MTB GROUP OF FUNDS

485BPOS 1 mtbform.htm MTB GROUP OF FUNDS



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

                    SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549

                                 Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933             X

    Pre-Effective Amendment No.

    Post-Effective Amendment No. 59 ........................        X

                                  and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940     X

    Amendment No. 60 .......................................        X

                            MTB GROUP OF FUNDS
                         (Variable Annuity Funds)

            (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)

                        C. Grant Anderson, Esquire
                              Reed Smith LLP
                        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)
X   on April 28, 2004 pursuant to paragraph (b)(1)(iii)
    60 days after filing pursuant to paragraph (a) (i)
    on ______________ pursuant to paragraph (a) (i)
    75 days after filing pursuant to paragraph (a)(ii)
    on _________________ pursuant to paragraph (a)(ii) of Rule 485.

If appropriate, check the following box:

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


                                 Copy to:

Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, D.C.  20037

[Logo of MTB Group of Funds]

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April 30, 2004 : PROSPECTUS

Introduction – Information Common to All Portfolios

Each portfolio (each, a “Fund”) of MTB Group of Funds (the “Trust”) is a mutual fund. A mutual fund pools shareholders’ money and, using professional investment managers, invests it in securities.

Each Fund has its own investment goal and strategies for reaching that goal. The investment advisor invests each Fund’s assets in a way that he or she believes will help a Fund achieve its goal. Still, investing in each Fund involves risk, and there is no guarantee that a Fund will achieve its goal. The investment advisor’s judgments about the markets, the economy, or companies may not anticipate actual market movements, economic conditions or company performance, and these judgments may affect the return on your investment. In fact, no matter how good a job the investment advisor does, you could lose money on your investment in a Fund, just as you could with other investments.

The value of your investment in a Fund is based on the market prices of the securities the Fund holds. These prices change daily due to economic and other events that affect particular companies and other issuers. These price movements, sometimes called volatility, may be greater or lesser depending on the types of securities a Fund owns and the markets in which they trade. The effect on a Fund of a change in the value of a single security will depend on how widely the Fund diversifies its holdings.

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This prospectus has been arranged into different sections so that you can easily review this important information. For more detailed information about each Fund, please see:

Contents

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Fund Goals, Strategies,
Risks and Performance	1
MTB Managed Allocation Fund –
Moderate Growth II	3
MTB Large Cap Value Fund II	7
MTB Large Cap Growth Fund II	9
Principal Securities of the Funds	11
Other Investment Strategies	14
Specific Risks of Investing in the Funds	15
How are Shares Priced?	17
How are the Funds Sold?	17
How to Purchase, Redeem and
Exchange Shares	18
Account and Share Information	18
Who Manages the Funds?	19
Financial Information	20
How to Obtain More Information
About MTB Funds	22

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Managed by MTB Investment Advisors, Inc. The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.

MTB Funds • Are NOT FDIC Insured • Have No Bank Guarantee • May Lose Value

FUND GOALS, STRATEGIES, RISKS AND PERFORMANCE

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This prospectus of the MTB Group of Funds (Trust) offers shares of MTB Managed Allocation Fund – Moderate Growth II (Moderate Growth Fund II), MTB Large Cap Value Fund II (Large Cap Value Fund II) and MTB Large Cap Growth Fund II (Large Cap Growth Fund II), (Fund, or Funds), each of which is a portfolio of the Trust. The Funds are managed by MTB Investment Advisors, Inc. (Advisor).

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Currently, shares of the Funds may be sold only to separate accounts of insurance companies to serve as the investment medium for variable annuity contracts and variable life insurance policies issued by the insurance companies.

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The separate accounts invest in the Funds in accordance with allocation instructions received from owners of annuity contracts. Such allocation rights are described further in the prospectus for the separate account. The Funds are subject to investment limitations that do not apply to other mutual funds available directly to the general public. Therefore, any comparison of these two types of mutual funds may not be appropriate.

This prospectus contains the information you should read and know before you invest in the Funds. Keep this prospectus for future reference.

This prospectus should be accompanied by the prospectus for such a variable annuity contract or variable life insurance policy.

The Fees and Expenses tables and the Examples that follow them relate exclusively to the Funds’ Shares. They do not reflect any additional fees or expenses that may be imposed by separate accounts of insurance companies or in connection with any variable annuity or variable life insurance contract. If these had been included, your costs would be higher. The share performance reflected in the Bar Charts, Average Annual Total Return Tables, and the Financial Highlights does not reflect any charges or expenses that would be imposed under a variable insurance product contract. Were the effect of such charges to be included, Share performance would be lower.

The Shares of the Funds offered by this prospectus are not deposits or obligations of any bank, are not endorsed or guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency.

MTB MANAGED ALLOCATION FUND – MODERATE GROWTH II

CUSIP: 55376T577

Goal

To seek capital appreciation and, secondarily, income.

Strategy

The Fund seeks to achieve its objective by investing in a combination of underlying MTB Funds (Underlying Funds) managed by the Advisor. The Fund’s assets are allocated among Underlying Funds that invest primarily in the three asset classes shown below so that the Fund normally has exposure to each of these asset classes. The amount allocated among the Underlying Funds will vary from time to time in an attempt to achieve the Fund’s goal based upon the Advisor’s view of economic conditions. The largest allocations normally are to Underlying Funds that invest primarily in equity securities (Underlying Equity Funds), but at times the amount allocated to Underlying Funds that invest primarily in fixed income securities (Underlying Fixed Income Funds) and money market funds (Underlying Money Market Funds) can be higher than the amount in equities.

The Fund currently plans to invest in shares of the following Underlying Funds within the percentage ranges indicated:

		INVESTMENT RANGE
		(Percentage of the Managed Allocation Fund –
ASSET CLASS		Moderate Growth II Assets)

MONEY MARKET FUNDS		5-45%
U.S. Treasury Money Market Fund
Prime Money Market Fund

FIXED INCOME FUNDS		15-50%
Short Duration Government Bond Fund
U.S. Government Bond Fund
Intermediate-Term Bond Fund

EQUITY FUNDS		40-70%
Large Cap Value Fund Large Cap Stock Fund Large Cap Growth Fund Mid Cap Stock Fund Small Cap Stock Fund International Equity Fund

Risks

Following are principal risks associated with investment in the Fund:

Stock Market Risk – The risk posed by the fact that the values of equity securities rise and fall.
Risks Related to Investing for Growth – Due to their relatively high valuations, growth stocks are typically more volatile than value stocks.
Risks Related to Investing for Value – Due to their relatively low valuations, value stocks are typically less volatile than growth stocks and therefore may lag behind growth stocks in an up market.
Risk Related to Company Size – The risk posed by mid- and small-market capitalization companies tending to have fewer shareholders, less liquidity, more volatility, unproven track records, limited product or service base and limited access to capital. These risks are greater for small-market capitalization stocks.
Interest Rate Risks – The risk posed by the fact that prices of fixed income securities rise and fall inversely in response to interest rate changes. In addition, this risk increases with the length of the maturity of the debt. Generally, prices of fixed income securities fall when interest rates rise and vice versa.
Credit Risks – The possibility than an issuer will default on a security by failing to pay interest or principal when due.
Call Risks – The possibility than an issuer may redeem a fixed income security before maturity at a price below its current market price.
Prepayment Risks – The risk posed by the relative volatility of mortgage-backed securities. The likelihood of prepayments increases in a declining interest rate environment and decreases in a rising interest rate environment. This adversely affects the value of these securities.
Risks of Foreign Investing – Foreign economic, political or regulatory conditions may be less favorable than those of the United States.
Expenses of Investing in Other Funds – Mutual fund portfolios bear expenses for advisory fees and operational expenses. The Fund and the Underlying Funds in which it will invest will each bear these expenses, so investors in the Fund may bear higher expenses than a fund that invests directly in equity, fixed income or money market securities.

Performance Information

Risk/Return Bar Chart

The performance information shown below will help you analyze the Fund’s investment risks in light of its historical returns. The bar chart shows the variability of the Fund’s total returns on a calendar year-by-year basis. The Average Annual Total Return table shows returns averaged over the stated periods, and includes comparative performance information. The Fund’s performance will fluctuate, and past performance is no guarantee of future results.

Best Quarter 10.01% (6/30/03)

Worst Quarter (2.10)% (3/31/03)

The Fund’s Shares are sold without a sales charge (load). The total returns shown in the bar chart above are based upon net asset value.

The Fund’s total return for the three-month period from January 1, 2004 to March 31, 2004 was 1.86%.

Average Annual Total Return Table

Return Before Taxes is shown. The table also shows returns for the Standard and Poor’s 500 Index (S&P 500) and the Lehman Brothers Aggregate Bond Index (LBAB), broad-based market indexes. Index returns shown do not reflect taxes, sales charges, expenses or other fees that the SEC requires to be reflected in the Fund’s performance. Indexes are unmanaged, and it is not possible to invest directly in an index.

(For the periods ended December 31, 2003)

		Start of
	1 Year	Performance(1)

Return Before Taxes	17.29%	5.95%

S&P 500	28.68%	4.49%

LBAB	4.10%	6.75%

(1) The Fund’s Shares start of performance date was June 17, 2002.

Fees and Expenses

This table describes the fees and expenses that you may pay if you buy and hold Shares of the Fund.

Shareholder Fees

Fees Paid Directly From Your Investment

		The Fund

Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)		None

Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price or
redemption proceeds, as applicable)		None

Maximum Sales Charge (Load) Imposed on

Reinvested Dividends (and other Distributions)
(as a percentage of offering price)		None

Redemption Fee (as a percentage of amount redeemed, if applicable)		None

Exchange Fee		None

Annual Fund Operating Expenses

Expenses That are Deducted From Fund Assets (as a percentage of average net assets)

		The Fund

Management Fee(1)		0.25%

Distribution (12b-1) Fee		0.25%

Other Expenses		0.52%

Total Annual Fund Operating Expenses
(before fee waivers and/or expense reimbursements)		1.02%

Fee Waivers and/or Expense Reimbursements(1)		0.28%

Total Annual Fund Operating Expenses
(after fee waivers and/or expense
reimbursements)(1)		0.74%

(1) The Advisor has agreed to contractually waive all or a portion of its investment advisory fee (based on average daily net assets) to which it is otherwise entitled to receive and/or to reimburse certain operating expenses of the Fund in order to limit the Fund’s total operating expenses to not more than 0.74% of the Fund’s average daily net assets, for the period starting May 1, 2004 through April 30, 2005.

Example

This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. It assumes that you invest $10,000 in the Fund for the time periods indicated, that each year your investment has a 5% return and that the Fund’s expenses remain the same. Although your actual costs and returns may be different, your approximate costs of investing $10,000 in the Fund would be:

	1 Year		3 Years		5 Years		10 Years

Fund	$	76	$	297	$	536	$	1,222

If waivers had not been in place	$	104	$	325	$	563	$	1,248

Summary of Goals, Strategies and Risks of the Underlying Funds

A summary of the goals, strategies and risks of the Underlying Funds is set forth below. Capitalized terms are defined under the captions “Principal Securities of the Funds” and “Specific Risks of Investing in the Funds.” Additional information on each Underlying Fund can be found in separate MTB Funds prospectuses, which are available by calling (800) 836-2211. Each Underlying Fund is available for investment directly by the general public.

Underlying Money Market Funds

Goals. The goal of each Underlying Money Market Fund is to seek current income with liquidity and stability of principal by investing in high quality money market instruments. Each Underlying Money Market Fund seeks to maintain a constant net asset value of $1.00 per share for purchases and redemptions. Each of these Funds may engage in securities lending.

Strategies. U.S. Treasury Money Market Fund invests primarily in Treasury Securities and Repurchase Agreements secured by Treasury Securities. Prime Money Market Fund may invest primarily in Bank Instruments, Corporate Debt Securities, Municipal Securities, Variable Rate Demand Instruments, Mortgage-Backed Securities, Asset-Backed Securities, Treasury Securities, Agency Securities and Repurchase Agreements. Each of these Funds may engage in Securities Lending.

Risks. The principal risks applicable to Underlying Money Market Funds are, in the case of U.S. Treasury Money Market Fund, Interest Rate Risks and Call Risks; and in the case of Prime Money Market Fund, Interest Rate Risks, Call Risks, Credit Risks, Prepayment Risks and Risks of Foreign Investing.

Underlying Fixed Income Funds

Goals. The goal of each Underlying Fixed Income Fund is to seek current income. Capital appreciation is a secondary goal of Intermediate-Term Bond Fund and U.S. Government Bond Fund, while preservation of capital is a secondary goal of Short Duration Government Bond Fund.

Strategies – Principal Securities. Intermediate-Term Bond Fund may invest primarily in each category of Fixed Income Securities. Short Duration Government Bond Fund and U.S. Government Bond Fund may invest primarily in each category of Fixed Income Securities, with the exception of Corporate Debt Securities and Bank Instruments. Each of these Funds may engage in Securities Lending.

Strategies – Duration/Maturity. Short Duration Government Bond Fund seeks to maintain an average duration of less than three years. Duration measures the price sensitivity of a fixed income security to changes in interest rates. Intermediate-Term Bond Fund seeks to maintain a dollar-weighted average maturity of 3 to 10 years. U.S. Government Bond Fund will invest primarily in fixed income securities having maturities greater than one year.

Risks. The principal risks applicable to Underlying Fixed Income Funds are Interest Rate Risks, Credit Risks, Call Risks and Prepayment Risks.

Underlying Equity Funds

Goals. The goal of each Underlying Equity Fund is to provide capital appreciation, although the primary goal, in the case of Large Cap Value Fund, and the secondary goal, in the case of Mid Cap Stock Fund, is current income.

Strategies – Principal Securities. Each Underlying Equity Fund invests primarily in Equity Securities and Convertible Securities, which, in the case of International Equity Fund, include primarily Foreign Securities.

Strategies – Market Capitalization. Large Cap Growth Fund, Large Cap Value Fund and Large Cap Stock Fund each invests primarily in “large cap” securities of companies that have a market capitalization at time of purchase greater than $3 billion. Mid Cap Stock Fund invests primarily in “mid cap” securities of companies that have a market capitalization at time of purchase of $1 billion to $15 billion. Small Cap Stock Fund invests primarily in “small cap” securities of companies that have a market capitalization under $2 billion at time of purchase.

Strategies – Style Orientation. International Equity Fund and Large Cap Value Fund use a “value” oriented approach, seeking companies whose stock prices do not appear to reflect their underlying value as measured by assets, earnings, cash flow, business franchises, or other quantitative or qualitative measures. Large Cap Growth Fund uses a “growth” oriented approach, seeking stocks with high earnings growth which, in the opinion of the Advisor, will lead to appreciation in stock price. Small Cap Stock Fund, Mid Cap Stock Fund and Large Cap Stock Fund use a “blended” oriented approach, using a growth-based strategy or value-based strategy (or both), as market conditions dictate.

Risks. The principal risks applicable to Underlying Equity Funds are Stock Market Risks, Risks Related to Investing for Growth, Risks Related to Investing for Value, Risks Related to Company Size, Risks of Foreign Investing and Risks Associated with Non-Investment Grade Securities.

Advisor’s Potential Conflict

In managing the Fund, the Advisor has the authority to select and substitute the Underlying Funds in which the Fund will invest. The Advisor is subject to conflict of interest in allocating Fund assets among the various Underlying Funds both because the fees payable to it and/or its affiliates by some Underlying Funds are higher than the fees payable by other Underlying Funds and because the Advisor is also primarily responsible for managing the Underlying Funds. The Trustees and officers may also have conflicting interests in fulfilling their fiduciary duties to both the Funds and Underlying Funds.

MTB LARGE CAP VALUE FUND II

CUSIP: 55376T650

Goal

To provide capital appreciation. Current income is a secondary, non-fundamental consideration.

Strategy

The Fund invests, under normal market conditions, at least 80% of the value of its net assets plus the amount of borrowings for investment purposes in a diversified portfolio of equity securities (primarily common stocks) of U.S. companies with market capitalizations at time of purchase greater than $3 billion. Equity securities include common and preferred stocks, as well as convertible securities. The Advisor uses a value-oriented approach to select those companies with unrecognized or undervalued assets. Such a value approach seeks companies whose stock prices do not appear to reflect their underlying value as measured by assets, earnings, cash flow, business franchises, or other quantitative or qualitative measurements.

Risks

Following are principal risks associated with investment in the Fund:

Stock Market Risk – The risk posed by the fact that the values of equity securities rise and fall.
Risks Related to Investing for Value – Due to their relatively low valuations, value stocks are typically less volatile than growth stocks and therefore may lag behind growth stocks in an up market.

Performance Information

Risk/Return Bar Chart

Best Quarter 19.08% (6/30/03)

Worst Quarter (3.24)% (3/31/03)

The Fund’s Shares are sold without a sales charge (load). The total returns shown in the bar chart above are based upon net asset value.

The Fund’s total return for the three-month period from January 1, 2004 to March 31, 2004 was 1.78%.

Average Annual Total Return Table

Return Before Taxes is shown. The table also shows returns for the Standard and Poor’s 500/Barra Value Index (S&P 500/ BV), a broad-based market index. Index returns shown do not reflect taxes, sales charges, expenses or other fees that the SEC requires to be reflected in the Fund’s performance. Indexes are unmanaged, and it is not possible to invest directly in an index.

(For the periods ended December 31, 2003)

		Start of
	1 Year	Performance(1)


Return Before Taxes	33.45%	1.90%


S&P 500/BV	31.79%	3.93%

(1) The Fund’s Shares start of performance date was May 31, 2002.

Fees and Expenses

This table describes the fees and expenses that you may pay if you buy and hold Shares of the Fund.

Shareholder Fees

Fees Paid Directly From Your Investment

		The Fund
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)		None

Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, as applicable)		None

Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a percentage of offering price)		None

Redemption Fee (as a percentage of amount redeemed, if applicable)

Exchange Fee		None

Annual Fund Operating Expenses

Expenses That are Deducted From Fund Assets (as a percentage of average net assets)

		The Fund

Management Fee(1)		0.70%

Distribution (12b-1) Fee		0.25%

Other Expenses		1.28%

Total Annual Fund Operating Expenses
(before fee waivers and/or expense reimbursements)		2.23%

Fee Waivers and/or Expense Reimbursements(1)		1.23%

Total Annual Fund Operating Expenses (after fee waivers and/or expense reimbursements)(1)		1.00%

(1) The Advisor has agreed to contractually waive all or a portion of its investment advisory fee (based on average daily net assets) to which it is otherwise entitled to receive and/or to reimburse certain operating expenses of the Fund in order to limit the Fund’s total operating expenses to not more than 1.00% of the Fund’s average daily net assets, for the period starting May 1, 2004 through April 30, 2005.

Example

	1 Year		3 Years		5 Years		10 Years

Fund	$	102	$	579	$	1,082	$	2,468

If waivers had not been in place	$	226	$	697	$	1,195	$	2,565

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MTB LARGE CAP GROWTH FUND II

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CUSIP: 55376T734

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Goal

To provide capital appreciation.

Strategy

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The Fund invests, under normal market conditions, at least 80% of the value of its net assets plus the amount of any borrowings for investment purposes in a diversified portfolio of equity securities (primarily common stocks) of companies with market capitalizations at time of purchase greater than $3 billion. Equity securities include common and preferred stocks as well as convertible securities. The Fund’s Sub-advisor uses a bottom-up approach to selecting growth-oriented stocks. The Fund seeks to invest in high-quality, well established large-cap companies that:

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have a strong history of earnings growth;
are attractively priced, relative to the company’s potential for above-average, long-term earnings and revenue growth;
have strong balance sheets;

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have a sustainable competitive advantage; and
are currently, or have the potential to outperform during market downturns.

Risks

Following are principal risks associated with investment in the Fund:

Stock Market Risk – The risk posed by the fact that the values of equity securities rise and fall.

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Risks Related to Investing for Growth – Due to their relatively high valuations, growth stocks are typically more volatile than value stocks.

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Performance Information

Risk/Return Bar Chart

Best Quarter 9.18% (6/30/03)

Worst Quarter (0.65)% (3/31/03)

The Fund’s Shares are sold without a sales charge (load). The total returns shown in the bar chart above are based upon net asset value.

The Fund’s total return for the three-month period from January 1, 2004 to March 31, 2004 was 1.66%.

Average Annual Total Return Table

Return Before Taxes is shown. The table also shows returns for the Russell 1000 Index (RUS1), Standard and Poor’s 500 Index (S&P 500) and the Standard and Poor’s 500/Barra Growth Index (S&P 500/BG), broad-based market indexes. Index returns shown do not reflect taxes, sales charges, expenses or other fees that the SEC requires to be reflected in the Fund’s performance. Indexes are unmanaged, and it is not possible to invest directly in an index.

(For the periods ended December 31, 2003)

		Start of
	1 Year	Performance(1)

Return Before Taxes	17.35%	(1.27)%

RUS1	29.89%	5.04%

S&P 500	28.68%	4.49%

S&P 500/BG	25.66%	3.93%

(1) The Fund’s Shares start of performance date was May 31, 2002.

Fees and Expenses

This table describes the fees and expenses that you may pay if you buy and hold Shares of the Fund.

