PROSPECTUS SUPPLEMENT
Dear Shareholder:
The KeyFunds are pleased to release the financial highlights for the KeyChoice
Funds for the period from commencement of operations through May 31, 1997. In
May, 1997 additional non-proprietary mutual funds were added to the investments
of each KeyChoice Fund's portfolio. The information below is important and
should be kept with a copy of your prospectus.
KeyFunds (R)
KeyChoice Growth Fund
KeyChoice Moderate Growth Fund
KeyChoice Income and Growth Fund
Supplement Dated July 7, 1997
to the Prospectus Dated December 16, 1996, as previously supplemented
The Prospectus of the KeyChoice Funds is supplemented as follows:
1. By deleting the tables on pages 1 through 3 and replacing them with the
following:
Expenses are one of several factors to consider when investing in the
Funds. The following table summarizes shareholder transaction expenses and
estimated Fund operating expenses for the Funds.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
KeyChoice KeyChoice
KeyChoice Moderate Income and
Growth Fund Growth Fund Growth Fund
Shareholder Transaction Expenses(1):
Maximum Sales Load Imposed on Purchases None None None
Maximum Sales Load Imposed on Reinvested None None None
Dividends
Deferred Sales Load None None None
Redemption Fees None None None
Exchange Fees None None None
Annual Fund Operating Expenses After Expense
Waivers and Reimbursements (as a percentage of
average daily net assets):
Management Fee .20% .20% .20%
Other Expenses(2) .10% .10% .10%
Total Fund Operating Expenses(3) .30% .30% .30%
</TABLE>
The purpose of this table is to assist an investor in understanding the
various costs and expenses that an investor in the Funds will bear directly
("Shareholder Transaction Expenses") or indirectly ("Annual Fund Operating
Expenses"). For a more complete description of the Funds' operating expenses,
see "Expenses, Distribution Plan and Shareholder Servicing Plan." From time to
time, fees may be waived or expenses reimbursed by one or more Funds.
_____________
(1) Investors may be charged a fee if orders are placed through a broker or
agent, including affiliated banks and non-bank affiliates of KeyCorp (see
"Purchasing Shares").
(2) "Other Expenses" includes administration fees and shareholder servicing fees
and estimates of such expenses as custodial and transfer agency fees, audit,
legal and other business expenses for the current fiscal year. Absent voluntary
fee waivers and expense reimbursements, "Other Expenses" would have been 22.56%
for the KeyChoice Growth Fund, 2.79% for the KeyChoice Moderate Growth Fund, and
29.04% for the KeyChoice Income and Growth Fund for the Funds' initial five
months of operations. Absent voluntary waivers, the maximum shareholder
servicing fee payable by each Fund is .25% of a Fund's average daily net assets.
(3) Absent the fee waivers and/or expense reimbursements described in Note 2
above, "Total Fund Operating Expenses" would have been 22.66% for the KeyChoice
Growth Fund, 2.89% for the KeyChoice Moderate Growth Fund, and 29.14% for the
KeyChoice Income and Growth Fund, not inclusive of indirect expenses associated
with investments in Underlying Portfolios (see pages 2 and 3) for the Funds'
initial five months of operations. There can be no assurance that the foregoing
voluntary fee waivers and/or expense reimbursements will continue.
<PAGE>
FUND EXPENSES (cont.)
