SUPPLEMENT DATED DECEMBER 9, l998, TO PROSPECTUS DATED AUGUST 1, 1998 OF
GRADISON ESTABLISHED VALUE FUND
GRADISON OPPORTUNITY VALUE FUND
GRADISON GROWTH AND INCOME FUND
GRADISON INTERNATIONAL FUND
The purpose of this supplement is to notify shareholders of several
developments with respect to the Funds named above:
1- The merger of the corporate parent of McDonald & Company Securities
Inc. ("McDonald") with KeyCorp, as described in a Supplement to the
Prospectus dated September 30, l998, was finalized on October 23, l998.
McDonald, which has changed its name to McDonald Investments Inc., remains
Investment Adviser for the Funds pursuant to Investment Advisory Agreements
dated October 23, l998. These Agreements will be submitted to shareholders
for approval at a special meeting to be held early next year.
2- The Distributor of the Funds has been changed to BISYS Fund Services
Limited Partnership to comply with certain banking regulations that now
apply due to the KeyCorp merger.
3-The Board of Trustees of the Trust has approved an Agreement and Plan of
Reorganization for the Funds. Each Reorganization is subject to the
approval of the shareholders of the affected Fund.. The Reorganizations
will be submitted to shareholders at a special meeting to be held early
next year.
If the Reorganization of a Fund is approved,
shareholders of that Gradison Fund indicated below will exchange their
Fund shares for Class "G" shares of the respective Victory Fund
indicated below. The shares of the Victory Fund received by Gradison
shareholders will have the same total value as the total
value of their Gradison Fund shares on the effective date of the
Reorganization. (In other words, a shareholder who owns
$1,000 worth of a shares of a Gradison Fund, will receive $1,000
worth of shares of the respective Victory Fund. ) The exchange of
shares will not be subject to any sales charges and the Funds
will receive an opinion of counsel to the effect that the exchange will
not be taxable.
If you own shares of: You will receive "G" class shares of:
Name of Gradison Fund Name of Victory Fund
Established Value Fund Established Value Fund
Opportunity Value Fund Special Growth Fund (which is
expected to change its name to
Small Company Opportunity Fund)
Growth and Income Fund Diversified Stock Fund
International Fund International Growth Fund
- - The Victory Established Value Fund will continue the operations
of and will have substantially the same investment objective and policies
as the current Gradison Established Value Fund.
- - The Victory Special Growth Fund will continue the operations of and will
have substantially the same investment objective and policies as the
current Gradison Opportunity Value Fund.
- - The Victory Diversified Stock Fund will continue its
operations. It has an investment objective of providing long-term growth.
It pursues its investment objective by investing primarily in equity
securities issued by established domestic and foreign companies.
- - The Victory International Growth Fund will continue its operations.
It has an investment objective of capital growth consistent with reasonable
investment risk. It pursues its investment objective by investing most of
its assets in securities of companies located in Western Europe and Japan,
although it may purchase securities of companies listed on any securities
exchange outside of the United States, including securities of companies
located in developing countries.
The Victory Funds are "Series" or "Portfolios" of the Victory Portfolios,
an open-end management investment company organized as a Delaware business
trust. Key Asset Management Inc. ("KAM") is investment adviser for the
Victory Portfolios. KAM is a subsidiary of KeyBank National Association, a
wholly-owned subsidiary of KeyCorp. All reorganizations and the change of
name and investment policy of the Victory Special Growth Fund are subject
to the approval of the Board of Trustees of the Victory Portfolios.
4- In connection with the merger of the corporate parent of McDonald with
KeyCorp, a new sub-investment advisory agreement, dated October 23, l998,
was entered into between Blairlogie Capital Management and McDonald.
Separately, on October 24, l998, the owners of a 75% general partner
interest in Blairlogie Capital Management entered into an agreement to sell
that interest to a subsidiary of Alleghany Asset Management Inc.
("Alleghany"), a subsidiary of Alleghany Corporation, a public company.
Alleghany subsidiaries have approximately $32 billion under investment
management. Blairlogie has informed the Trust that it does not contemplate
any material changes in the investment philosophy, policies, or strategies
of the Fund as a result of this transaction and intends to continue to
operate with the same personnel providing services to the Fund as prior to
the transaction. The Trustees of the Trust have approved a new sub-
investment advisory agreement with Blairlogie in the same form as the
agreement dated October 23, l998, to take effect upon the completion of the
transaction in which the interest in Blairlogie is transferred. This
agreement will be submitted to the shareholders of the Fund for approval.