Shareholder Fees

Fees Paid Directly From Your Investment

	The Fund

Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)	None

Maximum Deferred Sales Charge (Load) (as a percentage
of original purchase price or redemption proceeds, as applicable)	None

Maximum Sales Charge (Load) Imposed on Reinvested Dividends
(and other Distributions) (as a percentage of offering price)	None

Redemption Fee (as a percentage of amount redeemed, if applicable)	None

Exchange Fee	None

Annual Fund Operating Expenses

Expenses That are Deducted From Fund Assets (as a percentage of average net assets)

		The Fund

Management Fee(1)		0.85%

Distribution (12b-1) Fee		0.25%

Other Expenses		1.35%

Total Annual Fund Operating Expenses
(before fee waivers and/or expense reimbursements)		2.45%

Fee Waivers and/or Expense Reimbursements(1)		1.45%

Total Annual Fund Operating Expenses (after fee waivers and/or expense reimbursements)(1)		1.00%

(1) The Advisor has agreed to contractually waive all or a portion of its investment advisory fee (based on average daily net assets) to which it is otherwise entitled to receive and/or to reimburse certain operating expenses of the Fund in order to limit the Fund’s total operating expenses to not more than 1.00% of the Fund’s average daily net assets, for the period starting May 1, 2004 through April 30, 2005.

Example

	1 Year		3 Years		5 Years		10 Years

Fund	$	102	$	625	$	1,174	$	2,676

If waivers had not been in place	$	248	$	764	$	1,306	$	2,786

Principal Securities of the Funds

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The principal securities of each Fund are marked with an “X”.

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	Moderate	Large Cap	Large Cap
	Growth Fund II*	Value Fund II	Growth Fund II

Equity Securities	X	X	X

Common Stocks	X	X	X

Preferred Stocks	X	X	X

Fixed Income Securities	X

Treasury Securities	X

Agency Securities	X

Corporate Debt Securities	X

Mortgage-Backed Securities	X

Collateralized Mortgage Obligations (CMOs)	X

Asset-Backed Securities	X

Zero Coupon Securities	X

Bank Instruments	X

Credit Enhancement	X

Foreign Securities	X

Depositary Receipts	X

Foreign Exchange Contracts	X

Foreign Government Securities	X

Securities Lending	X

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* Through investment in the Underlying Funds

Equity Securities

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

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.

Fixed Income Securities

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

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

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

Treasury Securities

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

Agency Securities

Agency securities are issued or guaranteed by a federal agency or other government sponsored entity (a GSE) acting under federal authority. Some GSE securities are supported by the full faith and credit of the United States. These include Government National Mortgage Association, Small Business Administration, Farm Credit System Financial Assistance Corporation, Farmer’s Home Administration, Federal Financing Bank, General Services Administration, Department of Housing and Urban Development, Export-Import Bank, Overseas Private Investment Corporation, and Washington Metropolitan Area Transit Authority Bonds.

Other GSEs receive support through federal subsidies, loans or other benefits. For example, the U.S. Treasury is authorized to purchase specified amounts of securities issued by (or otherwise make funds available to) the Federal Home Loan Bank System, Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Student Loan Marketing Association, and Tennessee Valley Authority in support of such obligations.

A few GSEs have no explicit financial support, but are regarded as having implied support because the federal government sponsors their activities. These include the Farm Credit System, Financing Corporation, and Resolution Funding Corporation.

Investors regard agency securities as having low credit risks, but not as low as Treasury securities.

A Fund treats mortgage-backed securities guaranteed by a GSE as if issued or guaranteed by a federal agency. Although such a guarantee protects against credit risks, it does not reduce market and prepayment risks.

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. A Fund may also purchase interests in bank loans to companies. The credit risks of corporate debt securities vary widely among issuers.

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

Mortgage-Backed Securities

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

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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 prepayments from the underlying mortgages. As a result, the holders assume all the prepayment risks of the underlying mortgages.

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Collateralized Mortgage Obligations (CMOs)

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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.

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Asset-Backed Securities

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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.

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Zero Coupon Securities

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

Bank Instruments

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

Credit Enhancement

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

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Convertible Securities

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

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

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

Municipal Securities

Municipal 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.

Municipal Notes

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

Variable Rate Demand Instruments

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

Foreign Securities

Foreign securities are securities of issuers based outside the United States. An issuer is considered to be based outside the United States if:

it is organized under the laws of, or has a principal office located in, another country;
the principal trading market for its securities is in another country; or
it (or its subsidiaries) derived in its most current fiscal year at least 50% of its total assets, capitalization, gross revenue or profit from goods produced, services performed, or sales made in another country.

Foreign securities are primarily denominated in foreign currencies. Along with the risks normally associated with domestic securities of the same type, foreign securities are subject to currency risks and risks of foreign investing. Trading in certain foreign markets is also subject to liquidity risks.

Depositary Receipts

Depositary receipts represent interests in underlying securities issued by a foreign company. Depositary receipts are not traded in the same market as the underlying security. The foreign securities underlying American Depositary Receipts (ADRs) are traded outside 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. The foreign securities underlying European Depositary Receipts (EDRs), Global Depositary Receipts (GDRs), and International Depositary Receipts (IDRs), are traded globally or outside the United States. Depositary receipts involve many of the same risks of investing directly in foreign securities, including currency risks and risks of foreign investing.

Foreign Exchange Contracts

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In order to convert U.S. dollars into the currency needed to buy a foreign security, or to convert foreign currency received from the sale of a foreign security into U.S. dollars, the International Equity Fund (an Underlying Fund) may enter into spot currency trades. In a spot trade, the Fund agrees to exchange one currency for another at the current exchange rate. The Fund may also enter into derivative contracts in which a foreign currency is an underlying asset. The exchange rate for currency derivative contracts may be higher or lower than the spot exchange rate. Use of these derivative contracts may increase or decrease the Fund’s exposure to currency risks.

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Foreign Government Securities

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

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

Repurchase Agreements

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

The Fund’s custodian will take possession of the securities subject to repurchase agreements. The Advisor 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.

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Repurchase agreements are subject to credit risks.

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Securities Lending

Each Underlying Money Market and Fixed Income Fund (an “Underlying Non-Equity Fund”) may lend portfolio securities to borrowers that the Advisor deems creditworthy. In return, the Underlying Non-Equity Fund receives cash or liquid securities from the borrowers as collateral. The borrower must furnish additional collateral if the market value of the loaned securities increases. Also, the borrower must pay the Underlying Non-Equity Fund the equivalent of any dividends or interest received on the loaned securities.

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

Loans are subject to termination at the option of the Underlying Non-Equity Fund or the borrower. The Underlying Non-Equity 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 Underlying Non-Equity Fund may pay administrative and custodial fees in connection with the 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.

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Investing in Securities of Other Investment Companies

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The Funds, and each Underlying Fund, may invest in securities of other investment companies, including the securities of affiliated money market funds, as an efficient means of carrying out their investment policies and managing their uninvested cash. Moderate Growth Fund II intends to invest substantially all of its assets in Underlying Funds in order to achieve its investment goals.

Other Investment Strategies

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Portfolio Turnover

Large Cap Growth Fund II and Large Cap Value Fund II, and certain Underlying Funds, actively trade their portfolio securities in an attempt to achieve their investment objectives. Actively trading portfolio securities increases a Fund’s trading costs and may have an adverse impact on the Fund’s performance.

Temporary Defensive Investments

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

Investment Ratings for Investment Grade Securities

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

Specific Risks of Investing in the Funds

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Stock Market Risks

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

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

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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. Furthermore, value stocks tend to have higher dividends than growth stocks. This means they depend less on price changes for returns and may lag behind growth stocks in an up market.

Risks Related to Company Size

Generally, the smaller the market capitalization of a company, the fewer the number of shares traded daily, the less liquid its stock and the more volatile its price. 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.

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, a Fund will lose money.

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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, a Fund must rely entirely upon the Advisor’s credit assessment.

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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.

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

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Call Risks

Call risk is the possibility that an issuer may redeem a fixed income security before maturity (a call) at a price below its current market price. An increase in the likelihood of a call may reduce the security’s price.

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

Prepayment Risks

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

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

A 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 of Foreign Investing

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

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

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

Risks Associated with Non-Investment Grade Securities

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

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Affiliated Persons Risk

The Moderate Growth Fund II is subject to affiliated persons risk. In managing the Fund, the Advisor has the authority to select and substitute the underlying funds in which the Fund will invest. The Advisor is subject to conflicts of interest in allocating Fund assets among the various Underlying Funds both because the fees payable to it and/or its affiliates by some Underlying Funds are higher than the fees payable by other Underlying Funds and because the Advisor is also primarily responsible for managing the Underlying Funds. The Trustees and officers of the Fund may also have conflicting interests in fulfilling their fiduciary duties to both the Fund and the Underlying Funds.

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Expenses of Investing in Other Funds

Mutual fund portfolios bear expenses for advisory fees and operational expenses. The Moderate Growth Fund II and the Underlying Funds in which it will invest will each bear these expenses, so investors in the Moderate Growth Fund II may bear higher expenses than a fund that invests directly in equity, fixed income or money market securities.

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Mixed Funding and Shared Funding

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As noted previously, the Funds were established exclusively for the purpose of providing an investment vehicle for variable annuity contracts and variable life insurance policies offered by separate accounts of participating insurance companies. The Trust is permitted to engage in “mixed funding” (using shares as investments for both variable annuity contracts and variable life insurance policies) and “shared funding” (using shares as investments for separate accounts of unaffiliated life insurance companies) pursuant to an exemption from the SEC, and currently is engaged in shared funding arrangements and must comply with conditions of the SEC exemption that are designed to protect investors in the Funds. Although the Funds do not currently see any disadvantage to contract owners due to differences in redemption rates, tax treatment or other considerations resulting from mixed funding or shared funding, the SEC only requires the Trustees to monitor the operation of mixed funding and shared funding arrangements, and to consider appropriate action to avoid material conflicts, and to take appropriate action in response to any material conflicts which occur. Such action could result in one or more participating insurance companies withdrawing their investment in a Fund.

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The Funds are authorized to pay financial institutions (primarily life insurance companies), a fee at the maximum annual rate of 0.25% of the average daily net assets of Shares for which a financial institution provides shareholder and/or recordkeeping services. In addition, MTBIA and its affiliates may pay out of their own reasonable resources and profits to these financial institutions an additional fee for providing these services.

How are Shares Priced?

Shares may be purchased, redeemed, or exchanged by participating insurance companies any day the New York Stock Exchange (NYSE) is open for business. Purchases and redemptions by wire will not be available on days the Federal Reserve wire system is closed. When a transaction request is received in proper form (as described in this prospectus), it is processed at the next calculated net asset value (NAV). The Funds have authorized participating insurance companies to accept transaction requests on their behalf.

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The value of Shares of Large Cap Growth Fund II and Large Cap Value Fund II is generally determined based upon the market value of portfolio securities. The value of Shares of Moderate Growth Fund II is based upon the share prices of the Underlying Funds in which it invests; and the prices of those shares are determined by the market value of the portfolio securities held by the Underlying Funds. In all cases, the Funds’ Board may determine in good faith that another method of valuing investments is necessary to appraise their fair market value. From time to time a Fund may purchase foreign securities that trade in foreign markets on days the NYSE is closed. If a Fund directly or indirectly owns foreign securities that trade in foreign markets on the days the NYSE is closed, the value of a Fund’s assets may change on days you cannot purchase or redeem Shares.

NAV for the Funds is determined at the end of regular trading (normally 4:00 p.m. Eastern Time) each day the NYSE is open. The Funds generally value 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). The Funds generally value fixed income securities according to the mean between bid and asked prices as furnished by an independent pricing service, except that fixed income securities with remaining maturities of less than 60 days at the time of purchase may be valued at amortized cost.

Trading in foreign securities may be completed at times which vary from the closing of the NYSE. In computing their NAV, the Funds value foreign securities at the latest closing price on the exchange on which they are traded immediately prior to the closing of the NYSE. Certain foreign currency exchange rates may also be determined at the latest rate prior to the closing of the NYSE. Foreign securities quoted in foreign currencies are translated into U.S. dollars at current rates. Occasionally, events that affect these values and exchange rates may occur between the times at which they are determined and the closing of the NYSE. If such events materially affect the value of portfolio securities, these securities may be valued at their fair value as determined in good faith by the Fund’s Board, although the actual calculation may be done by others.

Shares are sold at their NAV next determined after an order is received. Shares are not subject to any sales charges.

How are the Funds Sold?

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The Funds’ distributor, Edgewood Services, Inc. (Distributor), markets the Shares described in this prospectus to your insurance company as a funding vehicle for variable annuity contracts issued by your insurance company. When the Distributor receives marketing fees, it may pay some or all of them to investment professionals for sales, distribution, recordkeeping and/or administrative services. 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).

The Advisor and its its affiliates may pay out of their reasonable resources and profits other amounts (including items of material value) to investment professionals for marketing and servicing Shares. These supplemental payments may be based upon such factors as the number or value of Shares the investment professional sells or may sell; the value of client assets invested; and/or the type and nature of services, sales support or marketing support furnished by the investment professional. In addition to these supplemental payments, an investment professional may also receive payments under the Rule 12b-1 Plan.

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Rule 12b-1 Plans

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Moderate Growth Fund II, Large Cap Value Fund II and Large Cap Growth Fund II each has adopted a Rule 12b-1 Plan, which allows each of them to pay marketing fees to the Distributor for the sale and distribution of such Funds’ Shares at an annual rate of up to 0.25% of the average daily NAV of such Funds’ Shares. Because Shares subject to a Rule 12b-1 Plan pay fees on an ongoing basis, over time these fees would increase the cost of an investment and may cost investors more than paying other types of sales charges.

How to Purchase, Redeem and Exchange Shares

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Currently shares are used solely as the investment vehicle for separate accounts of your insurance company offering variable annuity contracts. Thus the general public has access to the Funds only by purchasing a variable annuity contract (thus becoming a contract owner). Shares are not sold directly to the general public.

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Purchase and redemption orders are placed by your insurance company when your funds are credited to that insurance company’s accounts. In order to purchase or redeem shares of a Fund on a particular day, the Trust or its designated agent must receive the request before the close of regular trading on the NYSE (normally 4:00 p.m. Eastern Time) that day (the “NYSE Close”). Purchase or redemption orders received by your insurance company by the NYSE Close will be processed at the NAV calculated on that day. If a purchase or redemption order is received by your insurance company after the NYSE Close, that transaction will receive the NAV computed on the next business day.

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Your insurance company is responsible for properly transmitting purchase and redemption orders and federal funds to the Funds.

Currently the Funds are only available as an investment option in variable annuity contracts. Please consult the accompanying separate account prospectus for information about the terms of an investment in a contract.

Limitations on Redemption Proceeds

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

to allow a purchase payment to clear;
during periods of market volatility; or
when a redemption adversely impacts a Fund’s ability to manage its assets.

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Redemption in Kind

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

Exchange Privilege

You may instruct your insurance company to exchange Shares of a Fund into shares of another fund of the Trust described in this prospectus and offered by your insurance company at NAV. To exchange shares, you must receive a prospectus for the Trust portfolio into which you wish to exchange.

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

Abusive Trading Practices

In order to protect shareholders, the Funds discourage excessive short-term or other abusive trading practices that can increase transactional expenses, produce adverse tax consequences, or interfere with the efficient execution of portfolio management strategies. Accordingly, the Funds’ management or Advisor 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 Funds may reject purchases or exchanges, or terminate purchase or exchange privileges where excessive short-term or other abusive trading practices are detected. This policy is uniformly applied. While the Funds monitor for excessive short-term or other abusive trading practices, there can be no guarantee that the Funds will be successful in identifying this activity, particularly with respect to activity occurring within these omnibus accounts, which is how most of the investments from the variable annuity contracts will be established. The Funds rely on the participating insurance companies to implement restrictions on market timing, and these restrictions are described in the prospectus for the variable annuity contracts.

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Account and Share Information

Dividends and Capital Gains

The Funds declare and pay any dividends quarterly. Shares of the Fund will begin earning dividends if owned on the record date. Dividends are automatically invested in additional shares.

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In addition, each Fund intends to pay any capital gains at least annually. Unless you elect to receive your dividends and capital gains distributions in cash, they will be automatically reinvested in additional Shares.

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Tax Information

The Funds will seek to comply with asset diversification regulations applicable to registered investment companies under the Investment Company Act of 1940 and the Internal Revenue Code. The variable insurance contracts that invest in the Fund will be affected by the Fund’s compliance with applicable diversification tests. If the Fund fails to comply with these regulations, contracts invested in the Fund may not be treated as an annuity, endowment or life insurance contract under the Internal Revenue Code. In such event, income with respect to contracts invested in the Fund at any time during the calendar quarter in which the failure occurred could become currently taxable to the owners of the contracts. Similarly, income for prior periods with respect to such contracts also could be taxable, most likely in the year of the failure to achieve the desired diversification. Other adverse tax consequences could also ensue. For more information concerning the consequences of the Fund failing to meet the asset diversification regulations, consult your separate account prospectus.

Contract owners should review the applicable contract prospectus for information concerning the federal income tax treatment of their contracts and distributions from the Fund to the separate accounts.

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Contract owners are urged to consult their own tax advisors regarding the status of their contracts under state and local tax laws.

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Who Manages the Funds?

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The Board of Trustees governs the Funds. The Board selects and oversees the Advisor, MTB Investment Advisors, Inc., (MTBIA or Advisor) a subsidiary of Manufacturers and Traders Trust Company (M&T Bank). The Advisor manages the Funds’ assets, including buying and selling portfolio securities. The Advisor’s address is 100 East Pratt Street, 17th Floor, Baltimore, MD 21202.

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On August 22, 2003, the investment advisory operations of M&T Asset Management, a department of M&T Bank, were transferred to Allied Investment Advisors, Inc. (which was renamed MTB Investment Advisors, Inc.) and effective on that date MTB Investment Advisors, Inc. became the investment advisor to the Trust.

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M&T Bank 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 1892 and provides comprehensive banking and financial services to individuals, governmental entities and businesses throughout New York State, Pennsylvania, Maryland and parts of Virginia, West Virginia, the District of Columbia and Delaware. As of December 31, 2003, M&T Bank had over $24.4 billion in assets under management. MTBIA and entities affiliated with MTBIA or its predecessors have served as investment advisor to MTB Funds since 1988, and, as of March 31, 2004, it managed approximately $5.5 billion in net assets of money market funds and $3.3 billion 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 Advisor is entitled to receive an annual Advisory Fee from each Fund, equal to a percentage of each Fund’s average daily net assets as follows:

FUND NAME		ADVISORY FEE

Moderate Growth Fund II		0.25%

Large Cap Value Fund II		0.70%

Large Cap Growth Fund II		0.85%

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

In addition to the investment management services provided by MTBIA, MTBIA’s affiliate M&T Securities, Inc. also provides administrative services to the Funds and is entitled to receive a maximum fee of .04% of the Funds’ average daily net assets for such administrative services. M&T Securities, Inc. and its affiliates also may receive up to 0.25% of the Funds’ average daily net assets for distribution services provided to the Funds.

Sub-Advisor

The Advisor has delegated daily management of Large Cap Growth Fund II to a subadvisor, Montag & Caldwell, Inc. (Montag & Caldwell). Montag & Caldwell has complete discretion to manage portfolio securities of the Fund, subject to the Fund’s investment objective, policies and limitations and subject to supervision of and oversight by the Advisor and the Fund’s Board. Montag & Caldwell and its predecessors have been engaged in the business of providing investment counseling to individuals and institutions since 1945. Total assets under management for all clients (including two other mutual funds) were approximately $30.9 billion as of December 31, 2003. For its services, Montag & Caldwell receives a fee based upon a percentage of the Fund’s average daily net assets which is paid by the Advisor and not by the Fund. The subadvisor’s address is 3455 Peachtree Road, N.E., Suite 1200, Atlanta, Georgia 30326-3248.

Pursuant to an exemptive order from the Securities and Exchange Commission, the Advisor (subject to the approval of the Board of Trustees) may select and replace subadvisors and amend subadvisory agreements between the Advisor and the subadvisors without obtaining shareholder approval. Accordingly, the Advisor may (subject to Board approval) appoint and replace subadvisors and amend subadvisory agreements without obtaining shareholder approval. The foregoing applies to Large Cap Growth Fund II and Large Cap Value Fund II.

Portfolio Managers

Fund		Portfolio Manager(s)

Moderate Growth Fund II		Thomas R. Pierce
		Mark Stevenson

Large Cap Value Fund II		Clyde L. Randall II
		Barbara L. Rishel

Large Cap Growth Fund II		David L. Watson,
		Montag & Caldwell, Inc.

Thomas R. Pierce has been a Vice President and Portfolio Manager of MTBIA since April 2003 and Vice President of M&T Bank since January 1995. Prior to joining M&T, Mr. Pierce was employed by Merit Investment Advisors where he acted as Director of Fixed Income Product and Trading since 1993. For the period from 1987 to 1993, Mr. Pierce served as Fixed Income Manager at ANB Investment Management Company, where he directed the management of $3.5 billion of active and passive fixed income portfolios. Mr. Pierce is a holder of the right to use the Chartered Financial Analyst designation (CFA Charterholder) and has a B.A. in Economics from Washington University, and an M.B.A from the University of Chicago.

Mark Stevenson is a Vice President of MTBIA. Prior to joining M&T in October 2000, Mr. Stevenson was with Martindale Andres & Company since 1990, where he managed retirement plan and personal trust assets for the clients of Martindale. He is a CFA Charterholder.

Clyde L. Randall II has been a Vice President and a Portfolio Manager of MTBIA since 1996 and a Vice President of M&T Bank since April 2003. He was a Vice President of Allfirst Bank from 1995 until its acquisition by M&T Bank on April 1, 2003. He has more than 14 years of experience in investment research and equity analysis. He earned his B.A. from the University of Vermont, and is a CFA Charterholder.