Shareholders in the Funds will indirectly bear the expenses of the
Underlying Portfolios in which the Funds invest. The following table provides
the total expense ratios after fee waivers and expense reimbursements for the
Proprietary Portfolios of KeyFunds and VP as described in their current
prospectuses, as well as the percentage range of each Fund's total investments
that could be invested in each Proprietary Portfolio. Absent such fee waivers
and expense reimbursements, which may be discontinued at any time, the expense
ratios of the Underlying Portfolios would be higher. In addition, the table
provides the annual operating expenses of the Other Portfolios as described in
each of the Other Portfolio's current prospectus. The expense ratios of the
Other Portfolios may change. In addition, the Adviser has the discretion to
substitute different Other Portfolios at any time.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Percentage of Percentage of
Expense Ratios Percentage of Moderate of Income and
(after Waivers Growth Fund's Growth Fund's Growth Fund's
and Total Total Total
Proprietary Portfolio Reimbursements) Investments Investments Investments
KeyFunds:
SBSF Fund 1.27% 0%-30% 0%-25% 0%-20%
SBSF Capital Growth Fund 1.42% 0%-20% 0%-15% 0%-10%
SBSF Convertible Securities Fund 1.31% 0%-30% 0%-30% 0%-30%
Victory Portfolios:
Value Fund 1.40% 0%-45% 0%-35% 0%-25%
Diversified Stock Fund(1) 1.05% 0%-50% 0%-40% 0%-30%
Growth Fund 1.40% 0%-25% 0%-20% 0%-15%
Special Value Fund(1) 1.40% 0%-30% 0%-25% 0%-20%
Special Growth Fund 1.53% 0%-20% 0%-15% 0%-10%
International Growth Fund(1) 1.75% 0%-30% 0%-25% 0%-20%
Government Mortgage Fund .90% 0%-20% 0%-25% 0%-30%
Investment Quality Bond Fund 1.00% 0%-30% 0%-40% 0%-50%
Fund for Income 1.00% 0%-15% 0%-25% 0%-35%
Intermediate Income Fund .95% 0%-15% 0%-25% 0%-35%
Limited Term Income Fund .86% 0%-10% 0%-10% 0%-10%
Financial Reserves Fund(2) .67% 0%-15% 0%-15% 0%-15%
Other Portfolio
PBHG Growth Fund 1.25% 0%-20% 0%-20% 0%-20%
Neuberger&Berman Genesis Fund 1.28% 0%-20% 0%-20% 0%-20%
Loomis Sayles Bond Fund .75% 0%-20% 0%-20% 0%-20%
(Institutional Shares)
Average Weighted Expense Ratios: 1.12% 1.07% 1.03%
</TABLE>
________________
(1) Denotes Class A shares only.
(2) Total investments in the Money Market Funds may temporarily exceed the 15%
maximum due to daily investment of cash flows that are expected to be used for
next day settlement of variable fund purchases by each of the Funds.
<PAGE>
The average weighted expense ratios for the Funds' investments in the
Underlying Portfolios are based on a hypothetical portfolio mix that reflects
expected investments under current market conditions. These figures are
approximations of the Funds' indirect expense ratios associated with its
investments in the Underlying Portfolios. The percentage of the Funds'
investments in each of the Underlying Portfolios will vary within the ranges
shown above and investments in Other Portfolios will total 15%-20% of each
Fund's total investments.
Using the average weighted annual expense ratio for each Fund, the
following example demonstrates the projected dollar amount of total cumulative
expenses, including both the Fund level direct expense (Total Fund Operating
Expense of .30% for each of the Funds) and the Underlying Portfolio level
indirect expenses that would be incurred over various periods with respect to
each of the Funds. Estimated expense ratios after waivers would be 1.42% for the
Growth Fund, 1.37% for the Moderate Growth Fund, and 1.33% for the Income and
Growth Fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
KeyChoice KeyChoice Income
KeyChoice Moderate Growth and Growth Fund
Growth Fund Fund
Example
You would pay the following
expenses on a $1,000 investment,
assuming (1) a 5% annual return and
(2) full redemption at the end of each
time period:
1 Year $14 $14 $14
3 Years $45 $43 $42
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. MOREOVER,
WHILE THE TABLE ASSUMES A 5% ANNUAL RETURN, A FUND'S ACTUAL PERFORMANCE WILL
VARY AND MAY RESULT IN AN ACTUAL RETURN GREATER OR LESS THAN 5%. YOU WOULD PAY
THE SAME AMOUNT OF EXPENSES ON THE SAME INVESTMENT ASSUMING NO REDEMPTION AT THE
END OF EACH TIME PERIOD.
