<PAGE> 1
VICTORY FUNDS
ANNUAL REPORT
THE VICTORY FUNDS
OCTOBER 31, 1995
vic-tor-y (vik'te-re)
n., 1. The act or fact
of winning in a contest
or struggle, as with an
opponent or difficulty;
a triumph.
<PAGE> 2
"The ultimate victory in competition is derived from the inner satisfaction of
knowing that you have done your best and that you have gotten the most out of
what you had to give." - Howard Cosell Sports Broadcaster
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
Shareholder Letter 2
Investment Review and Outlook 3
FUND REVIEW AND COMMENTARY
Introduction to Victory Money Market Funds 4
Introduction to Victory Fixed Income Funds 8
Introduction to Victory Municipal Bond Funds 15
Introduction to Victory Equity Funds 19
Question & Answers 29
Glossary of Terms 30
How to Read Your Financial Statements 31
FINANCIAL STATEMENTS
Schedules of Investments 33
Statements of Assets and Liabilities 109
Statements of Operations 115
Statements of Changes in Net Assets 121
Notes to Financial Statements 129
Financial Highlights 139
Report of Independent Accountants 158
Special Shareholder Meeting 159
</TABLE>
Society Asset Management, Inc. ("SAM"), a subsidiary of KeyCorp, is the
investment adviser to The Victory Funds. The Victory Funds are sponsored and
distributed by Victory Broker Dealer Services, Inc., which is not affiliated
with SAM, KeyCorp, any KeyCorp bank or their affiliates. SAM and Key Trust
Company of Ohio, N.A., also a subsidiary of KeyCorp, receive fees from The
Victory Funds for their services.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus for The Victory Funds.
NOT Shares of The Victory Funds are not deposits or other obligations
FDIC of, or guaranteed by, any KeyCorp bank, Society Asset Management,
INSURED Inc., or their affiliates, and are subject to investment risks,
including possible loss of the principal amount invested.
THE VICTORY FUNDS
1
<PAGE> 4
LETTER FROM THE PRESIDENT
Dear Shareholder,
The Victory Funds are pleased to provide you with this annual report for the
fiscal year ended October 31, 1995. This past fiscal year has been good for
most investors as the equity markets excluding international, have posted
impressive returns. Fixed income markets have also achieved impressive results
after a disappointing 1994. The average one year total return of our Equity
Funds, including the International Growth Fund, was 18% for the period ending
10/31/95. This compares favorably with the 15.5% average total return of all
equity funds (3,321) in the Morningstar Principia database. There were some
impressive returns in the marketplace during this period, but we believe that
being consistent, being above average, is the best way to achieve an objective.
In this report you will find some very important information on the fund(s) in
which you have invested. We hope that you will look through it carefully and
read the comments of your portfolio manager(s). We have attempted to provide an
overview of each fund's performance and style by interviewing each of the
portfolio managers. We feel that this interview and performance discussion is
the most important section of the annual report as it explains how economic
conditions and market behavior affected the strategy and performance of your
fund(s), outlines the portfolio manager's outlook for the future and more.
We seek to always provide you with interesting information that will continue
to educate or intrigue you as an investor, and to offer you the opportunity to
stay abreast of investment opportunities. In order to accomplish this
objective, we have enclosed with this report a business reply card. Please use
it to order information, send us your ideas and comments or simply to let us
know how we are doing in servicing your investment needs.
The growth of $10,000 chart is information that funds are required to publish
with the exception of money market funds. Each Fund's growth is compared to a
an appropriate index. This chart is meant to provide general information of the
market(s) and should be used only as a guide to the Fund's relative performance
for two very important reasons:
- The mutual fund must clearly define in its prospectus its investment
objective and permissible investments. The index is a measure of the
most appropriate broad market; however, it does not have an
investment objective and may not accurately reflect the types of
investments held by a particular fund.
- In addition, it is important to remember that the index is a 'paper
calculation' and does not reflect any expenses that accompany a real
investment such as sales charges, management fees, portfolio
transaction costs or the cash reserves required to provide daily
liquidity. The performance of the Fund must reflect all expenses
incurred by the Fund as well as the highest front-end or
deferred sales charges that may be applied.
Additionally, each Fund's growth is also plotted without a sales charge. In
some cases we have also included a second index or benchmark to help explain or
highlight a specific aspect of fund performance.
We wish you all a prosperous and successful 1996. Thank you for choosing to
invest in The Victory Funds.
Leigh A. Wilson, President
THE VICTORY FUNDS
P.S. For more information about any of the Victory Funds, request a prospectus
by calling 1-800-539-FUND (3863). The prospectus contains more complete
information, including charges and expenses. Read the prospectus carefully
before you invest or send money.
THE VICTORY FUNDS
2
<PAGE> 5
INVESTMENT REVIEW AND OUTLOOK
In our opinion, as of November 9, 1995.
THE U.S. ECONOMY "Soft landing" minimal turbulence. The 2.0% real annual
growth rate during 1995's first half was followed by the third quarter's 4.2%
growth rate (which included some "quirks"). The next few quarters?. . . Near a
2.0-2.5% real annual rate. The chance of recession remains slim.
THE BUDGET BATTLE - The political nonsense continues. Finger pointing, heated
debate, name-calling, tears, hostility, screaming, mistruths. . . This must be
Washington D.C. The Congress must soon approve a debt extension bill acceptable
to the President. The Administration and the Congress must also reach an
agreement on long-term deficit reduction in coming weeks. Expect the President
to veto the first Republican plan. . . Then the real "fun" begins. When all is
said and done, a legitimate "deal" is expected.
JOB GROWTH/UNEMPLOYMENT - More modest job creation. Impressive job growth
during 1994 (roughly four million net new jobs) gave way to a more timid pace
during 1995. Modest job growth should continue, partly due to a shortage of
skilled labor in many areas of the country. The nation's relatively low
unemployment rate (5.5%) is tied to a mysterious lack of labor force growth.
Unemployment should remain in a range of 5.5-6.0% through mid-1996.
INFLATION - A major success story. The Fed's battle with inflation is
temporarily over. . .The Fed won. Consumer prices rose at a 2.8% annual rate
during 1995's first nine months, identical to consumer inflation of the past
three years. We've lowered our forecast of 1996 consumer inflation to 2.7%.
THE FEDERAL RESERVE - Yes, "government" can work. The Fed is likely to trim
rates more than once in coming months, in line with economic slowing and
minimal inflation anxiety. The Fed will probably "reward" the expected
Administration/Congress deficit reduction package (if completed and credible)
with an easing move on December 19. A 5.0% federal funds rate and an 8.0% prime
rate (versus 5.75% and 8.75% today) are reasonable bets by the end of 1996's
first quarter.
LONG-TERM INTEREST RATES - Additional declines are possible. If the
Administration/Congress finally agree on a legitimate deficit reduction
package by year-end, long-term rates could test their lows of October '93. The
result? Thirty-year fixed-rate mortgages again below 7.0%.
THE DOLLAR - More recent global respect. The dollar has rebounded impressively
against the Japanese yen in recent months, less so versus the German mark.
Additional global dollar strength could emerge following a viable deficit
reduction package.
HOUSING - Very attractive mortgage rates. Today's fixed-rate mortgages - at a
20-month low - will help stimulate new construction and refinance activity.
Even more housing activity is possible if mortgage rates decline further in
coming months.
THE U.S. SUMMARY - Moderate U.S. economic expansion should continue throughout
1996 with. . .Legitimate prospects of smaller future budget deficits. . .
Sluggish job creation/low unemployment. . .Stable consumer spending. . .
Minimal inflation pressures. . . Expectations of lower short-term and
long-term interest rates. . . stable dollar. . . Good housing markets. . .And
balanced regional economic growth. All factors considered an "acceptable"
combination.
NOTE: Economic data courtesy of Regional Financial Associates.
- --------------------------------------------------------------
THE VICTORY FUNDS
"Don't be afraid to take a big step if one is indicated. You can't cross a
chasm in two small jumps."- David Lloyd George
3
<PAGE> 6
INTRODUCTION TO MONEY MARKET FUNDS
THE VICTORY MONEY MARKET FUNDS
Who should invest in money market funds?
- - Money market funds may be most appropriate for investors looking for
stability of principal and income.
- - Money market funds are sometimes used by investors who have short-term
investment goals.
- - Individuals who need quick and easy access to their funds.
What type of securities are found in money market funds?
- - Depending on the objectives of each fund, money market funds usually invest
in shorter-term securities such as U.S. Treasury bills, Commercial Paper,
Certificate of Deposit and repurchase agreements.
- - A tax-free money market fund, such as The Ohio Municipal Money Market Fund,
may invest in securities issued by municipalities of the state of Ohio, while
a U.S. Government money market fund may limit its investments to
government-issued/backed securities only.
Not sure how other Victory Funds can work for you, too? Let us send you our
Consumer Brochure which gives an overview on each asset class and on how the
Victory Funds can help you achieve your objectives. Please complete and return
the business reply card found in this report, and we will promptly send you the
information you request, or for more information about any of the Victory Fixed
Income Funds in particular, including charges and expenses, obtain a prospectus
by calling 1-800-539-FUND. Please read the prospectus carefully before you
invest or send money.
THE VICTORY FUNDS
"If you don't invest very much, then defeat doesn't hurt very much and winning
is not very exciting."
- - Dick Vermeil, NFL Coach
4
<PAGE> 7
VICTORY U.S. GOVERNMENT OBLIGATIONS FUND
Q Can you describe some of the major trends or events that affected your Fund
this past year?
A Changes in Federal Reserve policy from a tightening mode (increasing
interest rates) at the beginning of 1995 to an easing mode (lowering rates)
by July shaped the government bond market. The Federal Reserve reversed
direction due to signs that the economy was slowing, and that inflation
had been subdued.
Q How did you structure the Fund to take advantage of these conditions?
A While the Federal Reserve was tightening, I decreased the average maturity,
and invested in repurchased agreements. This let the Fund yield rise in
response to the market. When the Fed reversed course, I looked to extend the
average maturity of the Fund and lock in yields through a mix of
longer-dated fixed treasury coupons.
Q What does this mean in laymen's terms?
A When rates are rising, repurchase agreements are the investment of choice
because the yield adjusts daily. However, in a market characterized by
declining interest rates, daily resets are not advantageous. Once it became
evident that the Federal Reserve would be in an easing mode, I decided to
lock in yields by investing in longer-dated fixed coupon treasury
securities. In this way the fund is not as sensitive to declining rates.
Q How did the Fund perform during the past year?
A The strategy I described allowed the Fund to outperform the Donoghue
Government Money Market Fund Average1 during the year. In addition the Fund
7-day yield was better than the average 7-day yield for 51 of each of the
past 52 weeks reported.
Q What do you see going forward?
A We expect the Federal Reserve to further ease interest rates during the
remainder of 1995 and into 1996. As a result, we will continue to look for
opportunities to extend the Fund's maturity and lock in higher fixed rates
to keep its yield as high as possible.
<TABLE>
<CAPTION>
AS OF OCTOBER 31, 1995
<S> <C>
Seven-day Yield 5.25%
Seven-day Effective Yield 5.39%
One Year Total Return 5.38%
</TABLE>
<TABLE>
<CAPTION>
MATURITY SCHEDULE 2
As of 10/31/95
<S> <C>
Days to
Maturity
Less Than 30 days 79.8%
31 to 60 days 0.0%
61 to 90 days 0.0%
Greater Than 90 days 20.2%
</TABLE>
THE VICTORY FUNDS
Ellyn M. Morgan is an Assistant Vice-President with Society Asset Management,
Inc. ("SAM"). She has been with SAM and/or an affiliate since 1987. Ms. Morgan
received her B.A. from Cleveland State University.
The performance data quoted represent past performance and therefore are not
indicative of future results. Yields will fluctuate with market conditions.
There can be no assurance that any of the Victory Money Market Funds will be
able to maintain a stable net asset value of $1.00 per share. An investment in
a Victory Money Market Fund is neither insured not guaranteed by the U.S.
Government.
1 IBC/Donoghue's Money Market Fund Averages are based on the unweighted
averages of yields and total returns of funds which have similar investment
policies and objectives. The Average is comprised of funds similar to, but not
necessarily the same as, The Victory U.S. Government Obligations Fund.
2 The Funds Maturity Schedule is presented to illustrate examples of a barbell
strategy and may not be representative of current or future strategies. Fund
strategies may change at any time.
5
<PAGE> 8
VICTORY PRIME OBLIGATIONS FUND
VICTORY FINANCIAL RESERVES FUND
VICTORY INSTITUTIONAL MONEY
MARKET FUND
Q Can you describe the interest rate environment during the year?
A 1995 began with expectations that short-term interest rates would continue
to follow the upward trend initiated by the Federal Reserve in February
1994. However, as the year progressed, softening economic activity and a
benign inflation outlook became the two most important economic factors
affecting short-term rates. This environment influenced the Federal Reserve
to lower rates in July.
Q How did the market environment change your strategy for the funds you
manage?
A Given the accommodative Federal Reserve policy and the tame inflation
levels, I took the opportunity to extend the average maturity of the Funds
in order to capture and maintain higher yields for a longer period of
time.
Q Are the funds managed with the same strategy?
A Yes, each Fund is managed with the same basic strategy. However, due to the
different liquidity needs and cash flows, the implementation may vary.
Q Does this explain why the yields are different?
A Only partially, more importantly, each fund bears different expenses,
depending on their target market and service features. For example, the
Institutional MMKT Fund has the highest yield because the minimum account
size is one million dollars, and it provides no additional services. On the
other hand, Prime is targeted to smaller accounts with more frequent
transactions and it offers extra service features such as check writing
privileges which increases the Fund's costs.
Q What was your strategy to keep the fund yields competitive?
A I used a combination of floating rate securities and a barbell maturity
structure. The barbell strategy concentrated investments between short
maturities (1-2 months) and longer maturities (10-12 months). The short
maturities often carried yields equal to or greater than securities in the
intermediate maturity range (3-9 months). By employing the barbell strategy
a competitive yield was maintained for the Funds without sacrificing
liquidity. The availability of liquidity provided the wherewithal for the
Funds to take advantage of market opportunities as they became available in
the longer end of the yield curve. In addition, floating rate notes were
employed as they provided yield enhancement over other fixed rate securities
of similar maturity.
Q What are your expectations for the coming year?
A The main theme for the remainder of 1995 and the beginning of 1996 is
the continued benign behavior of inflation, currently running at less than
3%. Since short-term rates are currently higher than the inflation rate,
there is room for rates to decline. A further easing in rates could
certainly materialize if the favorable inflation outlook is also accompanied
by weaker economic conditions and credible fiscal reforms that lead to a
balanced budget.
<TABLE>
<CAPTION>
MATURITY SCHEDULE 1
As of 10/31/95
Days to Prime Financial Institutional
Maturity Obligations Reserves Money Market
<S> <C> <C> <C>
Less Than 30 days 65.5% 57.9% 59.7%
31 to 60 days 21.6% 27.4% 26.4%
61 to 90 days 2.0% 2.5% 3.0%
Greater Than 90 days 10.9% 12.2% 10.9%
</TABLE>
<TABLE>
<CAPTION>
AS OF OCTOBER 31, 1995
Prime Financial Institutional Institutional
Obligations Reserves Money Market Service Class
<S> <C> <C> <C> <C>
Seven-Day Yield 5.13% 5.26% 5.53% 5.28%
One Year
Total Return 5.26% 5.50% 5.79% N/A
</TABLE>
THE VICTORY FUNDS
Michael Gabriel joined Society Asset Management Inc. in March 1995 as a
Vice-President of Fixed Income Management. He was previously with Boston Safe
Deposit & Trust Company. Mr. Gabriel received a B.S. in marketing and an MBA
from Fordham University.
The performance data quoted represent past performance and are not indicative
of future results. Yields will fluctuate with market conditions. The Victory
Financial Reserves Fund and the Institutional Money Market Fund and Service
Class yields reflect the waiver of a portion of certain fees for various
periods. In such instances and without such waiver of fees, the current 7-day
yields would have been 5.15%, 5.29% and 5.04% respectively. There can be no
assurance that any of the Victory Money Market Funds will be able to maintain a
stable net asset value of $1.00 per share. An investment in a Victory Money
Market Fund is neither insured nor guaranteed by the U.S. Government.
1 The Funds Maturity Schedule is presented to illustrate examples of a barbell
strategy and may not be representative of current or future strategies. Fund
strategies may change at any time.
6
<PAGE> 9
VICTORY TAX-FREE MONEY MARKET FUND
VICTORY OHIO MUNICIPAL MONEY MARKET FUND
Q Robin, during the past year how have economic
events affected the markets in which these two Funds invest?
A Although the economy continued to improve during the past year, inflation
remained at very subdued levels and did not pose any serious threat. Recent
data has sent mixed signals regarding economic strength for the remainder of
1995. The Federal Reserve is expected to ease interest rates further to
boost what has become a slowing economy.
Q
Do you manage each Fund the same way?
A Yes, except that the Ohio Fund purchases only Ohio muni debt, while the
Tax-Free Fund can buy any state's. Other than that the strategy and
structure of the Funds are very similar.
Q How did each Fund+s structure impact its performance?
A Each Fund maintained a barbelled structure combining short-term
variable rate securities with longer-term fixed-rate resets. As the
anticipated Federal Reserve move to lower interest rates did not materialize
in the third quarter, variable rates remained high, thus boosting the Fund's
yield. The Fund's yield has also benefited from maturity extensions on a
positively sloping yield curve. The maturity allocation schedule shows the
recent barbell structure, with the bulk, over 60% of the funds allocated to
maturities of 30 days or less.
Q What noteworthy changes were made in the Funds during the
past year? Why were these changes made?
A The main changes carried out in the
Funds were the extension of maturities and the addition of more fixed-rate
securities to lock in higher rates should the Federal Reserve decide to ease
monetary policy and lower interest rates.
Q Given the current economic environment, what should investors expect of the
Funds in the near future?
A Short-term money managers are closely watching weekly economic reports to
determine the strength of the economy and whether the Fed will intervene to
lower rates again this year. In light of the uncertainty surrounding the
timing of this move, tax-exempt securities have been trading in a very
narrow range. The Funds will continue to increase the percentage of
fixed-rate bonds they hold in anticipation of a decline in short-term
interest rates. The large percentage of shorter-term securities, however,
will continue to provide liquidity and a hedge if the Fed is slower to ease
and short-term rates remain high.
<TABLE>
<CAPTION>
AS OF OCTOBER 31, 1995
Tax-Free Ohio MMMKT
<S> <C> <C>
Seven-day Yield 3.26% 3.36%
Tax Equivalent Yield1 5.09% 5.88%
One Year Total Return 3.42% 3.42%
</TABLE>
<TABLE>
<CAPTION>
MATURITY SCHEDULE 2
As of 10/31/95
Days to
Maturity Tax-Free Ohio MMMKT
<S> <C> <C>
Less Than 30 days 59.2% 57.5%
31 to 60 days 15.1% 20.8%
61 to 90 days 4.7% 3.5%
Greater Than 90 days 20.7% 17.2%
</TABLE>
THE VICTORY FUNDS
Robin M. Hudson is a Senior Investment Officer with Society Asset Management,
Inc. ("SAM") and a Municipal Research Analyst. She has been with SAM and/or an
affiliate since 1981. Ms. Hudson received her MBA from Baldwin-Wallace College.
The performance data quoted represent past performance and are not indicative
of future results. Yields will fluctuate with market conditions. The Victory
Ohio Funds MMMkt yields reflect the waiver of a portion of certain fees for
various periods. In such instances and without such waiver of fees, the current
7-day yield and Tax-Equivalent Yield would have been 3.16% and 5.53%
respectively. There can be no assurance that any of the Victory Money Market
Funds will be able to maintain a stable net asset value of $1.00 per share. An
investment in a Victory Money Market Fund is neither insured nor guaranteed by
the U.S. Government. Certain investors may be subject to the Federal
Alternative Minimum Tax and to certain state and local taxes.
1 The tax equivalent yield is for illustrative purposes only. The tax rate used
to calculate the tax equivalent yield was based on the 36% Federal regular
income rate, and the rate used for the Ohio MMMKT is the combined 36% federal
and 6.9% Ohio state income tax rate are for illustrative purposes only. The
tax bracket does not reflect the effects of the Federal AMT.
2 The Funds Maturity Schedule is presented to illustrate examples of a barbell
strategy and may not be representative of current or future strategies. Fund
strategies may change at any time.
7
<PAGE> 10
INTRODUCTION TO FIXED-INCOME FUNDS
THE VICTORY FIXED INCOME FUNDS
Who should invest in a fixed-income fund?
- - The Victory Fixed Income Funds may be most appropriate for investors
looking for relative stability of principal and a steady source of income.
- - The Victory Fixed Income Funds may also be appropriate for investors who look
to "balance" by smoothing out some of the ups and downs of more aggressive
investments.
What type of securities are found in fixed-income funds?
- - Most of the securities found in our fixed-income funds are issued by the U.S.
Government, Government Agencies, or major corporations that are generally of
"Investment Quality," meaning they are rated no lower than B.1
- - Many fixed-income bond funds can also invest in very liquid securities, such
as commercial paper and overnight repurchase agreements so that assets are
always available for investors who need to redeem their shares.
How does a fixed income fund fit into a complete portfolio? Let us send you our
Client Guide to Asset Allocation, which describes asset allocation and why it
is important. Please complete and return the business reply card found in this
report, and we will promptly send you the information you request, or for more
information about any of the Victory Fixed Income Funds in particular,
including charges and expenses, obtain a prospectus by calling 1-800-539-FUND.
Please read the prospectus carefully before you invest or send money.
THE VICTORY FUNDS
"Champions take responsibility. When the ball is coming over the net, you can
be sure I want the ball." - Billy Jean King, tennis player
1 As reported by Standard & Poors. Investment Quality is generally defined as
those issues rated either AAA, AA, A or B. Lower ratings may be subject to
additional risk and are therefore not called Investment Quality.
8
<PAGE> 11
VICTORY LIMITED TERM INCOME FUND
Q Can you summarize the short-term bond market environment over the course of
the past year?
A For the first half of 1995 the bond market correctly anticipated a weaker
economy following the Federal Reserve's increase in short-term rates in
February. Benign inflation, coupled with a slower economy, eventually caused
the Fed to reverse the course of its monetary policy in July but by then the
bond market prices had already rallied over 3.5% in the two-year note sector.
This has produced one of the best performance years in fixed-income history.
Q Was the fund able to take advantage of the short-term rally?
A The Fund has been positioned with a slightly longer average life than its
new benchmark, the Merrill Lynch 1-3 Year Treasury Index. This "bull market
posture" helped the Fund outperform the index. The large allocation to
Treasuries along with additional yield received in agency securities helped
also.
Q Do you think the favorable conditions in the short-term market will
continue?
A The economy is somewhat of an open question at the moment. The final
resolution of the budget talks will certainly have a longer-term impact,
while the strength of consumer demand during the important Christmas retail
season is yet to be determined. The suspicion is that high debt levels will
hold consumers back, and the economy will show only modest growth. However\
continued low inflation will probably allow the Fed the opportunity to ease
rates further during 1996. As long as the outlook is favorable for lower
rates, the Fund will stay longer than its benchmark and fully invested.
Q Can you briefly explain the change in the index for measuring the Fund's
relative performance?
A The Limited Term Income Fund has an average life of over two years. This
sets it apart from the longer (four-year) Intermediate Income Fund that I
also manage. In order to more accurately represent the short (two-year)
section of the Treasury curve, the Merrill Lynch 1-3 Year Treasury Index is
now being used. By using an index with a similar average life and duration
as the Fund, the market risk and performance are more comparable. The
fund's 30-Day yield as of 10-31-95 was 4.99%
<TABLE>
<CAPTION>
VICTORY LIMITED TERM INCOME FUND
VS. MERRILL LYNCH 1-3 YR TREAS
& GOV'T CORP 1-5
10/89 4/90 10/90 4/91 10/91 4/92 10/92 4/93 10/93 4/94 10/94 4/95 10/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 8,000
$ 9,000
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
$16,000
</TABLE>
The graph that appears on page 9 of the annual report represents a comparison
between a $10,000 investment made on October 20, 1989 in the Limited Term
Income Fund and identical investments in the Merrill Lynch 1-3 Year Treasury
and Merrill Lynch Government/Corporate Indexes. The chart indicates that
$10,000 invested on October 20, 1989 in the Limited Term Income Fund would be
worth $14,505 at maximum load and $14,794 at New Asset Value on October 31,
1995, as opposed to $15,272 and $15,818 had $10,000 been invested in the
Merrill Lynch 1-3 Year Treasury or Merrill Lynch Government/Corporate 1-5
Indexes, respectively.
The Merrill Lynch 1-3 Year Treasury Index is a broad-based unmanaged index that
represents the general performance of short-term (1-3 year) U.S. Treasury
securities.
The Merrill Lynch Government/Corporate Index is a broad-based unmanaged index
that represents the general performance of short-term (1-5 year),
investment-grade, fixed-income securities.
TOTAL RETURN
As of 10/31/95
<TABLE>
<CAPTION>
Net Asset Maximum
Value Offering Price
<S> <C> <C>
One Year 8.77% 6.62%
Annualized Return
Three Years 4.76% 4.06%
Five Years 6.54% 6.12%
Since Inception
10/20/89 6.77% 6.42%
</TABLE>
THE VICTORY FUNDS
Robert H. Fernald is a Vice-President of Society Asset Management, Inc. ("SAM")
and has managed the Fund since January 1995. He has been with SAM and/or an
affiliate since 1991. Mr. Fernald received his BS from Trinity College.
The performance data quoted represent past performance and, therefore, are not
indicative of future results. Total returns are historical and include the
change in share price and reinvestment of dividends and capital gains
distributions, and unless indicated, show the effect of the maximum 2.00% sales
charge. Investment returns and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. The total return figures set forth above may reflect the waiver of a
portion of certain fees for various periods since the Fund's inception date. In
such instances and without such waiver of fees, the total returns would have
been lower and the 30-Day yield would have been 4.96%.
9
<PAGE> 12
VICTORY INTERMEDIATE INCOME FUND
Q What economic changes have occurred during the past year, and how have they
affected the intermediate bond market?
A The intermediate sector of the bond market benefited from the tremendous
rally that materialized during the past year. This rally, which started in
January 1995 was propelled by the perception of a slowing economy, sustained
low inflation, and large cash inflows into U.S. markets by foreign central
banks as a result of dollar-support intervention. More recently, a positive
long-term outlook for a balanced budget resolution has also helped the
bullish sentiment in the marketplace.
Q How did you respond to the market conditions you just described?
A Our strategy was to remain as fully invested as possible while maintaining
a longer average life than the Index. Keeping pace with the market's rally
was difficult at times as the market seemed to "get ahead of itself." The
months of May and June were examples of this. The market moved sharply
higher and then experienced some retrenchment.
Q What factors have most affected the performance of the Fund this year?
A Two factors have caused the Fund to modestly underperform the Lehman
Brothers Intermediate Government/Corporate Bond Index. First of all, our
relative value approach to sector selection kept us invested in the
mortgage-backed segment of the market, a sector that has experienced weakness
for most of the year. Secondly, the average life of the Fund was shortened by
the mortgage component, thus holding the Fund's performance back during the
bond market rally.
Q What is your outlook for the coming year, and how do you plan to manage the
Fund to provide the best return for shareholders?
A We expect that a more moderate pace of economic growth coupled with tame
inflation levels (and possibly a favorable resolution of the balanced budget
issue) will allow the Federal Reserve to continue on its path of lowering
interest rates. In the very near term, the market is waiting to find out
whether consumers can lift fourth quarter GDP with strong Christmas
purchases. As long as our outlook for lower rates remain in place, the Fund
will remain fully invested and maintain a longer average life relative to
its benchmark in an attempt to lock in attractive yields. The fund's 30-Day
yield as of 10-31-95 was 5.12%.
TOTAL RETURN
As of 10/31/95
<TABLE>
<CAPTION>
Net Asset Maximum
Value Offering Price
<S> <C> <C>
One Year 11.65% 6.36%
Since Inception Annualized
12/10/93 4.60% 1.93%
</TABLE>
<TABLE>
<CAPTION>
VICTORY INTERMEDIATE INCOME FUND
VS. LEHMAN INT GOV'T/CORP
12/93 2/94 4/94 6/94 8/94 10/94 12/94 2/95 4/95 6/95 8/95 10/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 8,000
$ 8,500
$ 9,000
$ 9,500
$10,000
$10,500
$11,000
$11,500
</TABLE>
The graph that appears on page 10 of the annual report represents a comparison
between a $10,000 investment made on December 10, 1993 in the Intermediate
Income Fund and an identical investment in the Lehman Brothers Intermediate
Government/Corporate Bond Index. The chart indicates that $10,000 invested on
December 10, 1993 in the Intermediate Income Fund would be worth $10,387 at
maximum load and $10,909 at Net Asset Value on October 31, 1995, as opposed to
$11,046 had $10,000 been invested in the Lehman Brothers Intermediate
Government/Corporate Bond Index.
The Lehman Brothers Intermediate Government/Corporate Bond Index is an
unmanaged index comprised of investment-grade corporate debt securities and
U.S. Treasury and U.S. Government Agency debt securities that mature in one to
ten years.
THE VICTORY FUNDS
Robert H. Fernald is a Vice-President of Society Asset Management, Inc. ("SAM")
and has managed the Fund since January 1995. He has been with SAM and/or an
affiliate, since 1991. Mr. Fernald received his BS from Trinity College.
The performance data quoted represent past performance and, therefore, are not
indicative of future results. Total returns are historical and include the
change in share price and reinvestment of dividends and capital gains
distributions, and unless indicated show the effect of the maximum 4.75% sales
charge. Investment returns and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. The total return figures set forth above may reflect the waiver of a
portion of certain fees for various periods since the Fund's inception date. In
such instances and without such waiver of fees, the total returns would have
been lower and the 30-Day yield would have been 4.95%.
10
<PAGE> 13
VICTORY INVESTMENT QUALITY BOND FUND
Q Can you describe what happened in the high-quality bond market this year?
A The bond market experienced one of its best years ever. This follows on the
heels of 1994, which is considered one of the worst bond markets in
history. A number of positive forces fueled the bond market over the past
year. These include low inflation, a slowing economy and a shift to an
accommodative policy by the Federal Reserve.
Q How did the Fund perform in this market?
A The market rally benefited well-structured issues that provided call
protection as interest rates declined. Since the Fund is heavily weighted in
high-quality issues, such as U.S. Treasuries, government mortgage-backed
issues and corporates primarily A rated or above, the Fund was well-
structured to participate in the rally. The Fund performed well, and was up
14.63% for the one-year period, compared to the Lehman Brothers Aggregate
Bond Index, which was up 15.65%.
Q What portion of the Fund contributed the most to performance?
A Fund performance was enhanced by the overweighting in longer-term Treasury
bonds, industrial bonds and bank issues. These issues added significant price
appreciation when long-term interest rates fell in response to the short-term
rate cuts initiated by the Federal Reserve. On the other hand, the weighting
in mortgage-backed issues caused a slight drag on performance as investor
concerns over increased prepayments of mortgages caused them to underperform.
Q Can you describe some of your strategies?
A We use what we like to call a "relative value sector approach," which means
that we look for sectors or issues that have good value compared to similar
sectors or issues. For example, right now the mortgage-backed sector has good
value, with yields about 1.25% higher than a comparable Treasury issue. This
type of approach helps to maintain a competitive yield. The fund's 30-Day
yield as of 10-31-95 was 5.30%.
Q What are your expectations for next year?
A The bond market should continue to ride the current good fundamentals of low
inflation and moderate economic growth. However, areas of concern in the
marketplace include the outcome of the current Federal budget negotiations,
any temporary pick-up in the economy sparked by an improvement in the housing
industry, and indications that the market is overbought.
TOTAL RETURN
As of 10/31/95
<TABLE>
<CAPTION>
Net Asset Maximum
Value Offering Price
<S> <C> <C>
One Year 14.63% 9.23%
Since Inception Annualized
12/10/93 5.23% 2.55%
</TABLE>
<TABLE>
<CAPTION>
VICTORY INVESTMENT QUALITY BOND FUND
VS. LEHMAN AGGREGATE
12/93 2/94 4/94 6/94 8/94 10/94 12/94 2/95 4/95 6/95 8/95 10/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 8,000
$ 8,500
$ 9,000
$ 9,500
$10,000
$10,500
$11,000
$11,500
</TABLE>
The graph that appears on page 11 of the annual report represents a comparison
between a $10,000 investment made on December 10, 1993 in the Investment
Quality Bond Fund and an identical investment in the Lehman Brothers Aggregate
Bond Index. The chart indicates that $10,000 invested on December 10, 1993 in
the Investment Quality Bond Fund would be worth $10,527 at maximum load and
$11,057 at Net Asset Value on October 31, 1995, as opposed to $11,175 had
$10,000 been invested in the Lehman Brothers Aggregate Bond Index.
The Lehman Brothers Aggregate Bond Index is a broad-based unmanaged
index that represents the general performance of longer-term (>1 year),
investment-grade fixed-income securities.
THE VICTORY FUNDS
Richard T. Heine is a Chartered Financial Analyst and a Vice-President with
Society Asset Management, Inc. ("SAM"), and has managed the Fund since its
inception. He has been with SAM and/or an affiliate since 1974. Mr. Heine
received his MBA from Case Western Reserve University.
The performance data quoted represent past performance and, therefore, are not
indicative of future results. Total returns are historical and include the
change in share price and reinvestment of dividends and capital gains
distributions, and unless indicated show the effect of the maximum 4.75% sales
charge. Investment returns and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. The total return figures set forth above may reflect the waiver of a
portion of certain fees for various periods since the Fund's inception date. In
such instances and without such waiver of fees, the total returns would have
been lower and the 30-Day yield would have been 5.17%.
11
<PAGE> 14
VICTORY GOVERNMENT BOND FUND
Q Can you summarize the government bond market environment over the course of
the past year?
A Low inflation and expectations for a slowing economy for 1995 propelled the
longer end of the fixed-income markets to achieve price gains and a resultant
positive total rate of return that is among the highest we have seen in many
years. A strong rally in short rates helped the long end rally as well. The
high levels of return were due to the significant price appreciation that you
get in longer securities over and above the income return. Finally, optimism
about a balanced budget helped keep a bid in the longer end of the Treasury
market, which caused some flattening of the yield curve from late summer
levels.
Q How did you manage the Fund during this period ?
A Since the Fund invests primarily in Treasury bonds, the two most important
elements of performance are the Fund's duration and structure. The strategy
employed was to invest in those parts of the Treasury curve that represented
the best value, while at the same time, maintaining a longer duration than
that of the Lehman Brothers Government Bond Index, the Fund's benchmark.
Q Given your strategy, how did the Fund perform?
A The Fund performed in line with its benchmark. Having the duration longer
than the benchmark during this period enhanced fund performance, but
earlier in the year there was a larger concentration of securities in the
short-end, thus not capturing all of the long-term rally. The Fund was
structured using a barbell approach, with maturities weighted between two
year and 30-year securities. Year-to-date, a bulleted approach with a
concentration in the 10-year sector could have performed a little better.
Toward mid-year the Fund was repositioned, with more emphasis on the
10-year sector.
Q What events are you looking for going forward, and what will your strategy
be?
A While the economy seems to be moving toward a soft landing, the Treasury
market has recently been range bound waiting for the next "shoe to fall."
This could come either in the form of weak fourth quarter final sales, a
Federal Reserve ease on December 19, or a budget resolution that results in
near-term spending cuts and fiscal drag. If any of these scenarios come to
pass, the rally should continue into 1996 and the strategy will be to stay
longer than the Index. The fund's 30-Day yield as of 10-31-95 was 4.82%.
TOTAL RETURN
As of 10/31/95
<TABLE>
<CAPTION>
Net Asset Maximum
Value Offering Price
<S> <C> <C>
GOVERNMENT BOND Class A
One Year 14.40% 8.93%
Since Inception Annualized
5/3/93 5.01% 2.98%
GOVERNMENT BOND Class B
Contingent
Net Asset Deferred
Value Charge
<S> <C> <C>
One Year 13.58% 9.58%
Since Inception Annualized
9/26/94 11.88% 8.27%
</TABLE>
<TABLE>
<CAPTION>
VICTORY GOVERNMENT BOND FUND
VS. LEHMAN GOVERNMENT
5/93 8/93 11/93 2/94 5/94 8/94 11/94 2/95 5/95 10/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 8,000
$ 9,000
$10,000
$11,000
$12,000
</TABLE>
The graph that appears on page 12 of the annual report represents a comparison
between a $10,000 investment made on May 3, 1993 in the Government Bond Fund
and an identical investment in the Lehman Brothers Government Bond Index. The
chart indicates that $10,000 invested on May 3, 1993 in the Government Bond
Fund would be worth $10,846 at maximum load and $11,383 at Net Asset Value on
October 31, 1995, as opposed to $11,676 had $10,000 been invested in the Lehman
Brothers Government Bond Index.
The Lehman Brothers Government Bond Index is a broad-based unmanaged index that
represents the general performance of U.S. Treasury and U.S. Government agency
debt securities.
THE VICTORY FUNDS
Robert H. Fernald is a Vice-President of Society Asset Management, Inc. ("SAM")
and has managed the Fund since January 1995. He has been with SAM and/or an
affiliate, since 1991. Mr. Fernald received his BS from Trinity College.
The performance data quoted represent past performance and are not indicative
of future results. Total returns are historical and include the change in share
price and reinvestment of dividends and capital gain distributions. Performance
of the different classes of shares will vary based on the differences in sales
charges and fees paid by shareholders. Class A performance with a sales charge
shows the effect of the maximum 4.75% sales charge applied at the beginning of
the reported period. Class B performance with sales charge shows the effect of
the applicable contingent deferred sales charge, assuming a complete redemption
as of October 31, 1995. Investment returns and principal value will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. The total return figures set forth above may reflect the
waiver of a portion of certain fees for various periods since inception. In
such instances and without such waiver of fees, the total returns would have
been lower and the 30-Day yield would have been 4.65%. The yield on Class B was
4.44% and 4.27% without waiver.
12
<PAGE> 15
VICTORY GOVERNMENT MORTGAGE FUND
Q What are the more significant trends affecting the government mortgage
market over the course of the past year?
A I think that the most significant trend of the past year was definitely the
rapid and significant decline in long-term rates. Ten-year Treasury notes
have fallen nearly 2% so far in 1995. This shortened the duration of mortgage
portfolios significantly as investors rushed to refinance their mortgages to
take advantage of declining interest rates.
Q How have the developments you described above affected your strategy for
managing the Fund?
A These developments in the mortgage market made it very difficult to maintain
a bullish posture in the Fund. When the fixed-income market rallies you want
to hold longer average-life securities, because they appreciate in value when
rates drop. Mortgage investments tend to run counter to this, however.
Mortgage pools tend to move to a shorter life, which means they don't
appreciate in value as much, due to the fact that some of the homeowners in
the pool refinance their mortgages at lower rate.
Q Despite the difficult conditions facing the mortgage market, have there been
any positive accomplishments in the Fund?
A Yes, we successfully managed to consolidate smaller positions into more
manageable larger blocks of mortgages. But, most importantly, after lagging
the index early in the year, we have been able to turn the performance of
the Fund around and the trend has been positive for the past several months.
Q Can you briefly explain the performance of the Fund relative to the Index?
A The Fund has lagged the Lehman Brothers Mortgage-Backed Index during the
year due to a higher concentration of high-coupon (premium price) mortgages
compared to the Index. This type of security performs best in stable markets
and in rising interest rate environments. As the year went on, we adjusted
the Fund's asset mix to include more low-coupon (discount price) securities,
which tend to perform better in a declining interest rate environment such
as the one we have experienced in 1995. The fund's 30-Day yield as of
10-31-95 was 5.76%.
Q What's ahead for the economy, the mortgage market and the Fund?
A Our current expectations for the economy call for lower growth and very
moderate inflationary pressures. These conditions should be conducive to a
continued rally in bonds. The Fund is currently positioned to capture the
expected move to lower interest rates. However, should the economic scenario
strengthen and rates move higher, we may move back to higher-coupon mortgages
to benefit from better performance in this sector and decrease our small
position in 10-year Treasury notes.
TOTAL RETURN
As of 10/31/95
<TABLE>
<CAPTION>
Net Asset Maximum
Value Offering Price
<S> <C> <C>
One Year 13.55% 8.11%
Annualized Return
Three Years 6.30% 4.59%
Five Years 8.56% 7.50%
Since Inception
5/18/90 8.85% 7.88%
</TABLE>
<TABLE>
<CAPTION>
VICTORY GOVERNMENT MORTGAGE FUND
VS. LEHMAN MORTGAGE
5/90 10/90 3/91 8/91 1/92 6/92 11/92 4/93 9/93 2/94 7/94 12/94 5/95 10/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 7,000
$ 8,000
$ 9,000
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
$16,000
$17,000
</TABLE>
The graph that appears on page 13 of the annual report represents a comparison
between a $10,000 investment made on May 18, 1990 in the Government Mortgage
Fund and an identical investment in the Lehman Brothers Mortgage-Backed
Securities Index. The chart indicates that $10,000 invested on May 18, 1990 in
the Government Mortgage Fund would be worth $15,001 at maximum load and $15,745
at Net Asset Value on October 31, 1995, as opposed to $16,059 had $10,000 been
invested in the Lehman Brothers Mortgage-Backed Securities Index.
The Lehman Brothers Mortgage-Backed Securities Index is a broad-based unmanaged
index that represents the general performance of fixed-rate mortgage pools.
THE VICTORY FUNDS
Robert H. Fernald is a Vice-President of Society Asset Management, Inc. ("SAM")
and has managed the Fund since November 1994. He has has been with SAM and/or
an affiliate since 1991. Mr. Fernald received his BS from Trinity College.
The performance data quoted represent past performance and are not indicative
of future results. Total returns are historical and include the change in share
price and reinvestment of dividends and capital gains distributions, and unless
indicated show the effect of the maximum 4.75% sales charge. Investment returns
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost. The total return figures
set forth above may reflect the waiver of a portion of certain fees for various
periods since the Fund's inception date. In such instances and without such
waiver of fees, the total returns would have been lower.
13
<PAGE> 16
VICTORY FUND FOR INCOME
Q Can you briefly comment on the bond market environment and, in particular,
on the mortgage market for the past year?
A A combination of declining interest rates and tame inflation figures have
made 1995 a good year for bonds, which have recovered impressively from their
1994 slump. However, in such an environment of declining interest rates,
mortgage-backed securities usually find it difficult to keep pace with U.S.
Treasury bonds and other high-grade bonds with a discrete maturity. The
reason is that when interest rates are falling, homeowners rush to refinance
their mortgages in an attempt to lock in lower rates and this causes the
expected maturity of mortgage-backed securities to shorten.
Q What does the mortgage market situation you described above imply for
performance of the Fund?
A As mortgage-backed securities represent the majority of the Fund's holdings,
it has been difficult at times to invest in a sector of the market that has
fallen temporarily out of favor. The Fund's shorter expected maturity
explains why it generally underperforms when bond prices are rising and why
it tends to outperform when bond prices are declining.
Q Despite your disappointment with the mortgage market performance this year,
have there been any success stories in the Fund?
A Certainly, the Fund has been able to maintain a generous dividend yield
despite the sharp decline in market interest rates and, at the same time, it
has generated significant unrealized capital gains for its shareholders.
Q How is your 1996 outlook for the bond market and, specifically, the mortgage
market?
A The backdrop for bond prices is quite good. The pace of economic growth is
modest; inflation is benign; and the prospect for meaningful deficit
reduction legislations appears good. However, since we believe that the
good news is largely reflected in current bond prices, our expectation is
for a relatively tame bond market. The effect on mortgage-backed securities
should be positive because stable interest rates and bond prices increase
the demand for these types of securities.
Q If you were to summarize the essence of your Fund in just one sentence, what
would you say?
A Our goal for the Fund has always been to provide our shareholders with more
income than short- and intermediate-term Government bonds, but, at the same
time, less price fluctuation than long-term Government bonds through a
portfolio of intermediate-term, high-grade, mortgage-backed securities. The
fund's 30-Day yield as of 10-31-95 was 6.76%.
TOTAL RETURN
As of 10/31/95
<TABLE>
<CAPTION>
Net Asset Maximum
Value Offering Price
<S> <C> <C>
One Year 12.75% 10.52%
Annualized Return
Three Years 5.49% 4.77%
Five Years 7.85% 7.42%
Since Inception
5/8/87 8.66% 8.41%
</TABLE>
<TABLE>
<CAPTION>
VICTORY FUND FOR INCOME
VS. LEHMAN MORTGAGE
5/87 1/88 9/88 5/89 1/90 9/90 5/91 1/92 9/92 5/93 1/94 9/94 10/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
</TABLE>
The graph that appears on page 14 of the annual report represents a comparison
between a $10,000 investment made on May 8, 1987 in the Fund For Income and an
identical investment in the Lehman Brothers Mortgage-Backed Securities Index.
The chart indicates that $10,000 invested on May 8, 1987 in the Fund For Income
would be worth $19,992 at maximum load and $20,397 at Net Asset Value on
October 31, 1995, as opposed to $21,682 had $10,000 been invested in the Lehman
Brothers Mortgage-Backed Securities Index.
The Lehman Brothers Mortgage-Backed Securities Index is a broad-based unmanaged
index that represents the general performance of fixed-rate mortgage pools.
THE VICTORY FUNDS
Robert T. Hennes, Jr. has been with First Albany Asset Management Corporation
as an Executive Vice-President since 1991. Mr. Hennes has managed the Fund
since its inception in 1987.
The performance data quoted represent past performance and are not indicative
of future results. Total returns are historical and include the change in share
price and reinvestment of dividends and capital gains distributions, and unless
indicated show the effect of the maximum 2.00% sales charge. Investment returns
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost. The total return figures
set forth above may reflect the waiver of a portion of certain fees for various
periods since the Fund's inception date. In such instances and without such
waiver of fees, the total returns would have been lower and the 30 Day Yield
would have been 6.37%.
14
<PAGE> 17
INTRODUCTION TO MUNICIPAL BOND FUNDS
THE VICTORY MUNICIPAL BOND FUNDS
Who should invest in a tax-exempt fixed-income fund?
- - Tax-exempt fixed income funds may be most appropriate for investors looking
for relative stability of principal, a steady source of income and an
investment that can provide some shelter from taxation.
- - Depending on your tax bracket, tax-exempt income may be greater than the
after-tax equivalent income provided by a taxable investment.
What type of securities are found in tax-exempt fixed-income funds?
- - Most of the securities found in many tax-exempt funds are bonds issued by
state and local municipalities and governments and can include bonds to pay
for such items as the building of libraries, schools and hospitals and
improving infrastructure, utilities and transportation.
- - Many tax-exempt bond funds can also invest in very liquid securities such
as tax-exempt commercial paper so that assets are always available for
investors who need to redeem their shares.
How do I compare my tax-exempt yield to a taxable yield?
- - Yield + (1 - Tax Bracket) = Tax Equivalent Yield
1. The math is fairly simple, but you have to know your marginal tax rate.
For example an individual earning between $117,000 and $256,000 would be in
the 36% federal income tax bracket. For some states, such as New York and
Ohio, you add your state income tax rate to the federal for a combined tax
rate. However, if you invest in a New York or Ohio fund your income will
likely be exempt from those taxes as well.1
2. Subtract the combined tax rate from 1.
For the federal tax example, it would be (1-.36)=.64
3. You then take the yield of the tax-exempt fund, 4% for example and divide by
the number in step 2.
For example .04/.64=.0625, or 6.25%, which means that you would
have to get 6.25% on a taxable investment to equal the 4% you get
on the tax-exempt.
For more information about any of the Victory Municipal Bond Funds in
particular, including charges and expenses, obtain a prospectus by calling
1-800-539-FUND. Please read the prospectus carefully before you invest
or send money.
THE VICTORY FUNDS
"A winner is someone who sets his goals, commits himself to those goals, and
then pursues his goals with all the ability given to him."
- Anonymous
1 This example assures a maximum rate of 36% and is for illustrative purposes
only. The tax-free yield is hypothetical and does not reflect the performance
of the fund. The example does not reflect the possible effects of the federal
alternative minimum tax.
15
<PAGE> 18
VICTORY NATIONAL MUNICIPAL BOND FUND
Q Can you describe some of the trends that affected the municipal bond market
this past year?
A Although Gross Domestic Product (GDP) grew at a robust annual rate of 4.20%
during the third quarter of 1995, the expectation is for a slowing growth
rate more in line with the Administration's goal of about 2.5%. Inflation
appears to be in check, allowing fixed-income markets to achieve an
impressive recovery from the tough times of 1994. When you look at after-
tax returns, municipal investment returns look very attractive.
Q What was your investment strategy during the past year?
A The fund was managed so that its characteristics were kept fairly close to
the characteristics of the Lehman Brothers 10-Year Municipal Bond Index. The
bull market of 1995, as well as strong net inflows into the Fund, have
allowed for some excellent investment opportunities throughout the year as
well as the attractive total return performance of 14.02% for the year ended
October 31, 1995, compared to 14.77% for the Lehman 10-Year Municipal Bond
Index.
Q How does this performance compare to similar municipal bond funds?
A For the period 10/31/94 through 10/31/95, the Fund was ranked #1 in total
return by Lipper Analytical, from a group of 115 intermediate municipal bond
funds.1
Q Can you describe some of the factors that led to this performance?
A During the past 12 months, the Fund's asset size has grown from less than $1
million to over $10 million. The still relatively small size of the Fund
gives us the opportunity to make a major impact on the Fund's performance
with a relatively small number of trades. In addition, the positive cash
flow coming into the Fund allowed us to strategically purchase new issues
that contributed to the positive performance. The fund's 30-Day yield as of
10-31-95 was 4.54%.
Q What are your expectations for next year?
A We expect a slowing rate of economic growth during the next few months. If
Congress can pass a favorable budget package including a plan to balance the
budget in the year 2002 or 2003, the Federal Reserve should be more open to
further easing of interest rates. If this happens, the fixed income markets
should continue to provide good returns.
TOTAL RETURN
As of 10/31/95
<TABLE>
<CAPTION>
NATIONAL MUNI Class A
Net Asset Maximum
Value Offering Price
<S> <C> <C>
One Year 14.02% 8.62%
Since Inception Annualized
2/3/94 4.93% 2.04%
NATIONAL MUNI Class B
Contingent
Net Asset Deferred
Value Charge
<S> <C> <C>
One Year 13.35% 9.35%
Since Inception Annualized
9/26/94 9.76% 6.15%
</TABLE>
VICTORY NATIONAL MUNICIPAL BOND FUND
VS. LEHMAN 10-YR MUNI
<TABLE>
<CAPTION>
2/94 4/94 6/94 8/94 10/94 12/94 2/95 4/95 6/95 8/95 10/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 8,000
$ 9,000
$10,000
$11,000
$12,000
</TABLE>
The graph that appears on page 16 of the annual report represents a comparison
between a $10,000 investment made on February 3, 1994 in the National Municipal
Bond Fund and an identical investment in the Lehman Brothers 10-Year Municipal
Bond Index. The chart indicates that $10,000 invest on February 3, 1994 in the
National Municipal Bond Fund would be worth $10,517 at maximum load and $11,041
at Net Asset Value on October 31, 1995, as opposed to $11,114 had $10,000 been
invested in the Lehman Brothers 10-Year Municipal Bond Index.
The Lehman Brothers 10-Year Municipal Bond Index is a broad-based unmanaged
index that represents the general performance of investment-grade municipal
bonds with maturities of 8 to 12 years.
THE VICTORY FUNDS
Paul Toft is a Vice-President with Society Asset Management, Inc. ("SAM"). He
has been with SAM since 1994. Prior to his affiliation with Society, Mr. Toft
was Vice-President and Manager of Nike Securities (1991-1994) and Assistant
Vice-President with Van Kampen Merritt (1990-1991). Mr. Toft obtained his MBA
from Northwestern University.
The performance data quoted represent past performance and are not indicative
of future results. Total returns are historical and include the change in share
price and reinvestment of dividends and capital gain distributions. Performance
of the different classes of shares will vary based on the differences in sales
charges and fees paid by shareholders. Class A performance with a sales charge
shows the effect of the maximum 4.75% sales charge applied at the beginning of
the reported period. Class B performance with sales charge shows the effect of
the applicable contingent deferred sales charge, assuming a complete redemption
as of October 31, 1995. Investment returns and principal value will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. The total returns figures set forth above may reflect the
waiver of a portion of certain fees for various periods since inception. In
such instances and without such waiver of fees, the total returns would have
been lower and the 30-Day yield would have been 3.87%. The yield on Class B was
3.77% and 3.08% without waiver.
1 Lipper bases this ranking on total return and does not include the effect of
a sales charge, in addition in the absence of the fee waiver the return and
ranking may have been lower.
16
<PAGE> 19
VICTORY NEW YORK TAX-FREE FUND
Q What was the market like for New York municipal bonds this past year?
A The New York municipal market benefited from the rally in interest rates
that was started when the Federal Reserve lowered short-term rates earlier
this year. Municipal bond markets in general performed very nicely, posting
returns comparable to taxable alternatives.
Q Is your strategy for managing this Fund similar to the other two funds you
manage?
A No, the emphasis is a little different. This Fund is being managed with the
primary focus on generating as much tax-free income as possible while
maintaining the high quality of the issues purchased. The Fund holds a lot of
high coupon issues, which helps maintain a high payout rate. However these
same high coupon issues were priced to the first call date, which means
that they behaved like a shorter maturity note, and therefore caused the
Fund to not fully participate in the market rebound this year.
Q How did Fund performance compare to the Index?
A The Fund underperformed the Lehman Brothers 10-Year Municipal Bond Index due
to the shorter duration during the bond market rally. In order to extend
the duration of the Fund at the beginning of the year, it would have
been necessary to take large capital gains and cut the dividend rate
substantially. We chose to focus on maximizing tax-free income instead. For
New York investors, the Fund offers a very competitive distribution yield
with a short duration. Since the dividend income is exempt from New York
state income tax, the gap narrows somewhat when compared to the Lehman Index
which is a national index.1 The fund's 30-Day yield as of 10-31-95 was
3.46%.
Q What do you see for next year?
A If the economy continues to grow at the current rate and inflation remains
under control, then the Federal Reserve may lower interest rates again. In
this environment the municipal bond market rally will most likely continue.
This Fund would participate in any rally, but may continue to lag the
Index. On the other hand, as yields fall for alternative investments, this
Fund's dividend should continue to stay near the same level.
TOTAL RETURN
As of 10/31/95
<TABLE>
NY TAX FREE CLASS A
<CAPTION>
Net Asset Maximum
Value Offering Price
<S> <C> <C>
One Year 10.82% 5.54%
Annualized Return
Three Years 7.22% 5.50%
Since Inception
2/11/91 7.65% 6.54%
NY TAX-FREE CLASS B
<CAPTION>
Contingent
Net Asset Deferred
Value Charge
<S> <C> <C>
One Year 10.18% 6.18%
Since Inception
Annualized 9/26/94 7.98% 4.36%
</TABLE>
<TABLE>
<CAPTION>
VICTORY NEW YORK TAX-FREE FUND
VS. LEHMAN 10-YR MUNI
2/91 7/91 12/91 5/92 10/92 3/93 8/93 1/94 6/94 11/94 4/95 10/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 7,000
$ 8,000
$ 9,000
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
</TABLE>
The graph that appears on page 17 of the annual report represents a comparison
between a $10,000 investment made on February 11, 1991 in the New York Tax-Free
Fund and an identical investment in the Lehman Brothers 10-Year Municipal Bond
Index. The chart indicates that $10,000 invested on February 11, 1991 in the
New York Tax-Free Fund would be worth $13,625 at maximum load and $14,302 at
Net Asset Value on October 31, 1995, as opposed to $14,696 had $10,000 been
invested in the Lehman Brothers 10-Year Municipal Bond Index.
The Lehman Brothers 10-Year Municipal Bond Index is a broad-based unmanaged
index that represents the general performance of investment-grade municipal
bonds with maturities of 8 to 12 years.