Barbara L. Rishel has been a Vice President and Portfolio Manager of MTBIA since 2001. She is also an equity analyst. Ms. Rishel was a research analyst for The Adams Express Co. from 1997 until she joined MTBIA. She has more than 15 years of experience in the investment industry. She earned both her B.S. and M.B.A. from the University of Baltimore.

Since 1998, David L. Watson has been a Vice President and Senior Portfolio Manager of Montag & Caldwell, Inc. since 1998. Mr. Watson has over 21 years of equity and fixed income investment management experience. He established an office for Merrill Lynch Asset Management in Atlanta in 1997 and was employed there through 1998. Prior to 1997 Mr. Watson was employed as a senior portfolio manager with Trusco Capital Management in Atlanta. Mr. Watson received his Bachelor’s degree in Finance from Mississippi State University and his M.B.A. from the Goizueta Business School of Emory University. He is a CFA Charterholder and member of the Atlanta Society of Financial Analysts.

</R>

Financial Information

Financial Highlights

<R>

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

The following financial highlights do not reflect any charges or expenses that would be imposed under a variable insurance product contract. Were the effect of such charges to be included, your cost would be higher and share performance would be lower.

This information has been audited by Ernst & Young, LLP whose report, along with the Funds’ audited financial statements, is included in the Funds’ December 31, 2003 Annual Report which is available upon request.

</R>

MTB Group of Funds Financial Highlights

(For a share outstanding throughout each period)

																					Ratios to Average Net Assets

	Net Asset Value, beginning of period				Net Realized and Unrealized Gain (Loss) on Investments				Distributions from Net Investment Income		Distributions from Net Realized Gain on Investments														Net Assets, end of period (000 omitted)
Year Ended December 31,			Net Investment Income				Total from Investment Operations								Net Asset Value, end of period						Net Investment Income		Expense Waiver/ Reimbursement (b)				Portfolio Turnover Rate
													Total Distributions				Total Return(a)
													Total Distributions				Total Return(a)		Expenses

Managed Allocation Fund – Moderate Growth II
2002(c)	$	10.00	0.10	(d)	(0.78	)	(0.68	)	(0.03	)	—		(0.03	)	$	9.29	(6.79	)%	0.74	%(e)	2.03	%(e)	1.03	%(e)	$	6,623	8	%
2003	$	9.29	0.11	(d)	1.46		1.57		(0.09	)	(0.11	)	(0.20	)	$	10.66	17.29	%	0.74	%	1.08	%	0.28	%	$	23,279	17	%

Large Cap Value Fund II
2002(f)	$	10.00	0.04		(2.32	)	(2.28	)	(0.02	)	—		(0.02	)	$	7.70	(22.79	)%	1.00	%(e)	0.98	%(e)	2.98	%(e)	$	1,293	18	%
2003	$	7.70	0.09	(d)	2.47		2.56		(0.08	)	—		(0.08	)	$	10.18	33.45	%	1.00	%	1.01	%	1.23	%	$	2,756	26	%

Large Cap Growth Fund II
2002(f)	$	10.00	0.01		(1.66	)	(1.65	)	—		—		—		$	8.35	(16.50	)%	1.00	%(e)	0.32	%(e)	2.80	%(e)	$	1,304	35	%
2003	$	8.35	0.03		1.42		1.45		(0.02	)	—		(0.02	)	$	9.78	17.35	%	1.00	%	0.37	%	1.45	%	$	2,627	45	%

(a)	Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
(b)	This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above.
(c)	Reflects operations for the period from June 17, 2002 (date of initial public investment) to December 31, 2002.
(d)	Based on average shares outstanding.
(e)	Computed on an annualized basis.
(f)	Reflects operations for the period from May 31, 2002 (date of initial public investment) to December 31, 2002.
Further information about the Funds’ performance is contained in the Funds’ Annual Report, dated December 31, 2003, which can be obtained free of charge.

HOW TO OBTAIN MORE INFORMATION ABOUT MTB GROUP OF FUNDS

Statement of Additional Information (SAI)

A Statement of Additional Information (SAI) dated April 30, 2004 is incorporated by reference into this prospectus. Additional information about the Funds’ investments is available in the SAI and in the Annual and Semi-Annual Reports to shareholders of the MTB Group of Funds as they become available. The Annual Report discusses market conditions and investment strategies that significantly affected the Funds’ performance during its last fiscal year. To obtain the SAI, the Annual and Semi-Annual Reports (when available) and other information without charge, and to make inquiries, call 1-800-836-2211.

Annual and Semi-Annual Reports

These reports list the holdings of the MTB Group of Funds and contain information from the Portfolio Managers about strategies and recent market conditions and trends and their impact on performance. The reports also contain detailed financial information about the Funds.

To Obtain More Information:

Phone: Call 1-800-836-2211

Mail: Write to us at: MTB Funds
P.O. Box 4556
Buffalo, NY 14240-4556

Web: www.mtbfunds.com

SEC: You can also obtain the SAI or Annual and Semi-Annual Reports, as well as other information about MTB Group of Funds, from the SEC’s website (http://www.sec.gov). You may review and copy documents at the SEC Public Reference Room in Washington, D.C. (for information call (202) 942-8090). You may request documents by mail from the SEC, upon payment of a duplicating fee, by (1) writing to: Securities and Exchange Commission, Public Reference Section, Washington, D.C. 20549-0102 or (2) sending an electronic request to publicinfo@sec.gov.

Cusip 55376T734
Cusip 55376T650
Cusip 55376T577

Investment Advisor

MTB Investment Advisors, Inc.
100 E. Pratt Street
17th Floor
Baltimore, MD 21202

Distributor

Edgewood Services, Inc.
5800 Corporate Drive
Pittsburgh, PA 15237-5829

Sub-Advisor to MTB Large Cap Growth Fund II

Montag & Caldwell, Inc.
3455 Peachtree Road, N.E.
Suite 1200
Atlanta, GA 30326-3248

Co-Administrator

M&T Securities, Inc.
One M&T Plaza
Buffalo, NY 14203

Co-Administrator

Federated Services Company
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Transfer Agent and Dividend Disbursing Agent

Federated Shareholder Services Company
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Custodian and Fund Accountant

State Street Corporation
P.O. Box 8609
Boston, MA 02266-8609

Independent Auditors

Ernst & Young, LLP
200 Clarendon Street
Boston, MA 02116-5072

SEC File No. 811-5514
27273 (4/04)

MTB-AR-007-0404

MTB GROUP OF FUNDS

(formerly, VISION GROUP OF FUNDS)

Statement of Additional Information

April 30, 2004
=========================================================================

<R>

MTB Managed Allocation Fund - Moderate Growth II

("Moderate Growth Fund II")

(formerly, VISION Managed Allocation Fund - Moderate Growth II)

MTB Large Cap Value Fund II

("Large Cap Value Fund II")

(formerly, VISION Large Cap Value Fund II)

MTB Large Cap Growth Fund II

("Large Cap Growth Fund II")

(formerly, VISION Large Cap Growth Fund II)

=========================================================================

This Statement of Additional Information (SAI) is not a prospectus.
Read this SAI in conjunction with the prospectus for the Funds dated
April 30, 2004.

Obtain the prospectus without charge by calling (800) 836-2211 (in the
Buffalo area call (716) 635-9368).

=========================================================================
CONTENTS
How Are the Funds Organized? 2
Securities In Which the Funds Invest 2
Investment Risks 9
Fundamental Investment Objectives 13
Investment Limitations 13
Determining Market Value of Securities 15
What Do Shares Cost? 15
How Are the Funds Sold? 15
Subaccounting Services 16
Redemption in Kind 16
Account and Share Information 16
Tax Information 18
Who Manages and Provides Services to the Funds? 20
How Do the Funds Measure Performance? 43
Financial Information 45
Investment Ratings 46
Addresses Back Cover

</R>

Cusip 55376T734
Cusip 55376T650
Cusip 55376T577
27285 (4/04)

HOW ARE THE FUNDS ORGANIZED?
=========================================================================
Each Fund covered by this SAI is a diversified portfolio of MTB Group
of Funds (the "Trust"), a Delaware business trust. On August 11, 2000,
the Trust was organized to acquire all of the assets and liabilities of
the VISION Group of Funds, Inc., a Maryland corporation (the
"Corporation") that was originally incorporated under the laws of the
State of Maryland on February 23, 1988, and registered as an open-end
management investment company. The name of the Trust was changed to
"MTB Group of Funds" on August 15, 2003. The Trust may offer separate
series of shares representing interests in separate portfolios of
securities.

<R>

Through an internal reorganization, the Funds' investment advisor
changed from M&T Asset Management, a department of Manufacturers
and Traders Trust Company ("M&T Bank"), to MTB Investment Advisors,
Inc. (Advisor), a subsidiary of M&T Bank, on August 15, 2003. The
sub-advisor for the Large Cap Growth Fund II is Montag & Caldwell,
Inc.

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

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

As described in the prospectus, Moderate Growth II seeks to achieve its
investment objective by investing in a combination of underlying funds
(the "Underlying Funds") managed by the Advisor. The types of
securities shown for Moderate Growth II in the table represent the
investments held by the Underlying Funds.

--------------------------------------------------------------------------------------------
Moderate Growth Large Cap Large Cap
Fund II ---------------- Growth Fund II
Value Fund II
---------------------------------
--------------------------------------------------------------------------------------------
Equity Securities P P P
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Common Stocks P P P
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Preferred Stocks P P P
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Real Estate Investment Trusts A A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Warrants4 A A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Fixed Income Securities P A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Treasury Securities P A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Agency Securities P A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Corporate Debt Securities1 P A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Commercial Paper A A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Demand Instruments A A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Mortgage Backed Securities P A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Asset Backed Securities2 P A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Zero Coupon Securities P A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Bank Instruments P A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Credit Enhancement P A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Convertible Securities5 A A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Tax Exempt Securities3 A A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Variable Rate Demand Instruments A A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Municipal Securities A A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Municipal Notes A A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Foreign Securities P A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Depository Receipts P A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Foreign Exchange Contracts P A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Foreign Government Securities P A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Derivative Contracts A A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Futures Contracts A A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Options A A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Special Transactions A A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Repurchase Agreements A A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Reverse Repurchase Agreements A A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Delayed Delivery Transactions A A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Securities Lending A A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Asset Coverage A A A
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Investing in Securities of Other A A A
Investment Companies
--------------------------------------------------------------------------------------------
1. Rated in the top four rating categories of a nationally
recognized statistical rating organization (NRSRO), or, if unrated,
of comparable quality as determined by the Advisor or sub-advisor.
If a security's rating is lowered, the Advisor will assess whether
to sell the security, but is not required to do so.
2. Large Cap Value Fund II may invest in asset backed securities
which, at the time of purchase, are rated in the top three rating
categories by an NRSRO, and the Large Cap Growth Fund II may invest
in such securities, which, at the time of purchase, are rated in the
top four rating categories by an NRSRO, or if unrated, are of
comparable quality as determined by the Advisor or subadvisor. If a
security's rating is lowered, the Advisor will assess whether to
sell the security, but is not required to do so.
3. Which are in one of the top four rating categories of an NRSRO.
4. The Funds do not have a present intent to invest more than 5% of
their respective net assets in warrants.
5. The Funds may invest in convertible securities rated below
investment grade. See "Risks Associated with Non-investment Grade
Securities" herein.

</R>

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

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

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. A Fund may also treat such
redeemable preferred stock as a fixed income security.

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

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

Fixed Income Securities
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 a
Fund may invest.

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

Agency Securities
Agency securities are issued or guaranteed by a federal agency or
other government sponsored entity acting under federal authority (a
GSE). Some GSEs are supported by the full faith and credit of the
United States. These include the Government National Mortgage
Association, Small Business Administration, Farm Credit System
Financial Assistance Corporation, Farmer's Home Administration,
Federal Financing Bank, General Services Administration, Department
of Housing and Urban Development, Export-Import Bank, Overseas
Private Investment Corporation, and Washington Metropolitan Transit
Authority Bonds.

Other GSEs receive support through federal subsidies, loans or other
benefits. For example, the U.S. Treasury is authorized to purchase
specified amounts of securities issued by (or otherwise make funds
available to) the Federal Home Loan Bank System, Federal Home Loan
Mortgage Corporation, Federal National Mortgage Association, Student
Loan Marketing Association, and Tennessee Valley Authority in
support of such obligations.

A few GSEs have no explicit financial support, but are regarded as
having implied support because the federal government sponsors their
activities. Investors regard agency securities as having low credit
risks, but not as low as Treasury securities.

A Fund treats mortgage backed securities guaranteed by a GSE as if
issued or guaranteed by a federal agency. Although such a guarantee
protects against credit risks, it does not reduce the market and
prepayment risks.

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.

<R>

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. Like CMOs, asset backed securities may be structured like
Floaters, Inverse Floaters, IOs and POs.

</R>

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.

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

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

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

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

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

Tax Exempt Securities
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 Funds treat demand
instruments as short-term securities, because their variable
interest rate adjusts in response to changes in market rates, even
though their stated maturity may extend beyond thirteen months.

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

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

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

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

Foreign securities are primarily denominated in foreign currencies.
Along with the risks normally associated with domestic securities of
the same type, foreign securities are subject to currency risks and
risks of foreign investing. Trading in certain foreign markets is also
subject to liquidity risks.

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

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

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

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

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

Depending upon how the Fund uses derivative contracts and the
relationships between the market value of a derivative contract and the
underlying asset, derivative contracts may increase or decrease a
Fund's exposure to market and currency risks, and may also expose the
Fund to liquidity and leverage risks. OTC contracts also expose the
Fund to credit risks in the event that a counterparty defaults on the
contract.

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

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

The Funds may buy/sell financial futures contracts. Large Cap Value
Fund II and certain Underlying Funds (Mid Cap Stock Fund and Large
Cap Value Fund) may also buy/sell stock index futures contracts.

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

The Funds may:

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

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

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

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

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

Special Transactions

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

The Funds' custodian or subcustodian will take possession of the
securities subject to repurchase agreements. The Advisor 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 Advisor
deems creditworthy. In return, the Fund receives cash or liquid
securities from the borrower as collateral. The borrower must
furnish additional collateral if the market value of the loaned
securities increases. Also, the borrower must pay the Fund the
equivalent of any dividends or interest received on the loaned
securities.

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

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

Securities lending activities are subject to interest rate risks and
credit risks.

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

Investing in Securities of Other Investment Companies
The Funds, and each Underlyling Fund, may invest in securities of other
investment companies, including the securities of affiliated money
market funds, as an efficient means of carrying out their investment
policies and managing their uninvested cash. Moderate Growth II intends
to invest substantially all its assets in Underlying Funds in order to
achieve its investment goals.

INVESTMENT RISKS
=========================================================================

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

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

The Advisor and subadvisor each 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 Advisor allocates more of a Fund's portfolio holdings to a
particular sector, a Fund's performance will be more susceptible to any
economic, business or other developments which generally affect that
sector.

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

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

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

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

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

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

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

Risks Related to Company Size
Generally, the smaller the market capitalization of a company, the
fewer the number of shares traded daily, the less liquid its stock and
the more volatile its price. 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.

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

<R>

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

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

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

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

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

To the extent a Fund invests in foreign securities, its 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 a 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 Advisor's credit assessment.

</R>

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

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

Call Risks
Call risk is the possibility that an issuer may redeem a fixed income
security before maturity (a call) at a price below its current market
price. An increase in the likelihood of a call may reduce the
security's price.

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

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

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

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

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

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

STATE INSURANCE REGULATIONS

The Funds are intended to be funding vehicles for variable annuity
contracts and variable life insurance policies offered by certain
insurance companies. The contracts will seek to be offered in as many
jurisdictions as possible. Certain states have regulations concerning,
among other things, the concentration of investments, sales and
purchases of futures contracts, and short sales of securities. If
applicable, the Funds may be limited in their ability to engage in such
investments and to manage their portfolios with desired flexibility.
The Funds will operate in material compliance with the applicable
insurance laws and regulations of each jurisdiction in which contracts
will be offered by the insurance companies which invest in the Funds.

VARIABLE ASSET REGULATIONS

The Funds are also subject to variable contract asset regulations
prescribed by the U.S. Treasury Department under Section 817(h) of the
Internal Revenue Code. After a one year start-up period, the
regulations generally require that, as of the end of each calendar
quarter or within 30 days thereafter, no more than 55% of the total
assets of each Fund may be represented by any one investment, no more
than 70% of the total assets of each Fund may be represented by any two
investments, no more than 80% of the total assets of each Fund may be
represented by any three investments, and no more than 90% of the total
assets of each Fund may be represented by any four investments. In
applying these diversification rules, all securities of the same
issuer, all interests of the same real property project and all
interests in the same commodity are each treated as a single
investment. In the case of government securities, each government
agency or instrumentality shall be treated as a separate issuer. If
the Funds fail to achieve the diversification required by the
regulations, and unless relief is obtained from the Internal Revenue
Service, the contracts invested in the Fund will not be treated as
annuity, endowment, or life insurance contracts.

MIXED FUNDING AND SHARED FUNDING
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As noted previously, the Funds were established exclusively for the
purpose of providing an investment vehicle for variable annuity
contracts and variable life insurance policies offered by separate
accounts of participating insurance companies. The Trust is permitted
to engage in "mixed funding" (using shares as investments for both
variable annuity contracts and variable life insurance policies) and
"shared funding" (using shares as investments for separate accounts of
unaffiliated life insurance companies) pursuant to an exemption from
the SEC, and currently is engaged in shared funding arrangements and
must comply with conditions of the SEC exemption that are designed to
protect investors in the Funds. Although the Funds do not currently
see any disadvantage to contract owners due to differences in
redemption rates, tax treatment or other considerations resulting from
mixed funding or shared funding, the SEC only requires the Trustees to
monitor the operation of mixed funding and shared funding arrangements,
and to consider appropriate action to avoid material conflicts, and to
take appropriate action in response to any material conflicts which
occur. Such action could result in one or more participating insurance
companies withdrawing their investment in a Fund.
The Funds are authorized to pay financial institutions (primarily life
insurance companies), a fee at the maximum annual rate of 0.25% of the
average daily net assets of Shares for which a financial institution
provides shareholder and/or recordkeeping services.

FUNDAMENTAL INVESTMENT OBJECTIVES
=========================================================================

The Moderate Growth Fund II's investment objective is to seek capital
growth. Income is a secondary objective.

The Large Cap Value Fund II's investment objective is to provide
capital appreciation. Current income is a secondary, non-fundamental
investment consideration.

The Large Cap Growth Fund II's investment objective is to provide
capital appreciation.

Unless otherwise stated above, all of the investment objectives listed
above are fundamental. The investment objective may not be changed by
the Funds' Trustees without shareholder approval.

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INVESTMENT LIMITATIONS
=========================================================================

Each Fund may, in the future, seek to achieve the Fund's investment
objectives by investing all of the Fund's assets in a no-load, open-end
management investment company having substantially the same investment
objectives as the Fund. The Fund's investment policies permit such an
investment. Shareholders will receive prior written notice with respect
to any such investment.

Issuing Senior Securities and Borrowing Money
Each Fund may borrow money, directly or indirectly, and issue senior
securities, to the maximum extent permitted under the Investment
Company Act of 1940 (1940 Act), any rule or order thereunder, or any
SEC staff interpretation thereof.

Underwriting
The Funds may not underwrite the securities of other issuers, except
that the Funds may engage in transactions involving the acquisition,
disposition or resale of their portfolio securities, under
circumstances where the Funds may be considered to be an underwriter
under the Securities Act of 1933.

Investing in Real Estate
The Funds may not purchase or sell real estate, provided that this
restriction does not prevent the Funds 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 Funds may exercise their rights under
agreements relating to such securities, including the right to enforce
security interests and hold real estate acquired by reason of such
enforcement until that real estate can be liquidated in an orderly
manner.

Lending Cash or Securities
The Funds may not make loans, provided that this restriction does not
prevent the Funds from purchasing debt obligations, entering into
repurchase agreements, lending their assets to broker/dealers or
institutional investors and investing in loans, including assignments
and participation interests.

Investing in Commodities
The Funds may not purchase or sell physical commodities, provided that
the Funds 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.

Concentration of Investments
The Funds will not make investments that will result in the
concentration of their 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.

Diversification
With respect to securities comprising 75% of the value of its total
assets, the Funds 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 Funds would own more than 10%
of the outstanding voting securities of that issuer.

The above limitations cannot be changed unless authorized by the Board
of Trustees (Board) and by the "vote of a majority of its outstanding
voting securities," as defined by the 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.

Buying on Margin
The Funds will not purchase securities on margin, provided that the
Funds may obtain short-term credits necessary for the clearance of
purchases and sales of securities, and further provided that the Funds
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.

Investing in Restricted and Illiquid Securities
The Funds may invest in restricted securities. Restricted securities
are any securities in which a Fund may invest pursuant to its
investment objective and policies but which are subject to restrictions
on resale under federal securities law. Under criteria established by
the Trustees, certain restricted securities are determined to be
liquid.

The Funds 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.

Pledging Assets

The Funds will not mortgage, pledge, or hypothecate any of their
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.

