evidence of such coverage upon
request of Adviser.
(b) In the absence of willful misfeasance, bad faith or gross negligence on the
part of Adviser, or reckless disregard of its obligations and duties hereunder,
Adviser shall not be subject to any liability to Subadviser for any act or
omission in the course of or connected with, the Adviser's carrying out its
duties and obligations under this Agreement.
(c) Subadviser and Adviser shall each defend, indemnify and hold harmless the
other party and the other party's affiliates, officers, directors, employees and
agents, from and against any claim, loss, liability, damages, deficiency,
penalty, cost or expense (including without limitation reasonable attorneys'
fees and disbursements for external counsel) resulting from the reckless
disregard of the indemnifying party's obligations and duties hereunder or
willful misfeasance, bad faith or gross negligence on the part of the
indemnifying party, its officers, directors, employees and agents with respect
to this Agreement or the Fund whether such claim, loss, liability, damages,
deficiency, penalty, cost or expense was incurred or suffered directly or
indirectly.
11. ASSIGNMENT AND AMENDMENT. This Agreement may not be assigned by the
Subadviser, and shall automatically terminate, without the payment of any
penalty, in the event of: (a) its assignment, including any change in control of
the Adviser or the Subadviser which is deemed to be an assignment under the 1940
Act, or (b) the termination of the Investment Advisory Agreement. Trades that
were placed prior to such termination will not be canceled; however, no new
trades will be placed after notice of such termination is received. Termination
of this Agreement shall not relieve the Adviser or the Subadviser of any
liability incurred hereunder.
The terms of this Agreement shall not be changed unless such change is agreed to
in writing by the parties hereto and is approved by the affirmative vote of a
majority of the Directors of the Company voting in person, including a majority
of the Directors who are not interested persons of the Company, the Adviser or
the Subadviser, at a meeting called for the purpose of voting on such change,
and (to the extent required by the 1940 Act) unless also approved at a meeting
by the affirmative vote of the majority of outstanding voting securities of the
Fund.
12. DURATION AND TERMINATION. This Agreement shall become effective as of the
date first above written and shall remain in full force and effect for a period
of two years from such date, and thereafter for successive periods of one year
(provided such continuance is approved at least annually in conformity with the
requirements of the 1940 Act) unless the Agreement is terminated automatically
as set forth in Section 11 hereof or until terminated as follows:
(a) The Company or the Adviser may at any time terminate this Agreement,
without payment of any penalty, by not more than 60 days' prior written
notice delivered or mailed by registered mail, postage prepaid, or by
nationally recognized overnight delivery service, receipt requested, to
the Subadviser. Action of the Company under this subsection may be taken
either by (i) vote of its Directors, or (ii) the affirmative vote of the
outstanding voting securities of the Fund; or
(b) The Subadviser may at any time terminate this Agreement by not less than
one hundred twenty (120) days' prior written notice delivered or mailed by
registered mail, postage prepaid, or by nationally recognized overnight
delivery service, receipt requested, to the Adviser.
Termination of this Agreement pursuant to this Section shall be without payment
of any penalty.
Fees payable to Subadviser for services rendered under this Agreement will be
prorated to the date of termination of the Agreement.
In the event of termination of this Agreement for any reason, the Subadviser
shall, immediately upon receiving a notice of termination or a receipt
acknowledging delivery of a notice of termination to Adviser, or such later date
as may be specified in such notice, cease all activity on behalf of the Fund and
with respect to any of its assets, except as expressly directed by the Adviser,
and except for the settlement of securities transactions already entered into
for the account of the Fund. In addition, the Subadviser shall deliver copies of
the Fund's Books and Records to the Adviser upon request by such means and in
accordance with such schedule as the Adviser shall reasonably direct and shall
otherwise cooperate, as reasonably directed by the Adviser, in the transition of
Fund investment management to any successor to the Subadviser, including the
Adviser.
13. SHAREHOLDER APPROVAL OF AGREEMENT. The parties hereto acknowledge and agree
that the obligations of the Company, the Adviser, and the Subadviser under this
Agreement shall be subject to the following conditions precedent: (a) this
Agreement shall have been approved by the vote of a majority of the Directors,
who are not interested persons of the Company, the Adviser or the Subadviser, at
a meeting called for the purpose of voting on such approval, and (b) this
Agreement shall have been approved by the vote of a majority of the outstanding
voting securities of the Fund.
14. MISCELLANEOUS.
(a) The captions in this Agreement are included for convenience of reference
only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be
executed simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the
same instrument. The obligations of the Company and the Fund are not
personally binding upon, nor shall resort be had to be private property of,
any of the Directors, shareholders, officers, employees or agents of the
Company or the Fund, but only the Fund's property shall be bound. The
Company or the Fund shall not be liable for the obligations of any other
series of the Company.
(b) Any information supplied by the Company or the Adviser to the Subadviser in
connection with the performance of its duties hereunder, or learned by the
Subadviser as a result of its position as Subadviser to the Fund, which is
not otherwise in the public domain, is to be regarded as confidential and
for use only by the Subadviser in connection with the performance of its
duties hereunder. Any information supplied by the Subadviser, which is not
otherwise in the public domain, in connection with the performance of its
duties hereunder is to be regarded as confidential and for use only by the
Adviser, the Fund and/or its agents, and only in connection with the Fund
and its investments. Any such information in the hands of either party may
be disclosed as necessary to comply with any law, rule, regulation or order
of a court or government authority.
(c) The parties hereto acknowledge that Manufacturers and Traders Trust
Company has reserved the right to grant the non-exclusive use of the name
"VISION" or any derivative thereof to any other investment company,
investment company portfolio, investment adviser, distributor or other
business enterprise, and to withdraw from the Company and one or more of
the funds the use of the name "VISION."
(d) The Subadviser agrees to submit any proposed sales literature (including
advertisements, whether in paper, electronic or Internet medium) for the
Company, the Fund, the Subadviser or for any of its affiliates which
mentions the Company, the Fund or the Adviser (other than the use of the
Fund's name on a list of the clients of the Subadviser), to the Adviser and
to the Fund's distributor for review and filing with the appropriate
regulatory authority prior to public release of any such sales literature;
provided, however, that nothing herein shall be construed so as to create
any obligation or duty on the part of the Subadviser to produce sales
literature for the Company or the Fund. The Company and the Adviser agree
to submit any proposed sales literature that mentions the Subadviser to the
Subadviser for review prior to use and the Subadviser agrees to promptly
review such materials by a reasonable and appropriate deadline. The Company
agrees to cause the Adviser and the Company's distributor to promptly
review all such sales literature for compliance with relevant requirements,
to promptly advise the Subadviser of any deficiencies contained in such
sales literature, and to promptly file complying sales literature with the
relevant authorities.
(e) All notices, consents, waivers and other communications under this
Agreement must be in writing and, other than notices governed by Section 12
above, will be deemed to have been duly given when (i) delivered by hand
(with written confirmation of receipt), (ii) sent by telecopier, provided
that receipt is confirmed by return telecopy and a copy is sent by
overnight mail via a nationally recognized overnight delivery service
(receipt requested); (iii) when received by the addressee, if sent via a
nationally recognized overnight delivery service (receipt requested) or
U.S. mail (postage prepaid), in each case to the appropriate address and
telecopier number set forth below (or to such other address and telecopier
number as a party may designate by notice to the other parties):
Subadviser: Montag & Caldwell, Inc.