THE VICTORY FUNDS
Paul Toft is a Vice-President with Society Asset Management, Inc. ("SAM"). He
has been with SAM since 1994. Prior to his affiliation with Society, Mr. Toft
was Vice-President and Manager of Nike Securities (1991-1994) and Assistant
Vice-President with Van Kampen Merritt (1990-1991). Mr. Toft obtained his MBA
from Northwestern University.
The performance data quoted represent past performance and are not indicative
of future results. Total returns are historical and include the change in share
price and reinvestment of dividends and capital gain distributions.
Performance of the different classes of shares will vary based on the
differences in sales charges and fees paid by shareholders. Class A performance
with a sales charge shows the effect of the maximum 4.75% sales charge applied
at the beginning of the reported period. Class B performance with sales charge
shows the effect of the applicable contingent deferred sales charge, assuming a
complete redemption as of October 31, 1995. Investment returns and principal
value will fluctuate so that an investor's shares, when redeemed, may be worth
more or less than their original cost. The total returns figures set forth
above may reflect the waiver of a portion of certain fees for various periods
since inception. In such instances and without such waiver of fees, the total
returns would have been lower and the 30-Day Yield would have been 2.85%. The
yield on Class B was 3.22% and 2.58% without waiver.
1 Some investors may be subject to the federal alternative minimum tax and
certain state and local taxes.
17
<PAGE> 20
VICTORY OHIO MUNICIPAL BOND FUND
Q Can you describe some of the trends that affected the Ohio municipal bond
market this past year?
A The Ohio municipal bond market participated in the bond market rally much
like the national municipal bond market. Municipal markets were impacted
primarily by the actions taken by the Federal Reserve in the taxable market.
When the Federal Reserve lowered short-term interest rates, most fixed
income markets rallied in response.
Q How did these market conditions affect the Fund?
A The Fund participated nicely in the rally. The Fund is managed similarly to
the National Municipal Bond Fund. Both Funds are managed so that their
characteristics are kept fairly close to the characteristics of the 10-Year
Lehman Brothers Municipal Bond Index. This fund however, is limited to Ohio
municipal bonds only.
Q How did the Fund perform during this period?
A We are very satisfied with the performance of the Fund. The Fund
outperformed the Lehman Index with a total return of 15.03% compared to
14.77% respectively for the period ended 10-31-95. The fund's 30-Day yield
as of 10-31-95 was 4.13%.
Q Can you describe your strategy?
A Through active relative value trading, we were able to outperform the
benchmark without taking any significant interest rate risk by keeping the
Fund's duration similar to the benchmark.
Q Do you think the rally will continue into 1996?
A I think it is very possible. If the economy continues at the current growth
rate, and inflation remains subdued then the Federal Reserve may lower
interest rates again. This would most likely set the tone for the market
causing the rally to continue. Only if inflation heats up, or the economy
starts to grow too fast should the rally falter.
TOTAL RETURN
As of 10/31/95
<TABLE>
<CAPTION>
Net Asset Maximum
Value Offering Price
<S> <C> <C>
One Year 15.03% 9.52%
Annualized Return
Three Years 8.18% 6.45%
Five Years 8.34% 7.30%
Since Inception
5/18/90 8.25% 7.29%
</TABLE>
<TABLE>
<CAPTION>
VICTORY OHIO MUNICIPAL BOND FUND
VS. LEHMAN 10-YR MUNI
5/90 10/90 3/91 8/91 1/92 6/92 11/92 4/93 9/93 2/94 7/94 12/94 5/95 10/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 7,000
$ 8,000
$ 9,000
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
$16,000
</TABLE>
The graph that appears on page 18 of the annual report represents a comparison
between a $10,000 investment made on May 18, 1990 in the Ohio Municipal Bond
Fund and an identical investment in the Lehman Brothers 10-Year Municipal Bond
Index. The chart indicates that $10,000 invested on May 18, 1990 in the Ohio
Municipal Bond Fund would be worth $14,641 at maximum load and $15,371 at Net
Asset Value on October 31, 1995, as opposed to $15,890 had $10,000 been
invested in the Lehman Brothers 10-Year Municipal Bond Index.
The Lehman Brothers 10-Year Municipal Bond Index is a broad-based unmanaged
index that represents the general performance of investment-grade municipal
bonds with maturities of 8 to 12 years.
THE VICTORY FUNDS
Paul Toft is a Vice-President with Society Asset Management, Inc. ("SAM"). He
has been with SAM since 1994. Prior to his affiliation with Society, Mr. Toft
was Vice-President and Manager of Nike Securities (1991-1994) and Assistant
Vice-President with Van Kampen Merritt (1990-1991). Mr. Toft obtained his MBA
from Northwestern University.
The performance data quoted represent past performance and are not indicative
of future results. Total returns are historical and include the change in share
price and reinvestment of dividends and capital gains in distributions, and
unless indicated show the effect of the maximum 4.75% sales charge. Investment
returns and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The total return
figures set forth above may reflect the waiver of a portion of certain fees for
various periods since the Fund's inception date. In such instances and without
such waiver of fees, the total returns would have been lower and the 30-Day
Yield would have been 4.04%.
18
<PAGE> 21
INTRODUCTION TO EQUITY FUNDS
THE VICTORY EQUITY FUNDS
Who should invest in an equity fund?
- - Equity funds may be most appropriate for investors looking for long-term
growth over an intermediate- to longer-term time horizon.
- - Many individuals look to equity investments when considering options for
retirement plans and funding for their children+s college education.
What are some of the types of equity funds?
- - There are many different types of equity funds. Some equity funds are
known as "large-capitalization funds" because they invest in major U.S.
corporations. Some examples of large cap stocks may include AT&T, IBM,
McDonalds, Coca-Cola, General Motors, etc.
- - Others, often known as aggressive equity funds or small-capitalization stock
funds, may invest in newer, start-up companies. Keep in mind that small-cap
funds carry additional risks and have historically experienced a greater
degree of market volatility than average.
- - Global equity funds invest in companies located in the United States and
overseas. Foreign funds invest overseas, but not in the U.S. There are also
country specific funds [like a Japan fund or a Germany fund] that invest
primarily in companies headquartered in one country. Keep in mind that
international investing is subject to certain factors such as currency
exchange rate volatility, country risks, foreign taxation, and/or
differences in auditing and other financial standards.
- - Another type of equity fund is an "index" fund. These funds invest in the
same securities in the same proportion of a specific index, like the Standard
and Poor's 500. The goal of these funds is to perform as well as the index
after which they are modeled.
- - And of course, there are also equity funds that have a portion of their
assets invested in bonds. These are known as balanced funds and can provide
investors with longer-term growth potential as well as current income.
- - Many equity funds also invest in very liquid securities such as commercial
paper and overnight repurchase agreements so that assets are always available
for investors who need to redeem their shares.
Curious about the different types of equity fund management? Let us send you
our brochure called "The Art of Portfolio Management," which explains some of
the aspects of stock selection, and the styles of management using an artist
metaphor. Please complete and return the business reply card found in this
this report, and we will promptly send you the information you request, or for
more information about any of the Victory Equity Funds in particular, including
charges and expenses, obtain a prospectus by calling 1-800-539-FUND. Please
read the prospectus carefully before you invest or send money.
"Yesterday I dared to struggle. Today I dare to win."
- Bernadette Devlin
19
<PAGE> 22
VICTORY BALANCED FUND
Q How was the market environment for the Balanced Fund during the past year?
A A combination of lower interest rates, improving corporate earnings and
modest inflation propelled the S&P 500 to all-time high levels in 1995. A
"soft landing" of the economy along with merger activity and corporate
restructurings had a positive impact on stock price and fixed-income
performance. The fixed-income markets came back strongly compared to 1994,
as soon as the Federal Reserve reversed course by lowering interest rates.
Q How has the Fund been structured during this period?
A A "soft landing" economic scenario and our generally positive outlook for
the equity and bond market led us to maintain a relatively high equity (55%)
and fixed-income (42%) exposure and minimal exposure (3%) to cash. This
allocation helped the Fund deliver good returns, as equities have
outperformed both bonds and cash over the past year. While the equity
weighting was important to the overall return, the strong bond market also
contributed. We believe that allocation is the most important determinant of
performance, and we also believe that while this type of fund may lag a bull
equity market, it will capture most of the returns with less risk along the
way.
Q Tell us about the equity process.
A We continue to have a strong value orientation with an above-market dividend
yield and below-market price-earnings ratio. The equity performance of the
Fund was enhanced by an overweight position in financials and an underweight
position in consumer cyclicals relative to the S&P 500. Unfortunately the
Fund was underweighted in technology, a sector that significantly
outperformed the S&P 500 over the past year.
Q Have there been any changes in the Fund this year?
A Yes, we started to allocate some of the equity portion of the Fund to
international stocks. As of October 31, 3.8% of the Fund was invested in
international stocks. As the Fund grows larger, we have added flexibility in
stock selection, and, in this case, flexibility in its allocation of a
portion of investments to international stocks. Based on the historical
relationship between domestic and international investments, an allocation
that includes international stocks may enhance returns and improve risk.1
Q How is the fixed income portion of the Fund managed?
A The fixed-income portion is managed using the same strategy as is employed
in the Investment Quality Bond Fund. We invest primarily in high credit
quality issues, and we utilize a relative value approach to seek good values
in the fixed-income market segments. This year we maintained a longer
duration which contributed to good returns. On the other and, we were
overweighted in government mortgage-backed issues, which did not perform as
strongly when interest rates fell and consumers refinanced their mortgages.
TOTAL RETURN
As of 10/31/95
<TABLE>
<CAPTION>
Net Asset Maximum
Value Offering Price
<S> <C> <C>
One Year 19.24% 13.57%
Since Inception Annualized
12/10/93 9.41% 6.63%
</TABLE>
<TABLE>
<CAPTION>
VICTORY BALANCED FUND
VS. S&P 500 & LIPPER BALANCED
12/93 2/94 4/94 6/94 8/94 10/94 12/94 2/95 4/95 6/95 8/95 10/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 7,000
$ 8,000
$ 9,000
$10,000
$11,000
$12,000
$13,000
$14,000
</TABLE>
The graph that appears on page 20 of the annual report represents a comparison
between a $10,000 investment made on December 10, 1993 in the Balanced Fund and
identical investments in the Standard & Poor's 500 Stock and Lipper Balanced
Fund Indexes. The chart indicates that $10,000 invested on December 10, 1993
in the Balanced Fund would be worth $11,251 at maximum load and $11,813 at Net
Asset Value on October 31, 1995, as opposed to $13,100 and $11,628 had $10,000
been invested in the Standard & Poor's 500 Stock or Lipper Balanced Indexes,
respectively.
The Standard & Poor's 500 Stock Index (S&P 500) is a broad-based unmanaged
index that represents the general performance of domestically traded common
stocks of mid- to large-size companies.
The Lipper Balanced Fund Index is a non-weighted index of the 30
largest funds within the Lipper Balanced Fund investment category.
THE VICTORY FUNDS
Denise M. Coyne is a Chartered Financial Analyst as well as a Certified Public
Accountant. She is a Vice-President with Society Asset Management, Inc. ("SAM")
and has been with SAM and/or an affiliate, since 1985. Ms. Coyne received her
MBA from Miami University.
Richard T. Heine is a Chartered Financial Analyst, Vice-President and Portfolio
Manager with Society Asset Management, Inc. ("SAM"). He has been with SAM
and/or an affiliate since 1974. Mr. Heine received his MBA from Case Western
Reserve University.
The performance data quoted represent past performance and, therefore, are not
indicative of future results. Total returns are historical and include the
change in share price and reinvestment of dividends and capital gains
distributions, and unless indicated show the effect of the maximum 4.75% sales
charge. Investment returns and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. The total return figures set forth above may reflect the waiver of a
portion of certain fees for various periods since the Fund's inception date. In
such instances and without such waiver of fees, the total returns would have
been lower.
1 Source: Ibbotson & Associates Inc., Chicago. 1995 Asset Allocation Seminar
20
<PAGE> 23
VICTORY STOCK INDEX FUND
Q To what factors do you attribute the outstanding performance of the stock
market during the past year?
A I think that a combination of lower interest rates, improving corporate
earnings and modest inflation propelled the S&P 500 to all time high levels
in 1995. Through its careful maneuvering of monetary policy, the Federal
Reserve was successful in carrying out a "soft landing" of the economy,
slowing down the pace of economic growth to more moderate and sustainable
levels. This had a major positive impact on stock price performance
throughout the year.
Q What impact did this favorable climate for equities have on the strategy and
performance of your Fund?
A An index fund, by definition, strives to replicate the performance of a
specific index. In our case, the Fund seeks to replicate the performance of
the S&P 500. In order to achieve our objective, we invest exclusively in S&P
500 stocks keeping our sector weights as close as possible to those of the
Index. As a result, the Fund has participated in the outstanding performance
of the stock market during the past year, and its performance closely
followed the S&P 500.
Q What are your future expectations for the economy and the market and how
will they affect your Fund's strategy?
A Our long-term market outlook remains positive although we are somewhat
cautious near term, due to our expectation of a slower economy and corporate
earnings growth in 1996. As stated in the investment objective, the Fund will
continue to be fully invested in S&P 500 stocks in an attempt to match the
performance of this index.
TOTAL RETURN
As of 10/31/95
<TABLE>
<CAPTION>
Net Asset Maximum
Value Offering Price
<S> <C> <C>
- ------------------------------------------------------------
One Year 25.72% 19.72%
- ------------------------------------------------------------
Since Inception Annualized
12/03/93 14.85% 11.96%
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
VICTORY STOCK INDEX FUND
VS. S&P 500
12/93 2/94 4/94 6/94 8/94 10/94 12/94 2/95 4/95 6/95 8/95 10/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 7,000
$ 8,000
$ 9,000
$10,000
$11,000
$12,000
$13,000
$14,000
</TABLE>
The graph that appears on page 21 of the annual report represents a comparison
between a $10,000 investment made on December 3, 1993 in the Stock Index Fund
and an identical investment in the Standard & Poor's 500 Stock Index. The
chart indicates that $10,000 invested on December 3, 1995 in the Stock Index
Fund would be worth $12,350 at maximum load and $12,965 at Net Asset Value on
October 31, 1995, as opposed to $13,100 had $10,000 been invested in the
Standard & Poor's 500 Stock Index.
The Standard & Poor's 500 Stock Index (S&P 500) is a broad-based unmanaged
index that represents the general performance of domestically traded common
stocks of mid- to large-size companies.
THE VICTORY FUNDS
Denise M. Coyne is a Chartered Financial Analyst as well as a Certified Public
Accountant. She is a Vice-President with Society Asset Management, Inc. ("SAM")
and has been with SAM and/or an affiliate, since 1985. Ms. Coyne received her
MBA from Miami University.
The performance data quoted represent past performance and, therefore, are not
indicative of future results. Total returns are historical and include the
change in share price and reinvestment of dividends and capital gains
distributions, and unless indicated show the effect of the maximum 4.75% sales
charge. Investment returns and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. The total return figures set forth above may reflect the waiver of a
portion of certain fees for various periods since the Fund's inception date. In
such instances and without such waiver of fees, the total returns would have
been lower.
21
<PAGE> 24
VICTORY DIVERSIFIED STOCK FUND
Q Can you briefly comment on the equity market environment over the past year?
A The equity market has performed extremely well in the past year primarily
due to low and declining interest rates, restrained inflation and solid
corporate profitability. In addition, large capitalization stocks have
benefited from the phenomenal growth of mutual funds as the investment
vehicle of choice for many people.
Q How was the Fund's strategy shaped by the market conditions you described
above?
A We maintained a bullish posture all year long but, from time to time, we had
a higher cash position than desired due to our underestimation of the cash
flows in the Fund.
Q Can you describe some of your Fund's success stories and disappointments
during the year?
A The Fund successfully entered 1995 with a significantly overweighted
position in the technology sector, which delivered outstanding returns over
the year. This allowed us the flexibility to reduce our holdings on strength
to a more neutral market weighted position as the year went on. On the other
hand, we were a little late in recognizing the economic slowdown taking
place late in the year. The Fund's underweight in the consumer non-durable
sector, which performed very well in this environment despite high
valuations, caused it to underperform its benchmark.
Q What are your expectations for the stock market and the Fund for the coming
year?
A Our outlook remains positive because most of the factors that have been
supporting higher stock prices remain in place. The Fund continues to be
fully invested but has shifted to an emphasis on the more defensive
financial, utility, and energy sectors.
Q Is there anything else you would like us to know about your Fund?
A The Fund's investment approach has always been to balance risk with reward.
With many investors concerned about the high level reached by the market, it
should be noted that we aim to continue our historical approach of balancing
the potential for return with minimization of risk.
TOTAL RETURN
As of 10/31/95
<TABLE>
<CAPTION>
Net Asset Maximum
Value Offering Price
<S> <C> <C>
One Year 23.54% 17.69%
Annualized Return
Three Years 14.78% 12.92%
Five Years 16.55% 15.42%
Since Inception
10/20/89 12.52% 11.61%
</TABLE>
<TABLE>
<CAPTION>
VICTORY DIVERSIFIED STOCK FUND
VS. S&P 500
10/89 4/90 10/90 4/91 10/91 4/92 10/92 4/93 10/93 4/94 10/94 4/95 10/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
</TABLE>
The graph that appears on page 22 of the annual report represents a comparison
between a $10,000 investment made on October 20, 1989 in the Diversified Stock
Fund and an identical investment in the Standard & Poor's 500 Stock Index. The
chart indicates that $10,000 invested on October 20, 1989 in the Diversified
Stock Fund would be worth $19,612 at maximum load and $20,502 at Net Asset
Value on October 31, 1995, as opposed to $20,583 had $10,000 been invested in
the Standard & Poor's 500 Stock Index.
The Standard & Poor's 500 Stock Index (S&P 500) is a broad-based unmanaged
index that represents the general performance of domestically traded common
stocks of mid- to large-size companies.
THE VICTORY FUNDS
Lawrence G. Babin is a Chartered Financial Analyst and a Vice-President at
Society Asset Management, Inc. ("SAM"). He has managed the Fund since its
inception, and he has been with SAM and/or an affiliate, since 1982. Mr. Babin
received his MBA from the University of Michigan.
The Performance data quoted represent past performance and, therefore, are not
indicative of future results. Total returns are historical and include the
change in share price and reinvestment of dividends and capital gains
distributions, and unless indicated show the effect of the maximum 4.75% sales
charge. Investment returns and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. The total return figures set forth above may reflect the waiver of a
portion of certain fees for various periods since the Fund's inception date. In
such instances and without such waiver of fees, the total returns would have
been lower.
22
<PAGE> 25
VICTORY VALUE FUND
Q What have been the major trends in the stock market over the past year?
A Throughout the past year, merger activity and restructuring stories
continued to boost stock prices. Growth stocks, led by the technology sector,
outperformed value stocks for the period. Small- and mid-cap stocks
outperformed large-cap stocks as investors became more risk oriented.
Q How have these trends shaped the Fund's performance?
A The Victory Value Fund concentrates its holdings in large-cap, high-yield,
low price-to-earnings ratio issues. While these types of stocks (known
as value stocks) performed very well, smaller-cap growth issues did even
better. Thus, the Fund underperformed its benchmark as the value style was
out of favor during this period of time.
Q Can you share some of the Fund's successes or disappointments during the
past year?
A The Fund's largest holding, AT&T rose 20.5% during the third calendar
quarter as the company announced that it will break up into three
separate companies. Financial stocks also had outstanding performance as
they benefited from consolidation and lower interest rates. On the other
hand, we were disappointed by the performance of energy stocks which despite
excellent earnings were hurt by the uncertainty over oil prices. We feel
that this uncertainty will be diminished over the next several quarters and
the oils relative attractiveness is still intact.
Q What do you think 1996 has in store for the economy and the stock market?
A Our economic outlook in 1996 calls for a moderate growth rate of about 2.3%.
U.S. profit growth could be further tamed by slowing global industrial
production and a stronger dollar. We therefore expect a choppy stock market
performance in the near term. However, we strive to maintain a high dividend
yield in the Fund to attempt to provide investors with a safety net should
the stock market undergo some degree of correction. We continue to believe
that value investing will outperform growth over time. Academic studies of
total rate of return support the conclusion that value investing offers
higher returns with lower volatility than the growth style.1
TOTAL RETURN
As of 10/31/95
<TABLE>
<CAPTION>
Net Asset Maximum
Value Offering Price
<S> <C> <C>
One Year 22.28% 16.42%
Since Inception Annualized
12/03/93 12.97% 10.13%
</TABLE>
<TABLE>
<CAPTION>
VICTORY VALUE FUND
VS. LIPPER GRTH & INC & S&P 500
12/93 2/94 4/94 6/94 8/94 10/94 12/94 2/95 4/95 6/95 8/95 10/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 7,000
$ 8,000
$ 9,000
$10,000
$11,000
$12,000
$13,000
$14,000
</TABLE>
The graph that appears on page 23 of the annual report represents a comparison
between a $10,000 investment made on December 3, 1993 in the Value Fund and
identical investments in the Lipper Growth & Income and Standard & Poor's 500
Stock Indexes. The chart indicates that $10,000 invested on December 3, 1993
in the Value Fund would be worth $11,899 at maximum load and $12,488 at Net
Asset Value on October 31, 1995, as opposed to $12,285 and $13,100 had $10,000
been invested in the Lipper Growth & Income or Standard & Poor's 500 Stock
Indexes, respectively.
The Lipper Growth & Income Index is a non-weighted index of the 30 largest
funds within the Lipper Growth & Income Fund investment category.
The Standard & Poor's 500 Stock Index (S&P 500) is a broad-based unmanaged
index that represents the general performance of domestically traded common
stocks of mid- to large-size companies.
THE VICTORY FUNDS
Judith Jones is a Chartered Financial Analyst as well as a Certified Financial
Planner. She is a Vice-President with Society Asset Management, Inc. ("SAM")
and has managed the Fund since its inception. She has been with SAM and/or an
affiliate since 1965. Ms. Jones received her MBA from Kent State University.
The performance data quoted represent past performance and, therefore, is not
indicative of future results. Total returns are historical and include the
change in share price and reinvestment of dividends and capital gains
distributions, and unless indicated show the effect of the maximum 4.75% sales
charge. Investment returns and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. The total return figures set forth above may reflect the waiver of a
portion of certain fees for various periods since the Fund's inception date. In
such instances and without such waiver of fees, the total returns would have
been lower.
1 Source: Ibbotson & Associates Inc., Chicago. 1995 Asset Allocation Seminar
23
<PAGE> 26
VICTORY GROWTH FUND
Q What are some of the highlights of the 1995 market environment?
A The economic and financial backdrop for the equity market during the past
year was extraordinarily favorable. The economy achieved a "soft
landing"; the inflation rate remained moderate, and interest rates dropped
sharply. Corporate profits, benefiting from improving international
economies and strong productivity gains in the U.S., turned in an
exceptional performance and exceeded optimistic expectations.
Q Can you explain the meaning of "soft landing" and what it implies for the
Fund's strategy?
A A "soft landing" generally indicates a mixed economy with some weak areas
and some strong areas. The consumer cyclical sector and, more recently,
the basic industry sector are two areas that in the past year have
experienced weaker sales and earnings. As a result, we decided to
underweight these two sectors and instead overweight the consumer staples
sector, an area that showed a more consistent and predictable earnings
pattern.
Q Have there been any major changes in the Fund over the course of 1995?
A During the past year, we have changed the Fund's diversification strategy
from "sector neutral" relative to the S&P 500 to a more growth-oriented
approach. As a result, in the future we will emphasize growth-oriented
sectors such as consumer staples and technology while lessening our exposure
to such value-oriented sectors as utilities and finance. This new approach
has already improved the performance of the Fund over the past four months.
Q Can you briefly comment on the performance of the Fund for the past year?
A The Fund has underperformed its benchmark over the past year for three
reasons: a large cash withdrawal in the first calendar quarter of 1995
increased our cash position in a strongly rising equity market; an
overweight in the underperforming energy sector and an underweight in the
outperforming consumer staples sector; and, finally, poor performance of a
few issues, namely Telefonos de Mexico, International Game Technology, El
Paso Natural Gas and Home Depot (the first three have been sold from the
portfolio).
Q What is your outlook for 1996, and how is the Fund positioned as we enter
the new year?
A At this time we remain optimistic about the potential for the market to
achieve modest additional gains in the latter part of 1995 and in 1996.
Interest rate cuts by the Federal Reserve, in response to a credible deficit
reduction plan, could be a major positive for the equity market as could a
cut in the capital gains tax rate. Currently we remain overweighted relative
to the S&P 500 in those sectors showing an improving rate of earnings
growth, such as consumer staples, technology and capital goods.
<TABLE>
<CAPTION>
VICTORY GROWTH FUND
VS. S&P 500
12/93 2/94 4/94 6/94 8/94 10/94 12/94 2/95 4/95 6/95 8/95 10/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 7,000
$ 8,000
$ 9,000
$10,000
$11,000
$12,000
$13,000
$14,000
</TABLE>
The graph that appears on page 24 of the annual report represents a comparison
between a $10,000 investment made on December 3, 1993 in the Growth Fund and an
identical investment in the Standard & Poor's 500 Stock Index. The chart
indicates that $10,000 invested on December 3, 1993 in the Growth Fund would be
worth $11,808 at maximum load and $12,397 at Net Asset Value on October 31,
1995, as opposed to $13,100 had $10,000 been invested in the Standard & Poor's
500 Stock Index.
The Standard & Poor's 500 stock Index (S&P 500) is a broad-based unmanaged
index that represents the general performance of domestically traded common
stocks of mid- to large-size companies.
TOTAL RETURN
As of 10/31/95
<TABLE>
<CAPTION>
Net Asset Maximum
Value Offering Price
<S> <C> <C>
One Year 20.54% 14.81%
Since Inception Annualized
12/03/93 12.10% 9.28%
</TABLE>
THE VICTORY FUNDS
William Ruple is a Vice-President and a Portfolio Manager with Society Asset
Management, Inc. (SAM). He has been with SAM and/or an affiliate, since 1970.
Mr. Ruple received a BS from Ohio Wesleyan University and an MBA from Case
Western Reserve University.
The performance data quoted represent past performance and, therefore are not
indicative of future results. Total returns are historical and include the
change in share price and reinvestment of dividends and capital gains
distributions, and unless indicated show the effect of the maximum 4.75% sales
charge. Investment returns and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. The total return figures set forth above may reflect the waiver of a
portion of certain fees for various periods since the Fund's inception date. In
such instances and without such waiver of fees, the total returns would have
been lower.
24
<PAGE> 27
VICTORY SPECIAL VALUE FUND
Q Can you give us a brief overview of the mid-cap market's performance over
the course of the past year?
A The equity markets posted impressive gains in the past year due to the ideal
combination of declining interest rates and stronger than expected
corporate earnings reports. Mid/small-market capitalization equities
participated in the rally, but lagged the larger-market cap sector by a few
percentage points for much of the year. Momentum/growth stocks dominated the
advance among the mid/small-capitalization companies this past year,
creating a particularly challenging environment for value investors. The
technology sector alone generated nearly half of the total return of the S&P
400 Mid-Cap Index for the year.
Q How did these conditions affect the performance of the Fund?
A Although we participated in the technology rally, our underweighting of this
sector throughout the year caused the Fund to underperform the S&P 400
Mid-Cap Index. Our value discipline typically causes the Fund to fall short
of the benchmark in very strong markets but it should better protect capital
in weaker markets.
Q What sectors of the mid/small capitalization equity market worked best for
the Fund ?
A The financial sector was a continuous source of favorable surprises for the
Fund. We started the year with an overweighting in financials, thus
participating in the sector's strong rally. Three of the companies we owned
were the targets of buyouts, starting with Michigan National in February,
which was one of our largest holdings at the time, and continuing with other
outright acquisitions including Kemper and Integra Financial.
Q What are your future expectations for the economy and the markets? How will
they shape your strategy for managing the Fund?
A We believe high valuations and lofty expectations of the technology sector
are a potentially dangerous combination and we remain underweighted in
this sector. We are also reducing our exposure to the financial sector. We
expect valuation to play a more important role in equity performance in the
coming year. As a result, we remain overweighted in the basic industry and
capital goods sectors where expectations and valuations remain generally low
following a lackluster performance in 1995.
Q Can you explain to your shareholders why your Value Fund is "Special"?
A Although the Special Value Fund invests in mid/small-size companies, it is
somewhat unique from most small-cap funds. The Fund is managed with a
disciplined value approach versus the aggressive growth style most commonly
associated with smaller-cap funds. Over time, smaller-cap stocks have
outperformed larger-cap stocks and value stocks have outperformed growth
stocks.(1) By combining the two approaches, we attempt to capture the above
average returns of the small-cap sector, with less volatility than is
typical of small/ mid-cap investing.
<TABLE>
<CAPTION>
TOTAL RETURN
As of 10/31/95
Net Asset Maximum
Value Offering Price
<S> <C> <C>
One Year 18.01% 12.44%
Since Inception Annualized
12/3/93 12.37% 9.54%
</TABLE>
<TABLE>
<CAPTION>
VICTORY SPECIAL VALUE FUND
VS. S&P 400 MID CAP
12/93 2/94 4/94 6/94 8/94 10/94 12/94 2/95 4/95 6/95 8/95 10/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 8,000
$ 9,000
$10,000
$11,000
$12,000
$13,000
</TABLE>
The graph that appears on page 25 of the annual report represents a comparison
between a $10,000 investment made on December 3, 1993 in the Special Value Fund
and an identical investment in the Standard & Poor's 400 Mid-Cap Index. The
chart indicates that $10,000 invested on December 3, 1993 in the Special Value
Fund would be worth $11,566 at maximum load and $12,139 at Net Asset Value on
October 31, 1995, as opposed to $12,126 had $10,000 been invested in the
Standard & Poor's 400 Mid-Cap Index.
The Standard & Poor's 400 Mid-Cap Index is a broad-based unmanaged index that
represents the general performance of domestically traded common stocks of mid-
size companies.
THE VICTORY FUNDS
Anthony Aveni is a Chartered Financial Analyst and a Senior Vice-President with
Society Asset Management, Inc. ("SAM"). Mr. Aveni has been a Fund Manager with
SAM since 1987 and is the Managing Director of the Small/Mid-Cap Equity
Investments for SAM. He received his MBA from Case Western Reserve University.
Barbara Myers is a Chartered Financial Analyst, a Portfolio Manager and a
Vice-President with Society Asset Management, Inc. ("SAM"). She joined SAM in
1994 and has seven years of previous investment experience. Ms. Myers received
a BBA from Cleveland State University and an MBA from Baldwin Wallace.
The performance data quoted represent past performance and is not indicative of
future results. Total returns are historical and include the change in share
price and reinvestment of dividends and capital gains distributions, and unless
indicated show the effect of the maximum 4.75% sales charge. Investment returns
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost. The total return figures
set forth above may reflect the waiver of a portion of certain fees for various
periods since the Fund's inception date. In such instances and without such
waiver of fees, the total returns would have been lower.
1 Source: Ibbottson & Associates Inc, Chicago.
25
<PAGE> 28
VICTORY SPECIAL GROWTH FUND
Q Can you give us a brief overview of the small-cap market's performance over
the course of the past year?
A The broad stock market delivered outstanding returns during the past year
fueled by a favorable environment of lower interest rates, tame
inflation levels and positive corporate profits. Bigger was better this
year; in fact, smaller-capitalization companies underperformed larger
capitalization companies for most of the year with the exception of the
third quarter. Early in the year, earnings of large-cap companies benefited
to a greater extent from the weakness of the U.S. dollar due to their higher
exposure to foreign sales. In addition, small cap stocks lagged towards the
end of the year as investors began to favor large cap growth stocks which
were seen as a safe haven in the midst of a slowing economy.
Q With this market environment, how did the fund perform?
A The Special Growth Fund lagged the large cap market, as many small cap
investments did. For the one year period ending 10/31/95, the Fund
outperformed its benchmark, the Russell 2000 Growth Index, with a return of
20.83% compared to 18.35% for the Index.
Q Since you took over in June what changes have you made in the Fund?
A The Fund inherited investments in small-cap and mid-cap growth stocks from
the merger of the Victory Aggressive Growth Fund and the Victory Special
Growth Fund. The old Special Growth invested primarily in mid-cap stocks,
but the new Special Growth Fund adopted the style and universe of the
Aggressive Growth Fund. In other words, the Fund is now concentrated in
small-cap issues, with a weighted average market cap of about 700 million,
which is much smaller than before. In addition, we increased the number of
holdings from less than a hundred to about 300 as of October 31, 1995.
Q Why the large increase in the number of holdings?
A We believe that this gives a more risk controlled return, one that is not
dependent (good or bad) on large bets in a low number of stocks. This
approach should help the Fund perform well through broader exposure to the
small-cap market, but with less risk than a concentrated style.
Q Did you make any other changes?
A Yes, we also changed the sector weightings considerably. As with our stock
selection approach, we prefer not to make large bets, but to carefully
balance sector weights versus the market. The Fund's sector weights are much
more closely aligned to the Russell 2000 Growth Index, which is the "Growth"
portion of the Russell 2000.
Q What is your outlook going forward?
A We believe that the outlook for small-cap growth companies still looks good.
If this market does well, we believe that the Fund will continue to
participate.
<TABLE>
<CAPTION>
TOTAL RETURN
As of 10/31/95
Net Asset Maximum
Value Offering Price
<S> <C> <C>
One Year 20.83% 15.07%
Since Inception Annualized
1/11/94 9.75% 6.82%
</TABLE>
<TABLE>
<CAPTION>
VICTORY SPECIAL GROWTH FUND
VS. RUSSELL 2000
1/94 3/94 5/94 7/94 9/94 11/94 1/95 3/95 5/95 7/95 10/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 8,000
$ 8,500
$ 9,000
$ 9,500
$10,000
$10,500
$11,000
$11,500
$12,000
$12,500
</TABLE>
The graph that appears on page 26 of the annual report represents a comparison
between a $10,000 investment made on January 11, 1994 in the Special Growth
Fund and an identical investment in the Russell 2000 Growth Index. The chart
indicates that $10,000 invested on January 11, 1994 in the Special Growth Fund
would be worth $11,266 at maximum load and $11,829 at Net Asset Value on
October 31, 1995, as opposed to $11,433 had $10,000 been invested in the
Russell 2000 Growth Index.
The Russell 2000 Growth Index is a broad-based unmanaged index that represents
the general performance of domestically traded common stocks of small- to
mid-sized companies.
THE VICTORY FUNDS
Jonathan M. Greene is Vice-President of T. Rowe Price. The Investment Advisory
Committee of T. Rowe Price is primarily responsible for the investment
management of the Special Growth Fund. Mr. Greene has been with T. Rowe Price
since 1974, and has been managing investments since 1979. Mr. Greene received
his MBA from Dartmouth.
The performance data quoted represent past performance and is not indicative of
future results. Total returns are historical and include the change in share
price and reinvestment of dividends and capital gains distributions, and unless
indicated show the effect of the maximum 4.75% sales charge. Investment returns
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost. The total return figures
set forth above may reflect the waiver of a portion of certain fees for various
periods since the Fund's inception date. In such instances and without such
waiver of fees, the total returns would have been lower. Small-Cap Funds carry
additional risks and historically have experienced a greater degree of market
volatility than average.
26
<PAGE> 29
VICTORY OHIO REGIONAL STOCK FUND
Q Your Fund limits the majority of its holdings to stocks of companies based
in the state of Ohio. How did these stocks compare to the broader stock
market during the past year?
A The universe of Ohio-based stocks from which we chose the Fund's holdings is
heavily weighted toward financial, basic industry and capital goods
issues. In 1995, the basic industry and capital goods sectors have
underperformed the S&P 500, whose performance throughout the year was fueled
by the impressive rally in technology stocks. Unfortunately the technology
sector is severely underrepresented in Ohio.
Q How did the Fund perform versus Ohio companies?
A As of November 24, 1995, the Fund was leading an index constructed of
Ohio-based companies with a return of 23% versus 17%.(1) But just because
the fund has lagged the S&P this year, don't count it out. Coincidentally,
the Fund has outperformed the S&P 500 with an annualized return of 23%
versus only 17.25% for the five years ended 10/31/95. So even though the
Fund invests primarily in Ohio companies, that does not mean that its
performance is limited or less competitive.
Q Can you share some of your success stories or disappointments during the
past year?
A Keithley Instruments, Comair, Invacare, Acme Cleveland, Owens Corning,
Omnicare and Telxon were among the better performing issues in the
Fund. On the other hand, disappointments included Mid-American Waste,
Corrpro, Sun TV and The Limited.
Q What is one of the things to which you attribute your successes?
A Since the Fund invests primarily in Ohio companies, I have the opportunity
to talk to the managers of the companies in which we invest. I spend a
considerable amount of time visiting the companies, talking to their
suppliers, competitors and customers. This allows me to become very familiar
with and closer to what is happening with a company. I use a value
discipline coupled with a strong "bottom-up" analysis of companies.
Q What is your "top-down" strategy?
A As the market climbs to higher levels, the Fund has become more defensive,
giving greater weights to utilities, energy and financial issues.
Long-term, we favor the capital goods sector.
THE VICTORY FUNDS
Lynn Hamilton is a Vice-President with Society Asset Management, Inc. ("SAM")
and has been managing the Fund since its inception. Mr. Hamilton has been a
Fund Manager with SAM since 1993. Prior to this position, he was a Fund Manager
with Society National Bank. Mr. Hamilton obtained his MBA from Miami
University.
<TABLE>
<CAPTION>
TOTAL RETURN
As of 10/31/95
Net Asset Maximum
Value Offering Price
<S> <C> <C>
One Year 16.93% 11.35%
Annualized Return
Three Years 14.40% 12.57%
Five Years 23.00% 21.80%
Since Inception
10/20/89 11.73% 10.83%
</TABLE>
<TABLE>
<CAPTION>
VICTORY OHIO REGIONAL STOCK FUND
VS. S&P 500
10/89 4/90 10/90 4/91 10/91 4/92 10/92 4/93 10/93 4/94 10/94 4/95 10/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 6,000
$ 8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
</TABLE>
The graph that appears on page 27 of the annual report represents a comparison
between a $10,000 investment made on October 20, 1989 in the Ohio Regional
Stock Fund and an identical investment in the Standard & Poor's 500 Stock
Index. The chart indicates that $10,000 invested on October 20, 1989 in the
Ohio Regional Stock Fund would be worth $19,149 at maximum load and $20,095 at
Net Asset Value on October 31, 1995, as opposed to $20,502 had $10,000 been
invested in the Standard & Poor's 500 Stock Index.
The Standard & Poor's 500 Stock Index (S&P 500) is a broad-based unmanaged
index that represents the general performance of domestically traded common
stocks of mid- to large-size companies.
The performance data quoted represent past performance and is not indicative of
future results. Total returns are historical and include the change in share
price and reinvestment of dividends and capital gains distributions, and unless
indicated show the effect of the maximum 4.75% sales charge. Investment returns
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost. The total return figures
set forth above may reflect the waiver of a portion of certain fees for various
periods since the Fund's inception date. In such instances and without such
waiver of fees, the total returns would have been lower.
1 Ohio index constructed by William O'Neil & Company. The index is composed of
approximately 200 Ohio based companies with revenues equal to or greater
than $25 million. KeyCorp is excluded from the index, since the Fund is
prohibited from investing in an affiliated company.
27
<PAGE> 30
VICTORY INTERNATIONAL GROWTH FUND
Q What developments have characterized the international equity markets over
the past year?
A Investors focused on actual and effected changes in interest rates around
the world this past year. In December of 1994, the meltdown of the Mexican peso
became known as the "Tequila Effect" because, as most risk premiums widened,
most emerging markets suffered from fears that similar radical interest rate
increases would cause a collapse in their currencies. On the other hand,
markets have also continued to focus on potential rate cuts by the Bundesbank,
which also would allow the Banque de France to follow through with cuts of its
own. Inflation remained extremely well-behaved around the world, both
directionally and in absolute terms. Global liquidity remains high.
Q Did the performance of the U.S. dollar relative to other major foreign
currencies have any impact on returns to dollar-based investors?
A The U.S. dollar experienced wide swings relative to the Japanese yen and
German Deutschemark during the 12 months ended October 31, 1995. For the
period, however, on an EAFE-weighted basis, the dollar's strength had only a
small negative effect on returns to dollar-based investors.
Q How did you position the Fund given the market developments you outlined
above and how did your strategy impact the Fund's performance?
A We reduced our exposure to higher risk emerging markets. In addition, the
Fund was underweighted in Japan during the entire period, which was beneficial
overall, but hurt performance in the third calendar quarter of 1995, when the
Japanese market rallied briefly. Our overweight in the Nordic countries
benefited the Fund's performance throughout the year.
Q What is your outlook for the coming months and how will it shape your
strategy for managing the Fund?
A We continue to believe in the longer-term merits of international
investments, especially given the likelihood of recovery following the U.S.
market outperformance in recent years. We are looking to increase the Fund's
weightings in energy and finance and lighten the capital goods and services
sectors. This will result in greater diversification across industry segments.
With Japan having performed so poorly over the last several years, this market
is certainly cheap on a historic basis. The latter, combined with Japan's
apparent willingness to let the banks accelerate the recognition and write-off
of non-performing loans, could bode well for the Japanese market. We could be
looking to at least neutral weight Japan in the first half of 1996. Finally,
we anticipate continuing to reduce our weightings in the emerging markets
because we believe that, over the near-term on a risk-adjusted basis, the
developed markets could offer more stable returns.
<TABLE>
<CAPTION>
TOTAL RETURN
As of 10/31/95
Net Asset Maximum
Value Offering Price
<S> <C> <C>
One Year -2.50% -7.10%
Annualized Return
Three Years 13.30% 11.46%
Five Years 7.95% 6.91%
Since Inception
5/18/90 6.35% 5.40%
</TABLE>
<TABLE>
<CAPTION>
VICTORY INTERNATIONAL GROWTH FUND
VS. MSCI EAFE
5/90 10/90 3/91 8/91 1/92 6/92 11/92 4/93 9/93 2/94 7/94 12/94 5/95 10/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 7,000
$ 8,000
$ 9,000
$ 10,000
$ 11,000
$ 12,000
$ 13,000
$ 14,000
$ 15,000
</TABLE>
The graph that appears on page 28 of the annual report represents a comparison
between a $10,000 investment made on May 18, 1990 in the International Growth
Fund and an identical investment in the Morgan Stanley Capital International
Europe, Australia and Far East Index. The chart indicates that $10,000
invested on May 18, 1990 in the International Growth Fund would be worth
$13,238 at maximum load and $13,895 at Net Asset Value on October 31, 1995, as
opposed to $12,633 had $10,000 been invested in the Morgan Stanley Capital
International Europe, Australia and Far East Index.
The Morgan Stanley Capital International Europe, Australia and Far East Index
(EAFE) is a broad-based unmanaged index that represents the general performance
of international equity markets.
THE VICTORY FUNDS
Conard R. Metz is a Vice president of International Equity Investments and
Portfolio Manager with Society Asset Management Inc. ("SAM"). He has managed
the International Growth Fund since October 1995. Mr. Metz received a BS
from the University of California at Berkeley.
The performance data quoted represent past performance and are not indicative
of future results. Total returns are historical and include the change in share
price and reinvestment of dividends and capital gains distributions, and unless
indicated show the effect of the maximum 4.75% sales charge. Investment returns
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost. The total return figures
set forth above may reflect the waiver of a portion of certain fees for various
periods since the Fund's inception date. In such instances and without such
waiver of fees, the total returns would have been lower. International
investing is subject to certain factors such as currency fluctuation and
differences in accounting and taxation standards.
28
<PAGE> 31
QUESTIONS AND ANSWERS
THESE ARE SOME OF THE QUESTIONS THAT SHAREHOLDERS HAVE ASKED US ABOUT ANNUAL
REPORTS.
Q Who prepares the annual report for The Victory Funds?
A The annual report for The Victory Funds is sent to current shareholders and
is available to anyone interested in learning more about the Fund
complex and the securities held by each portfolio. The report is prepared by
the Fund complex, and the financial pages are audited by an independent
public accounting firm. In the case of The Victory Funds, the independent
auditing firm is Coopers & Lybrand L.L.P.
Q What type of information is available in an annual report?
A Our annual report usually contains a letter to the shareholders written by
the President of the Board of Trustees, an economic review or outlook and
any other educational material the Fund complex feels benefits its
shareholders. Each Fund other than money market funds, must give the
performance for certain periods, as well as show the growth of $10,000 from
inception versus an applicable securities index. In addition each Fund's
performance and strategies are reviewed by the portfolio manager. You can
also find standard financial statements and the holdings of each Fund as of
the close of the fiscal year.
Q When are annual reports issued?
A Usually, annual reports are issued at the end of a company's fiscal year,
which in the case of The Victory Funds is October 31, 1995. Companies are
allowed no more than 60 days after the Fund's books are closed to assemble
the report, complete the audit and mail to shareholders.
Q Where can I find specific information on the Fund[s] I have invested in?
A The annual report is divided in two sections. You can find your Fund[s] in
the front section, which lists each Fund individually according to asset
class.Information on each Fund is also found in the financial
statements.
Q Why are annual reports necessary?
A It is important for you as a shareholder and for other interested parties to
have access to an objective, independently audited review of the Funds. It
is also a requirement of the Securities and Exchange Commission that
shareholders be provided with annual reports. This is the same rule that
applies to most corporations. Shareholders (owners) can check their company
or fund to see what progress it has made over the year. Corporations and
mutual funds are also required to publish a semi-annual report which is not
as detailed; ours is published as of April 30.
Q How can I learn more about The Victory Funds?
A For more information, including a prospectus, on any of The Victory Funds,
please call 1-800-539-FUND. You can also get information on specific topics
by returning the business reply card found in this report.
The Victory Funds
"You have to learn the rules of the game. And then you have to play better than
anyone else." - Dianne Feinstein
29
<PAGE> 32
GLOSSARY OF TERMS
A GLOSSARY OF OFTEN-USED INVESTMENT TERMS
ANNUAL REPORT : A legally required document published annually for each fund. It
includes a list of fund holdings, full financial statements, performance
figures and other pertinent information.
ASSET ALLOCATION: A way to diversify your investments among stocks, bonds and
money-market securities. The appropriate asset allocation for you depends on
several factors - your time horizon, tolerance for risk and investment
objectives.
BOND [fixed-income security]: A debt security issued by a company, municipality
or government agency. The purpose of a bond is to lend money to the issuer. In
exchange, the issuer promises to repay the amount of the loan on a specified
maturity date. The issuer is also obligated to pay the bond holder periodic,
fixed interest payments over the life of the loan.
CAPITAL APPRECIATION: An increase in an investment's value.
CAPITAL GAIN/LOSS: A profit or loss on the sale of a security or other assets.
COMMON STOCK: A security representing proportionate ownership of a
corporation's assets.
INVESTMENT OBJECTIVE: The investment strategy of a shareholder or mutual fund
designed to achieve a particular goal.
INFLATION RISK: The risk that the purchasing power of your investment will be
eroded by inflation.
LIQUIDATE: To convert shares into cash. Equivalent terms include redeem and
sell.
LIQUIDITY: The ease and speed with which an investment can be converted into
cash.
MARKET VALUE: The current price of an investment. Market value is generally
determined by the most recent price at which the investment is traded on the
open market.
MAXIMUM OFFERING PRICE [MOP]: The purchase price of a fund plus applicable
sales charges.
MUTUAL FUND: An investment company that pools money from shareholders and
invests in a variety of securities, including stocks, bonds and money-market
instruments. An open-ended mutual fund stands ready to buy back [redeem] its
shares at their current net asset value. This value depends on the market value
of the fund's portfolio of securities at the time of redemption. Open-ended
mutual funds continuously offer new shares to investors.
NET ASSET VALUE (NAV): The market value of one share of a mutual fund. NAV is
calculated by taking the total value of a mutual fund's assets, less fund
liabilities and dividing them by the number of shares outstanding. NAVs are
commonly listed in the business pages of many newspapers.
PORTFOLIO: Any combination of more than one security. A mutual fund typically
has a large, diversified portfolio of securities or of investments in order to
lower investment risks.
PRINCIPAL: The actual amount of money you invest.
STOCK: [Equity Security] Common stock represents ownership in a company. Stocks
entail the most risk of price fluctuation, however, they also offer the highest
potential reward if the underlying companies perform well.
TOTAL RETURN: A measure of an investment's performance that takes into account
all three components of earnings per share: dividends, capital gain
distribution and price appreciation.
YIELD: The annual rate of return of an investment. Yield is computed by
dividing an investment's interest or dividend by its current market value.
Yield and capital appreciation are the two components of total return.
THE VICTORY FUNDS
30
<PAGE> 33
HOW TO READ YOUR FINANCIAL STATEMENTS
This guide will assist you in extracting information from the report which is
most important to you.
THE FINANCIAL STATEMENTS summarize and describe the Fund's financial
transactions. They are broken down into four different statements, which are
illustrated below:
THE STATEMENT OF ASSETS AND LIABILITIES presents all of the assets and
liabilities of each mutual Fund. This is each individual Fund's "balance sheet"
as of the date of the statement.
SUMMARY OF THE MUTUAL FUND'S ASSETS STATED AT MARKET VALUE INCLUDING
INVESTMENTS OWNED, DIVIDENDS, INTEREST AND OTHER AMOUNTS OWED TO EACH FUND BY
OUTSIDE PARTIES, AND OTHER ASSETS OWNED BY EACH FUND.
SUMMARY OF ALL AMOUNTS OWED BY EACH FUND INCLUDING DISTRIBUTIONS DECLARED BUT
NOT YET PAID TO SHAREHOLDERS AND OTHER AMOUNTS DUE TO OUTSIDE PARTIES.
SUMMARY OF THE AMOUNTS THAT COMPRISE EACH FUND'S NET ASSETS INCLUDING CAPITAL,
UNDISTRIBUTED NET INVESTMENT INCOME, UNREALIZED GAINS FROM INVESTMENTS OWNED
AND REALIZED GAINS FROM INVESTMENTS SOLD.
THE NUMBER OF SHARES OWNED BY SHAREHOLDERS OF EACH FUND.
THE MARKET WORTH OF EACH MUTUAL FUND'S TOTAL NET ASSETS DIVIDED BY THE NUMBER
OF OUTSTANDING SHARES.
THE NET ASSET VALUE PER SHARE PLUS SALES CHARGES.
THE STATEMENT OF OPERATIONS presents the results of operating activities during
the period.
INVESTMENT INCOME INCLUDES DIVIDEND AND INTEREST INCOME EARNED FROM HOLDING
INVESTMENTS.
SUMMARY OF EXPENSES INCURRED BY EACH FUND FROM ITS OPERATIONS.
SUMMARY OF REALIZED GAINS OR LOSSES FROM SELLING EACH FUND'S INVESTMENTS AND
THE CHANGE DURING THE PERIOD IN UNREALIZED GAINS OR LOSSES FROM HOLDING EACH
FUND'S INVESTMENTS.
NET CHANGE DUE TO MUTUAL FUND OPERATIONS.
THE VICTORY FUNDS
31
<PAGE> 34
HOW TO READ YOUR FINANCIAL STATEMENTS
THE STATEMENT OF CHANGES IN NET ASSETS presents the activity that affects the
value of total net assets of each Fund during the two most recent reporting
periods.
SEE STATEMENT OF OPERATIONS.
DISTRIBUTIONS DECLARED TO SHAREHOLDERS FROM NET INVESTMENT INCOME OR FROM NET
REALIZED GAINS DURING THE PERIODS. EACH FUND DECLARES DISTRIBUTIONS BASED ON
TAXABLE INCOME AND TAXABLE REALIZED GAINS, WHICH MAY DIFFER FROM THE FUND'S
OPERATIONS FOR FINANCIAL STATEMENT PURPOSES. THUS, DISTRIBUTIONS MAY EXCEED NET
INVESTMENT INCOME OR REALIZED GAINS.
DOLLAR AMOUNT OF MUTUAL FUND SHARES ISSUED, REINVESTED AND REDEEMED DURING THE
PERIODS. DETAIL OF THIS ACTIVITY PERTAINING TO FUNDS WITH TWO SHARE CLASSES IS
PRESENTED IN THE FOOTNOTES.
COMPARES TOTAL NET ASSETS AS OF THE END OF THE CURRENT AND PRIOR PERIODS.
NUMBER OF MUTUAL FUND SHARES ISSUED, REINVESTED AND REDEEMED DURING THE
PERIODS. DETAIL OF THIS ACTIVITY PERTAINING TO FUNDS WITH TWO SHARE CLASSES IS
PRESENTED IN THE FOOTNOTES.
THE NOTES TO FINANCIAL STATEMENTS provide explanatory information to the
financial statements. These include information on accounting methods used by
the mutual Fund, contractual arrangements between the Fund and its service
providers, certain transactions affecting the Fund, and other general
information about the Fund.
THE FINANCIAL HIGHLIGHTS present changes in net asset value per share as well
as certain ratios and supplementary data for the five most recent reporting
periods.
THE TABLE PRESENTS CHANGES IN THE NET ASSET VALUE PER SHARE CAUSED BY THE
FUND'S INVESTMENT ACTIVITIES AND DISTRIBUTIONS.
TOTAL RETURN PRESENTS THE HISTORICAL RETURN ON AN INVESTMENT IN THE FUND
THROUGHOUT THE PERIOD INCLUDING CHANGES IN NET ASSET VALUE PER SHARE AND
REINVESTMENT OF DIVIDENDS. THE TOTAL RETURN PRESENTED EXCLUDES SALES CHARGES.
ACTUAL RATIOS OF EXPENSES AND NET INVESTMENT INCOME TO AVERAGE NET ASSETS
DURING THE PERIOD.
HYPOTHETICAL RATIOS OF EXPENSES AND NET INVESTMENT INCOME TO AVERAGE NET ASSETS
DURING THE PERIOD ASSUMING NO FEE WAIVERS OR EXPENSE REIMBURSEMENTS HAD
OCCURRED.
PORTFOLIO TURNOVER PRESENTS THE RATE OF INVESTMENT ACTIVITY. HIGHER TURNOVER
INDICATES MORE ACTIVE INVESTMENT PURCHASES AND SALES.
THE VICTORY FUNDS
32
<PAGE> 35
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
U.S. GOVERNMENT OBLIGATIONS FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
- -------------------------------------------
U.S. TREASURY NOTES (20.1%)
$25,000 4.25%, 5/15/96 $ 24,803
25,000 4.63%, 2/29/96 24,911
25,000 5.13%, 3/31/96 24,931
80,000 5.50%, 4/30/96 79,925
40,000 6.13%, 7/31/96 40,121
- -------------------------------------------------------
TOTAL U.S. TREASURY NOTES 194,691
- -------------------------------------------------------
TOTAL INVESTMENTS 194,691
- -------------------------------------------------------
- -------------------------------------------------------
REPURCHASE AGREEMENTS (79.9%)
45,000 Barclays Bank,
5.88%, 11/1/95,
(Collateralized by $44,944
various U.S. Treasury
securities, 0.00%-9.00%,
7/31/97-5/15/98,
market value-$45,901) 45,000
45,000 Chase Securities,
5.85%, 11/1/95,
(Collateralized by $47,539
U.S. Treasury Securities,
0.00%, 5/30/96-6/27/96,
market value-$45,901) 45,000
45,000 Dean Witter,
5.85%, 11/1/95,
(Collateralized by $48,380
various U.S. Treasury
securities, 0.00%-7.88%,
11/15/95-8/15/00,
market value-$45,900) 45,000
45,000 Deutsche Bank,
5.85%, 11/1/95,
(Collateralized by $45,588
various U.S. Treasury
securities, 0.00%-7.37%,
11/2/95-8/15/96,
market value-$45,900) 45,000
41,227 Donaldson-Lufkin Jenrette,
5.88%, 11/1/95,
(Collateralized by $49,847
various U.S. Treasury
securities, 0.00%-8.88%,
5/15/96-8/15/00,
market value-$42,052) 41,227
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$45,000 Goldman Sachs,
5.88%, 11/1/95,
(Collateralized by $52,348
various U.S. Treasury
securities, 0.00%-5.38%,
5/31/98-2/15/99,
market value-$45,901) $ 45,000
45,000 Harris Securities,
5.87%, 11/1/95,
(Collateralized by $51,292
various U.S. Treasury
securities, 0.00%-5.63%,
11/15/95-5/15/00,
market value-$45,901) 45,000
45,000 Lehman Brothers,
5.85%, 11/1/95,
(Collateralized by $45,000
various U.S. Treasury
securities, 6.00%-7.25%,
12/31/97-2/15/98,
market value-$46,001) 45,000
45,000 Merrill Lynch,
5.75%, 11/1/95,
(Collateralized by $45,000
U.S. Treasury Notes,
5.63%, 6/30/97,
market value-$45,844) 45,000
235,000 NationsBank,
5.88%, 11/1/95,
(Collateralized by
$251,009
various U.S. Treasury
securities, 0.00%-9.50%,
11/15/95-8/15/00,
market value-$239,704) 235,000
45,000 Nomura Securities,
5.87%, 11/1/95,
(Collateralized by $45,365
various U.S. Treasury
securities, 0.00%-7.00%,
5/30/96-8/31/99,
market value-$45,901) 45,000
45,000 Sanwa Bank,
5.85%, 11/1/95,
(Collateralized by $45,679
various U.S. Treasury
securities & U.S.