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Investing in Other Investment Companies
The Funds may invest their assets in securities of other investment
companies as an efficient means of carrying out their investment
policies. It should be noted that investment companies incur certain
expenses, such as management fees, and, therefore, any investment by
the Funds in shares of other investment companies may be subject to
such duplicate expenses. At the present time, the Funds expect that
their investments in other investment companies may include shares of
money market funds, including funds affiliated with the Funds'
investment advisor. In addition, Moderate Growth II intends to invest
substantially all of its assets in Underlying Funds managed by Moderate
Growth II's investment advisor.
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In applying the Funds' 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 Funds 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 Funds'
total assets in any one industry will constitute "concentration."

Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not
result in a violation of such restriction. Only the Large Cap Growth
Fund II has any present intent to borrow money in excess of 5% of the
value of its net assets during the coming fiscal year.

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

The Underlying Funds in which Moderate Growth Fund II may invest have
adopted certain investment restrictions which may be more or less
restrictive than those listed above, thereby allowing Moderate Growth
Fund II to participate in certain investment strategies indirectly that
may be prohibited under the fundamental and non-fundamental investment
restrictions and policies listed above.

Portfolio Turnover

The portfolio turnover rate for each Fund is calculated by dividing the
lesser of a Fund's purchases or sales of portfolio securities for the
year by the monthly average value of the portfolio securities. The
Securities and Exchange Commission requires that the calculation
exclude all securities whose remaining maturities at the time of
acquisition were one year or less.

The portfolio turnover rate for a Fund may vary greatly from year to
year, and may also be affected by cash management requirements for
share redemptions. High portfolio turnover rates will generally result
in higher transaction costs, including brokerage commissions, to a Fund
and may result in tax consequences to shareholders. Portfolio turnover
will not be a limiting factor in making investment decisions.

DETERMINING MARKET VALUE OF SECURITIES
=========================================================================

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

| 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;

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

| futures contracts and options are generally 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 generally 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;

| for fixed income securities, according to the mean between bid
and asked prices as furnished by an independent pricing service,
except that fixed income securities with remaining maturities of less
than 60 days at the time of purchase may be valued at amortized cost;

| for shares of other mutual funds, at their net asset value per
share; and

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

Prices provided by independent pricing services may be determined
without relying exclusively on quoted prices and may consider
institutional trading in similar groups of securities, yield, quality,
stability, risk, coupon rate, maturity, type of issue, trading
characteristics, and other market data or factors. From time to time,
when prices cannot be obtained from an independent pricing service,
securities may be valued based on quotes from broker-dealers or other
financial institutions that trade the securities.

Trading in Foreign Securities
Trading in foreign securities may be completed at times which vary from
the closing of the New York Stock Exchange (NYSE). In computing its
NAV, the Fund values foreign securities at the latest closing price on
the exchange on which they are traded immediately prior to the closing
of the NYSE. Certain foreign currency exchange rates may also be
determined at the latest rate prior to the closing of the NYSE. Foreign
securities quoted in foreign currencies are translated into U.S.
dollars at current rates. Occasionally, events that affect these values
and exchange rates may occur between the times at which they are
determined and the closing of the NYSE. If such events materially
affect the value of portfolio securities, these securities may be
valued at their fair value as determined in good faith by the Funds'
Board, although the actual calculation may be done by others.

WHAT DO SHARES COST?
=========================================================================

Each 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.

HOW ARE THE FUNDS SOLD?
=========================================================================

<R>

Under the Distributor's Contract with the Fund, the Distributor
(Edgewood Services, Inc.) offers Shares on a continuous, best-efforts
basis.

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

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

SUPPLEMENTAL PAYMENTS
Investment professionals may be paid fees out of the assets of the
Distributor (but not out of Fund assets) and/or the Advisor or their
affiliates.

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

</R>

SUBACCOUNTING SERVICES
=========================================================================

Certain participating insurance companies 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. Participating insurance companies
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 participating insurance company about the
services provided, the fees charged for those services, and any
restrictions and limitations imposed.

REDEMPTION IN KIND
=========================================================================

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

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

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

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

ACCOUNT AND SHARE INFORMATION
=========================================================================

VOTING RIGHTS
The insurance company separate accounts, as shareholders of the Funds,
will vote the Fund Shares held in their separate accounts at meetings
of the shareholders. Voting will be in accordance with instructions
received from contract owners of the separate accounts, as more fully
outlined in the prospectus of the separate account.

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

All Shares of the Trust 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.

Trustees 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
Trust's outstanding shares of all series entitled to vote.

<R>

As of March 29, 2004, the following shareholders owned of record,
beneficially, or both, 5% or more of outstanding Shares:

--------------------------------------------------------------------------------------------
Fund Shareholder Name Address Percentage Owned
Moderate Growth Fund II Nationwide Insurance Company, c/o 100.00%
IPO Portfolio Accounting,
Columbus, OH
Large Cap Value Fund II Nationwide Insurance Company, c/o 70.44%
IPO Portfolio Accounting,
Columbus, OH
---------------------------------- 29.56%
Nationwide Insurance Company,
Attn: Pam Smith, Columbus, OH
Large Cap Growth Fund II Nationwide Insurance Company, c/o 67.76%
IPO Portfolio Accounting,
Columbus, OH
Nationwide Insurance Company, 32.24%
Attn: Pam Smith, Columbus, OH
--------------------------------------------------------------------------------------------
</R>

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

TAX INFORMATION
=========================================================================

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

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

Each Fund must, and intends to, comply with the diversification
requirements imposed by Section 817(h) of the Internal Revenue Code.
For information concerning the consequence of a Fund not meeting the
Section 817(h) requirements, see the prospectus of the separate account.

The Treasury Department announced that it would issue future
regulations or rulings addressing the circumstances in which a variable
contract owner's control of the investments of the separate account may
cause the contract owner, rather than the insurance company, to be
treated as the owner of the assets held by the separate account. If the
contract owner is considered the owner of the securities underlying the
separate account, income and gains produced by those securities would
be included currently in the contract owner's gross income. It is not
known what standards will be set forth in the regulations or rulings.

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

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

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

WHO MANAGES AND PROVIDES SERVICES TO THE FUNDS?
=========================================================================

BOARD OF TRUSTEES
The Board is responsible for managing the Trust's business affairs and
for exercising all the Trust's powers except those reserved for the
shareholders. The following tables give information about each Board
member and the senior officers of the Funds. Where required, the tables
separately list Board members who are "interested persons" of the Funds
(i.e., "Interested" Board members) and those who are not (i.e.,
"Independent" Board members). Each Board member oversees all portfolios
of the Trust and serves for an indefinite term. Information about each
Board member is provided below and includes each person's: name,
address, birthdate, present position(s) held with the Trust, principal
occupations for the past five years, other directorships held, and
total compensation received as a Trustee from the Trust for its most
recent fiscal year applicable to MTB Large Cap Growth Fund II, MTB
Large Cap Value Fund II, and MTB Managed Allocation Fund - Moderate
Growth II (December 31, 2003). The Trust is composed of 34 funds and is
the only investment company in the Fund Complex.

INTERESTED TRUSTEE BACKGROUND AND COMPENSATION

------------------------------------------------------------------------ --------------
Name
Address -------------
-------------------------- ------------------------------------------ Total
Birth date Compensation
Position With Trust Principal Occupations for Past Five Years From
Date Service Began and Other Directorships Held Trust
---------------------------------------------- --------------
Mark J. Czarnecki+ Principal Occupations: Executive Vice $0
-------------------------- President, Manufacturers and Traders
Manufacturers and Traders Trust Company ("M&T Bank"), division
Trust Company head for M&T Bank's investment group.
One M&T Plaza
Buffalo, NY 14203 Other Directorships Held: None
Birthdate: November 3,
1955

Trustee

Began serving: August 2000

______________________________________________________________________________________

+ Mark J. Czarnecki is "interested" due to positions he holds with
M&T Bank, the parent of the Funds' advisor.

<R>

INDEPENDENT TRUSTEES BACKGROUND AND COMPENSATION

------------------------------------------------------------------------ --------------
Name
Address -------------
-------------------------- ------------------------------------------ Total
Birth date Compensation
Position With Trust Principal Occupationsfor Past Five Years From
Date Service Began and Other Directorships Held Trust
------------------------------------------------------------------------ --------------
Joseph J. Castiglia Principal Occupations: Chairman of the $20,000
-------------------------- Board, HealthNow New York, Inc. (health
Roycroft Campus care company) ; and former President,
21 South Grove Street, Chief Executive Officer and Vice
Suite 290 Chairman, Pratt & Lambert United,
East Aurora, NY 14052 Inc. (manufacturer of paints and chemical
Birth date: July 20, 1934 specialties).

Trustee Other Directorships Held: The Energy East
Corp.
Began serving: February
1988

---------------------------
------------------------------------------------------------------------ --------------
William H. Cowie, Jr.++ Principal Occupations: Retired Chief $10,000
1408 Ruxton Road Financial Officer, Pencor, Inc.
Baltimore, MD (environmental project development
Birth date: January 24, company) since 1995.
1931
Other Directorships Held: None
Trustee

Began serving: September
2003
------------------------------------------------------------------------ --------------
John S. Cramer Principal Occupations: Retired President $20,000
4216 Jonathan Lane and Chief Executive Officer, Pinnacle
Harrisburg, PA 17110 Health System (health care); Predident
Birth date: February 22, Emeritis, Highmark Blue Cross Blue Shield.
1942
Other Directorships Held: Highmark Blue
Trustee Cross Blue Shield; Chek-Med Corporation

Began serving: December
2000

------------------------------------------------------------------------ --------------
Daniel R. Gernatt, Jr. Principal Occupations: President and CFO, $20,000
Richardson & Taylor Gernatt Asphalt Products, Inc.; Executive
Hollow Roads Vice President, Dan Gernatt Gravel
Collins, NY Products, Inc.; Vice President, Country
Birth date: July 14, 1940 Side Sand & Gravel, Inc.

Trustee Other Directorships Held: None

Began serving: February
1988

------------------------------------------------------------------------ --------------
George K. Hambleton, Jr. Principal Occupations: Retired President, $20,000
1003 Admiral's Walk Brand Name Sales, Inc. (catalog showroom
Buffalo, NY operator); Retired President, Hambleton
Birth date: February 8, & Carr, Inc. (catalog showroom
1933 operator).

Trustee Other Directorships Held: None

Began serving: February
1988

------------------------------------------------------------------------ --------------
------------------------------------------------------------------------ --------------
Richard B. Seidel++ Principal Occupations: Director and $10,000
770 Hodges Lane President (since 1995) of Girard
Strafford, PA Partners, a registered broker-dealer.
Birth date: April 20, 1941
Other Directorships Held: None
Trustee

Began serving: September
2003
---------------------------
++Mr. Cowie and Mr. Seidel became members of the Board of Trustees on
September 1, 2003.

OFFICERS

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

-------------------------- -------------
------------------------------------------
Name Total
Address Compensation
Birth date ---Principal Occupations for Past Five Years From
Position With Trust and Previous Positions Trust**
------------------------------------------------------------------------ --------------
Edward C. Gonzales Principal Occupations: Employee, $0
-------------------------- Federated Investors, Inc.; formerly,
Federated Investors Tower President and Executive Vice President of
Pittsburgh, PA other funds distributed by Federated
Birth date: October 22, Securities Corp.; Vice Chairman,
1930 Federated Investors, Inc.; Trustee,
Federated Administrative Services.
Chairman
Previous Positions: Trustee or Director
of other funds distributed by Federated
Securities Corp.; CEO and Chairman,
Federated Administrative Services; Vice
President, Federated Investment
Management Company, Federated Investment
Began serving: May 2001 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.

----
--------------------------- -------------------------------------------- --------------
Charles L. Davis Principal Occupations: Vice President, $0
Federated Investors Tower Director of Mutual Fund Services and
Pittsburgh, PA Strategic Relationship Management,
Birth date: March 23, 1960 Federated Services Company.

Chief Executive Officer

Began serving: December
2002
--------------------------- ------------------------------------------- --------------
Carl W. Jordan Principal Occupations: Senior Vice $0
One M&T Plaza President, M&T Bank, 2001- Present;
Buffalo, NY Administrative Vice President, M&T
Birth date: January 2, Bank, 1995-2001.
1955

President

Began serving: May 2001
--------------------------- ------------------------------------------- --------------
Kenneth G. Thompson Principal Occupations: Administrative $0
100 East Pratt Street Vice President, M&T Bank,
Baltimore, MD 2002-Present; Vice President, M&T
Birth date: September 4, Bank, 1999-2002; Regional Sales Manager,
1964 M&T Securities, Inc., 1995-1999.

Vice President

Began serving: May 2001
--------------------------- ------------------------------------------- --------------
Philip R. Carbone Principal Occupations: Vice President, $0
100 East Pratt Street, Director of Distribution for Proprietary
15th floor Products, M&T Securities, since 2003;
Baltimore, MD Manager, Vision Shareholder Services and
Birth date: July 27, 1954 Discount Brokerage, 1998-2002.

Vice President Previous Positions: Regional Sales
Manager, M&T Securities, Inc.,
Began serving: September 1995-1998.
2003
--------------------------- ------------------------------------------- --------------
Scot A. Millen Principal Occupations: Vice President, $0
100 East Pratt Street, Product Manager, M&T Securities,
15th floor since 2002; Executive Associate, M&T
Baltimore, MD Investment Group, 2001-2002; Summer
Birth date: February 22, Associate, M&T Investment Group, 2000.
1969

Vice President

Began serving: September
2003
--------------------------- ------------------------------------------- --------------
Beth S. Broderick Principal Occupations: Vice President, $0
Federated Investors Tower Mutual Fund Services Division, Federated
Pittsburgh, PA Services Company.
Birth date: August 2, 1965

Vice President and
Assistant Treasurer

Began serving: February
1998
--------------------------- -------------------------------------------- --------------
Richard J. Thomas Principal Occupations: Principal Financial $0
Federated Investors Tower Officer and Treasurer of the Federated
Pittsburgh, PA Fund Complex; Senior Vice President,
Birth date: June 17, 1954 Federated Administrative Services.

Treasurer Previous Positions: Vice President,
Federated Administrative Services; held
Began serving: December various management positions within Funds
2002 Financial Services Division of Federated
Investors, Inc.
------------------------------------------------------------------------ --------------
C. Grant Anderson Principal Occupation: Counsel, Reed Smith $0
Federated Investors Tower LLP (since October 2002).
Pittsburgh, PA
Birth date: November 6,
1940 Previous Positions: Corporate Counsel,
Federated Investors, Inc.; Vice
Secretary President, Federated Services Company.

Began serving: December
2000
------------------------------------------------------------------------ --------------
------------------------------------------------------------------------ --------------
Victor R. Siclari Principal Occupations: Partner, Reed $0
Federated Investors Tower Smith LLP (since October 2002).
Pittsburgh, PA
Birth date: November 17, Previous Positions: Sr. Corporate Counsel
1961 and Vice President, Federated Services
Company (prior to October 2002).
Assistant Secretary

Began serving: May 2000;
Secretary from August 11,
1995 to May 11, 2000;
Assistant Secretary from
May 11, 2000 to present.
------------------------------------------------------------------------ --------------

** Officers do not receive any compensation from the Funds.

COMMITTEES of the board
Board Committee Committee Functions Meetings Held
Committee --Members ----------------------------------------------During Last
Fiscal Year

Executive* Mark J. Czarnecki In between meetings of the full Board, None
------------------ the Executive Committee generally may
Daniel R. exercise all the powers of the full Board
Gernatt, Jr. in the management and direction of the
Richard B. Seidel business and conduct of the affairs of
the Trust in such manner as the Executive
Committee shall deem to be in the best
interests of the Trust. However, the
Executive Committee cannot elect or
remove Board members, increase or
decrease the number of Trustees, elect or
remove any Officer, declare dividends,
issue shares or recommend to shareholders
any action requiring shareholder approval.
Audit Joseph J. The Audit Committee reviews and Five
Castiglia recommends to the full Board the
William H. Cowie, independent auditors to be selected to
Jr. audit the Funds' financial statements;
John S. Cramer meets with the independent auditors
Richard B. Seidel periodically to review the results of the
audits and reports the results to the
full Board; evaluates the independence of
the auditors, reviews legal and
regulatory matters that may have a
material effect on the financial
statements, related compliance policies
and programs, and the related reports
received from regulators; reviews the
Funds' internal audit function; reviews
compliance with the Funds' code of
conduct/ethics; reviews valuation issues;
monitors inter-fund lending transactions;
reviews custody services and issues and
investigates any matters brought to the
Committee's attention that are within the
scope of its duties.

* created effective December 15, 2003
-------------------------------------------------------------------------

Board ownership of shares in the funds and in the TRUST
AS OF DECEMBER 31, 2003

Interested Dollar Range of Aggregate
Board Member Name Shares Owned Dollar Range of
------------------------------- in Funds Shares Owned in
----------------- the Trust

Mark J. Czarnecki None Over $100,000

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

Independent Dollar Range of Aggregate
Board Member Name Shares Owned Dollar Range of
------------------------------- in Funds Shares Owned in
----------------- the Trust

Joseph J. Castiglia None Over $100,000

William H. Cowie, Jr. None None

John S. Cramer None $1-$10,000

Daniel R. Gernatt, Jr. None Over $100,000

George K. Hambleton, Jr. None $1-$10,000

Richard B. Seidel None $10,001-$50,000

-------------------------------------------------------------------------
As of March 29, 2004, the funds' board and officers as a group owned
less than 1% of each fund's outstanding shares.

INVESTMENT ADVISoR
The Advisor conducts investment research and makes investment decisions
for the Funds.

The Advisor shall not be liable to the Trust 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 Trust.

As required by the Investment Company Act of 1940 ("1940 Act"), the
Funds' Board has initially approved the Funds' investment advisory
contract and subadvisory contracts and will have to renew the contracts
on a yearly basis after the initial term. The Board's decision to
approve these contracts reflects the exercise of its business
judgment. During its review of these contracts, the Board considers
many factors, among the most material of which are: the Funds'
investment objectives and any long term performance; the Advisor's and
subadvisors' management philosophy, personnel, and processes; the
preferences and expectations of Fund shareholders and their relative
sophistication; the continuing state of competition in the mutual fund
industry; comparable fees in the mutual fund industry; and the range
and quality of services provided to the Funds and its shareholders by
the M&T Bank organization in addition to investment advisory
services.

In assessing the Advisor's and subadvisors' performance of their
respective obligations, the Board also considers whether there is
likely to occur a circumstance or event that would constitute a reason
for it to not renew an advisory contract. In this regard, the Board is
mindful of the potential disruptions of the Funds' operations and
various risks, uncertainties and other effects that could occur as a
result of a decision to terminate or not renew an advisory contract.
In particular, the Board recognizes that most shareholders will invest
in the Funds on the strength of the Advisor's industry standing and
reputation and in the expectation that the Advisor will have a
continuing role in providing advisory services to the Funds.

The Board also considers the compensation and benefits received by the
advisor and subadvisors. This includes fees received for services
provided to the Funds by other entities in the M&T Bank
organization and research services received by the Advisor and
subadvisors from brokers that execute Fund trades, as well as advisory
fees. In this regard, the Board is aware that various courts have
interpreted provisions of the 1940 Act and have indicated in their
decisions that the following factors may be relevant to an advisor's
compensation: the nature and quality of the services provided by the
advisor, including the performance of the fund; the advisor's cost of
providing the services; the extent to which the advisor may realize
"economies of scale" as the fund grows larger; any indirect benefits
that may accrue to the advisor and its affiliates as a result of the
advisor's relationship with the fund; performance and expenses of
comparable funds; and the extent to which the independent Board members
are fully informed about all facts bearing on the advisor's service and
fee. The Funds' Board is aware of these factors and takes them into
account in its review of the Funds' advisory contract.

The Board considers and weighs these circumstances in light of its
substantial accumulated experience in governing the Funds and working
with the Advisor and subadvisors on matters relating to its funds, and
is assisted in its deliberations by the advice of independent legal
counsel. In this regard, the Board requests and receives a significant
amount of information about the Funds and the Advisor and subadvisors.
The Advisor provides much of this information at each regular meeting
of the Board, and furnishes additional reports in connection with the
particular meeting at which the Board's formal review of the advisory
contracts occurs. In between regularly scheduled meetings, the Board
may receive information on particular matters as the need arises.
Thus, the Board's evaluation of an advisory contract is informed by
reports covering such matters as: the advisor's investment philosophy,
personnel, and processes; the fund's short- and long-term performance
(in absolute terms as well as in relationship to its particular
investment program and certain competitor or "peer group" funds), and
comments on the reasons for performance; the fund's expenses (including
the advisory fee itself and the overall expense structure of the fund,
both in absolute terms and relative to similar and/or competing funds,
with due regard for contractual or voluntary expense limitations); the
use and allocation of brokerage commissions derived from trading the
Fund's portfolio securities; the nature and extent of the advisory and
other services provided to the Fund by the Advisor and subadvisors and
their respective affiliates; compliance and audit reports concerning
the Funds and the companies that service them; and relevant
developments in the mutual fund industry and how the Funds and/or the
Advisor and subadvisors are responding to them.

The Board also receives financial information about the Advisor and
subadvisors, including reports on the compensation and benefits the
Advisor or subadvisors, as the case may be, derives from its
relationships with the Funds. These reports cover not only the fees
under the advisory contracts, but also fees received by the Advisor's
affiliates for providing other services to the Funds under separate
contracts (e.g., for serving as the Funds' co-administrator and
shareholder servicing agent). The reports also discuss any indirect
benefit the Advisor or subadvisors may derive from its receipt of
research services from brokers who execute fund trades.

