Dear Shareholder: The following supplement provides important information
about the reorganization of the Key Mutual Funds. In addition, some of the
waivers for Other Expenses of the Key Stock Index Fund are being discontinued
Details regarding these changes are listed below. This information is
important and should be kept with a copy of your Prospectus.
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Key Funds
Key Stock Index Fund
Supplement Dated January 2, 1998
to the Prospectus Dated April 1, 1997
as previously supplemented
1. On December 2, 1997, the Board of Directors unanimously recommended a
reorganization and liquidation of the Funds. The Board's recommendations and
more information are more fully described in the Combined Prospectus/Proxy
Statement that has been filed with the Securities and Exchange Commission, and
when effective, will be provided to shareholders of record on or about December
26, 1997. Shareholders will be asked to approve the reorganization and other
additional items as set forth in the Proxy Statement.
If the reorganization is approved by shareholders, shareholders of the Key
Stock Index Fund will become shareholders of the Victory Stock Index Fund.
As a shareholder, your Key Stock Index Fund's assets will be exchanged for
equivalent full and fractional shares of the Victory Stock Index Fund without
sales charges and on a tax-free basis. Additional purchases of new shares of
the Victory Stock Index Fund will include a sales charge of up to 5.75%.
2. The Fund's prospectus is supplemented so that on page 1 and 2 under the
topic, "Fund Expenses," the section is deleted and replaced with the following:
FUND EXPENSES
Expenses are one of several factors to consider when investing in the Fund.
The following table summarizes shareholder transaction expenses and annual Fund
operating expenses for the Fund.
<TABLE>
<CAPTION>
Key Stock
Index
Fund
<S> <C>
Shareholder Transaction Expenses <F1>:
Maximum Sales Load Imposed on Purchase None
Maximum Sales Load Imposed on Reinvested None
Maximum Deferred Sales Load None
Redemption Fees None
Exchange Fees None
Annual Fund Operating Expenses After Waivers and Reimbursements
(as a percentage of average daily net assets):
Management Fees <F2> 0.00%
Other Expenses <F3> 0.56%
Total Fund Operating Expenses <F3> 0.56%
<FN>
<F1> Investors may be charged a fee if orders are placed through a broker or
agent, including affiliated banks and non-bank
affiliates of Key Asset Management Inc. and KeyCorp (see "Purchasing
Shares").
<F2> These fees have been voluntarily waived. Without this waiver, the
Management Fee payable by the Stock Index Fund would be
.10% of the average daily net assets of the Fund.
<F3> "Other Expenses" include such expenses as administration fees, custodial
and transfer agent fees, and audit, legal and other
business expenses. For the current fiscal year, it is expected that, absent
waivers, the "Other Expenses" for the Fund would be
.77% and Total Fund Operating Expenses would be .87%.
</TABLE>
The purpose of this table is to assist an investor in understanding the various
costs and expenses that an investor in the Fund
will bear directly ("Shareholder Transaction Expenses") and indirectly ("Annual
Fund Operating Expenses"). For a more complete
description of the Fund's operating expenses, see "Expenses." The Adviser
and/or the Fund's administrator may, from time to time,
waive fees due from the Fund or reimburse expenses paid by the Fund in order to
enhance the Fund's performance. For further
information, see the Fund's Annual Report which is available upon request and
without charge by writing to the Fund or by calling
the Fund at 800-KEY-FUND.
The following example is designed to help you understand the various costs you
will bear, directly and indirectly, as an investor
in the 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:
<TABLE>
<CAPTION>
<S> <C>
1 Year $ 6
3 Years $18
5 Years $31
10 Years $70
</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, THE 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.
Please insert this Supplement in the front of your Prospectus. Investors
wishing to obtain more should call the Fund at 800-KEY-
FUND.
2KF-IND-SUP2