Government Agencies,
0.00%-6.75%,
1/22/96-8/10/00,
market value-$45,901) 45,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
33
<PAGE> 36
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
U.S. GOVERNMENT OBLIGATIONS FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$45,000 UBS Securities,
5.87%, 11/1/95,
(Collateralized by $45,082
U.S. Treasury Notes,
4.25%-9.38%,
2/15/96-7/15/96,
market value-$45,903) $ 45,000
- -------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 771,227
- -------------------------------------------------------
TOTAL (COST $965,918)(a) $965,918
- -------------------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $964,929.
(a) Cost for federal income tax and financial reporting purposes are the same.
SEE NOTES TO FINANCIAL STATEMENTS.
34
<PAGE> 37
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
PRIME OBLIGATIONS FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
- ----------------------------------------------
BANKER'S ACCEPTANCES (1.1%)
$ 5,000 ABN Amro,
5.61%, 11/20/95 $ 4,985
- --------------------------------------------------------------
TOTAL BANKER'S ACCEPTANCES 4,985
- --------------------------------------------------------------
- ----------------------------------------------
CERTIFICATES OF DEPOSIT (3.6%)
2,500 Banque Nationale De Paris,
6.27%, 8/28/96 2,500
5,000 Deutsche Bank,
6.07%, 9/13/96 5,000
4,000 Deutsche Bank,
5.98%, 10/4/96 4,000
5,000 Huntington National Bank,
6.05%, 8/1/96 4,996
- --------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT 16,496
- --------------------------------------------------------------
- ----------------------------------------------
COMMERCIAL PAPER (55.9%)
5,000 A T & T Capital Corp.,
5.78%*, 11/17/95** 5,000
2,000 A T & T Capital Corp.,
6.30%, 7/30/96 2,004
3,000 American General Finance
Corp., 4.65%, 4/22/96 2,977
2,000 Associates Corp.,
7.50%, 10/15/96 2,029
6,000 Bankers Trust,
5.87%*, 11/20/95 6,000
8,900 Bankers Trust,
5.69%, 12/1/95 8,858
5,000 Bear Stearns Cos.,
6.08%*, 5/23/96** 5,000
10,000 Beta Finance,
5.53%*, 11/7/95 9,999
5,000 Beta Finance,
5.54%*, 4/9/96 4,991
20,000 Bishopgate Funding Corp.,
5.78%, 11/20/95 19,939
5,000 Boatmans First National
Bank,
5.87%*, 6/12/96 5,000
2,000 Broadway Capital Corp.,
5.75%, 11/20/95 1,994
8,000 Fleet Funding Corp.,
5.73%, 12/7/95 7,954
3,000 Ford Motor Credit Corp.,
9.00%, 6/28/96 3,069
4,185 Ford Motor Credit Corp.,
5.63%, 12/1/95 4,165
1,100 Ford Motor Credit Corp.,
8.25%, 7/15/96 1,119
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 5,000 Galicia Funding Corp.,
5.85%, 11/28/95 $ 4,978
2,000 General Electric Capital
Corp.,
5.97%, 8/21/96 2,000
5,350 General Electric Capital
Corp.,
5.60%*, 8/1/96** 5,343
15,000 Goldman Sachs Group,
5.81%*, 8/5/96** 14,979
5,000 Hansen Finance,
5.66%, 11/15/95 4,989
9,500 Hansen Finance,
5.67%, 11/30/95 9,457
5,000 Hanson Overseas,
5.50%, 1/15/96 4,988
7,000 Intel Corp.,
5.71%, 11/10/95 6,990
10,000 Merrill Lynch Corp.,
5.68%*, 1/17/96** 9,998
4,000 Merrill Lynch Corp.,
5.59%*, 3/26/96 3,995
900 Merrill Lynch Corp.,
4.75%, 6/24/96 892
3,779 New Hampshire Higher
Education Loan,
5.75%, 11/16/95 3,767
5,000 Oakland Alameda County
Coliseum Authority,
5.78%, 11/15/95 5,000
5,000 Oakland Alameda County
Coliseum Authority,
5.82%, 11/28/95 5,000
5,000 PHH Corp.,
5.77%*, 8/21/96** 4,998
2,500 Philip Morris,
5.88%, 7/1/96 2,564
9,000 Pitney Bowes Credit Corp.,
5.72%, 11/16/95 8,979
3,000 Pitney Bowes Credit Corp.,
5.65%, 12/4/95 2,985
4,000 Pitney Bowes Credit Corp.,
5.61%, 12/12/95 3,974
5,000 Sara Lee Co.,
5.67%, 12/28/95 4,955
5,000 Sony Capital Corp.,
5.74%, 11/20/95 4,985
10,000 Sony Capital Corp.,
5.72%, 12/4/95 9,948
10,000 Transamerica Finance Corp.,
5.74%, 11/3/95 9,997
5,000 Transamerica Finance Corp.,
5.68%, 11/5/95 4,989
8,000 United States Leasing
Capital Corp., 5.69%,
11/3/95 7,998
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
35
<PAGE> 38
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
PRIME OBLIGATIONS FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 5,000 United States Leasing
Capital Corp., 5.70%,
12/5/95 $ 4,973
4,500 Vehicle Services,
5.73%, 12/6/95 4,475
1,000 Vehicle Services,
5.76%, 1/16/96 988
5,725 WMX Technologies,
4.88%, 6/15/96 5,673
- --------------------------------------------------------------
TOTAL COMMERCIAL PAPER 254,955
- --------------------------------------------------------------
- ----------------------------------------------
CORPORATE NOTES (19.2%)
3,525 Astro Aluminum,
5.95%*, 4/1/05** 3,525
3,500 Baylis Group Partnership,
6.10%*, 1/1/10** 3,500
275 Carelife, Inc.,
5.95%*, 8/1/11** 275
2,350 Carelife, Inc.,
5.95%, 8/1/11** 2,350
1,560 Cleveland Steel Container,
5.95%*, 12/1/08** 1,560
2,000 Cuyahoga County, Ohio
Taxable Economic
Development Revenue,
6.23%*, 6/1/22** 2,000
900 Dietz Road Ltd. Partnership,
5.95%*, 11/1/08** 900
3,000 Dome Corp. -- Dome Corp.
Project, 5.96%*, 8/31/16** 3,000
320 Fremont Plastics,
5.95%*, 4/1/03** 320
1,900 GMH Enterprises,
5.95%*, 7/1/03** 1,900
435 Highland Road Partners,
5.95%*, 10/1/04** 435
5,000 Lehman Brothers Holding,
Inc., 6.18%*, 3/11/16** 5,000
22,000 Lehman Government Securities
Master Note,
6.08%*, 11/1/95** 22,000
1,800 Letts Industries,
5.95%*, 2/1/20 1,800
1,000 MCMC Pob LII,
5.95%*, 8/1/14** 1,000
950 McKinley Air Transport,
5.95%*, 8/1/09** 950
900 Olen Corp.,
5.95%*, 12/1/04** 900
1,610 Olen Corp.,
5.95%*, 8/1/08** 1,610
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 500 Olympic Steel Corp.,
6.01%*, 10/1/08** $ 500
350 Presrite Corp.,
5.90%*, 1/1/04** 350
700 Rivnut Engineered Products,
5.95%*, 2/1/01** 700
940 S & SLP Project,
5.95%*, 12/1/07** 940
15,000 Sea River Maritime Exxon
Shipping, 5.87%*,
10/1/01** 15,000
60 D.J. Schipper Enterprise,
5.90%*, 4/1/09** 60
420 Schipper -- DJA Properties,
5.91%*, 10/1/05** 420
3,060 Schipper Enterprises,
5.91%*, 4/1/09** 3,060
1,395 Technisand, Inc.,
5.95%*, 11/1/01** 1,395
1,800 Tell-Schipper Properties,
Inc.,
5.91%*, 10/1/03** 1,800
8,300 Tyler Health Facilities,
6.10%*, 11/1/25** 8,300
1,945 Zanetos Partnership Project,
5.95%*, 7/1/13** 1,945
- --------------------------------------------------------------
TOTAL CORPORATE NOTES 87,495
- --------------------------------------------------------------
- ----------------------------------------------
MUNICIPAL BONDS (0.4%)
KENTUCKY (0.4%):
2,000 Bardstown, GO,
5.90%, 3/1/25** 2,000
- --------------------------------------------------------------
TOTAL MUNICIPAL BONDS 2,000
- --------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (7.3%)
FEDERAL HOME LOAN BANK:
12,000 5.75%*, 12/15/95 11,999
FEDERAL NATIONAL MORTGAGE ASSOC.:
5,000 5.60%, 11/28/95 4,979
5,000 5.55%, 1/29/96 4,931
5,000 5.82%, 9/27/96 5,000
STUDENT LOAN MORTGAGE ASSOC.:
3,500 6.20%*, 5/1/96 3,506
3,000 6.08%*, 7/1/96** 3,009
- --------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 33,424
- --------------------------------------------------------------
TOTAL INVESTMENTS 399,355
- --------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
36
<PAGE> 39
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
PRIME OBLIGATIONS FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
- ----------------------------------------------
REPURCHASE AGREEMENTS (12.5%)
$ 22,203 Donaldson-Lufkin Jenrette,
5.88%, 11/1/95
(Collateralized by $25,056
various U.S. Treasury
securities, 0.00%-8.88%,
11/15/95-11/15/99,
market value-$22,647) $ 22,203
17,000 NationsBank,
5.88%, 11/1/95
(Collateralized by $20,360
U.S. Treasury Securities,
0.00%,
5/15/98-2/15/99,
market value-$17,343) 17,000
18,000 UBS Securities,
5.87%, 11/1/95
(Collateralized by $18,095
U.S. Treasury Notes,
6.25%-6.50%,
8/31/96-9/30/96, market
value-$18,361) 18,000
- ------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 57,203
- ------------------------------------------------------------
TOTAL (COST $456,558)(a) $ 456,558
- ---------------------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $456,266.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable rate securities having liquidity sources through bank letters of
credit or other credit and/or liquidity arrangements. The interest rate,
which will change periodically, is based upon bank prime rates or an index of
market interest rates. The rate reflected on the Schedule of Investments is
the rate in effect on October 31, 1995.
** Put and demand features exist allowing the Fund to require the repurchase of
the instrument within variable time periods ranging from daily, weekly,
monthly or semi-annually.
SEE NOTES TO FINANCIAL STATEMENTS.
37
<PAGE> 40
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
FINANCIAL RESERVES FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
- ----------------------------------------------
$10,000 BANKER'S ACCEPTANCES (1.3%)
ABN Amro,
5.61%, 11/20/95 $ 9,970
- ----------------------------------------------------------
TOTAL BANKER'S ACCEPTANCES 9,970
- ----------------------------------------------------------
- ----------------------------------------------
CERTIFICATES OF DEPOSIT (3.9%)
5,000 Banque Nationale De Paris,
6.27%, 8/28/96 5,000
8,000 Deutsche Bank,
6.07%, 9/13/96 8,000
7,000 Deutsche Bank,
5.98%, 10/4/96 7,000
10,000 Huntington National Bank,
6.05%, 8/1/96 9,993
- ----------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT 29,993
- ----------------------------------------------------------
- ----------------------------------------------
COMMERCIAL PAPER (59.8%)
1,700 A T &T Capital Corp.,
6.30%, 7/25/96 1,703
10,000 A T &T Capital Corp.,
5.78%*, 11/17/95 10,000
3,244 Banc One, Auto Receivable
Trust, 95-A,
6.36%*, 4/15/96 3,244
30,000 Banc One Industries,
7.18%, 2/6/96 30,000
14,000 Bankers Trust,
5.87%, 11/20/95 14,000
16,000 Bankers Trust,
5.69%, 12/1/95 15,924
10,000 Bear Stearns Cos.,
5.70%, 12/11/95 9,937
9,000 Bear Stearns Cos.,
6.08%*, 5/23/96 9,000
10,000 Beta Finance,
5.53%*, 11/7/95 9,999
25,000 Bishopgate Funding Corp.,
5.78%, 11/20/95 24,924
5,343 Blue Hawk Funding Corp.,
5.80%, 11/1/95 5,343
13,500 Blue Hawk Funding Corp.,
5.75%, 11/8/95 13,485
10,000 Boatmen's First National
Bank
5.87%*, 6/12/96 10,000
7,000 Canadian Imperial Bank
Holdings,
5.74%, 1/24/96 6,906
2,800 Compaigne Bancaire,
5.93%*, 4/29/96 2,799
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 20,000 Fleet Funding Corp.,
5.75%, 11/21/95 $ 19,936
5,312 Fleet Funding Corp.,
5.73%, 12/7/95 5,282
8,000 Ford Motor Credit Corp.,
5.63%, 12/1/95 7,963
5,000 Ford Motor Credit Corp.,
6.13%, 12/11/95 5,001
10,000 Galicia Funding Corp.,
5.85%, 11/28/95 9,956
4,000 General Electric Capital
Corp.,
5.71%, 12/7/95 3,977
10,000 General Electric Capital
Corp.,
5.72%, 12/15/95 9,930
20,000 Hanson Finance,
5.68%, 11/22/95 19,934
12,000 Hanson Finance,
5.72%, 1/8/96 11,870
10,000 Intel Corp.,
5.71%, 11/10/95 9,986
11,500 Intel Corp.,
5.70%, 12/29/95 11,394
25,000 Lehman Brothers Holdings,
6.18%*, 3/18/96 25,000
10,000 Merrill Lynch Corp.,
5.59%*, 3/26/96 9,987
9,000 Oakland Alameda County,
Colliseum Authority,
5.78%, 11/15/95 9,000
5,000 Oakland Alameda County,
Colliseum Authority,
5.82%, 11/28/95 5,000
10,000 PHH Corp.,
5.77%*, 8/21/96 9,997
8,000 Pitney Bowes Credit Corp.,
5.65%, 12/4/95 7,959
10,000 Pitney Bowes Credit Corp.,
5.61%, 12/12/95 9,936
7,557 Retailer Funding Corp.,
5.75%, 11/14/95, 7,541
10,000 Sara Lee,
5.67%, 12/28/95 9,910
9,246 Secondary Market Services,
5.70%, 11/8/95 9,236
8,000 Secondary Market Services,
5.68%, 11/15/95 7,982
6,900 Sony Capital Corp.,
5.74%, 11/20/95 6,879
15,000 Sony Capital Corp.,
5.72%, 12/4/95 14,921
8,000 Transamerica Finance,
5.68%, 11/5/95 7,982
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
38
<PAGE> 41
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
FINANCIAL RESERVES FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 12,000 USL Capital Corp.,
5.69%, 11/3/95 $ 11,996
9,000 Vehicle Services,
5.73%, 12/6/95 8,950
11,000 WMX Technologies,
4.88%, 6/15/96 10,901
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 455,670
- ----------------------------------------------------------
- ----------------------------------------------
CORPORATE NOTES (13.2%)
2,440 Austin Printing Co.,
5.95%*, 8/1/14** 2,440
100 Auto Tracking System,
5.95%*, 5/1/99** 100
2,640 Automated Packaging System,
5.95%*, 10/1/08** 2,640
1,000 Bee Holdings, Inc.,
5.95%*, 9/1/15** 1,000
1,750 Best Sand Corp.,
5.95%*, 7/1/02** 1,750
4,525 Buckeye Corrugated,
5.95%*, 1/1/05** 4,525
6,000 General Electric Capital
Corp.,
5.95%, 8/22/96 5,998
1,500 Hancor, Inc.,
5.95%*, 12/1/04** 1,500
31,982 Lehman Brothers Government
Security,
5.99%*, 1/1/99** 31,982
14,300 Pacific Mutual Funding,
5.82%*, 1/1/99**GIC 14,300
700 Parkway Business Plaza,
5.95%*, 4/1/13** 700
1,985 SGS Tool Co.,
5.95%*, 8/1/08** 1,985
3,750 Sandridge Foods,
5.95%*, 12/1/00** 3,750
25,000 Sea River Maritime, Inc.,
5.87%*, 10/1/11** 25,000
675 TPC Properties, Inc.,
5.95%*, 11/1/09** 675
2,450 Zanetos Partnership Project,
5.95%*, 7/1/13** 2,450
- ----------------------------------------------------------
TOTAL CORPORATE NOTES 100,795
- ----------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (11.7%)
FEDERAL NATIONAL MORTGAGE ASSOC.:
10,000 5.60%, 11/28/95 9,958
10,000 5.55%, 1/29/96 9,863
10,000 5.81%*, 9/27/96 10,000
15,000 5.63%*, 5/25/99** 15,000
20,000 5.55%*, 7/14/99** 20,000
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
STUDENT LOAN MARKETING ASSOC.:
$ 10,000 5.80%*, 10/30/97** $ 10,037
10,000 5.64%*, 9/28/98** 9,996
4,500 5.66%*, 2/8/99** 4,502
- ----------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 89,356
- ----------------------------------------------------------
TOTAL INVESTMENTS 685,784
- ----------------------------------------------------------
- ----------------------------------------------
REPURCHASE AGREEMENTS (10.1%)
20,787 Donaldson-Lufkin Jenrette,
5.88%, 11/1/95
(Collateralized by $42,977
various U.S. Government
securities, 0.00%,
1/15/96-2/15/00, market
value-$38,927) 20,787
28,000 NationsBank,
5.88%, 11/1/95
(Collateralized by $34,965
U.S. Treasury Strip's
9.13%, 5/15/99, market
value-$28,562) 28,000
28,000 UBS Securities,
5.87%, 11/1/95
(Collateralized by $27,725
U.S. Treasury Notes, 6.25-
7.88%, 7/15/96-8/31/96,
market value-$28,561) 28,000
- ----------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 76,787
- ----------------------------------------------------------
TOTAL (COST $762,571)(a) $762,571
- ----------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $762,693.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable rate securities having liquidity sources through bank letters of
credit or other liquidity arrangements. The interest rate, which will change
periodically, is based upon bank prime rates or an index of market interest
rates. The rate reflected on the Schedule of Investments is the rate in
effect at October 31, 1995.
** Put and demand features exist allowing the Fund to require the repurchase of
the instrument within variable time periods ranging from daily, weekly,
monthly or semi-annually.
GIC -- Guaranteed Insurance Contract.
SEE NOTES TO FINANCIAL STATEMENTS.
39
<PAGE> 42
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
INSTITUTIONAL MONEY MARKET FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
- ----------------------------------------------
ALTERNATIVE MINIMUM TAX PAPER (1.7%)
$ 9,000 Oakland, Alameda County,
Colliseum Authority,
5.78%, 11/15/95, LOC
Canadian Imperial Bank $ 9,000
- ----------------------------------------------------------
TOTAL ALTERNATIVE MINIMUM TAX PAPER 9,000
- ----------------------------------------------------------
- ----------------------------------------------
BANKER'S ACCEPTANCES (2.3%)
5,000 ABN Amro,
5.61%, 11/20/95 4,985
2,000 NationsBank, Texas,
5.73%, 1/24/96 1,973
5,000 NationsBank, Texas,
5.64%, 2/28/96 4,908
- ----------------------------------------------------------
TOTAL BANKER'S ACCEPTANCES 11,866
- ----------------------------------------------------------
- ----------------------------------------------
CERTIFICATES OF DEPOSIT (3.6%)
7,000 Deutsche Bank,
6.07%, 9/13/96 7,000
4,000 Deutsche Bank,
5.98%, 10/4/96 4,000
2,500 Banque Nationale De Paris,
6.27%, 8/28/96 2,500
5,000 Huntington National Bank,
6.05%, 8/1/96 4,996
- ----------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT 18,496
- ----------------------------------------------------------
- ----------------------------------------------
COMMERCIAL PAPER (45.5%)
5,000 A T &T Capital Corp.,
5.78%*, 11/17/95 5,000
17,000 Bankers Trust,
5.69%, 12/1/95 16,919
5,000 Bear Stearns,
6.08%*, 5/23/96 5,000
5,000 Beta Finance,
5.53%*, 11/7/95 5,000
15,000 Bishopgate Funding Corp.,
5.78%, 11/20/95 14,955
10,280 Blue Hawk Funding,
5.75%, 11/30/95 10,232
5,000 Boatmen's First National
Bank, Kansas City,
5.87%*, 6/12/96 5,000
2,060 Broadway Capital Corp.,
5.80%, 12/22/95 2,043
5,000 Canadian Imperial Bank
Holdings,
5.74%, 1/24/96 4,933
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 10,000 Comerica Bank,
5.56%*, 11/15/95 $ 10,000
2,000 Dean Witter,
6.06%*, 1/29/96 2,002
1,000 Dean Witter,
6.01%*, 2/12/96 1,001
1,500 Exxon Capital Corp.,
8.00%, 12/1/95 1,502
2,000 Ford Motor Credit Corp.,
9.00%*, 7/24/96 2,043
12,000 Ford Motor Credit Corp.,
5.90%, 11/1/95 12,000
8,000 Ford Motor Credit Corp.,
5.63%, 12/1/95 7,962
4,000 General Electric Capital
Corp.,
7.63%, 7/30/96 4,051
3,800 General Electric Capital
Corp.,
7.63%, 7/24/96 3,851
10,000 Hanson Finance,
5.66%, 11/15/95 9,978
12,000 Hanson Finance,
5.67%, 11/30/95 11,945
7,500 Merrill Lynch Corp.,
5.97%*, 2/14/96 7,502
2,500 Merrill Lynch Corp.,
4.75%, 6/24/96 2,484
5,000 Oakland, Alameda County,
Colliseum Authority,
5.82%, 11/28/95, LOC
Canadian Imperial Bank 5,000
5,000 Oakland, Alameda County,
Colliseum Authority,
5.80%, 11/30/95, LOC
Canadian Imperial Bank 5,000
5,000 PHH Corp.,
5.77%*, 8/21/96 4,998
4,000 Pitney Bowes Credit Corp.,
5.65%, 12/4/95 3,979
6,000 Pitney Bowes Credit Corp.,
5.61%, 12/12/95 5,963
5,062 Retailer Funding Corp.,
5.73%, 12/7/95 5,033
5,000 Sara Lee,
5.67%, 12/28/95 4,955
5,000 Secondary Market Services,
5.70%, 11/8/95 4,994
7,906 Secondary Market Services,
5.68%, 11/15/95 7,889
5,000 Sony Capital Corp.,
5.74%, 11/20/95 4,985
5,000 Sony Capital Corp.,
5.72%, 12/4/95 4,974
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
40
<PAGE> 43
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
INSTITUTIONAL MONEY MARKET FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 10,000 Transamerica Financial
Corp.,
5.68%, 11/5/95 $ 9,978
750 Transamerica Financial
Corp.,
9.68%, 12/7/95 753
3,000 Transamerica Financial
Corp.,
5.69%, 12/29/95 2,972
7,810 Transamerica Financial
Corp.,
5.75%, 1/17/96 7,714
5,000 USL Capital Corp.,
5.69%, 11/3/95 4,998
5,000 Vehicle Services,
5.73%, 12/6/95 4,972
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 234,560
- ----------------------------------------------------------
- ----------------------------------------------
CORPORATE NOTES (17.8%)
2,375 Akron Welding,
5.95%*, 12/1/01** 2,375
400 Auto Tracking System,
5.95%*, 5/1/99** 400
2,555 Automated Packaging System,
5.95%*, 10/1/08** 2,555
1,800 Buckeye Corrugated, Inc.
Project,
5.95%*, 1/3/05** 1,800
3,340 Burton I Saltzman,
5.95%*, 8/1/08** 3,340
1,150 Cardinal Packaging,
5.95%*, 8/1/01** 1,150
1,250 Fairborn Christel Mann,
6.06%*, 6/10/10** 1,250
3,000 General Electric Capital
Corp.,
5.95%, 8/22/96 2,999
3,850 Hannah Boulevard Ltd.
Partnership,
5.95%*, 9/1/15** 3,850
2,160 Industrial Dimensions Inc.,
5.95%*, 1/1/00** 2,160
1,100 L & B Realty,
5.95%*, 11/1/04** 1,100
5,000 Lehman Brothers Holding,
Inc.,
6.18%*, 3/11/16** 5,000
8,293 Lehman Government Securities
Master Note,
6.02%*, 1/1/99** 8,293
2,250 Maximum Principal Mubea
Project,
5.95%*, 12/1/04** 2,250
2,400 Monticello Investments,
5.95%*, 7/1/04** 2,400
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 745 Muffin Lane Ltd.
Partnership,
5.95%*, 3/1/06** $ 745
15,000 Pacific Mutual Funding,
5.82%*, 1/1/99**, GIC 15,000
615 Perfection Corp.,
5.95%*, 4/1/09** 615
2,250 Pomeroy Investments,
6.01%*, 9/1/15** 2,250
1,550 Professional Center
Associates Ltd.,
5.95%*, 8/1/15** 1,550
5,000 Republic New York Corp.,
5.99%*, 1/1/99** 5,000
14,600 Sea River Maritime Inc.,
5.87%*, 10/1/11** 14,600
2,700 Sedlak Interiors Inc.,
6.06%*, 5/1/10** 2,700
500 Tube Products,
5.95%*, 11/1/09** 500
7,000 WMX Technologies,
4.88% 6/15/96 6,937
1,000 Xerox Credit Corp.,
6.25%, 1/15/96 1,001
- ----------------------------------------------------------
TOTAL CORPORATE NOTES 91,820
- ----------------------------------------------------------
- ----------------------------------------------
MUNICIPAL BONDS (0.2%)
1,030 Ottawa County Michigan,
Series C, Old Kent Bank,
6.05%*, 3/1/16** 1,030
- ----------------------------------------------------------
TOTAL MUNICIPAL BONDS 1,030
- ----------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (21.8%)
FEDERAL NATIONAL MORTGAGE ASSOC.:
5,000 5.55%, 1/29/96 4,931
5,000 5.81%, 9/27/96 5,000
25,000 5.63%*, 5/25/99** 25,000
33,000 5.55%*, 7/26/99** 33,000
STUDENT LOAN MORTGAGE ASSOC.:
1,000 5.82%*, 11/27/96** 1,002
1,190 5.80%*, 10/30/97** 1,194
4,000 5.64%*, 9/28/98** 4,000
6,000 5.66%*, 1/13/99** 5,999
32,500 5.67%*, 8/2/99** 32,500
- ----------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 112,626
- ----------------------------------------------------------
TOTAL INVESTMENTS 479,398
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
41
<PAGE> 44
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
INSTITUTIONAL MONEY MARKET FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
- ----------------------------------------------
REPURCHASE AGREEMENTS (7.1%)
$ 17,000 Chase Securities,
5.85%, 11/1/95
(Collateralized by 17,340
U.S. Treasury Notes,
5.63%, 10/31/97, market
value-$17,340) $ 17,000
19,464 Donaldson-Lufkin Jenrette,
5.88%, 11/1/95
(Collateralized by 19,638
various U.S. Treasury
securities, 0.00%-9.13%,
1/31/96-5/15/99, market
value-$19,853) 19,464
- ----------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 36,464
- ----------------------------------------------------------
TOTAL (COST $515,862)(a) $515,862
- ----------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $516,015.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable rate securities collateralized by bank letters of credit or other
liquidity arrangements. The interest rate, which will change periodically, is
based upon bank prime rates or an index of market interest rates. The rates
reflected on the Schedule of Investments is the rate in effect at October 31,
1995.
** Put and demand features exist allowing the Fund to require the repurchase of
the instrument within variable time periods ranging from daily, weekly,
monthly or semi-annually.
GIC -- Guaranteed Insurance Contract
LOC -- Letter of credit
SEE NOTES TO FINANCIAL STATEMENTS.
42
<PAGE> 45
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
TAX-FREE MONEY MARKET FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (96.6%)
ALABAMA (2.0%):
$ 3,740 Ardmore IDR,
4.15%*, 6/1/04**, LOC Bank
One $ 3,740
900 Montgomery IDR, 3.85%*
12/1/30**, AMBAC, LOC First
National Bank Chicago 900
1,500 Montgomery IDR, 3.85%*,
12/1/30**, AMBAC, LOC First
National Bank Chicago 1,500
----------
6,140
----------
ARIZONA (4.2%):
1,500 Maricopa County, Southern
California Education,
3.70%, 11/15/95 1,500
5,100 Maricopa County, Southern
California Education
3.85%, 2/8/96 5,100
3,700 Maricopa County, Southern
California Education
3.85%, 2/9/96 3,700
1,500 Maricopa County, Southern
California Education
3.75%, 1/11/96 1,500
1,000 Pima County IDR,
4.10%*, 9/1/09**, LOC
National City Bank 1,000
----------
12,800
----------
ARKANSAS (1.6%):
5,000 University of Arkansas,
3.90%*, 12/1/19**, LOC
Credit Suisse 5,000
----------
CALIFORNIA (0.8%):
2,500 California Housing Finance,
4.60%, 2/1/96, FGIC 2,500
----------
COLORADO (1.1%):
3,400 Pitkin County Colorado IDR,
4.45%*, 4/1/14**, LOC First
National Bank Chicago 3,400
----------
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
FLORIDA (7.8%):
$ 4,500 Broward County, Housing
Finance Authority
4.15%*, 12/1/29**, LOC John
Hancock $ 4,500
9,700 Dade County, Housing Finance
Authority,
3.30%*, 8/1/05**, LOC John
Hancock 9,700
5,000 Dade County, Solid Waste
4.15%*, 12/1/13**, LOC
Banque Paribas 5,000
490 Florida State Board of
Education, GO,
5.50%, 1/1/96** 490
1,500 Jacksonville, Electric
Authority,
3.70%, 11/13/95 1,500
1,000 Jacksonville, Electric
Authority,
3.70%, 11/17/95 1,000
1,200 Jacksonville, Electric
Authority,
3.85%, 2/7/96 1,200
625 Orlando, Orange County,
7.50%, 7/1/96 651
----------
24,041
----------
GEORGIA (3.8%):
2,800 Burke County IDR,
3.55%, 12/5/95, LOC Credit
Swiss 2,800
1,000 Clayton County IDR,
3.90%*, 1/1/21**, LOC
Barclays 1,000
3,900 Georgia Municipal Gas
Authority,
3.55%, 12/7/95, LOC Wachovia 3,900
2,140 Georgia State Residential,
4.05%, 12/1/95 2,140
1,190 Georgia State Residential,
4.05%, 12/1/95 1,190
575 Warner Robins, Georgia Water
& Sewer, prerefunded,
7.76%, 7/1/96 600
----------
11,630
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
43
<PAGE> 46
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
TAX-FREE MONEY MARKET FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
ILLINOIS (6.6%):
$ 1,000 Dupage Illinois Water
Commercial, prerefunded
7.88%, 3/1/96 $ 1,034
1,100 Illinois Development IDR,
4.00%*, 11/1/08**, LOC ABN
Amro 1,100
1,600 Illinois Development,
Kindlen,
4.15%*, 5/1/06**, LOC
La Salle National Bank 1,600
5,000 Illinois Development, Power
& Light, 3.70%, 11/1/95,
LOC
Canadian Imperial Bank 5,000
3,600 Illinois Development Finance
Authority, 4.00%*,
12/1/95,
LOC ABN Amro 3,600
1,000 Illinois State,
7.75%, 6/1/96 1,043
2,800 Kankakee County, IDR,
4.15%*, 12/1/07**, LOC
Societe Generale 2,800
4,000 Tinley Park Multi-Family
Revenue,
3.95%*, 12/1/08**, LOC La
Salle National Bank 4,000
----------
20,177
----------
INDIANA (9.0%):
1,575 Crawfordsville,
4.10%*, 4/1/30**, GTD
Federal Home Loan Bank 1,575
4,200 Fort Wayne, Economic
Development,
4.15%*, 7/1/09**, LOC
Societe Generale 4,200
1,150 Indianapolis, Calderon,
4.15%*, 2/1/99**, LOC Bank
One 1,150
4,900 Indianapolis, GO,
4.25%, 1/11/96 4,904
2,800 Mt. Vernon, Pollution
Control,
3.80%, 12/12/95, GTD G.E.
Capital Corp. 2,800
1,995 Scottsburg, IDR,
4.45%*, 10/1/09**, LOC
Pittsburg National City
Bank 1,995
1,020 Syracuse, Economic
Development Revenue,
4.00%*, 12/1/05**, LOC Bank
One 1,020
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 1,130 Wakarusa, Economic
Development,
4.00%*, 7/1/03**, LOC Bank
One $ 1,130
9,000 Washington Township Metro
School District,
4.04%, 12/29/95 9,002
----------
27,776
----------
IOWA (1.4%):
4,325 City of Urbandale IDR,
4.15%*, 10/1/15**, GTD
Principal Mutual 4,325
----------
KANSAS (1.2%):
2,300 Fairway IDR,
4.15%*, 11/1/14**, GTD
Principle Mutual 2,300
1,500 Wamego, PCR,
3.90%*, 11/1/14**, LOC
Credit Suisse 1,500
----------
3,800
----------
KENTUCKY (2.9%):
2,475 Boone County,
4.45%*, 12/1/09**, LOC
Pittsburg National City
Bank 2,475
2,465 Covington IDR,
4.00%*, 4/1/05**, LOC
Fifth-Third Bank 2,465
1,100 Lewis County IDR,
4.15%*, 12/1/03**, LOC
Fifth-Third 1,100
3,000 Pendelton IDR,
4.00%, 7/1/96, LOC
Pittsburgh National Bank 3,000
----------
9,040
----------
LOUISIANA (0.5%):
1,450 Louisiana Public Facilities
Authority Revenue,
3.90%*, 9/1/10**, LOC
Societe Generale 1,450
----------
MAINE (0.3%):
770 Maine, State GO,
5.90%, 7/1/96 779
----------
MASSACHUSETTS (0.7%):
2,200 Massachusetts Water
Development Authority,
3.80%, 2/7/96, LOC Morgan
Stanley 2,200
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
44
<PAGE> 47
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
TAX-FREE MONEY MARKET FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
MICHIGAN (1.7%):
$ 1,250 Detroit Wayne County School
District,
4.50%, 5/1/96, LOC St. Aid $ 1,254
1,000 Farmington Hills, Economic
Development,
4.10%*, 11/1/10**, LOC
CoAmerica 1,000
1,725 Michigan State Strategic,
3.95%*, 4/1/06**, LOC
CoAmerica 1,725
1,120 Michigan State Strategic,
4.10%*, 5/1/05**, LOC
CoAmerica 1,120
----------
5,099
----------
MINNESOTA (2.1%):
3,000 Minnesota School Districts
Tax & Aid,
4.25%, 9/18/96 3,005
3,340 St. Cloud Housing &
Redevelopment Authority,
4.25%*, 11/1/05**, LOC
National City Bank 3,340
----------
6,345
----------
MISSOURI (5.6%):
1,200 Cuba IDR,
4.15%*, 10/1/05**, LOC Bank
One 1,200
3,600 Kansas City,
4.15%*, 5/1/15**, GTD
Principle Mutual 3,600
5,000 St. Louis GO,
4.50%, 6/20/96 5,021
2,830 St. Charles County, Cedar
Ridge,
3.95%*, 10/1/07**, LOC Bank
One 2,830
4,600 St. Louis IDR,
4.15%*, 2/1/07**, GTD John
Hancock 4,600
----------
17,251
----------
NEBRASKA (1.7%):
5,145 Nebraska Investment Finance
Authority, GNMA,
3.75%, 1/15/96**, FGIC 5,145
----------
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
NEVADA (2.5%):
$ 5,000 Clark County,
3.95%*, 10/1/30**, LOC
Barclays $ 5,000
1,375 Director State Department
Business & Industry,
4.15%*, 8/1/01**, LOC Bank
One 1,375
1,290 Director State Department
Business & Industry,
4.15%*, 8/1/14**, LOC Bank
One 1,290
----------
7,665
----------
NEW HAMPSHIRE (1.3%):
1,800 New Hampshire Higher
Education,
3.85%*, 12/1/25**, LOC First
National Bank of Chicago 1,800
2,300 Strafford,
4.00%, 12/28/95 2,301
----------
4,101
----------
NEW YORK (1.9%):
5,800 New York, Water,
4.00%*, 6/15/25**, FGIC 5,800
----------
NORTH CAROLINA (4.3%):
5,000 North Carolina Eastern
Municipal,
3.80%, 1/1/26**, LOC Union
Bank Swiss, GTD JP Morgan 5,000
8,240 Person County, Carolina
Power & Light, PCR,
3.95%*, 11/1/19** 8,240
----------
13,240
----------
OHIO (12.9%):
430 Akron Bath Copley Township
Hospital,
4.10%*, 5/1/13**, LOC
National City Bank 430
1,000 Chillicothe,
4.04%, 7/5/96 1,001
2,850 Dublin School District,
5.57%, 12/20/95 2,851
4,800 East Palestine School
District,
3.85%, 4/4/96 4,800
2,550 Fayetteville Perry,
4.68%, 4/12/96 2,552
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
45
<PAGE> 48
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
TAX-FREE MONEY MARKET FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 2,300 Franklin County, Childrens
Hospital,
4.10%*, 12/1/14** $ 2,300
2,250 Franklin County IDR,
4.15%*, 6/1/10**, LOC
Fifth-Third Bank, 2,250
2,680 Gallia County IDR,
3.85%*, 12/15/10**, LOC
Fifth-Third Bank 2,680
3,000 Highland Heights,
5.65%, 12/28/95 3,002
2,500 Hillsborough County,
Ringhaven,
4.20%*, 12/1/11**, LOC
Mellon Bank 2,500
1,700 Hudson, Ohio 4.20%, 8/15/96 1,703
1,800 Ohio Housing Finance
Authority,
3.95%*, 3/1/15**, LOC
Bayerische Landesbank 1,800
100 Ohio Housing Finance
Authority,
3.95%*, 3/1/15**, LOC
Bayerische Landesbank 100
2,000 Ohio State Air Quality Bond,
3.50%, 11/6/95, FGIC 2,000
1,500 Ohio State Air Quality Bond,
3.90%, 11/9/95, LOC Toronto
Dominion 1,500
775 Pickerington,
4.15%, 6/28/96 776
1,400 Portage County,
4.15%, 7/11/96 1,401
300 Scioto County, VHA,
3.80%*, 12/1/25**, LOC
Mellon Bank 300
735 Summit County,
4.40%, 11/195 735
5,000 Sylvania, School District,
4.25%, 12/28/95 5,002
----------
39,683
----------
OREGON (0.6%):
2,000 Klamath Falls,
4.40%, 5/1/96 2,000
----------
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
PENNSYLVANIA (1.1%):
$ 1,000 E. Lycoming,
4.25%, 6/28/96 $ 1,002
2,400 Montgomery County, Pollution
Control,
3.70%, 1/10/96, LOC Deutsche
Bank 2,400
----------
3,402
----------
SOUTH CAROLINA (0.8%):
2,500 South Carolina, Job Economic
Development,
4.15%*, 12/1/99**, LOC Bank
One 2,500
----------
TENNESSEE (2.0%):
6,200 Hawkins County, Kingston,
4.50%*, 8/1/09**, LOC
Chemical Bank 6,200
----------
TEXAS (4.7%):
1,251 Austin, Utility Development
Systems,
3.85%, 2/8/96, LOC Swiss
Bank 1,251
4,000 Grapevine IDR,
4.15%*, 4/1/19**, LOC First
National Bank Chicago 4,000
4,140 Harris County, IDR
4.15%*, 10/1/16**. GTD JP
Morgan 4,140
5,000 Texas State GO,
4.75%, 8/30/96 5,028
----------
14,419
----------
UTAH (0.3%):
1,000 Tooele County IDR,
3.85%, 6/1/20**, LOC Union
Bank Swiss 1,000
----------
VIRGINIA (0.3%):
800 Lynchburg IDR, 3.85%*,
12/1/25**, AMBAC, LOC First
National Bank Chicago 800
----------
WASHINGTON (0.6%):
1,000 Pierce County IDR,
4.55%, 11/1/95, LOC Deutsche
Bank 1,000
1,000 Port Seattle, Revenue Bond,
5.00%, 11/1/95 1,000
----------
2,000
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
46
<PAGE> 49
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
TAX-FREE MONEY MARKET FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
WISCONSIN (6.5%):
$ 1,030 Appleton IDR,
4.15%*, 8/1/01**, LOC Bank
One $ 1,030
3,900 Evansville IDR,
4.15%*, 12/1/08**, LOC Bank
One 3,900
3,870 Kenosha Metalmen IDR,
4.15%*, 9/1/14**, LOC Bank
One 3,870
1,525 New Berlin IDR,
4.15%*, 4/1/07**, LOC Bank
One 1,525
1,400 Oshkosh, Schloesser IDR,
4.15%*, 3/1/02**, LOC Bank
One 1,400
2,800 Plymouth IDR,
4.25%*, 8/1/04**, LOC
Rabobank 2,800
1,600 Prairie Du Chien, 4.15%*,
6/1/02**, LOC
La Salle National Bank 1,600
4,000 Wausaw, School District,
4.05%, 9/20/96 4,002
----------
20,127
----------
WYOMING (1.9%):
3,600 Gillette County, PCR,
3.85%, 12/6/95, LOC Deutsche
Bank 3,600
2,100 Sweetwater County, PCR,
3.75%, 11/16/95, LOC Union
Bank Switzerland 2,100
----------
5,700
- ------------------------------------------------------------
TOTAL MUNICIPAL BONDS 297,535
- ------------------------------------------------------------
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (3.0%)
$ 9,109 Federated #15 Tax-Free Money
Market $ 9,109
1 Fidelity Ohio Tax-Free 1
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 9,110
- ------------------------------------------------------------
TOTAL (COST $306,645)(a) $ 306,645
- ------------------------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $307,726.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable rate securities collateralized by bank letters of credit or other
credit arrangements. The interest rate will change periodically. The rates
reflected on the Schedule of Investments is the rate in effect at October 31,
1995.
** Put and Demand features exist allowing the Fund to require the repurchase of
the instrument within variable time periods ranging from daily, weekly,
monthly or semi-annually.
AMBAC -- American Municipal Bond Assurance Corp.
FGIC -- Financial Guaranty Insurance Company
GO -- General Obligation
GTD -- Guaranteed by
IDR -- Industrial Development Revenue
LOC -- Letter of Credit
PCR -- Pollution Control Revenue
VHA -- Voluntary Hospitals of America
SEE NOTES TO FINANCIAL STATEMENTS.
47
<PAGE> 50
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
OHIO MUNICIPAL MONEY MARKET FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (98.3%)
OHIO (98.3%):
$ 1,950 Akron, 5.25%, 12/14/95 $ 1,951
3,240 Akron Sewer System Revenue,
3.95%*, 12/4/14**, LOC
Credit Suisse 3,240
3,400 Anthony Wayne Local School,
4.00%, 12/14/95 3,401
870 Avon, 4.14%, 7/3/96 871
970 Barberton, 4.05%, 10/4/96 970
1,200 Barberton, 4.86%, 5/16/96 1,202
1,900 Bedford Heights, IDR,
4.15%*, 12/1/04**, LOC
National City Bank 1,900
1,000 Belmont County, 4.34%,
8/30/96 1,002
1,000 Berea, 5.20%, 12/21/95 1,000
1,525 Berea, 4.20%, 7/18/96 1,527
1,240 Blue Ash IDR, 3.90%, 3/1/96,
LOC Society National Bank 1,240
2,000 Bowling Green, 4.30%,
9/12/96 2,006
2,600 Bowling Green IDR, 4.15%*,
8/1/09**, LOC GECC 2,600
950 Brecksville, 4.59%, 5/2/96 951
1,235 Brecksville, 4.10%, 8/9/96 1,236
3,925 Brecksville-Broadview
Heights, City School
district, 5.71%, 1/18/96 3,926
630 Brooklyn Heights IDR,
4.15%*, 2/1/02**, LOC Bank
One 630
700 Cardington, 4.58%, 4/11/96 702
3,500 Centerville Health Bethany,
4.00%*, 11/1/13**, LOC
Pittsburgh National Bank 3,500
2,325 Chillicothe IDR, 4.05%*,
10/1/15**, LOC Pittsburgh
National Bank 2,325
7,400 Cincinnati & Hamilton IDR,
4.05%*, 5/1/15** 7,400
480 Circleville, 4.45%, 6/13/96 481
200 Clark County IDR, 4.05%,
4/1/96**, LOC Huntington
Nationall Bank 200
290 Clark County IDR, 4.05%,
4/1/96**, LOC Huntington
National Bank 290
500 Clark County IDR, 4.05%,
4/1/96**, LOC Huntington
National Bank 500
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 935 Clark County, 3.93%, 7/5/96 $ 936
6,000 Cleveland-Cuyahoga County
IDR, 3.95%*, 12/1/15**,
LOC Credit Locale De
France 6,000
500 Cleveland Heights, 4.15%,
8/29/96 501
500 Clinton County IDR, 4.15%*,
11/1/99**, LOC Fifth-Third
Bank 500
6,000 Clinton County IDR, 3.95%*,
6/1/11**, LOC Wachovia
Bank 6,100
460 Cuyahoga County IDR, 3.95%,
4/15/96**, Bank One 460
3,300 Cuyahoga County IDR, 4.10%*,
12/1/12**, LOC National
City Bank 3,300
4,650 Cuyahoga County IDR, 4.07%*,
9/1/09**, LOC Banque
Nationale De Paris 4,650
300 Cuyahoga County IDR, 4.20%*,
12/1/98**, LOC National
City Bank 300
4,220 Cuyahoga County IDR, 4.28%*,
12/7/05**, LOC National
City Bank 4,220
405 Cuyahoga County IDR, 4.45%*,
11/2/09**, LOC Huntington
National Bank 405
1,300 Cuyahoga County Hospital,
4.00%*, 11/15/20**, LOC
First National Bank of
Chicago 1,300
2,700 Cuyahoga County Revenue,
4.00%*, 4/1/12**, LOC
Union Bank of Switzerland 2,700
2,500 Cuyahoga Falls Ohio IDR,
4.15%*, 9/1/14**, LOC
Fifth-Third Bank 2,500
3,400 Cuyahoga Falls Ohio IDR,
4.15%*, 5/1/15**, LOC
Fifth-Third Bank 3,400
4,500 Dayton, 4.00%, 12/29/95 4,500
1,760 Defiance County IDR, 4.15%*,
12/1/97**, LOC Pittsburgh
National Bank 1,760
900 Delaware County IDR, 3.85%*,
12/1/04**, LOC Wells Fargo 900
1,575 Elyria, 4.18%, 7/25/96 1,576
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
48
<PAGE> 51
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
OHIO MUNICIPAL MONEY MARKET FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 1,200 Elyria, City School
District, 4.59%, 4/11/96 $ 1,200
900 Erie County, 4.17%, 7/19/96 901
1,200 Euclid IDR, 3.95%, 4/15/96,
LOC Bank One 1,200
2,500 Fairfield, 4.08%, 8/30/96 2,502
767 Fairfield County, 4.75%,
9/4/95 770
900 Findlay, 4.75%, 6/11/96 904
2,205 Franklin County IDR, 4.05%,
3/1/96, LOC Society
National Bank 2,205
1,560 Franklin County IDR, 4.15%*,
10/1/15**, LOC Fifth-Third
Bank 1,560
7,200 Franklin County IDR, 4.25%*,
12/1/15**, LOC Banc One 7,200
2,600 Franklin County IDR, 4.00%*,
12/1/16**, LOC Fifth-Third
Bank 2,600
1,000 Franklin County IDR, 4.20%*,
4/1/19**, LOC Huntington
National Bank 1,000
3,500 Franklin County, Childrens
Hospital, 4.10%*,
12/1/14** 3,500
1,860 Franklin County, Health Care
Facilities, 4.00%*,
6/1/15**, LOC Fifth-Third
Bank 1,860
1,000 Franklin County, Hospital
Revenue, 3.95%*, 5/1/15**,
LOC NBD Bank 1,000
4,800 Franklin County, Holy Cross
Hospital, 3.90%*, 6/1/16** 4,800
3,800 Franklin County IDR, 4.25%*,
12/1/02**, LOC Huntington
National Bank 3,800
1,500 Franklin County IDR, 4.07%*,
4/1/13**, LOC Fifth-Third
Bank 1,500
5,280 Franklin County IDR, 4.07%*,
4/1/13**, LOC Fifth-Third
Bank 5,280
1,650 Geauga County, 5.30%,
12/14/95 1,650
3,300 Greene County, Apple Valley,
3.85%*, 8/1/09**, LOC
Pittsburgh National Bank 3,300
3,615 Hamilton County IDR, 4.15%*,
12/1/04**, LOC Fifth-Third
Bank 3,615
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 2,870 Hamilton County IDR, 4.15%*,
12/1/08**, LOC Fifth-Third
Bank $ 2,870
1,650 Hamilton County IDR, 4.00%*,
6/15/05**, LOC Fifth-Third
Bank 1,650
1,360 Hancock County IDR, 4.40%,
12/1/95**, Bank One 1,360
1,305 Hancock County, 4.40%,
4/15/96 1,309
1,870 Hancock County, 4.77%,
3/7/96 1,871
1,600 Highland County, 3.90%,
3/1/96 1,600
890 Hilliard IDR, 4.15%*,
12/1/14**, LOC Fifth-Third
Bank 890
1,395 Holmes County, 4.65%,
11/21/95 1,395
500 Holmes County IDR, 4.10%*,
4/1/09**, LOC Rabobank 500
2,955 Independence IDR, 4.45%*,
1/1/96, LOC Huntington
National Bank 2,955
1,000 Independence, 3.98%, 3/6/96 1,000
2,000 Licking County IDR, 4.15%*,
4/1/05**, LOC Bank One 2,000
1,455 Lorain County IDR, 3.95%,
4/15/96**, LOC Bank One 1,455
3,450 Lorain County, Elyria Home,
3.95%*, 6/1/12**, LOC
Fifth-Third Bank 3,450
990 Lorain County Hospital,
4.00%*, 5/1/01**, LOC
Pittsburgh National Bank 990
1,050 Lorain County IDR, 4.15%*,
6/1/09**, LOC Bank One 1,050
1,065 Lucas County IDR, 4.40%,
12/1/95**, LOC Bank One 1,065
620 Lucas County IDR, 4.10%*,
3/1/06**, LOC National
City Bank 620
6,000 Lucas County IDR, 4.10%*,
12/1/12**, LOC National
City Bank 6,000
450 Lucas County IDR, 4.10%*,
12/1/07**, LOC National
Cilty Bank 450
2,770 Mahoning County IDR, 4.00%*,
4/1/17**, LOC Bank One 2,770
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
49
<PAGE> 52
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
OHIO MUNICIPAL MONEY MARKET FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 440 Mahoning County IDR, 4.00%*,
6/1/03**, LOC Bank One $ 440
2,405 Mahoning County Healthcare,
4.00%*, 9/1/20**, LOC Bank
One 2,405
3,310 Marion County Hospital Pool,
4.25%*, 11/1/95**, LOC
Bank One 3,310
1,125 Marion County, 5.10%,
2/15/96 1,125
1,475 Marion County, 5.35%,
2/15/96 1,477
630 Marion County Hospital Pool,
4.00%*, 5/1/19**, LOC Bank
One 630
1,305 Marion County Hospital Pool,
4.00%*, 10/1/22**, LOC
Bank One 1,305
5 Marion County Hospital Pool,
4.00%*, 3/1/16**, LOC Bank
One 5
241 Marion County Hospital Pool,
4.00%*, 8/1/20**, LOC Bank
One 241
715 Marion County Hospital,
4.00%*, 4/1/17**, LOC Bank
One 715
1,200 Marysville School District,
4.27%, 12/20/95 1,201
3,700 Mason School District,
4.33%, 12/19/95 3,703
550 Mayfield Heights, 4.00%,
7/5/96 550
850 Mayfield Heights, 4.00%,
7/25/96 851
3,500 Medina County, 4.25%,
10/10/96 3,509
1,700 Mentor, 4.74%, 11/30/95 1,700
1,200 Middlefield, 5.25%, 3/1/96 1,202
1,700 Milford, 3.92%, 2/1/96 1,701
875 Montgomery County, Health
Care Facility, 4.00%*,
9/1/01**, LOC Society
National Bank 875
2,830 Montgomery Industrial
Development, 4.45%*,
5/2/05**, LOC Huntington
National Bank 2,830
1,945 Muskingum County, Hospital,
4.45%* 1/1/01**, LOC
Huntington National Bank 1,945
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 10,000 North Olmsted, 4.67%,
6/20/96 $ 10,025
1,300 Northwood, 4.70%, 8/1/96 1,306
1,945 Ohio Higher Education, Mt.
Union College, 3.95%*,
9/1/20**, LOC NBD Bank 1,945
10,200 Ohio Housing Finance
Authority, 3.95%*,
3/1/15**, LOC Bayerische
Landesbank 10,200
1,500 Ohio Housing Finance
Authority, 3.95%*,
3/1/15**, LOC Bayerische
Landesbank 1,500
16,530 Ohio Housing Finance
Authority, 4.15%*,
3/1/22**, LoC Bayerische
Landesbank 16,530
2,000 Ohio School District Cash
Flow, 4.52%, 6/28/96 2,008
2,500 Ohio State Air Quality
Development Revenue,
3.90%, 11/9/95, LOC
Toronto Dominion 2,500
6,000 Ohio State Air Quality
Development Revenue,
9.50%, 12/1/95, LOC
Societe Generale 6,177
5,000 Ohio State Air Quality
Development Revenue,
3.75%, 12/4/95, LOC
Toronto Dominion 5,000
7,400 Ohio State Air Quality
Development Revenue,
3.50%, 12/7/95, FGIC 7,400
4,000 Ohio State Air Quality
Development Revenue,
3.80%, 1/10/96, FGIC 4,000
1,000 Ohio State Air Quality
Development Revenue,
3.45%, 2/1/96, LOC Toronto
Dominion 995
3,000 Ohio State Air Quality
Development Revenue,
3.70%, 12/4/95 3,000
2,800 Ohio State Air Quality
Development Revenue,
3.50%, 12/15/95 2,800
3,000 Ohio State Air Quality
Development Revenue,
3.70%, 12/15/95 3,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
50
<PAGE> 53
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
OHIO MUNICIPAL MONEY MARKET FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 2,000 Ohio State Air Quality
Development Revenue,
3.50%, 12/6/95, LOC J.P.