The Board bases its decision to approve an advisory and subadvisor
contract on the totality of the circumstances and relevant factors, and
with a view to past and future long-term considerations. Not all of
the factors and considerations identified above are relevant to every
fund, nor does the Board consider any one of them to be determinative.
Because the totality of circumstances includes considering the
relationship of each fund to the MTB Group of Funds, the Board does not
approach consideration of every fund's advisory contract as if that
were the only fund offered by the Advisor.

SUB-ADVISOR

Large Cap Growth Fund II

The Advisor has delegated daily management of the Large Cap Growth Fund
II to the sub-advisor, Montag & Caldwell, Inc. (M&C).
Alleghany Asset Management, Inc. (the parent of M&C) was acquired
by ABN AMRO North America Holding Company on January 31, 2001.

For its services under the Sub-Advisory Agreement, M&C receives an
allocable portion of the advisory fee the Advisor receives from the
Large Cap Growth Fund II. The allocation is based on the amount of
securities which M&C manages for the Fund. This fee is paid by the
Advisor out of the fees it receives and is not a Fund expense. M&C
is paid by the Advisor as follows:

Sub-Advisory Fee Average Daily Net Assets of the Fund
------------------------------------------------------------------------------
0.50% on the first $50 million average daily net
assets;
------------------------------------------------------------------------------
0.40% on the next $50 million average daily net
assets; and
------------------------------------------------------------------------------
0.30% on the next $100 million average daily net
assets; and,
0.20% on average daily net assets over $200 million.
------------------------------------------------------------------------------

Code of ethics restrictions on personal trading
As required by SEC rules, the Funds, their Advisor, Subadvisor and
Distributor have adopted codes of ethics. These codes govern securities
trading activities of investment personnel, Trustees, and certain other
employees. Although they do permit these people to trade in securities,
including those that the Funds could buy, they also contain significant
safeguards designed to protect the Funds and their shareholders from
abuses in this area, such as requirements to obtain prior approval for,
and to report, particular transactions.

</R>

VOTING PROXIES ON FUND PORTFOLIO SECURITIES

The Board has delegated to the Advisor authority to vote proxies on the
securities held in the Fund's portfolio. The Board has also approved
the Advisor's policies and procedures for voting the proxies, which are
set forth in their entirety below.

MTB INVESTMENT ADVISORS, INC.
PROXY VOTING POLICY

INTRODUCTION
<R>...
MTB Investment Advisors, Inc. acknowledges that among its duties
as a fiduciary to its clients is the obligation to protect the
interests of its clients by voting the shares held by its clients'
accounts. In order to ensure that shares are voted in all appropriate
circumstances, Advisor will exercise voting discretion as to all shares
unless voting discretion is specifically reserved for the client or
assigned to a third party in the advisory contract. To ensure that
shares are voted in a consistent manner and in the best interest of its
clients, Advisor has adopted this Proxy Voting Policy.
GENERAL STANDARDS AND APPROACH
Each year, the Advisor receives hundreds of proxy solicitations
with respect to voting securities held in client accounts. The matters
to be voted upon may be proposals of management or of stockholders, and
cover a diverse assortment of complex issues. Whether the interests of
shareholders are best served by a vote "for" or "against" a proposal
often depends upon the context, the effects that adoption could have on
the company's business, and the motivations of the parties making the
proposal. These determinations require a considerable investment of
time, resources and expertise.
Given the sheer volume of proxies, and the broad spectrum of
issues to be voted upon, the proxy voting process represents a
considerable administrative burden. In order to efficiently discharge
its duty to vote proxies, Advisor has engaged a third party,
Institutional Shareholder Services, Inc. ("ISS") to perform the
function of analyzing and providing recommendations on voting proxies.
ISS is the acknowledged industry leader in assisting
institutional shareholders with the types of proxy analysis described
above. Advisor has reviewed the policies and considerations applied by
ISS in voting proxies and found them to be fully consistent with the
policies of Advisor, which are set forth in detail herein.
Accordingly, Advisor will generally follow the ISS recommendations in
voting proxies.
In general, Advisor believes that it is in the best interests of
its clients to vote its clients' shares so as to promote the alignment
of the interests of corporate management with the interests of its
shareholders, to improve the accountability of corporate management to
its shareholders, to reward good performance by management, and to
approve proposals that Advisor believes will result in financial
rewards for its clients.
Advisor reserves the right to override any voting policy stated
below when it believes that a vote contrary to a policy would be in the
best interest of Advisor's clients. Any vote contrary to a stated
policy must be approved by the Trade Management Oversight Committee of
the Advisor's Board of Directors, or that Committee's designee. A
written summary of the considerations in making the voting decision
should be prepared and retained with the records of the proxy.
Advisor believes that addressing its proxy voting obligations as
described in this Proxy Voting Policy will promote the best interests
of shareholders, and therefore, will be in the best interests of
Advisor's clients.

CONFLICTS OF INTEREST

Advisor may have a conflict of interest in voting a particular
proxy. A conflict of interest could arise, for example, as a result of
a business relationship with a company, or a direct or indirect
business interest in the matter being voted upon, or as a result of a
personal relationship with corporate directors or candidates for
directorships. Whether a relationship creates a material conflict of
interest will depend upon the facts and circumstances.
The Trade Management Oversight Committee has reviewed a copy of
the ISS policies, procedures and practices regarding potential
conflicts of interest that could arise in ISS proxy voting services to
Advisor as result of business conducted by ISS. The Trade Management
Oversight Committee believes that the policies, procedures and
practices followed by ISS minimize the potential conflicts of interest
by ISS in making voting recommendations to Advisor.
Whenever a portfolio manager determines that it is in a client's
best interest to vote on a particular proposal in a manner other than
in accordance with the guidelines set forth in this Proxy Voting
Policy, or the policy does not address how to vote on the proposal, the
portfolio manager shall present the matter to the Trade Management
Oversight Committee, which shall be responsible for evaluating
information relating to conflicts of interest in connection with the
voting of the client proxy.
For purposes of identifying conflicts under this policy, the
Trade Management Oversight Committee will rely on publicly available
information about a company and its affiliates, information about the
company and its affiliates that is generally known by employees of
Advisor, and other information actually known by a member of the Trade
Management Oversight Committee.
In the event that the Trade Management Oversight Committee
determines that Advisor has a material conflict of interest with
respect to a proxy proposal, then Advisor shall either:
1. Vote on the proposal in accordance with the
recommendation of the Trade Management Oversight Committee or
that committee's designee;
OR
2. Prior to voting on the proposal, either:
(i) Contact an independent third party (such as another
plan fiduciary) to recommend how to vote on the proposal and will
vote in accordance with the recommendation of such third party
(or have the third party vote such proxy); or
(ii) Fully disclose the nature of the conflict to the
client(s), and obtain the client's consent as to how Advisor will
vote on the proposal (or otherwise obtain instructions from the
client as to how the proxy on the proposal should be voted).
Advisor may not address a material conflict of interest by
abstaining from voting, unless the Trade Management Oversight Committee
(or that committee's designee) has determined that not voting the proxy
is in the best interest of a client. However, as indicated above,
there may be other circumstances where Advisor determines that
refraining from voting a proxy is in the client's best interest and the
existence of a material conflict of interest shall not affect such a
determination.
The Trade Management Oversight Committee shall document the
manner in which proxies involving a material conflict of interest have
been voted by Advisor as well as the basis for any determination that
Advisor does not have a material conflict of interest in respect of a
particular matter.
ROUTINE MATTERS
VOTING FOR DIRECTOR NOMINEES IN UNCONTESTED ELECTIONS.
Advisor will vote for the candidates nominated by management in
uncontested elections unless there is a basis or reason for opposing
such candidates, in which event Advisor shall withhold its vote for
such candidates.
To the extent practicable, Advisor will consider the following factors
when assessing reasons for opposing candidates in uncontested elections
and making case-by-case voting determinations in contested elections:
o Long-Term Corporate Performance Record. When Advisor believes that
there has been consistent underperformance by a company, Advisor
will consider the potential for effecting change when evaluating
incumbent candidates and first-time candidates. As part of this
consideration, Advisor will examine the company's financial
performance measures, market-based performance measures, S&P
Common Stock rankings, and any other applicable performance
measures.
o Composition of the Board and Key Board Committees. Advisor will
consider a director to be independent if he or she has no
connection to the company other than a board seat. Even if the
board member has served on the board for over ten years, he/she
will still be considered to be an independent director.
Key board committees such as audit, compensation, and nominating
committees should be composed entirely of independent directors.
Votes for insider directors will normally be withheld if they
serve on any of these committees. In addition, votes for inside
directors should be withheld in instances where the full board
serves as the audit, compensation, or nominating committee or in
instances where the company does not have one of these
committees.
o Attendance at Meetings. An incumbent candidate should have
attended at least 75 percent of the board and committee meetings.
Mitigating circumstances for absenteeism may include the
convening of relatively few meetings and other reasonable
justifications that are not likely to reoccur.
o Director's Investment in the Company. Ownership of a significant
block of stock is a positive factor because it tends to align the
director's interests with those of the shareholders. The lack of
any stock holding or a small holding may be a negative factor in
the absence of an explanation. Stock ownership should not be a
factor in the case of candidates, such as academics or religious
leaders, who may be qualified to serve but lack the wealth to buy
stock.
o Retired Chief Executive Officers (CEOs). Nominations of retired
CEOs to boards of the companies they headed are generally not
favored but may be supported in exceptional circumstances. For
example, the nomination of a retired CEO with an outstanding
record of performance by a nominating committee composed of
independent directors would be viewed more favorably than the
nomination of a former CEO with a lackluster performance record
by directors who owe their positions to him.
o Number of Other Board Seats. A candidate generally should not
serve on more than four boards at once (except boards of
registered investment companies that are a family of funds),
especially if he or she holds a regular, full-time position apart
from being a director.
o Other Factors. Any other factor bearing on the qualifications of
candidates to serve as directors, including but not limited to
conviction of a crime, payment of greenmail, appearance of
entrenchment, interlocking directorships, etc., may be
considered.
RATIFYING AUDITORS.
Advisor will vote for resolutions to ratify auditors, unless there is
reason to believe the independent auditor has rendered an opinion that
is neither accurate nor indicative of the company's financial position.

CHANGES IN CORPORATE GOVERNANCE AND SHAREHOLDER RIGHTS
MAJORITY OF INDEPENDENT DIRECTORS.
Advisor will generally vote for shareholder resolutions seeking boards
composed of a majority of independent directors.
Advisor will vote for shareholder resolutions seeking board audit
committees, compensation committees, and nomination committees composed
exclusively of independent directors.
Exceptions to the rule may be made where the board is already
sufficiently independent and is fulfilling its fiduciary duty making
support of such proposals unnecessary.
STAGGERED VERSUS ANNUAL ELECTIONS.
Advisor will vote for proposals to repeal classified boards and elect
all directors annually.
Advisor will vote against proposals to classify boards.
A classified Board is one in which all directors are not elected in the
same year; rather the directors' terms of office are staggered. This
eliminates the possibility of removing entrenched management at any one
annual election of directors.
CUMULATIVE VOTING.
Advisor will vote for proposals to permit cumulative voting in cases
where there are insufficient good governance provisions and against in
cases where there are sufficient good governance provisions.
Advisor will vote against proposals to eliminate cumulative voting.
Most corporations provide that shareholders are entitled to cast one
vote for each director for each share owned, which is the so-called
"one share, one vote" standard. A minority of companies allow
cumulative voting, which permits shareholders to distribute the total
number of votes they have in any manner they see fit when electing
directors. For example, if a shareholder owns 50,000 shares and three
director seats are open for election, the shareholder may cast 150,000
votes for one candidate (or otherwise distribute his 150,000 votes as
he desires).
While cumulative voting can be an important tool to promote management
accountability, the need for such a policy should be evaluated in
concert with the company's other governance provisions. If there are
other safeguards to ensure that shareholders have reasonable access and
input into the process of nominating and electing directors, cumulative
voting in not essential. However, it would be necessary for a company's
governing documents to contain the following provisions for Advisor to
vote against providing for cumulative voting:
(a) Annually elected board;
(b) Majority of board composed of independent directors;
(c) Nominating committee composed solely of independent directors;
(d) Confidential voting (however, there may be a provision for
suspending confidential voting during proxy contests);
(e) Ability of shareholders to call special meetings or to act by
written consent with 90 days' notice;
(f) Absence of superior voting rights for one or more classes of stock.
For example, an unacceptable structure could consist of two classes of
stock where Class A stock was entitled to one vote per share and Class
B stock was entitled to 10 votes per share;
(g) Board does not have the sole right to change the size of the board
beyond a stated range that has been approved by shareholders;
(h) Absence of shareholder rights plan that can only be removed by the
incumbent directors (dead hand poison pill);
(i) (Optional) Published statement of board governance guidelines,
including a description of the process for shareholders to submit
director nominees that ensures valid nominees are considered.
In addition to these desired governance provisions, the company's
performance must be comparable to that of its peers or the board must
have demonstrated its focus on increasing shareholder value by taking
action to improve performance. For example, the board may have recently
replaced management or changed strategic direction.
PREEMPTIVE RIGHTS.
Advisor will vote on a case-by-case basis regarding shareholder
proposals seeking preemptive rights.
Preemptive rights guarantee existing shareholders the first opportunity
to purchase shares of new stock issues in the same class they already
own and in an amount equal to the percentage of stock they own. While
shareholders may not choose to exercise their right, it at least
affords them some protection from involuntary dilution of their
ownership interest, as well as an opportunity to save a brokerage
commission. The absence of these rights could cause stockholders'
interest in a company to be reduced by the sale of additional shares
without their knowledge and at prices that are unfavorable to them.
Generally, we do not believe the cost of implementing preemptive rights
is justified by the value added to shareholders. In evaluating
proposals on preemptive rights, Advisor will look at the size of the
company and the characteristics of its shareholder base.
STOCK OWNERSHIP REQUIREMENTS.
Advisor will vote against shareholder resolutions requiring directors
to own a minimum amount of company stock to qualify as a director or
remain on the board.
TERM OF OFFICE.
Advisor will vote against shareholder proposals to limit the tenure of
outside directors.
AGE LIMITS
Advisor will vote against shareholder proposals to impose mandatory
retirement age for outside directors.
DIRECTOR AND OFFICER INDEMNIFICATION AND LIABILITY PROTECTION.
Advisor will vote for proposals for indemnification and liability
protection that satisfy the following conditions: (1) the director must
have acted in good faith and in a manner that he reasonably believed
was in the best interests of the company, (2) such protection does not
extend beyond legal expenses to acts involving gross negligence or
other violations of the duty of care that exceed reasonable standards,
(3) such protection does not extend to acts involving a breach of the
duty of loyalty or self dealing, (4) such protection does not limit or
eliminate entirely directors' and officers' liability for monetary
damages for violating the duty of care; and (5) such protection does
not extend to acts involving criminal activity. Advisor will vote
against proposals that are overly broad.
SEPARATING CHAIRMAN AND CEO.
Advisor will vote shareholder proposals requiring that the positions of
chairman and CEO be held separately on a case-by-case basis.
In cases in which corporate performance is average or better relative
to a peer group and market index, Advisor will vote against shareholder
proposals to separate the positions. In cases in which performance is
below average, Advisor will generally vote for resolutions to separate
the positions, especially if the same person has held both positions
over a sustained period of underperformance.
SHAREHOLDERS' ABILITY TO REMOVE DIRECTORS.
Advisor will vote against proposals that provide that directors may be
removed only for cause.
Advisor will vote for proposals to restore shareholder ability to
remove directors with or without cause.
Advisor will vote against proposals that provide that only continuing
directors may elect replacements to fill board vacancies.
Advisor will vote for proposals that permit shareholders to elect
directors to fill board vacancies.
Shareholders' ability to remove directors, with or without cause, is
either prescribed by a state's business corporation law, an individual
company's articles of incorporation, or its bylaws. Many companies have
solicited shareholder approval prohibiting the removal of directors
except for cause (guilty of self-dealing, fraud, or misappropriation of
company assets). This type of prohibition insulates the directors from
removal by shareholders even if the director has been performing
poorly, not attending meetings, or not acting in the best interest of
shareholders. In addition, proposals will often be bundled to contain
provisions which specify that if a board vacancy exists, only the
continuing directors may appoint new directors to fill the vacancies,
further insulating the board by allowing directors to fill a vacancy of
a board member removed by shareholders.
SHAREHOLDERS' ABILITY TO CALL SPECIAL MEETINGS.
Advisor will vote against proposals to restrict or prohibit shareholder
ability to call special meetings.
Advisor will vote for proposals that remove restrictions on the right
of shareholders to call special meetings independently of management.
According to the Institutional Shareholder Services, Inc. (ISS)
database, most state corporation statutes allow shareholders to call a
special meeting when they want to take action on certain matters that
arise between regularly scheduled annual meetings. The laws in some
states vest corporations with the discretion to limit or deny
altogether the right of shareholders to call a special meeting. States
that provide this right may require that the shareholder proponent, or
group of shareholders, own a specified percentage of the outstanding
shares (10 percent is a common requirement) to bring the proposal for a
special meeting to a shareholder vote. The percentage of shareholder
votes required to force the corporation to call a special meeting
varies from state to state. ISS reports that 129 of the S&P 500
companies either do not provide for the right of shareholders to call
special meetings or place voting restrictions on the right. The
remaining 371 companies allow the right to call special meetings.
Special meetings give shareholders the ability to take such actions as
removing directors, initiating a shareholder resolution, or responding
to a beneficial offer if the bidder cannot call a special meeting,
without having to wait for the next scheduled meeting. The inability to
call a special meeting could be detrimental to the interests of
shareholders.
The most common management proposals regarding special meetings seek
higher vote requirements to call special meetings or elimination of the
right to special meetings. These management proposals also may contain
supermajority voting requirements for the amendment of special meeting
restrictions, which effectively lock the restrictions in place.
Shareholder resolutions regarding special meetings typically call for
the restoration or expansion of the right to call special meetings.

SHAREHOLDERS' ABILITY TO ALTER THE SIZE OF THE BOARD.
Advisor will vote for proposals that seek to fix the size of the board.
Advisor will vote against proposals that give management the ability to
alter the size of the board without shareholder approval.
SHAREHOLDERS' ABILITY TO ACT BY WRITTEN CONSENT.
Advisor will vote against proposals to restrict or prohibit
shareholders from taking action by written consent.
Advisor will vote for proposals to allow or make easier shareholder
action by written consent.
A consent solicitation is similar to a proxy solicitation: consents are
mailed to shareholders for their vote and signature, and they are then
delivered to management. The only procedural difference is that the
consent process ends with delivery of the consents. If enough consents
are returned, the subject of the consent is deemed ratified. By
contrast, a proxy solicitation must end with a meeting because proxy
cards merely authorize the indicated "proxy" to cast a vote at a
shareholder meeting. A signed consent is itself a final vote and, as
such, does not require a vote by proxy at a shareholder meeting.
Consent solicitations can be advantageous to both shareholders and
management because the process is less expensive than holding a
physical meeting, and shareholders can simply respond to the proposal
by mail. Institutional Shareholder Services, Inc. (ISS) reports that
350 of the S&P 500 companies allow shareholder action by written
consent. The remaining 150 companies either do not allow action by
written consent or place restrictions on such action.
Many states require a unanimous shareholder vote for the subject of a
consent solicitation to become effective, according to ISS. In other
states, consent subjects are ratified if the consent vote matches the
ratification vote required at a shareholder meeting.
Detractors of the ability to act by written consent argue that since
shareholders are not required to provide advance notice to the SEC of
their intention to take action by written consent, a consent
solicitation aimed at replacing a board or other takeover measure can
be inherently coercive because it does not allow shareholders enough
time to evaluate their actions properly. Shareholder rights advocates
counter that institutional investors possess the expertise and
resources to evaluate a consent solicitation in the allotted time.
PROXY CONTESTS
VOTING FOR DIRECTOR NOMINEES IN CONTESTED ELECTIONS.
Contested elections involving the nomination of an entire board of
directors in opposition to the current board (hostile takeover) or the
nomination of a minority of directors in opposition to the management
slate (proxy contest) shall be voted on a case-by-case basis with the
vote determined by the Advisor's Trade Management Oversight Committee
or that Committee's designee.
Among the relevant considerations for a determination of the vote are
the overall long-term financial performance of the target company,
management's track record, background of the proxy contest,
qualifications of director nominees, evaluation of the positions of
both sides and likelihood of accomplishing proposed objectives, and
stock ownership holdings.
REIMBURSING PROXY SOLICITATION EXPENSES.
Advisor will vote shareholder proposals that provide for full
reimbursement for dissidents waging a proxy contest on a case-by-case
basis.
Generally, the reimbursement system is currently biased as
reimbursement for incumbents is rarely denied with reimbursement of
dissidents only being paid if they gain control of the company. Factors
to be considered in determining how to vote include the identity of
persons who will pay solicitation expenses, estimated total cost of
solicitation, total expenditures to date, fees to be paid to proxy
solicitation firms, and the terms of a proxy contest settlement, if
applicable. If the request for reimbursement is after the proxy
contest, consider the percentage of the votes captured by the
dissidents and management, the issues involved, and the expected
benefits resulting from the proxy contest as well as the total amount
requested in efforts to estimate a reasonable cost for lawyer fees,
professional solicitors, investment bankers, travel costs, mailing and
printing.

