Supplement Dated September 30, l998 to the
Prospectus Dated August 1, l998 of the Gradison Established Value
Fund
Prospectus Dated August 1, l998 of the Gradison Opportunity
Value Fund
Prospectus Dated August 1, l998 of the Gradison Growth and
Income Fund
Prospectus Dated August 1, l998 of the Gradison International
Fund
Prospectus Dated February 1, l998 of the Gradison U.S. Government
Reserves Fund
Prospectus Dated May 1, l998 of the Gradison Government Income
Fund
Prospectus Dated November 1, l997 of the Gradison Ohio Tax-Free
Income Fund
On September 14, l998, the Board of Trustees of each Trust
approved a new investment advisory agreements between each Fund
and the Adviser, McDonald & Company Securities, Inc. ("McDonald")
and a new investment sub-advisory agreement between Blairlogie
Capital Management, the International Fund's sub-investment
adviser, and McDonald. Theis agreements wereas approved in
anticipation of the merger of McDonald & Company Investments Inc.
(the parent of McDonald) and KeyCorp. That merger may result in
the automatic termination of the existing investment advisory
agreements and the investment sub-advisory agreement between the
Trust and McDonaldby operation of law.. The Funds currently
anticipate that, subsequent to the merger, which is expected to
occur in October of l998, McDonald will become a subsidiary of
KeyCorp and will continue to act as investment adviser, transfer
agent, and accounting service provider for the Funds. In
connection with the merger, certain officers of the Trust who are
employees of McDonald may be replaced by individuals who are not
employees of McDonald or any other KeyCorp subsidiary in order to
comply with certain banking laws and regulations.
The implementation of the new advisory agreements and the
investment sub-advisory agreement is subject to the issuance by
the Securities and Exchange Commission ("SEC") of an exemptive
order or the promulgation by the SEC of a rule allowing such
implementation prior to shareholder approval of the agreements.
The Funds, McDonald, and Blairlogie have applied for such an
order and may rely on it if it is granted or on the promulgation
of such a rule. If the requested order is not issued and such
rule is not promulgated, other alternatives will be considered
for providing advisory services to the Funds and sub-investment
advisory services to the International Fund
The new investment advisory agreements contain substantially the
same provisions as the existing investment advisory agreements
except that certain provisions providing for McDonald to engage
in distribution activities with respect to theact as Distributor
of the Established, Opportunity, Growth & Income, and
International Funds have been deleted to satisfy the requirements
of the Glass-Steagall Act and a provision has been added to hold
in escrow all investment advisory fees until the agreements haves
been approved by the shareholders of the Funds. If such
shareholder approval is not obtained by the time provided for in
the SEC exemptive order which is expected to be issued or rule
which may be promulgated, such fees will be returned to the
Funds. The new investment sub-advisory agreement applicable to
the International Fund contains substantially the same provisions
as the current agreement with the addition that fees paid by
McDonald to Blairlogie will be withheld pending shareholder
approval of the agreement.
Also in connection with the merger, the Funds have entered into
Distribution Agreements with BISYS Fund Services Limited
Partnership to become effective upon the merger. The replacement
of McDonald as distributor was necessary because the Glass-
Steagall Act does not permit a subsidiary of a bank holding
company to act as distributor of the securities of an investment
company.
In connection with the merger, the Adviser expects to present to
the Trustees of the Funds a proposal to consolidate one or more
of the Funds with investment companies as to which subsidiaries
of KeyCorp acts as investment adviser. Any such proposal would
require the separate approval of the Board of Trustees and the
shareholders of the affected Fund(s).
KeyCorp is a bank holding company and one of the nation's largest
financial services companies, with assets of approximately $75
billion. Through four principal lines of business - Corporate
Capital, Consumer Finance, Community Banking and Capital Partners
- - KeyCorp provides retail and wholesale banking, investment,
financing and money management services to individuals and
companies across the United States.
You may obtain a copy of the prospectus of any of the Funds
mentioned above by calling (513) 579-5700. The prospectus
contains more complete information about the Funds. Read it
carefully before you invest.