The Pinnacle
3455 Peachtree Road, N. E.
Suite 1200
Atlanta GA 30326-3248
Attention: David L. Watson
Facsimile Number: 404-836-7192
Adviser: Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14203
Attention: Maureen W. Sullivan
Facsimile Number: (716) 842-5376
Company: Vision Group of Funds, Inc.
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
Attention: Secretary
Facsimile Number: (412) 288-8141
(f) For purposes of this Agreement: (i) "affirmative vote of a majority of the
outstanding voting securities of the Fund" means the affirmative vote, at
an annual meeting or a special meeting of the shareholders of the Fund,
duly called and held, (A) of 67% or more of the shares of the Fund present
(in person or by proxy) and entitled to vote at such meeting, if the
holders of more than 50% of the outstanding shares of the Fund entitled to
vote at such meeting are present (in person or by proxy), or (B) of more
than 50% of the outstanding shares of the Fund entitled to vote at such
meeting, whichever is less; and (ii) "interested person" and "assignment"
shall have the respective meanings as set forth in the 1940 Act, subject,
however, to such exemptions as may be granted by the Securities and
Exchange Commission under said Act.
(g) This Agreement shall be construed in accordance with the laws of the State
of New York and the applicable provisions of the 1940 Act.
(f) The provisions of this Agreement are independent of and separable from
each other and no provision shall be affected or rendered invalid or
unenforceable by virtue of the fact that for any reason any other or
others of them may be deemed invalid or unenforceable in whole or in part.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed
on their behalf by their duly authorized officers as of the date first above
written.
VISION GROUP OF FUNDS, INC.
By: /S/ VICTOR R. SICLARI
Title: Secretary
MANUFACTURERS AND TRADERS TRUST COMPANY
By: /S/ KENNETH G. THOMPSON
Title: Vice President
MONTAG & CALDWELL, INC.
By: /S/ DAVID L. WATSON
Title: Vice President
SCHEDULE 1
Custody Agreement between the Company and the Fund's custodian ("Custodian"),
including information as to:
The Fund's nominee
The federal tax identification numbers of the Fund and its nominee All
routing, bank participant and account numbers and other information
necessary to provide proper instructions for transfer and
delivery of securities to the Fund's account at the Custodian
The name address and telephone and Fax number of the Custodian's employees
responsible for the Fund's accounts
The Fund's pricing service and contact persons
All procedures and guidelines adopted by the Board of Directors or the Adviser
regarding:
Transactions with affiliated persons
Evaluating the liquidity of securities
Segregation of liquid assets in connections with firm commitments and
standby commitments
Derivative contracts and securities
Rule 10f-3 (relating to affiliated underwriting syndicates) Rule 17a-7
(relating to interfund transactions) Rule 17e-1 (relating to transactions
with affiliated brokers) and
Release No. IC-22362 (granting exemptions for investments in money market funds)
Any master agreements that the Company has entered into on behalf of the Fund,
including:
Master Repurchase Agreement
Master Futures and Options Agreements
Master Foreign Exchange Netting Agreements
Master Swap Agreements
CFTC Rule 4.5 letter
Exhibit (p)(i) under Form N-1A
Exhibit 99 under Item 601/Reg. S-K
MANUFACTURERS AND TRADERS TRUST COMPANY
CODE OF ETHICS FOR ACCESS PERSONS
REVISED FEBRUARY 29, 2000
TABLE OF CONTENTS
SECTION PAGE
1. General Fiduciary Principles 2
2. Definitions 2
3. Exempt Transactions 4
4. Prohibited Transactions and Activities 4
5. Pre-clearance Requirement and Exempted 5
Transactions
6. Prohibition on the Receipt of Gifts 7
7. REPORTING REQUIREMENTS 8
----------------------
Initial Reporting Requirements 8
Quarterly Reporting Requirements 8
Annual Reporting Requirements 9
Exemption for Disinterested Directors 10
8. Sanctions 10
Procedures for Prior Approval of Personal 11
Securities Transactions by Access Persons
o Preclearing Foreign Securities 12
Procedures for the Reporting and Review of 18
Personal Transaction Activity
VISION GROUP OF FUNDS, INC.
MANUFACTURERS AND TRADERS TRUST COMPANY
CODE OF ETHICS REGARDING PERSONAL SECURITIES TRADING
Pursuant to rule 17j-1 under the Investment Company Act of 1940, this Code of
Ethics has been adopted on behalf of the Adviser and the Funds.*
1. GENERAL FIDUCIARY PRINCIPLES
a) Each Access Person:
i) must place the Funds' interests ahead of the Access Person's
personal interests;
ii) must avoid conflicts or apparent conflicts of interest with the
Funds; and
iii) must conduct his or her personal transactions in a manner
which neither interferes with Fund portfolio transactions nor
otherwise takes unfair or inappropriate advantage of the
Access Person's relationship to the Fund.
The failure to recommend or purchase a Covered Security for the
Fund may be considered a violation of this Code.
b) Every Access Person must adhere to these general fiduciary
principles, as well as comply with the specific provisions and
Associated Procedures of this Code. TECHNICAL COMPLIANCE WITH THE
TERMS OF THIS CODE AND THE ASSOCIATED PROCEDURES MAY NOT BE
SUFFICIENT WHERE THE TRANSACTIONS UNDERTAKEN BY AN ACCESS PERSON
SHOW A PATTERN OF ABUSE OF THE ACCESS PERSON'S FIDUCIARY DUTY.
2. DEFINITIONS
a) The "1940 Act" means the Investment Company Act of 1940, as amended.
b) "Access Person" means any director, trustee, officer, managing
general partner, general partner, or Advisory Person of a Fund or
the Adviser and all family members permanently residing in the same
household. (If non-family members also reside in the household, the
Access Person must either declare that the Access person has no
influence on the investment decisions of the other party or the
Access Person must report the party as an Access Person).
c) "Adviser" means Manufacturers and Traders Trust Company.
d) "Advisory Person" means (i) any employee of the Adviser or of any
company in a control relationship to the Adviser, who, in
connection with the employee's regular functions or duties,
makes, participates in, or obtains information regarding the
purchases or sales of a Covered Security by the Fund, or whose
functions relate to the making of any recommendations with
respect to such purchases or sales; and (ii) any natural person
in a control relationship to the Fund who obtains information
concerning recommendations made to the Fund with regard to the
purchase or sale of a Covered Security.
e) "Associated Procedures" means those policies, procedures and/or
statements that have been adopted by the Adviser or the Fund, and
which are designed to supplement this Code and its provisions.
f) "Beneficial ownership" will be attributed to an Access Person in
all instances where the Access Person (i) possesses the ability
to purchase or sell the Covered Securities (or the ability to
direct the disposition of the Covered Securities); (ii) possesses
voting power (including the power to vote or to direct the
voting) over such Covered Securities; or (iii) receives any
benefits substantially equivalent to those of ownership.
Beneficial ownership shall be interpreted in the same manner as
it would be in determining whether a person is subject to the
provisions of Section 16a-1(a)(2) of the Securities Exchange Act
of 1934, and the rules and regulations thereunder, except that
the determination of direct or indirect beneficial ownership
shall apply to all Covered Securities which an Access Person has
or acquires.
g) "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the 1940 Act.
h) Except as provided in this definition, "Covered Security" shall
include any Security, including without limitation: equity and
debt securities; derivative securities, including options on and
warrants to purchase equity or debt securities; shares of
closed-end investment companies; investments in unit investment
trusts; and Related Securities. "Related Securities" are
instruments and securities that are related to, but not the same
as, a Covered Security. For example, a Related Security may be
convertible into a Covered Security, or give its holder the right
to purchase the Covered Security. For purposes of reporting,
"Covered Security" shall include futures, swaps and other
derivative contracts.