COMPENSATION
EXECUTIVE COMPENSATION PLANS.
Advisor will vote on stock option plans, incentive plans, and other
executive compensation plans on case-by-case determinations of
reasonableness.
Advisor will evaluate executive compensation plans by measuring
shareholder value transfer (SVT) using a Binomial Model developed by
Institutional Shareholder Services (ISS), which is a variation of the
widely known Black-Scholes mathematical option pricing formula and
allows for the possibility of early option exercise and other
characteristics unique to nonpublicly traded options, and voting power
dilution (VPD). Voting power dilution is the relative reduction in
voting power as stock-based incentives are exercised and existing
shareholders' proportional ownership in a company is diluted. SVT and
VPD, as calculated by ISS, are compared to an industry-specific, market
cap-based benchmark (allowable cap) calculated by ISS. If SVT and VPD
are less than the allowable cap, Advisor will generally vote in favor
of the plan; if SVT and VPD are greater than the allowable cap, Advisor
will generally vote against the plan. Although no single factor below
may be dispositive of a voting determination, other factors to be
considered are as follows:
o Option Exercise Price. Advisor does not favor option exercise
prices for executives that are less than 100 percent of fair
market value at the grant date.
o Replacing or Repricing Awards or Grants. Advisor does not favor
stock option plans with provisions that allow the repricing of
options already granted at a lower exercise price or that allow
participants to swap options already granted for lower priced
options. (This policy relates to so-called "underwater" options,
for which the stock price has dropped below the exercise price.)
An exception may be considered if the decline in stock price
results from a market phenomenon rather than company-specific
poor performance.
o Omnibus or Blank Check Stock Plans. Advisor does not favor
"omnibus" or "blank check" stock plans that give directors broad
discretion to decide how much and what kind of stock to award,
when to make awards, and to whom the awards should be made.
(Omnibus plans authorize five or more different types of awards.)
o Pyramiding. Advisor generally does not favor "pyramiding," a
cashless form of stock option exercise that permits the payment
for stock options with previously owned, appreciated shares in
successive, short-term transactions, thus pyramiding a small
stock holding into a larger holding.
o Stock Appreciation Rights. Advisor does not favor stock
appreciation rights, which allow the recipient to collect, in
cash, the difference between the exercise price and the market
price of an option without having to make a personal cash outlay
to exercise the option.
o Reload Options (also termed Restoration Options, Incremental Stock
Ownership, or Accelerated-Ownership Options). Advisor does not
favor reload stock options, which is a compensation scheme that
grants a new option for each exercise of a plan participant's
stock options. Reloads come into play only when an option holder
pays to exercise with stock; the new option is granted for shares
turned in, at the current market price. The risk that a plan
participant will not have captured the highest stock price is
eliminated because every time an option is exercised, another
option replaces the exercised option. This enables the
participant to continue to realize all the upside potential
inherent in the original stock option grant.
o Restricted Stock. Advisor does not favor grants of stock that are
subject to restrictions but cost the recipient little or nothing
and are not aligned with performance goals. Such shares are
usually subject to forfeiture if the recipient leaves the company
before a specified period of time. The restrictions usually lapse
over three to five years, during which time the recipient cannot
sell his shares but is typically entitled to vote the stock and
receive dividends.
o Change of Control Features. Advisor does not favor stock option
plans that incorporate provisions for acceleration or cash-out
upon a change in control of the company (e.g., mergers and
acquisitions).
o Loans to Executives. Advisor generally does not favor allowance of
corporate loans to company officers for the purpose of buying
stock, especially if the loans are at subsidized interest rates.
o Amendments. Advisor does not favor plans that authorize the Board
of Directors or its Compensation Committee to materially amend a
plan without shareholder approval.
DIRECTOR COMPENSATION.
Advisor will vote for director compensation plans on a case-by-case
basis.
Advisor favors director compensation plans that include a large
component of stock-based compensation in proportion to the cash
component. The same factors for assessing the reasonableness of
executive compensation plans may be applied to director compensation
proposals.

SHAREHOLDER PROPOSALS TO LIMIT EXECUTIVE AND DIRECTOR PAY.
Advisor will vote for shareholder proposals to limit executive and
director compensation on a case-by-case basis.
Advisor will vote for shareholder proposals seeking additional
disclosure of executive and director pay information that is relevant
to voting determinations under this policy.
The policy considerations identified above for voting determinations on
executive compensation plans may be relevant to determinations on
shareholder proposals to limit executive and director compensation.
Advisor opposes shareholder proposals that impose arbitrary limits on
compensation.
GOLDEN AND TIN PARACHUTES.
Advisor will vote for shareholder proposals to submit golden and tin
parachutes to shareholders for ratification.
Advisor will vote on a case-by-case basis for proposals to ratify or
cancel golden or tin parachutes.
Management occasionally will propose a compensation plan that is
triggered by both a change in control of the company (e.g., hostile
takeover or merger) and termination of employment. These plans are
commonly known as "golden parachutes" in the case of top management and
"tin parachutes" in the case of middle management and other non-highly
compensated employees. Shareholders should be allowed to vote on all
plans of this type. Advisor will vote against parachute proposals that
can be triggered by a mechanism or procedure that is within the control
of management or that exceed three times the annual base salary and
bonus of the recipients. The fact that a proposal includes reasonable
provisions for guaranteed retirement and other benefits should not be
viewed negatively.
EMPLOYEE STOCK OWNERSHIP PLANS (ESOP).
Advisor will vote for proposals seeking shareholder approval to
implement an ESOP or to increase authorized shares for existing ESOPs,
except in cases when the number of shares allocated to the ESOP is
excessive (i.e., usually greater than 5 percent of the outstanding
shares).
ESOPs are stock bonus plans, or combinations of stock bonus plans and
money purchase pension plans, which qualify under the Internal Revenue
Code of 1986, ERISA, and other statutory and regulatory requirements.
The plans are designed to defer a portion of current employee income
for retirement purposes.
EMPLOYEE STOCK PURCHASE PLANS.
Advisor will vote for proposals with an offering period of 27 months or
less and voting power dilution (VPD) of ten percent or less and will
vote against all other proposals.
Employee stock purchase plans give employees an opportunity to purchase
stock (usually at a discount to market), primarily through payroll
deductions. Such plans can lead to greater commitment from employees,
provide performance incentives, and allow workers to share in the
growth potential of their employer.
401(k) EMPLOYEE BENEFIT PLANS.
Advisor will vote for proposals to implement 401(k) savings plans for
employees.
MERGERS AND CORPORATE RESTRUCTURINGS
MERGERS AND ACQUISITIONS.
Advisor will normally vote with management when a corporation is
merging with, or into, or acquiring, or being acquired by another firm
or company on a friendly basis. Hostile bids will be considered on a
case-by-case basis.
Advisor's vote on proposed mergers or acquisitions should promote the
long-term financial interest of its clients' accounts. Among the
factors to be considered are:
o existence of clear, long-term benefits to shareholders, such as
demonstrable stock price appreciation;
o whether a "fairness opinion" has been issued and, if so, its
quality and the credibility of the provider;
o anticipated financial and operating benefits, including synergies
to be obtained, if any;
o offer price;
o preservation or elimination of shareholder rights;
o whether insiders would acquire control blocks of stock or receive
excessive compensation or takeover cash-outs;
o other options that may be available.
ASSET SALES.
Advisor will vote for asset sales that yield reasonable value and that
serve a stated corporate purpose, such as debt reduction, shedding an
unprofitable business, elimination of diseconomies of scale or negative
synergies, raising needed capital, etc.
Asset sales are often accompanied by an investment banker's opinion
that compares the sale transaction with similar deals. The market
response to the announcement of a proposed asset sale may also provide
an indication of its effect on shareholders.

SPIN-OFFS.
Advisor will vote for spin-offs that add economic value to its clients'
investment.
A spin-off is a corporate strategy that divides a segment or division
of a large company into a separate corporate entity, the shares of
which are distributed to existing shareholders as a bonus or dividend.
By way of example, a corporation may spin off a business that is
unprofitable or distracts from its core business. Among the factors
that should be considered are the following:
o tax and regulatory advantages;
o market reaction to the announcement of proposed spin-off;
o effects of spin-off on parent company;
o planned use of sale proceeds;
o managerial incentives that promote entrepreneurial behavior and
better control over operations; and
o possible motivation to thwart takeover attempts.
LIQUIDATIONS.
Advisor will vote on liquidations on a case-by-case basis after
considering management's efforts to pursue other alternatives, the
appraisal value of the assets, and the compensation plan for the
executives managing the liquidation.
Although obviously not good news for long-term investors, a voluntary
liquidation is generally more attractive for shareholders than either a
bankruptcy or an offer for the company as a whole that is less than the
value of its assets.
APPRAISAL RIGHTS.
Advisor will vote for proposals to restore or confer rights of
appraisal.
Mergers and other corporate restructuring transactions are subject to
appraisal rights in many states. Rights of appraisal provide
shareholders that are not satisfied with the terms of certain corporate
transactions the right to demand a judicial review to determine a fair
value for their shares.
Appraisal rights also serve another important interest. If a majority
of shareholders approve a given transaction, the exercise of appraisal
rights by a minority shareholder will not necessarily prevent the
transaction from taking place. If a small minority of shareholders
succeed in obtaining what they believe to be a fair value, appraisal
rights may benefit all shareholders. The downside of appraisal rights
is that if enough shareholders dissented and the courts found that a
transaction's terms were unfair, appraisal rights could prevent a
transaction that other shareholders had already approved.
Unless a shareholder is certain that his stock is substantially
undervalued in, for example, a merger transaction, initiating the
appraisal process would not be worth the time, trouble, and expense.
The dissenting shareholder also faces the possibility that he will
receive less for his shares than the nondissenting group, which has
happened.
BLANK CHECK PREFERRED STOCK.
Advisor will vote against proposals authorizing creation of new classes
of preferred stock with unspecified voting, conversion, dividend
distribution, and other rights ("blank check" preferred stock).
Advisor will vote for proposals to create blank check preferred stock
in cases where the company expressly states that the stock will not be
used as a takeover defense or carry superior voting rights.
Advisor will vote for proposals to authorize preferred stock in cases
where the company specifies the voting, dividend, conversion, and other
rights of such stock and the terms of the preferred stock appear
reasonable.
Advisor will vote against proposals to increase the number of blank
check preferred shares authorized for issuance when no shares have been
issued or reserved for a specific purpose.
Advisor will vote case-by-case on proposals to increase the number of
blank check preferred shares after analyzing the number of preferred
shares available for issue given a company's industry and performance
in terms of shareholder returns.
Preferred stock is technically an equity security, but has certain
features which liken it to debt instruments, such as fixed dividend
payments, seniority of claims status over common stock and, in most
cases, no voting rights (except on matters that affect the seniority of
preferred stock as a class). The terms of "blank check" preferred stock
give the board of directors the power to issue shares of preferred
stock at their discretion--with voting, conversion, distribution, and
other rights to be determined by the board at the time of issue.
SHAREHOLDER PROPOSALS REGARDING BLANK CHECK PREFERRED STOCK.
Advisor will vote for shareholder proposals to have blank check
preferred stock placements, other than those issued for the purpose of
raising capital or making acquisitions in the normal course of
business, submitted for shareholder ratification.
DEBT RESTRUCTURINGS.
Advisor will vote on proposals to increase common and/or preferred
stock and to issue shares as part of a debt restructuring on a
case-by-case basis.
Factors which Advisor will consider when review debt restructurings
proxies include dilution of ownership interest, change in control of
the company, and potential for the company to go bankrupt should the
restructuring not be approved.

TENDER OFFER DEFENSES
SHAREHOLDER RIGHTS PLANS ("POISON PILLS").
Advisor will vote for shareholder proposals calling for a company to
submit its poison pill for shareholder ratification.
Advisor will generally vote against management proposals to adopt
poison pills and for shareholder proposals to eliminate such poison
pills.
Advisor may consider supporting a poison pill if the following factors
are present:
o 20% or higher flip-in level (a flip-in provision provides that
shareholders of the target company are given the right to purchase, at
a discount, shares of their own company should the acquirer surpass a
specified ownership threshold);
o sunset provisions of five years or less;
o shareholder redemption feature: If the board refuses to redeem the
pill 90 days after an offer is announced, ten percent of the shares may
call a special meeting or seek a written consent to vote on rescinding
the pill; and
o no dead-hand or no-hand features.
FAIR PRICE PROVISIONS.
Advisor will vote proposals to adopt fair price provisions on a
case-by-case basis, evaluating factors such as the vote required to
approve the proposed acquisition, the vote required to repeal the fair
price provision, and the mechanism for determining the fair price.
Advisor will vote against fair price provisions with shareholder vote
requirements greater than a majority of disinterested shares.
Standard fair price provisions require that, absent board or
shareholder approval of the acquisition, a bidder for the company must
pay the remaining shareholders the same price for their shares as was
paid to buy the control shares (usually between 5 to 20 percent of
outstanding shares) that triggered the provision. This requirement
tends to make the cost of acquisition prohibitively expensive. An
acquirer may avoid such a pricing requirement by obtaining the support
of at least a majority of disinterested shares (fair price provisions
often require a supermajority vote requirement that may effectively
prevent an acquirer from obtaining relief from shareholders).
GREENMAIL.
Advisor will vote for proposals to adopt antigreenmail charter or bylaw
amendments or to otherwise eliminate a company's ability to make
greenmail payments.
Advisor will vote on a case-by-case basis regarding antigreenmail
proposals when they are bundled with other charter or bylaw amendments.
Greenmail payments are targeted stock repurchases by management from a
party seeking control of the company, usually at a substantial premium
over the market value of the shares.
PALE GREENMAIL.
Advisor will generally vote on a case-by-case basis for restructuring
plans that involve the payment of pale greenmail.
Pale greenmail is nothing more than an effort by management and
greenmailers to disguise the true nature of their transaction behind
the veil of a restructuring or public share acquisition (as opposed to
a targeted share acquisition). In general, the company will acquire all
the shares of a certain shareholder(s) and then buy back a percentage
of the remaining shares outstanding at an amount equal to or greater
than the purchase price of the investor who targeted the company.
Normally, this will result in a drop in the share value following the
transaction that is greater than any premium received. However, since
pale greenmail is typically disguised as part of a restructuring
effort, it is not easily discovered. Even when discovered, the benefits
to the proposed restructuring may outweigh the negative effects of the
proposed share repurchase. Therefore, Advisor will evaluate
restructuring plans that include the payment of pale greenmail on a
case-by-case basis.
UNEQUAL VOTING RIGHTS.
Advisor will vote against proposals that would create different classes
of stock with unequal voting rights, such as dual class exchange offers
and dual class recapitalizations.
Advisor adheres to the "one share, one vote" philosophy: all holders of
common equity must be treated equally.

SUPERMAJORITY VOTE REQUIREMENTS.
Advisor will vote against management proposals to require a
supermajority shareholder vote to approve charter or bylaw amendments
or to approve mergers and other significant business combinations.
Advisor will vote for shareholder proposals to lower such supermajority
requirements.
WHITE SQUIRE PLACEMENTS.
Advisor will vote for shareholder proposals to require approval of
blank check preferred stock issues for other than general corporate
purposes.
White Squire Placements are placements of large blocks of corporate
securities, or blank check preferred stock, with friendly third
parties. This practice was followed by a series of placements done
before a tender offer was threatened - the white squire placement -
either to a private investor, a company's ESOP, another corporation or
to an investment fund. These placements may possibly dilute existing
shareholders' equity and voting positions.
PROPOSALS DESIGNED TO DISCOURAGE MERGERS AND ACQUISITIONS IN ADVANCE.
Advisor will generally vote against proposals that direct board members
to weigh socioeconomic and legal as well as financial factors when
evaluating takeover bids, unless the Advisor's investment mandate from
the client directs Advisor to consider social implications of the
account's investments.
These provisions direct Board members to weigh socioeconomic and legal
as well as financial factors when evaluating takeover bids. This
catchall apparently means that the perceived interests of customers,
suppliers, managers, etc. would have to be considered along with those
of the shareholder. These proposals may be worded: "amendments to
instruct the Board to consider certain factors when evaluating an
acquisition proposal." Directors are elected primarily to promote and
protect shareholder interests. Directors should not allow other
considerations to dilute or deviate from those interests.
STATE TAKEOVER STATUTES.
Advisor will vote for proposals to opt out of state takeover statutes
(control share acquisition statutes, control share cash-out statutes,
freezeout provisions, fair price provisions, stakeholder laws, and
disgorgement provisions) that are harmful to the long-term interests of
shareholders.
Control Share Acquisition Statutes are a prevalent form of
state-sponsored antitakeover legislation. Such statutes function by
denying shares their voting rights when they contribute to ownership in
excess of certain thresholds (e.g., for Pennsylvania companies, those
thresholds are 20%, 33%, and 50%). Voting rights for those shares
exceeding ownership limits may only be restored by approval of either a
majority or supermajority of disinterested investors.
Control Share Cash-Out Statutes give dissident shareholders the right
to "cash-out" of their position in a company at the expense of the
shareholder who has taken a control position. In other words, when an
investor crosses a preset threshold level, remaining shareholders are
given the right to sell their shares to the acquirer, who must buy them
at the highest acquiring price.
Freezeout Provisions force an investor who surpasses a certain
ownership threshold in a company (usually between ten percent and 20
percent) to wait a specified period of time (usually two to five years)
before gaining control of the company.
Fair Price Provisions contain a requirement that board and shareholder
approval be obtained for all takeover bids that do not meet
predetermined fair price standards.
Stakeholder laws permit directors, when taking action, to weigh the
interests of constituencies other than shareholders - including
bondholders, employees, creditors, customers, suppliers, the
surrounding community, and even society as a whole - in the process of
corporate decision making. In other words, such laws allow directors to
consider nearly any factor they deem relevant in discharging their
duties.
Disgorgement Provisions require that an acquirer or potential acquirer
of more than a certain percentage of a company's stock pay back, or
disgorge to the company, any profits realized from the sale of that
company's stock purchased 24 months before achieving control status.
All sales of company stock by the acquirer occurring within a certain
period of time (between 18 months and 24 months) prior to the
investor's gaining control status are subject to these
recapture-of-profit provisions.
Antitakeover laws tend to entrench management by making it difficult to
effect a change in control of the corporation. Such laws are often not
in the best interests of the institutional investor because they
decrease the chances of realizing full shareholder value.
MISCELLANEOUS CORPORATE GOVERNANCE ISSUES
SHARE REPURCHASE PROGRAMS.
Advisor will vote for management proposals to institute open-market
share repurchase plans in which all shareholders may participate on
equal terms.
REDUCING PAR VALUE OF COMMON STOCK.
Advisor will vote for management proposals to reduce the par value of
common stock.

STOCK DISTRIBUTIONS: SPLITS AND DIVIDENDS.
Advisor will vote for management proposals to increase common share
authorization for a stock split, provided that the increase in
authorized shares would not result in an excessive number of shares
available for issuance given a company's industry and performance in
terms of shareholder returns.
REVERSE STOCK SPLITS.
Advisor will vote for management proposals to implement a reverse stock
split when the number of shares will be proportionately reduced or to
avoid delisting.
Advisor will vote case-by-case on proposals to implement a reverse
stock split that do not proportionately reduce the number of shares
authorized for issue.
A reverse stock split is an exchange of a greater number of shares for
a lesser number to increase the share price. The objective typically is
to place the company's shares in an optimal trading range.
How could the number of authorized common shares increase to more than
100 percent of existing authorized shares in a reverse stock split,
which should reduce the number of shares of common stock? Many
companies reduce the number of outstanding shares of common stock
through a reverse stock split but fail to reduce proportionately the
number of shares authorized for issue. The result may effectively be a
large increase in authorized share, in which case Advisor will evaluate
the proposal as if it were a request for additional authorized shares.
In extraordinary cases, Advisor will approve an increase in authorized
shares resulting from a reverse split which would create a number of
available shares in excess of the threshold amount if delisting of the
company's stock is imminent and would result in greater harm to Advisor
than the excessive share authorization.

INCREASE AUTHORIZED COMMON STOCK.
Advisor will vote case-by-case on proposals to increase the number of
shares of common stock authorized for issuance after analyzing the
company's industry and performance in terms of shareholder returns.

Advisor will vote against proposals at companies with dual-class
capital structures to increase the number of authorized shares of the
class of stock that has superior voting rights.
Authorized common shares allow management to issue new stock in the
future for ordinary business purposes such as raising new capital,
funding stock compensation programs, funding business acquisitions,
implementing stock splits, and paying stock dividends. (By contrast,
outstanding common shares are the common stock that has been issued by
the company.) Corporations typically request a large enough number of
authorized shares to provide for projected needs as well as for
unexpected financing needs and unanticipated opportunities. Continually
seeking shareholder approval of additional stock authorizations each
time a need to issue shares for ordinary business purposes arises would
be costly and impractical.
When faced with a request to increase authorized common shares, Advisor
will examine the number of shares available for issuance (shares not
outstanding and not reserved for issuance) as a percentage of the total
number of authorized shares after giving effect to the requested
increase. Advisor recognizes that patterns of utilization of authorized
common shares vary from industry to industry. Within a given industry,
companies that have posted superior shareholder returns should be given
more latitude with respect to capital stock increases than
lesser-performing companies. Companies that have used authorized shares
for stock splits and stock option plans with reasonable levels of
dilution and value transfer should be given further leeway.
Institutional Shareholder Services (ISS) compiles data on common stock
proposals for companies comprising 98 percent of the investable U.S.
equity market. Companies are classified into one of ten peer groups,
and ISS divides companies within each peer group into four quartiles
based on three-year total shareholder returns. An 11th peer group is
designated for rapidly growing companies whose shares have recently
become publicly traded. An "allowable increase" for a company is set
within each quartile, with the largest allowable increases for top
quartile performers and the smallest for bottom quartile companies.
This allowable increase represents the maximum permitted number of
available shares as a percentage of authorized shares after giving
effect to the requested increase.
Advisor recommends votes against proposals to increase the number of
authorized common shares when the available shares on a post-increase
basis exceeds the allowable increase. Proposals to increase authorized
common shares are supported when the available shares after giving
effect to the increase falls within the allowable increase. Advisor
recommends votes for increases beyond the allowable increase when a
company's shares are on the verge of being delisted or if a company's
ability to continue as a going concern is uncertain.