Morgan $ 2,000
2,500 Ohio State Air Quality
Development Revenue,
3.90%, 11/1/95, LOC
Toronto Dominion 2,500
2,000 Ohio State Air Quality
Development Revenue,
3.65%, 11/7/95, LOC
Toronto; Dominion 2,000
1,500 Ohio State Air Quality
Development Revenue,
3.55%, 11/8/95, LOC Union
Bank of Switzerland 1,500
1,300 Ohio State Air Quality
Development Revenue,
3.60%, 12/5/95, LOC Union
Bank of Switzerland 1,300
6,400 Ohio State Air Quality
Development Revenue,
3.55%, 12/8/95, LOC Union
Bank of Switzerland 6,400
2,200 Ohio State Air Quality
Development Revenue,
3.50%, 1/12/96, LOC Union
Bank of Switzerland 2,200
1,000 Ohio State Air Quality
Development Revenue,
Cincinnati G&E, 3.55%,
12/7/95, LOC J.P. Morgan 1,000
6,000 Ohio State Air Quality
Development Revenue,
Series 1992B, 4.05%*,
4/1/28**, LOC Societe
Generale 6,000
1,000 Ohio State Environmental
IDR, 3.95%*, 12/1/01**,
LOC Pittsburgh National
Bank 1,000
1,000 Ohio State Higher Education,
4.10%*, 9/1/09**, LOC
National City Bank 1,000
1,400 Ohio State Higher Education,
Kenyon College, 3.90%*,
4/1/22** 1,400
210 Ohio State IDR, 4.10%*,
7/1/02**, LOC Bank One 210
2,845 Ohio State IDR, 4.10%*,
1/2/03**, LOC Bank One 2,845
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 995 Ohio State IDR, 4.10%*,
6/7/06**, LOC National
City Bank $ 995
950 Ohio State IDR, 4.10%*,
7/1/07**, LOC Bank One 950
875 Ohio State IDR, 4.10%*,
12/1/11**, LOC Bank One 875
720 Ohio State IDR, 4.10%*,
6/1/16**, LOC National
Cilty Bank 720
2,500 Ohio State IDR, 4.15%*,
6/1/20**, LOC Bank One 2,500
6,300 Ohio State Water Development
Authority, 3.90%, 11/9/95,
LOC Toronto Dominion 6,300
1,500 Ohio State Water Development
Authority, 3.85%, 12/6/95 1,500
2,435 Ohio State Water Development
Authority, 3.50%, 12/7/95,
FGIC 2,435
7,000 Ohio State Water Development
Authority, 3.60%, 12/8/95,
FGIC 7,000
5,300 Ohio State Water Development
Authority, 3.75%, 12/8/95,
LOC Toronto Dominion 5,300
3,050 Ohio State Water Development
Authority, 3.80%, 12/8/95,
LOC Toronto Dominion 3,050
5,600 Ohio State Water Development
Authority, 3.70%,
12/15/95, FGIC 5,600
4,300 Ohio State Water Development
Authority, 3.80%, 1/12/96,
FGIC 4,300
200 Orrville IDR, 4.20%*,
9/1/00**, LOC National
City Bank 200
250 Orrville IDR, 4.20%*,
8/1/03**, LOC National
City Bank 250
4,400 Ottawa County, 4.70%,
4/11/96 4,403
1,280 Ottoville, 5.72%, 11/1/95 1,280
1,600 Paulding County IDR, 4.00%*,
3/1/99**, LOC Fifth-Third
Bank 1,600
750 Perrysburg, 4.65%, 8/22/96 753
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
51
<PAGE> 54
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
OHIO MUNICIPAL MONEY MARKET FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 590 Pickerington, 4.07%, 8/9/96 $ 590
3,500 Pike County IDR, 4.15%*,
6/1/13**, LOC Fifth-Third
Bank 3,500
2,090 Portsmouth IDR, 4.15%*,
10/1/02**, LOC Bank One 2,090
1,000 Portsmouth IDR, 4.15%*,
12/1/09**, LOC National
City Bank 1,000
2,820 Richland County IDR, 4.15%*,
12/1/16**, LOC Huntington
National Bank 2,820
4,000 Rickenbacker Port Authority,
4.00%*, 12/1/10**, LOC
Bank One 4,000
2,750 Ross County, Ohio Medical
Center, 3.95%*, 12/1/20**,
LOC Fifth-Third 2,750
100 Scioto County Hospital,
3.85%*, 12/1/25**, AMBAC,
LOC Mellon Bank 100
700 Scioto County Hospital,
3.85%*, 12/1/25**, AMBAC,
LOC Mellon Bank 700
1,600 Seneca County, St. Francis
Hospital, 4.05%*,
12/15/13**, LOC National
City Bank 1,600
1,560 Seven Hills, 3.95%, 5/9/95 1,560
1,000 Sharonville IDR, 4.07%*,
11/1/09**, LOC Banque
Nationale De Paris 1,000
1,800 Sharonville IDR, 4.20%*,
10/1/98**, LOC Fifth-Third
Bank 1,800
6,155 Sharonville IDR, 4.00%*,
9/1/14**, LOC National
City Bank 6,155
585 Sheffield Village, 4.50%,
9/20/96 587
2,430 Stark Health Care Facility,
4.00%*, 3/1/13** 2,430
1,950 Stow, 5.10%, 12/21/95 1,950
1,190 Streetsboro, 4.26%, 10/10/96 1,191
1,150 Strongsville, 4.20%, 9/12/96 1,152
9,700 Student Loan Funding Corp.,
Cincinnati, 4.05%*,
1/1/07** 9,700
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 1,000 Student Loan Funding Corp.,
Cincinnati, 4.05%*,
1/1/07** $ 1,000
4,100 Student Loan Funding Corp.,
Cincinnati, 4.05%*,
1/1/07**, LOC Nation West 4,100
13,145 Student Loan Funding Corp.,
Cincinnati, Student Loan
Revenue, 4.00%*,
12/29/98** 13,145
445 Summit County IDR, 4.05%,
3/1/96**, LOC Bank One 445
980 Summit County IDR, 3.80%,
4/1/96**, LOC Bank One 980
1,290 Summit County, 4.25%, 6/6/96 1,292
2,300 Summit County IDR, 4.20%*,
8/1/05**, LOC Huntington
National Bank 2,300
2,000 Summit County, Cuyahoga
Falls Hospital, 4.00%*,
7/1/99**, LOC Bank One 2,000
515 Summit County IDR, 4.50%,
3/1/96**, LOC Bank One 515
700 Summit County IDR, 4.15%*,
9/1/01**, LOC Bank One 700
1,100 Summit County IDR, 4.15%*,
9/1/11**, LOC Bank One 1,100
2,335 Summit County IDR, 4.00%*,
9/1/05**, LOC Bank One 2,335
1,815 Summit County IDR, 4.00%*,
9/1/11**, LOC Bank One 1,815
2,680 Toledo, 3.90%, 6/1/96, LOC
Canadian Imperial Bank of
Commerce 2,682
3,500 Toledo, Lucas County, 3.55%,
11/9/95, LOC Bank of Nova
Scotia 3,500
2,800 Toledo, Lucas County IDR,
4.25%*, 12/1/06**, LOC
Pittsburgh National Bank 2,800
3,000 Toledo, Lucas County, 3.55%,
1/12/96, LOC Bank of Nova
Scotia 3,000
3,200 Toledo, Lucas County, 4.00%,
12/15/21, LOC Bank of Nova
Scotia 3,200
1,205 Toledo, Lucas County, Port
Authority, 4.40%*,
12/1/13**, LOC Old Kent
Bank 1,205
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
52
<PAGE> 55
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
OHIO MUNICIPAL MONEY MARKET FUND (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 940 Troy IDR, 4.35%, 12/1/95,
LOC Societe Generale $ 940
300 Trumbull County IDR, 4.15%*,
6/1/05**, LOC Pittsburgh
National Bank 300
7,000 Trumbull County IDR, 4.20%*,
12/1/06**, LOC Mellon Bank 7,000
750 Twinsburg IDR, 4.20%*,
7/1/98**, LOC National
City Bank 750
1,955 Union County, 4.19%, 6/28/96 1,959
1,000 University of Cincinnati,
General Receipts, 5.00%,
3/21/96 1,001
600 Wauseon, 5.25%, 5/23/96 602
2,330 Westerville IDR, 3.95*,
12/1/11**, LOC National
City Bank 2,330
1,440 West Clermont, Local School
District, 4.23%, 4/15/96 1,442
6,750 Westlake IDR, 4.28%*,
7/2/08**, LOC National
City Bank 6,750
2,900 Westlake IDR, 4.00%*,
3/1/02**, LOC Bayerische
Landesbank 2,900
2,600 Williams County, 5.25%,
5/16/96 2,609
3,500 Williams County IDR, 4.00%*,
11/1/08**, LOC NBD Bank 3,500
1,500 Wilmington, 4.39%, 4/10/96 1,502
<CAPTION>
SHARES OR
PRINCIPAL AMORTIZED
AMOUNT SECURITY DESCRIPTION COST
<S> <C> <C> <C>
$ 300 Wooster, IDR, 3.85%*,
12/1/10**, LOC Dresdner
Bank $ 300
928 Wyoming, 4.19%, 7/10/96 929
- ------------------------------------------------------------
TOTAL MUNICIPAL BONDS 501,731
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (1.3%)
6,547 Federated Ohio Municipal
Cash Trust Fund 6,547
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 6,547
- ------------------------------------------------------------
TOTAL (COST-$508,278)(a) $ 508,278
- ------------------------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $510,414.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable rate securities having liquidity sources through bank letters of
credit or other credit and/or liquidity arrangements. The interest rate,
which will change periodically. The rate reflected on the Schedule of
Investments is the rate in effect on October 31, 1995.
** Put and demand features exist allowing the Fund to require the repurchase of
the investment within variable time periods of less than one year.
AMBAC -- American Municipal Bond Assurance Corp.
FGIC -- Financial Guaranty Insurance Company
GECC -- General Electric Capital Corp.
GTD -- Guaranteed
IDR -- Industrial Development Revenue
LOC -- Letter of Credit
SEE NOTES TO FINANCIAL STATEMENTS.
53
<PAGE> 56
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
LIMITED TERM INCOME FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ---------------------------------------------------------
ASSET BACKED SECURITIES (0.8%)
$ 227 Capital Auto Receivables
Asset Trust, 1993-1 Class
A-6, 4.90%, 2/17/98 $ 227
1,000 Capital Auto Receivables
Asset Trust, 1993-1 Class
A-7, 5.35%, 2/15/98 997
121 GMAC 1993 A Grantor Trust,
Class A, 4.15%, 3/15/98 120
- ----------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 1,344
- ----------------------------------------------------------
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATIONS (7.7%)
FEDERAL HOME LOAN MORTGAGE CORP.:
1,321 7.00%, 7/15/98 1,334
2,000 5.50%, 10/15/02 1,979
2,000 5.50%, 11/15/03 1,975
359 8.40%, 1/15/05 362
519 6.00%, 2/15/13 517
52 8.00%, 1/15/18 52
1,300 8.50%, 9/15/19 1,315
FEDERAL NATIONAL MORTGAGE ASSOC.:
2,000 6.00%, 10/25/03 1,993
1,000 8.00%, 3/25/04 1,014
1,373 5.75%, 6/25/06 1,359
585 7.00%, 2/25/18 584
765 7.50%, 7/25/18 777
- ----------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 13,261
- ----------------------------------------------------------
- ----------------------------------------------
CORPORATE BONDS (15.3%)
BROKERAGE SERVICES (2.0%):
1,500 Lehman Brothers Holdings,
5.50%, 6/15/96 1,493
2,000 Lehman Brothers Holdings,
5.75%, 11/15/98 1,948
--------
3,441
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
BUSINESS EQUIPMENT (1.2%):
$ 2,175 International Business
Machines Corp.,
6.38%, 11/1/97 $ 2,186
--------
CHEMICALS (0.6%):
1,000 Dow Capital,
5.75%, 9/15/97 993
--------
FINANCIAL SERVICES (6.1%):
1,000 American Express Co.,
6.05%, 7/15/97 1,002
1,000 Associates Corp.,
6.88%, 1/15/97 1,011
1,500 Associates Corp.,
7.25%, 9/1/99 1,551
3,000 Ford Motor Credit,
7.13%, 12/1/97 3,060
1,800 Merrill Lynch, Corp.,
5.00%, 12/15/96 1,800
2,000 Norwest Corp.,
7.75%, 12/31/96 2,042
--------
10,466
--------
GOVERNMENTS (FOREIGN) (0.6%):
1,000 Province of Ontario Global
Bonds,
5.70%, 10/1/97 999
--------
INDUSTRIAL GOODS & SERVICES (2.4%):
2,000 Burlington Resources,
7.15%, 5/1/99 2,060
2,000 WMX Technologies,
7.13%, 3/22/97 2,028
--------
4,088
--------
INSURANCE (1.2%):
2,000 International Lease Finance,
8.35%, 10/1/98 2,115
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
54
<PAGE> 57
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
LIMITED TERM INCOME FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
UTILITIES -- GAS & ELECTRIC (1.2%):
$ 1,000 Northern Illinois Gas,
5.50%, 2/1/97 $ 994
1,000 Northern States Power Corp.,
5.50%, 2/1/99 979
--------
1,973
- ----------------------------------------------------------
TOTAL CORPORATE BONDS 26,261
- ----------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (8.7%)
FEDERAL HOME LOAN BANK:
5,000 7.63%, 3/15/99** 5,022
3,000 8.13%, 2/22/00** 3,116
FEDERAL HOME LOAN MORTGAGE CORP.:
2,000 5.20%, 8/4/97 1,979
FEDERAL NATIONAL MORTGAGE ASSOC.:
2,000 5.30%, 1/17/97 1,990
3,000 5.23%, 11/25/98** 2,935
- ----------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 15,042
- ----------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY NOTES (65.0%)
1,000 7.50%, 12/31/96 1,021
8,000 7.50%, 1/31/97 8,180
16,000 6.88%, 2/28/97 16,253
10,000 6.63%, 3/31/97 10,136
2,000 6.50%, 5/15/97 2,025
7,000 6.50%, 8/15/97 7,101
4,000 7.38%, 11/15/97 4,131
10,500 7.88%, 4/15/98 11,021
7,000 5.88%, 8/15/98 7,030
16,000 4.75%, 8/31/98 15,606
9,000 7.75%, 11/30/99 9,626
12,000 7.13%, 2/29/00 12,592
5,000 6.13%, 9/30/00 5,065
2,000 5.75%, 10/31/20 1,995
- ----------------------------------------------------------
TOTAL U.S. TREASURY NOTES 111,782
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (1.3%)
2,181,663 AIM Treasury Portfolio 2,182
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 2,182
- ----------------------------------------------------------
TOTAL (COST $168,101) (a) $169,872
- ---------------------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $172,002.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 2,209
Unrealized depreciation (438)
--------
Net unrealized appreciation $ 1,771
=========
</TABLE>
** Put and demand features exist allowing the Fund to require the repurchase of
the investment within variable time periods of less than one year.
SEE NOTES TO FINANCIAL STATEMENTS.
55
<PAGE> 58
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
INTERMEDIATE INCOME FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ---------------------------------------------------------
ASSET BACKED SECURITIES (0.6%)
$ 1,000 Capital Auto Receivables
Asset Trust,
5.35%, 2/15/98 $ 997
- ----------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 997
- ----------------------------------------------------------
- ----------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATIONS (12.7%)
FEDERAL HOME LOAN MORTGAGE CORP.:
2,114 5.80%, 4/15/14 2,098
1,800 6.50%, 5/15/03 1,808
1,994 6.50%, 7/15/16 1,991
1,000 7.00%, 5/15/99 1,019
1,736 7.50%, 9/15/20 1,756
52 8.00%, 1/15/18 52
2,500 8.40%, 1/15/21 2,554
FEDERAL NATIONAL MORTGAGE ASSOC.:
2,475 6.00%, 10/25/03 2,466
4,000 6.25%, 5/25/19 3,957
956 7.50%, 7/25/18 972
2,000 8.50%, 8/25/19 2,071
- ----------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 20,744
- ----------------------------------------------------------
- ----------------------------------------------
CORPORATE BONDS (29.3%)
APPLIANCES (0.7%):
1,000 Whirlpool Corp. Notes,
9.50%, 6/15/00 1,125
--------
AUTOMOTIVE (2.1%):
1,000 General Motors Corp.,
9.13%, 7/15/01 1,124
1,000 General Motors Corp.,
9.63%, 12/1/00 1,137
1,000 Ford Motor Co.,
9.00%, 9/15/01 1,126
--------
3,387
--------
BANKING (0.7%):
1,000 Wells Fargo & Co.,
8.75%, 5/1/02 1,119
--------
BROKERAGE SERVICES (3.0%):
5,000 Lehman Brothers Sr.
Subordinated Note,
5.75%, 11/15/98 4,869
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
CHEMICALS (1.3%):
$ 1,000 Dow Chemical,
5.75%, 9/15/97 $ 992
1,000 Monsanto Defined,
8.13%, 12/15/06 1,111
--------
2,103
--------
FINANCIAL SERVICES (11.6%):
2,000 American Express Credit,
8.50%, 8/15/01 2,212
2,000 American Express Credit,
6.75%, 6/1/01 2,040
4,000 Bear Stearns Co.,
9.38%, 6/1/01 4,515
2,500 Merrill Lynch,
8.25%, 11/15/99 2,666
1,000 Norwest Corp.,
7.75%, 12/31/96 1,021
3,500 Salomon, Inc.,
6.75%, 1/15/06 3,259
3,000 Transamerica Financial,
8.75%, 10/1/99 3,240
--------
18,953
--------
FOOD PRODUCTS (0.6%):
1,000 Super Valu, Inc.,
5.88%, 11/15/95 1,000
--------
INDUSTRIAL GOODS & SERVICES (5.9%):
3,000 Amoco Canada,
7.25%, 12/1/02 3,157
1,000 Grand Metropolitan Investment
Corp.,
8.63%, 8/15/01 1,114
3,000 Service Corp. International,
8.38%, 12/15/04 3,349
2,000 WMX Technologies,
7.13%, 3/22/97 2,028
--------
9,648
--------
OIL & GAS EXPLORATION (0.6%):
1,000 Chevron Corp. Amortization
Notes,
8.11%, 12/1/04 1,108
--------
PRINTING & PUBLISHING (1.4%):
1,000 Knight Ridder, Inc.,
8.50%, 9/1/01 1,114
1,000 R.R. Donnelley & Sons Co.,
9.13%, 12/1/00 1,135
--------
2,249
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
56
<PAGE> 59
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
INTERMEDIATE INCOME FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
UTILITIES -- TELECOMMUNICATIONS (1.4%):
$ 2,000 GTE Corp. Notes,
9.10%, 6/1/03 $ 2,265
- ----------------------------------------------------------
TOTAL CORPORATE BONDS 47,826
- ----------------------------------------------------------
MEDIUM TERM NOTES (0.6%):
INDUSTRIAL (0.6%):
1,000 J.C. Penney, Inc.,
6.38%, 9/15/00 1,005
- ----------------------------------------------------------
TOTAL MEDIUM TERM NOTE 1,005
- ----------------------------------------------------------
U.S. GOVERNMENT AGENCIES (4.3%):
FEDERAL HOME LOAN BANK:
5,000 7.63%, 3/15/99, 3/15/96** 5,022
FEDERAL NATIONAL MORTGAGE ASSOC.:
2,000 5.23%, 11/25/98, 11/25/96** 1,957
- ----------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 6,979
- ----------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY NOTES (46.9%)
3,000 4.75%, 8/31/98 2,926
3,000 5.75%, 10/31/00 2,992
5,000 5.88%, 8/15/98 5,022
3,000 6.13%, 9/30/00 3,039
11,000 6.50%, 8/15/05 11,386
4,000 6.88%, 4/30/97 4,072
7,000 7.00%, 4/15/99 7,266
16,000 7.13%, 2/29/00 16,789
22,000 7.88%, 4/15/98 23,091
- ----------------------------------------------------------
TOTAL U.S. TREASURY NOTES 76,583
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (4.4%)
7,138,512 Aim Treasury Portfolio 7,139
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 7,139
- ----------------------------------------------------------
TOTAL (COST $159,722)(a) $161,273
- ----------------------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $163,281.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax reporting purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax reporting
of approximately $13. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 2,450
Unrealized depreciation (912)
--------
Net unrealized appreciation $ 1,538
=========
</TABLE>
** Put and demand features exist allowing the Fund to require the repurchase of
the investment within variable time periods of less than one year.
SEE NOTES TO FINANCIAL STATEMENTS.
57
<PAGE> 60
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
INVESTMENT QUALITY BOND FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ----------------------------------------------
ASSET BACKED SECURITIES (0.6%)
$ 233 Capital Auto Receivables
Asset Trust,
4.90%, 2/17/98 $ 233
442 Railcar Trust, Series 92-1,
7.75%, 6/1/04 470
- ------------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 703
- ------------------------------------------------------------
- ----------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (0.9%)
FEDERAL HOME LOAN MORTGAGE CORP.:
1,092 7.50%, 4/1/07 1,113
FEDERAL NATIONAL MORTGAGE ASSOC.:
41 7.00%, 3/25/18 41
10 7.25%, 6/25/18 10
- ------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 1,164
- ------------------------------------------------------------
- ----------------------------------------------
CORPORATE BONDS (22.3%)
AUTOMOTIVE (2.3%):
1,000 Ford Motor Co.,
8.88%, 1/15/22 1,196
1,000 Ford Motor Co.,
9.00%, 9/15/01 1,126
500 General Motors,
9.13%, 7/15/01 562
----------
2,884
----------
BANKING (3.9%):
600 BankAmerica Corp.,
9.63%, 2/13/01 684
1,020 First Union Corp,
9.45%, 6/15/99 1,123
800 SunTrust Banks Inc.,
7.38%, 7/1/02 853
2,000 Wells Fargo & Co.,
8.75%, 5/1/02 2,238
----------
4,898
----------
BROKERAGE SERVICES (1.3%):
500 Morgan Stanley,
8.00%, 10/15/96 509
1,000 Morgan Stanley,
8.88%, 10/15/01 1,116
----------
1,625
----------
ELECTRICAL & ELECTRONIC (0.8%):
1,000 Philips Electronics,
7.13%, 5/15/25 1,027
----------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
FINANCIAL SERVICES (1.9%):
$ 255 Ford Motor Credit Co.,
9.40%, 11/16/95 $ 255
1,000 Lehman Brothers Holdings,
7.38%, 5/15/07 1,025
1,020 Merrill Lynch,
8.25%, 11/15/99 1,088
----------
2,368
----------
GOVERNMENTS (FOREIGN) (0.6%):
700 Quebec Province, Canada,
7.50%, 7/15/23 702
----------
HEALTH CARE (0.9%):
1,000 Columbia Health Care,
8.85%, 1/1/07, 1,154
----------
INDUSTRIAL GOODS & SERVICES (5.3%):
1,500 Black & Decker,
7.50%, 4/1/03 1,541
500 Dean Foods Co.,
6.75%, 6/15/05 505
1,000 Georgia-Pacific,
9.95%, 6/15/02 1,171
500 Loral,
7.63%, 8/15/25 508
1,000 Lubrizol Corp.,
7.25%, 6/15/25 1,031
1,200 Nabisco, Inc.,
8.00%, 1/15/00 1,267
500 Westvaco Corp.,
9.75%, 6/15/20 644
----------
6,667
----------
MACHINERY & EQUIPMENT (1.0%):
1,100 John Deere Capital,
8.63%, 8/1/19 1,222
----------
TOBACCO & TOBACCO RELATED (1.8%):
2,000 Phillip Morris,
9.00%, 1/1/01 2,213
----------
UTILITIES -- TELECOMMUNICATIONS (1.1%):
510 GTE Hawaiian Telephone
Service,
9.00%, 12/1/00 519
510 MCI Communications,
7.63%, 11/7/96 519
360 Northern Telecom Ltd.,
8.25%, 6/13/96 365
----------
1,403
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
58
<PAGE> 61
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
INVESTMENT QUALITY BOND FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
UTILITIES -- TELEPHONE (1.4%):
$ 750 A T &T Corp.,
4.50%, 2/15/96 $ 748
1,000 New England Telephone &
Telegraph,
6.25%, 12/15/97 1,003
----------
1,751
- ------------------------------------------------------------
TOTAL CORPORATE BONDS 27,914
- ------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (36.4%)
FEDERAL HOME LOAN MORTGAGE CORP.:
133 8.00%, 5/1/02 136
FEDERAL NATIONAL MORTGAGE ASSOC.:
2,969 6.00%, 8/1/10 2,901
1,506 7.50%, 3/1/24 1,522
2,396 9.00%, 3/1/25 2,502
1,276 9.00%, 5/1/25 1,333
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
2,574 6.50%, 2/15/09 2,570
957 6.50%, 7/15/23 932
1,409 7.00%, 10/15/23 1,401
2,594 7.50%, 8/15/22 2,629
198 7.50%, 8/15/23 201
612 7.50%, 8/15/23 621
1,370 7.50%, 10/15/23 1,389
4,646 7.50%, 1/15/24 4,711
1,912 7.50%, 5/15/24 1,939
1,407 8.50%, 9/15/17 1,462
1,573 8.50%, 8/15/22 1,639
1,124 8.50%, 2/15/23 1,169
7,253 8.50%, 12/15/24 7,552
1,454 9.00%, 2/15/17 1,523
803 9.00%, 6/15/18 842
776 9.00%, 10/15/19 813
805 9.00%, 10/15/19 843
1,148 9.00%, 12/15/19 1,202
719 9.00%, 12/15/19 753
673 9.00%, 12/15/19 705
1,608 9.00%, 1/15/20 1,690
570 9.00%, 10/15/21 597
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 45,577
- ------------------------------------------------------------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BONDS (12.8%)
$ 2,000 7.13%, 2/15/23 $ 2,179
11,155 7.50%, 11/15/24 12,741
1,000 7.63%, 2/15/25 1,160
- ------------------------------------------------------------
TOTAL U.S. TREASURY BONDS 16,080
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY NOTES (21.5%)
3,100 5.75%, 9/30/97 3,108
5,000 6.13%, 5/31/97 5,036
1,500 6.13%, 9/30/00 1,520
5,000 7.13%, 2/29/00 5,247
4,000 7.25%, 5/15/04 4,328
4,000 7.50%, 1/31/96 4,019
1,000 7.50%, 2/29/96 1,006
2,500 7.75%, 1/31/00 2,679
- ------------------------------------------------------------
TOTAL U.S. TREASURY NOTES 26,943
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (4.0%)
5,021,916 Aim Treasury Portfolio 5,022
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 5,022
- ------------------------------------------------------------
TOTAL (COST $122,273)(A) $ 123,403
- ---------------------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $125,248.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax reporting purposes by the amount of losses recognized
for financial reporting proposes in excess of federal income tax reporting
of approximately $43. Cost for federal income tax purposes and differs from
value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 1,948
Unrealized depreciation (861)
----------
Net unrealized depreciation $ 1,087
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
59
<PAGE> 62
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
GOVERNMENT BOND FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BONDS (21.9%)
$ 4,000 8.13%, 8/15/19 $ 4,812
1,000 12.00%, 8/15/13 1,500
- ----------------------------------------------------------
TOTAL U.S. TREASURY BONDS 6,312
- ----------------------------------------------------------
- ---------------------------------------------------------
U.S. TREASURY NOTES (72.9%)
5,200 6.50%, 4/30/99 5,321
2,000 6.50%, 5/15/05 2,069
2,000 6.50%, 8/15/05 2,070
5,000 6.75%, 5/31/99 5,156
3,000 7.75%, 11/30/99 3,209
3,000 7.88%, 4/15/98 3,149
- ----------------------------------------------------------
TOTAL U.S. TREASURY NOTES 20,974
- ----------------------------------------------------------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ---------------------------------------------------------
INVESTMENT COMPANIES (3.8%)
$1,081,904 Federated Treasury
Obligation $ 1,082
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,082
- ----------------------------------------------------------
TOTAL (COST $27,598)(a) $ 28,368
- ----------------------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $28,765.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 779
Unrealized depreciation (9)
--------
Net unrealized depreciation $ 770
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
60
<PAGE> 63
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
GOVERNMENT MORTGAGE FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATIONS (11.2%)
FEDERAL HOME LOAN MORTGAGE CORP.:
$ 5,000 5.50%, 10/15/02 $ 4,947
FEDERAL NATIONAL MORTGAGE ASSOC.:
10,000 7.50%, 8/25/22 10,284
- ---------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS 15,231
- ---------------------------------------------------------
- ---------------------------------------------------------
U.S. GOVERNMENT
AGENCIES (80.6%)
FEDERAL HOME LOAN MORTGAGE CORP.:
2,774 5.99%, 12/1/23* 2,831
4,759 7.50%, 4/1/24 4,815
4,675 7.50%, 4/1/24 4,730
4,870 7.50%, 4/1/24 4,927
4,841 7.50%, 4/1/24 4,898
202 9.50%, 8/1/21 212
FEDERAL NATIONAL MORTGAGE ASSOC.:
9,084 6.00%, 8/1/10 8,878
9,597 6.50%, 4/1/24 9,332
1,308 8.00%, 5/1/17 1,339
2,253 8.00%, 2/1/23 2,310
3,720 8.50%, 8/1/24 3,855
2,081 9.50%, 6/1/22 2,188
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
4,706 7.00%, 9/15/23 4,679
2,717 7.00%, 10/15/23 2,702
4,590 7.00%, 12/15/23 4,564
4,389 7.50%, 7/15/23 4,450
2,764 7.50%, 1/15/24 2,803
6,275 8.00%, 5/15/22 6,456
5,901 8.00%, 5/15/22 6,072
3,935 8.00%, 10/15/22 4,050
1,520 8.00%, 8/15/23 1,565
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
$ 451 8.50%, 12/15/19 $ 468
42 8.50%, 2/15/20 44
93 8.50%, 5/15/21 97
2,135 8.50%, 3/15/23 2,218
388 8.50%, 3/15/23 404
1,708 8.75%, 8/15/25 1,777
513 9.00%, 11/15/18 537
1,401 9.00%, 3/15/21 1,467
1,179 9.00%, 5/15/21 1,234
1,136 9.00%, 6/15/21 1,189
2,913 9.00%, 2/15/23 3,056
1,965 9.50%, 11/15/17 2,089
360 9.50%, 1/15/19 383
1,220 9.50%, 5/15/20 1,297
2,193 9.50%, 6/15/21 2,334
3,265 9.75%, 1/15/21 3,425
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 109,675
- ---------------------------------------------------------
- ---------------------------------------------
U.S. TREASURY NOTES (3.0%)
1,000 6.50%, 5/15/05 1,035
3,000 6.50%, 8/15/05 3,105
- ---------------------------------------------------------
TOTAL U.S. TREASURY NOTES 4,140
- ---------------------------------------------------------
- ---------------------------------------------
INVESTMENT COMPANIES (0.7%)
956,684 Aim Treasury Portfolio 957
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 957
- ---------------------------------------------------------
TOTAL (COST $129,826)(a) $130,003
- ---------------------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $136,103.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax reporting purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax reporting
of approximately $29. Cost for federal income tax purposes and differs from
value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 1,592
Unrealized depreciation (1,444)
--------
Net unrealized appreciation $ 148
=========
</TABLE>
*Adjustable Rate Mortgage.
SEE NOTES TO FINANCIAL STATEMENTS.
61
<PAGE> 64
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
FUND FOR INCOME (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATIONS (60.5%)
$ 1,079 Bear Stearns Mortgage
Capital Corp.,
9.40%, 6/25/21 $ 1,079
2,291 Bear Stearns Secured
Investors Trust,
7.50%, 9/20/20 2,302
83 Drexel, Burnham, & Lambert
Trust,
6.30%, 6/1/17 85
1,000 General Electric Capital
Mortgage Services, Inc.,
7.00%, 3/25/08 968
213 Federal Home Loan Mortgage
Corp., 138c
8.85%, 4/15/20 214
92 Federal Home Loan Mortgage
Corp., Series 8B-3, C
9.30%, 8/15/15 94
1,000 Federal National Mortgage
Assoc., 1991-13, C
8.25%, 3/25/04 1,023
1,996 Federal National Mortgage
Assoc., 1988, 4Z
9.25%, 3/25/18 2,092
1,921 Housing Securities, Inc.,
7.25%, 4/25/08 1,908
1,000 Kidder Peabody Acceptance
Corp.,
6.80%, 9/1/06 997
118 Merrill Lynch Trust,
8.90%, 10/20/15 119
1,334 Prudential Home Mortgage
Securities,
7.00%, 1/25/08 1,337
1,500 Resolution Trust Corp.,
8.20%, 11/25/21 1,549
- ------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 13,767
- ------------------------------------------------------------
- ----------------------------------------------
COMMERCIAL PAPER (1.9%)
FINANCIAL SERVICES (1.9%):
441 Cooperative Assoc. of
Tractor Dealers,
5.85%, 11/1/95 441
- ------------------------------------------------------------
TOTAL COMMERCIAL PAPER 441
- ------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (34.4%)
FEDERAL HOME LOAN MORTGAGE CORPORATION:
$ 128 9.50%, 8/1/19 $ 134
195 9.50%, 11/1/19 204
81 9.50%, 11/1/19 85
838 9.50%, 12/1/22 882
21 10.00%, 2/1/17 23
215 10.00%, 9/1/19 231
13 12.00%, 10/1/10 14
2 12.00%, 7/1/14 2
3 12.00%, 7/1/14 3
FEDERAL NATIONAL MORTGAGE ASSOCIATION:
805 8.50%, 10/1/24 834
573 8.50%, 10/1/24 594
25 9.50%, 1/1/19 26
12 10.00%, 5/1/13 14
11 10.00%, 1/1/14 12
8 10.00%, 8/1/17 9
20 10.00%, 8/1/17 22
5 10.00%, 10/1/17 6
12 10.00%, 10/1/17 13
6 10.00%, 11/1/17 7
12 10.00%, 1/1/18 13
10 10.00%, 1/1/18 11
12 10.00%, 1/1/18 13
41 10.00%, 2/1/18 44
10 10.50%, 1/1/18 11
33 12.00%, 8/1/13 36
22 12.00%, 4/1/15 24
36 13.00%, 12/1/12 40
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION:
181 9.50%, 8/15/17 192
56 9.50%, 8/15/17 60
408 9.50%, 5/15/18 434
214 9.50%, 6/15/18 228
232 9.50%, 10/15/19 247
1,036 9.50%, 9/20/20 1,092
108 10.00%, 3/15/16 117
98 10.00%, 10/15/17 107
91 10.00%, 1/15/18 99
83 10.00%, 1/15/18 90
22 10.00%, 2/15/18 24
63 10.00%, 3/15/18 68
8 10.00%, 7/15/18 9
124 10.00%, 7/15/18 134
73 10.00%, 9/15/18 79
117 10.00%, 9/15/18 127
99 10.00%, 9/15/18 107
121 10.00%, 9/15/18 131
91 10.00%, 9/15/18 98
332 10.00%, 11/15/18 360
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
62
<PAGE> 65
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
FUND FOR INCOME (Amounts in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
$ 111 10.00%, 1/15/19 $ 120
312 10.00%, 6/15/21 338
48 10.25%, 3/15/19 52
49 10.25%, 6/15/19 53
72 10.50%, 2/15/16 79
66 11.00%, 9/20/14 72
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 7,824
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY OBLIGATIONS (1.8%)
U.S. Treasury Strip's
2,000 0.00%, 8/15/20 397
- ------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS 397
- ------------------------------------------------------------
TOTAL (COST $21,384)(a) $ 22,429
- ---------------------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $22,756.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 1,099
Unrealized depreciation (54)
----------
Net unrealized appreciation $ 1,045
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
63
<PAGE> 66
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
NATIONAL MUNICIPAL FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (97.0%)
ALABAMA (2.4%):
$ 5 East Alabama, Health Care
Authority, Series A,
5.10%, 9/1/08, MBIA $ 5
300 Mobile, Water & Sewer,
4.50%, 1/1/00, FGIC 300
----------
305
----------
ARIZONA (1.5%):
125 Maricopa County, School
District #95, Queens
Creek, Series A,
5.20%, 7/1/05 129
50 Salt River Project,
Agriculture Improvement,
Series A,
5.63%, 1/1/06 53
----------
182
----------
CALIFORNIA (0.1%):
5 California State Public
Works, Department of
Corrections,
Del Norte Project, Series
C,
4.88%, 12/1/06 5
5 Capital Area Development
Authority, GO, Tax
Allocation,
4.35%, 10/1/01 5
----------
10
----------
COLORADO (7.3%):
250 Adams County, School
District #12,
4.70%, 12/15/02, MBIA 251
400 Routt County, School
District, GO, 3.90%,
12/1/96 400
250 Summit County, School
District, GO,
4.75%, 12/1/02, FGIC 253
----------
904
----------
CONNECTICUT (1.8%):
5 Connecticut State, Special
Tax Obligation,
Transportation
Infrastructure, Series B,
4.30%, 10/1/03 5
200 Connecticut State, Special
Tax Obligation,
Transportation
Infrastructure, Series B,
6.00%, 9/1/06 217
----------
222
----------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
FLORIDA (1.4%):
$ 5 Melbourne, Water & Sewer,
Series A,
4.50%, 10/1/05, FGIC $ 5
150 Orlando, Utilities
Commission, Water &
Electric,
5.80%, 10/1/06 160
5 Palm Bay, Utility Revenue
Bonds,
5.00%, 10/1/08, MBIA 5
----------
170
----------
GEORGIA (1.7%):
200 Georgia State, GO, Series E,
5.50%, 7/1/03 213
----------
ILLINOIS (10.1%):
250 Chicago Public Building
Commission, Revenue Bonds,
6.05%, 1/1/06, AMBAC 269
250 Chicago Public Building
Commission, Revenue Bonds,
6.20%, 1/1/08, AMBAC 267
200 Illinois State Sales Tax
Revenue Bonds, Series V,
5.88%, 6/15/05 214
500 Northlake, Illinois Tax
Increment,
5.00%, 12/1/04, MBIA 508
----------
1,258
----------
INDIANA (0.1%):
15 Indiana Board Book Revenue
Bonds,
5.38%, 2/1/03 15
----------
IOWA (3.2%):
400 Woodbury, Iowa Health
Systems Revenue Bonds,
5.10%, 9/1/06, MBIA 398
----------
KENTUCKY (0.4%):
15 Kentucky Economic
Development Finance
Authority, St. Claire
Medical Center,
5.35%, 9/1/04 15
30 Kentucky State Turnpike
Authority, Revitalization
Projects,
5.30%, 7/1/04, AMBAC 31
----------
46
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
64
<PAGE> 67
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
NATIONAL MUNICIPAL FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
MAINE (1.3%):
$ 150 Maine Health & Higher
Educational Facilities,
6.20%, 7/1/25 $ 153
5 Maine State Housing
Authority,
5.00%, 11/15/06 5
----------
158
----------
MASSACHUSETTS (0.5%):
50 Massachusetts State, GO,
Series B,
5.20%, 11/1/04 51
10 New England Education Loan
Marketing Corp., Series A,
5.80%, 3/1/02 10
----------
61
----------
MICHIGAN (10.7%):
255 Byron Center,
5.40%, 5/1/07 261
240 Farmington Hills, Economic
Development Corp.,
5.30%, 2/15/06, MBIA 244
5 Imlay City, Community School
District,
5.00%, 5/1/08, AMBAC 5
250 Leslie, Public Schools
5.55%, 5/1/07 259
225 Michigan Municipal Bond
Authority, Revenue Bonds,
6.70%, 11/1/06 253
275 Michigan Municipal Bond
Authority, Revenue Bonds,
6.80%, 11/1/07 308
----------
1,330
----------
MINNESOTA (8.1%):
1,000 Minneapolis, Series B,
5.10%, 9/1/07 1,010
----------
MISSOURI (4.3%):
500 Excelsior Springs School
District Building Corp.,
6.50%, 3/1/09 538
----------
NEVADA (0.3%):
25 Nevada State, GO, Series B,
5.60%, 7/15/06 26
15 Washoe County, School
District, Series A,
4.70%, 6/1/99, MBIA 15
----------
41
----------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
NEW JERSEY (0.2%):
$ 20 New Jersey State
Transportation Authority,
Series A,
5.40%, 12/15/02 $ 21
----------
NEW YORK (0.2%):
5 Albany, GO, 4.70% 11/1/01,
MBIA 5
5 Nassau County, GO, Series A,
4.10%, 5/1/00, FGIC 5
5 New York State Mortgage
Agency, Series 33,
4.50%, 10/1/02 5
5 Schenectady Industrial
Development Agency,
Broadway Center Project,
Series A,
5.00%, 9/1/09, FGIC 5
----------
20
----------
OHIO (14.2%):
200 Columbus Sewer, Revenue
Bonds,
5.50%, 6/1/01 209
400 Huber Heights Ohio Water
Systems,
5.10%, 12/1/06, MBIA 404
100 Lorain, GO, 5.00%, 12/1/05 102
500 Middleburg Heights Hospital,
5.75%, 8/15/21, FSA 492
15 Ohio State Building
Authority, State
Correctional Facilities,
Series A, 5.50%, 10/1/05 16
5 Ohio State, GO, 4.90%,
8/1/09 5
500 Ohio State, Special
Obligation,
5.80%, 6/1/03 538
----------
1,766
----------
OKLAHOMA (3.3%):
500 Oklahoma State Municipal
Power,
4.50%, 1/1/28, FGIC 415
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
65
<PAGE> 68
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
NATIONAL MUNICIPAL FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
PENNSYLVANIA (0.1%):
$ 5 Allegheny County, Higher
Education, Community
College, Capital Guaranty,
Series B,
5.00%, 7/15/10 $ 5
5 Harrisburg Water Authority,
Series A,
5.00%, 8/15/08, FGIC 5
----------
10
----------
RHODE ISLAND (0.0%):
5 Rhode Island State Health &
Educational, Butler
Hospital Financing,
4.60%, 1/1/01 5
----------
SOUTH CAROLINA (2.2%):
5 Charleston County, GO,
4.20%, 6/1/00 5
250 Hilton Head Public Service
District #1, Waterworks &
Sewer Systems,
5.00%, 8/1/05 253
20 Piedmont Municipal Power
Agency,
5.50%, 1/1/08, MBIA 21
----------
279
----------
SOUTH DAKOTA (4.1%):
250 Rapid City, Sales Tax,
Revenue Bonds, Series C,
4.70%, 6/1/00 253
250 Rapid City, Water Revenue
Bonds,
5.00%, 11/1/04, FGIC 254
----------
507
----------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
TEXAS (6.4%):
$ 200 Conroe Independent School
District, GO, 6.50%,
2/1/04 $ 222
15 Dallas County, Hospital
District,
5.40%, 5/15/06, AMBAC 15
5 Houston Public Improvement,
GO, 3.85%, 3/1/99 5
200 Keller Independent School
District,
6.20%, 8/15/04 220
15 North Texas Water District,
4.20%, 6/1/00, AMBAC 15
100 Texas State, GO, Series A,
6.00%, 10/1/08 108
200 Ysleta, Independent School
District,
5.60%, 8/15/02 211
----------
796
----------
UTAH (3.4%):
5 Brigham City, GO, Series A,
4.90%, 6/1/07 5
410 St. George, Water Revenue
Bonds,
5.05%, 6/1/05, AMBAC 414
----------
419
----------
WASHINGTON (1.9%):
15 Seattle Indian Services
Commission,
4.95%, 11/1/00 15
200 Seattle Municipal Light &
Power, Revenue Bonds,
6.00%, 7/1/03 217
----------
232
----------
WISCONSIN (2.3%):
200 Milwaukee Sewer District,
Series A,
6.70%, 10/1/02 224
5 Sturgeon Bay, Combined
Utilities,
4.75%, 1/1/05, AMBAC 5
20 Wisconsin State,
5.80%, 5/1/01 21
25 Wisconsin State
Transportation, Series A,
7.50%, 7/1/04 30
----------
280
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
66
<PAGE> 69
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
NATIONAL MUNICIPAL FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
WYOMING (1.5%):
$ 185 Lincoln County, School
District,
5.10%, 6/1/03 $ 191
----------
WEST VIRGINIA (2.0%):
250 West Virginia State
Hospital,
5.00%, 9/1/05, MBIA 251
- ------------------------------------------------------------
TOTAL MUNICIPAL BONDS 12,053
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (1.1%)
133,272 Nuveen Reserves Fund 133
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 133
- ------------------------------------------------------------
TOTAL (COST $11,691)(a) $ 12,186
- ---------------------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $12,420.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 497
Unrealized depreciation (2)
----------
Net unrealized appreciation $ 495
==========
</TABLE>
AMBAC -- American Municipal Bond Assurance Corp.
FGIC -- Financial Guaranty Insurance Company
GO -- General Obligation
MBIA -- Municipal Bond Insurance Assoc.
SEE NOTES TO FINANCIAL STATEMENTS.
67
<PAGE> 70
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
NEW YORK TAX-FREE FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- -------------------------------------------
MUNICIPAL BONDS (97.3%)
$ 250 County of Erie, GO, 5.50%,
6/15/25 $ 244
1,200 Metropolitan Transit
Authority, 7.50%, 7/1/98,
AMBAC 1,326
220 Metropolitan Transit
Authority, 7.50%, 1/1/20,
AMBAC 251
250 Metropolitan Transit
Authority, Revenue Bonds,
Series I, 7.00%, 7/1/09,
AMBAC 293
250 Nassau County Industrial
Development Agency, Civic
Facilities Revenue Bonds,
Hofstra University
Project, 6.75%, 8/1/11,
AMBAC 273
680 New York City, Cultural
Resources, Revenue Bonds,
6.63%, 1/1/11, AMBAC 743
300 New York City, GO, Series B,
7.00%, 10/1/18, FSA 327
350 New York City, GO, Series C,
7.00%, 2/1/12, FGIC 359
700 New York City, Housing
Development, Refunding
Revenue Bonds, Multi-Unit
Mortgage, Series A, FHA,
7.30%, 6/1/10 756
675 New York City, Housing
Development, Refunding
Revenue Bonds, Multi-Unit
Mortgage, Series A, FHA,
7.35%, 6/1/19 724
335 New York City, Housing
Development, Revenue
Bonds, Series 1, MBIA,
7.38%, 4/1/17 353
200 New York City, Industrial
Development Agency, Civic
Facilities Revenue Bonds,
USTA National Tennis
Center, 6.38%, 11/15/14 212
750 New York City, Municipal
Water Finance Authority,
6.75%, 6/15/16 823
<CAPTION>
SHARES
OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
$ 750 New York State, Dormitory
Authority, Revenue Bonds,
Ithaca College, 6.50%,
7/1/10, MBIA $ 808
225 New York State, Dormitory
Authority, Revenue Bonds,
Judicial Facilities
Leases, Series B, 7.00%,
4/15/16, MBIA 249
700 New York State, Dormitory
Authority, Revenues Bonds,
City University, Series 2,
MBIA 6.75%, 7/1/24 770
370 New York State, GO, 6.75%,
8/1/18, AMBAC 404
325 New York State, GO, 6.75%,
8/1/19, AMBAC 353
340 New York State, Medical Care
Facilities, 7.45%, 2/15/00 387
200 New York State, Medical Care
Facilities Finance Agency,
Montefiore Medical 5.75%,
2/15/25, AMBAC 197
815 New York State, Medical Care
Facilities Finance Agency,
Refunding Revenue Bonds,
North Shore University,
7.20%, 11/1/20, MBIA 917
550 New York State, Medical Care
Facilities Finance Agency,
Revenue Bonds,
St. Luke's, Series A, BIG,
7.10%, 2/15/27 579
500 New York State, Medical
Care, Facilities Finance
Agency, Unrefunded/Revenue
Bonds, 7.38%, 8/15/19,
MBIA 558
550 New York State, TWY
Authority, General Revenue
Bonds, Series C, 6.00%,
1/1/25, FGIC 559
1,000 New York State, Urban
Development, 7.50%, 1/1/98 1,093
400 New York State, Urban
Development, 7.50%, 1/1/00 457
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
68
<PAGE> 71
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
NEW YORK TAX-FREE FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
$ 250 New York State, Urban
Development, 5.50%, 1/1/25 $ 244
900 Triborough Bridge & Tunnel
Authority, 7.00%, 1/1/01 1,022
1,000 Triborough Bridge & Tunnel
Authority, Special
Obligation Refunding
Revenue Bonds, Series B,
6.88%, 1/1/15, AMBAC 1,097
500 University Puerto Rico,
Revenue Bonds, 5.25%,
6/1/25, MBIA 478
- ------------------------------------------------------
TOTAL MUNICIPAL BONDS 16,856
- ------------------------------------------------------
- -------------------------------------------
INVESTMENT COMPANIES (0.3%)
$57,738 Providence of New York $ 58
- ------------------------------------------------------
TOTAL INVESTMENT COMPANIES 58
- ------------------------------------------------------
TOTAL (COST $15,602)(a) $16,914
- ------------------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $17,327.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 1,312
Unrealized depreciation
-------
Net unrealized appreciation $ 1,312
========
</TABLE>
AMBAC -- American Municipal Bond Assurance Corp.
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
MBIA -- Municipal Bond Insurance Assoc.
GO -- General Obligation
SEE NOTES TO FINANCIAL STATEMENTS.
69
<PAGE> 72
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
OHIO MUNICIPAL BOND FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARE OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (97.4%)
ALTERNATIVE MINIMUM TAX PAPER (12.8%):
$ 3,500 Student Loan Funding Corp.,
Series A, 5.50%, 12/1/01 $ 3,576
4,000 Student Loan Funding Corp.,
Series A, 5.85%, 8/1/04 4,105
- ------------------------------------------------------------
TOTAL ALTERNATIVE MINIMUM TAX PAPER 7,681
- ------------------------------------------------------------
- ----------------------------------------------
GENERAL OBLIGATION BONDS (35.7%)
COUNTY, CITY, SPECIAL DISTRICT & SCHOOLS (35.4%):
1,000 Adams County,
5.35%, 12/1/07, MBIA 1,027
1,000 Anthony Wayne School
District,
5.75%, 12/1/18, FGIC 1,001
1,500 Batavia Local School
District,
7.00%, 12/1/14 1,700
750 Batavia Local School
District,
6.30%, 12/1/22 796
500 Canton Waterworks System,
5.75%, 12/1/10,
AMBAC 513
1,100 Chardon,
5.80%, 12/1/05, MBIA 1,101
500 Columbus,
5.35%, 9/15/06 519
1,385 Crawford County,
6.75%, 12/1/19, AMBAC 1,560
500 Dawson Bryant Local
School District,
6.70%, 12/1/17, FGIC 553
1,250 Delaware City School
District,
5.75%, 12/1/20, FGIC 1,251
1,000 Hilliard School District,
6.15%, 12/1/06 1,071
2,500 Indian Valley Local
School District,
7.00%, 12/1/14 2,886
1,250 Lakeview Local School
District,
6.95%, 12/1/19,
AMBAC 1,426
250 Lorain,
5.35%, 12/01/08, AMBAC 254
600 Madison County,
7.00%, 12/1/19, AMBAC 688
1,000 Marysville Exempt Village
School District,
5.75%, 12/1/23, MBIA 997
<CAPTION>
SHARE OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
$ 1,000 Monroe Falls,
Series A
6.95%, 12/1/14, AMBAC $ 1,112
500 Olentangy Local
School District,
6.25%, 12/1/14 523
250 St. Henry Local
School District,
5.25%, 12/1/19, MBIA 239
1,000 Sylvania City School
District,
5.75%, 12/1/22, FGIC 997
1,000 Toledo,
6.10%, 12/1/14, AMBAC 1,037
----------
21,251
----------
SPECIAL TAX (LIMITED TAXES, TAX ALLOCATION) (0.3%):
200 North Ridgeville,
5.70%, 12/1/15, AMBAC 201
- ------------------------------------------------------------
TOTAL GENERAL OBLIGATION BONDS 21,452
- ------------------------------------------------------------
- ----------------------------------------------
REVENUE BONDS (48.8%)
HOSPITALS, NURSING HOMES & HEALTH CARE (23.1%):
2,250 Butler County, Middletown
Regional Hospital,
6.75%, 11/15/10, FGIC 2,463
1,720 Franklin County, Riverside
Hospital,
7.25%, 5/15/20 1,924
1,000 Garfield Heights Marymont
Hospital, Refunding &
Improvement,
6.70%, 11/15/15 1,043
2,200 Lake County Hospital
Improvement Facilities,
6.38%, 8/15/03 2,374
1,500 Middleburg Heights Hospital,
5.75%, 8/15/21 1,476
635 Portage County Hospital
6.50%, 11/15/03, MBIA 712
675 Portage County Hospital,
6.50%, 11/15/04, MBIA 759
715 Portage County Hospital,
6.50%, 11/15/05, MBIA 806
2,315 Portage County Hospital,
5.50%, 11/15/09, MBIA 2,347
----------
13,904
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
70
<PAGE> 73
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
OHIO MUNICIPAL BOND FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARE OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
HOUSING (8.9%):
$ 2,000 Cuyahoga County Multifamily
Revenue, GNMA
6.60%, 10/20/30, $ 2,041
275 Ohio Cap Corp.,
5.75%, 7/1/06 283
1,775 Ohio Cap Corp.,
6.35%, 7/1/22 1,805
1,170 Ohio Capital Corp.,
6.50%, 1/1/24 1,194
----------
5,323
----------
PUBLIC FACILITIES (CONVENTION, SPORT) (5.3%):
2,000 Ohio State Building
Authority,
Adult Correctional
Facilities,
6.00%, 10/1/07 2,135
1,000 Ohio State Higher
Educational Facility,
5.88%, 12/1/04 1,067
----------
3,202
----------
TRANSPORTATION (AIRPORTS, TOLL ROADS) (1.7%):
1,000 Greater Cleveland Regulatory
Transit Authority,
4.45%, 7/1/99, FGIC 1,006
----------
UTILITY (SEWERS, TELEPHONE, ELECTRIC) (9.8%):
540 Cambridge Ohio Water System,
5.50%, 12/1/08 552
1,985 Cleveland Public Power
Systems,
7.00%, 11/15/24, MBIA 2,271
500 Huber Heights Water System,
5.25%, 12/1/07, MBIA 507
815 Huber Heights Water System,
5.55%, 12/1/10, MBIA 822
1,185 Huber Heights Water System,
0.00%, 12/1/21, MBIA 266
1,205 Huber Heights Water System,
0.00%, 12/1/22, MBIA 255
1,225 Huber Heights Water System,
0.00%, 12/1/23, MBIA 244
1,245 Huber Heights Water System,
0.00%, 12/1/24, MBIA 234
1,265 Huber Heights Water System,
0.00%, 12/1/25, MBIA 224
500 Southwest Regional Water,
6.00%, 12/1/20, MBIA 513
----------
5,888
- ------------------------------------------------------------
TOTAL REVENUE BONDS 29,323
- ------------------------------------------------------------
TOTAL MUNICIPAL BONDS 58,456
- ------------------------------------------------------------
<CAPTION>
SHARE OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (0.8%)
$ 505,774 Federated Ohio Municipal
Cash Trust Fund $ 506
- ------------------------------------------------------------
Total Investment Companies 506
- ------------------------------------------------------------
TOTAL (COST $56,549) (a) $ 58,962
- ---------------------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $60,031.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 2,503
Unrealized depreciation (90)
----------
Net unrealized appreciation $ 2,413
==========
AMBAC American Municipal Bond Assurance Corp.
FGIC Financial Guaranty Insurance Company
GNMA Government National Mortgage Assoc.