"Covered Security" shall not include: direct obligations of the
Government of the United States (regardless of their maturities);
bankers' acceptances; bank certificates of deposit; commercial
paper; high quality short-term debt instruments, including
repurchase agreements; and shares of registered open-end investment
companies.
i) "Disinterested director" means a director, trustee, or managing
general partner of the Fund who is not an "interested person" of the
Fund within the meaning of Section 2(a)(19) of the 1940 Act.
j) "Fund" means Vision Group of Funds, Inc., an investment company
registered under the 1940 Act (and any series or portfolios of such
company).
k) "Initial Public Offering" means an offering of securities registered
under the Securities Act of 1933, the issuer of which, immediately
before the registration, was not subject to the reporting
requirements of sections 13 or 15(d) of the Securities Exchange Act
of 1934.
l) "Investment Personnel" include: Access Persons with direct
responsibility and authority to make investment decisions affecting
the Fund (such as portfolio managers and chief investment officers);
Access Persons who provide information and advice to such portfolio
managers (such as securities analysts); and Access Persons who
assist in executing investment decisions for the Fund (such as
traders).
m) "Private Placement" or "limited offering" means an offering that is
exempt from registration under Section 4(2) or Section 4(6) of the
Securities Act of 1933 or pursuant to rule 504, rule 505 or rule 506
under the Securities Act of 1933.
n) "Purchase or sale of a Covered Security" includes, INTER ALIA, the
writing of an option, future or other derivative contract to
purchase or sell a Covered Security.
o) "Security" shall have the meaning set forth in Section 2(a)(36)
of the 1940 Act.
p) "Underwriter" means Federated Securities Corp./Edgewood Services
Inc.
q) "Chief Investment Officer" shall mean the incumbent in that position
or his delegate as determined by the Chief Investment Officer from
time to time. (In situations that might involve the Chief Investment
Officer the position of Investment Group Head will be substitute).
3. EXEMPT TRANSACTIONS
The prohibitions or requirements of Section 4 and Section 5 of this Code
shall not apply to:
a) Purchases or sale of the following Securities:
i) direct obligations of the Government of the United States
(regardless of their maturities). This exemption does not apply
to indirect obligations of the U.S. Government, including FNMAs,
GNMAs or FHLMCs.
ii) bankers' acceptances;
iii) bank certificates of deposit;
iv) commercial paper;
v) high quality short-term debt instruments, including repurchase
agreements; and
vi) shares of registered open-end investment companies.
b) Purchases or sales effected in any account over which the Access
Person has no direct or indirect influence or control.
4. PROHIBITED TRANSACTIONS AND ACTIVITIES
a) Every Access Person is prohibited from acquiring any Security
distributed in an initial public offering; however, subject to
provisions of this Code and its Associated Procedures, an Access
Person may acquire the security in the secondary market.
b) Every Access Person is prohibited from acquiring any Security in
a private placement or other limited offering, without the
express prior approval of the Senior Trader. In instances where
an Investment Personnel, after receiving prior approval, acquires
a Security in a private placement, the Investment Personnel has
an affirmative obligation to disclose this investment to the
Chief Investment Officer if the Investment Personnel participates
in any subsequent consideration of any potential investment by
the Fund in the issuer of that Security. Following a purchase by
an Investment Personnel in an approved personal transaction, any
purchase by the Fund of Securities issued by the same company
(other than secondary market purchases of publicly traded
Securities) will be subject to an independent review by the Chief
Investment Officer.
c) Every Access Person is prohibited from executing a personal
transaction in any Covered Security on a day during which the Fund
has a pending "buy" or "sell" order for that Covered Security, until
the Fund's orders are either executed or withdrawn.
All Investment Personnel are prohibited from purchasing or selling
any Covered Security within seven (7) calendar days AFTER the Fund
purchases or sells the same Covered Security. Members of an
Investment Personnel group, as defined by "Access Person List"
maintained by the Compliance Officer, are prohibited from purchasing
or selling any Covered Security within seven (7) days BEFORE any
Fund advised by that group purchases or sells the same Covered
Security.
d) Every Access Person is prohibited from profiting in the purchase and
sale, or sale and purchase, of the same (or equivalent) Covered
Security within 60 calendar days. For purposes of this prohibition,
each personal transaction in the Covered Security will begin a new 60
calendar day period. As an illustration, if an Access Person purchases
1000 shares of Omega Corporation on June 1st, 500 shares on July 1st,
and 250 shares on August 1st, the profit from the sale of the 1000
shares purchased on June 1st is prohibited for any transaction prior
to October 1st (i.e., 60 calendar days following August 1st). In
circumstances where a personal transaction in a Covered Security
within the proscribed period is involuntary (for example, due to
unforeseen corporate activity, such as a merger), the Access Person
must notify Kathy Gurney, Compliance Assistant, 9th floor, One M&T
Plaza, Buffalo, New York 14203.
In circumstances where an Access Person can document personal
exigencies, Chief Investment Officer may grant an exemption from the
prohibition of profiting in the purchase and sale, or sale and
purchase, of the same (or equivalent) Covered Security within 60
calendar days. Such an exemption is wholly within the discretion of
Chief Investment Officer and any request for such an exemption will
be evaluated on the basis of the facts of the particular situation.
e) All Investment Personnel are prohibited from serving on the boards of
directors of any issuer of a Covered Security, absent express prior
authorization from Chief Investment Officer. Authorization to serve on
the board of such a company may be granted in instances where the
Chief Investment Officer determines that such board service would be
consistent with the interests of the Fund and its shareholders. If
prior approval to serve as a director of a company is granted,
Investment Personnel have an affirmative duty to recuse themselves
from participating in any deliberations by the Fund regarding possible
investments in the securities issued by the company on whose board the
Investment Personnel sit.
f) Every Access Person is prohibited from purchasing or selling,
directly or indirectly, any Covered Security in which he or she has,
or by reason of such transaction acquires, a direct or indirect
beneficial ownership interest and which he or she knows, or should
have known, at the time of such purchase or sale:
i) is being considered for purchase or sale by the Fund; or
ii) is being purchased or sold by the Fund.
g) Every Access Person is prohibited, in connection with the purchase
or sale, directly or indirectly, by the Access Person of a Security
Held or to be Acquired by the Fund:
i) from employing any device, scheme or artifice to defraud the Fund;
ii) from making any untrue statement of a material fact to the
Fund or omit to state a material fact necessary in order to
make the statements made to the Fund, in light of the
circumstances under which they are made, not misleading;
iii) from engaging in any act, practice or course of business that
operates or would operate as a fraud or deceit on the Fund; or
iv) from engaging in any manipulative practice with respect to the
Fund.
Examples of this would include causing the Fund to purchase a
Covered Security owned by the Access Person for the purpose of
supporting or driving up the price of the Covered Security, and
causing the Fund to refrain from selling a Covered Security in an
attempt to protect the value of the Access Person's investment, such
as an outstanding option. One test which will be applied in
determining whether this prohibition has been violated will be to
review the Covered Securities transactions of Access Persons for
patterns. However, it is important to note that a violation could
result from a single transaction if the circumstances warranted a
finding that the provisions of Section 1 of this Code have been
violated.
h) Notwithstanding the other restrictions of this Code to which
Disinterested directors are subject, subparagraphs (a) through (d)
of this Section 4 shall not apply to Disinterested directors.