CHANGING CORPORATE NAME.
Advisor will generally vote for management proposals to change the
corporate name.
REINCORPORATION PROPOSALS.
Advisor will generally vote for reincorporation proposals that are
supported by sound business reasons and that do not significantly
reduce shareholder rights or management accountability; otherwise,
Advisor will generally vote against reincorporation proposals.
CONFIDENTIAL VOTING.
Advisor will vote for proposals calling for corporations to adopt
confidential voting, use independent vote tabulators, and use
independent inspectors of election.
EQUAL ACCESS.
Advisor will vote for shareholder proposals that would allow
significant shareholders equal access to management's proxy material
(i) to evaluate and propose voting recommendations on proxy proposals
and director nominees or (ii) to nominate their own candidates to the
board.
Equal access proposals seek to include a shareholder's perspective
within the company's proxy statement. These proposals are designed to
"even the playing field" in the proxy system by providing large company
shareholders opportunity to discuss in the proxy statement the merits
of management's director nominees, nominate and profile director
candidates, and discuss other management-sponsored proposals.
BUNDLED PROPOSALS.
Advisor will vote on bundled proposals on a case-by-case basis, voting
for bundled proposals of which the combined effect is positive and
against all others.
A bundled proposal refers to any proxy proposal that includes a number
of separate elements. Some bundled proposals are fair and
straightforward, involving various elements that belong together both
logically and functionally. However, certain bundled proxy proposals
combine unrelated issues that should be presented as separate voting
items. Some companies have deliberately used these types of proposals
to manipulate the vote in order to pass a questionable proposal by
bundling it with a proposal(s) that would likely pass on its own - a
strategy similar to the use of riders and amendments in legislative
packages.
SHAREHOLDER ADVISORY COMMITTEES.
Advisor will vote on proposals to establish shareholder advisory
committees on a case-by-case basis after consideration of the potential
benefits and disadvantages of the proposals.
ANNUAL MEETING LOCATION.
Advisor will normally vote against shareholder proposals to hold annual
meetings somewhere other than where management desires.
DISCLOSURE.
Advisor will vote against proposals that would require any kind of
government-related disclosure, such as the release of information on a
corporation's military contracts, or any other unnecessary disclosure
of business records.
INVESTMENT COMPANY PROXIES
This section of the proxy guidelines relates to both open-end and
closed-end investment companies. Open-end investment companies have no
set limit on the number of shares they may issue. The value of an
open-end fund's shares is determined solely by dividing the value of
that fund's portfolio by the number of shares outstanding. Closed-end
funds, on the other hand, have a capital stock structure akin to that
of operating companies, as the number of shares they may issue is
fixed. The shares of these funds trade on an exchange like other stocks
and may be more or less valuable than the value of the fund's
portfolio. The primary advantage of closed-end funds is that (1) they
can be fully invested with far fewer liquidity concerns; and (2) they
do not have to maintain the same level of liquidity as open-end funds,
which must be able to redeem shares at the request of their investors.
At the time this Proxy Voting Policy was adopted, Advisor did not
manage any closed-end funds. However, issues relevant to closed-end
funds are covered for the sake of completeness.
There are a few proxy issues that relate specifically to closed-end
funds. Those will be noted below.
ELECTION OF DIRECTORS.
Advisor votes on director nominees will be evaluated on a case-by-case
basis, considering the following factors: board structure; director
independence and qualifications; compensation of directors within the
fund and family of funds; and, attendance at board and committee
meetings.
Advisor will generally follow the same criteria used in the election of
directors for a publicly traded corporation as discussed above.
APPROVE NEW CLASSES OR SERIES OF SHARES
Advisor will vote for the establishment of new classes or series of
shares.

INVESTMENT ADVISORY AGREEMENTS.
Advisor will vote investment advisory agreements on a case-by-case
basis, considering the following factors: proposed and current fee
schedules; fund category/investment objective; performance benchmarks;
investment performance compared with peers; and magnitude of fee
increase.
Issues that can come up in these proxies are advisory fees, which will
be evaluated based on the proposed fee change as it relates to
variations in asset size, the fee change relative to fund performance,
the fee structure of peers, and the nature of the fund's investment
profile. Another issue is changing advisors from the fund to a
subsidiary of the advisors or changing the advisory agreement due to a
change in the structure or purpose of the fund.
CHANGE FUNDAMENTAL RESTRICTION TO NONFUNDAMENTAL RESTRICTION
Advisor will vote proposals to change a fundamental restriction to a
nonfundamental restriction on a case-by-case basis, considering the
following factors: the fund's target investments; the reasons given by
the fund for the change; and, the projected impact of the change on the
portfolio.
Fundamental investment restrictions are limits proscribed in the fund's
charter document that determine the investment practices of the fund.
Such restrictions may only be amended or eliminated with shareholder
approval. Nonfundamental investment restrictions, by contrast, may be
altered by the board of trustees.
CHANGE FUNDAMENTAL INVESTMENT OBJECTIVE TO NONFUNDAMENTAL
Advisor will vote proposals to change a fund's fundamental investment
objective to nonfundamental on a case-by-case basis.
Although it is generally undesirable for funds to change their
investment objective arbitrarily, it may be acceptable to avoid the
expense and uncertainty of future shareholder votes if the ability of
the fund to thereafter change its objective is subject to reasonable
limits and oversight by the Board.
CHANGE IN FUND'S SUBCLASSIFICATION
Advisor will vote changes in a fund's subclassification on a
case-by-case basis, considering the following factors: potential
competitiveness; current and potential returns; risk of concentration;
and, consolidation in target industry.
Occasionally a fund will seek shareholder approval to change its
subclassification from a diversified to a nondiversified investment
fund under the Investment Company Act of 1940. The fund's manager
recommends such a change because it believes that the diversification
requirements of the Act are constraining and that the fund's
performance could benefit from the change.
NAME CHANGE PROPOSALS
Advisor will vote name change proposals on a case-by-case basis,
considering the following factors: political/economic changes in the
economic market; bundling with quorum requirements; bundling with asset
allocation changes; and, consolidation in target market.
CHANGES TO THE CHARTER DOCUMENT
Advisor will vote changes to the charter document on a case-by-case
basis, considering the following factors: the degree of change implied
by the proposal; the efficiencies that could result; and regulatory
standards and implications.
CHANGE THE FUND'S DOMICILE
Advisor will vote fund reincorporations on a case-by-case basis,
considering the following factors: regulations of both states; required
fundamental policies of both states; and, increased flexibility
available.
CONVERT CLOSED-END FUND TO OPEN-END FUND [CLOSED-END FUNDS ONLY]
Advisor will vote conversion proposals on a case-by-case basis,
considering the following factors: past performance as a closed-end
fund; market in which fund invests; measures taken by the board to
address the discount; and, past shareholder activism, board activity,
and votes on related proposals.
PREFERRED STOCK PROPOSALS [CLOSED-END FUNDS ONLY]
Advisor will vote the authorization for or increase in preferred shares
on a case-by-case basis, considering the following factors: stated
specific financing purpose; other reasons management gives; and,
possible dilution for common shares.
PROXY CONTESTS
Advisor will vote proxy contests on a case-by-case basis, considering
the following factors: past performance; market in which the fund
invests; measures taken by board to address the issue; and, past
shareholder activism, board activity, and votes on related proposals.
DISPOSITION OF ASSETS/TERMINATION/LIQUIDATION
Advisor will vote dispositions of assets/terminations/liquidations on a
case-by-case basis, considering the following factors: strategies
employed to save the company; the company's past performance; and, the
terms of the liquidations.

AUTHORIZE BOARD TO HIRE/TERMINATE SUBADVISORS WITHOUT SHAREHOLDER
APPROVAL
Advisor will generally vote on a case-by-case basis with regard to
proposals authorizing the board to hire/terminate subadvisors without
shareholder approval.
A fund is not currently permitted to make such changes without
obtaining an exemptive order, containing specific limitations and
representations, from the Securities and Exchange Commission, the terms
of which restrict the fund's ability to hire/terminate subadvisors
arbitrarily.
DISTRIBUTION AGREEMENTS.
Advisor will generally vote for proposed distribution agreements as
long as the agreements do not call for an excessive fee rate.
Distribution Agreements provide for what is commonly known as Rule
12b-1 fees, which are paid from net assets used to promote the sale of
the fund's shares. These fees provide a means of allowing the fund to
increase asset size and realize economies of scale.
MASTER-FEEDER STRUCTURE
Advisor will vote for the establishment of a master-feeder structure or
the investment of fund assets in an affiliated fund.
Master-feeder structures allow the fund to invest its assets in a
pooled portfolio with funds having similar investment objectives.
Generally, these types of arrangements lead to certain economies of
scale and result in reduced operating costs and, ultimately, enhanced
shareholder value. Investments in an affiliated fund may benefit
investment performance and are subject to SEC rules against excessive
compensation.

MERGERS
Advisor will vote merger proposals on a case-by-case basis, considering
the following factors: the resulting fee structure; the performance of
both funds; and continuity of management personnel.
SHAREHOLDER PROPOSALS TO ESTABLISH DIRECTOR OWNERSHIP REQUIREMENT
Advisor will vote against the establishment of a director ownership
requirement.
Advisor is generally in favor of director ownership of fund shares.
However, in large fund complexes, it may be impractical or undesirable
for directors to own shares of each fund in the complex. Therefore,
Advisor believes that the terms of such a policy should be determined
by the board in conjunction with the fund's management and sponsor.
SHAREHOLDER PROPOSALS TO REIMBURSE SHAREHOLDER FOR EXPENSES INCURRED
Advisor will vote on the reimbursement of expenses on a case-by-case
basis.
SHAREHOLDER PROPOSALS TO TERMINATE INVESTMENT ADVISOR
Advisor will vote shareholders proposals to terminate the investment
advisor on a case-by-case basis, considering the following factors:
performance of the fund's NAV; and, the fund's history of shareholder
relations.
SOCIAL AND ENVIRONMENTAL ISSUES.
Advisor will generally abstain from voting on proposals dealing with
other social and environmental issues in instances in which the best
economic interests of Advisor's clients will not be affected positively
or negatively by the determination of such an issue, unless the
Advisor's investment mandate from the client directs Advisor to follow a
socially responsible investment strategy, in which case the Advisor
vote such matters on a case-by-case basis. In situations in which the
proposal would positively affect the economic interests of Advisor's
clients, Advisor will generally vote for the proposal. Conversely, in
situations in which the proposal would negatively affect the economic
interests of Advisor's clients, Advisor will generally vote against the
proposal. Where the Advisor is mandated to follow a socially
responsible investment strategy, Advisor will weigh the comparative
benefits to shareholders against the social interest that would be
served by the proposal.
Advisor may consider the following in analyzing shareholder social
proposals:
>> whether adoption of the proposal would have either a positive or
negative impact on the company's short-term or long-term share
value;
>> the percentage of sales, assets, and earnings affected;
>> the degree to which the company's stated position on issues
raised in the proposal could affect its reputation or sales, or
leave it vulnerable to boycott or selective purchasing;
>> whether the issues presented should be dealt with through
government action or through company-specific action;
>> whether the company has already responded in some appropriate
manner to the request embodied in the proposal;
>> whether the company's analysis and voting recommendation to
shareholders is persuasive;
>> what other companies have done in response to the issue;
>> whether the proposal itself is well framed and reasonable;
>> whether implementation of the proposal would achieve the
objectives sought in the proposal; and
>> whether the subject of the proposal is best left to the
discretion of the board.

BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Advisor and subadvisor look for prompt
execution of the order at a favorable price. The Advisor and
sub-advisor 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 Advisor and
sub-advisor 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 Advisor and sub-advisor 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 Advisor and sub-advisor make decisions on portfolio
transactions and select brokers and dealers subject to review by the
Funds' Board.

Research Services
Research services may include advice as to the advisability of
investing in securities; security analysis and reports; economic
studies; industry studies; receipt of quotations for portfolio
evaluations; and similar services. Research services may be used by the
Advisor or sub-advisor in advising other accounts. To the extent that
receipt of these services may replace services for which the Advisor,
the sub-advisor or their affiliates might otherwise have paid, it would
tend to reduce their expenses. The Advisor, the sub-advisor and their
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 Funds are made independently from those of
other accounts managed by the Advisor. When the Funds and one or more
of those accounts invests in, or disposes of, the same security,
available investments or opportunities for sales will be allocated
among the Fund and the account(s) in a manner believed by the Advisor
to be equitable. While the coordination and ability to participate in
volume transactions may benefit the Funds, it is possible that this
procedure could adversely impact the price paid or received and/or the
position obtained or disposed of by the Funds.

</R>

CO-ADMINISTRATORS, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company (FSC) and M&T Securities, Inc. serve as
co-administrators to the Trust and provide the Funds with certain
administrative personnel and services necessary to operate the Funds.
Administrative services were provided for an aggregate annual fee as
specified below:

Fees Payable to FSC:

Maximum Administrative Fee Average Aggregate Daily Net Assets of the MTB
Group of Funds
-----------------------------------------------------------------------------
0.06% on the first $2 billion
-----------------------------------------------------------------------------
0.03% on the next $3 billion
-----------------------------------------------------------------------------
0.02% on the next $2 billion
-----------------------------------------------------------------------------
0.0125% on the next $3 billion
-----------------------------------------------------------------------------
0.01% on assets in excess of $10 billion
-----------------------------------------------------------------------------

Fees Payable to M&T Securities, Inc.:
Maximum Administrative Fee Average Aggregate Daily Net Assets of the MTB
Group of Funds
-----------------------------------------------------------------------------
0.04% on the first $5 billion
-----------------------------------------------------------------------------
0.03% on the next $2 billion
-----------------------------------------------------------------------------
0.0175% on the next $3 billion
-----------------------------------------------------------------------------
0.015% on assets in excess of $10 billion
-----------------------------------------------------------------------------

FSC, through its affiliate, Federated Shareholder Services Company
(FSSC), a registered transfer agent, also serves as transfer and
dividend disbursing agent to the Trust, and receives a separate fee
from the Fund for these transfer agency services.

CUSTODIAN AND FUND ACCOUNTANT
State Street Bank and Trust Company, Boston, Massachusetts, is
custodian for the securities and cash of the Funds. Foreign instruments
purchased by a Fund are held by foreign banks participating in a global
custody network coordinated by State Street Bank. State Street Bank
and Trust Company provides financial administration and fund accounting
services for the Funds for an aggregate annual fee of 0.045% of the
Funds' average daily net assets.

INDEPENDENT Auditors
The independent auditor for the Funds, Ernst & Young LLP, conducts
its audits in accordance with auditing standards generally accepted in
the United States of America, which require it to plan and perform its
audits to provide reasonable assurance about whether the Funds'
financial statements and financial highlights are free of material
misstatement.

<R>

FEES PAID BY THE FUNDS FOR SERVICES

------------------------------------------------------------------------------------------------------------------------------
Advisory Fee Paid/ Brokerage Administrative Fee Paid/
Advisory Fee Waived Commissions Paid Administrative Fee Waived
------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
Funds For the fiscal For the period For the fiscal For the period For the fiscal For the period
year ended ended December year ended ended December year ended ended December
December 31, 31, 2002* December 31, 31, 2002* December 31, 2003 31, 2002*
2003 2003
----------------------------------------------------------------------------------------------------
--------------------------
Moderate Growth Fund II $35,209/$35,209 $3,539/$3,539 $0 $0 $10,323/$0 $1,219/$0
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Large Cap Value Fund II $13,249/$13,249 $4,249/$4,249 $4,566 $4,205 $1,419/$0 $523/$0
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Large Cap Growth Fund II $15,798/$15,798 $5,467/$5,467 $2,825 $3,088 $1,391/$0 $554/$0
------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------
------------------------- Moderate Growth Large Cap Value Fund Large Cap Growth Fund II
Fees Paid for the fiscal Fund II II
year ended December 31,
2003

-----------------------------------------------------------------------------------------------
------------------------- $35,209/$0 $4,732/$0 $4,647/$0
12b-1 Fees Paid/12b-1
Fees Waived
-----------------------------------------------------------------------------------------------

*Start of performance dates: Moderate Growth Fund II - June 17, 2002;
Large Cap Value Fund II - May 31, 2002; Large Cap Growth Fund II - May
31, 2002.

</R>

HOW DO THE FUNDS MEASURE PERFORMANCE?
=========================================================================

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

Share performance reflects the effect of non-recurring charges, such as
maximum sales charges, which, if excluded, would increase the total
return and yield. The performance of Shares depends upon such variables
as: portfolio quality; average portfolio maturity; type and value of
portfolio securities; changes in interest rates; changes or differences
in a Fund's or any class of Shares' expenses; and various other
factors. Share performance does not reflect any charges and expenses
that would be imposed under a variable insurance product contract. Were
the effect of such charges to be included, Share performance would be
lower.

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 $10,000 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
$10,000, 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 Funds is calculated by dividing: (i) the net
investment income per Share earned by the Shares over a 30-day period;
by (ii) the maximum offering price per Share on the last day of the
period. This number is then annualized using semi-annual compounding.
This means that the amount of income generated during the 30-day period
is assumed to be generated each month over a 12-month period and is
reinvested every six months.

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.

<R>

Average Annual Total Returns and Yield
----------------------------------------------------------------------------------------------------------------------
For the periods ended Moderate Growth Fund II Large Cap Value Fund II Large Cap Growth Fund II
December 31, 2003
----------------------------------------------------------------------------------------------------------------------
-------------------------

----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
1 Year 17.29% 33.45% 17.35%
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
Start of performance* 5.95% 1.90% (1.27)%
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
YIELD
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
30-day period 0.66% 0.89% 0.18%
----------------------------------------------------------------------------------------------------------------------
*Start of performance for Large Cap Growth Fund II and Large Cap Value
Fund II was May 31, 2002; start of performance for Moderate Growth Fund
II was June 17, 2002.

PERFORMANCE COMPARISONS
Advertising and sales literature may include:

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

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

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

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

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

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

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

| Lipper, 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. (All Funds)

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

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

| Standard & Poor's 500/Barra Value Index is a market
capitalization-weighted index of the stocks in the Standard &
Poor's 500 Index having the lowest price to book ratios. The index
consists of approximately half of the S&P 500 on a market
capitalization basis. (Large Cap Value Fund II)

| Standard & Poor's 500/Barra Growth Index is a market
capitalization-weighted index of the stocks in the Standard &
Poor's 500 Index having the highest price to book ratios. The index
consists of approximately half of the S&P 500 on a market
capitalization basis. (Large Cap Growth Fund II)

| Consumer Price Index is generally considered to be a measure of
inflation. (All Funds)

| New York Stock Exchange Composite Index is a market value
weighted index which relates all NYSE stocks to an aggregate market
value as of December 31, 1965, adjusted for capitalization changes.
(All Funds)

| Value Line Composite Index consists of approximately 1,700 common
equity securities. It is based on a geometric average of relative
price changes of the component stocks and does not include income.
(All Funds)

| Salomon 30-Day Treasury Bill Index is a weekly quote of the most
representative yields for selected securities issued by the U.S.
Treasury maturing in 30 days.

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

| Donoghue's Money Fund Report publishes annualized yields of
hundreds of money market funds on a weekly basis and through its
Money Market Insight publication reports monthly and year-to-date
investment results for the same money funds.

| Morningstar, Inc., an independent rating service, is the
publisher of the bi-weekly Mutual Fund Values. Mutual Fund Values
rates more than l,000 NASDAQ-listed mutual funds of all types,
according to their risk-adjusted returns. The maximum rating is five
stars, and ratings are effective for two weeks. (All Funds)

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

Mutual Fund Market
Forty-nine percent of American households are pursuing their financial
goals through mutual funds. These investors, as well as businesses and
institutions, have entrusted over $6.2 trillion to the more than 8,300
funds available according to the Investment Company Institute.