LOC Letter of Credit
MBIA Municipal Bond Insurance Assoc.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
71
<PAGE> 74
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
BALANCED FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATIONS (0.8%)
FEDERAL HOME LOAN MORTGAGE CORP.:
$ 430,890 7.50%, 4/1/07 $ 439
FEDERAL NATIONAL MORTGAGE ASSOC.:
1,129,727 7.40%, 7/25/17 1,130
- ------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 1,569
- ------------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (53.9%)
AEROSPACE/DEFENSE (2.6%):
19,900 Boeing Co. 1,306
11,800 General Dynamics Corp. 653
47,300 Raytheon Co. 2,063
18,400 Textron, Inc. 1,265
----------
5,287
----------
ALUMINUM (1.3%):
50,300 Aluminum Co. of America 2,565
----------
AUTOMOBILES (0.7%):
8,000 Chrysler Corp. 413
1,200 Fiat - ADR 20
35,000 Ford Motor Co. 1,006
----------
1,439
----------
BANKS (4.0%):
54,900 BankAmerica Corp. 3,157
900 BBV - ADR 27
28,200 Comerica, Inc. 948
27,600 First Union Corp. 1,370
1,300 IMI - ADR 21
33,150 J.P. Morgan & Co., Inc. 2,557
2,000 Westpac Banking-ADR(b) 41
----------
8,121
----------
BEVERAGES (1.2%):
35,400 Anheuser Busch Co., Inc. 2,336
2,300 Coca-Cola Femsa - ADR 41
----------
2,377
----------
BROADCASTING (0.0%):
2,000 Grupo Televisa - ADR 34
----------
CHEMICALS (1.1%):
14,800 Dow Chemical Co. 1,016
8,300 Eastman Chemical 494
1,200 Imperial Chemical - ADR 58
21,200 Lubrizol Corp. 610
3,200 Montedison - ADR(b) 22
1,000 Norsk Hydro - ADR 40
----------
2,240
----------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
CLOSED END FUNDS (0.1%):
5,600 Alliance Worldwide
Privatization Fund, Class
A $ 58
11,000 Italy Fund, Inc. 83
5,000 Japan OTC Equity Fund(b) 40
2,300 Latin American Equity Fund 30
2,000 Malaysia Fund 35
----------
246
----------
COMPUTERS & PERIPHERALS (1.1%):
11,000 Cisco Systems(b) 853
13,400 Hewlett Packard Co. 1,241
----------
2,094
----------
CONTAINERS (0.8%):
28,600 Newell Co. 690
34,600 Sonoco Products Co. 856
----------
1,546
----------
COSMETICS & RELATED (0.5%):
15,400 Avon Products 1,095
----------
ELECTRICAL EQUIPMENT (2.0%):
24,100 Emerson Electric Co. 1,717
34,400 General Electric Co. 2,176
900 Hitachi - ADR 94
----------
3,987
----------
ELECTRONIC COMPUTING EQUIPMENT (0.9%):
32,900 Compaq Computer Corp.(b) 1,834
----------
ENTERTAINMENT (0.1%):
450 Matsushita Electric - ADR 65
1,500 Sony - ADR 69
----------
134
----------
FINANCIAL SERVICES (2.0%):
26,400 American Express Co. 1,073
1,000 Barclays - ADR 47
15,300 Federal National Mortgage
Assoc. 1,605
23,300 Household International,
Inc. 1,311
----------
4,036
----------
FOOD DISTRIBUTORS (0.3%):
16,500 Supervalu Inc. 507
----------
FOOD PROCESSING & PACKAGING (0.7%):
16,000 ConAgra, Inc. 618
2,000 Grand Metropolitan PLC - ADR 55
22,000 Sara Lee Corp. 646
----------
1,319
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
72
<PAGE> 75
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
BALANCED FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
FOREST PRODUCTS (1.7%):
44,000 International Paper Co. $ 1,628
14,000 Mead Corp. 807
19,700 Union Camp Corp. 1,002
----------
3,437
----------
HEALTH CARE (0.5%):
20,000 Columbia HCA Healthcare 983
----------
HEAVY MACHINERY (0.8%):
58,500 Baker Hughes, Inc. 1,148
4,500 Deere & Co. 402
----------
1,550
----------
HOLDING COMPANIES (0.0%):
150 U.S. Industries, Inc.(b) 2
----------
INDUSTRIAL SERVICES (0.7%):
16,700 American Home Products Corp. 1,480
----------
INSURANCE (2.3%):
51,942 Allstate 1,909
12,000 American General Corp. 395
9,200 Chubb Corp. 827
30,200 St. Paul Cos., Inc. 1,533
----------
4,664
----------
MANAGEMENT COMPANIES (0.0%):
3,000 Hanson PLC - ADR 47
----------
MANUFACTURING (0.8%):
24,700 Allied Signal, Inc. 1,050
15,300 Litton Industries, Inc.(b) 606
----------
1,656
----------
MEDICAL SUPPLIES (0.4%):
13,200 Medtronic, Inc. 762
----------
METALS (0.3%):
1,300 SKF Corp. - ADR 25
22,100 USX U.S. Steel Group 660
----------
685
----------
OFFICE EQUIPMENT & SUPPLIES (0.0%):
1,000 Canon - ADR 85
----------
OIL (7.6%):
16,000 Atlantic Richfield Co. 1,708
700 British Petroleum Co., PLC -
ADR 62
19,800 Chevron Corp. 926
41,000 Exxon Corp. 3,131
44,200 Mobil Corp. 4,453
1,400 Repsol - ADR 41
24,100 Royal Dutch Petroleum Co. -
ADR 2,962
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
29,500 Texaco, Inc. $ 2,010
2,800 YPF S.A. - ADR 48
----------
15,341
----------
OIL & GAS EXPLORATION (2.3%):
52,600 Enron Corp. 1,808
85,900 Phillips Petroleum Co. 2,770
----------
4,578
----------
OILFIELD EQUIPMENT & SERVICES (0.5%):
16,000 Schlumberger Limited 996
----------
PAINT, VARNISHES & ENAMELS (0.3%):
17,700 Sherwin Williams Co. 666
----------
PAPER (0.0%):
913 Fletcher Challange - ADR 23
----------
PHARMACEUTICALS (3.5%):
49,000 Abbott Laboratories 1,948
13,600 Merck & Co., Inc. 782
44,800 Pfizer, Inc. 2,570
30,200 Schering-Plough 1,619
1,400 Smithkline Beecham 73
----------
6,992
----------
PUBLISHING (0.4%):
2,500 News Corp. - ADR 50
20,000 Time Warner, Inc. 730
----------
780
----------
RETAIL (1.9%):
23,800 Dayton Hudson Corp. 1,636
25,200 Pep Boys -- Manny, Moe &
Jack 551
19,500 Sears & Roebuck Co. 663
7,500 Wal-Mart Stores, Inc. 162
27,800 Walgreen Co. 792
----------
3,804
----------
SEMICONDUCTORS (0.7%):
19,700 Intel Corp. 1,377
600 Kyocera - ADR 99
----------
1,476
----------
SOAPS & CLEANING AGENTS (0.1%):
1,300 Procter & Gamble Co. 105
----------
SOFTWARE & COMPUTER SERVICES (0.8%):
10,650 Microsoft(b) 1,065
32,000 Novell, Inc.(b) 528
----------
1,593
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
73
<PAGE> 76
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
BALANCED FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
STEEL (0.1%):
2,100 British Steel - ADR $ 54
880 Broken Hill Proprietary -
ADR 48
2,300 Worthington Industries, Inc. 38
----------
140
----------
TAX RETURN PREPARATION (0.2%):
10,500 H & R Block 433
----------
TOBACCO & TOBACCO PRODUCTS (0.8%):
4,000 B.A.T. Industries - ADR 67
16,500 Philip Morris Cos., Inc. 1,394
3,900 UST, Inc. 117
----------
1,578
----------
TRANSPORTATION (0.0%):
900 British Airways -ADR 64
3,000 TMM - ADR (b) 21
----------
85
----------
UTILITIES - ELECTRIC (3.5%):
64,900 Consolidated Edison Co. NY,
Inc. 1,971
51,000 DQE Co. 1,403
17,400 Houston Industries 807
75,300 Texas Utilities Co. 2,767
----------
6,948
----------
UTILITIES - TELECOMMUNICATIONS (4.3%):
68,600 A T & T Corp 4,390
15,000 Ameritech Corp. 810
900 British Telecom - ADR 54
700 CIA Telecommunicacion -
Chile - ADR 50
60,500 GTE Corp. 2,496
1,000 Hong Kong Telecom - ADR 17
29,000 MCI Telecommunications Corp. 723
1,000 Telefonica De Espana - ADR 38
2,000 Telephonos De Mexico - ADR 55
----------
8,633
- ------------------------------------------------------------
TOTAL COMMON STOCKS 108,383
- ------------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS - FOREIGN (1.4%)
BRITAIN (0.1%):
PUBLISHING (0.0%):
2,200 Reed Elsevier International 33
----------
FOOD MANUFACTURING (0.0%):
5,000 United Biscuits 22
----------
RETAIL (0.0%):
8,000 Marks & Spencer 53
----------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
UTILITIES - WATER (0.0%):
5,000 Severn Trent PLC $ 51
- ------------------------------------------------------------
TOTAL BRITAIN 159
- ------------------------------------------------------------
DENMARK (0.0%):
FINANCIAL SERVICES (0.0%):
1,000 Dansk Bank 66
- ------------------------------------------------------------
TOTAL DENMARK 66
- ------------------------------------------------------------
FINLAND (0.0%):
FOOD PRODUCTS (0.0%):
1,000 Huhtamaki 1 30
- ------------------------------------------------------------
TOTAL FINLAND 30
- ------------------------------------------------------------
FRANCE (0.2%):
AUTOMOBILES (0.0%):
400 PSA Peugeot Citroen 52
----------
BUILDING PRODUCTS (0.0%):
700 LaFarge 46
----------
BANKS (0.0%):
900 Cie Financiere De Paribas-A 49
----------
BUILDING MATERIALS (0.0%):
450 Compagnie De Saint Gobain 54
----------
OIL & GAS PRODUCTION (0.0%):
700 Elf Aquitaine 48
----------
UTILITIES - TELECOMMUNICATIONS (0.0%):
600 Alcatel-Alsthom 51
----------
UTILITIES - WATER (0.0%):
500 Cie Generale Des Eaux 46
- ------------------------------------------------------------
TOTAL FRANCE 346
- ------------------------------------------------------------
GERMANY (0.2%):
AUTOMOBILES (0.0%):
190 Volkswagen 60
----------
BANKING (0.0%):
200 Commerzbank 46
1,000 Deutsche Bank 45
----------
91
----------
BUILDING PRODUCTS (0.0%):
100 M.A.N. AG 29
----------
CHEMICALS (0.0%):
200 Bayer 53
----------
MACHINERY & ENGINEERING (0.0%):
100 Mannesmann 33
----------
MANUFACTURING (0.0%):
100 Siemens AG 52
----------
RETAIL (0.0%):
1,000 Douglas Holding AG 36
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
74
<PAGE> 77
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
BALANCED FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
UTILITIES - ELECTRIC (0.0%):
1,400 Veba $ 57
- ------------------------------------------------------------
TOTAL GERMANY 411
- ------------------------------------------------------------
HOLLAND (0.1%):
BANKING (0.0%):
1,400 ABN/Amro Holding 59
----------
CHEMICALS (0.0%):
200 Akzo Nobel NV 23
----------
TELECOMMUNICATIONS (0.0%):
2,400 Koninklijke PTT NED NV 84
- ------------------------------------------------------------
TOTAL HOLLAND 166
- ------------------------------------------------------------
HONG KONG (0.1%):
BROKERAGE (0.0%):
20,000 Peregrine Investments
Holding Co. 26
----------
REAL ESTATE (0.1%):
10,000 Cheung Kong 56
10,000 Hutchinson Whampoa 55
----------
111
- ------------------------------------------------------------
TOTAL HONG KONG 137
- ------------------------------------------------------------
JAPAN (0.6%):
AUTOMOBILES (0.0%):
4,000 Nippon Denso Co., Ltd. 73
----------
BANKS (0.1%):
2,000 Mitsubishi Bank 39
3,000 Sanwa Bank 51
4,000 Sumitomo Bank 71
----------
161
----------
BEVERAGES (0.0%):
5,000 Kirin Brewery Co. 50
----------
CHEMICALS (0.0%):
11,000 Mitsubishi Chemical, Inc. 50
5,000 Toray Industries, Inc. 31
----------
81
----------
CONSTRUCTION (0.0%):
4,000 Kajima Corp. 37
----------
FINANCIAL SERVICES (0.1%):
3,000 Kinden 52
3,000 Nomura Securities 55
----------
107
----------
HOUSEHOLD PRODUCTS (0.0%):
6,000 Kao Corp. 73
----------
INSURANCE (0.0%):
4,000 Tokio Marine & Fire
Insurance 41
----------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
PAPER (0.0%):
6,000 New Oji Paper Co., Ltd. $ 55
----------
PHARMACEUTICALS (0.1%):
2,000 Sankyo Co. Ltd. 44
3,000 Yamanouchi Pharmaceutical 67
----------
111
----------
REAL ESTATE (0.0%):
4,000 Mitsui Fudosan 46
----------
RETAIL (0.1%):
2,000 Ito Yokado Co. 109
2,000 Jusco 47
4,000 Marui Co., Ltd. 69
----------
225
----------
RUBBER & RUBBER PRODUCTS (0.0%):
4,000 Bridgestone(b) 55
----------
STEEL (0.0%):
15,000 Nippon Steel 50
----------
UTILITIES - ELECTRIC (0.0%):
2,100 Tokyo Electric Power 55
----------
UTILITIES - WATER (0.0%):
3,000 Kurita Water Ind. 84
- ------------------------------------------------------------
TOTAL JAPAN 1,304
- ------------------------------------------------------------
SWEDEN (0.0%):
AUTOMOTIVE (0.0%):
2,500 Volvo AB 56
- ------------------------------------------------------------
TOTAL SWEDEN 56
- ------------------------------------------------------------
SWITZERLAND (0.1%):
ENGINEERING (0.0%):
50 ABB Asea Brown Boveri,
Series A 58
----------
FINANCIAL SERVICES (0.0%):
725 CS Holding 74
----------
FOOD MANUFACTURING (0.0%):
50 Nestle SA Registered 52
----------
PHARMACEUTICALS (0.0%):
5 Roche Genussshein 36
- ------------------------------------------------------------
TOTAL SWITZERLAND 220
- ------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS 2,895
- ------------------------------------------------------------
- ----------------------------------------------
CONVERTIBLE PREFERRED STOCKS (0.2%)
AUTOMOTIVE (0.2%):
4,300 Ford Motor Co., Series A 404
- ------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS 404
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
75
<PAGE> 78
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
BALANCED FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ----------------------------------------------
CORPORATE BONDS (9.6%)
AUTOMOTIVE (1.3%):
800,000 Ford Motor Co., 8.88%,
1/15/22 $ 957
1,500,000 General Motors, 9.13%,
7/15/01 1,686
----------
2,643
----------
BANKING (1.5%):
300,000 BankAmerica Corp., 9.63%,
2/13/01 342
1,200,000 First Union Corp., 9.45%,
8/15/01 1,382
500,000 Nation Bank Corp., 5.38%,
12/1/95 500
300,000 SunTrust Banks, Inc., 7.38%,
7/1/02 320
500,000 Wells Fargo & Co., 8.75%,
5/1/02 559
----------
3,103
----------
BROKERAGE SERVICES (0.4%):
750,000 Morgan Stanley, 8.88%,
10/15/01 837
----------
ELECTRICAL & ELECTRONIC (0.2%):
500,000 Philips Electronics, 7.13%,
5/15/25 514
----------
FINANCIAL SERVICES (2.0%):
1,000,000 Associates, 7.50%, 10/15/96 1,015
700,000 John Deere Capital Corp.,
8.63%, 8/1/19 778
500,000 Lehman Brothers Holdings,
7.38%, 5/15/07 513
1,000,000 Merrill Lynch Corp., 8.25%,
11/15/99 1,066
500,000 Merrill Lynch Corp., 4.75%,
6/24/96 497
200,000 U.S. West Capital Funding,
Inc., 8.00%, 10/15/96 204
----------
4,073
----------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
GOVERNMENTS (FOREIGN) (0.2%):
500,000 Province of Quebec, 7.50%,
7/15/23 $ 501
----------
HEALTH CARE (0.6%):
1,000,000 Columbia Health Care, 8.85%,
1/1/07 1,154
----------
INDUSTRIAL GOODS & SERVICES (2.6%):
1,200,000 Black & Decker, 7.50%,
4/1/03 1,233
400,000 Dean Foods Co., 6.75%,
6/15/05 404
500,000 Georgia-Pacific, 9.95%,
6/15/02 586
500,000 Loral, 7.63%, 8/15/25 508
500,000 Lubrizol Corp., 7.25%,
6/15/25 516
700,000 Nabisco, Inc., 8.00%,
1/15/00 739
500,000 Waste Management, 7.88%,
8/15/96 507
500,000 Westvaco Corp., 9.75%,
6/15/20 644
----------
5,137
----------
TOBACCO & TOBACCO PRODUCTS (0.6%):
1,000,000 Philip Morris, 9.00%, 1/1/01 1,106
----------
UTILITIES - TELECOMMUNICATIONS (0.2%):
300,000 Southwestern Bell Co.,
8.30%, 6/1/96 304
- ------------------------------------------------------------
TOTAL CORPORATE BONDS 19,372
- ------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT SECURITIES (14.8%)
FEDERAL HOME LOAN MORTGAGE CORP.:
119 8.00%, 5/1/02 121
FEDERAL NATIONAL MORTGAGE ASSOC.:
2,110 6.00%, 11/1/08 2,067
2,969 6.00%, 8/1/10 2,901
1,772 7.50%, 3/1/24 1,791
1,276 9.00%, 5/1/25 1,333
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
76
<PAGE> 79
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
BALANCED FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
$ 1,704 6.50%, 2/15/09 $ 1,701
219 9.50%, 7/15/09 233
1,427 9.00%, 10/15/16 1,500
204 9.00%, 11/15/16 213
767 9.00%, 6/15/18 803
21 10.00%, 10/15/18 22
744 9.00%, 9/15/19 779
1,080 9.00%, 10/15/19 1,131
686 9.00%, 12/15/19 719
745 9.00%, 12/15/19 780
804 9.00%, 1/15/20 845
516 9.00%, 2/15/20 541
1,510 8.50%, 5/15/20 1,569
608 8.50%, 4/15/21 631
797 7.50%, 12/15/22 808
410 8.50%, 3/15/23 427
946 7.50%, 11/15/23 959
1,951 7.50%, 1/15/24 1,978
1,434 7.50%, 5/15/24 1,454
2,883 8.50% 9/15/24 3,002
1,397 9.00%, 4/1/25 1,460
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT SECURITIES 29,768
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY BONDS (5.0%)
500 7.13%, 2/15/23 545
8,350 7.50%, 11/15/24 9,537
- ------------------------------------------------------------
TOTAL U.S. TREASURY BONDS 10,082
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY NOTES (10.3%)
5,000 7.50%, 12/31/96 5,106
4,000 6.13%, 5/31/97 4,029
500 7.13%, 9/30/99 523
1,000 7.75%, 12/31/99 1,071
3,700 7.75%, 1/31/00 3,965
3,600 7.13%, 2/29/00 3,777
1,000 6.13%, 9/30/00 1,013
1,000 7.25%, 5/15/04 1,082
- ------------------------------------------------------------
TOTAL U.S. TREASURY NOTES 20,566
- ------------------------------------------------------------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (3.3%)
6,493,638 AIM Treasury Fund $ 6,494
65,396 Federated Treasury
Obligation Fund 65
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 6,559
- ------------------------------------------------------------
TOTAL (COST - $181,749)(a) $ 199,598
- ---------------------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $201,073.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $691. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 17,307
Unrealized depreciation (149)
----------
Net unrealized appreciation $ 17,158
==========
</TABLE>
(b) Represents non-income producing securities.
ADR -- American Depository Receipt
SEE NOTES TO FINANCIAL STATEMENTS.
77
<PAGE> 80
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
STOCK INDEX FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ----------------------------------------------
COMMERCIAL PAPER (17.7%)
FINANCIAL SERVICES (17.7%):
$ 5,000 American General Finance,
5.75%, 11/2/95 $ 5,000
5,000 Ford Motor Credit,
5.71%, 12/22/95 5,000
4,000 General Electric Capital
Services,
5.75%, 11/16/95 4,000
5,000 Household Finance,
5.72%, 11/3/95 5,000
4,000 Merrill Lynch,
5.73%, 11/3/95 3,999
5,500 General Motors Acceptance
Corp.,
5.77%, 12/14/95 5,500
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 28,499
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (78.8%)
ADVERTISING (0.1%):
2,286 Interpublic Group Cos., Inc. 89
--------
AEROSPACE/DEFENSE (1.2%):
10,066 Boeing Co. 661
1,900 General Dynamics Corp. 105
5,861 Lockheed Martin Corp. 399
3,346 McDonnell Douglas 274
1,498 Northrop Grumman Corp 86
6,420 Rockwell International Corp. 286
2,480 Textron, Inc. 170
--------
1,981
--------
AIRCRAFT & AIRCRAFT PARTS (0.2%):
3,604 United Technologies Corp. 320
--------
AIR FREIGHT (0.1%):
2,206 AMR Corp. Delaware(b) 146
1,834 U. S. Air Group, Inc.(b) 25
--------
171
--------
AIRLINES (0.1%):
1,537 Delta Air Lines 101
--------
ALUMINUM (0.2%):
5,260 Aluminum Co. of America 268
--------
APPAREL (0.0%):
2,202 Liz Claiborne, Inc. 62
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
AUTOMOBILES (1.6%):
11,221 Chrysler Corp. $ 579
31,694 Ford Motor Co. 911
22,040 General Motors 964
2,200 Navistar International
Corp.(b) 23
1,172 Paccar, Inc. 49
--------
2,526
--------
AUTOMOTIVE PARTS (0.4%):
1,204 Cummins Engine, Inc. 42
2,958 Dana Corp. 76
2,328 Eaton Corp. 119
1,754 Echlin, Inc. 63
3,614 Genuine Parts Co. 143
1,931 TRW, Inc. 127
--------
570
--------
BANKS (3.1%):
3,333 Bank of Boston Corp. 148
10,991 BankAmerica Corp. 632
2,322 Bankers Trust New York 148
2,816 Barnett Banks, Inc. 156
3,736 Boatmens Bancshares, Inc. 142
5,177 Chase Mahattan Corp. 295
7,387 Chemical Banking Corp. 420
2,622 First Chicago Corp. 178
2,364 First Fidelity Bancorp. 155
2,206 First Interstate Bancorp. 285
5,064 First Union Corp. 251
5,513 J.P. Morgan & Co., Inc. 425
8,014 NationsBank Corp. 527
9,549 Norwest Corp. 282
6,814 PNC Bank Corp. 179
3,324 SunTrust Banks, Inc. 214
5,022 Wachovia Corp. 222
1,415 Wells Fargo & Co. 297
--------
4,956
--------
BANKS -- MONEY CENTERS (REGIONAL) (0.8%):
11,690 Citicorp 758
4,107 CoreStates Financial Corp. 149
1,731 Golden West Financial Corp.
Delaware 87
4,547 NBD Bancorp., Inc. 173
4,350 National City Corp. 134
--------
1,301
--------
BANKS -- OUTSIDE MONEY CENTER (0.4%):
11,648 Banc One Corp. 393
3,870 First Bank Systems, Inc. 193
--------
586
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
78
<PAGE> 81
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
STOCK INDEX FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
BEVERAGES (3.0%):
7,558 Anheuser Busch Co., Inc. $ 499
2,021 Brown Forman Corp., Class B 77
37,212 Coca Cola Co. 2,675
1,143 Coors Adolph Co., Class B 20
23,182 PepsiCo, Inc. 1,223
10,971 Seagram Co. Limited 395
--------
4,889
--------
BUILDING MATERIALS (0.5%):
1,143 Armstrong World Industries,
Inc. 68
866 Centex Corp. 28
846 Crane Co. 30
1,360 Fleetwood Enterprises, Inc. 28
904 Kaufman & Broad Home Corp. 11
4,631 Masco Corp. 130
3,446 Monsanto Co. 361
4,354 Morton International, Inc. 133
1,521 Owens Corning Fiberglas
Corp.(b) 64
807 Pulte Corp. 26
--------
879
--------
CHEMICALS (0.1%):
1,948 Great Lakes Chemical 131
--------
CHEMICALS -- GENERAL (2.0%):
3,268 Air Products & Chemicals,
Inc. 169
7,906 Dow Chemical Co. 543
16,394 E.I. Du Pont De Nemours Co. 1,023
2,373 Eastman Chemical 141
1,857 Ecolab, Inc. 54
1,124 FMC Corp.(b) 80
3,263 Hercules, Inc. 174
2,225 Mallinckrodt 77
2,009 Nalco Chemical Co. 60
6,004 PPG Industries, Inc. 255
4,059 Praxair, Inc. 110
1,989 Rohm & Haas Co. 110
1,500 Sigma-Aldrich 71
4,012 Union Carbide Corp. 152
2,758 W.R. Grace & Co. 154
--------
3,173
--------
CHEMICALS -- SPECIALTY (0.0%):
1,554 Avery Dennison Corp. 70
--------
COMMERCIAL SERVICES (0.1%):
5,150 CUC International(b) 178
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
COMPUTERS & PERIPHERALS (2.9%):
3,468 Amdahl Corp.(b) $ 32
3,588 Apple Computer, Inc. 130
7,950 Cisco Systems(b) 616
1,656 Computer Sciences Corp.(b) 111
788 Cray Research, Inc.(b) 16
1,104 Data General Corp.(b) 13
4,321 Digital Equipment Corp.(b) 234
15,110 Hewlett Packard Corp. 1,399
1,298 Integraph Corp.(b) 16
16,742 International Business
Machines Corp. 1,628
4,650 Silicon Graphics(b) 155
2,852 Sun Microsystems, Inc.(b) 222
3,449 Tandem Computers, Inc.(b) 39
5,086 Unisys Corp.(b) 29
--------
4,640
--------
CONGLOMERATES (0.5%):
6,749 Corning Glass Works 176
12,424 Minnesota Mining &
Manufacturing Co. 707
--------
883
--------
CONSTRUCTION (0.1%):
2,403 Fluor Corp. 136
1,024 Foster Wheeler Corp. 38
--------
174
--------
CONSUMER CREDIT (0.2%):
4,984 Dean Witter Discover & Co. 248
--------
CONSUMER GOODS (0.1%):
2,167 American Greetings Corp. 68
1,046 Jostens, Inc. 24
--------
92
--------
CONTAINERS -- METAL, GLASS, PAPER, PLASTIC
(0.3%):
927 Ball Corp. 26
1,457 Bemis, Inc. 38
2,680 Crown Cork & Seal, Inc.(b) 93
1,321 Federal Paper Board, Inc. 55
4,690 Newell Co. 113
4,647 Rubbermaid, Inc. 121
2,743 Stone Container Corp. 45
--------
491
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
79
<PAGE> 82
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
STOCK INDEX FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
COSMETICS & RELATED (0.6%):
827 Alberto Culver Co. $ 26
2,048 Avon Products 146
2,758 Dial Corp. 67
13,040 Gillette Co. 631
3,289 International Flavor &
Fragrance, Inc. 159
--------
1,029
--------
DEPARTMENT STORES (0.3%):
3,349 Dillard Department Stores,
Inc., Class A 91
6,734 J. C. Penney 283
1,043 Mercantile Stores, Inc. 47
--------
421
--------
DIVERSIFIED -- CONGLOMERATES, HOLDINGS (0.3%):
3,446 International Telephone &
Telegraph 422
1,418 National Service Industries,
Inc. 42
--------
464
--------
DRUG STORES (0.1%):
591 Longs Drug Stores Corp. 24
2,480 Rite Aid Corp. 67
--------
91
--------
ELECTRICAL EQUIPMENT (2.6%):
1,379 Bally Manufacturing Corp.(b) 15
3,390 DSC Communications Corp.(b) 125
6,598 Emerson Electric Co. 470
49,948 General Electric Co. 3,159
1,182 Johnson Controls, Inc. 69
572 Thomas & Betts Corp. 37
1,457 W.W. Grainger, Inc. 91
11,521 Westinghouse Electric Corp. 163
--------
4,129
--------
ELECTRICAL SERVICES (0.1%):
3,450 General Public Utilities
Corp. 108
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
ELECTRONIC COMPUTING EQUIPMENT (0.4%):
2,100 Cabletron Systems,(b) $ 165
7,809 Compaq Computer Corp.(b) 435
--------
600
--------
ELECTRONIC & ELECTRICAL -- GENERAL (1.8%):
3,019 Advanced Micro Devices(b) 72
6,447 AMP, Inc. 253
1,167 Andrew Corp.(b) 49
3,168 Cooper Industries 107
1,515 E G & G, Inc. 28
1,379 General Signal Corp. 44
1,182 Harris Corp. 69
3,759 Honeywell, Inc. 158
17,354 Motorola, Inc. 1,139
3,611 National Semiconductor
Corp.(b) 88
7,158 Raytheon Co. 312
1,925 Tandy Corp. 95
946 Tektronix, Inc. 56
5,544 Texas Instruments, Inc. 378
--------
2,848
--------
ELECTRONICS -- DEFENSE RELATED (0.1%):
5,006 Loral Corp. 148
--------
ENTERTAINMENT (0.9%):
2,797 Brunswick Corp. 54
3,034 Harrahs Entertainment(b) 75
2,580 Hasbro, Inc. 79
1,043 King World Productions(b) 36
1,700 Loews Corp. 249
4,734 Lowes Cos., Inc. 128
15,368 Walt Disney Co. 886
--------
1,507
--------
ENVIRONMENTAL CONTROL (0.0%):
8,100 Laidlaw, Inc., Class B 73
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
80
<PAGE> 83
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
STOCK INDEX FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
FINANCIAL SERVICES (3.1%):
14,400 American Express Co. $ 585
4,276 Automatic Data Processing,
Inc. 306
5,700 Bank of New York Co., Inc. 239
1,576 Beneficial Corp. 77
1,321 Ceridian Corp.(b) 57
5,319 Federal Home Loan Mortgage
Corp. 368
7,996 Federal National Mortgage
Assoc. 839
4,198 Fleet Financial Group 163
4,021 Great Western Financial
Corp. 91
3,407 H.F. Ahmanson & Co. 85
2,877 Household International,
Inc. 162
6,700 Keycorp 226
4,382 MBNA Corp. 162
4,346 Mellon Bank Corp. 218
5,204 Merrill Lynch & Co., Inc. 289
2,280 Morgan Stanley Group, Inc. 198
3,110 Salomon, Inc. 112
3,777 Shawmut National Corp. 128
2,045 Transamerica Corp. 139
9,468 Travelers, Inc. 478
2,845 U.S. Bancorp 84
--------
5,006
--------
FOOD DISTRIBUTORS (0.2%):
7,505 Albertsons, Inc. 250
--------
FOOD DISTRIBUTORS
(SUPERMARKETS & WHOLESALERS) (0.3%):
1,143 Fleming Cos., Inc. 26
1,163 Great Altantic & Pacific
Tea, Inc. 24
3,652 Kroger Co.(b) 122
2,048 Supervalu, Inc. 63
5,416 Sysco Corp. 165
2,225 Winn Dixie Stores, Inc. 145
--------
545
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
FOOD PROCESSING & PACKAGING (2.1%):
15,961 Archer Daniels Midland Co. $ 257
4,331 CPC International, Inc. 287
7,386 Campbell Soup Co. 387
7,286 ConAgra, Inc. 281
4,647 General Mills 267
7,225 H.J. Heinz Co. 336
2,319 Hershey Foods Corp. 139
6,456 Kellogg Co. 466
2,509 Pioneer Hi-Bred
International, Inc. 125
3,996 Quaker Oats Co. 136
3,113 Ralston-Ralston Purina Group 185
14,100 Sara Lee Corp. 414
3,407 Wm. Wrigley Jr. Co. 158
--------
3,438
--------
FOREST PRODUCTS -- LUMBER & PAPER (1.5%):
1,679 Alco Standard Corp. 149
1,363 Boise Casacade Corp. 49
2,858 Champion International Corp. 153
2,719 Georgia Pacific Corp. 224
7,408 International Paper Co. 274
2,383 James River Corp. Virginia 77
4,747 Kimberly Clark Corp. 345
3,210 Louisiana Pacific Corp. 77
1,554 Mead Corp. 90
2,955 Moore Corp. Ltd. 57
827 Potlatch Corp. 35
4,472 Scott Paper Co. 238
1,615 Temple Inland, Inc. 73
2,028 Union Camp Corp. 103
2,955 Westvaco Corp. 82
5,988 Weyerhaeuser Co. 264
1,650 Willamette Industries, Inc. 96
--------
2,386
--------
FUNERAL SERVICES (0.1%):
2,822 Service Corp. International 113
--------
GOLD & SILVER MINING (0.0%):
3,800 Santa Fe Pacific Gold Corp. 38
--------
HEALTH CARE (0.4%):
13,078 Columbia HCA Healthcare 642
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
81
<PAGE> 84
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
STOCK INDEX FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
HEAVY MACHINERY (0.6%):
4,156 Baker Hughes, Inc. $ 82
5,848 Caterpillar Tractor, Inc. 328
2,522 Deere & Co. 225
1,369 Harnischfeger Industries,
Inc. 43
3,133 Ingersoll Rand Co. 111
1,557 McDermott International,
Inc. 25
2,279 Tyco Laboratories, Inc. 138
1,218 Varity Corp.(b) 44
--------
996
--------
HOLDING COMPANIES (0.1%):
1,700 Republic New York Corp. 100
--------
HOSPITAL & NURSING EQUIPMENT (1.0%):
1,557 Bard C.R., Inc. 44
18,983 Johnson & Johnson, Inc. 1,547
--------
1,591
--------
HOTELS & MOTELS (0.1%):
1,398 Hilton Hotels Corp. 94
3,694 Marriott International, Inc. 136
--------
230
--------
HOUSEHOLD GOODS --
APPLIANCES & FURNISHINGS (0.2%):
416 Bassett Furniture Ind. 8
3,171 Maytag Corp. 60
1,832 Premark International, Inc. 85
2,128 Whirlpool Corp. 113
1,300 Zenith Electronics(b) 11
--------
277
--------
INDUSTRIAL SERVICES (0.6%):
9,120 American Home Products Corp. 808
3,268 Dover Corp. 129
--------
937
--------
INSURANCE -- LIFE (0.5%):
1,437 Jefferson Pilot Corp. 95
2,774 Providian Corp 109
2,067 Torchmark Corp. 86
5,150 United Healthcare 274
4,550 U. S. Healthcare, Inc. 175
945 USLIFE Corp. 27
--------
766
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
INSURANCE -- MULTI-LINE (1.7%):
3,310 Aetna Life & Casualty Co. $ 233
1,301 Alexander & Alexander
Services, Inc. 29
6,062 American General Corp. 199
13,936 American International
Group, Inc. 1,176
2,148 Cigna Corp. 213
2,442 General Re Corp. 354
2,777 Lincoln National Corp. 124
2,167 Marsh & Mclennan Cos., Inc. 177
1,812 SafeCo Corp. 116
2,442 St. Paul Cos., Inc. 124
44 Transport Holdings, Inc.(b) 2
3,242 USF & G Corp. 54
--------
2,801
--------
INSURANCE -- PROPERTY, CASUALTY, HEALTH (0.5%):
13,170 Allstate 484
2,580 Chubb Corp. 232
2,100 UNUM Corp. 111
--------
827
--------
LEISURE -- RECREATION, GAMING (0.0%):
985 Handleman Co. 8
--------
MACHINE TOOLS (0.0%):
985 Cincinnati Milacron, Inc. 25
1,004 Giddings & Lewis, Inc. 16
--------
41
--------
MANUFACTURING -- CAPITAL GOODS (0.1%):
3,449 Illinois Tool Works, Inc. 200
807 Trinova Corp. 23
--------
223
--------
MANUFACTURING -- CONSUMER GOODS (0.1%):
591 Outboard Marine Corp. 12
1,615 Teledyne, Inc. 40
1,560 Western Atlas(b) 68
--------
120
--------
MANUFACTURING -- MISCELLANEOUS (0.8%):
8,312 Allied Signal, Inc. 353
826 Briggs & Stratton Corp. 33
1,314 Millipore Corp. 46
966 Morrison Knudsen Corp. 6
3,401 Pall Corp. 83
2,127 Parker-Hannifin Corp. 72
4,747 Unilever N. V. 622
3,071 Whitman Corp. 65
--------
1,280
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
82
<PAGE> 85
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
STOCK INDEX FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
MEDICAL SERVICES (0.1%):
2,903 Beverly Enterprises, Inc.(b) $ 34
1,321 Community Psychiatric
Centers, Inc.(b) 14
1,844 Manor Care, Inc. 60
5,825 Tenet Healthcare Corp.(b) 104
--------
212
--------
MEDICAL SUPPLIES (0.8%):
1,673 Bausch & Lomb, Inc. 58
8,135 Baxter International, Inc. 314
1,906 Becton Dickinson & Co. 124
3,388 Biomet, Inc.(b) 56
4,500 Boston Scientific Corp.(b) 190
6,816 Medtronic, Inc. 394
1,379 St. Jude Medical, Inc.(b) 73
1,615 United States Surgical Corp. 40
--------
1,249
--------
METALS -- FABRICATION (0.5%):
6,669 Alcan Aluminum Ltd. 211
1,201 Asarco, Inc. 39
2,700 Cyprus Amax Minerals 71
5,950 Freeport McMoran Copper,
Class B 135
4,098 Homestake Mining Co. 63
1,424 Inland Steel Industries,
Inc. 33
2,527 Newmont Mining Corp. 95
2,028 Phelps Dodge Corp. 129
1,873 Reynolds Metals Co. 94
--------
870
--------
PRIMARY METAL & MINERAL PRODUCTION (0.5%):
3,113 Armco, Inc.(b) 19
10,377 Barrick Gold Corp. 240
3,239 Bethlehem Steel Corp.(b) 43
3,330 Echo Bay Mines Ltd. 30
4,270 Englehard Corp. 106
3,510 Inco Ltd. 121
2,561 Nucor Corp. 123
2,413 USX U.S. Steel Group 72
--------
754
--------
NEWSPAPERS (0.4%):
4,134 Gannett Co., Inc. 225
1,495 Knight-Ridder, Inc. 83
2,852 New York Times Co., Class A 79
3,282 Times Mirror Co., Class A 95
1,870 Tribune Co. 118
--------
600
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
OFFICE EQUIPMENT & SUPPLIES (0.4%):
4,509 Pitney Bowes, Inc. $ 197
3,213 Xerox Corp. 417
--------
614
--------
OIL & GAS EXPLORATION & PRODUCTION (1.2%):
2,758 Amerada Hess Corp. 124
1,873 Ashland, Inc. 59
3,123 Coastal Corp. 101
1,437 Columbia Gas System(b) 55
630 Eastern Enterprises 19
7,473 Enron Corp. 257
1,970 Enserch Corp. 29
769 Helmerich & Payne, Inc. 20
1,498 Kerr-Mcgee Corp. 83
985 Louisiana Land & Exploration
Co. 35
3,585 Noram Energy Corp. 28
9,362 Occidental Petroleum Corp. 201
788 Oneok, Inc. 19
2,916 Oryx Energy Co.(b) 34
1,360 Pennzoil Co. 51
7,722 Phillips Petroleum Co. 249
2,422 Rowan Cos.(b) 16
2,619 Sante Fe Energy Resources,
Inc.(b) 23
2,561 Sonat, Inc. 74
2,252 Sun Co., Inc. 64
8,790 USX -- Marathon Group 156
7,231 Unocal Corp. 190
2,994 Williams Co., Inc. 116
--------
2,003
--------
OIL & GAS PRODUCTION (1.0%):
3,701 Burlington Resource, Inc. 133
11,639 Mobil Corp. 1,173
5,364 Tenneco, Inc. 235
--------
1,541
--------
OIL -- INTEGRATED COMPANIES (4.7%):
14,655 Amoco Corp. 936
4,728 Atlantic Richfield Co. 505
19,206 Chevron Corp. 898
36,639 Exxon Corp. 2,798
15,837 Royal Dutch Petroleum Co. 1,946
7,683 Texaco, Inc. 523
--------
7,606
--------
OILFIELD EQUIPMENT & SERVICES (0.4%):
5,418 Dresser Industries, Inc. 112
3,368 Halliburton Co. 140
7,131 Schlumberger Limited 444
--------
696
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
83
<PAGE> 86
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
STOCK INDEX FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
PAINT, VARNISHES & ENAMELS (0.1%):
2,500 Sherwin Williams Co. $ 94
--------
PHARMACEUTICALS (4.9%):
23,344 Abbott Laboratories 928
7,758 Amgen, Inc.(b) 372
1,870 Allergan, Inc. 55
2,406 Alza Corp., Class A(b) 53
14,966 Bristol-Myers Squibb Co. 1,141
8,568 Eli Lilly & Co. 828
36,416 Merck & Co., Inc. 2,094
18,574 Pfizer, Inc. 1,066
11,004 Schering-Plough 590
5,041 Upjohn Co. 256
3,979 Warner-Lambert Co. 339
--------
7,722
--------
PHOTOGRAPHY (0.4%):
10,092 Eastman Kodak Co. 632
1,379 Polaroid Corp. 59
--------
691
--------
POLLUTION CONTROL SERVICES & EQUIPMENT (0.4%):
6,322 Browning-Ferris Industries,
Inc. 184
1,644 Safety Kleen 25
14,242 WMX Technologies, Inc. 401
375 Zurn Industries, Inc. 9
--------
619
--------
PRECISION INSTRUMENTS & RELATED (0.0%):
1,240 Perkin Elmer 44
--------
PUBLISHING, EXCEPT NEWSPAPER (0.8%):
2,403 Deluxe Corp. 64
2,855 Dow Jones & Co., Inc. 101
5,000 Dun & Bradstreet Corp. 299
866 John H. Harland Co. 18
1,518 McGraw Hill, Inc. 124
826 Meredith Corp. 30
4,470 R.R. Donnelley & Sons Co. 163
11,382 Time Warner, Inc. 415
--------
1,214
--------
RADIO & TELEVISION (1.0%):
1,955 CBS, Inc. 158
4,530 Capital Cities ABC, Inc. 537
6,775 Comcast, Class A Special
Shares 121
300 Comcast Corp., Class A 5
19,285 Tele-Communications, Inc.,
Class A(b) 328
10,687 Viacom, Class B(b) 534
--------
1,683
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
RAILROAD & RAILROAD HOLDING
COMPANIES (0.7%):
4,422 Burlington Northern/Santa
Fe, Inc. $ 371
3,113 CSX Corp. 261
2,264 Conrail, Inc. 156
6,088 Union Pacific Corp. 398
--------
1,186
--------
RAILROADS (0.2%):
3,837 Norfolk Southern Corp. 296
--------
RESTAURANTS (0.6%):
4,647 Darden Restaurants, Inc. 53
707 Luby's Cafeterias, Inc. 15
20,520 McDonald's Corp. 841
1,576 Ryans Family Steak House(b) 12
1,182 Shoney's, Inc.(b) 13
2,955 Wendy's International 59
--------
993
--------
RETAIL (1.9%):
4,356 American Stores Co. 130
2,994 Charming Shoppes, Inc. 9
2,148 Dayton Hudson Corp. 148
2,125 Harcourt General, Inc. 84
13,556 K-Mart Corp. 110
7,328 May Department Stores 288
2,403 Nordstrom, Inc. 89
5,712 Price/Costco, Inc.(b) 97
11,521 Sears & Roebuck Co. 392
67,700 Wal-Mart Stores, Inc. 1,464
7,208 Walgreen Co. 205
3,921 Woolworth Corp. 57
--------
3,073
--------
RETAIL -- SPECIALTY STORES (0.9%):
2,897 Circuit City Stores, Inc. 97
4,215 The Gap 166
1,773 Giant Food, Inc. 57
14,031 Home Depot, Inc. 523
10,496 The Limited, Inc. 193
3,133 Melville Corp. 100
1,792 Pep Boys - Manny, Moe & Jack 39
2,167 TJX Cos., Inc. 29
8,168 Toys R Us, Inc.(b) 179
--------
1,383
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
84
<PAGE> 87
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
STOCK INDEX FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
RUBBER & RUBBER PRODUCTS (0.2%):
769 B.F. Goodrich, Inc. $ 51
2,422 Cooper Tire & Rubber Co. 56
4,534 Goodyear Tire & Rubber Co. 172
--------
279
--------
SEMICONDUCTORS (1.5%):
5,200 Applied Materials, Inc.(b) 261
24,300 Intel Corp. 1,698
6,100 Micron Technology, Inc. 431
--------
2,390
--------
SERVICES (NON-FINANCIAL) (0.2%):
3,550 First Data Corp. 235
1,440 Ogden Corp. 33
--------
268
--------
SHOES, LEATHER GOODS &
CLOTHING ACCESSORIES (0.2%):
552 Brown Group, Inc. 8
4,212 Nike, Inc. 239
2,261 Reebok International Ltd. 77
1,437 Stride Rite Corp. 16
--------
340
--------
SOAPS & CLEANING AGENTS (1.3%):
1,595 Clorox Co. 114
4,270 Colgate Palmolive, Inc. 296
20,271 Procter & Gamble Co. 1,642
--------
2,052
--------
SOFTWARE & COMPUTER SERVICES (1.8%):
1,398 Autodesk, Inc. 48
7,037 Computer Associates
International, Inc. 387
17,300 Microsoft Corp.(b) 1,730
10,862 Novell, Inc.(b) 179
12,819 Oracle Systems Corp.(b) 559
730 Shared Medical Systems 28
--------
2,931
--------
STEEL (0.0%):
2,719 Worthington Industries, Inc. 45
--------
TAX RETURN PREPARATION (0.1%):
3,052 H & R Block 126
--------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
TELECOMMUNICATIONS (2.0%):
14,612 Airtouch Communications(b) $ 416
5,600 Alltel Corp. 172
12,844 Bell Atlantic Corp. 817
7,447 Northern Telecom Ltd. 268
12,572 Pacific Telesis Group 382
2,266 Scientific-Atlanta, Inc. 28
10,266 Sprint Corp. 395
2,580 Tellabs, Inc.(b) 88
13,891 U. S. West, Inc. 662
--------
3,228
--------
TEXTILE MANUFACTURING (0.1%):
2,250 Fruit of The Loom(b) 39
1,101 Russell Corp. 27
552 Springs Industries, Inc.,
Class A 24
1,931 V. F. Corp. 92
--------
182
--------
TOBACCO & TOBACCO PRODUCTS (1.6%):
5,549 American Brands, Inc. 238
24,804 Philip Morris Cos., Inc. 2,096
5,746 UST, Inc. 172
--------
2,506
--------
TOOLS & HARDWARE MANUFACTURING (0.1%):
2,522 Black & Decker Corp. 85
1,221 Snap On Tools, Inc. 52
1,260 Stanley Works 60
946 Timken Co. 38
--------
235
--------
TOYS & BICYCLES -- MANUFACTURING (0.1%):
6,525 Mattel, Inc. 188
--------
TRANSPORTATION-AIR (0.1%):
4,250 Southwest Airlines Co. 85
--------
TRANSPORTATION LEASING & TRUCKING (0.2%):
1,324 Consolidated Freightways,
Inc. 31
1,695 Federal Express Corp.(b) 139
1,201 Pittston Services Group 33
1,163 Roadway Services, Inc. 52
2,306 Ryder Systems, Inc. 56
807 Yellow Corp. 11
--------
322
--------
TRUCKS -- MANUFACTURING (0.1%):
236 Nacco Industries, Inc. 14
7,073 Placer Dome, Inc. 155
--------
169
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
85
<PAGE> 88
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
STOCK INDEX FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
UTILITIES -- ELECTRIC (2.6%):
5,497 American Electric Power $ 210
4,547 Carolina Power & Light 149
5,655 Central & South West Corp. 151
4,628 Cinergy Corp. 131
6,914 Consolidated Edison Co. NY,
Inc. 210
4,353 Detroit Edison Co. 147
5,115 Dominion Resources 203
5,988 Duke Power Co. 268
6,661 Entergy Corp 190
5,435 FPL Group, Inc. 228
3,901 Houston Industries 181
4,276 Niagara Mohawk Power Corp. 46
1,970 Northern States Power Co.
Minnesota 93
4,531 Ohio Edison 104
8,396 Pacificorp 158
6,540 Peco Energy Co. 191
7,231 Public Service Enterprise 212
1,301 Raychem Corp. 60
13,138 SCEcorp. 223
19,612 Southern Co. 468
6,659 Texas Utilities Co. 245
6,323 Unicom Corp. 207
2,994 Union Electric Co. 117
--------
4,192
--------
UTILITIES -- ELECTRIC & GAS (0.3%):
4,324 Baltimore Gas & Electric 116
12,524 Pacific Gas & Electric Co. 368
1,004 Peoples Energy Corp. 29
--------
513
--------
UTILITIES -- NATURAL GAS (0.2%):
2,758 Consolidated Natural Gas 105
1,515 Nicor, Inc. 41
2,522 Pacific Enterprises 62
4,427 Panhandle Eastern Corp. 112
--------
320
--------
UTILITIES -- TELECOMMUNICATIONS (5.0%):
46,798 A T & T Corp 2,995
16,316 Ameritech Corp. 881
14,636 Bellsouth Corp. 1,120
28,613 GTE Corp. 1,180
19,940 MCI Telecommunications Corp. 497
12,633 Nynex Corp. 594
17,949 SBC Communications, Inc. 1,003
--------
8,270
- ----------------------------------------------------------
TOTAL COMMON STOCKS 126,596
- ----------------------------------------------------------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BILLS (0.8%)
$ 20 5.22%, 12/14/95(c) $ 20
1,315 5.38%, 12/21/95(c) 1,305
--------
1,325
--------
- ----------------------------------------------
INVESTMENT COMPANIES (2.7%)
4,367,074 AIM Treasury Portfolio 4,367
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 4,367
- ----------------------------------------------------------
TOTAL (COST $138,797)(a) $160,787
- ----------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $160,822.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax reporting purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax reporting
of approximately $530. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows (amount in
thousands):
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 24,874
Unrealized depreciation $ (2,988)
--------
Net unrealized appreciation $ 21,886
=========
</TABLE>
(b) Represents non-income producing security.
(c) Serves as collateral for futures contracts.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------
FUTURES CONTRACTS
<CAPTION>
NUMBER OF MARKET
CONTRACTS VALUE
<S> <C> <C> <C>
Long, Standard & Poor's 500
Index Futures Contract,
face amount $34,605,
expiring December 1995 120 $35,031
-------
Total Futures Contracts $35,031
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
86
<PAGE> 89
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
DIVERSIFIED STOCK FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (94.7%)
AEROSPACE/DEFENSE (5.2%):
128,500 Boeing Co. $ 8,432
98,000 General Dynamics Corp. 5,427
105,000 Textron, Inc. 7,219
--------
21,078
--------
AIR FREIGHT (1.0%):
60,000 AMR Corp., Delaware (b) 3,960
--------
ALUMINUM (1.4%):
110,200 Aluminum Co. of America 5,620
--------
BANKS (7.0%):
125,800 BankAmerica Corp. 7,234
100,000 First Union Corp. 4,963
96,800 J.P. Morgan & Co., Inc. 7,466
174,400 Norwest Corp. 5,145
150,000 PNC Bank Corp. 3,938
--------
28,746
--------
CHEMICALS (3.4%):
110,200 Dow Chemical Co. 7,562
120,000 Lubrizol Corp. 3,450
145,000 RPM, Inc., Ohio 2,809
--------
13,821
--------
COMPUTERS & PERIPHERALS (1.1%):
50,000 Hewlett Packard Co. 4,631
--------
CONTAINERS - METAL, GLASS, PAPER, PLASTIC
(0.8%):
134,300 Newell Co. 3,240
--------
COSMETICS & RELATED (0.7%):
40,300 Avon Products 2,866
--------
ELECTRICAL EQUIPMENT (3.1%):
110,800 General Electric Co. 7,008
86,800 W.W. Grainger, Inc. 5,425
--------
12,433
--------
ELECTRONIC & ELECTRICAL - GENERAL (1.6%):
60,000 Motorola, Inc. 3,938
40,800 Texas Instruments, Inc. 2,785
--------
6,723
--------
ENGINEERING & CONSTRUCTION (1.6%):
113,700 Fluor Corp. 6,424
--------
ENTERTAINMENT (0.4%):
70,400 Harrah's Entertainment (b) 1,742
--------
FINANCIAL SERVICES (2.8%):
260,000 Bear Stearns Cos., Inc. 5,168
130,000 Travelers, Inc. 6,565
--------
11,733
--------
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
FOREST PRODUCTS (2.7%):
200,000 International Paper Co. $ 7,400
31,900 Mead Corp. 1,838
38,900 Union Camp Corp. 1,979
--------
11,217
--------
FUNERAL SERVICES (0.5%):
46,900 Service Corp. International 1,882
--------
HEALTH CARE (1.9%):
160,000 Columbia HCA Healthcare 7,860
--------
HOTELS & MOTELS (1.2%):
115,000 Mirage Resorts, Inc. (b) 3,766
56,700 Promus Hotel Corp. (b) 1,247
--------
5,013
--------
HOUSEHOLD GOODS - APPLIANCES, FURNISHINGS
(1.3%):
100,000 Whirlpool Corp. 5,300
--------
INSURANCE - LIFE (1.0%):
60,000 Jefferson Pilot Corp. 3,960
--------
INSURANCE - MULTI-LINE (3.4%):
45,000 Aetna Life & Casualty Co. 3,167
80,350 American International
Group, Inc. 6,780
80,000 St. Paul Companies, Inc. 4,060
--------
14,007
--------
INSURANCE - PROPERTY, CASUALTY, HEALTH & OTHER
(0.8%):
35,000 Chubb Corp. 3,146
--------
MANUFACTURING - MISCELLANEOUS (0.8%):
81,100 Allied Signal, Inc. 3,447
--------
OFFICE EQUIPMENT & SUPPLIES (1.5%):
47,500 Xerox Corp. 6,163
--------
OIL & GAS EXPLORATION (2.8%):
168,700 Enron Corp. 5,799
170,000 Phillips Petroleum Co. 5,483
--------
11,282
--------
OIL & GAS PRODUCTION (1.3%):
120,000 Tenneco, Inc. 5,265
--------
OIL - INTEGRATED COMPANIES (7.4%):
40,400 Atlantic Richfield Co. 4,313
88,200 Chevron Corp. 4,123
135,500 Exxon Corp. 10,349
170,500 Texaco, Inc. 11,615
--------
30,400
--------
OILFIELD EQUIPMENT & SERVICES (3.9%):
270,000 Baker Hughes, Inc. 5,299
252,600 Dresser Industries, Inc. 5,241
89,800 Schlumberger Ltd. 5,590
--------
16,130
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
87
<PAGE> 90
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
DIVERSIFIED STOCK FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
PHARMACEUTICALS (4.8%):
120,000 Abbott Laboratories $ 4,770
159,000 Amgen, Inc. (b) 7,632
50,000 Pfizer, Inc. 2,869
50,000 Warner-Lambert Co. 4,256
--------
19,527
--------
POLLUTION CONTROL SERVICES (0.8%):
110,000 Browning-Ferris Industries,
Inc. 3,204
--------
RADIO & TELEVISION (1.2%):
100,000 Viacom, Class B (b) 5,000
--------
RETAIL (3.7%):
101,500 Dayton Hudson Corp. 6,977
110,000 Nordstrom, Inc. 4,077
149,000 Walgreen Co. 4,247
--------
15,301
--------
RETAIL - SPECIALTY STORES (0.8%):
148,000 Pep Boys -- Manny,
Moe & Jack 3,238
--------
RUBBER & RUBBER PRODUCTS (2.1%):
170,000 Cooper Tire & Rubber Co. 3,931
119,600 Goodyear Tire & Rubber Co. 4,545
--------
8,476
--------
SEMICONDUCTORS (1.2%):
70,000 Intel Corp. 4,891
--------
SHIPPING (1.1%):
250,650 TNT Freightways Corp. 4,512
--------
SOFTWARE & COMPUTER SERVICES (2.6%):
75,800 Microsoft (b) 7,580
70,000 Oracle Systems Corp. (b) 3,054
--------
10,634
--------
TAX RETURN PREPARATION (1.0%):
100,000 H&R Block 4,125
--------
TOBACCO & TOBACCO RELATED (2.7%):
130,000 Philip Morris Cos., Inc. 10,984
--------
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
UTILITIES - ELECTRIC (5.2%):
200,000 Consolidated Edison Co. NY,
Inc. $ 6,075
100,000 Houston Industries 4,638
150,000 Southern Co. 3,581
188,500 Texas Utilities Co. 6,927
--------
21,221
--------
UTILITIES - TELECOMMUNICATIONS (6.9%):
175,000 A T & T Corp 11,200
380,000 GTE Corp. 15,674
33,100 Nynex Corp. 1,556
--------
28,430
- ----------------------------------------------------------
TOTAL COMMON STOCKS 387,632
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (6.4%)
16,704,032 Aim Treasury Portfolio 16,704
9,672,252 Federated Treasury
Obligation Fund 9,672
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 26,376
- ----------------------------------------------------------
TOTAL (COST--$372,310)(A) $414,008
- ---------------------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $409,549.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
approximately $268. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 47,305
Unrealized depreciation (5,875)
--------
Net unrealized appreciation $ 41,430
=========
</TABLE>
(b) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS.