5. PRE-CLEARANCE REQUIREMENT AND EXEMPTED TRANSACTIONS
a) Every Access Person is prohibited from executing a personal
transaction in any Covered Security (including transactions in pension
or profit-sharing plans in which the Access Person has a beneficial
interest), without express prior approval of the Senior Trader, in
accordance with the Associated Procedures governing pre-clearance. A
purchase or sale of Covered Securities not otherwise approved pursuant
to the Associated Procedures may, upon request made prior to the
personal transaction, nevertheless receive the approval of the Chief
Investment Officer if such purchase or sale would be: only remotely
potentially harmful to the Fund; very unlikely to affect a highly
institutional market; or clearly not related economically to the
securities to be purchased, sold or held by the Fund. Notwithstanding
the receipt of express prior approval, any purchases or sales by any
Access Person undertaken in reliance on this provision remain subject
to the prohibitions enumerated in Section 4 of this Code.
b) The pre-clearance requirement in Section 5(a) SHALL NOT apply to:
i) Purchases or sales which are non-volitional on the part of
either the Access Person or the Fund, subject to the
provisions of Section 4 (g) of this Code.
ii) Purchases which are either made solely with the dividend
proceeds received in a dividend reinvestment plan; or part of
an automatic payroll deduction plan, whereby an employee
purchases securities issued by an employer.
iii) Purchases effected upon the exercise of rights issued by an
issuer PRO RATA to all holders of a class of its Covered
Securities, to the extent such rights were acquired from such
issuer, and any sales of such rights so acquired.
iv) Purchases and sales of a Security that represents an interest
in certain indices as determined by the Chief Investment
Officer.
v) Transactions in a Covered Security which involve the giving of
gifts or charitable donations.
vi) Purchases and sales of Covered Securities executed by a person
deemed to be an Access Person SOLELY by reason of his position
as an Officer and/or Director or Trustee of the Fund. This
exemption does not apply to those persons who are Officers
and/or Directors of an Underwriter or Adviser.
c) Notwithstanding the other restrictions of this Code to which
Disinterested directors are subject, Section 5 shall not apply to
Disinterested directors.
6. PROHIBITION ON THE RECEIPT OF GIFTS
Every Access Person is prohibited from receiving any gift, favor,
preferential treatment, valuable consideration, or other thing of more
than a DE MINIMIS value in any year from any person or entity from, to or
through whom the Fund purchases or sells Securities, or an issuer of
Securities. For purposes of this Code, "DE MINIMIS value" is equal to $250
or less. This prohibition shall not apply to:
i) salaries, wages, fees or other compensation paid, or expenses
paid or reimbursed, in the usual scope of an Access Person's
employment responsibilities for the Access Person's employer;
ii) the acceptance of meals, refreshments or entertainment of
reasonable value in the course of a meeting or other occasion,
the purpose of which is to hold bona fide business
discussions;
iii) the acceptance of advertising or promotional material of
nominal value, such as pens, pencils, note pads, key chains,
calendars and similar items;
iv) the acceptance of gifts, meals, refreshments, or entertainment
of reasonable value that are related to commonly recognized
events or occasions, such as a promotion, new job, Christmas,
or other recognized holiday; or
v) the acceptance of awards, from an employer to an employee, for
recognition of service and accomplishment.
7. REPORTING
Every Access Person is required to submit reports of transactions in
Covered Securities to Kathy Gurney, Compliance Assistant, 9th Floor, One
M&T Plaza, Buffalo, New York 14203 as indicated below. Any such report may
contain a statement that the report shall not be construed as an admission
by the person making such report that he or she has any direct or indirect
beneficial ownership in the Covered Security to which the report relates.
INITIAL REPORTING REQUIREMENTS
a) Within 10 calendar days of commencement of employment as an Access
Person, the Access Person will provide a list including:
i) the title, number of shares and principal amount of each
Covered Security in which the Access Person had any direct or
indirect beneficial ownership when the person became an Access
Person;
ii) the name of any broker, dealer or bank maintaining an account
in which any Security was held for the direct or indirect
benefit of the Access Person as of the date of employment as
an Access Person; and
iii) the date the report is submitted to Kathy Gurney, Compliance
Assistant, 9th Floor, One M&T Plaza, Buffalo, New York 14203.
b) Every Access Person is required to direct his broker to forward to
Kathy Gurney, Compliance Assistant, 9th Floor, One M&T Plaza,
Buffalo, New York 14203, on a timely basis, duplicate copies of both
confirmations of all personal transactions in Covered Securities
effected for any account in which such Access Person has any direct
or indirect beneficial ownership interest and periodic statements
relating to any such account.
QUARTERLY REPORTING REQUIREMENTS
c) Every Access Person shall report the information described in
Section 7(d) of this Code with respect to transactions in any
Covered Security (other than those personal transactions in
Securities exempted under Section 3 of this Code) in which such
Access Person has, or by reason of such transaction acquires, any
direct or indirect beneficial ownership.
d) Every report shall be made not later than 10 calendar days after the
end of the calendar quarter in which the transaction to which the
report relates was effected, shall be dated and signed by the Access
Person submitting the report, and shall contain the following
information:
i) the date of the transaction, the title and the number of
shares, the principal amount, the interest rate and maturity
date, if applicable of each Covered Security involved;
ii) the nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
iii) the price at which the transaction was effected;
iv) the name of the broker, dealer or bank through whom the
transaction was effected; and
v) if there were no personal transactions in any Covered Security
during the period, either a statement to that effect or the
word "None" (or some similar designation).
e) Every Access Person shall report any new account established with a
broker, dealer or bank in which any Security was transacted or held
for the direct or indirect benefit of the Access Person during the
quarter. The report shall include the name of the entity with whom
the account was established and the date on which it was
established.
ANNUAL REPORTING REQUIREMENTS
f) Every Access Person, on an annual basis or upon request of the Chief
Investment Officer, will be required to furnish a list including the
following information (which information must be current as of a
date no more than 30 days before the report is submitted) within 10
calendar days of the request:
i) the title, number of shares and principal amount of each
Covered Security in which the Access Person had any direct or
indirect beneficial ownership;
ii) the name of any broker, dealer or bank maintaining an account
in which any Covered Security was held for the direct or
indirect benefit of the Access Person; and
iii) the date the report is submitted to Kathy Gurney, Compliance
Assistant, 9th Floor, One M&T Plaza, Buffalo, New York 14203.
g) In addition, every Access Person is required, on an annual basis, to
certify that they have received, read, and understand the provisions
of this Code and its Associated Procedures, and that they recognize
that they are subject to its provisions. Such certification shall also
include a statement that the Access Person has complied with the
requirements of this Code and its Associated Procedures and that the
Access Person has disclosed or reported all personal transactions in
Securities that are required to be disclosed or reported pursuant to
the requirements of this Code.
EXEMPTION FOR DISINTERESTED DIRECTORS
h) A Disinterested director is exempt from the "initial reporting
requirements" and "annual reporting requirements" contained in
Section 7.
i) A Disinterested director shall be exempt from the "quarterly reporting
requirements" contained in Section 7, so long as at the time of the
personal transaction in the Covered Security, the Disinterested
director neither knew, nor, in the ordinary course of fulfilling his
official duties as a director of the Fund, should have known that
during the 15-day period immediately preceding or after the date of
the transaction in the Covered Security by the Disinterested director
the Covered Security was purchased or sold by the Fund, or considered
for purchase or sale.
