Vision U.S. Government Securities Fund
Vision New York Tax-Free Fund
Vision Growth and Income Fund
Vision Capital Appreciation Fund
Supplement to Combined Prospectus dated June 30, 1997
The following information is a supplement to your combined prospectus dated June
30, 1997. We're providing it to advise you of a change in the name of Vision New
York Tax-Free Fund ("Fund"), and a change to a fundamental investment policy of
the Fund that were recently approved by the Fund's Board of Directors and
shareholders. Both of these changes are effective as of October 6, 1997. There
is no change in the investment objective of the Fund which continues to be to
provide current income which is exempt from federal income tax and the personal
income taxes imposed by the State of New York and New York municipalities and is
consistent with the preservation of capital. Additionally, all of the Funds are
eliminating the issuance of share certificates.
(Vision New York Tax-Free Fund only)
1. Effective October 6, 1997, the Vision New York Tax-Free Fund will be renamed
the Vision New York Municipal Income Fund. All references in your combined
prospectus to the New York Tax-Free Fund should also be changed to New York
Municipal Income Fund.
2. Under the sub-section entitled "Investment Policies" under the section
"Vision New York Tax-Free Fund" on page 12 of the prospectus, the Vision New
York Tax-Free Fund's fundamental investment limitation currently reads as
follows:
"Under normal market conditions, at least 80% of the Fund's net assets
will be invested in securities that pay interest exempt from federal
income tax. For purposes of this policy, the tax-free interest must be
a preference item for purposes of computing the federal alternative
minimum tax."
Please revise the above limitation to read as follows:
"Under normal market conditions, at least 80% of the Fund's net assets will
be invested in securities the interest on which is exempt from federal
regular income tax. The Fund may invest in securities the interest on which
may be subject to the alternative minimum tax or "AMT."
3. Please delete the section entitled "AMT Obligations" on page 13 of the
prospectus.
4. Please delete the sub-section entitled "New York Tax-Free Fund--Federal
Taxes" under the section "Tax Information" on page 40 of the prospectus and
replace with the following:
"Shareholders are not required to pay federal regular income tax on any
dividends received from the Fund that represent net interest on
tax-exempt municipal bonds, although tax-exempt interest will increase
the taxable income of certain recipients of social security benefits.
However, under the Tax Reform Act of 1986, dividends representing net
interest income earned on some municipal bonds may be included in
calculating the federal individual alternative minimum tax for
corporations.
The alternative minimum tax, up to 28% of alternative minimum taxable
income for individuals and 20% for corporations, applies when it
exceeds the regular tax for the taxable year. Alternative minimum
taxable income is equal to the regular taxable income of the taxpayer
increased by certain "tax preference" items not included in regular
taxable income and reduced by only a portion of the deductions allowed
in the calculation of the regular tax.
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The Tax Reform Act of 1986 treats interest on certain "private
activity" bonds issued after August 7, 1986, as a tax preference item
for both individuals and corporations. Unlike traditional governmental
purpose municipal bonds, which finance roads, schools, libraries,
prisons, and other public facilities, private activity bonds provide
benefits to private parties. The Fund may purchase all types of
municipal bonds, including private activity bonds. Thus, should it
purchase any such bonds, a portion of the Fund's dividends may be
treated as a tax preference item.
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In addition, in the case of a corporate shareholder, dividends of the
Fund which represent interest on municipal bonds will become subject to
the 20% corporate alternative minimum tax because the dividends are
included in a corporation's "adjusted current earnings." The corporate
alternative minimum tax treats 75% of the excess of a taxpayer's
pre-tax "adjusted current earnings" over the taxpayer's alternative
minimum taxable income as a tax preference item.
"Adjusted current earnings" is based upon the concept of a
corporation's "earnings and profits." Since "earnings and profits"
generally includes the full amount of any Fund dividend, and
alternative minimum taxable income does not include the portion of the
Fund's dividend attributable to municipal obligation bonds, which are
not private activity bonds, the difference will be included in the
calculation of the corporation's alternative minimum tax.
Dividends of the Fund representing net interest income earned on some
temporary investments and any realized net short-term gains are taxed as
ordinary income.
These tax consequences apply whether dividends are received in cash or as
additional shares. Information on the tax status of dividends and distributions
is provided annually."
5. Please delete the first paragraph of the sub-section entitled "Corporate
Shareholder Information" on page 41 of the prospectus.
(All Funds)
6. Please replace the disclosure under the section "Certificates and
Confirmations" on page 36 of the prospectus with the following:
"Shareholders will receive detailed confirmations of transactions
(except for systematic program transactions). In addition, shareholders
will receive periodic statements reporting all account activity,
including dividends paid. The Funds will not issue share certificates."
7. Effective September 25, 1997, Vision Group of Funds, Inc. will be adding a
new fund, Vision Equity and Income Fund, which is a diversified portfolio which
seeks to provide current income. Capital appreciation is a secondary investment
consideration. The Fund pursues its investment objective by investing in a
diversified portfolio consisting primarily of income-producing equity securities
of domestic companies (e.g., common and preferred stocks, convertible
securities). The Fund also may invest in foreign equity securities and debt
obligations. To obtain more information about this Fund and a copy of its
prospectus, please call (800) 836-2211.
October 6, 1997
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Vision U.S. Government Securities Fund
Vision New York Tax-Free Fund
Vision Growth and Income Fund
Vision Capital Appreciation Fund
Supplement to Combined Statement of Additional Information dated June 30, 1997
1. Effective October 6, 1997, the Vision New York Tax-Free Fund will be
renamed the Vision New York Municipal Income Fund. All references in
your combined Statement of Additional Information should also be
changed to New York Municipal Income Fund.
2. Please replace the language under the investment limitation entitled
"Investing in Exempt-Interest Obligations" on page 13 of the statement
of additional information with the following:
"The Tax-Free Fund will not invest less than 80% of its net assets in
securities the interest on which is exempt from federal regular income tax,
except during temporary defensive periods."
October 6, 1997