88
<PAGE> 91
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
VALUE FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (94.7%)
AEROSPACE/DEFENSE (4.7%):
72,000 Boeing Co. $ 4,725
40,000 General Dynamics Corp. 2,215
51,500 Litton Industries, Inc.(b) 2,041
114,000 Raytheon Co. 4,973
--------
13,954
--------
AUTOMOTIVE (2.9%):
62,000 Chrysler Corp. 3,201
84,000 Ford Motor Co. 2,415
47,000 TRW, Inc. 3,090
--------
8,706
--------
BANKS (7.0%):
92,000 BankAmerica Corp. 5,290
110,000 Comerica, Inc. 3,699
54,500 CoreStates Financial Corp. 1,982
71,000 First Union Corp. 3,523
79,100 J.P. Morgan & Co., Inc. 6,101
--------
20,595
--------
BEVERAGES (1.3%):
58,000 Anheuser Busch Co., Inc. 3,828
--------
CHEMICALS (2.1%):
31,000 Dow Chemical Co. 2,127
18,000 Eastman Chemical 1,071
60,000 Lubrizol Corp. 1,725
70,000 RPM, Inc., Ohio 1,356
--------
6,279
--------
COMPUTER SOFTWARE (1.5%):
28,000 Microsoft Corp.(b) 2,800
92,000 Novell, Inc.(b) 1,518
--------
4,318
--------
COMPUTERS & OFFICE EQUIPMENT (1.4%):
22,000 International Business
Machines Corp. 2,140
45,000 Pitney Bowes, Inc. 1,963
--------
4,103
--------
CONTAINERS & PACKAGING (0.3%):
40,000 Sonoco Products Co. 990
--------
ELECTRICAL EQUIPMENT (2.8%):
36,000 Emerson Electric Co. 2,565
91,000 General Electric Co. 5,756
--------
8,321
--------
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
ELECTRONICS (2.7%):
42,000 Hewlett Packard Co. $ 3,890
60,000 Intel Corp. 4,193
--------
8,083
--------
FINANCIAL SERVICES (3.4%):
70,000 American Express Co. 2,844
29,000 Federal National Mortgage
Assoc. 3,041
33,000 H & R Block 1,361
52,500 Household International,
Inc. 2,953
--------
10,199
--------
FOOD PROCESSING & PACKAGING (1.3%):
58,500 ConAgra, Inc. 2,260
31,000 Pioneer Hi-Bred
International, Inc. 1,538
--------
3,798
--------
HOME PRODUCTS (1.8%):
95,000 Newell Co. 2,292
53,000 Sherwin Williams Co. 1,994
23,000 Stanley Works 1,098
--------
5,384
--------
INDUSTRIAL -- MISCELLANEOUS (2.8%):
40,000 Allied Signal, Inc. 1,700
43,500 Minnesota Mining &
Manufacturing Co. 2,474
35,000 Textron, Inc. 2,406
62,000 WMX Technologies, Inc. 1,744
--------
8,324
--------
INSURANCE (5.1%):
43,000 Aetna Life & Casualty Co. 3,026
135,000 Allstate 4,961
105,200 American General Corp. 3,458
69,000 St. Paul Cos., Inc. 3,502
--------
14,947
--------
MACHINERY & MANUFACTURING (1.1%):
54,000 Cooper Industries 1,822
15,500 Deere & Co. 1,385
--------
3,207
--------
MEDIA (2.6%):
34,700 Cox Communications, Inc.,
Class A(b) 651
47,000 Dow Jones & Co., Inc. 1,657
40,000 Dun & Bradstreet Corp. 2,390
48,000 Time Warner, Inc. 1,752
46,000 Times Mirror Co., Class A 1,334
--------
7,784
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
89
<PAGE> 92
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
VALUE FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
METALS & MINING (2.6%):
55,000 Aluminum Co. of America $ 2,805
83,000 Cyprus Amax Minerals 2,168
92,000 USX U.S. Steel Group 2,749
--------
7,722
--------
OIL -- INTEGRATED (DOMESTIC) (3.5%):
44,000 Atlantic Richfield Co. 4,697
179,000 Phillips Petroleum Co. 5,773
--------
10,470
--------
OIL -- INTEGRATED (INTERNATIONAL) (9.3%):
111,600 Chevron Corp. 5,217
70,000 Exxon Corp. 5,346
73,000 Mobil Corp. 7,355
19,500 Royal Dutch Petroleum Co. 2,396
105,200 Texaco, Inc. 7,167
--------
27,481
--------
OILFIELD WELL EQUIPMENT & SERVICES (1.4%):
127,000 Baker Hughes, Inc. 2,492
25,000 Schlumberger Ltd. 1,556
--------
4,048
--------
PAPER & FOREST PRODUCTS (2.6%):
10,000 Georgia Pacific Corp. 825
136,000 International Paper Co. 5,032
33,000 Mead Corp. 1,902
--------
7,759
--------
PHARMACEUTICALS (6.0%):
75,200 Abbott Laboratories 2,989
38,400 American Home Products Corp. 3,403
44,000 Merck & Co., Inc. 2,530
88,000 Pfizer, Inc. 5,049
70,200 Schering-Plough 3,764
--------
17,735
--------
RETAIL -- FOOD & DRUGS (1.5%):
80,200 Supervalu, Inc. 2,466
72,000 Walgreen Co. 2,052
--------
4,518
--------
RETAIL -- SPECIALTY STORES (0.6%):
80,000 Pep Boys -- Manny, Moe &
Jack 1,750
--------
RETAIL -- TRADE (2.5%):
62,000 Dayton Hudson Corp. 4,263
90,000 Sears & Roebuck Co. 3,060
--------
7,323
--------
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
SOAPS & PERSONAL CARE (1.3%):
41,000 Avon Products $ 2,916
10,000 Procter & Gamble Co. 810
--------
3,726
--------
TOBACCO (1.7%):
46,000 Philip Morris Cos., Inc. 3,887
42,000 UST Corp. 1,260
--------
5,147
--------
TRANSPORTATION (1.0%):
15,500 Norfolk Southern Corp. 1,197
40,000 Roadway Services, Inc. 1,790
--------
2,987
--------
UTILITIES -- ELECTRIC (6.0%):
136,000 Consolidated Edison Co. NY,
Inc. 4,131
90,000 DQE Light Co. 2,475
66,000 Houston Industries 3,061
95,000 Public Service Co. of
Colorado 3,242
130,000 Texas Utilities Co. 4,778
--------
17,687
--------
UTILITIES -- NATURAL GAS (2.1%):
75,000 Consolidated Natural Gas 2,850
52,000 Enron Corp. 1,788
50,000 Peoples Energy Corp. 1,438
--------
6,076
--------
UTILITIES -- TELECOMMUNICATIONS (7.8%):
127,000 A T & T Corp. 8,128
62,000 Ameritech Corp. 3,348
41,000 Comsat Corp. 815
156,000 GTE Corp. 6,435
82,000 MCI Telecommunications Corp. 2,045
47,000 Nynex Corp. 2,209
--------
22,980
--------
- ----------------------------------------------------------
TOTAL COMMON STOCKS $280,229
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (5.3%)
12,892,123 AIM Treasury Portfolio 12,892
2,824,635 Federated Treasury
Obligation Fund 2,825
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 15,717
- ----------------------------------------------------------
TOTAL (COST $257,181)(a) $295,946
- ---------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
90
<PAGE> 93
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
VALUE FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
- ---------------
Percentages indicated are based on net assets of $295,871.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax reporting purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax reporting
of approximately $148. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 43,806
Unrealized depreciation (5,189)
--------
Net unrealized appreciation $ 38,617
=========
</TABLE>
(b) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS.
91
<PAGE> 94
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
GROWTH FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (98.5%)
AEROSPACE/DEFENSE (0.8%):
12,500 Boeing Co. $ 820
----------
ALUMINUM (0.5%):
10,000 Aluminum Co. of America 510
----------
AUTOMOTIVE (0.1%):
30,000 Pep Boys -- Manny, Moe, &
Jack 656
----------
BANKS (1.9%):
20,500 BankAmerica Corp. 1,179
29,700 Norwest Corp. 876
----------
2,055
----------
BEVERAGES (4.5%):
15,000 Anheuser Busch Co., Inc. 990
54,700 Coca-Cola Co. 3,932
----------
4,922
----------
CHEMICALS-SPECIALTY (1.9%):
15,000 Eastman Co. 892
15,000 Lubrizol Corp. 431
37,500 RPM, Inc. 727
----------
2,050
----------
CHEMICALS -- GENERAL (1.3%):
20,000 Dow Chemical Co. 1,372
----------
COMPUTERS & PERIPHERALS (2.1%):
15,000 Hewlett Packard Co. 1,389
20,000 3-Com Corp. (b) 940
----------
2,329
----------
COSMETICS & RELATED (1.6%):
35,000 Gillette Co. 1,693
----------
ELECTRICAL EQUIPMENT (7.8%):
35,000 Emerson Electric Co. 2,494
72,000 General Electric Co. 4,554
20,000 W.W. Grainger, Inc. 1,250
----------
8,298
----------
ELECTRONIC COMPUTING EQUIPMENT (1.0%):
20,000 Compaq Computer Corp. (b) 1,115
----------
ELECTRONIC & ELECTRICAL -- GENERAL (2.6%):
42,000 Motorola, Inc. 2,756
----------
ENTERTAINMENT (1.6%):
30,000 Walt Disney Co. 1,729
----------
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
FINANCIAL SERVICES (2.3%):
14,600 Federal National Mortgage
Assoc. $ 1,531
20,000 First USA, Inc. 920
----------
2,451
----------
FOOD PROCESSING & PACKAGING (1.2%):
20,000 ConAgra, Inc. 772
18,000 Sara Lee Corp. 529
----------
1,301
----------
FOREST PRODUCTS -- LUMBER, PAPER (2.8%):
50,000 International Paper Co. 1,850
10,000 Mead Corp. 576
25,000 Sonoco Products Co. 619
----------
3,045
----------
HEALTH CARE (2.0%):
45,000 Columbia HCA Healthcare 2,211
----------
HOME PRODUCTS (1.9%):
85,000 Newell Co. 2,051
----------
INSURANCE (3.0%):
30,000 American International
Group, Inc. 2,531
15,000 St. Paul Cos., Inc. 761
----------
3,292
----------
MANUFACTURING -- MISCELLANEOUS (2.2%):
30,000 Allied Signal, Inc. 1,275
18,000 Minnesota Mining &
Manufacturing Co. 1,024
----------
2,299
----------
MEDICAL SUPPLIES (2.8%):
30,000 Johnson & Johnson, Inc. 2,445
10,000 Medtronic, Inc. 577
----------
3,022
----------
OFFICE EQUIPMENT & SUPPLIES (1.0%):
25,000 Pitney Bowes, Inc. 1,091
----------
OILFIELD EQUIPMENTS & SERVICES (0.9%):
50,000 Baker Hughes, Inc. 981
----------
OIL-DOMESTIC INTEGRATED (5.8%):
20,000 Atlantic Richfield Co. 2,135
75,000 Enron Corp. 2,578
50,000 Phillips Petroleum Corp. 1,612
----------
6,325
----------
OIL -- INTEGRATED COMPANIES (4.2%):
54,000 Chevron Corp. 2,525
19,700 Mobil Corp. 1,985
----------
4,510
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
92
<PAGE> 95
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
GROWTH FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
PHARMACEUTICALS (13.5%):
50,000 Abbott Laboratories $ 1,988
20,000 Alza Corp., Class A (b) 440
27,500 American Home Products Corp. 2,437
21,000 Amgen, Inc. (b) 1,008
30,000 Merck & Co., Inc. 1,725
55,000 Pfizer, Inc. 3,156
69,000 Schering-Plough 3,700
----------
14,454
----------
RETAIL (5.6%):
65,000 Home Depot, Inc. 2,421
30,000 The Gap 1,181
70,000 Wal Mart Stores, Inc. 1,514
32,000 Walgreen Co. 912
----------
6,028
----------
SEMICONDUCTORS (3.2%):
50,000 Intel Corp. 3,494
----------
SOAPS & CLEANING AGENTS (2.6%):
35,000 Procter & Gamble Co. 2,835
----------
SOFTWARE & COMPUTER SERVICES (4.7%):
10,000 Automatic Data Processing,
Inc. 715
32,000 Microsoft (b) 3,200
40,000 Novell, Inc. (b) 660
10,000 Oracle Systems Corp. (b) 436
----------
5,011
----------
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
TOBACCO & TOBACCO PRODUCTS (3.7%):
40,000 Philip Morris Cos., Inc. $ 3,380
20,000 UST, Inc. 600
----------
3,980
----------
TRANSPORTATION -- AIR (0.6%):
30,000 Southwest Airlines Co. 600
----------
UTILITIES -- TELECOMMUNICATIONS (6.8%):
62,500 A T & T Corp. 4,000
60,000 SBC Communications, Inc. 3,353
----------
7,353
- ------------------------------------------------------------
TOTAL COMMON STOCKS 106,639
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (1.5%)
1,652,960 AIM Treasury Portfolio 1,653
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,653
- ------------------------------------------------------------
TOTAL (COST $91,022) $ 108,292
- ---
</TABLE>
- ---------------
Percentages indicated are based on net assets of $108,253.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 19,144
Unrealized depreciation (1,874)
----------
Net unrealized appreciation $ 17,270
==========
</TABLE>
(b) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS.
93
<PAGE> 96
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
SPECIAL VALUE FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (90.6%)
AEROSPACE/DEFENSE (2.9%):
113,400 GenCorp, Inc. $ 1,191
43,100 General Dynamics Corp. 2,387
58,000 Thiokol Corp. Delaware 2,008
----------
5,586
----------
AIRLINES (0.5%):
41,100 Atlantic Southeast Airlines 1,017
----------
AUTOMOTIVE PARTS (3.2%):
26,000 Echlin, Inc. 930
44,200 Genuine Parts Co. 1,751
121,331 Mark IV Industries 2,366
51,600 Mascotech, Inc. 529
85,775 T B C Corp.(b) 600
----------
6,176
----------
BANKS (4.3%):
35,500 Bank of Boston Corp. 1,580
30,100 Central Fidelity Banks, Inc. 948
89,600 Comerica, Inc. 3,013
16,129 Michigan National Corp. 1,770
17,500 Star Bank 969
----------
8,280
----------
BEVERAGES (1.0%):
71,000 Coca Cola Enterprises, Inc. 1,890
----------
CHEMICALS (6.1%):
42,100 A. Schulman, Inc. 789
70,000 Arcadian Corp.(b) 1,444
42,550 Avery Dennison Corp. 1,904
32,000 Lubrizol Corp. 920
57,500 Olin Corp. 3,680
8,500 Raychem Corp. 394
96,500 RPM, Inc. 1,870
21,900 WD 40 Co. 862
----------
11,863
----------
CONSTRUCTION (1.5%):
10,700 CBI Industries, Inc. 333
71,100 Foster Wheeler Corp. 2,666
----------
2,999
----------
CONSUMER GOODS (1.6%):
41,400 Jostens, Inc. 937
89,000 Newell Co. 2,147
----------
3,084
----------
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
CONTAINERS (1.0%):
74,550 Sonoco Products Co. $ 1,845
----------
ELECTRICAL EQUIPMENT (5.5%):
39,200 Arrow Electronics, Inc.(b) $ 1,989
28,000 Harris Corp. 1,628
16,000 Lam Research Corp.(b) 974
41,625 Molex Corp. 1,374
24,900 Sensormatic Electronic 532
31,000 Varian Associates, Inc 1,593
37,000 Vishay Intertechnology,
Inc.(b) 1,304
22,500 W.W. Grainger, Inc. 1,406
----------
10,800
----------
ENVIRONMENTAL CONTROL (0.9%):
199,650 Laidlaw, Inc., Class B 1,797
----------
FINANCIAL SERVICES (8.1%):
95,000 Bear Stearns Cos., Inc. 1,888
54,000 Capital One Financial Corp. 1,323
53,300 Equifax, Inc. 2,079
36,800 H & R Block 1,518
13,900 Integra Financial Corp. 817
51,900 Northern Trust Corp. 2,478
70,600 PMI Group, Inc. 3,389
69,100 UJB Financial Corp. 2,203
----------
15,695
----------
FOOD & DRUG DISTRIBUTORS (1.2%):
70,000 Rite Aid Corp. 1,890
15,500 Supervalu, Inc. 477
----------
2,367
----------
FOOD PROCESSING & PACKAGING (2.4%):
72,100 Dean Foods Co. 2,010
45,250 IBP, Inc. 2,709
----------
4,719
----------
FOREST PRODUCTS (0.8%):
64,600 Louisiana Pacific Corp. 1,542
----------
FUNERAL SERVICES (1.9%):
93,000 Service Corp. International 3,732
----------
FURNITURE (0.8%):
67,100 Leggett & Platt, Inc. 1,610
----------
HOTELS & MOTELS (1.5%):
88,300 Mirage Resorts, Inc.(b) 2,892
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
94
<PAGE> 97
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
SPECIAL VALUE FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
INSURANCE (6.0%):
38,800 American Re Corp. $ 1,484
55,000 Horace Mann Educators 1,464
55,200 Kemper Corp. 2,677
46,000 Progressive Corp. 1,909
72,000 Prudential Reinsurance
Holdings, Inc.(b) 1,467
25,000 Transatlantic Holdings 1,684
63,800 USF&G Corp. 1,069
----------
11,754
----------
MACHINE TOOLS (2.1%):
80,000 Albany International Corp. 1,660
22,900 Greenfield Industries 687
28,000 Kennametal, Inc. 872
28,100 Manitowoc Industries 797
----------
4,016
----------
MANUFACTURING (6.2%):
38,000 Briggs & Stratton Corp. 1,534
71,333 Federal Signal Corp. 1,596
19,100 Hillenbrand 606
72,200 Kaydon Corp. 2,085
56,466 Pall Corp. 1,376
8,100 Paragon Trade Brands,
Inc.(b) 129
40,062 Pentair, Inc. 2,023
13,000 Stewart & Stevenson
Services, Inc. 296
40,650 Tyco Laboratories, Inc. 2,469
----------
12,114
----------
MEDICAL SERVICES (4.0%):
139,300 Community Psychiatric
Centers, Inc. 1,515
67,200 Coventry Corp.(b) 1,319
53,900 Integrated Health Services,
Inc.(b) 1,233
33,000 Lincare Holdings(b) 821
73,300 Quorum Health Group(b) 1,571
42,437 Vivra, Inc.(b) 1,400
----------
7,859
----------
MEDICAL SUPPLIES (0.1%):
10,000 Sunrise Medical, Inc.(b) 181
----------
METALS (1.9%):
31,800 Minerals Technologies, Inc. 1,268
84,000 Ucar International(b) 2,394
----------
3,662
----------
NEWSPAPERS (1.8%):
35,900 New York Times Co., Class A 996
41,100 Tribune Co. 2,594
----------
3,590
----------
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
OILFIELD EQUIPMENTS & SERVICES (1.3%):
125,200 Baker Hughes, Inc. $ 2,457
----------
OIL & GAS EXPLORATION (2.5%):
80,100 Anadarko Petroleum 3,474
145,000 ENSERCH Exploration(b) 1,432
----------
4,906
----------
OIL & GAS PRODUCTION (1.2%):
26,000 Diamond Shamrock, Inc. 670
46,100 Snyder Oil Corp. 473
42,500 Vastar Resources, Inc. 1,201
----------
2,344
----------
RETAIL (2.7%):
90,200 Fingerhut Cos., Inc. 1,229
70,800 Hannaford Brothers 1,850
48,000 Tiffany & Co. 2,094
----------
5,173
----------
RUBBER (0.5%):
15,800 Bandag, Inc. 810
4,500 Bandag, Inc., Class A 224
----------
1,034
----------
SEMICONDUCTORS (0.6%):
25,000 Advanced Micro Devices(b) 597
16,000 MEMC Electronic Materials,
Inc.(b) 512
----------
1,109
----------
SHOES, LEATHER GOODS (0.8%):
28,000 Nike, Inc. 1,589
----------
SOFTWARE & COMPUTER SERVICES (0.9%):
10,000 American Software, Inc.(b) 78
14,750 Analysts International Corp. 437
28,300 Policy Management Systems
Corp.(b) 1,334
----------
1,849
----------
STEEL (0.6%):
68,620 Worthington Industries, Inc. 1,141
----------
TELECOMMUNICATIONS (1.2%):
4,600 Comsat Corp. 91
69,400 Worldcom, Inc.(b) 2,264
----------
2,355
----------
TRANSPORTATION (3.7%):
47,150 GATX Corp. 2,240
80,750 Illinois Central Corp. 3,089
66,000 Pittston Services Group 1,815
----------
7,144
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
95
<PAGE> 98
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
SPECIAL VALUE FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
TRUCKS -- MANUFACTURING (0.4%):
28,700 Wabash National Corp. $ 728
----------
UTILITIES - ELECTRIC & GAS (6.9%):
32,400 Brooklyn Union Gas Co. 814
40,530 DQE Co. 1,114
118,600 Florida Progress Corp. 3,929
154,300 Northeast Utilities 3,818
79,400 Public Service Co. of
Colorado 2,710
55,400 Washington Gas Light Co. 1,060
----------
13,445
- ------------------------------------------------------------
TOTAL COMMON STOCKS 176,344
- ------------------------------------------------------------
- ----------------------------------------------
PREFERRED STOCKS (0.0%)
INSURANCE (0.0%):
1,766 Everen Capital, Series A(b) 39
- ------------------------------------------------------------
TOTAL PREFERRED STOCKS 39
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (8.3%)
8,244,719 AIM Treasury Portfolio $ 8,245
8,016,471 Federated Treasury
Obligation 8,016
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 16,261
- ------------------------------------------------------------
TOTAL (COST $171,447)(a) $ 192,644
- ---------------------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $194,700.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax reporting purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax reporting
of approximately $31. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 27,076
Unrealized depreciation (5,910)
----------
Net unrealized appreciation $ 21,166
==========
</TABLE>
(b) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS.
96
<PAGE> 99
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
SPECIAL GROWTH FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ----------------------------------------------
COMMERCIAL PAPER (4.7%)
FINANCIAL SERVICES (1.0%):
130,000 Corporate Asset Funding,
5.70%, 12/13/95 $ 129
430,000 Preferred Receivables Fund,
5.73%, 12/6/95 427
----------
556
----------
INSURANCE (1.6%):
324,000 Aon Corp., 5.90%, 11/1/95 324
375,000 Aon Corp., 5.75%, 11/27/95 373
172,000 Metlife Funding, 5.72%,
11/10/95 172
----------
869
----------
PUBLISHING(1.3%):
685,000 Dow Jones & Co., Inc.,
5.70%, 12/18/95 680
----------
RETAIL (0.8%):
425,000 Wal-Mart Stores, Inc.,
5.70%, 11/21/95 424
- ------------------------------------------------------------
TOTAL COMMERCIAL PAPER 2,529
- ------------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (95.3%)
ADVERTISING (0.4%):
4,400 Catalina Marketing Group
Corp.(b) 222
----------
AEROSPACE/DEFENSE (0.4%):
1,000 Alliant Techsystems, Inc.(b) 46
5,000 Precision Castparts 179
----------
225
----------
AGRICULTURE & LIVESTOCK (0.2%):
2,500 Delta & Pine Land Co. 97
----------
AUTOMOTIVE PARTS (2.1%):
18,100 Breed Technologies, Inc. 337
4,000 Exide Corp. 175
3,000 Gentex Corp.(b) 67
3,100 Intermet Corp.(b) 36
16,300 Kaydon Corp. 471
3,000 OEA, Inc. 82
----------
1,168
----------
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
BANKS (0.9%):
3,163 First Bank Systems, Inc. $ 157
3,400 Firstbank Puerto Rico 66
13,300 Peoples Heritage Financial
Group 253
----------
476
----------
BROADCASTING (1.5%):
6,000 Emmis Broadcasting, Inc.,
Class A(b) 159
5,500 Evergreen Media Corp.(b) 150
2,500 Heartland Wireless
Communications, Inc.(b) 64
5,500 Heritage Media Corp.,
Class A(b) 153
6,000 TCA Cable TV, Inc. 178
7,000 Westwood One, Inc.(b) 110
----------
814
----------
BUILDING MATERIALS (0.7%):
5,600 Medusa Corp. 140
5,800 Oakwood Homes Corp. 217
----------
357
----------
CHEMICALS (2.5%):
2,700 Church & Dwight Co., Inc. 55
5,500 First Mississippi Corp. 113
28,700 Lilly Industries, Inc.,
Class A 366
13,300 Om Group, Inc. 386
6,800 Synalloy Corp. 139
7,000 WD 40 Co. 276
----------
1,335
----------
COMMERCIAL SERVICES (1.6%):
2,000 Affiliated Computer
Services, Inc.(b) 67
4,650 Apollo Group, Class A(b) 122
4,500 Concord Efs, Inc.(b) 155
3,000 Corrections Corp. of
America(b) 164
5,900 Robert Half International,
Inc.(b) 215
11,400 Sothebys Holdings, Class A 158
----------
881
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
97
<PAGE> 100
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
SPECIAL GROWTH FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
COMPUTERS & PERIPHERALS (9.6%):
4,500 Alantec Corp.(b) $ 161
9,000 Cheyenne Software, Inc.(b) 188
6,600 Cognex Corp.(b) 394
14,500 Conner Peripherals(b) 261
7,600 Control Data Systems,
Inc.(b) 101
7,600 Davidson & Associates(b) 270
3,300 FTP Software, Inc.(b) 89
2,000 FileNet Corp.(b) 91
5,400 Henry(Jack) & Associates 117
3,800 Hyperion Software Corp.(b) 187
7,000 In Focus Systems, Inc.(b) 230
10,000 MapInfo Corp.(b) 201
1,000 McAfee Associates, Inc.(b) 58
5,200 Minnesota Educational
Computing Corp.(b) 161
10,800 Netmanage, Inc.(b) 220
4,000 Network General Corp.(b) 166
9,900 Optical Data Systems(b) 296
6,000 Safeguard Scientifics,
Inc.(b) 270
5,400 Sequent Computer Systems,
Inc.(b) 94
2,200 Shiva Corp.(b) 132
5,200 Sterling Software, Inc.(b) 240
12,300 Sungard Data Systems,
Inc.(b) 338
4,000 Systems & Computers
Technology Corp.(b) 72
2,600 Tivoli Systems, Inc.(b) 84
5,800 VeriFone, Inc.(b) 157
5,200 Wonderware Corp.(b) 165
5,000 Zebra Technologies(b) 297
5,200 Zilog, Inc.(b) 185
----------
5,225
----------
CONSUMER GOODS (0.9%):
14,000 Bell Industries(b) 294
5,500 Tootsie Roll Industries 199
----------
493
----------
CONTAINERS (0.2%):
3,500 Chesapeake Corp. 107
----------
COSMETICS & RELATED (0.3%):
7,000 Maybelline, Inc. 165
----------
DRUG STORES (0.6%):
8,000 Eckerd Corp.(b) 317
----------
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
ELECTRICAL EQUIPMENT (3.5%):
13,600 Belden, Inc. $ 328
3,800 C-Cube Microsystems, Inc.(b) 263
3,500 Cable Design Technologies(b) 115
4,000 Checkpoint Systems, Inc.(b) 116
4,000 CIDCO, Inc.(b) 118
1,800 Electro Scientific, Inc.(b) 56
2,000 FORE Systems, Inc.(b) 106
4,000 Input/Output, Inc.(b) 150
2,000 ITI Technologies, Inc.(b) 50
5,000 Littelfuse, Inc.(b) 162
5,500 Methode Electronics, Inc. 127
6,000 Pioneer-Standard
Electronics, Inc. 83
4,800 SCI Systems, Inc.(b) 169
4,000 Tech Data Corp.(b) 48
----------
1,891
----------
ELECTRICAL & ELECTRONICS (6.1%):
8,500 AMETECK, Inc. 150
7,000 Allen Group 172
7,950 Alliance Semiconductor
Corp.(b) 244
9,000 Atmel Corp.(b) 281
3,300 Avnet, Inc. 166
5,250 Harman International 242
18,000 Integrated Circuit
Systems(b) 244
8,600 Kent Electronics Corp.(b) 419
5,000 Lam Research Corp.(b) 304
5,000 Lattice Semiconductor(b) 196
5,000 Rexel, Inc.(b) 58
6,000 Teleflex, Inc. 254
4,000 Thermedics, Inc.(b) 74
2,500 Thermotrex Corp.(b) 90
1,750 Transpro, Inc.(b) 19
5,200 Ultratech Stepper, Inc.(b) 208
9,000 VLSI Technology, Inc.(b) 212
----------
3,333
----------
ENTERTAINMENT (0.5%):
10,000 Carmike Cinemas, Inc.,
Class A(b) 209
3,800 Players International,
Inc.(b) 41
----------
250
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
98
<PAGE> 101
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
SPECIAL GROWTH FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
ENVIRONMENTAL CONTROL (1.8%):
5,200 Donaldson Co., Inc. $ 127
5,000 Sanifill, Inc.(b) 157
7,500 U.S.A. Waste Services,
Inc.(b) 158
4,700 United States Filter
Corp.(b) 109
6,300 United Waste Systems,
Inc.(b) 249
8,800 Western Waste Industries(b) 174
----------
974
----------
FINANCIAL SERVICES (2.4%):
8,300 Aames Financial Corp. 208
2,600 Eaton Vance Corp. 95
7,000 Green Tree Financial Corp. 186
8,000 North American Mortgage Co. 165
8,700 Pioneer Group, Inc. 228
9,450 Quick & Reilly Group 224
2,900 Value Line, Inc. 95
5,250 Waterhouse Investor Services 104
----------
1,305
----------
FOOD PROCESSING & PACKAGING (0.2%):
5,200 Goodmark Foods 96
----------
FURNITURE (0.7%):
10,000 Juno Lighting 145
8,300 La Z Boy Chair Co. 247
----------
392
----------
HEALTH CARE SERVICES (1.3%):
8,000 Charter Medical Corp.(b) 144
8,000 Medaphis Corp.(b) 254
19,000 Res-Care, Inc.(b) 313
----------
711
----------
HOSPITAL & NURSING EQUIPMENT & SUPPLIES
(0.8%):
11,000 Invacare Corp. 278
2,300 Omnicare, Inc. 83
5,500 Vital Signs, Inc. 100
----------
461
----------
HOTELS & MOTELS (0.2%):
5,200 Doubletree Corp.(b) 114
600 Marcus Corp. 21
----------
135
----------
HOUSEHOLD GOODS -- APPLIANCES, FURNISHINGS &
ELECTRONICS (0.2%):
5,800 Williams-Sonoma Co.(b) 101
----------
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
INDUSTRIAL SERVICES (1.4%):
15,000 Peak Technologies Group,
Inc.(b) $ 379
16,900 Unitog Co. 397
----------
776
----------
INSURANCE (1.3%):
2,800 CMAC Investment Corp. 133
17,120 Gainsco, Inc. 148
2,000 Gallagher (Arthur J.) & Co. 71
6,700 Maxicare Health Plans,
Inc.(b) 116
3,900 Reliastar Financial Corp. 163
6,600 United American Healthcare,
Inc.(b) 73
----------
704
----------
LEISURE -- RECREATION, GAMING (0.4%):
12,200 Callaway Golf Co. 200
----------
MACHINERY & ENGINEERING (2.1%):
10,000 Alamo Group, Inc. 171
4,600 Applied Power, Inc., Class A 140
5,500 Credence Systems Corp.(b) 206
2,300 Electroglas, Inc.(b) 162
3,600 Helix Technology Corp. 135
6,500 IDEX Corp. 245
4,600 JLG Industries, Inc. 108
----------
1,167
----------
MACHINE TOOLS (1.2%):
5,000 Cascade Corp. 69
3,000 FSI International, Inc.(b) 71
6,300 Greenfield Industries 189
4,600 Kulicke & Soffa
Industries(b) 161
7,200 Telxon Corp. 166
----------
656
----------
MANUFACTURING -- MISCELLANEOUS (1.9%):
3,000 AptarGroup, Inc. 103
5,000 Fisher Scientific
International, Inc. 157
3,600 Graco, Inc. 121
11,500 Keystone International, Inc. 256
10,000 Pall Corp. 243
2,000 Plantronics, Inc.(b) 67
3,000 Watts Industries, Class A 62
----------
1,009
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
99
<PAGE> 102
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
SPECIAL GROWTH FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
MEDICAL-BIOTECHNOLOGY (0.8%):
3,100 Liposome Company, Inc.(b) $ 48
6,000 Mentor Corp. 132
7,500 Protein Design Labs, Inc.(b) 126
7,000 Somatogen, Inc.(b) 109
----------
415
----------
MEDICAL SERVICES (6.3%):
2,000 American Oncology
Resources(b) 70
9,000 Apria Healthcare Group,
Inc.(b) 195
7,400 Community Health Systems,
Inc.(b) 235
5,000 Express Scripts, Inc.,
Class A(b) 190
2,400 Gelman Sciences, Inc.(b) 51
9,000 Health Management Assoc.,
Inc.-A(b) 193
5,400 Health Management Systems,
Inc.(b) 173
5,500 Horizon/CMS Healthcare
Corp.(b) 111
6,000 Integrated Health Services,
Inc. 137
4,000 Living Centers of America(b) 103
10,000 Mid-Atlantic Medical
Services, Inc.(b) 199
5,400 Nellcor Puritan Bennett,
Inc.(b) 311
10,000 Ornda Healthcorp(b) 176
7,400 Orthodontic Centers of
America(b) 237
7,000 Pacific Physician Services,
Inc.(b) 111
4,800 Pacificare Health System(b) 349
7,200 PhyCor, Inc.(b) 265
3,600 Renal Treatment Centers,
Inc.(b) 130
1,200 Sierra Health Services(b) 34
5,200 Vivra, Inc.(b) 172
----------
3,442
----------
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
MEDICAL SUPPLIES (2.8%):
5,300 AMSCO International, Inc.(b) $ 85
9,900 Centocor, Inc.(b) 111
4,400 Diagnostic Products Corp. 163
2,800 Fresenius USA, Inc.(b) 46
6,200 Haemonetics Corp.(b) 117
7,500 IDEXX Laboratories, Inc.(b) 306
4,000 MediSense, Inc.(b) 85
3,500 PLC Systems, Inc.(b) 67
1,000 Sofamor Danek Group, Inc.(b) 24
4,500 STERIS Corp.(b) 152
5,000 Summit Technology, Inc.(b) 222
1,500 Target Therapeutics, Inc.(b) 116
----------
1,494
----------
MERCHANDISING (0.3%):
10,000 Lands End, Inc.(b) 150
----------
METALS -- FABRICATION (1.7%):
13,000 Commercial Metals Co. 335
8,000 Kennametal, Inc. 249
3,900 Mueller Industries, Inc.(b) 92
7,000 Quanex Corp. 138
3,000 Wolverine Tube, Inc.(b) 107
----------
921
----------
MINING (1.1%):
16,400 Addington Resources, Inc.(b) 205
7,100 Coeur D'Alene Mines Corp. 120
3,897 Firstmiss Gold, Inc.(b) 70
5,500 Minerals Technologies, Inc. 219
----------
614
----------
OFFICE EQUIPMENT & SUPPLIES
(NON-COMPUTER REL) (0.3%):
6,300 American Business Products 138
----------
OIL & GAS EXPLORATION, PRODUCTION
& SERVICES (3.1%):
9,000 Barrett Resources Corp.(b) 209
5,000 Camco International, Inc. 114
13,000 Devon Energy Corp. 283
25,000 H.S. Resource, Inc.(b) 347
14,100 Newfield Exploration(b) 416
11,300 Smith International, Inc.(b) 181
9,000 United Meridian Corp.(b) 152
----------
1,702
----------
OILFIELD EQUIPMENT & SERVICES (0.5%):
8,200 BJ Services Co.(b) 193
10,000 Pride Petroleum Services(b) 87
----------
280
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
100
<PAGE> 103
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
SPECIAL GROWTH FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
PHARMACEUTICALS (2.3%):
3,100 Alpharma, Inc., Class A $ 74
10,000 Amylin Pharmaceuticals(b) 74
2,900 Dura Pharmaceuticals(b) 85
5,000 Gilead Sciences, Inc.(b) 98
8,200 Immunex Corp.(b) 105
4,000 INCYTE Pharmaceuticals,
Inc.(b) 83
9,500 ISIS Pharmaceuticals,
Inc.(b) 96
4,200 Roberts Pharmaceutical(b) 81
5,000 Teva Pharmaceutical
Industries Ltd. 196
8,000 Watson Pharmaceutical(b) 358
----------
1,250
----------
PRECISION INSTRUMENTS & RELATED (0.4%):
4,000 Dionex Corp.(b) 216
----------
PUBLISHING (1.7%):
5,700 A. H. Belo Corp. 197
3,100 Edmark Corp.(b) 133
4,700 Meredith Corp. 168
4,000 Houghton Mifflin Co. 164
17,800 Valassis Communications(b) 247
----------
909
----------
RADIO & TELEVISION (0.3%):
8,250 Renaissance Communications
Corp.(b) 185
----------
REAL ESTATE INVESTMENT TRUSTS (3.9%):
4,000 Beacon Corp. 87
6,000 Cail Realty Corp. 117
4,500 Chelsea GCA Realty, Inc. 125
5,500 Crescent Real Estate
Equities, Inc. 176
8,000 DeBartolo Realty Corp. 104
3,900 Developers Divers Realty 111
6,000 Federal Realty Investment
Trust 122
5,500 General Growth Properties 111
4,500 Liberty Property Trust 91
4,000 National Health Investors,
Inc. 120
4,500 Nationwide Health
Properties, Inc. 185
5,900 Post Properties, Inc. 177
3,800 Reckson Associates Realty
Corp. 102
3,500 Saul Centers, Inc. 50
6,000 Spieker Properties, Inc. 145
5,000 Starwood Lodging Trust 136
2,000 Summit Properties, Inc. 37
4,500 Weeks Corp. 104
----------
2,100
----------
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
RESTAURANTS (1.1%):
5,100 Apple South, Inc. $ 105
8,000 Applebees International,
Inc. 225
5,700 IHOP Corp.(b) 123
6,800 Sbarro, Inc. 142
----------
595
----------
RETAIL (2.2%):
2,000 Circle K Corp.(b) 41
8,300 Gymboree Corp.(b) 188
6,000 Medicine Shoppe
International, Inc. 258
7,500 Micro Warehouse, Inc.(b) 334
10,200 Nautica Enterprises, Inc.(b) 349
----------
1,170
----------
RETAIL -- SPECIALTY STORES (1.7%):
1,700 CDW Computer Centers,
Inc.(b) 82
12,900 Lillian Vernon Corp. 173
6,200 Men's Wearhouse(b) 242
4,000 Michaels Stores, Inc.(b) 54
4,100 Tiffany & Co. 179
13,800 Zale Corp.(b) 204
----------
934
----------
SEMICONDUCTORS (2.2%):
9,600 Actel Corp.(b) 113
8,000 International Rectifier
Corp.(b) 361
7,100 Linear Technology 311
13,400 S-3, Inc.(b) 229
10,000 Sierra Semiconductor(b) 179
----------
1,193
----------
SERVICES (NON-FINANCIAL) (0.2%):
11,000 IDEON Group, Inc. 98
----------
SHIPPING (0.7%):
20,500 TNT Freightways Corp. 369
----------
SHOES, LEATHER GOODS & CLOTHING ACCESSORIES
(0.3%):
6,200 Wolverine World Wide 186
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
101
<PAGE> 104
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
SPECIAL GROWTH FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
SOFTWARE & COMPUTER SERVICES (5.4%):
4,600 Acxiom Corp.(b) $ 138
5,600 American Management Systems,
Inc.(b) 162
6,500 Analysts International Corp. 192
4,000 Avid Technology, Inc.(b) 175
3,600 Bolt Beranek & Newman,
Inc.(b) 111
5,900 Continuum Co., Inc.(b) 232
4,000 Electronics For Imaging,
Inc.(b) 329
3,000 Expert Software, Inc.(b) 62
8,000 Intersolv, Inc.(b) 126
10,600 Macromedia, Inc.(b) 392
9,800 National Data Corp. 260
5,800 ParGain Technologies,
Inc.(b) 248
7,400 Sierra On-Line, Inc.(b) 276
4,500 Wallace Computer Services,
Inc. 254
----------
2,957
----------
STEEL (0.3%):
2,000 Carpenter Technology 76
5,000 J&L Speciality Steel, Inc. 82
----------
158
----------
TRANSPORTATION (2.0%):
5,000 Air Express International 104
8,500 Comair Holding, Inc. 238
14,000 Landstar System, Inc.(b) 367
18,800 Railtex, Inc.(b) 390
----------
1,099
----------
TRUCKING LOCAL & LONG DISTANCE (0.5%):
21,000 American Freightways,
Inc.(b) 268
----------
TRUCKS -- MANUFACTURING (0.2%):
5,000 Wabash National Corp. 127
----------
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
UTILITIES-TELECOMMUNICATIONS (4.8%):
12,200 Aspect Telecommunications(b) $ 419
6,000 BroadBand Technologies,
Inc.(b) 105
4,500 CellStar Corp.(b) 125
6,000 Cellular Communications,
Class A(b) 322
5,000 Cellular Communication of
Puerto Rico(b) 145
10,100 Centennial Cellular(b) 184
4,600 Coherent Communications
Systems Corp.(b) 94
15,000 Digi International, Inc.(b) 401
6,100 Network Equipment
Technologies, Inc.(b) 199
4,900 Picture Tel Corp.(b) 323
23,000 U.S. Long Distance Corp.(b) 296
----------
2,613
----------
WINE & SPIRITS (0.3%):
6,100 Robert Mondavi Corp.(b) 172
- ------------------------------------------------------------
TOTAL COMMON STOCKS 51,798
- ------------------------------------------------------------
TOTAL (COST $51,675)(a) $ 54,327
- ----------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $54,335.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax reporting purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax reporting
of approximately $34. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 5,887
Unrealized depreciation (3,269)
----------
Net unrealized appreciation $ 2,618
==========
</TABLE>
(b) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS.
102
<PAGE> 105
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
OHIO REGIONAL STOCK FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (95.4%)
AMUSEMENT & RECREATION SERVICES (0.6%):
7,000 Cedar Fair L.P. $ 221
----------
AUTOMOTIVE PARTS (4.8%):
24,000 Dana Corp. 615
19,800 Myers Industries, Inc. 285
15,000 TRW, Inc. 986
----------
1,886
----------
BANKS (7.9%):
24,000 Charter One Financial, Inc. 681
19,000 First Merit Corp. 513
9,843 Huntington Bancshares, Inc. 235
20,000 National City Corp. 618
15,000 Provident Bancorp 634
2,000 Second Bancorp 59
6,000 Star Bank 332
----------
3,072
----------
BUILDING MATERIALS (1.2%):
10,000 Medusa Corp 250
5,000 Owens Corning Fiberglass
Corp.(b) 212
----------
462
----------
CHEMICALS (6.0%):
12,500 A. Schulman, Inc. 234
15,000 Chemed Corp. 525
12,500 Chempower, Inc.(b) 48
20,000 Ferro Corp. 463
19,000 Lubrizol Corp. 546
26,250 RPM, Inc. 509
----------
2,325
----------
CONSUMER GOODS (2.7%):
12,000 American Greetings Corp. 378
15,000 Cincinnati Microwave, Inc.
(b) 86
43,000 Gibson Greetings, Inc. 597
----------
1,061
----------
ELECTRICAL EQUIPMENT (4.5%):
78,500 Pioneer-Standard
Electronics,
Inc. 1,089
20,000 Robbins & Myers, Inc. 670
----------
1,759
----------
ENGINEERING (0.1%):
10,000 Corrpro(b) 56
----------
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
FINANCIAL SERVICES (2.8%):
16,500 Haverfield Corp. $ 233
18,000 Mcdonald & Co. Investments 322
24,000 State Auto Financial 528
----------
1,083
----------
FOOD DISTRIBUTORS (1.0%):
10,000 Chiquita Brands
International 162
7,000 Kroger Co.(b) 234
----------
396
----------
FOOD PROCESSING & PACKAGING (0.2%):
5,000 Smuckers Class A 98
----------
FOREST PRODUCTS (3.1%):
12,000 Mead Corp. 692
15,000 Reynolds & Reynolds Co. 534
----------
1,226
----------
HEALTH CARE (0.3%):
9,000 Health Power, Inc.(b) 101
----------
HOSPITAL & NURSING EQUIPMENT (6.0%):
38,000 Invacare Corp. 960
38,000 Omnicare, Inc. 1,377
----------
2,337
----------
HOUSEHOLD GOODS (2.5%):
26,099 Lancaster Colony Corp. 868
20,000 Sun Television & Appliance 110
----------
978
----------
INDUSTRIAL SERVICES (3.2%):
40,000 ACME Cleveland Corp. 875
22,000 Amcast Industrial Corp. 374
----------
1,249
----------
INSURANCE (2.9%):
15,000 Ohio Casualty 532
15,000 Progressive Corp. 623
----------
1,155
----------
MACHINE TOOLS (8.3%):
15,750 Bearings, Inc. 571
17,000 Cincinnati Milacron, Inc. 438
37,050 Commercial Intertech Corp. 625
46,500 Gorman Rupp Co. 668
14,000 Lincoln Electric Co. 354
5,000 Monarch Machine Tool Co. 58
24,000 Telxon Corp. 555
----------
3,269
----------
MANUFACTURING (1.3%):
15,000 Parker-Hannifin Corp. 506
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
103
<PAGE> 106
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
OHIO REGIONAL STOCK FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
MEDICAL -- BIOTECHNOLOGY (0.1%):
5,000 Gliatech, Inc.(b) $ 48
----------
METALS (0.9%):
10,000 Brush Wellman, Inc. 168
7,000 Cold Metal Products, Inc.(b) 40
10,000 Park-Ohio Industries,
Inc.(b) 137
----------
345
----------
OFFICE EQUIPMENT & SUPPLIES (3.1%):
23,000 Diebold, Inc. 1,219
----------
OIL & GAS EXPLORATION (3.1%):
68,000 USX -- Marathon Group 1,207
----------
PAINT, VARNISHES & ENAMELS (1.3%):
14,000 Sherwin Williams Co. 527
----------
POLLUTION CONTROL SERVICES (0.6%):
51,100 Mid American Waste
Systems(b) 217
----------
PRECISION INSTRUMENTS (2.2%):
30,000 Keithley Instruments, Inc. 863
----------
PRINTING (0.2%):
20,000 Multi-Color Corp.(b) 75
----------
PUBLISHING (3.4%):
35,000 Scripps (E.W.) Co. 1,321
----------
REAL ESTATE INVESTMENT TRUSTS (0.8%):
16,000 Health Care Reit, Inc. 300
----------
RESTAURANTS (3.0%):
29,500 Bob Evans Farms, Inc. 531
20,000 Frisch's Restaurants 200
22,000 Wendy's International 437
----------
1,168
----------
RETAIL (2.0%):
17,000 Fabri-Centers of America,
Inc.(b) 253
17,000 Fabri-Centers of America-B
(b) 198
15,000 The Limited, Inc. 275
10,000 Value City Department
Stores,
Inc.(b) 60
----------
786
----------
RUBBER AND RUBBER PRODUCTS (1.5%):
5,000 Cooper Tire & Rubber Co. 116
12,000 Goodyear Tire & Rubber Co. 456
----------
572
----------
SERVICES (NON-FINANCIAL) (0.4%):
4,200 Roto Rooter, Inc. 139
----------
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
SHIPPING (0.3%):
3,000 Oglebay Norton Co. $ 105
----------
STEEL (2.0%):
35,000 Shiloh(b) 380
25,000 Worthington Industries, Inc. 416
----------
796
----------
TEXTILE MANUFACTURING (1.2%):
25,000 Essef Corp.(b) 456
----------
TOOLS AND HARDWARE MANUFACTURING (0.9%):
9,000 Timken Co. 362
----------
TRANSPORTATION (3.0%):
31,500 Comair Holding, Inc. 884
6,000 Roadway Services, Inc. 268
----------
1,152
----------
TRUCKS (0.8%):
20,000 Thor Industries, Inc. 318
----------
UTILITIES -- ELECTRIC (3.0%):
14,000 American Electric Power 534
22,500 D.P.L., Inc. 534
5,000 Ohio Edison 114
----------
1,182
----------
UTILITIES -- TELECOMMUNICATIONS (2.2%):
29,000 Cincinnati Bell 852
- ------------------------------------------------------------
TOTAL COMMON STOCKS 37,250
- ------------------------------------------------------------
- ----------------------------------------------
RIGHTS & WARRANTS (0.1%)
10,000 Cincinnati Microwave, Inc. 41
- ------------------------------------------------------------
TOTAL RIGHTS & WARRANTS 41
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (4.5%)
1,746,220 AIM Treasury Portfolio 1,746
9,659 Federated Treasury
Obligation 10
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,756
- ------------------------------------------------------------
TOTAL (COST $26,212)(a) $ 39,047
- ---------------------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $ 39,048.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 14,542
Unrealized depreciation (1,707)
----------
Net unrealized appreciation $ 12,835
==========
</TABLE>
(b) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS.