8. SANCTIONS
a) Upon discovering a violation of this Code or its Associated
Procedures, the Chief Investment Officer may take such actions or
impose such sanctions, if any, as it deems appropriate, including,
but not limited to:, i) a letter of censure; ii) suspension; iii) a
fine; iv) the unwinding of trades; v) the disgorging of profits; or
vi) the termination of the employment of the violator.
(In instances where the violation is committed by a member of the
Access Person's household, any sanction would be imposed on the
Access Person.)
b) The filing of any false, incomplete or untimely reports, as required
by Section 7 of this Code, may be considered a violation of this
Code.
c) All material violations of this Code and any sanctions imposed with
respect thereto shall be reported to the Board of Directors of the
Fund at least annually.
SAMPLE PROCEDURES FOR PRIOR APPROVAL OF PERSONAL
SECURITIES TRANSACTIONS BY ACCESS PERSONS
PROCESS
PRECLEARANCE APPROVAL
a) An Access Person [(defined to include all members of the Access
Person's household)] who wishes to effect a personal securities
transaction, whether a purchase, sale, or other disposition, must
preclear the Covered Security prior to engaging in the transaction.
b) When trading options, the Access Person must preclear the underlying
security before entering into the option contract.
c) Based on established criteria, [Name of Person or Department]
determines whether the contemplated transaction should be permitted.
The primary criteria applied are whether the Covered Security is on
the Equity Watch List (which is updated [weekly]) or Open Order
lists, or whether the Covered Security was traded by any of the
Adviser advised funds (fund trade information is updated [nightly]).
d) Approval is either granted or denied immediately.
e) If approval is denied, the Access Person is given a specific reason
for the denial. The contemplated personal transaction in that
Covered Security is prohibited until prior approval is subsequently
granted upon request in TradeCOMPLY.
f) If approval is granted, the Access Person is free to effect the
personal transaction in that Covered Security DURING THAT TRADING DAY
ONLY. In this regard, open orders for more than one trading day (good
till cancel) must be approved daily to comply with the Code. If
approval is granted, [Name of Person or Department] must record the
reasons supporting the approval on the following Personal Transaction
Notification form so that [Name of Person or Department] can maintain
a record of all approved preclearance requests.
g) All trade requests and their dispositions are maintained and
reviewed by [Name of Person or Department] in conjunction with other
information provided by Access Persons in accordance with the Code.
h) [Name of Person or Department] reviews all exceptions generated due
to a fund trade occurring after preclearance approval has been
granted. [Name of Person or Department] determines the appropriate
action to be taken to resolve each exception.
If extraordinary circumstances exist, an appeal may be directed to [Name of
Person or Department] at [phone number]. Appeals are solely within the
discretion of [Name of Person or Department].
TRANSACTIONS COVERED AND EXEMPTIONS
These procedures apply to Access Persons' personal transactions in "Covered
Security" as defined in Section 2 of the Code. A Covered Security
includes: equity and debt securities; options and warrants to purchase
equity or debt securities; shares of closed-end investment companies; and
investments in unit investment trusts.
These procedures do NOT apply to contemplated transactions in the following
instruments:
a) direct obligations of the Government of the United States
(regardless of their maturities). This exemption does not apply to
indirect obligations of the U.S. Government, including FNMAs, GNMAs
or FHLMCs.);
b) bankers' acceptances;
c) bank certificates of deposit;
d) commercial paper;
e) high quality short-term debt instruments, including repurchase
agreements; and
f) shares of registered open-end investment companies;
In addition, these procedures do NOT apply to the following transactions:
g) Purchases or sales effected in any account over which the Access
Person has no direct or indirect influence or control;
h) Purchases or sales which are non-volitional on the part of either the
Access Person or the Fund, subject to the provisions of the Code;
i) Purchases which are either (i) made solely with the dividend
proceeds received in a dividend reinvestment plan; or (ii) part of
an automatic payroll deduction plan, whereby an employee purchases
securities issued by an employer;
j) Purchases effected upon the exercise of rights issued by an issuer
PRO rata to all holders of a class of its Securities, to the extent
such rights were acquired from such issuer, and any sales of such
rights so acquired;
k) Purchases and sales of a Security that represents an interest in
certain indices as determined by [Name of Person or Department];
l) Transactions in a Covered Security which involve the giving of gifts
or charitable donations; and
m) Purchases and sales of Covered Securities executed by a person
deemed to be an Access Person SOLELY by reason of his position as an
Officer and/or Director or Trustee of the Fund. This exemption does
not apply to those persons who are Officers and/or Directors of an
Underwriter or Adviser.
SANCTIONS
Failure to comply with the preclearance process may result in any of the
following sanctions being imposed as deemed appropriate by [Name of Person
or Department]:
i) a letter of censure;
ii) suspension;
iii) a fine;
iv) the unwinding of trades;
v) the disgorging of profits; or
vi) the termination of the employment of the violator.
a) [(In instances where the violation is committed by a member of the
Access Person's household, any sanction would be imposed on the
Access Person.)]
PERSONAL TRANSACTION NOTIFICATION
I, [Name] intend to buy/sell shares of [Name of security] for my personal
account or an account over which I have discretion. I am aware of no conflict
this transaction may pose with any mutual fund managed by [Adviser].
Signed by:
Date:
________ Approval granted for trading on ______________ because ______________.
________ Approval denied.
Acknowledged by:
[person/title]
Date
Broker-Dealer Name
Address
RE: Your Name
Brokerage Account Number: 1234-5678
Dear Sir/Madam:
As an employee [relative residing in the household of an employee] of
[Adviser], I am subject to certain requirements applicable to my
personal securities transactions, in accordance with the Codes of
Ethics adopted by the various investment companies advised by
[Adviser]. These requirements also assist [Adviser] in carrying out
its responsibilities under the Insider Trading and Security Fraud
Enforcement Act of 1988. Among these requirements is my obligation
to provide to [Adviser] duplicate brokerage confirmations and
account statements.
Therefore, I hereby request that you provide duplicate confirmations and
account statements with respect to securities in which I have any
beneficial ownership or interest, including securities held in
street name or in house, family, joint or partnership accounts.
These duplicate account memoranda should occur with respect to all
transactions including, but not limited to, those involving options,
warrants, shares of closed end investment companies and futures
contracts. Please forward this information to:
[Adviser]
[Address]
Any questions concerning these matters can be directed to [name] at
[phone number]. Your serious attention to this matter is greatly
appreciated.
Sincerely,
PROCEDURES FOR THE REPORTING AND REVIEW OF PERSONAL TRANSACTION ACTIVITY
INITIAL REPORTING PROCESS
1. The Compliance Officer meets with each new Access Person and reviews the
Code of Ethics, the Insider Trading Policy (Division's Policy Manual) and
the procedures for preclearing personal securities transactions and
procedures for periodic reporting.
2. The Access Person is required to complete the "Certification and
Acknowledgment Form" to acknowledge his/her understanding of the Code of
Ethics and return it to Kathy Gurney, Compliance Assistant, 9th floor, One
M&T Plaza, Buffalo, New York 14203 within ten (10) calendar days.