<PAGE>
2. By inserting the information below after "Fund Expenses".
FINANCIAL INFORMATION SUMMARY
Financial Highlights (for a share outstanding throughout each period). The
following information has not been audited. This information should be read in
conjunction with the KeyChoice Funds' semi-annual report to shareholders. If you
would like a copy of the semi-annual report, write or call us at
800-KEY-FUND(R).
<TABLE>
<CAPTION>
<S> <C> <C> <C>
KeyChoice KeyChoice
KeyChoice Growth Moderate Growth Income & Growth
Fund(2) Fund(2) Fund(2)
Period Ended Period Ended Period Ended
May 31, 1997 May 31, 1997 May 31, 1997
(Unaudited) (Unaudited) (Unaudited)
Net Asset Value, Beginning of Period $10.00 $10.00 $10.00
Investment Activities
Net investment income 0.05 0.09 0.14
Net realized and unrealized gains from 0.69 0.48 0.29
investment transactions
Total from Investment Activities 0.74 0.57 0.43
Distributions
Net investment income (0.04) (0.04) (0.09)
Net Asset Value, End of Period $10.70 $10.53 $10.34
Total Return 7.40%(3) 5.75%(3) 4.33%(3)
Ratios/Supplemental Data:
Net Assets, End of Period (000) $432 $3,208 $391
Ratio of expenses to average net assets 0.20%(4) 0.20%(4) 0.20%(4)
Ratio of net investment income to average net 1.05%(4) 2.81%(4) 3.58%(3)
assets
Ratio of expenses to average net assets(1) 36.04%(4) 4.71%(4) 31.17(4)
Ratio of net investment income to average net -34.79%(4) -1.71%(4) -27.40%(4)
assets(1)
Portfolio Turnover 63.27% 64.13% 44.96%
Average Commission Rate per share 0.00% 0.00% 0.00%
____________
(1) During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(2) For the period December 31, 1996 (commencement of operations) through
May 31, 1997.
(3) Not annualized.
(4) Annualized.
</TABLE>
<PAGE>
3. By replacing the table on page 6 with the following table under "Investment
Objectives and Policies":
The following table shows how the investments of the Growth Fund, the Moderate
Growth Fund, and the Income and Growth Fund may be divided among various types
of Underlying Portfolios:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Percentage of Percentage of
Percentage of Moderate Growth Income and
Growth Fund's Fund's Total Growth Fund's
Total Investments Total Investments Underlying Portfolios
Investment Category Investments Qualifying for Purchases
Equity Funds 70-90% 50-70% 30-50% Proprietary Portfolios
SBSF Fund
SBSF Capital Growth Fund
Value Fund
Diversified Stock Fund
Growth Fund
Special Value Fund
Special Growth Fund
International Growth Fund
Other Portfolios(1)
PBHG Growth Fund
Neuberger&Berman Genesis Fund
Bond/Fixed Income Funds 10-30% 30-50% 50-70% Proprietary Portfolios
SBSF Convertible Securities Fund
Government Mortgage Fund
Investment Quality Bond Fund
Fund for Income
Intermediate Income Fund
Limited Term Income Fund
Other Portfolios(1)
Loomis Sayles Bond Fund
Money Market Fund(2) 0-15% 0-15% 0-15% Proprietary Portfolio
Financial Reserves Fund
</TABLE>
______________
(1) Total investments in Other Portfolios is expected to range between 15% and
20% of total investments of each of the Funds.
(2) Total investments in Money Market Fund may temporarily exceed the 15%
maximum due to daily investment of cash flows that are expected to be used for
next day settlement of variable fund purchases by each of the Funds.
<PAGE>
4. By changing the heading "Descriptions of Proprietary Portfolios" to
"Descriptions of Underlying Portfolios" and replacing the table on page 10, but
retaining Footnote 1 to the table.