104
<PAGE> 107
Schedule of Investments
THE VICTORY PORTFOLIOS October 31, 1995
INTERNATIONAL GROWTH FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (93.3%)
AUSTRALIA (1.3%):
ENERGY SOURCES (1.0%)
80,211 The Broken Hill Proprietary
Co., Ltd. $ 1,085
--------
METALS (0.2%)
234,000 Australian National
Industries, Ltd. 183
--------
OIL & GAS PRODUCTION (0.1%):
43,000 Australian Gas Light Co. 149
- ----------------------------------------------------------
TOTAL AUSTRALIA 1,417
- ----------------------------------------------------------
BRITAIN (13.7%):
AIRLINES (0.7%):
104,375 British Airways 749
--------
BANKS (1.5%):
38,000 National Westminster Bank 379
151,000 Standard Charter Bank 1,241
--------
1,620
--------
BUSINESS & PUBLIC SERVICES (2.5%):
122,200 British Airport Authority 949
65,800 Carlton Communications PLC 1,001
77,800 Reuters 722
--------
2,672
--------
BUILDING MATERIALS (0.2%):
47,000 Blue Circle 216
--------
CHEMICALS (0.9%):
82,900 Imperial Chemical Industries
PLC 1,012
--------
CONGLOMERATES (0.7%):
150,000 Hanson PLC 459
64,000 Tomkins PLC 252
--------
711
--------
FOOD PROCESSING & PACKAGING (0.3%):
39,000 Grand Metropolitan PLC 270
--------
HOTELS & MOTELS (0.2%):
30,000 Greenalls Group PLC 229
--------
INSURANCE (0.2%):
60,000 Guardian Royal Exchange PLC 217
--------
MANUFACTURING -- CAPITAL GOODS (0.2%):
100,000 Ladbroke 262
--------
METALS (0.6%):
254,000 British Steel PLC 655
--------
OIL & GAS PRODUCTION (1.0%):
144,400 British Petroleum 1,061
--------
PHARMACEUTICALS (0.6%):
50,000 Glaxo Wellcome PLC 673
--------
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
PUBLISHING (0.7%):
51,400 Reed International $ 780
--------
RETAIL (0.3%):
18,000 Great Universal Stores PLC $ 162
24,000 Tesco 114
--------
276
--------
TELECOMMUNICATIONS EQUIPMENT (1.9%):
120,000 British Telecom PLC 713
122,600 Cable Wireless 801
111,000 Vodafone 457
--------
1,971
--------
TEXTILE MANUFACTURING (0.2%):
75,000 Coats Vivella PLC 221
--------
TOBACCO & TOBACCO PRODUCTS (0.3%):
37,732 B.A.T. Industries PLC 309
--------
UTILITIES -- NATURAL GAS (0.2%):
54,000 British Gas PLC 205
--------
UTILITIES -- WATER (0.5%):
50,000 Severn Trent PLC 507
- ----------------------------------------------------------
TOTAL BRITAIN 14,616
- ----------------------------------------------------------
FINLAND (1.5%):
ELECTRONIC & ELECTRICAL (1.3%):
25,000 Nokia AB 1,430
--------
FOOD PROCESSING & PACKAGING (0.2%):
6,000 Huhtamaki I Free 178
- ----------------------------------------------------------
TOTAL FINLAND 1,608
- ----------------------------------------------------------
FRANCE (7.9%):
AUTOMOTIVE PARTS (0.8%):
18,700 Valeo 844
--------
BUILDING MATERIALS (0.2%):
2,973 LaFarge Coppee 197
--------
CHEMICALS (0.2%):
7,550 Rhone-Poulence A 165
--------
COSMETICS & RELATED (0.3%):
2,800 Christian Dior 275
--------
ELECTRICAL EQUIPMENT (1.0%):
26,600 Schneider 1,025
--------
ENERGY SOURCES (0.4%):
6,940 Elf Aquitaine 472
--------
FOOD PROCESSING & PACKAGING (0.4%):
3,000 Group Danone 479
--------
INSURANCE (1.4%):
26,450 Axa 1,468
--------
RECREATION/OTHER CONSUMER GOODS (0.7%):
7,400 BIC Corp. 702
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
105
<PAGE> 108
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
INTERNATIONAL GROWTH FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
RETAIL (2.5%):
1,120 Carrefour $ 657
3,600 Castorama 583
7,250 Pinault-Printemps 1,571
--------
2,811
- ----------------------------------------------------------
TOTAL FRANCE 8,438
- ----------------------------------------------------------
GERMANY (6.3%):
AUTOMOBILES (1.0%):
3,300 Volkswagen 1,037
--------
BANKS (2.0%):
4,920 Commerzbank AG 1,136
13,800 Deutsche Bank 622
8,700 Deutsche Bank AG 392
--------
2,150
--------
CHEMICALS (0.5%):
1,950 Bayer AG 515
--------
COSMETICS & RELATED (0.5%):
14,000 Douglas Holdings 504
--------
MACHINERY & ENGINEERING (1.2%):
1,000 Mannesmann 328
1,900 Siemens 992
--------
1,320
--------
UTILITIES -- ELECTRIC (1.1%):
28,750 Veba 1,177
- ----------------------------------------------------------
TOTAL GERMANY 6,703
- ----------------------------------------------------------
HOLLAND (4.7%):
BREWERIES (0.6%):
4,000 Heineken Holdings 660
--------
COMMERCIAL SERVICES (1.2%):
25,200 Randstad Holdings 1,135
--------
FINANCIAL SERVICES (1.0%):
18,600 Internationale Nederlanden 1,108
--------
FOREST PRODUCTS (0.8%):
29,300 Koninklijke KNP 881
--------
WHOLESALE & INTERNATIONAL TRADE (1.1%):
23,960 Hagemeyer 1,192
- ----------------------------------------------------------
TOTAL HOLLAND 4,976
- ----------------------------------------------------------
HONG KONG (3.5%):
BANKS (0.5%):
35,000 Hong Kong & Shanghai Bank 509
--------
DIVERSIFIED (1.9%):
197,000 Hutchinson Whampoa 1,086
122,000 Swire Pacific "A" 915
--------
2,001
--------
FINANCIAL SERVICES (0.3%):
250,000 Peregrine Investment
Holdings 318
--------
REAL ESTATE (0.8%):
150,000 Cheung Kong 846
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
- ----------------------------------------------------------
TOTAL HONG KONG $ 3,674
- ----------------------------------------------------------
ITALY (1.7%):
AUTOMOBILES (0.1%):
74,000 Fiat 146
--------
CHEMICALS (0.1%):
199,000 Montedison(b) 137
--------
INSURANCE (0.4%):
20,000 Assicurazioni Generali 466
--------
TELECOMMUNICATIONS EQUIPMENT (0.2%):
86,500 Stet Societa Finanziaria
Telefonica S.p.A. 189
--------
UTILITIES -- TELECOMMUNICATIONS (0.9%):
282,000 Telecom Italia 428
282,000 Telecom Italia Mobile 473
--------
901
- ----------------------------------------------------------
TOTAL ITALY 1,839
- ----------------------------------------------------------
JAPAN (33.4%):
AEROSPACE/DEFENSE (1.0%):
140,000 Mitsubishi Heavy Industry 1,080
--------
AUTOMOBILES (1.4%):
60,000 Honda Motor Co. 1,044
25,000 Toyota Motor Corp. 465
--------
1,509
--------
BANKS (2.6%):
41,000 Mitsubishi Bank 802
62,000 Sanwa Bank 1,055
52,000 Sumitomo 921
--------
2,778
--------
BUILDING MATERIALS (1.2%):
66,000 Matsushita Electric Works 652
22,000 Tostem Corp. 676
--------
1,328
--------
CHEMICALS (1.0%):
35,000 Mitsui Petrochemical
Industries 278
36,000 Shin Etsu Chemical 736
--------
1,014
--------
ELECTRICAL EQUIPMENT (10.3%):
86,000 Canon, Inc. $ 1,472
134,000 Hitachi, Ltd. 1,376
7,300 Keyence 900
17,000 Kyocera 1,393
50,000 Mitsubishi Electric Corp. 374
28,000 Murata Manufacturing 983
50,000 Nippon Denso Co. 914
25,000 Rohm Co., Ltd. 1,518
12,000 TDK Corp. 619
32,000 Tokyo Electron 1,390
--------
10,939
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
106
<PAGE> 109
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
INTERNATIONAL GROWTH FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
ENGINEERING/INDUSTRIAL CONSTRUCTION (0.5%):
30,000 Kinden $ 516
--------
FOOD PROCESSING (0.0%):
1,000 Mos Food Services 25
--------
FINANCE (0.7%):
12,000 Nichiei Co. 745
--------
FORREST PRODUCTS (0.4%):
50,000 New Oji Paper Co., Ltd. 459
--------
HOUSEHOLD GOODS (0.7%):
20,400 Amway Japan 778
--------
INSURANCE (0.4%):
40,000 Tokio Marine & Fire
Insurance 411
--------
MACHINE TOOLS (0.4%):
11,000 Fuji Machine 414
--------
MANUFACTURING -- CAPITAL GOODS (1.0%):
16,000 Secom & Co. 1,042
--------
PHARMACEUTICALS (1.1%):
51,000 Yamanouchi Pharmaceutical 1,137
--------
PRINTING (0.5%):
42,000 Toppan Printing Co., Ltd. 555
--------
REAL ESTATE (0.9%):
80,000 Sekisui House 923
--------
RETAIL (2.0%):
10,000 Ito-Yokado Co., Ltd. 547
50,000 Marui 866
11,000 Seven-Eleven Japan 734
--------
2,147
--------
RUBBER & RUBBER PRODUCTS (0.7%):
56,000 Bridgestone 778
--------
STEEL (1.6%):
268,000 NKK Corp. 647
315,000 Nippon Steel 1,044
--------
1,691
--------
STORAGE & WAREHOUSING (0.7%):
51,000 Mitsubishi Warehouse 703
--------
TELECOMMUNICATIONS EQUIPMENT (0.9%):
98 DDI Corp. 795
24,000 Nippon Denwa Shisetsu 199
--------
994
--------
TEXTILE MANUFACTURING (0.2%):
20,000 Kuraray Co., Ltd. 198
--------
UTILITIES -- TELECOMMUNICATIONS (0.8%):
99 Nippon Telephone & Telegraph 812
--------
UTILITIES -- WATER (1.0%):
40,000 Kurita Water Ind. 1,115
--------
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
WHOLESALE & INTERNATIONAL TRADE (1.4%):
33,000 Canon Sales $ 781
122,000 Itochu Corp. 723
--------
1,504
- ----------------------------------------------------------
TOTAL JAPAN 35,595
- ----------------------------------------------------------
MALAYSIA (1.6%):
BANKS (0.1%):
12,000 AMMB Holdings Berhad 148
--------
DIVERSIFIED (0.8%):
496,000 Renong Berhad 757
--------
ENTERTAINMENT (0.1%):
16,000 Genting Berhad 138
--------
FINANCIAL SERVICES (0.5%):
125,000 Hong Leong Credit 531
--------
SHIPPING (0.1%):
38,666 Malaysian International
Shipping 102
- ----------------------------------------------------------
TOTAL MALAYSIA 1,676
- ----------------------------------------------------------
NEW ZEALAND (0.8%):
FOREST PRODUCTS (0.8%):
338,000 Fletcher Challenge 895
- ----------------------------------------------------------
TOTAL NEW ZEALAND 895
- ----------------------------------------------------------
NORWAY (0.6%):
ENERGY SOURCES (0.2%):
5,000 Norsk Hydro 225
--------
OIL & GAS PRODUCTION (0.4%):
30,000 Saga Petroleum 376
- ----------------------------------------------------------
TOTAL NORWAY 601
- ----------------------------------------------------------
SINGAPORE (2.2%):
AIRLINES (0.7%):
84,000 Singapore Airlines, Series F 778
--------
BANKS (1.3%):
81,000 Overseas Chinese Banking
Corp. 950
43,320 United Overseas Bank 380
--------
1,330
--------
SHIP REPAIR (0.2%):
33,000 Jurong Shipyard Ltd. 219
- ----------------------------------------------------------
TOTAL SINGAPORE 2,327
- ----------------------------------------------------------
SPAIN (2.2%):
BANKS (0.3%):
2,600 Banco De Santander 113
1,500 Banco Popular Espanola 238
--------
351
--------
ENERGY SOURCES (0.3%):
42,200 Iberdrola I 318
--------
FOOD DISTRIBUTORS (1.0%):
48,600 Pryca 1,034
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
107
<PAGE> 110
Schedule of Investments -- Continued
THE VICTORY PORTFOLIOS October 31, 1995
INTERNATIONAL GROWTH FUND (Amounts in Thousands, except shares)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
OIL & GAS PRODUCTION (0.3%):
9,400 Repsol SA $ 280
--------
UTILITIES -- TELECOMMUNICATIONS (0.3%):
25,000 Telefonica 315
- ----------------------------------------------------------
TOTAL SPAIN 2,298
- ----------------------------------------------------------
SWEDEN (3.8%):
AUTOMOBILES (1.0%):
46,400 Volvo AB 1,044
--------
MANUFACTURING (1.6%):
68,000 Atlas Copco(b) 1029
30,000 Ericsson (L.M.) Series B 637
--------
1,666
--------
PHARMACEUTICALS (1.2%):
37,300 Astra A Free 1,370
- ----------------------------------------------------------
TOTAL SWEDEN 4,080
- ----------------------------------------------------------
SWITZERLAND (4.8%):
BANKS (0.9%):
9,200 CS Holding 939
--------
FOOD PROCESSING (0.9%):
960 Nestle Registered 1,005
--------
HOLDING COMPANY (1.3%):
1,180 Brown Boveri, Series A 1,367
--------
PHARMACEUTICALS (1.7%):
385 Ciba Geigy AG 333
199 Roche Holdings AG 1,445
--------
1,778
- ----------------------------------------------------------
TOTAL SWITZERLAND 5,089
- ----------------------------------------------------------
UNITED STATES (3.3%):
INVESTMENT FUNDS -- CLOSED END (1.3%):
34,000 Chile Fund 774
12,700 India Magnum Fund NV A 629
--------
1,403
--------
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
<S> <C> <C> <C>
OIL (1.6%):
8,800 Royal Dutch Petroleum $ 1,081
35,000 YPF S.A. Sponsored ADR 599
--------
1,680
--------
TELECOMMUNICATIONS EQUIPMENT (0.3%):
5,000 Cia Telecommunicacion -- ADR 360
--------
WHOLESALE & INTERNATIONAL TRADE (0.1%):
7,000 Grupo Casa Autrey -- ADR 89
- ----------------------------------------------------------
TOTAL UNITED STATES 3,532
- ----------------------------------------------------------
TOTAL COMMON STOCKS 99,364
- ----------------------------------------------------------
- ---------------------------------------------------------
INVESTMENT COMPANIES (4.9%)
4,847,717 AIM Treasury Portfolio 4,848
8,700 Brazilian Investment Co. 271
126,618 Federated Trust for U.S.
Treasury Obligations Money
Market Fund 126
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 5,245
- ----------------------------------------------
TOTAL (COST $96,839)(a) $104,609
- ---------------------------------------------------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $106,477.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation $ 8,058
Unrealized depreciation (288)
-------
Net unrealized
appreciation $ 7,770
========
</TABLE>
(b) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS.
108
<PAGE> 111
Statements of Assets and Liabilities
THE VICTORY PORTFOLIOS October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S.
GOVERNMENT PRIME FINANCIAL
OBLIGATIONS OBLIGATIONS RESERVES
FUND FUND FUND
(000) (000) (000)
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investments, at amortized cost $ 194,691 $ 399,355 $ 685,784
Repurchase agreements 771,227 57,203 76,787
- --------------------------------------------------------------------------------------------------
965,918 456,558 762,571
Interest receivable 3,789 2,032 4,328
Prepaid expenses and other assets 99
- --------------------------------------------------------------------------------------------------
Total Assets 969,707 458,590 766,998
- --------------------------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 4,176 1,958 3,783
Accrued expenses and other payables:
Investment advisory fees 279 135 259
Administration fees 119 58 99
Accounting and transfer agent fees 43 24 25
Shareholder service fees 27 91
Other 134 58 139
- --------------------------------------------------------------------------------------------------
Total Liabilities 4,778 2,324 4,305
- --------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 965,083 456,266 762,721
Accumulated undistributed net realized gains (losses)
from investment transactions (154) (28)
- --------------------------------------------------------------------------------------------------
Net Assets $ 964,929 $ 456,266 $ 762,693
- --------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) 965,105 456,366 762,846
- --------------------------------------------------------------------------------------------------
Net asset value -- offering and redemption price per
share $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------------------------------------------------------
Investments, at cost $ 965,918 $ 456,558 $ 762,571
- --------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
109
<PAGE> 112
Statements of Assets and Liabilities
THE VICTORY PORTFOLIOS October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO
INSTITUTIONAL TAX-FREE MUNICIPAL
MONEY MONEY MONEY
MARKET FUND MARKET FUND MARKET FUND
(000) (000) (000)
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investments, at amortized cost $ 479,398 $ 306,645 $ 508,278
Repurchase agreements 36,464
- ----------------------------------------------------------------------------------------------------------
515,862 306,645 508,278
Cash 31
Interest receivable 2,733 2,140 4,005
Prepaid expenses and other assets 8 93
- ----------------------------------------------------------------------------------------------------------
Total Assets 518,634 308,785 512,376
- ----------------------------------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 2,449 831 1,662
Accrued expenses and other payables:
Investment advisory fees 45 89 86
Administration fees 27 39 66
Accounting and transfer agent fees 21 13 41
Shareholder service fees 43 24
Shareholder service fees -- Service Shares 1
Other 76 44 83
- ----------------------------------------------------------------------------------------------------------
Total Liabilities 2,619 1,059 1,962
- ----------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 515,919 307,664 510,395
Undistributed net investment income 76
Accumulated undistributed net realized gains from investment
transactions 20 62 19
- ----------------------------------------------------------------------------------------------------------
Net Assets $ 516,015 $ 307,726 $ 510,414
- ----------------------------------------------------------------------------------------------------------
Net Assets
Institutional Shares $ 504,536
Service Shares 11,479
- ----------------------------------------------------------------------------------------------------------
Total $ 516,015
- ----------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares)
Institutional Shares 504,506
Service Shares 11,479
- ----------------------------------------------------------------------------------------------------------
Total 515,985 307,664 510,395
- ----------------------------------------------------------------------------------------------------------
Net asset value
Offering and redemption price per share $ 1.00 $ 1.00
Offering and redemption price per share -- Institutional
Shares $ 1.00
Offering and redemption price per share -- Service Shares 1.00
- ----------------------------------------------------------------------------------------------------------
Investments, at cost $ 515,862 306,645 $ 508,278
- ----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
110
<PAGE> 113
Statements of Assets and Liabilities
THE VICTORY PORTFOLIOS October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED INVESTMENT GOVERNMENT
TERM INCOME INTERMEDIATE QUALITY GOVERNMENT MORTGAGE
FUND INCOME FUND BOND FUND BOND FUND FUND
(000) (000) (000) (000) (000)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value $ 169,872 $ 161,273 $ 123,403 $ 28,368 $ 130,003
Interest receivable 2,271 2,145 1,937 805 926
Receivable for capital shares issued 9 2 28 342
Receivable from brokers for investments
sold 4 5,420
Prepaid expenses and other assets 7 9
- ----------------------------------------------------------------------------------------------------------------
Total Assets 172,152 163,420 125,372 29,522 136,358
- ----------------------------------------------------------------------------------------------------------------
LIABILITIES:
Cash overdraft 112
Dividends payable 14
Payable for capital shares redeemed 573 102
Accrued expenses and other payables:
Investment advisory fees 70 76 63 9 58
Administration fees 22 21 16 4 17
Accounting and transfer agent fees 19 9 15 19 7
Shareholder service fees 15 13 11 12
Shareholder service fees -- Class A 3
Shareholder service fees -- Class B 1
Other 24 20 19 22 59
- ----------------------------------------------------------------------------------------------------------------
Total Liabilities 150 139 124 757 255
- ----------------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 171,615 165,455 132,597 35,206 138,607
Undistributed net investment income 179 172 133 98 365
Net unrealized appreciation from
investments 1,771 1,551 1,130 770 177
Accumulated net realized losses from
investment transactions (1,563) (3,897) (8,612) (7,309) (3,046)
- ----------------------------------------------------------------------------------------------------------------
Net Assets $ 172,002 $ 163,281 $ 125,248 $ 28,765 $ 136,103
- ----------------------------------------------------------------------------------------------------------------
Net Assets
Class A $ 27,856
Class B 909
- ----------------------------------------------------------------------------------------------------------------
Total $ 28,765
- ----------------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares)
Class A 2,824
Class B 92
- ----------------------------------------------------------------------------------------------------------------
Total 16,940 16,857 12,827 2,916 12,533
- ----------------------------------------------------------------------------------------------------------------
Net asset value
Redemption price per share $ 10.15 $ 9.69 $ 9.76 $ 10.86
Redemption price per share -- Class A $ 9.87
Offering and redemption price per
share -- Class B $ 9.85
- ----------------------------------------------------------------------------------------------------------------
Maximum Sales Charge 2.00% 4.75% 4.75% 4.75% 4.75%
- ----------------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%(100% --
Maximum Sales Charge) of net asset
value adjusted to nearest cent) per
share $ 10.36 $ 10.17 $ 10.25 $ 11.40
- ----------------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%(100% --
Maximum Sales Charge) of net asset
value adjusted to nearest cent) per
share --
Class A $ 10.36
- ----------------------------------------------------------------------------------------------------------------
Investments, at cost $ 168,101 $ 159,722 $ 122,273 $ 27,598 $ 129,826
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
111
<PAGE> 114
Statements of Assets and Liabilities
THE VICTORY PORTFOLIOS October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NATIONAL NEW YORK OHIO
FUND FOR MUNICIPAL TAX-FREE MUNICIPAL
INCOME BOND FUND FUND BOND FUND
(000) (000) (000) (000)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value $22,429 $12,186 $16,914 $58,962
Cash 112
Interest receivable 293 170 348 1,117
Receivable for capital shares issued 26 162 5
Receivable from brokers for investments sold 1
Prepaid expenses and other assets 37 91 39
- ----------------------------------------------------------------------------------------------------------------
Total Assets 22,898 12,447 17,463 60,084
- ----------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable to brokers for investments purchased 3
Payable for capital shares redeemed 118 110
Accrued expenses and other payables:
Investment advisory fees 4 24
Administration fees 1 2 8
Accounting and transfer agent fees 5 7 7 4
Shareholder service fees 2 5
Shareholder service fees -- Class A 1 11
Shareholder service fees -- Class B 1
Other 12 14 7 12
- ----------------------------------------------------------------------------------------------------------------
Total Liabilities 142 27 136 53
- ----------------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 23,336 11,867 16,007 58,102
Undistributed net investment income 140 13 68 43
Net unrealized appreciation from investments 1,045 495 1,312 2,413
Accumulated undistributed net realized gains (losses)
from investment transactions (1,765) 45 (60) (527)
- ----------------------------------------------------------------------------------------------------------------
Net Assets $22,756 $12,420 $17,327 $60,031
- ----------------------------------------------------------------------------------------------------------------
Net Assets
Class A $11,964 $15,374
Class B 456 1,953
- ----------------------------------------------------------------------------------------------------------------
Total $12,420 $17,327
- ----------------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares)
Class A 1,189 1,196
Class B 45 152
- ----------------------------------------------------------------------------------------------------------------
Total 2,291 1,234 1,348 5,302
- ----------------------------------------------------------------------------------------------------------------
Net asset value
Redemption price per share $ 9.93 $ 11.32
Redemption price per share -- Class A $ 10.06 $ 12.85
Offering and redemption price per share -- Class B $ 10.07 $ 12.86
- ----------------------------------------------------------------------------------------------------------------
Maximum Sales Charge 2.00% 4.75% 4.75% 4.75%
- ----------------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%-Maximum Sales
Charge) of net asset value adjusted to nearest cent)
per share $ 10.14 $ 11.88
- ----------------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%-Maximum Sales
Charge) of net asset value adjusted to nearest cent)
per share -- Class A $ 10.56 $ 13.49
- ----------------------------------------------------------------------------------------------------------------
Investments, at cost $21,384 $11,691 $15,602 $56,549
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
112
<PAGE> 115
Statements of Assets and Liabilities
THE VICTORY PORTFOLIOS October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED STOCK INDEX DIVERSIFIED
FUND FUND STOCK FUND VALUE FUND GROWTH FUND
(000) (000) (000) (000) (000)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value $ 199,598 $ 160,787 $ 414,008 $ 295,946 $ 108,292
Interest and dividends receivable 1,466 281 292 470 106
Receivable for capital shares issued 23 81
Receivable from brokers for investments
sold 704 1,117 643
Unamortized organization costs 1 1 1
Prepaid expenses and other assets 18 25 18
- ----------------------------------------------------------------------------------------------------------------
Total Assets 201,810 161,069 415,523 297,078 108,398
- ----------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for capital shares redeemed 225 6
Payable to brokers for investments
purchased 298 5,609 852
Net variation margin on open futures
contracts 167
Accrued expenses and other payables:
Investment advisory fees 126 57 213 233 90
Administration fees 26 51 38 14
Accounting and transfer agent fees 7 1 12 16 14
Shareholder service fees 17 36 29 10
Other 38 22 47 39 17
- ----------------------------------------------------------------------------------------------------------------
Total Liabilities 737 247 5,974 1,207 145
- ----------------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 182,467 135,958 335,022 248,414 86,466
Undistributed net investment income 88 363 73 232 13
Net unrealized appreciation from
investments 18,085 22,416 41,698 38,765 17,270
Net unrealized depreciation from
translation of assets and liabilities
in foreign currencies (236)
Accumulated undistributed net realized
gains from investment transactions 658 2,085 32,756 8,460 4,504
Accumulated undistributed net realized
gains from foreign currency
transactions 11
- ----------------------------------------------------------------------------------------------------------------
Net Assets $ 201,073 $ 160,822 $ 409,549 $ 295,871 $ 108,253
- ----------------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest
(shares) 18,255 12,870 30,069 24,927 8,910
- ----------------------------------------------------------------------------------------------------------------
Net asset value -- redemption price per
share $ 11.01 $ 12.50 $ 13.62 $ 11.87 $ 12.15
- ----------------------------------------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 4.75% 4.75% 4.75% 4.75%
- ----------------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%-
Maximum Sales Charge) of net asset
value adjusted to nearest cent) per
share $ 11.56 $ 13.12 $ 14.30 $ 12.46 $ 12.76
- ----------------------------------------------------------------------------------------------------------------
Investments, at cost $ 181,749 $ 138,797 $ 372,310 $ 257,181 $ 91,022
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
113
<PAGE> 116
Statements of Assets and Liabilities
THE VICTORY PORTFOLIOS October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SPECIAL SPECIAL OHIO REGIONAL INTERNATIONAL
VALUE GROWTH STOCK GROWTH
FUND FUND FUND FUND
(000) (000) (000) (000)
-------- ------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value $192,644 $54,327 $39,047 $ 104,609
Foreign currency (cost $124) 126
Interest and dividends receivable 253 27 45 584
Receivable for capital shares issued 34 13
Receivable from brokers for investments sold 1,988 881 2,299
Unamortized organization costs 1
Prepaid expenses and other assets 12 1 5
- ---------------------------------------------------------------------------------------------------------------
Total Assets 194,932 55,236 39,092 107,636
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for capital shares redeemed 10 1
Payable to brokers for investments purchased 829 991
Accrued expenses and other payables:
Investment advisory fees 152 33 24 91
Administration fees 25 7 5 14
Accounting and transfer agent fees 5 12 3 19
Shareholder service fees 16 5 4 9
Other 24 15 8 34
- ---------------------------------------------------------------------------------------------------------------
Total Liabilities 232 901 44 1,159
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 168,004 51,968 24,726 101,870
Undistributed net investment income 57 1 247
Net unrealized appreciation from investments 21,197 2,652 12,835 5,515
Net unrealized appreciation from translation of
assets and liabilities in foreign currencies 2,248
Accumulated undistributed net realized gains (losses)
from investment transactions 5,442 (285) 1,486 (7,337)
Accumulated undistributed net realized gains from
foreign currency transactions 3,934
- ---------------------------------------------------------------------------------------------------------------
Net Assets $194,700 $54,335 $39,048 $ 106,477
- ---------------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) 16,026 4,601 2,449 8,637
- ---------------------------------------------------------------------------------------------------------------
Net asset value - redemption price per share $ 12.15 $ 11.81 $ 15.94 $ 12.33
- ---------------------------------------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 4.75% 4.75% 4.75%
- ---------------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%-Maximum Sales
Charge) of net asset value adjusted to nearest
cent) per share $ 12.76 $ 12.40 $ 16.73 $ 12.94
- ---------------------------------------------------------------------------------------------------------------
Investments, at cost $171,447 $51,675 $26,212 $ 96,839
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
114
<PAGE> 117
THE VICTORY PORTFOLIOS Statements of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S.
GOVERNMENT PRIME FINANCIAL
OBLIGATIONS OBLIGATIONS RESERVES
FUND FUND FUND
---------- ---------- ----------
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER OCTOBER OCTOBER
31, 31, 31,
1995 1995 1995
(000) (000) (000)
---------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 37,623 $ 31,781 $ 42,563
- ---------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 2,246 1,908 3,544
Administration fees 962 817 1,064
Shareholder service fees 25 706
Accounting fees 243 261 101
Custodian fees 14 7 15
Legal and audit fees 141 114 186
Trustees' fees and expenses 47 41 73
Transfer agent fees 24 35 23
Registration and filing fees 34 52 260
Printing fees 87 57 121
Other 12 20 1
Expenses voluntarily reduced (88) (421)
- ---------------------------------------------------------------------------------------------------------
Expenses before reimbursement from investment adviser 3,747 4,018 4,967
Expenses reimbursed by investment adviser (722)
- ---------------------------------------------------------------------------------------------------------
Total Expenses 3,747 4,018 4,245
- ---------------------------------------------------------------------------------------------------------
Net Investment Income 33,876 27,763 38,318
- ---------------------------------------------------------------------------------------------------------
REALIZED GAINS FROM INVESTMENTS:
Net realized gains from investment transactions 94
- ---------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 33,970 $ 27,763 $ 38,318
- ---------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
115
<PAGE> 118
THE VICTORY PORTFOLIOS Statements of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL
MONEY TAX-FREE OHIO MUNICIPAL
MARKET MONEY MONEY MARKET
FUND MARKET FUND
----------- FUND --------------
SIX MONTHS ----------- TWO MONTHS
ENDED YEAR ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1995 1995
(000) (000) (000)
----------- ----------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $15,508 $ 9,444 $ 3,369
Dividend income 360 43
- -----------------------------------------------------------------------------------------------------
Total Income 15,508 9,804 3,412
- -----------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 652 864 432
Administration fees 391 370 130
Shareholder service fees 1 43 130
Accounting fees 50 113 13
Custodian fees 8 5 8
Legal and audit fees 57 49 31
Trustees' fees and expenses 22 18 8
Transfer agent fees 2 17 10
Registration and filing fees 8 22 12
Printing fees 52 29 19
Other 27 5 5
Expenses voluntarily reduced (595) (34) (245)
- -----------------------------------------------------------------------------------------------------
Total Expenses 675 1,501 553
- -----------------------------------------------------------------------------------------------------
Net Investment Income 14,833 8,303 2,859
- -----------------------------------------------------------------------------------------------------
REALIZED GAINS FROM INVESTMENTS:
Net realized gains from investment transactions 62
- -----------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $14,833 $ 8,365 $ 2,859
- -----------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
116
<PAGE> 119
THE VICTORY PORTFOLIOS Statements of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED INVESTMENT
TERM INTERMEDIATE QUALITY GOVERNMENT
INCOME INCOME BOND BOND GOVERNMENT
FUND FUND FUND FUND MORTGAGE
---------- ---------- ---------- ---------- FUND
YEAR ENDED YEAR ENDED YEAR ENDED SIX MONTHS ------------
OCTOBER OCTOBER OCTOBER OCTOBER YEAR ENDED
31, 31, 31, 31, OCTOBER 31,
1995 1995 1995 1995 1995
(000) (000) (000) (000) (000)
---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 9,405 $ 9,451 $ 7,610 $ 1,956 $ 10,729
Dividend income 181 243 214 23 175
- ---------------------------------------------------------------------------------------------------------
Total Income 9,586 9,694 7,824 1,979 10,904
- ---------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 731 1,018 786 156 719
Administration fees 220 203 157 43 216
Shareholder service fees 15 13 11 12
Shareholder service fees -
Class A 6
Shareholder service fees and
12b-1 fees - Class B 2
Accounting fees 89 71 71 29 83
Custodian fees 3 2 3 2 2
Legal and audit fees 30 26 21 9 26
Amortization of organization
costs 16 16
Trustees' fees and expenses 10 10 7 2 10
Transfer agent fees 20 17 21 10 18
Registration and filing fees 16 44 40 15 25
Printing fees 25 18 20 25 14
Other 4 4 4 3 3
Expenses voluntarily reduced (21) (326) (239) (39) (16)
- ---------------------------------------------------------------------------------------------------------
Total Expenses 1,142 1,116 918 263 1,112
- ---------------------------------------------------------------------------------------------------------
Net Investment Income 8,444 8,578 6,906 1,716 9,792
- ---------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS
(LOSSES) FROM INVESTMENTS:
Net realized gains (losses)
from investment transactions (892) (1,399) (4,593) 3,139 (2,407)
Change in unrealized
appreciation (depreciation)
from investments 4,613 7,769 6,997 (101) 11,075
- ---------------------------------------------------------------------------------------------------------
Net realized/unrealized gains
from investments 3,721 6,370 2,404 3,038 8,668
- ---------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations $ 12,165 $ 14,948 $ 9,310 $ 4,754 $ 18,460
- ---------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
117
<PAGE> 120
THE VICTORY PORTFOLIOS Statements of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NATIONAL
MUNICIPAL NEW YORK OHIO
FUND FOR BOND FUND TAX-FREE MUNICIPAL
INCOME ----------- FUND BOND FUND
----------- SIX MONTHS ----------- -----------
YEAR ENDED ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1995 1995 1995
(000) (000) (000) (000)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 2,175 $ 236 $ 1,134 $ 3,087
Dividend income 7 12 54
- -------------------------------------------------------------------------------------------------------------
Total Income 2,175 243 1,146 3,141
- -------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 124 26 93 347
Administration fees 37 7 25 87
Shareholder service fees 62 5
Shareholder service fees - Class A 1 36
Shareholder service fees and 12b-1 fees - Class B 2 14
Accounting fees 32 24 49 43
Custodian fees 2 2 2
Legal and audit fees 14 13 23 12
Trustees' fees and expenses 3 2 5
Transfer agent fees 36 6 19 16
Registration and filing fees 44 21 27 13
Printing fees 36 17 42 13
Other 5 2 2
Expenses voluntarily reduced (46) (31) (52) (164)
- -------------------------------------------------------------------------------------------------------------
Expenses before reimbursement from investment
adviser 349 86 282 381
Expenses reimbursed by investment adviser (68) (85) (76)
- -------------------------------------------------------------------------------------------------------------
Total Expenses 281 1 206 381
- -------------------------------------------------------------------------------------------------------------
Net Investment Income 1,894 242 940 2,760
- -------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized gains (losses) from investment
transactions (328) 35 (60) (128)
Change in unrealized appreciation from investments 1,370 326 740 5,317
- -------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments 1,042 361 680 5,189
- -------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 2,936 $ 603 $ 1,620 $ 7,949
- -------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
118
<PAGE> 121
THE VICTORY PORTFOLIOS Statements of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED STOCK INDEX DIVERSIFIED
FUND FUND STOCK FUND VALUE FUND GROWTH FUND
----------- ----------- ----------- ----------- -----------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1995 1995 1995 1995
(000) (000) (000) (000) (000)
----------- ----------- ----------- ----------- -----------
INVESTMENT INCOME:
<S> <C> <C> <C> <C> <C>
Interest income $ 2,834 $ 802 $ 28 $ 832 $ 2
Dividend income 5,464 2,711 9,901 8,298 1,537
- ------------------------------------------------------------------------------------------------------------------
Total Income 8,298 3,513 9,929 9,130 1,539
- ------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 1,649 684 2,132 2,583 743
Administration fees 247 171 492 387 111
Shareholder service fees 17 36 29 10
Accounting fees 88 23 142 124 50
Custodian fees 5 8 7 8 4
Legal and audit fees 31 23 61 49 18
Amortization of organization costs 10 7 16 7
Trustees' fees and expenses 12 8 23 17 6
Transfer agent fees 116 17 182 19 55
Registration and filing fees 44 33 20 56 30
Printing fees 20 14 28 38 19
Other 3 3 6 30 4
Expenses voluntarily reduced (624) (366) (128) (811) (264)
- ------------------------------------------------------------------------------------------------------------------
Total Expenses 1,618 625 3,001 2,545 793
- ------------------------------------------------------------------------------------------------------------------
Net Investment Income 6,680 2,888 6,928 6,585 746
- ------------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gains from investment transactions 2,774 2,091 32,800 8,481 4,504
Net realized gains from foreign currency
transactions 11
Net change in unrealized appreciation from
investments 20,046 20,860 29,446 39,805 15,906
Change in unrealized depreciation from
translation of assets and liabilities in
foreign currencies (236)
- ------------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments
and foreign currencies 22,595 22,951 62,246 48,286 20,410
- ------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $29,275 $25,839 $69,174 $54,871 $21,156
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
119
<PAGE> 122
THE VICTORY PORTFOLIOS Statements of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SPECIAL OHIO
SPECIAL GROWTH FUND REGIONAL INTERNATIONAL
VALUE FUND ----------- STOCK FUND GROWTH FUND
----------- SIX MONTHS ----------- -----------
YEAR ENDED ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1995 1995 1995
(000) (000) (000) (000)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 34 $ 71 $ 214
Dividend income 3,659 155 $ 830 2,221
Foreign tax withholding (325)
- -------------------------------------------------------------------------------------------------------------
Total Income 3,693 226 830 2,110
- -------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 1,546 440 268 1,018
Administration fees 232 66 53 139
Shareholder service fees 16 5 4 9
Accounting fees 76 21 31 121
Custodian fees 4 1 1 92
Legal and audit fees 29 46 9 19
Amortization of organization costs 8 1
Trustees' fees and expenses 11 2 3 6
Transfer agent fees 18 11 43 72
Registration and filing fees 48 12 16 32
Printing fees 19 10 13 20
Other 3 1 1 2
Expenses voluntarily reduced (407) (330) (14) (116)
- -------------------------------------------------------------------------------------------------------------
Total Expenses 1,603 286 428 1,414
- -------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 2,090 (60) 402 696
- -------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND
FOREIGN CURRENCIES:
Net realized gains (losses) from investment
transactions 5,442 2,326 1,485 (7,848)
Net realized gains from foreign currency transactions 4,365
Net change in unrealized appreciation (depreciation)
from investments 18,049 (358) 3,578 (1,929)
Change in unrealized appreciation from translation of
assets and liabilities in foreign currencies 2,233
- -------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains (losses) from investments
and foreign currencies 23,491 1,968 5,063 (3,179)
- -------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $25,581 $ 1,908 $ 5,465 $(2,483)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
120
<PAGE> 123
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT
OBLIGATIONS FUND PRIME OBLIGATIONS FUND FINANCIAL RESERVES FUND
-------------------------- ------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31 OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995(B) 1994 1995 1994 1995(B) 1994(A)
(000) (000) (000) (000) (000) (000)
----------- ----------- ---------- ----------- ----------- -----------
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 33,876 $ 14,747 $ 27,763 $ 26,637 $ 38,318 $ 14,872
Net realized gains (losses) from
investment transactions 94 (167) (2,506) (28)
- ---------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
operations 33,970 14,580 27,763 24,131 38,318 14,844
- ---------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (33,876) (14,747) (27,763) (26,637) (38,353) (14,873)
In excess of net realized gains
from investment transactions (81)
Tax return of capital (88)
- ---------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (33,876) (14,828) (27,763) (26,637) (38,441) (14,873)
- ---------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 1,782,085 935,449 1,719,347 2,109,682 4,803,998 3,005,810
Proceeds from shares issued in
connection with acquisition 242,973
Dividends reinvested 3,962 1,179 15,471 8,381 1,265
Cost of shares redeemed (1,476,233) (1,040,066) (2,060,855) (2,055,784) (4,475,713) (3,030,387)
- ---------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions 552,787 (103,438) (326,037) 62,279 329,550 (24,577)
- ---------------------------------------------------------------------------------------------------------------------------
Contribution by KeyCorp 2,506
- ---------------------------------------------------------------------------------------------------------------------------
Change in net assets 552,881 (103,686) (326,037) 62,279 329,427 (24,606)
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 412,048 515,734 782,303 720,024 433,266 457,872
- ---------------------------------------------------------------------------------------------------------------------------
End of period $ 964,929 $ 412,048 $ 456,266 $ 782,303 $ 762,693 $ 433,266
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 1,782,107 935,449 1,719,347 2,109,682 4,803,998 3,005,810
Issued in connection with
acquisition 242,973
Reinvested 3,962 1,179 15,471 8,381 1,265
Redeemed (1,476,233) (1,040,066) (2,060,755) (2,055,784) (4,475,713) (3,030,387)
- ---------------------------------------------------------------------------------------------------------------------------
Change in shares 552,809 (103,438) (325,937) 62,279 329,550 (24,577)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Audited by other auditors.
(b) Effective June 5, 1995, the Victory U.S. Treasury Money Market Portfolio
merged into the U.S. Government Obligations Fund. Changes in net assets for
periods prior to June 5, 1995 represent the U.S. Government Obligations
Fund. Also, effective June 5, 1995 the Victory Financial Reserves Portfolio
became the Financial Reserves Fund.
SEE NOTES TO FINANCIAL STATEMENTS.
121
<PAGE> 124
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL TAX-FREE
MONEY MARKET FUND MONEY MARKET FUND OHIO MUNICIPAL MONEY MARKET FUND
-------------------------------------- ---------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SIX
MONTHS YEAR YEAR TWO MONTHS
ENDED YEAR ENDED YEAR ENDED ENDED ENDED ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, APRIL 30, APRIL 30, OCTOBER 31, OCTOBER 31, OCTOBER 31, AUGUST 31, AUGUST 31,
1995(b) 1995(a) 1994(a) 1995 1994 1995 1995(b) 1994(a)
(000) (000) (000) (000) (000) (000) (000) (000)
--------- ----------- ---------- --------- --------- ----------- ----------- -----------
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment
income $ 14,833 $ 22,107 $ 9,184 $ 8,303 $ 4,538 $ 2,859 $ 13,393 $ 6,365
Net realized
gains from
investment
transactions 20 8 62 7
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net
assets resulting
from operations 14,833 22,127 9,192 8,365 4,545 2,859 13,393 6,365
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net
investment
income (9,184) (8,303) (4,538) (2,859) (13,393) (6,365)
Institutional
Shares (14,857) (21,993)
Service Shares (22)
From net realized
losses from
investment
transactions (7)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net
assets from
distributions to
shareholders (14,879) (21,993) (9,184) (8,303) (4,545) (2,859) (13,393) (6,365)
- ---------------------------------------------------------------------------------------------------------------------------------
CAPITAL
TRANSACTIONS:
Proceeds from
shares issued 648,875 1,197,333 1,238,739 518,760 534,878 363,385 1,872,345 1,247,387
Dividends
reinvested 144 1,508 390 900 355 472 945 5,662
Cost of shares
redeemed (582,772) (1,290,390) (853,005) (410,557) (526,023) (355,896) (1,688,969) (1,197,598)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net
assets from
capital
transactions 66,247 (91,549) 386,124 109,103 9,210 7,961 184,321 55,451
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net
assets 66,201 (91,415) 386,132 109,165 9,210 7,961 184,321 55,451
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of
period 449,814 541,229 155,097 198,561 189,351 502,453 318,132 262,681
- ---------------------------------------------------------------------------------------------------------------------------------
End of period $ 516,015 $ 449,814 $ 541,229 $ 307,726 $ 198,561 $ 510,414 $ 502,453 $ 318,132
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 648,875 1,197,333 1,238,739 518,760 534,878 363,385 1,872,345 1,247,387
Reinvested 144 1,508 390 900 355 472 945 5,662
Redeemed (582,772) (1,290,390) (853,005) (410,557) (526,023) (355,896) (1,688,969) (1,197,598)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in shares 66,247 (91,549) 386,124 109,103 9,210 7,961 184,321 55,451
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Audited by other auditors.
(b) Effective June 5, 1995, the Victory Institutional Money Market Portfolio and
the Victory Ohio Municipal Money Market Portfolio became the Institutional
Money Market Fund and Ohio Municipal Money Market Fund, respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
122
<PAGE> 125
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED TERM INTERMEDIATE INVESTMENT QUALITY
INCOME FUND INCOME FUND BOND FUND
-------------------------- -------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
DECEMBER DECEMBER
10, 10,
YEAR ENDED YEAR ENDED YEAR ENDED 1993 TO YEAR ENDED 1993 TO
OCTOBER 31, OCTOBER 31, OCTOBER 31 OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995(b) 1994 1995 1994(a) 1995(b) 1994(a)
(000) (000) (000) (000) (000) (000)
----------- ----------- ----------- ----------- ----------- -----------
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 8,444 $ 4,521 $ 8,578 $ 5,951 $ 6,906 $ 5,712
Net realized losses from investment
transactions (892) (671) (1,399) (2,498) (4,593) (4,019)
Net change in unrealized appreciation
(depreciation) from investments 4,613 (4,406) 7,769 (6,218) 6,997 (5,867)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
operations 12,165 (556) 14,948 (2,765) 9,310 (4,174)
- --------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (8,403) (4,506) (8,634) (5,724) (6,970) (5,516)
In excess of net realized gains from
investment transactions (357)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from distributions
to shareholders (8,403) (4,863) (8,634) (5,724) (6,970) (5,516)
- --------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 121,860 34,263 73,087 159,988 48,431 139,893
Proceeds from shares issued in
connection with acquisition 14,263 27,853
Dividends reinvested 8,381 4,378 8,632 5,511 6,932 5,495
Cost of shares redeemed (55,414) (35,843) (37,675) (44,087) (54,993) (41,013)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions 89,090 2,798 44,044 121,412 28,223 104,375
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets 92,852 (2,621) 50,358 112,923 30,563 94,685
NET ASSETS:
Beginning of period 79,150 81,771 112,923 94,685
- --------------------------------------------------------------------------------------------------------------------------------
End of period $ 172,002 $ 79,150 $ 163,281 $ 112,923 $ 125,248 $ 94,685
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 12,215 3,336 7,738 16,205 4,675 14,142
Issued in connection with acquisition 1,398 2,849
Reinvested 836 433 915 579 735 582
Redeemed (5,518) (3,529) (4,005) (4,575) (5,833) (4,323)
- --------------------------------------------------------------------------------------------------------------------------------
Change in shares 8,931 240 4,648 12,209 2,426 10,401
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
(b) Effective June 5, 1995, the Victory Short-Term Government Income Portfolio
merged into the Limited Term Income Fund, and the Victory Corporate Bond
Portfolio merged into the Investment Quality Bond Fund. Changes in net
assets for the periods prior to June 5, 1995 represent the Limited Term
Income Fund and the Investment Quality Bond Fund, respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
123
<PAGE> 126
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FUND FOR INCOME
GOVERNMENT BOND FUND GOVERNMENT MORTGAGE -------------------------------------
------------------------------------- FUND NINE
----------------------- MONTHS
ENDED YEAR ENDED MAY 3, 1993 YEAR ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED
OCTOBER 31, APRIL 30, TO APRIL 30, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, JANUARY 31,
1995(c) 1995(b) 1994(a)(b) 1995 1994 1995(c) 1994(b) 1994(b)
(000) (000) (000) (000) (000) (000) (000) (000)
---------- ---------- ----------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income $ 1,716 $ 6,571 $ 3,192 $ 9,792 $ 10,593 $ 1,894 $ 1,967 $ 4,063
Net realized gains
(losses) from
investment
transactions 3,139 (7,388) (3,114) (2,407) 615 (328) (654) (839)
Net change in unrealized
appreciation
(depreciation) from
investments (101) 5,974 (5,103) 11,075 (16,536) 1,370 (2,075) (1,330)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets
resulting from
operations 4,754 5,157 (5,025) 18,460 (5,328) 2,936 (762) 1,894
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income (9,746) (10,495) (1,704) (1,911) (4,053)
From net investment
income by class:
Class A (1,750) (6,395) (3,192)
Class B (14) (1)
In excess of net
investment income (92) (49)
From net realized gains
from investment
transactions (596) (386) (86)
In excess of net
realized gains from
investment
transactions (638)
Tax return of capital (218)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to
shareholders (1,764) (6,396) (3,284) (11,198) (10,881) (1,704) (1,960) (4,139)
- ---------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued 3,800 13,782 136,272 36,846 119,347 3,698 3,073 17,079
Dividends reinvested 1,292 75 4 11,183 9,714 569 525 3,044
Cost of shares redeemed (64,039) (48,532) (7,331) (67,356) (97,422) (12,101) (18,150) (26,321)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from
capital transactions (58,947) (34,675) 128,945 (19,327) 31,639 (7,834) (14,552) (6,198)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets (55,957) (35,914) 120,636 (12,065) 15,430 (6,602) (17,274) (8,443)
NET ASSETS:
Beginning of period 84,722 120,636 148,168 132,738 29,358 46,632 55,075
- ---------------------------------------------------------------------------------------------------------------------------------
End of period $ 28,765 $ 84,722 $ 120,636 $136,103 $148,168 $ 22,756 $ 29,358 $ 46,632
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 390 1,475 13,500 3,517 10,724 382 312 1,645
Reinvested 132 8 1,065 906 58 54 294
Redeemed (6,585) (5,266) (738) (6,399) (8,967) (1,261) (1,853) (2,549)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in shares (6,063) (3,783) 12,762 (1,817) 2,663 (821) (1,487) (610)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
(b) Audited by other auditors.
(c) Effective June 5, 1995, the Victory Government Bond Portfolio and the
Victory Fund for Income Portfolio became the Government Bond Fund and Fund
for Income, respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
124
<PAGE> 127
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO MUNICIPAL BOND
NATIONAL MUNICIPAL BOND FUND NEW YORK TAX-FREE FUND FUND
---------------------------------------- ----------------------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SIX MONTHS PERIOD FROM PERIOD FROM
ENDED YEAR ENDED FEBRUARY 3, 1994 YEAR ENDED JANUARY 1, 1994 YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, APRIL 30, TO APRIL 30, OCTOBER 31, TO OCTOBER 31, DECEMBER 31, OCTOBER 31, OCTOBER 31,
1995(c) 1995(b) 1994(a)(b) 1995(c) 1994(b) 1993(b) 1995 1994
(000) (000) (000) (000) (000) (000) (000) (000)
---------- ---------- ---------------- ---------- --------------- ------------ ---------- ----------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment
income $ 242 $ 108 $ 3 $ 940 $ 1,033 $ 1,537 $ 2,760 $ 2,580
Net realized gains
(losses) from
investment
transactions 35 10 (1) (60) 229 142 (128) (399)
Net change in
unrealized
appreciation
(depreciation)
from investments 326 179 (10) 740 (2,384) 1,661 5,317 (4,662)
- -------------------------------------------------------------------------------------------------------------------------------
Change in net assets
resulting from
operations 603 297 (8) 1,620 (1,122) 3,340 7,949 (2,481)
- -------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net
investment
income (2,801) (2,557)
From net
investment
income by class:
Class A (221) (108) (3) (830) (1,033) (1,537)
Class B (6) (42)
In excess of net
investment
income (3)
From net realized
gains from
investment
transactions (60) (117) (1,169)
In excess of net
realized gains
from investment
transactions (169)
- -------------------------------------------------------------------------------------------------------------------------------
Change in net assets
from distributions
to shareholders (227) (111) (3) (1,101) (1,033) (1,654) (2,801) (3,726)
- -------------------------------------------------------------------------------------------------------------------------------
CAPITAL
TRANSACTIONS:
Proceeds from
shares issued 6,782 4,792 502 5,527 6,305 7,439 15,932 28,815
Dividends
reinvested 216 103 3 509 455 1,285 2,784 2,767
Cost of shares
redeemed (219) (310) (7,068) (15,295) (7,914) (21,537) (18,347)
- -------------------------------------------------------------------------------------------------------------------------------
Change in net assets
from capital
transactions 6,779 4,585 505 (1,032) (8,535) 810 (2,821) 13,235
- -------------------------------------------------------------------------------------------------------------------------------
Change in net assets 7,155 4,771 494 (513) (10,690) 2,496 2,327 7,028
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of
period 5,265 494 17,840 28,530 26,034 57,704 50,676
- -------------------------------------------------------------------------------------------------------------------------------
End of period $ 12,420 $5,265 $494 $ 17,327 $ 17,840 28,530 $ 60,031 $ 57,704
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 685 519 51 443 482 566 1,474 2,625
Reinvested 21 11 39 35 97 257 255
Redeemed (21) (33) (574) (1,185) (595) (2,014) (1,693)
- -------------------------------------------------------------------------------------------------------------------------------
Change in shares 685 497 51 (92) (668) 68 (283) 1,187
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
(b) Audited by other auditors.
(c) Effective June 5, 1995, the Victory National Municipal Bond Portfolio and
Victory New York Tax-Free Portfolio became the National Municipal Bond Fund
and New York Tax-Free Fund, respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
125
<PAGE> 128
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED FUND STOCK INDEX FUND DIVERSIFIED STOCK FUND
------------------------------ ---------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
PERIOD FROM
PERIOD FROM DECEMBER 3,
YEAR ENDED DECEMBER 10, 1993 YEAR ENDED 1993 YEAR ENDED YEAR ENDED
OCTOBER 31, TO OCTOBER 31, OCTOBER 31, TO OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994(a) 1995 1994(a) 1995 1994
(000) (000) (000) (000) (000) (000)
---------- ----------------- ---------- --------------- ---------- --------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 6,680 $ 3,706 $ 2,888 $ 1,515 $ 6,928 $ 5,177
Net realized gains (losses)
from investment transactions 2,774 (2,116) 2,091 (6) 32,800 30,135
Net realized gains from
foreign currency
transactions 11
Net change in unrealized
appreciation (depreciation)
from investments 20,046 (1,961) 20,860 1,556 29,446 (18,237)
Change in unrealized
depreciation from
translation of assets and
liabilities in foreign
currencies (236)
- ---------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 29,275 (371) 25,839 3,065 69,174 17,075
- ---------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (6,753) (3,545) (2,709) (1,331) (7,205) (4,738)
From net realized gains from
investment transactions (29,668) (26,397)
- ---------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (6,753) (3,545) (2,709) (1,331) (36,873) (31,135)
- ---------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 111,470 176,193 74,489 114,187 144,852 94,732
Dividends reinvested 6,726 3,529 2,709 1,321 36,846 22,231
Cost of shares redeemed (66,930) (48,521) (29,192) (27,556) (67,677) (97,081)
- ---------------------------------------------------------------------------------------------------------------------------
Changes in net assets from
capital transactions 51,266 131,201 48,006 87,952 114,021 19,882
- ---------------------------------------------------------------------------------------------------------------------------
Change in net assets 73,788 127,285 71,136 89,686 146,322 5,822
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 127,285 89,686 263,227 257,405
- ---------------------------------------------------------------------------------------------------------------------------
End of period $201,073 $ 127,285 $160,822 $ 89,686 $409,549 $263,227
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 11,125 17,854 6,638 11,441 11,560 7,718
Reinvested 659 366 241 135 3,276 1,830
Redeemed (6,762) (4,987) (2,815) (2,770) (5,529) (8,003)
- ---------------------------------------------------------------------------------------------------------------------------
Change in shares 5,022 13,233 4,064 8,806 9,307 1,545
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS.
126
<PAGE> 129
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE FUND GROWTH FUND SPECIAL VALUE FUND
-------------------------- -------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
PERIOD FROM PERIOD FROM PERIOD FROM
DECEMBER 3, DECEMBER 3, DECEMBER 3,
YEAR ENDED 1993 TO YEAR ENDED 1993 TO YEAR ENDED 1993 TO
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995(b) 1994(a) 1995(b) 1994(a)(c) 1995 1994(a)
(000) (000) (000) (000) (000) (000)
----------- ----------- ----------- ----------- ----------- -----------
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 6,585 $ 3,602 $ 746 $ 636 $ 2,090 $ 1,020
Net realized gains from investment
transactions 8,481 3,124 4,504 298 5,442 588
Net change in unrealized appreciation
(depreciation) from investments 39,805 (1,040) 15,906 1,364 18,049 3,148
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
operations 54,871 5,686 21,156 2,298 25,581 4,756
- --------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (6,666) (3,289) (783) (586) (2,126) (927)
From net realized gains from
investment transactions (3,145) (298) (588)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from distributions
to shareholders (9,811) (3,289) (1,081) (586) (2,714) (927)
- --------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 169,271 229,389 10,526 92,029 87,892 137,158
Proceeds from shares issued in
connection with acquisition 423 65,632
Dividends reinvested 9,809 3,283 1,067 584 2,712 924
Cost of shares redeemed (116,876) (46,885) (55,968) (27,404) (37,371) (23,311)
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions 62,627 185,787 21,257 65,209 53,233 114,771
- --------------------------------------------------------------------------------------------------------------------------------
Change in net assets 107,687 188,184 41,332 66,921 76,100 118,600
NET ASSETS:
Beginning of period 188,184 66,921 118,600
- --------------------------------------------------------------------------------------------------------------------------------
End of period $ 295,871 $ 188,184 $ 108,253 $ 66,921 $ 194,700 $ 118,600
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 16,259 22,949 1,655 9,240 7,864 13,472
Issued in connection with acquisition 38 5,881
Reinvested 940 336 100 60 246 91
Redeemed (10,888) (4,707) (5,267) (2,759) (3,389) (2,258)
- --------------------------------------------------------------------------------------------------------------------------------
Change in shares 6,349 18,578 2,369 6,541 4,721 11,305
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
(b) Effective June 5, 1995, the Victory Equity Income Portfolio and the Victory
Equity Portfolio merged into the Value Fund and Growth Fund, respectively.
Changes in net assets for periods prior to June 5, 1995 represent the Value
Fund and Growth Fund, respectively.
(c) Effective March 17, 1994, the Society Earnings Momentum Fund merged into the
Growth Fund. Changes in net assets for periods prior to March 17, 1994
represent the Growth Fund.
SEE NOTES TO FINANCIAL STATEMENTS.
127
<PAGE> 130
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO REGIONAL STOCK INTERNATIONAL GROWTH
SPECIAL GROWTH FUND FUND FUND
------------------------------------------------ ----------------------- -----------------------
PERIOD FROM
SIX MONTHS ENDED YEAR ENDED JANUARY 11, 1994 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, APRIL 30, TO APRIL 30, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1995(b)(c) 1994(a)(b)(c) 1995 1994 1995 1994
(000) (000) (000) (000) (000) (000) (000)
---------------- ---------- ---------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income
(loss) $ (60) $ 49 $ (15) $ 402 $ 438 $ 696 $ (136)
Net realized gains (losses)
from investment
transactions 2,326 (2,209) (402) 1,485 1,699 (7,848) 4,064
Net realized losses from
foreign currency
transactions 4,365 (152)
Net change in unrealized
appreciation
(depreciation) from
investments (358) 3,557 (547) 3,578 (867) (1,929) 2,879
Change in unrealized
appreciation from
translation of assets and
liabilities in foreign
currencies 2,233 15
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets
resulting from operations 1,908 1,397 (964) 5,465 1,270 (2,483) 6,670
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment income (49) (419) (409)
In excess of net investment
income (4)
From net realized gains
from investment and
foreign currency
transactions (1,699) (1,293) (3,413)
Tax return of capital (512)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to
shareholders (53) (2,118) (1,702) (3,925)
- ---------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 16,956 4,996 32,410 9,494 16,543 42,668 53,804
Proceeds from shares issued
in connection with
acquisition 19,565 21,742
Dividends reinvested 2,114 1,560 3,922
Cost of shares redeemed (4,890) (16,411) (579) (9,872) (18,632) (36,754) (9,796)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from
capital transactions 31,631 (11,415) 31,831 1,736 (529) 31,578 44,008
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets 33,539 (10,071) 30,867 5,083 (961) 25,170 50,678
NET ASSETS:
Beginning of period 20,796 30,867 33,965 34,926 81,307 30,629
- ---------------------------------------------------------------------------------------------------------------------------------
End of period $ 54,335 $ 20,796 $ 30,867 $ 39,048 $ 33,965 $106,477 $ 81,307
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 1,241 530 3,203 630 1,143 3,463 4,323
Issued in connection with
acquisition 1,816 1,797
Reinvested 156 109 337
Redeemed (429) (1,701) (59) (670) (1,297) (3,065) (784)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in shares 2,628 (1,171) 3,144 116 (45) 2,532 3,539
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
(b) Audited by other auditors.
(c) Effective June 5, 1995, the Victory Aggressive Growth Portfolio and Victory
Foreign Markets Portfolio merged into the Special Growth Fund and
International Growth Fund, respectively. Changes in net assets for periods
prior to June 5, 1995 represent the Aggressive Growth Portfolio and
International Growth Fund, respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
128
<PAGE> 131
Notes to Financial Statements
THE VICTORY PORTFOLIOS October 31, 1995
- --------------------------------------------------------------------------------
1. ORGANIZATION:
The Victory Portfolios (collectively, the "Funds" and individually, a "Fund")
were organized on February 5, 1986, and are registered under the Investment
Company Act of 1940 (the "1940 Act"), as amended, as an open-end investment
company established as a Massachusetts business trust. The Funds are authorized
to issue an unlimited number of shares which are units of beneficial interest
without par value. The Funds presently offer shares of the U.S. Government
Obligations Fund, Prime Obligations Fund, Financial Reserves Fund, Institutional
Money Market Fund, Tax-Free Money Market Fund, Ohio Municipal Money Market Fund,
Limited Term Income Fund, Intermediate Income Fund, Investment Quality Bond
Fund, Government Bond Fund, Government Mortgage Fund, Fund for Income, National
Municipal Bond Fund, New York Tax-Free Fund, Ohio Municipal Bond Fund, Balanced
Fund, Stock Index Fund, Diversified Stock Fund, Value Fund, Growth Fund, Special
Value Fund, Special Growth Fund, Ohio Regional Stock Fund, and International
Growth Fund.