3. In addition, the Access Person is required to complete the "Personal
Security Portfolio Form" which includes the following information:
a) the title, number of shares and principal amount of each Covered
Security in which the Access Person had any direct or indirect
beneficial ownership when the person became an Access Person;
b) the name and address of any broker, dealer or bank with whom the
Access Person maintained an account in which any Covered Security
was held for the direct or indirect benefit of the Access Person as
of the date of employment as an Access Person; and
c) The date the report is submitted to Kathy Gurney, Compliance
Assistant, 9th floor, One M&T Plaza, Buffalo, New York 14203.
4. A separate form must be completed for the Access Person and all household
members as defined in Section 2(c) of the Code. The signed form(s) must be
returned to Kathy Gurney, Compliance Assistant, 9th floor, One M&T Plaza,
Buffalo, New York 14203 within ten (10) calendar days.
5. Kathy Gurney maintains current portfolio holdings information as "initial"
holdings.
6. The Access Person notifies each broker, dealer or bank that duplicate
confirmations and statements for the Access Person and relatives
permanenetly residing in the household of the employee, if applicable,
must be sent to Kathy Gurney, Compliance Assistant, 9th floor, One M&T
Plaza, Buffalo, New York 14203 effective immediately.
QUARTERLY REPORTING PROCESS
1. On the first business day after each calendar quarter end, Kathy Gurney,
Compliance Assistant, 9th floor, One M&T Plaza, Buffalo, New York 14203
will send an e-mail to each Access Person reminding giving step-by-step
instructions on how to complete the quarterly reporting requirements.
2. Within 10 calendar days of the quarter end, the Access Person is required
to prepare report Covered Security transactions executed during the
previous calendar quarter in all personal and household member accounts.
3. Covered Security transactions executed by any Access Person during the
calendar quarter are reviewed by Senior Trader periodically throughout the
quarter.
4. Compliance Officer issues memos to each Access Person if any transactions
he or she has executed during the quarter have been deemed to be either
exceptions to or violations of the Code's requirements, for written
response by them within ten (10) days.
5. Based on the activity and the responses to the memos, Chief Investment
Officer may impose any of the sanctions identified in Section 8.
ANNUAL REPORTING PROCESS
1. At least annually, Compliance Officer requires that each Access Person
read the Code of Ethics and certify and acknowledge his/her understanding
of the Code and its requirements.
2. This re-certification is required to be completed within 10 calendar days
of the request. Kathy Gurney, Compliance Assistant, 9th floor, One M&T
Plaza, Buffalo, New York 14203 monitors compliance with this requirement.
3. Within ten (10) days of the request, each Access Person shall provide to
Kathy Gurney, Compliance Assistant, 9th floor, One M&T Plaza, Buffalo, New
York 14203 a current list of securities held in the Access Person's
account(s).
REPORTING TO THE BOARD OF DIRECTORS
1. Each quarter, the Chief Investment Officer reports any violations of the
Code to the Board of Directors. Violations of the Code include:
a) failure to preclear a transaction;
b) failure to complete the initial, quarterly or annual reporting
requirements timely, regardless of whether the Access Person
executed any transactions;
c) recognition of a profit on the sale of a security held less than 60
days;
d) failure to comply with the receipt of gifts requirements; and
e) any trends or patterns of personal securities trading which are
deemed by the Chief Investment Officer to be violations of the Code.
2. The Chief Investment Officer provides the Board with the name of the
Access Person; the type of violation; the details of the transaction(s);
and the types of sanctions imposed, if any.
RECORDKEEPING REQUIREMENTS
Compliance Officer maintains the following books and records for a period no
less than 6 calendar years:
a) a copy of the Code of Ethics;
b) a record of any violation of the Code of Ethics and any action taken
as a result of the violation;
c) a copy of each report made by an Access Person, including initial,
quarterly and annual reporting;
d) a record of all Access Persons (current and for the past five years);
e) a record of persons responsible for reviewing reports; and f) a copy of
any supporting documentation used in making decisions regarding
action taken by Chief Investment Officer with respect to personal
securities trading.
SAMPLE ADVISER'S ANNUAL ISSUES AND CERTIFICATION REPORT
[Date]
Board of Directors of the Vision Group of Funds, Inc.
Re: Annual Issues and Certification Report Under the Code of Ethics
("Code") Required by Rule 17j-1 ("Rule") of the Investment Company Act
of 1940, as amended.
Ladies and Gentlemen:
The purpose of this report is to certify to you as Directors of the Vision
Group of Funds, Inc. that Manufacturers & Traders Trust Company (M&T) has
adopted procedures reasonably necessary to prevent M&T's Access Persons, as such
term is defined in the Rule, from violating M&T's Code.
No issues arose under M&T's Code since M&T's last annual issues and
certification report that require your attention.
Or
The following issues arose under M&T's Code since M&T's last annual issues
and certification report:
[List all material violations, including violations that are material when
aggregated, of the M&T's Code and/or related procedures, and sanctions imposed
by M&T in response thereto. In addition, list all significant conflicts of
interest that arose involving M&T's personal investment policies.]
Very truly yours,
Chief Investment Officer
CONFIDENTIAL
MEMORANDUM
To:
From: Compliance Officer
Date:
Re: Personal Trading Exceptions
After review of the security trades effected in your personal account during the
__th quarter of ____, the following transaction coincided with a trade in a Fund
within the 15 day time frame as outlined in the Code of Ethics:
Date Shares/Par Security
Listed below is the Fund which executed transactions in this security and the
trade dates of the transactions:
Date Fund
As an Access Person with, you are subject to the trading provisions as outlined
in the Code of Ethics. Although we have not determined that any violations of
the Code occurred, because a trade was transacted within the parameters
described therein, we are concerned that an appearance of impropriety might
exist.
To alleviate these concerns, please forward to me (by e-mail or memo) a brief
explanation detailing the reason the above security was purchased/sold. You can
contact me at extension 5508 if you have questions.
CONFIDENTIAL
MEMORANDUM
To:
From: Compliance Officer
Date:
Re: Personal Trading Exceptions
After review of the reported security trades effected in your personal account,
it has been determined that the following trade (s) were not precleared as
required by the Code of Ethics.
Date Shares/Par Security
Effective July 1, 1995, all persons classified as Access Persons are required to
preclear personal security transactions before placing a trade with their
brokerage firm. According to our review, the above transactions(s) were not
precleared in accordance with the Code's provisions as the trades were executed
before requesting preclearance. Failure to properly preclear your trading
activity in the future may result in management requiring that the trade be
canceled and the profit disgorged.
In fulfilling our responsibility to follow up and review all transactions that
have not fully complied with our requirements regarding personal trading, please
forward to me (by e-mail or memo) a brief explanation detailing the reason the
above security was not precleared in accordance with policy. Please contact me
at extension 5508 if you have any questions.
Exhibit (p)(ii) under Form N-1A
Exhibit 99 under Item 601/Reg. S-K
VISION GROUP OF FUNDS, INC
CODE OF ETHICS
1. STATEMENT OF GENERAL FIDUCIARY PRINCIPLES
This Code of Ethics is based on the principles that (i) Access Persons (as
such term is hereinafter defined) owe a fiduciary duty to, among others, the
shareholders of the Fund to conduct their personal transactions in Securities in
a manner which neither interferes with Fund portfolio transactions nor otherwise
takes unfair or inappropriate advantage of an Access Person's relationship to
the Fund; (ii) in complying with this fiduciary duty, Access Persons owe
shareholders the highest duty of trust and fair dealing; and (iii) Access
Persons must, in all instances, place the interests of the shareholders of the
Fund ahead of the Access Person's own personal interests or the interests of
others. For example, in order to avoid the appearance of conflict from a
personal transaction in a Security, the failure to recommend that Security to,
or the failure to purchase that Security for, the Fund, may be considered a
violation of this Code.
