SUPPLEMENT DATED NOVEMBER 16, l998
TO PROSPECTUS DATED FEBRUARY 1, 1998
OF
GRADISON U.S. GOVERNMENT RESERVES (the "Fund")
The purpose of this supplement is to notify shareholders of
several developments with respect to the Fund:
1- The merger of the parent of McDonald & Company
Securities Inc. ("McDonald") with KeyCorp was finalized on
October 23, l998. McDonald, which has changed its name to
McDonald Investments Inc., remains Investment Adviser for
the Fund pursuant to an Investment Advisory Agreement dated
October 23, l998. This Advisory Agreement will be submitted
to shareholders for approval at a special meeting to be held
early next year.
2- The Distributor of the Fund has been changed to BISYS
Fund Services Limited Partnership to comply with certain
banking regulations.
3- The Board of Trustees of the Trust has approved an
Agreement and Plan of Reorganization for the Fund. The
Reorganization is subject to the approval of the
shareholders and the Board of Trustees of the Victory
Portfolios. The Reorganization will be submitted to
shareholders at a special meeting to be held early next
year. There can be no assurance that the shareholders of
the Fund or the Board of Trustees of the Victory
Portfolios will approve the Reorganization.
If the Reorganization of the Fund is approved,
shareholders will exchange their Fund shares for shares
of the Victory Gradison Government Reserves Fund. The
shares ofreceived by Gradison shareholders will have the
same value as the total value of their Gradison Fund
shares on the effective date of the Reorganization. (In
other words, if you own $1,000 worth of Gradison U.S.
Government Reserves shares, you will receive $1,000 worth
of Victory Gradison Government Reserves shares.) The
exchange of shares will not be taxable. Victory Gradison
Government Reserves will be a new fund formed to continue
the operations of the Gradison U.S. Government Reserves
Fund and will have substantially the same investment
objective and policies as the current Gradison U.S.
Government Reserves Fund. The Victory Gradison
Government Reserves Fund is a "Series" or "Portfolio" of
the Victory Portfolios, an open-end management investment
company organized as a Delaware trust.