Performance of Proprietary Portfolios
The following table summarizes the average annual total return (after the
deduction of fund operating expenses but before the deduction of any applicable
sales loads) for the following Proprietary Portfolios for the periods ended
May 31, 1997:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Date of
Commencement of Since
Proprietary Portfolio(1) Operations Inception One Year Five Years Ten Years
KeyFunds:
SBSF Fund 10/17/83 13.38% 14.51% 15.74% 12.53%
SBSF Capital Growth Fund 11/1/93 6.38% -8.59% n/a n/a
SBSF Convertible Securities Fund 4/14/88 12.24% 16.56% 13.24% n/a
Victory Portfolios:
Value Fund 12/3/93 19.30% 25.14% n/a n/a
Diversified Stock Fund-Class A 10/20/89 15.85% 25.32% 18.92% n/a
Growth Fund 12/3/93 20.03% 30.67% n/a n/a
Special Value Fund-Class A 12/3/93 17.31% 22.51% n/a n/a
Special Growth Fund 1/11/94 10.75% -5.40% n/a n/a
International Growth Fund-Class A 5/18/90 6.88% 7.32% 9.20% n/a
Intermediate Income Fund 12/10/93 4.41% 6.40% n/a n/a
Investment Quality Bond Fund 12/10/93 4.78% 7.19% n/a n/a
Fund for Income 5/8/87 8.26% 7.77% 5.97% n/a
Government Mortgage Fund 5/18/90 8.09% 8.00% 6.58% n/a
Limited Term Income Fund 10/20/89 6.34% 5.68% 5.05% n/a
</TABLE>
<PAGE>
5. By inserting the following under "Descriptions of Underlying Portfolios,"
starting on page 11.
"Descriptions of Other Portfolios
The PBHG Growth Fund. The PBHG Growth Fund seeks capital appreciation. The
portfolio will seek to achieve its objective by investing primarily in common
stocks and convertible securities of small to mid-size companies believed to
have an outlook for strong earnings growth and the potential for significant
capital appreciation.
The Neuberger&Berman Genesis Fund. The investment objective of the
Neuberger&Berman Genesis Fund is to seek capital appreciation. The
Neuberger&Berman Genesis Fund pursues this objective by investing primarily in
common stocks of companies with small market capitalizations. The
Neuberger&Berman Genesis Fund regards companies with market capitalization of up
to $1.5 billion at the time of investment as small-cap companies.
The Loomis Sayles Bond Fund. The Loomis Sayles Bond Fund's investment objective
is high total investment return through a combination of current income and
capital appreciation. The Loomis Sayles Bond Fund seeks to achieve its objective
by normally investing substantially all of its assets in fixed income
securities, although up to 20% of its assets may be invested in preferred
stocks. At least 65% of the Loomis Sayles Bond Fund's total assets will normally
be invested in bonds."
6. By replacing the information under "Determination of Net Asset Value" on page
16 with the following:
"Determination of Net Asset Value:
The net asset value ("NAV") of the shares of the Funds are determined and
their shares are priced each "Business Day." A "Business Day" is a day on which
the New York Stock Exchange ("NYSE") is open for trading. The NYSE is closed in
observance of the following holidays: New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
In general, a Fund's net asset value per share is determined after the
close of regular trading of the NYSE, which is normally at 4:00 p.m. Eastern
time. Each Fund calculates its NAV by dividing the total value of all
investments in Underlying Portfolios and securities, and other assets, less
liabilities, by the total number of shares outstanding. The value of an
investment in an Underlying Portfolio is based upon the NAV determined by the
Underlying Portfolio."
7. By inserting under the heading "Description of Common Stock" on page 24 the
following sentences:
"As of June 1, 1997, SNBOC and Company owned a controlling interest (as
that term is used under the 1940 Act) in the KeyChoice Growth Fund, KeyChoice
Moderate Growth Fund, and KeyChoice Income and Growth Fund. As of June 1, 1997,
BISYS Fund Services owned a controlling interest in KeyChoice Income and Growth
Fund."
8. By deleting the reference to Price Waterhouse LLP under "Independent
Accountants" on the back page and replacing it with the following:
"Coopers & Lybrand LLP, 100 East Broad Street, Suite 2100, Columbus, Ohio 43215"
<PAGE>