Access Persons must adhere to these general fiduciary principles, as well
as comply with the specific provisions and Associated Procedures of this Code.
Technical compliance with the terms of this Code and the Associated Procedures
will NOT automatically insulate an Access Person from scrutiny in instances
where the personal transactions in a Security undertaken by such Access Person
show a pattern of abuse of such Access Person's fiduciary duty to the Fund and
its shareholders or a failure to adhere to these general fiduciary principles.
2 . DEFINITIONS
(a) "Fund" means the investment company named above which adopts this Code,
and any series or portfolios of such Fund.
(b) "Access Person" means any director, trustee, officer, managing general
partner, general partner, or advisory person of the Fund, and all
relatives living within the same household as such Access Person;
provided, however, that any Access Person who is either an employee of
the Fund's investment adviser or principal underwriter, or an
"interested person" of the Fund's investment adviser or principal
underwriter (as such term is defined in Section 2(a)(19) of the 1940
Act), shall be subject to the provisions and terms of such adviser's or
underwriter's code of ethics, and shall not be subject to this Code.
(c) The "1940 Act" means the Investment Company Act of 1940, as amended.
(d) "Advisory Person" means (i) any employee of either the Fund or of any
company in a control relationship to the Fund, who, in connection with
the employee's regular functions or duties, makes, participates in, or
normally obtains information regarding the current purchases or sales of
a Security by the Funds, or whose functions relate to the making of any
recommendations with respect to such purchases or sales; and (ii) any
natural person in a control relationship to the Fund who normally
obtains information concerning current recommendations made to the Funds
with regard to the purchases or sales of a Security.
(e) A Security is "being considered for purchase or sale" when a
recommendation to purchase or sell a Security has been made and
communicated and, with respect to the person making the recommendation,
when such person seriously considers making such a recommendation.
(f) "Beneficial ownership" shall be interpreted in the same manner as it
would be in determining whether a person is subject to the provisions of
Section 16 of the Securities Exchange Act of 1934, and the rules and
regulations thereunder, except that the determination of direct or
indirect beneficial ownership shall apply to all Securities which an
Access Person has or acquires. As a general matter, "beneficial
ownership" will be attributed to an Access Person in all instances where
the Access Person (i) possesses the ability to purchase or sell the
Securities (or the ability to direct the disposition of the Securities);
(ii) possesses voting power (including the power to vote or to direct
the voting) over such Securities; or (iii) receives any benefits
substantially equivalent to those of ownership.
(g) "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the 1940 Act.
(h) "Disinterested director" means a director, trustee, or managing general
partner of the Fund who is not an "interested person" of the Fund within
the meaning of Section 2(a)(19) of the 1940 Act.
(i) "Purchase or sale of a Security" includes, INTER ALIA, the writing of an
option to purchase or sell a Security.
(j) "Investment Personnel" include: Access Persons with direct
responsibility and authority to make investment decisions affecting the
Fund (such as portfolio managers); Access Persons who provide
information and advice to such portfolio managers (such as securities
analysts); and Access Persons who assist in executing investment
decisions for the Fund (such as traders). As the context requires,
"Investment Personnel" may refer to one or more Access Person(s).
(k) "Security" shall have the meaning set forth in Section 2(a)(36) of the
1940 Act, and shall include: equity and debt securities; options on and
warrants to purchase equity or debt securities; shares of closed-end
investment companies, and Related Securities. "Related Securities" are
instruments and securities that are related to, but not the same as, a
Security. For example, a Related Security may be convertible into a
Security, or give its holder the right to purchase the Security. For
purposes of reporting, "Security" shall include futures contracts.
"Security" shall not include: securities issued by the Government of the
United States (including short term debt securities which are U.S.
government securities pursuant to Section 2(a)(16) of the 1940 Act);
bankers' acceptances; bank certificates of deposit; commercial paper;
shares of registered open-end investment companies; Securities which are
not eligible for purchase or sale by the Fund (including any Securities
representing an ownership interest in Federated Investors); and such
other instruments as may be determined by the Fund's Board of Directors,
from time to time.
(l) "Public Company" means any entity subject to the reporting requirements
of the Securities Exchange Act of 1934.
3. EXEMPTED TRANSACTIONS
The prohibitions of Section 4 of this Code shall not apply to:
(a) Purchases or sales effected in any account over which the Access Person
has no direct or indirect influence or control.
(b) Purchases or sales which are non-volitional on the part of either the
Access Person or the Fund, subject to the provisions of Section 4 (h) of
this Code.
(c) Purchases which are part of: an automatic dividend reinvestment plan;
or an automatic payroll deduction plan, whereby an employee purchases
securities issued by an employer.
(d) Purchases effected upon the exercise of rights issued by an issuer PRO
rata to all holders of a class of its Securities, to the extent such
rights were acquired from such issuer, and any sales of such rights so
acquired.
4. PROHIBITED TRANSACTIONS AND ACTIVITIES
(a) No Access Person shall purchase or sell, directly or indirectly, any
Security in which he or she has, or by reason of such transaction
acquires, a direct or indirect beneficial ownership interest and which
he or she knows, or should have known, at the time of such purchase or
sale:
(i) is being considered for purchase or sale by the Fund; or
(ii)is being purchased or sold by the Fund.
(b) Inducing or causing the Fund to take action, or to fail to take action,
for the purpose of achieving a personal benefit, rather than to benefit
the Fund, is a violation of this Code. Examples of this would include
causing the Fund to purchase a Security owned by the Access Person for
the purpose of supporting or driving up the price of the Security, and
causing the Fund to refrain from selling a Security in an attempt to
protect the value of the Access Person's investment, such as an
outstanding option.
(c) Using knowledge of the Fund's portfolio transactions to profit by the
market effect of such transactions is a violation of this Code. One test
which will be applied in determining whether this prohibition has been
violated will be to review the Securities transactions of Access Persons
for patterns. However, it is important to note that a violation could
result from a single transaction if the circumstances warranted a
finding that the provisions of Section 1 of this Code have been
violated.
(d) All Access Persons are prohibited from acquiring any Securities
distributed in an initial public offering, or for a period of five
business days following the commencement of the public offering of such
Securities.
(e) All Access Persons are prohibited from acquiring Securities for their
personal accounts in a private placement made by an issuer that is a
Public Company, without the express prior approval of the President of
the Fund's investment adviser (or his designee). In instances where an
Investment Personnel, after receiving prior approval, acquires a
Security in a private placement, the Investment Personnel has an
affirmative obligation to disclose this investment to the President of
the Fund's investment adviser (or his designee) if the Investment
Personnel participates in any subsequent consideration of any potential
investment, by the Fund, in the issuer of those Securities. The Fund's
decision to purchase Securities of such an issuer (following a purchase
by an Investment Personnel in an approved personal transaction) will be
subject to an independent review by the President of the Fund's
investment adviser, or his designee, so long as the person conducting
such review has no personal interest in the issuer.
(f) All Access Persons are prohibited from executing a personal transaction
in all Securities (including transactions in pension or profit-sharing
plans where the Access Person retains investment discretion), without
express prior approval of the President of the Fund's investment adviser
(or his designee). Notwithstanding the receipt of express prior
approval, any purchases or sales by Access Persons undertaken in
reliance on this provision remain subject to the prohibitions enumerated
in Sections 4(g) and (h) of this Code.
