SUPPLEMENT DATED DECEMBER 4, l998
TO PROSPECTUS DATED MAY 1, 1998
OF
GRADISON GOVERNMENT INCOME FUND (the "Fund")
The purpose of this supplement is to notify shareholders of
several developments with respect to the Fund:
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 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 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 Fund. The
Reorganization is subject to the approval of the
shareholders of the Fund 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 Class "G" shares of the
Victory Fund For Income. 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, a shareholder who owns
$1,000 worth of Gradison Government Income Fund shares will
receive $1,000 worth of Class "G" shares of the Victory Fund
For Income.) The Fund will receive an opinion of counsel to
the effect that the exchange of shares will not be taxable.
The exchange will not be subject to any sales charges. The
Victory Fund For Income is an existing mutual fund with an
investment objective of providing a high level of current
income consistent with preservation of shareholders'
capital. It currently pursues its investment objective by
normally investing at least 65% of its assets in mortgage-
related securities rated in the top two rating categories of
a nationally recognized rating organization (such as
Standard & Poor's Corp.), or if unrated, of comparable
quality. It is anticipated that prior to the time of the
reorganization, the investment policies will be changed to
become substantially identical to those of the Fund. The
Victory Fund For Income is a "Series" or "Portfolio" 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.