FINANCIAL INFORMATION

The Financial Statements for the Funds for the fiscal year ended
December 31,2003 are incorporated by reference to the Annual Report to
Shareholders of the MTB Group of Funds dated December 31, 2003.
</R>

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
=========================================================================

<R>
MTB Managed Allocation Fund - Moderate Growth II

MTB Large Cap Value Fund II

MTB Large Cap Growth Fund II

Distributor
Edgewood Services, Inc.
5800 Corporate Drive
Pittsburgh, PA 15237-5829

Investment Advisor
MTB Investment Advisors, Inc.
100 East Pratt Street
17th Floor
Baltimore, MD 21202

Sub-Advisor to VISION Large Cap Growth Fund II
Montag & Caldwell, Inc.
3455 Peachtree Road, N.E.
Suite 1200
Atlanta, GA 30326-3248
</R>
Co-Administrator
M&T Securities, Inc.
One M&T Plaza
Buffalo, NY 14203

Co-Administrator
Federated Services Company
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

Custodian and Fund Accountant
State Street Bank and Trust Company
P.O. Box 8609
Boston, MA 02266-8609

Independent Auditors
Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116-5072





PART C.     OTHER INFORMATION.
Item 23.
            (a)   (i)         Conformed copy of Amended and Restated
                              Agreement and Declaration of Trust of MTB
                              Group of Funds, a Delaware Statutory
                              Trust; (38)
                  (ii)        Conformed copy of Amendment to Certificate of Trust of MTB Group of
                              Funds, a Delaware Statutory Trust;
                              (38)
            (b)               Copy of Amended and Restated By-Laws of
                              MTB Group of Funds, a Delaware Statutory
                              Trust; (38)
            (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
                              Agreement of the Registrant (27 funds)
                              dated August 22, 2003; +
                  (ii)        Conformed copy of Investment Advisory
                              Agreement of the Registrant (2 money
                              market funds) dated August 22, 2003; +
                  (iii)       Conformed copy of Investment Advisory
                              Agreement of the Registrant (5
                              funds)dated August 22, 2003; +
                  (iv)        Conformed copy of Sub-Advisory Agreement
                              for the MTB Mid Cap Stock Fund
                              (Independence Investment LLC) dated
                              August 22, 2003; +
                  (v)         Conformed copy of Sub-Advisory Agreement
                              for the MTB Large Cap Growth Fund (Montag
                              & Caldwell, Inc.), dated August 22, 2003;
                              +
                  (vi)        Conformed copy of Sub-Advisory Agreement
                              for the MTB Small Cap Stock Fund (Mazama
                              Capital Management, Inc.), dated August
                              22, 2003; +
                  (vii)       Conformed copy of Sub-Advisory Agreement
                              for MTB Small Cap Stock Fund (LSV Asset
                              Management), dated August 22, 2003; +
                  (viii)      Conformed copy of Sub-Advisory Agreement
                              for MTB International Equity Fund (UBS
                              Global Asset Management), dated August
                              22, 2003; +
                   (ix)       Conformed copy of Sub-Advisory Agreement for MTB Large Cap Growth Fund II
                              (Montag & Caldwell, Inc.), dated August
                              22, 2003; +
                   (x)        Conformed copy of Amendment to Sub-Advisory Agreement for MTB Large Cap
                              Growth Fund II (Montag & Caldwell, Inc.); +
                   (xi)       Conformed copy of Amendment to Sub-Advisory Agreement for Large Cap
                              Growth Fund (Montag & Caldwell, Inc.); +
                   (xii)      Conformed copy of Amendment to Sub-Advisory Agreement for MTB Small Cap
                              Stock Fund (Mazama Capital Management,
                              Inc.); +
                   (xiii)     Conformed copy of Amendment to Sub-Advisory Agreement for MTB
                              Small Cap Stock Fund (LSV Asset
                              Management); +
                   (xiv)      Conformed copy of Amendment to Sub-Advisory Agreement for MTB
                              International Equity Fund (UBS Global
                              Asset Management (Americas), Inc.); +
                   (xv)       Conformed copy of Investment Advisory Contract Letter Agreement, dated
                              April 1, 2004. +
            (e)   (i)         Conformed copy of Distributor's Contract
                              of the Registrant, dated August 15, 2003; +
                  (ii)        Conformed copy of Agreement for
                              Administrative Services of the
                              Registrant, dated November 1, 2000; (34)
                  (iii)       Copy of Exhibit 1 to Agreement for
                              Administrative Services of the
                              Registrant; (36)
                  (iv)        Conformed copy of Amendment to Agreement
                              for Administrative Services of
                              the Registrant; (36)
                  (v)         Conformed copy of Assignment of Agreement
                              for Administrative Services of the
                              Registrant; (36)
                  (vi)        Form of Mutual Fund Sales and Services Agreement of the Registrant; (38)
                  (vii)       Conformed copy of Amendment to Distributor's Contract (September 22,
                              2003); +
                  (viii)      Conformed copy of Amendment to Agreement for Administrative
                              Services and Transfer Agency Services
                              (September 22, 2003); +
            (f)               Not applicable;
            (g)   (i)         Conformed copy of Custodian Agreement of
                              the Registrant, dated November 8, 2000;
                              (33)
                  (ii)        Copy of Schedules A-D to the Custodian
                              Agreement of the Registrant; (34)
            (h)   (i)         Conformed copy of Recordkeeping Agreement
                              of the Registrant, including Exhibits
                              A-C; (23)
                  (ii)        Conformed copy of Amendment #1 to Exhibit
                              A to the Recordkeeping Agreement of the
                              Registrant; (28)
                  (iii)       Conformed copy of Amendment No. 2 to
                              Exhibit A to the Recordkeeping Agreement
                              of the Registrant; (27)
                  (iv)        Conformed copy of Agreement for
                              Administrative Services and Transfer
                              Agency Services of the Registrant, dated
                              November 1, 2000; (32)
                  (v)         Copy of Exhibit 1 to Agreement for
                              Administrative Services and Transfer
                              Agency Services of the Registrant; (36)
                  (vi)        Conformed copy of Amendment to Agreement
                              for Administrative Services and Transfer
                              Agency Services of the Registrant; (36)
                  (vii)       Conformed copy of Financial
                              Administration and Accounting Services
                              Agreement between Registrant and State
                              Street Bank and Trust Company, dated
                              November 8, 2000. (33)
                  (viii)      Conformed copy of Shareholder Services
                              Agreement Letter Agreement, dated October
                              24, 2000; (33)
                  (ix)        Conformed copy of Shareholder Services
                              Agreement of the Registrant, dated
                              November 8, 2000; (34)
                  (x)         Conformed copy of Exhibit A to the
                              Shareholder Services Agreement of the
                              Registrant; (35)
                  (xi)        Conformed copy of Assignment of
                              Shareholder Services Agreement of the
                              Registrant; (36)
                  (xii)       Conformed copy of Shareholder Services
                              Plan of the Registrant, dated November 1,
                              2000. (33)
                  (xiii)      Conformed copy of Exhibit A to the
                              Shareholder Services Plan of the
                              Registrant; (36)
                  (xiv)       Conformed copy of Participation Agreement
                              of the Registrant, including Exhibits
                              A-E; (36)
                  (xvi)       Conformed copy of Indemnification Agreement of the Registrant; (36)
                  (xvii)      Conformed copy of Service Mark License Agreement; +
            (i)               Conformed copy of Opinion and Consent of
                              Counsel as to legality of shares being
                              registered; (11)
            (j)               Conformed copy of Consent of Independent
                              Auditors; +
            (k)               Not applicable;
            (l)               Conformed copy of Initial Capital
                              Understanding; (11)
            (m)   (i)         Form of Rule 12b-1 Agreement of the
                              Registrant; (38)
                  (ii)        Form of Rule 12b-1 Plan regarding Class B
                              Shares  of the Registrant; (38)
                  (iii)       Form of Rule 12b-1 Plan (non-Class B
                              Shares) of the Registrant; (38)
                  (iv)        Copy of Dealer (Sales) Agreement; (7)
            (n)   (i)         Conformed copy of Multiple Class Plan of
                              the Registrant, dated May 23, 2001,
                              including Exhibits A-D; (34)
                  (ii)        Conformed copy of Exhibit E to the
                              Multiple Class Plan of the Registrant;
                              (35)
                  (iii)       Conformed copy of Amended Exhibit C to
                              the Multiple Class Plan of the
                              Registrant; (36)
                  (iv)        Conformed copy of Amended Exhibit D to
                              the Multiple Class Plan of the
                              Registrant; (36)
            (o)   (i)         Conformed copy of Power of Attorney of
                              the Registrant; +
                  (ii)        Conformed copy of Power of Attorney of
                              Richard J. Thomas; +
            (p)   (i)         Copy of Code of Ethics for Access Persons
                              (Manufacturers and Traders Trust
                              Company); (36)
                  (ii)        Copy of Code of Ethics of Vision Group of
                              Funds, Inc.; (29)
                  (iii)       Copy of Montag & Caldwell, Inc. Code of
                              Ethics and Standards of Practice; (36)
                  (iv)        Copy of Independence Investment
                              Associates, Inc. and Subsidiaries Code of
                              Ethics; (30)
                  (v)         The Registrant hereby incorporates, on
                              behalf of the Distributor, the conformed
                              copy of the Code of Ethics for Access
                              Persons from Item 23(p) of the Federated
                              Institutional Trust Registration
                              Statement on Form N-1A filed with the
                              Commission on September 30, 2003 (File
                              Nos. 33-54445 and 811-7193).
                  (vi)        Copy of Code of Ethics of UBS
                              Brinson/Brinson Partners, Inc.; (32)
                  (vii)       Copy of Code of Ethics of LSV Asset
                              Management; (34)
                  (viii)      Copy of Code of Ethics of Mazama Capital
                              Management, Inc. (34)




------------------------------------------------------------------------
+     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)
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)
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)
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)
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)
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)
29.   Response is incorporated by reference to Registrant's
      Post-Effective Amendment No. 41 on Form N-1A filed April 14,
      2000, (File Nos. 33-20673 and 811-5514)
30.   Response is incorporated by reference to Registrant's Post-Effective
      Amendment No. 42 on Form N-1A filed June 28, 2000, (File Nos.
      33-20673 and 811-5514)
31.   Response is incorporated by reference to Registrant's
      Post-Effective Amendment No. 43 on Form N-1A filed August 25,
      2000, (File Nos. 33-20673 and 811-5514)
32.   Response is incorporated by reference to Registrant's
      Post-Effective Amendment No. 45 on Form N-1A filed November 8,
      2000, (File Nos. 33-20673 and 811-5514)
33.   Response is incorporated by reference to Registrant's
      Post-Effective Amendment No. 46 on Form N-1A filed February 14,
      2001, (File Nos. 33-20673 and 811-5514)
34.   Response is incorporated by reference to Registrant's
      Post-Effective Amendment No. 48 on Form N-1A filed August 27,
      2001, (File Nos. 33-20673 and 811-5514)
35.   Response is incorporated by reference to Registrant's
      Post-Effective Amendment No. 49 on Form N-1A filed December 21,
      2001, (File Nos. 33-20673 and 811-5514)
36.   Response is incorporated by reference to Registrant's
      Post-Effective Amendment No. 54 on Form N-1A filed June 27, 2002
      (File Nos. 33-20673 and 811-5514)
37.   Response is incorporated by reference to Registrant's Post-Effective
      Amendment No. 55 on Form N-1A filed April 21, 2003 (File Nos.
      33-20673 and 811-5514)
38.   Response is incorporated by reference to Registrant's Post-Effective
      Amendment No. 57 on Form N-1A filed August 22, 2003 (File Nos.
      33-20673 and 811-5514)



Item 24.    Persons Controlled by or Under Common Control with
                              Registrant:
            None

Item 25.    Indemnification:  7

Item 26.    Business and Other Connections of Investment Adviser:

    (a)     MTB Investment Advisors, Inc., (MTBIA), a subsidiary of
            Manufacturers and Traders Trust Company ("M&T Bank")
            performs investment advisory services for the Registrant.
            As of March 31, 2004, MTBIA and entities affiliated with
            MTBIA or its predecessors managed approximately $5.5
            billion in money market mutual fund assets and $3.3 billion
            in net assets of fluctuating mutual funds. M&T Bank is the
            principal banking subsidiary of M&T Bank Corporation, a $50
            billion bank holding company as of March 31, 2004,
            headquartered in Buffalo, New York.  As of March 31, 2004,
            M&T Bank had over 650 offices throughout New York State,
            Maryland, Delaware, Virginia, West Virginia, Pennsylvania,
            and Washington, D.C., and an office in the Cayman Islands,
            British West Indies.

            M&T Bank was founded in 1856 and provides comprehensive
            banking and financial services to individuals, governmental
            entities and businesses throughout its footprint. As of
            December 31, 2003, M&T Bank had over $24.4 billion in
            assets under management. Except for MTB Group of Funds, 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.



_____________________

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)


      (b)
                                          Other Substantial
                       Position with      Business, Profession,
     Name              M&T Bank           Vocation or Employment

William F. Allyn       Director           President, Welch Allyn
P.O. Box 50                               Ventures, LLC
Skaneateles Falls, NY 13153-0050

Brent D. Baird         Director           Private Investor
1350 One M&T Plaza
Buffalo, NY 14203-2396

Robert J. Bennett      Director           Former Chairman of the
101 Marrelle Road                         Board, M&T Bank
Fayetteville, NY 13066-1019               Corporation

C. Angela Bontempo     Director           President and Chief
3287 Georgian Court                       Executive Officer,
Erie, PA 16506                            Saint Vincent Health
                                          System

Robert J. Brady         Director          Chairman and Chief
286 Greenwood Court                       Executive Officer,
East Aurora, NY 14052-1353                Moog Inc.

Emerson L. Brumback    Executive          Executive Vice
One M&T Plaza,     Officer            President, M&T Bank
19TH Floor                                Corporation and M&T Bank
Buffalo, NY 14203-2396

Michael D. Buckley     Director           Group Chief Executive,
Bankcentre, Ballsbridge                   Allied Irish Banks, plc
Dublin, 6, Ireland

R. Carlos Carballada   Director           Chancellor Emeritus,
255 East Avenue                           New York State Board
3rd Floor                                 of Regents
Rochester, NY 14604-2624

T. Jefferson Cunningham III   Director    Chairman of the
1100 Route 52                             Director's Advisory
Lagrangeville, NY 12540                   Council, Hudson Valley
                                          Division of Manufacturers
                                          and Traders Trust Company


                                          Other Substantial
                       Position with      Business, Profession,
     Name              the Adviser        Vocation or Employment

Donald Devorris        Director           Chairman of the Board,
101 Lakemont Park Blvd.                   The Blair Companies
Altoona, PA 16602

Richard E. Garman      Director           Retired President and
578 Mill Road                             Chief Executive Officer,
East Aurora, NY 14052-2831                A.B.C. Paving Co., Inc. and Buffalo
                                          Crushed Stone, Inc.

James V. Glynn         Director           Chairman of the Board
151 Buffalo Avenue                        and Chief Executive
Suite 204                                 Officer, Maid of the
Niagara Falls, NY 14303-1288              Mist Corporation

Derek C. Hathaway      Director           Chairman of the Board,
350 Poplar Church Road                    President and Chief
Camp Hill, PA 17011                       Executive Officer,
                                          Harsco Corporation

Daniel R. Hawbaker     Director           President and Chief
325 West Aaron Drive                      Executive Officer,
State College, PA 16803                   Glenn O. Hawbaker, Inc.

Patrick W.E. Hodgson   Director           President, Cinnamon
60 Bedford Road                           Investments Limited
2nd Floor
Toronto, Ontario
Canada  M5R2K2

Gary Kennedy           Director            Group Director, Finance
AIB Group, AIB                             and Enterprise Technology,
Bankcentre, Ballsbridge                    Allied Irish Banks, plc
Dublin, 4, Ireland

Richard G. King        Director           President and Chief
900 High Street                           Operating Officer,
Hanover, PA 17331                         Utz Quality Foods, Inc.


                                          Other Substantial
                       Position with      Business, Profession,
     Name              the Adviser        Vocation or Employment

Reginal B. Newman, II   Director          Chairman of the Board,
2440 Sheridan Drive                       NOCO Energy Corp.
Tonawanda, NY 14150-9416

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

Michael P. Pinto     Executive Officer    Executive Vice
One M&T Plaza                             President and
19th Floor                                and Chief Financial
Buffalo, NY 14203-2399                    Officer, Manufacturers
                                          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,
19th Floor                Executive       Manufacturers
Buffalo, NY 14203-2399    Officer         and Traders Trust
                                          Company and
                                          Executive Vice
                                          President, M&T Bank
                                          Corporation

Eugene J. Sheehy        Director          Chairman and Chief
25 South Charles Street                   Executive Officer,
22nd Floor                                 M&T Bank's Mid-Atlantic
Baltimore, MD 21201                        Division

Stephen G. Sheetz       Director          Chairman of the Board,
5700 6th Avenue                           Sheetz, Inc.
Altoona, PA 16602

Herbert L. Washington   Director          President,
4900 Market Street                        H.L.W. Fast Track, Inc.
Boardman, OH 44512

Robert G. Wilmers      Director and       Chariman of the Board,
One M&T Plaza      Executive Officer  President, and Chief,
19th Floor                                Executive Officer;
Buffalo, NY  14203-2399                   M&T Bank Corporation;
                                          and Chairman of the
                                          Board and Chief
                                          Executive Officer,
                                          Manufacturers and
                                          Traders Trust Company



Item 27.    Principal Underwriters:

                  (a)   Edgewood Services, Inc. the Distributor for shares of
                  the Registrant, acts as principal underwriter for the
                  following open-end investment companies, including the
                  Registrant: Banknorth Funds, BBH Fund, Inc., BBH Trust,
                  Excelsior Funds, Inc., Excelsior Institutional Trust,
                  Excelsior Tax-Exempt Funds, Inc., Golden Oak(R) Family of
                  Funds, Hibernia Funds, The Huntington Funds, Huntington VA
                  Funds, Marshall Funds, Inc., MTB Group of Funds, The
                  Provident Riverfront Funds, and WesMark Funds.

            (b)

         (1)                           (2)                        (3)
Name and Principal            Positions and Offices        Positions and Offices
 Business Address                With Distributor             With Registrant


Charles L. Davis, Jr.         President,
5800 Corporate Drive          Edgewood Services, Inc.               --
Pittsburgh, PA 15237-7002

J. Christopher Donahue        Director,                             --
5800 Corporate Drive          Edgewood Services, Inc.
Pittsburgh, PA 15237-7002

Thomas R. Donahue             Director and Executive                --
5800 Corporate Drive          Vice President,
Pittsburgh, PA 15237-7002     Edgewood Services, Inc.

Peter J. Germain              Director and Secretary,               --
5800 Corporate Drive          Edgewood Services, Inc.
Pittsburgh, PA 15237-7002

Christine Johnston            Vice President,                       --
5800 Corporate Drive          Edgewood Services, Inc.
Pittsburgh, PA 15237-7002

Denis McAuley, III            Treasurer,                            --
5800 Corporate Drive          Edgewood Services, Inc.
Pittsburgh, PA 15237-7002

Stephen A. Keen               Assistant Secretary,                  --
5800 Corporate Drive          Edgewood Services, Inc.
Pittsburgh, PA 15237-7002

Richard A. Novak              Assistant Treasurer,
5800 Corporate Drive          Edgewood Services, Inc.
Pittsburgh, PA 15237-7002

      (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:

MTB Group of Funds            Reed Smith LLP
                              Investment Management Group (IMG)
                              Federated Investors Tower
                              12th Floor
                              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 Services Company    Federated Investors Tower
("Co-Administrator")          1001 Liberty Avenue
                              Pittsburgh, Pennsylvania 15222-3779

M&T Securities, Inc.      One M&T Plaza
("Co-Administrator")          Buffalo, New York 14240

MTB Investment Advisors,Inc.  100 E. Pratt Street, 17th Floor
a subsidiary of               Baltimore, MD 21202
Manufacturers and Traders
Trust Company ("Adviser")

Independence Investment LLC   53 State Street
("Sub-Adviser" to the         Boston, Massachusetts 02109
MTB Mid Cap
Stock Fund only)

Montag & Caldwell, Inc.   3455 Peachtree Road, N.E.
("Sub-Adviser" to the         Suite 1200
MTB Large Cap                 Atlanta, Georgia 30326-3248
Growth Fund and MTB
Large Cap Growth
Fund II only)

UBS Global Asset Management   209 South LaSalle Street
(Americas) Inc.               Chicago, Illinois 60604
("Sub-Adviser" to the MTB
International Equity Fund only)

LSV Asset Management          200 West Madison Street
("Sub-Adviser" to the MTB     Suite 2780
Small Cap Stock Fund only)    Chicago, Illinois 60806

Mazama Capital Management, Inc.    One SW Columbia Street
("Sub-Adviser" to the MTB          Suite 1860
Small Cap Stock Fund only)         Portland, OR 97258

State Street Bank                P.O. Box 8609
and Trust Company("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,  MTB  GROUP  OF  FUNDS,
     certifies that it meets all of the requirements  for  effectiveness of this
     Amendment to its Registration  Statement  pursuant to Rule 485(b) under the
     Securities  Act  of  1933  and  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 28th day of April, 2004.

                              MTB GROUP OF FUNDS

                  BY: /s/ C. Grant Anderson
                  C. Grant Anderson, Secretary
                  April 28, 2004


    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/ C. Grant Anderson
    C. Grant Anderson      Attorney In Fact        April 28, 2004
    SECRETARY              For the Persons
                           Listed Below

    NAME                      TITLE

Edward C. Gonzales*           Chairman

Charles L. Davis, Jr.*        Chief Executive Officer
                              (Principal Executive Officer)

Carl W. Jordan*               President

Richard J. Thomas*            Treasurer
                              (Principal Financial Officer)

Joseph J. Castiglia*          Trustee

William H. Cowie, Jr.*        Trustee

John S. Cramer*               Trustee

Mark J. Czarnecki*            Trustee

Daniel R. Gernatt, Jr.*       Trustee

George K. Hambleton, Jr.*     Trustee

Richard B. Seidel*            Trustee



* By Power of Attorney