(g) All Access Persons are prohibited from executing a personal transaction
in any Security on a day during which any portfolio of the Funds has a
pending "buy" or "sell" order for that Security, until the Funds' orders
are either executed or withdrawn. All Investment Personnel are
prohibited from purchasing or selling any Security within seven (7)
calendar days before and after the Fund purchases or sells the same
Security. Transactions undertaken in violation of this prohibition will
either be required to be unwound, or any profits realized by an Access
Person on any personal transactions in Securities within the proscribed
periods (either undertaken while the Fund has an open order, or within
the proscribed 7-day blackout period) will be required to be disgorged
(to an entity designated by the President of the Fund's investment
adviser [or his designee]), and the Access Person will be subject to
disciplinary action, as determined by the Director of Compliance and/or
the Fund's Board of Directors.
(h) All Access Persons are prohibited from profiting in the purchase and
sale, or sale and purchase, of the same (or equivalent) Securities
within 60 calendar days. Transactions undertaken in violation of this
prohibition will either be required to be unwound, or any profits
realized on such short-term trades will be required to be disgorged. For
purposes of this prohibition, each personal transaction in the Security
will begin a new 60 calendar day period. As an illustration, if an
Access Person purchases 1000 shares of Omega Corporation on June 1st,
500 shares on July 1st, and 250 shares on August 1st, the profiting from
the sale of the 1000 shares purchased on June 1st is prohibited for any
transaction prior to October 1st (i.e., 60 calendar days following
August 1st). In circumstances where a personal transaction in Securities
within the proscribed period is involuntary (for example, due to
unforeseen corporate activity, such as a merger), the Access Person must
notify the Director of Compliance.
In circumstances where an Access Person can document personal
exigencies, the President of the Fund's investment adviser (or his
designee) may grant an exemption from the prohibition of profiting in
the purchase and sale, or sale and purchase, of the same (or equivalent)
Securities within 60 calendar days. Such an exemption is wholly within
the discretion of the President of the investment adviser (or his
designee), and any request for such an exemption will be evaluated on
the basis of the facts of the particular situation.
(i) All Investment Personnel are prohibited from receiving any gift, favor,
preferential treatment, valuable consideration, or other thing of more
than a DE MINIMIS value in any year from any person or entity from, to
or through whom the Fund purchases or sells securities, or an issuer of
securities. For purposes of this limitation, "DE MINIMIS value" is equal
to $100 or less.
(j) All Investment Personnel are prohibited from serving on the boards of
directors of any Public Company, absent express prior authorization from
the President of the Fund's investment adviser (or his designee).
Authorization to serve on the board of a Public Company will be granted
in instances where the President of the Fund's investment adviser (or
his designee) determines that such board service would be consistent
with the interests of the Funds and their shareholders. In the
relatively small number of instances where prior approval to serve as a
director of a Public Company is granted, an Investment Personnel has an
affirmative duty to recuse himself from participating in any
deliberations by the Fund regarding possible investments in the
securities issued by the Public Company on whose board the Investment
Personnel sits.
(k) Notwithstanding the other restrictions of this Code to which
Disinterested directors are subject, subparagraphs subparagraphs (d)
through (h) of this Section 4 shall not apply to Disinterested
directors.
5. REPORTING
(a) Every Access Person shall report to the Fund the information described
in Section 5(c) of this Code with respect to transactions (other than
those personal transactions in Securities exempted under Section 3 of
this Code) in any Security in which such Access Person has, or by reason
of such transaction acquires, any direct or indirect beneficial
ownership.
(b) A Disinterested director of the Fund need only report a personal
transaction in a Security if such director, at the time of that personal
transaction, knew or, in the ordinary course of fulfilling his or her
official duties as a director of the Fund, should have known that,
during the 15-day period immediately preceding or following the date of
the personal transaction by the director, such Security was purchased or
sold by the Fund or was being considered for purchase or sale by the
Fund or its investment adviser.
(c) Every report shall be made not later than 10 calendar days after the end
of the calendar quarter in which the transaction to which the report
relates was effected, shall be dated and signed by the Access Person
submitting the report, and shall contain the following information:
(i) the date of the transaction, the title and the number of shares, and
the principal amount of each Security involved;
(ii) the nature of the transaction (i.e., purchase, sale or any other type
of acquisition or disposition);
(iii)the price at which the transaction was effected;
(iv) the name of the broker, dealer or bank through whom the transaction
was effected; and
(v) if there were no personal transactions in Securities during the
period, either a statement to that effect or the word "None" (or
some similar designation).
(d) Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that he or
she has any direct or indirect beneficial ownership in the Security to
which the report relates.
(e) Every Access Person is required to direct his or her broker to forward
to the President of the Fund's investment adviser (or his designee), on
a timely basis, duplicate copies of both confirmations of all personal
transactions in Securities effected for any account in which such Access
Person has any direct or indirect beneficial ownership interest and
periodic statements relating to any such account.
(f) Any Access Person who receives any gift, favor, preferential treatment,
valuable consideration or other thing of value of more than DE MINIMIS
value in any year from any person or entity that does business either
with or on behalf of the Fund is required to report the receipt of such
gift to the Director of Compliance (or his designee). This reporting
requirement shall not apply to:
(i) salaries, wages, fees or other compensation paid, or expenses paid or
reimbursed, in the usual scope of an Access Person's employment responsibilities
for the Access Person's employer;
(ii) the acceptance of meals, refreshments or entertainments of reasonable
value in the course of a meeting or other occasion, the purpose of which is to
hold bona fide business discussions;
(iii) the acceptance of advertising or promotional material of nominal
value, such as pens, pencils, note pads, key chains, calendars and similar
items;
(iv) the acceptance of gifts, meals, refreshments, or entertainments of
reasonable value that are related to commonly recognized events or occasions,
such as a promotion, new job, Christmas, or other recognized holiday; or
(v) the acceptance of awards, from an employer to an employee, for
recognition of service and accomplishment.
(g) All Access Persons, on an annual basis or upon request of the Director
of Compliance (or his designee), will be required to furnish a list of
all Securities held by such Access Person or the members of his
household. All Access Persons, upon commencement of employment, are
required to disclose all personal Securities holdings.
In addition, all Access Persons are required, on an annual basis, to
certify that they have received, read, and understand the provisions of
this Code, and that they recognize that they are subject to its
provisions. Such certification shall also include a statement that the
Access Person has complied with the requirements of this Code and that
the Access Person has disclosed or reported all personal transactions in
Securities that are required to be disclosed or reported pursuant to the
requirements of this Code.
(h) A Disinterested director shall be exempt from the reporting requirements
contained in subparagraphs (e) and (g) of this Section 5 of this Code,
so long as at the time of the personal transaction in the Security, the
Disinterested director neither knew, nor, in the ordinary course of
fulfilling his official duties as a director of the Fund, should have
known that during the 15-day period immediately preceding or after the
date of the transaction in the Security by the Disinterested director
the Security was purchased or sold by the Fund, or considered for
purchase or sale.
6. SANCTIONS
Upon discovering a violation of this Code the Board of Directors of the Fund
may impose such sanctions as it deems appropriate, including, INTER ALIA, a
letter of censure or suspension, a fine, or termination of the employment of
the violator. (In instances where the violation is committed by a member of
the Access Person's household, any sanction would be imposed on the Access
Person.) The filing of any false, incomplete or untimely reports, as required
by Section 5 of this Code, may (depending on the circumstances) be considered
a violation of this Code.