As described in note 3, certain portfolios of the Victory Funds merged into
corresponding series of The Victory Porfolios. Subsequent to this merger, the
fiscal period end changed from April 30 to October 31 for the Institutional
Money Market Fund, Government Bond Fund, National Municipal Bond Fund, and
Special Growth Fund. Likewise, the fiscal period end changed from August 31 to
October 31 for the Ohio Municipal Money Market Fund. Therefore, the current
period statements of operations and changes in net assets for those Funds
present results of operations and changes in net assets for the six-month period
and two-month period ended October 31, 1995, respectively.
The Institutional Money Market Fund is authorized to issue two classes of
shares, Institutional Shares and Service Shares. The Government Bond Fund,
National Municipal Bond Fund and New York Tax-Free Fund are each authorized to
issue two classes of shares, Class A Shares and Class B Shares. Each class of
shares in a Fund has identical rights and privileges except with respect to fees
paid under shareholder servicing or distribution plans, expenses allocable
exclusively to each class of shares, voting rights on matters affecting a single
class of shares, and the exchange privilege of each class of shares.
2. SIGNIFICANT ACCOUNTING POLICIES:
SECURITIES VALUATION:
- --------------------
Investments of the U.S. Government Obligations Fund, Prime Obligations Fund,
Financial Reserves Fund, Institutional Money Market Fund, Tax-Free Money Market
Fund, and Ohio Municipal Money Market Fund (collectively "the money market
funds") are valued at either amortized cost which approximates market value, or
at original cost which, combined with accrued interest, approximates market
value. Under the amortized cost valuation method, discount or premium is
amortized on a constant basis to the maturity of the security. In addition, the
money market funds may not (a) purchase any instrument with a remaining maturity
greater than thirteen months unless such instrument is subject to a demand
feature, or (b) maintain a dollar-weighted-average portfolio maturity which
exceeds 90 days.
Investments in common and preferred stocks, corporate bonds, commercial paper,
municipal and foreign government bonds, U.S. Government securities and
securities of U.S. Government agencies of the Limited Term Income Fund,
Intermediate Income Fund, Investment Quality Bond Fund, Government Bond Fund,
Government Mortgage Fund, Fund for Income, National Municipal Bond Fund, New
York Tax-Free Fund, Ohio Municipal Bond Fund, Balanced Fund, Stock Index Fund,
Diversified Stock Fund, Value Fund, Growth Fund, Special Value Fund, Special
Growth Fund, Ohio Regional Stock Fund, and International Growth Fund
(collectively "the variable net asset value funds") are valued at their market
values determined on the basis of the latest available bid prices in the
principal market (closing sales prices if the principal market is an exchange)
in which such securities are normally traded. Investments in investment
companies are valued at their respective net asset values as reported by such
companies. Investments in foreign securities, currency holdings and other assets
and liabilities of the Balanced Fund and International Growth Fund are valued
based on quotations from the primary market in which they are traded and are
translated from the local currency into U.S. dollars using current exchange
rates. The differences between the cost and market values of investments held by
the variable net asset value funds are reflected as either unrealized
appreciation or depreciation.
SECURITIES TRANSACTIONS AND RELATED INCOME:
- -------------------------------------------
Securities transactions are accounted for on the date the security is purchased
or sold (trade date). Interest income is recognized on the accrual basis and
includes, where applicable, the pro rata amortization of premium or accretion of
discount. Dividend income is recorded on the ex-dividend date. Dividend income
is recorded net of foreign taxes withheld. Gains or losses realized on sales of
securities are determined by comparing the identified cost of the security lot
sold with the net sales proceeds.
FOREIGN CURRENCY TRANSLATION:
- -----------------------------
The accounting records of the Funds are maintained in U.S. dollars. Investment
securities, other assets and liabilities of the Balanced Fund and International
Growth Fund denominated in a foreign currency are translated into U.S. dollars
at the current exchange rate. Purchases and sales of securities, income receipts
and expense payments are translated into U.S. dollars at the exchange rate on
the dates of the transactions.
129
<PAGE> 132
Notes to Financial Statements--Continued
THE VICTORY PORTFOLIOS October 31, 1995
- --------------------------------------------------------------------------------
The Funds isolate that portion of the results of operations resulting from
changes in foreign exchange rates from the fluctuation arising from changes in
market prices of securities held.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of securities, sales of foreign currencies, currency exchange
fluctuations between the trade and settlement dates of securities transactions,
and the difference between the amount of assets and liabilities recorded and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities, including investments in securities, resulting from changes in
currency exchange rates.
REPURCHASE AGREEMENTS:
- -----------------------
Each Fund may acquire repurchase agreements from financial institutions such as
banks and broker-dealers which Society Asset Management, Inc. (the Funds'
investment adviser) deems creditworthy under guidelines approved by the Board of
Trustees, subject to the seller's agreement to repurchase such securities at a
mutually agreed-upon date and price. The repurchase price generally equals the
price paid by a Fund plus interest negotiated on the basis of current short-term
rates, which may be more or less than the rate on the underlying Fund
securities. The seller, under a repurchase agreement, is required to maintain
the value of collateral held pursuant to the agreement at not less than the
repurchase price (including accrued interest). Securities subject to repurchase
agreements are held by the Funds' custodian or another qualified custodian or in
the Federal Reserve/Treasury book-entry system. Repurchase agreements are
considered to be loans by a Fund under the 1940 Act.
FORWARD CURRENCY CONTRACTS:
- ----------------------------
A forward currency contract ("forward") is an agreement between two parties to
buy and sell a currency at a set price on a future date. The market value of the
forward fluctuates with changes in currency exchange rates. The forward is
marked-to-market daily and the change in market value is recorded by a Fund as
unrealized appreciation or depreciation. When the forward is closed, the Fund
records a realized gain or loss equal to the fluctuation in value during the
period the forward was opened. A Fund could be exposed to risk if a counterparty
is unable to meet the terms of a forward or if the value of the currency changes
unfavorably.
FUTURES CONTRACTS:
- -----------------
The Balanced Fund, Stock Index Fund, Diversified Stock Fund, Value Fund, Growth
Fund, Special Value Fund, Special Growth Fund, Ohio Regional Stock Fund, and
International Growth Fund may enter into contracts for the future delivery of
securities or foreign currencies and futures contracts based on a specific
security, class of securities, foreign currency or an index, purchase or sell
options on any such futures contracts and engage in related closing
transactions. A futures contract on a securities index is an agreement
obligating either party to pay, and entitling the other party to receive, while
the contract is outstanding, cash payments based on the level of a specified
securities index. These Funds may enter into futures contracts in an effort to
hedge against market risks. The acquisition of put and call options on futures
contracts will give the Funds the right (but not the obligation), for a
specified price, to sell or to purchase the underlying futures contract, upon
exercise of the option, at any time during the option period. Futures
transactions involve brokerage costs and require the Funds to segregate assets
to cover contracts that would require it to purchase securities or currencies. A
Fund may lose the expected benefit of futures transactions if interest rates,
exchange rates or securities prices change in an unanticipated manner. Such
unanticipated changes may also result in poorer overall performance than if the
Fund had not entered into any futures transactions. In addition, the value of a
Fund's futures positions may not prove to be perfectly or even highly correlated
with the value of its portfolio securities or foreign currencies, limiting a
Fund's ability to hedge effectively against interest rate, exchange rate and/or
market risk and giving rise to additional risks. There is no assurance of
liquidity in the secondary market for purposes of closing out futures positions.
SECURITIES PURCHASED ON A WHEN-ISSUED AND DELAYED DELIVERY BASIS:
- ------------------------------------------------------------------
Each Fund may purchase securities on a "when-issued" basis. When-issued
securities are securities purchased for delivery beyond the normal settlement
date at a stated price and/or yield, thereby, involving the risk that the price
and/or yield obtained may be more or less than those available in the market
when delivery takes place. At the time a Fund makes the commitment to purchase a
security on a when-issued basis, the Fund records the transaction and reflects
the value of the security in determining net asset value. Normally, the
settlement date occurs within one month of the purchase. A segregated account is
established and the Funds maintain cash and marketable securities at least equal
in value to commitments for when-issued securities. Securities purchased on a
when-issued basis or delayed delivery basis do not earn income until settlement
date.
130
<PAGE> 133
Notes to Financial Statements--Continued
THE VICTORY PORTFOLIOS October 31, 1995
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS:
- -------------------------
Dividends from net investment income are declared daily and paid monthly for the
money market funds. Dividends from net investment income are declared and paid
quarterly for the Stock Index Fund, Diversified Stock Fund, Value Fund, Growth
Fund, Special Value Fund, Special Growth Fund, Ohio Regional Stock Fund, and
International Growth Fund. Dividends from net investment income are declared and
paid monthly for the Limited Term Income Fund, Intermediate Income Fund,
Investment Quality Bond Fund, Government Bond Fund, Government Mortgage Fund,
Fund for Income, National Municipal Bond Fund, New York Tax-Free Fund, Ohio
Municipal Bond Fund, and Balanced Fund. Distributable net realized capital
gains, if any, are declared and distributed at least annually.
During the year ended October 31, 1994, the Funds adopted Statement of Position
93-2, Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies.
Accordingly, timing differences relating to shareholder distributions are
reflected in the components of net assets and permanent book and tax basis
differences relating to shareholder distributions have been reclassified to
additional paid-in capital. Net investment income, net realized gains and net
assets were not affected by this change.
Dividends from net investment income and from net realized capital gains are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due to
differing treatments for mortgage-backed securities, foreign currency
transactions, expiring capital loss carryforwards and deferrals of certain
losses.
FEDERAL INCOME TAXES:
- ---------------------
It is the policy of each Fund to continue to qualify as a regulated investment
company by complying with the provisions available to certain investment
companies, as defined in applicable sections of the Internal Revenue Code, and
to make distributions of net investment income and net realized capital gains
sufficient to relieve it from all, or substantially all, federal income taxes.
OTHER:
- ------
Expenses that are directly related to one of the Funds are charged directly to
that Fund. Other operating expenses of The Victory Portfolios are prorated to
each Fund on the basis of relative net assets or other appropriate basis. Fees
paid under a Fund's shareholder servicing or distribution plans are borne by the
specific class of shares to which they apply.
All expenses in connection with Intermediate Income, Investment Quality Bond,
Balanced, Stock Index, Value, Growth, Special Value, and Special Growth Funds'
organization and registration under the 1940 Act and the Securities Act of 1933
were paid by those Funds. Such expenses are being amortized over a period of two
years commencing with the respective inception dates.
Certain prior year balances have been reclassified to be consistent with current
year presentation.
3. MERGERS:
As approved by vote of shareholders of The Victory Funds via proxy dated April
28, 1995, effective June 5, 1995, certain portfolios of The Victory Funds merged
into corresponding series of The Victory Portfolios. The mergers were
accomplished by the tax-free transfer of all assets of each Victory Fund to a
corresponding investment fund of The Victory Portfolios in exchange for the
assumption of liabilities of each Victory Fund. The portfolios of The Victory
Funds merged into existing funds of The Victory Portfolios as follows:
<TABLE>
<CAPTION>
THE VICTORY FUNDS THE VICTORY PORTFOLIOS
- ----------------------------------------- ------------------------------------------------------
<S> <C> <C>
U.S. Treasury Money Market Portfolio to U.S. Government Obligations Fund
Short-Term Government Income Portfolio to Limited Term Income Fund
Corporate Bond Portfolio to Investment Quality Bond Fund
Equity Income Portfolio to Value Fund
Equity Portfolio to Growth Fund
Aggressive Growth Portfolio to Special Growth Fund
Foreign Markets Portfolio to International Growth Fund
</TABLE>
The Special Growth Fund assumed the past performance of the Aggressive Growth
Portfolio.
131
<PAGE> 134
Notes to Financial Statements--Continued
THE VICTORY PORTFOLIOS October 31, 1995
- --------------------------------------------------------------------------------
Additionally, the following portfolios of The Victory Funds merged into newly
created funds of The Victory Portfolios:
<TABLE>
<CAPTION>
THE VICTORY FUNDS THE VICTORY PORTFOLIOS
- ----------------------------------------- ------------------------------------------------------
<S> <C> <C>
Financial Reserves Portfolio to Financial Reserves Fund
Institutional Money Market Portfolio to Institutional Money Market Fund
Ohio Municipal Money Market Portfolio to Ohio Municipal Money Market Fund
Government Bond Portfolio to Government Bond Fund
Fund for Income Portfolio to Fund for Income
National Municipal Bond Portfolio to National Municipal Bond Fund
New York Tax-Free Portfolio to New York Tax-Free Fund
</TABLE>
On March 17, 1994, the Growth Fund acquired all the net assets of the Society
Earnings Momentum Fund pursuant to a plan of reorganization approved by the
shareholders of the Society Earnings Momentum Fund.
The following is a summary of Shares Outstanding, Net Assets, Net Asset Value
per Share, and Unrealized Appreciation immediately before and after the mergers
(amounts in thousands except Net Asset Value):
<TABLE>
<CAPTION>
BEFORE MERGER AFTER MERGER
------------------------------------ ---------------
U.S. TREASURY U.S. GOVERNMENT U.S. GOVERNMENT
MONEY MARKET OBLIGATIONS OBLIGATIONS
JUNE 5, 1995 PORTFOLIO FUND FUND
---------------- --------------- ---------------
<S> <C> <C> <C>
Shares............................................ 242,970 531,916 774,889
Net Assets........................................ $242,973 $ 531,733 $ 774,706
Net Asset Value................................... $ 1.00 $ 1.00 $ 1.00
Unrealized Appreciation........................... $ 0 $ 0 $ 0
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM
GOVERNMENT LIMITED TERM LIMITED TERM
INCOME PORTFOLIO INCOME FUND INCOME FUND
---------------- --------------- ---------------
<S> <C> <C> <C>
Shares............................................ 1,460 16,699 18,097
Net Assets........................................ $ 14,265 $ 170,408 $ 184,673
Net Asset Value................................... $ 9.77 $ 10.20 $ 10.20
Unrealized Appreciation........................... $ 124 $ 2,956 $ 3,080
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT INVESTMENT
CORPORATE BOND QUALITY QUALITY
PORTFOLIO BOND FUND BOND FUND
---------------- --------------- ---------------
<S> <C> <C> <C>
Shares............................................ 2,857 10,475 13,322
Net Assets........................................ $ 27,848 $ 102,403 $ 130,251
Net Asset Value................................... $ 9.75 $ 9.78 $ 9.78
Unrealized Appreciation........................... $ 414 $ 1,992 $ 2,406
</TABLE>
<TABLE>
<CAPTION>
EQUITY INCOME
PORTFOLIO VALUE FUND VALUE FUND
---------------- --------------- ---------------
<S> <C> <C> <C>
Shares............................................ 39 24,535 24,573
Net Assets........................................ $ 423 $ 273,791 $ 274,214
Net Asset Value................................... $ 10.63 $ 11.16 $ 11.16
Unrealized Appreciation........................... $ 41 $ 25,387 $ 25,428
</TABLE>
<TABLE>
<CAPTION>
EQUITY PORTFOLIO GROWTH FUND GROWTH FUND
---------------- --------------- ---------------
<S> <C> <C> <C>
Shares............................................ 5,603 4,026 9,907
Net Assets........................................ $ 65,632 $ 44,910 $ 110,542
Net Asset Value................................... $ 11.71 $ 11.16 $ 11.16
Unrealized Appreciation........................... $ 8,173 $ 5,315 $ 13,488
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE SPECIAL SPECIAL
GROWTH PORTFOLIO GROWTH FUND GROWTH FUND
---------------- --------------- ---------------
<S> <C> <C> <C>
Shares............................................ 1,930 2,073 3,746
Net Assets........................................ $ 20,796 $ 19,565 $ 40,361
Net Asset Value................................... $ 10.77 $ 9.44 $ 10.77
Unrealized Appreciation........................... $ 3,089 $ 1,428 $ 4,517
</TABLE>
132
<PAGE> 135
Notes to Financial Statements--Continued
THE VICTORY PORTFOLIOS October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BEFORE MERGER AFTER MERGER
------------------------------------ ---------------
FOREIGN MARKETS INTERNATIONAL INTERNATIONAL
PORTFOLIO GROWTH FUND GROWTH FUND
---------------- --------------- ---------------
<S> <C> <C> <C>
Shares............................................ 2,245 6,986 8,783
Net Assets........................................ $ 21,748 $ 84,507 $ 106,255
Net Asset Value................................... $ 9.69 $ 12.10 $ 12.10
Unrealized Appreciation (Depreciation)............ $ (138) $ 6,550 $ 6,412
</TABLE>
<TABLE>
<CAPTION>
SOCIETY EARNINGS
MARCH 17, 1994 MOMENTUM FUND GROWTH FUND GROWTH FUND
---------------- --------------- ---------------
<S> <C> <C> <C>
Shares............................................ 883 6,053 6,912
Net Assets........................................ $ 8,794 $ 61,983 $ 70,777
Net Asset Value................................... $ 9.96 $ 10.24 $ 10.24
</TABLE>
4. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the
period ended October 31, 1995 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Limited Term Income Fund............. $ 219,352 $ 134,222
Intermediate Income Fund............. 164,126 124,722
Investment Quality Bond Fund......... 185,247 156,582
Government Bond Fund*................ 34,227 95,081
Government Mortgage Fund............. 81,862 106,516
Fund for Income...................... 8,139 19,372
National Municipal Bond Fund*........ 13,535 6,531
New York Tax-Free Fund............... 3,075 3,211
Ohio Municipal Bond Fund............. 70,385 71,668
Balanced Fund........................ 156,241 108,135
Stock Index Fund..................... 40,250 11,336
Diversified Stock Fund............... 320,417 232,263
Value Fund........................... 111,553 53,516
Growth Fund.......................... 100,486 76,374
Special Value Fund................... 97,912 55,387
Special Growth Fund*................. 54,021 25,441
Ohio Regional Stock Fund............. 4,264 3,878
International Growth Fund............ 81,845 58,858
</TABLE>
* For the period May 1, 1995 through October 31, 1995.
5. RELATED PARTY TRANSACTIONS:
Investment advisory services are provided to all the Funds by Society Asset
Management, Inc. ("SAM"), a wholly owned subsidiary of KeyCorp Asset Management
Holdings, Inc., which is a wholly owned subsidiary of Society National Bank
("Society"), a wholly owned subsidiary of KeyCorp. Under the terms of the
investment advisory agreements, SAM is entitled to receive fees based on a
percentage of the average daily net assets of the Funds. Society serves the
Funds as custodian. Society received custodian fees from the Funds for providing
custodian services in addition to reimbursement of actual out-of-pocket expenses
incurred.
Society also serves as Shareholder Servicing Agent for all the Funds. As such,
Society provides support services to their clients who are shareholders, which
may include establishing and maintaining accounts and records, processing
dividend and distribution payments, providing account information, assisting in
processing of purchase, exchange and redemption requests, and assisting
shareholders in changing dividend options, account designations and addresses.
For providing such services, Society may receive a fee computed daily as 0.25%
of the average net assets of certain shares of the Funds.
Concord Holding Corporation (the "Administrator"), an indirect, wholly-owned
subsidiary of The BISYS Group, Inc. ("BISYS") serves as the administrator to the
Funds, and Victory Broker Dealer Services, Inc. (the "Distributor"), a wholly-
owned subsidiary of BISYS, serves as the distributor to the Funds. Certain
officers of the Funds are affiliated with BISYS. Such officers receive no direct
payments or fees from the Fund for serving as officers of the Funds.
Under the terms of the administration agreement, the Administrator's fees are
computed as 0.15% of the average daily net assets of the Funds. Pursuant to a
12b-1 Plan, the Distributor may receive fees computed as 0.25% of the average
daily net
133
<PAGE> 136
Notes to Financial Statements--Continued
THE VICTORY PORTFOLIOS October 31, 1995
- --------------------------------------------------------------------------------
assets of Service Shares of the Institutional Money Market Fund and 0.75% of the
average daily net assets of Class B Shares of each of the Government Bond Fund,
National Municipal Bond Fund and New York Tax-Free Fund for providing
distribution services and is entitled to receive commissions on sales of shares
of the variable net asset value funds. For the year ended October 31, 1995, the
Distributor received $721,000 from commissions earned on sales of shares of the
variable net asset value funds all of which the Distributor reallowed to dealers
of the Funds' shares including $614,000 to affiliates of the Funds. BISYS Fund
Services, Ohio, Inc. (the Company), an affiliate of BISYS, serves the Funds as
Mutual Fund Accountant. Under the terms of the Fund Accounting Agreement, the
Company's fee is based on a percentage of average daily net assets.
Fees may be voluntarily reduced to assist the Funds in maintaining competitive
expense ratios.
Additional information regarding related party transactions is as follows for
the year ended October 31, 1995:
<TABLE>
<CAPTION>
INVESTMENT
ADVISORY ADMINISTRATION MUTUAL FUND
FEES FEES ACCOUNTANT CUSTODIAN
------------------------------- -------------- FEES FEES
(PERCENTAGES VOLUNTARY VOLUNTARY ----------- ---------
OF AVERAGE DAILY FEE FEE ANNUAL ANNUAL
NET ASSETS) REDUCTIONS REDUCTIONS FEE FEE
---------------- ---------- -------------- ----------- ---------
(000) (000) (000) (000)
<S> <C> <C> <C> <C> <C>
U.S. Government Obligations Fund 0.35% $ 88 $ 243 $14
Prime Obligations Fund 0.35% 261 7
Financial Reserves Fund 0.50% $420 1 101 15
Institutional Money Market Fund** 0.25% 338 257 50 8
Tax-Free Money Market Fund 0.35% 34 113 5
Ohio Municipal Money Market Fund* 0.50% 245 13 8
Limited Term Income Fund 0.50% 21 89 3
Intermediate Income Fund 0.75% 326 71 2
Investment Quality Bond Fund 0.75% 239 71 3
Government Bond Fund** 0.55% 36 3 29 2
Government Mortgage Fund 0.50% 16 83 2
Fund for Income 0.50% 37 9 32 2
National Municipal Bond Fund** 0.55% 25 6 24
New York Tax-Free Fund 0.55% 45 7 49 2
Ohio Municipal Bond Fund 0.60% 164 43 2
Balanced Fund 1.00% 624 88 5
Stock Index Fund 0.60% 195 171 23 8
Diversified Stock Fund 0.65% 126 2 142 7
Value Fund 1.00% 811 124 8
Growth Fund 1.00% 216 48 50 4
Special Value Fund 1.00% 406 1 76 4
Special Growth Fund** 1.00% 297 33 21 1
Ohio Regional Stock Fund 0.75% 14 31 1
International Growth Fund 1.10% 116 121 92
</TABLE>
* For the period September 1, 1995 through October 31, 1995
**For the period May 1, 1995 through October 31, 1995.
134
<PAGE> 137
Notes to Financial Statements--Continued
THE VICTORY PORTFOLIOS October 31, 1995
- --------------------------------------------------------------------------------
6. CAPITAL SHARE TRANSACTIONS:
Transactions in capital shares for the Funds with multiple share classes were as
follows (amounts in thousands):
<TABLE>
<CAPTION>
INSTITUTIONAL
MONEY MARKET FUND
-----------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, APRIL 30, APRIL 30,
1995(c) 1995(a) 1994(a)
------------- -------------- --------------
<S> <C> <C> <C>
CAPITAL AND SHARE TRANSACTIONS:
Institutional
Shares:
Issued 629,396 1,197,333 1,238,739
Reinvested 133 1,508 390
Redeemed (574,761) (1,290,390) (853,005)
- ----------------------------------------------------
Total 54,768 (91,549) 386,124
Service
Shares:
Issued 19,479
Reinvested 11
Redeemed (8,011)
- ----------------------------------------------------
Total 11,479
</TABLE>
<TABLE>
<CAPTION>
NEW YORK
NATIONAL MUNICIPAL TAX-FREE
GOVERNMENT BOND FUND BOND FUND FUND
-------------------------------------------- -------------------------------------------- ------------
SIX MONTHS PERIOD FROM SIX MONTHS PERIOD FROM
ENDED YEAR ENDED MAY 3, 1993 TO ENDED YEAR ENDED FEBRUARY 3, 1994 YEAR ENDED
OCTOBER 31, APRIL 30, APRIL 30, OCTOBER 31, APRIL 30, TO APRIL 30, OCTOBER 31,
1995 1995(a)(c) 1994(a)(b) 1995 1995(a)(c) 1994(a)(b) 1995
------------ -------------- -------------- -------------- ------------ ---------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
CAPITAL
TRANSACTIONS:
Class A Shares:
Proceeds from
shares issued.... 3,055 13,632 136,272 6,441 4,646 502 3,395
Dividends
reinvested....... 1,283 73 4 211 102 3 468
Cost of shares
redeemed......... (64,259) (48,532) (7,331) (169) (310) (6,784)
- ---------------------------------------------------------------------------------------------------------------------------
Total.............. (59,921) (34,827) 128,945 6,483 4,438 505 (2,921)
Class B Shares:
Proceeds from
shares issued.... 745 150 341 146 2,132
Dividends
reinvested....... 9 2 5 1 41
Cost of shares
redeemed......... (10) (50) (284)
- ---------------------------------------------------------------------------------------------------------------------------
Total.............. 744 152 296 147 1,889
SHARE TRANSACTIONS:
Class A Shares:
Issued............. 314 1,459 13,500 651 504 51 271
Reinvested......... 131 8 21 11 37
Redeemed........... (6,584) (5,266) (738) (17) (33) (552)
- ---------------------------------------------------------------------------------------------------------------------------
Total.............. (6,139) (3,799) 12,762 655 482 51 (244)
Class B Shares:
Issued............. 76 16 34 15 172
Reinvested......... 1 2
Redeemed........... (1) (4) (22)
- ---------------------------------------------------------------------------------------------------------------------------
Total.............. 76 16 30 15 152
<CAPTION>
PERIOD FROM
JANUARY 1,
1994 THROUGH YEAR ENDED
OCTOBER 31, DECEMBER 31,
1994(a)(c) 1993(a)
-------------- ------------
<S> <<C> <C>
CAPITAL
TRANSACTIONS:
Class A Shares:
Proceeds from
shares issued.... 6,305 7,439
Dividends
reinvested....... 455 1,285
Cost of shares
redeemed......... (15,295) (7,914)
- -------------------
Total.............. (8,535) 810
Class B Shares:
Proceeds from
shares issued....
Dividends
reinvested.......
Cost of shares
redeemed.........
- -------------------
Total..............
SHARE TRANSACTIONS:
Class A Shares:
Issued............. 482 566
Reinvested......... 35 97
Redeemed........... (1,185) (595)
- -------------------
Total.............. (668) 68
Class B Shares:
Issued.............
Reinvested.........
Redeemed...........
- -------------------
Total..............
</TABLE>
(a) Audited by other auditors.
(b) Period from commencement of operations.
(c) Service shares commenced offering June 5, 1995 for the Institutional Money
Market Fund. Class B Shares commenced offering September 26, 1994 for each
of the Government Bond Fund, National Municipal Bond Fund and New York
Tax-Free Fund.
135
<PAGE> 138
Notes to Financial Statements--Continued
THE VICTORY PORTFOLIOS October 31, 1995
- --------------------------------------------------------------------------------
7. CONCENTRATION OF RISK:
The Ohio Municipal Money Market Fund, New York Tax-Free Fund, Ohio Municipal
Bond Fund and Ohio Regional Stock Fund invest primarily in debt obligations
issued by the respective States and their political subdivisions, agencies and
public authorities to obtain funds for various public purposes and equity
securities issued by organizations domiciled in the respective States. The Funds
are more susceptible to economic and political factors that may adversely affect
issuers of the States' specific municipal securities than are municipal bond
funds that are not concentrated in these issuers to the same extent.
8. FEDERAL INCOME TAX INFORMATION (UNAUDITED):
The Victory Portfolios designate the following eligible distributions for the
dividends received deduction for corporations for the taxable year ended October
31, 1995:
<TABLE>
<CAPTION>
DIVIDEND INCOME
(000) DIVIDEND INCOME PER SHARE
--------------- -------------------------
<S> <C> <C>
Balanced Fund $ 5,464 $ 0.275
Stock Index Fund 2,711 0.203
Diversified Stock Fund 9,901 0.281
Value Fund 8,298 0.252
Growth Fund 1,537 0.110
Special Value Fund 3,659 0.154
Special Growth Fund 155 0.000
Ohio Regional Stock 830 0.177
</TABLE>
The Victory Portfolios designate the following exempt-interest dividends for the
taxable year ended October 31, 1995:
<TABLE>
<CAPTION>
TAX-FREE OHIO
MONEY MUNICIPAL NATIONAL NEW YORK OHIO
MARKET MONEY MARKET MUNICIPAL TAX-FREE MUNICIPAL
FUND FUND BOND FUND FUND BOND FUND
-------- ------------ --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Exempt-interest dividends (000) $8,301 $2,859 $ 2,801
Exempt-interest dividends (000) Class A $ 214 $ 830
Exempt-interest dividends (000) Class B 6 42
Exempt-interest dividends per share 0.034 0.006 0.525
Exempt-interest dividends per share Class
A 0.225 0.826
Exempt-interest dividends per share Class
B 0.180 0.744
</TABLE>
136
<PAGE> 139
Notes to Financial Statements--Continued
THE VICTORY PORTFOLIOS October 31, 1995
- --------------------------------------------------------------------------------
The percentage break-down of exempt-interest income by state for the Funds'
taxable year ended October 31, 1995 is as follows:
<TABLE>
<CAPTION>
TAX-FREE OHIO MUNICIPAL NATIONAL NEW YORK OHIO
MONEY MARKET MONEY MARKET MUNICIPAL TAX-FREE MUNICIPAL
FUND FUND BOND FUND BOND FUND BOND FUND
------------ -------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Alabama 2.1% 0.3%
Arizona 3.9% 2.9%
Arkansas 1.8%
California 3.0% 0.1%
Colorado 1.2% 1.8%
Connecticut 2.4%
District of Columbia 0.3%
Florida 8.6% 1.9%
Georgia 1.5% 2.3%
Illinois 8.1% 14.0%
Indiana 5.1% 0.2%
Iowa 3.4% 1.0%
Kansas 1.3%
Kentucky 2.6% 0.5%
Louisiana 0.3%
Maine 2.0%
Maryland 0.2% 0.1%
Massachusetts 0.1% 0.7%
Michigan 1.9% 15.5%
Minnesota 1.4% 1.4%
Missouri 5.3% 6.5%
Montana 0.1%
Nebraska 1.8%
Nevada 1.8% 0.4%
New Hampshire 1.0%
New Jersey 0.2%
New Mexico 0.4%
New York 1.3% 3.5% 97.5%
North Carolina 3.7%
North Dakota 3.5%
Ohio 16.7% 100.0% 11.5% 100.0%
Oklahoma 1.8%
Oregon 0.5%
Pennsylvania 1.9% 0.1%
Puerto Rico 2.5%
South Carolina 1.4% 2.3%
South Dakota 3.5%
Tennessee 2.8% 2.3%
Texas 4.9% 8.6%
Utah 0.1% 0.2%
Virginia 1.1% 0.5%
Washington 0.7% 2.8%
West Virginia 0.6%
Wisconsin 7.2% 2.9%
Wyoming 0.5% 1.7%
------ ------ --------- --------- ---------
100.0% 100.0% 100.0% 100.0% 100.0%
=============== =============== =========== =========== ===========
</TABLE>
137
<PAGE> 140
Notes to Financial Statements--Continued
THE VICTORY PORTFOLIOS October 31, 1995
- --------------------------------------------------------------------------------
The International Growth Fund elected to pass the benefits of the foreign tax
credit to shareholders for the year ended October 31, 1995. The following
information is presented with respect to the election:
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH FUND
-------------------------
<S> <C>
Gross income from foreign countries (000) $ 2,435
Gross income from foreign countries per share 0.17
Income taxes paid to foreign countries (000) 325
Income taxes paid to foreign countries per share 0.02
</TABLE>
As of October 31, 1995, for Federal income tax purposes, the following funds
have capital loss carryforwards available to offset future capital gains, if any
(amounts in thousands):
<TABLE>
<CAPTION>
AMOUNT EXPIRES
------ -------
<S> <C> <C>
U.S. Government Obligations Fund..................................... $ 117 2002
Limited Term Income Fund............................................. 1,856 2002
Limited Term Income Fund............................................. 946 2003
Intermediate Income Fund............................................. 2,498 2002
Intermediate Income Fund............................................. 1,429 2003
Investment Quality Bond Fund......................................... 4,019 2003
Investment Quality Bond Fund......................................... 4,392 2004
Government Bond Fund................................................. 3,935 2003
Government Bond Fund................................................. 3,374 2004
Government Mortgage Fund............................................. 2,013 2004
Fund for Income...................................................... 839 2001
Fund for Income...................................................... 598 2002
Fund for Income...................................................... 314 2003
New York Tax-Free Fund............................................... 60 2003
Ohio Municipal Bond Fund............................................. 399 2002
Ohio Municipal Bond Fund............................................. 138 2003
Special Growth Fund.................................................. 2,524 2003
Special Growth Fund.................................................. 3,826 2004
International Growth Fund............................................ 362 2003
International Growth Fund............................................ 3,020 2004
</TABLE>
138
<PAGE> 141
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT OBLIGATIONS FUND
-----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------
1995(a) 1994 1993 1992 1991
---------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ----------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.052 0.032 0.026 0.036 0.060
Distributions
Net investment income (0.052) (0.032) (0.026) (0.036) (0.060)
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ----------------------------------------------------------------------------------------------------------
Total Return 5.38% 3.30% 2.62% 3.66% 6.14%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $964,929 $ 412,048 $515,734 $579,836 $430,248
Ratio of expenses to average net assets 0.58% 0.63% 0.60% 0.60% 0.60%
Ratio of net investment income to
average net assets 5.28% 3.20% 2.57% 3.50% 5.92%
Ratio of expenses to average net
assets* 0.60% 0.80%
Ratio of net investment income to
average net assets* 5.26% 3.03%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the
ratios would have been as indicated.
(a) Effective June 5, 1995, the Victory U.S. Treasury Money Market Portfolio merged into the U.S. Government
Obligations Fund. Financial highlights for the periods prior to June 5, 1995 represent the U.S. Government
Obligations Fund.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
139
<PAGE> 142
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME OBLIGATIONS FUND
-----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ----------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.051 0.035 0.030 0.037 0.061
Net realized losses from investment
transactions (0.003)
- ----------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.051 0.032 0.030 0.037 0.061
- ----------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.051) (0.035) (0.030) (0.037) (0.061)
- ----------------------------------------------------------------------------------------------------------
Capital transactions 0.003
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ----------------------------------------------------------------------------------------------------------
Total Return 5.26% 3.57% 3.05% 3.77% 6.32%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $456,266 $ 782,303 $720,024 $524,338 $442,263
Ratio of expenses to average net assets 0.74% 0.62% 0.60% 0.61% 0.62%
Ratio of net investment income to
average net assets 5.09% 3.52% 2.96% 3.68% 6.14%
Ratio of expenses to average net
assets* 0.79%
Ratio of net investment income to
average net assets* 3.35%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the
ratios would have been as indicated.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
140
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THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FINANCIAL RESERVES FUND
-----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------
1995(c) 1994(b) 1993(a)(b) 1992(a)(b) 1991(a)(b)
---------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ----------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.054 0.035 0.030 0.040 0.060
Distributions
Net investment income (0.054) (0.035) (0.030) (0.040) (0.060)
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ----------------------------------------------------------------------------------------------------------
Total Return 5.50% 3.57% 2.81% 3.76% 6.28%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $762,693 $ 433,266 $457,872 $523,889 $412,542
Ratio of expenses to average net assets 0.60% 0.57% 0.55% 0.55% 0.55%
Ratio of net investment income to
average net assets 5.40% 3.48% 2.78% 3.67% 6.12%
Ratio of expenses to average net
assets* 0.76% 0.73% 0.70% 0.70% 0.62%
Ratio of net investment income to
average net assets* 5.24% 3.32% 2.63% 3.52% 6.05%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced and/or reimbursed. If such voluntary fee reductions
and/or reimbursements had not occurred, the ratios would have been as indicated.
(a) Effective May 16, 1991, Ameritrust Company National Association became investment adviser to the Fund. Effective
March 16, 1992, Ameritrust was acquired by Society Corporation and merged into Society National Bank, a
wholly-owned subsidiary of Society Corporation, on July 13, 1992. Effective January 7, 1993, Society Asset
Management, Inc., a wholly-owned subsidiary of Society Corporation, was named investment adviser to the Fund.
(b) Audited by other auditors.
(c) Effective June 5, 1995, the Victory Financial Reserves Portfolio became the Financial Reserves Fund.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
141
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THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL MONEY MARKET FUND
-------------------------------------------------------------------------------------------
SERVICE INSTITUTIONAL
SHARES SHARES
------------- -------------
SIX MONTHS
JUNE 5, 1995 ENDED YEAR ENDED APRIL 30,
TO OCTOBER 31, OCTOBER 31, ---------------------------------------------------------
1995(a)(e) 1995(e) 1995(d) 1994(d) 1993(d) 1992(d) 1991(d)
------------- ------------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- -------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.012 0.290 0.500 0.028 0.032 0.051 0.076
Distributions
Net investment income (0.012) (0.290) (0.500) (0.028) (0.032) (0.051) (0.076)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END
OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ------------------------------------------------------------------------------------------------------------------------
Total Return 1.23%(b) 2.90%(b) 4.91 % 2.80 % 3.26 % 5.21 % 7.83 %
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of
Period (000) $11,479 $ 504,536 $449,814 $541,229 $155,097 $177,640 $248,515
Ratio of expenses to
average net assets 0.51%(c) 0.26%(c) 0.27% 0.55% 0.43% 0.30% 0.30%
Ratio of net investment
income to average net
assets 5.33%(c) 5.69%(c) 4.91% 2.78% 3.19% 5.06% 7.46%
Ratio of expenses to
average net assets* 1.00%(c) 0.49%(c) 0.51% 0.55% 0.48% 0.42% 0.44%
Ratio of net investment
income to average net
assets* 4.84%(c) 5.46%(c) 4.67% 2.78% 3.14% 4.94% 7.32%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced and/or reimbursed. If such voluntary fee reductions
and/or reimbursements had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Audited by other auditors.
(e) Effective June 5, 1995, the Victory Institutional Money Market Portfolio became the Institutional Money Market
Fund, and the Fund commenced offering separate share classes.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
142
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THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND
-----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ----------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.034 0.021 0.020 0.027 0.043
Distributions
Net investment income (0.034) (0.021) (0.020) (0.027) (0.043)
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ----------------------------------------------------------------------------------------------------------
Total Return 3.42% 2.17% 2.06% 2.77% 4.44%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $307,726 $ 198,561 $189,351 $151,012 $129,601
Ratio of expenses to average net assets 0.61% 0.60% 0.59% 0.61% 0.62%
Ratio of net investment income to
average net assets 3.36% 2.14% 2.04% 2.70% 4.29%
Ratio of expenses to average net
assets* 0.62% 0.79% 0.60%
Ratio of net investment income to
average net assets* 3.35% 1.95% 2.02%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the
ratios would have been as indicated.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
143
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THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO MUNICIPAL MONEY MARKET FUND
---------------------------------------------------------------------------------
TWO MONTHS
ENDED YEAR ENDED AUGUST 31,
OCTOBER 31, -----------------------------------------------------------------
1995 1995(b) 1994(c) 1993(a)(c) 1992(A)(c) 1991(a)(c)
------------- ---------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.006 0.033 0.021 0.021 0.031 0.046
Distributions
Net investment income (0.006) (0.033) (0.021) (0.021) (0.031) (0.046)
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END
OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ------------------------------------------------------------------------------------------------------------
Total Return 0.55%(d) 3.33% 2.10% 2.14% 3.18% 4.67%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of
Period (000) $ 510,414 $502,453 $ 318,132 $262,681 $252,705 $253,177
Ratio of expenses to
average net assets 0.64%(e) 0.63% 0.65% 0.65% 0.65% 0.64%
Ratio of net investment
income to average net
assets 3.31%(e) 3.33% 2.08% 2.12% 3.13% 4.59%
Ratio of expenses to
average net assets* 0.92%(e) 0.94% 0.76% 0.72% 0.68% 0.66%
Ratio of net investment
income to average net
assets* 3.03%(e) 3.02% 1.97% 2.05% 3.10% 4.57%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced and/or reimbursed. If such voluntary fee reductions
and/or reimbursements had not occurred, the ratios would have been as indicated.
(a) Effective February 27, 1991, Ameritrust Company National Association became investment adviser to the Fund.
Effective March 16, 1992, Ameritrust was acquired by Society Corporation and merged into Society National Bank, a
wholly-owned subsidiary of Society Corporation, on July 13, 1992. Effective February 3, 1993, Society Asset
Management, Inc. a wholly-owned subsidiary of Society Corporation was named investment adviser to the Fund.
(b) Effective June 5, 1995, the Victory Ohio Municipal Money Market Portfolio became the Ohio Municipal Money Market
Fund.
(c) Audited by other auditors.
(d) Not annualized.
(e) Annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
144
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THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED TERM INCOME FUND
-----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------
1995(a) 1994 1993 1992 1991
---------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.88 $ 10.53 $ 10.45 $ 10.33 $ 10.02
- ----------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.57 0.54 0.57 0.64 0.73
Net realized and unrealized gains
(losses) from investments 0.27 (0.61) 0.08 0.13 0.31
- ----------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.84 (0.07) 0.65 0.77 1.04
- ----------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.57) (0.54) (0.57) (0.64) (0.73)
In excess of net realized gains (0.04) (0.01)
- ----------------------------------------------------------------------------------------------------------
Total Distributions (0.57) (0.58) (0.57) (0.65) (0.73)
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.15 $ 9.88 $ 10.53 $ 10.45 $ 10.33
- ----------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 8.77% (0.66)% 6.39% 7.77% 10.82%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $172,002 $79,150 $ 81,771 $ 55,565 $ 43,763
Ratio of expenses to average net assets 0.78% 0.79% 0.77% 0.78% 0.80%
Ratio of net investment income to
average net assets 5.77% 5.29% 5.49% 6.18% 7.20%
Ratio of expenses to average net
assets* 0.79% 0.97% 0.78%
Ratio of net investment income to
average net assets* 5.76% 5.10% 5.48%
Portfolio turnover 97.25% 41.26% 50.27% 14.97% 9.79%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the
ratios would have been as indicated.
(a) Effective June 5, 1995, the Victory Short-Term Government Income Portfolio merged into the Limited Term Income
Fund. Financial highlights for the periods prior to June 5, 1995 represent the Limited Term Income Fund.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
145
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THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE INCOME FUND INVESTMENT QUALITY BOND FUND
-------------------------------- --------------------------------
YEAR ENDED DECEMBER 10, 1993 YEAR ENDED DECEMBER 10, 1993
OCTOBER 31, TO OCTOBER 31, OCTOBER 31, TO OCTOBER 31,
1995 1994(a) 1995(d) 1994(a)
---------- ------------------- ---------- -------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.25 $ 10.00 $ 9.10 $ 10.00
- -------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.60 0.52 0.62 0.53
Net realized and unrealized gains (losses)
from investments 0.44 (0.76) 0.67 (0.92)
- -------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.04 (0.24) 1.29 (0.39)
- -------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.60) (0.51) (0.63) (0.51)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.69 $ 9.25 $ 9.76 $ 9.10
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 11.65% (2.48)%(b) 14.63% (3.92)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $163,281 $ 112,923 $125,248 $94,685
Ratio of expenses to average net assets 0.82% 0.79%(c) 0.88% 0.79%(c)
Ratio of net investment income to average net
assets 6.32% 6.23%(c) 6.59% 6.33%(c)
Ratio of expenses to average net assets* 1.06% 1.25%(c) 1.10% 1.25%(c)
Ratio of net investment income to average net
assets* 6.08% 5.77%(c) 6.37% 5.87%(c)
Portfolio turnover 98.07% 55.06% 160.01% 89.92%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the
ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Effective June 5, 1995, the Victory Corporate Bond Portfolio merged into the Investment Quality Bond Fund.
Financial highlights for the periods prior to June 5, 1995 represent the Investment Quality Bond Fund.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
146
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THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GOVERNMENT BOND FUND
-----------------------------------------------------------------------------
CLASS B CLASS A
---------------------------------- -------------------------
SIX MONTHS SIX MONTHS
ENDED SEPTEMBER 26, 1994 ENDED YEAR ENDED MAY 3, 1993
OCTOBER 31, TO APRIL 30, OCTOBER 31, APRIL 30, TO APRIL 30,
1995(e) 1995(a)(d) 1995(e) 1995(d) 1994(a)(d)
----------- -------------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.43 $ 9.25 $ 9.44 $ 9.45 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.25 0.31 0.33 0.55 0.45
Net realized and unrealized gains
(losses) from investments 0.45 0.17 0.40 (0.02) (0.54)
- -----------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.70 0.48 0.73 0.53 (0.09)
- -----------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.22) (0.30) (0.29) (0.54) (0.45)
In excess of net investment income (0.06) (0.01)
Net realized gains (0.01)
- -----------------------------------------------------------------------------------------------------------------------
Total Distributions (0.28) (0.30) (0.30) (0.54) (0.46)
- -----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.85 $ 9.43 $ 9.87 $ 9.44 $ 9.45
- ------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 7.47%(b) 5.26%(b) 7.86%(b) 5.87% (1.06)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 909 $ 155 $27,856 $84,567 $120,636
Ratio of expenses to average net assets 1.82%(c) 1.43%(c) 0.92%(c) 0.63% 0.38%(c)
Ratio of net investment income to
average net assets 4.98%(c) 5.03%(c) 6.04%(c) 5.97% 4.61%(c)
Ratio of expenses to average net assets* 2.12%(c) 1.60%(c) 1.06%(c) 0.98% 0.96%(c)
Ratio of net investment income to
average net assets* 4.68%(c) 4.86%(c) 5.90%(c) 5.62% 4.03%(c)
Portfolio turnover 68.82% 127.00% 68.82% 127.00% 121.00%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the
ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Audited by other auditors.
(e) Effective June 5, 1995, the Victory Government Bond Portfolio became the Government Bond Fund.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
147
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THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GOVERNMENT MORTGAGE FUND
-----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.33 $ 11.36 $ 11.07 $ 10.73 $ 10.18
- ----------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.72 0.68 0.66 0.74 0.80
Net realized and unrealized
gains(losses) from investments 0.62 (1.02) 0.32 0.34 0.55
- ----------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.34 (0.34) 0.98 1.08 1.35
- ----------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.71) (0.67) (0.66) (0.74) (0.80)
Net realized gains (0.03) (0.02) (0.03)
In excess of net realized gains (0.05)
Tax return of capital (0.02)
- ----------------------------------------------------------------------------------------------------------
Total Distributions (0.81) (0.69) (0.69) (0.74) (0.80)
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.86 $ 10.33 $ 11.36 $ 11.07 $ 10.73
- ----------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 13.55% (3.01)% 9.05% 10.34% 13.77%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $136,103 $ 148,168 $132,738 $ 73,660 $ 42,616
Ratio of expenses to average net assets 0.77% 0.76% 0.75% 0.77% 0.78%
Ratio of net investment income to
average net assets 6.81% 6.38% 5.92% 6.82% 7.68%
Ratio of expenses to average net
assets* 0.79% 0.96% 0.76%
Ratio of net investment income to
average net assets* 6.80% 6.18% 5.92%
Portfolio turnover 59.14% 131.63% 50.18% 11.19% 20.70%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the
ratios would have been as indicated.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
148
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THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FUND FOR INCOME
-----------------------------------------------------------------------------
PERIOD FROM
YEAR ENDED FEBRUARY 1, 1994 YEAR ENDED JANUARY 31,
OCTOBER 31, TO OCTOBER 31, ----------------------------------------
1995(d) 1994(c) 1994(c) 1993(c) 1992(c) 1991(c)
----------- ------------------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.43 $ 10.14 $ 10.57 $ 10.55 $ 10.19 $ 9.90
- -------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.73 0.52 0.80 0.80 0.85 0.91
Net realized and unrealized gains
(losses) on investments 0.43 (0.71) (0.41) 0.06 0.36 0.29
- -------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.16 (0.19) 0.39 0.86 1.21 1.20
- -------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.59) (0.51) (0.80) (0.80) (0.85) (0.91)
In excess of net investment income (0.07) (0.01)
Net realized gains (0.02) (0.04)
- -------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.66) (0.52) (0.82) (0.84) (0.85) (0.91)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.93 $ 9.43 $ 10.14 $ 10.57 $ 10.55 $ 10.19
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 12.75% (1.99)%(a) 3.75% 8.45% 12.34% 12.75%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $22,756 $ 29,358 $46,632 $55,075 $58,055 $44,097
Ratio of expenses to average net assets 1.12% 1.12%(b) 1.13% 1.12% 0.92% 0.50%
Ratio of net investment income to average
net assets 7.62% 7.21%(b) 7.65% 7.56% 8.18% 9.15%
Ratio of expenses to average net assets* 1.58% 1.26%(b)
Ratio of net investment income to average
net assets* 7.16% 7.07%(b)
Portfolio turnover 35.20% 18.00% 47.00% 23.00% 24.00% 5.00%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the
ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Audited by other auditors.
(d) Effective June 5, 1995, the Victory Fund For Income Portfolio became the Fund For Income.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
149
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THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NATIONAL MUNICIPAL BOND FUND
-----------------------------------------------------------------------------------
CLASS B CLASS A
---------------------------------- -------------------------
SIX MONTHS SIX MONTHS
ENDED SEPTEMBER 26, 1994 ENDED YEAR ENDED FEBRUARY 3, 1994
OCTOBER 31, TO APRIL 30, OCTOBER 31, APRIL 30, TO APRIL 30,
1995(e) 1995(a)(d) 1995(e) 1995(d) 1994(a)(d)
----------- -------------------- ----------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.59 $ 9.53 $ 9.59 $ 9.64 $10.00
- ---------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.20 0.28 0.24 0.44 0.08
Net realized and unrealized gains
(losses) from investments 0.47 0.05 0.46 (0.05) (0.36)
- ---------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.67 0.33 0.70 0.39 (0.28)
- ---------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.19) (0.27) (0.23) (0.44) (0.08)
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.07 $ 9.59 $ 10.06 $ 9.59 $ 9.64
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 6.99%(b) 3.54%(b) 7.39%(b) 4.21% (2.82)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 456 $ 147 $11,964 $ 5,118 $ 494
Ratio of expenses to average net
assets 0.96%(c) (0.05)%(c) 0.02%(c) 0.20% 0.65%(c)
Ratio of net investment income (loss)
to average net assets 4.15%(c) 4.35%(c) 5.11%(c) 5.01% 3.15%(c)
Ratio of expenses to average net
assets* 3.67%(c) 2.63%(c) 2.57%(c) 3.95% 26.10%(c)
Ratio of net investment loss to
average net assets* 1.44%(c) 1.67%(c) 2.56%(c) 1.26% (22.30%(c))
Portfolio turnover 72.46% 52.00% 72.46% 52.00% 13.00%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the
ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Audited by other auditors.
(e) Effective June 5, 1995, the Victory National Municipal Bond Portfolio became the National Municipal Bond Fund.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
150
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THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK TAX-FREE FUND
----------------------------------------------------------------------------------------------------
CLASS B CLASS A
------------------------------ ---------------------------
PERIOD FROM PERIOD FROM PERIOD FROM
SEPTEMBER 26, JANUARY 1, YEARS ENDED FEBRUARY 11,
YEAR ENDED 1994 TO YEAR ENDED 1994 TO DECEMBER 31, 1991 TO
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, ------------------ DECEMBER 31,
1995(e) 1994(d) 1995(e) 1994(d) 1993(d) 1992(d) 1991(a)(d)
----------- --------------- ----------- ------------ ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 12.39 $ 12.62 $ 12.39 $ 13.54 $12.76 $12.50 $ 12.00
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.85 0.07 0.87 0.57 0.70 0.74 0.64
Net realized and
unrealized gains
(losses) from
investments 0.36 (0.23) 0.42 (1.15) 0.84 0.26 0.50
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 1.21 (0.16) 1.29 (0.58) 1.54 1.00 1.14
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.74) (0.07) (0.83) (0.57) (0.70 ) (0.74 ) (0.64)
Net realized gains (0.06 )
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.74) (0.07) (0.83) (0.57) (0.76 ) (0.74 ) (0.64)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END
OF PERIOD $ 12.86 $ 12.39 $ 12.85 $ 12.39 $13.54 $12.76 $ 12.50
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes
sales charges) 10.18% (1.25)%(b) 10.82% (4.31)%(b) 12.34 % 8.26 % 11.06%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period
(000) $ 1,953 $ (f) $15,374 $ 17,840 $28,530 $26,034 $20,995
Ratio of expenses to
average net assets 2.02% 0.52%(c) 1.16% 0.91%(c) 0.87 % 0.66 % 0.45%(c)
Ratio of net investment
income (loss) to average
net assets 5.94% 5.94%(c) 5.50% 5.33%(c) 5.28 % 5.89 % 6.28%(c)
Ratio of expenses to
average net assets* 2.25% 0.86%(c) 1.96% 1.25%(c) 0.96 % 0.96 % 0.95%(c)
Ratio of net investment
loss to average net
assets* 5.71% 5.60%(c) 4.70% 4.99%(c) 5.19 % 5.59 % 5.78%(c)
Portfolio turnover 18.33% 18.00% 18.33% 18.00% 12.00 % 14.00 % 61.00%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the
ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Audited by other auditors.
(e) Effective June 5, 1995, the Victory New York Tax-Free Portfolio became the New York Tax-Free Fund.
(f) Amount is less than $1,000.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
151
<PAGE> 154
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO MUNICIPAL BOND FUND
-----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.33 $ 11.52 $ 10.52 $ 10.37 $10.06
- ----------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.52 0.49 0.52 0.60 0.65
Net realized and unrealized
gains(losses) from investments 1.00 (0.94) 1.00 0.15 0.31
- ----------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.52 (0.45) 1.52 0.75 0.96
- ----------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.53) (0.49) (0.52) (0.60) (0.65)
Net realized gains (0.25)
- ----------------------------------------------------------------------------------------------------------
Total Distributions (0.53) (0.74) (0.52) (0.60) (0.65)
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.32 $ 10.33 $ 11.52 $ 10.52 $10.37
- ----------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 15.03% (4.08)% 14.75% 7.34% 9.87%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 60,031 $57,704 $ 50,676 $ 17,676 $8,042
Ratio of expenses to average net assets 0.66% 0.51% 0.42% 0.09% 0.01%
Ratio of net investment income to
average net assets 4.78% 4.58% 4.77% 5.76% 6.39%
Ratio of expenses to average net
assets* 0.94% 1.09% 0.86% 0.84%
Ratio of net investment income to
average net assets* 4.49% 4.01% 4.33% 5.01%
Portfolio turnover 124.79% 52.59% 150.76% 47.28% 15.06%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the
ratios would have been as indicated.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
152
<PAGE> 155
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED FUND STOCK INDEX FUND
---------------------------------- ---------------------------------
YEAR ENDED DECEMBER 10, 1993 YEAR ENDED DECEMBER 3, 1993
OCTOBER 31, TO OCTOBER 31, OCTOBER 31, TO OCTOBER 31,
1995 1994(a) 1995 1994(a)
----------- -------------------- ----------- -------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.62 $ 10.00 $ 10.18 $ 10.00
- -------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.41 0.33 0.27 0.20
Net realized and unrealized gains (losses)
from investments and foreign currencies 1.40 (0.39) 2.31 0.16
- -------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.81 (0.06) 2.58 0.36
- -------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.42) (0.32) (0.26) (0.18)
Net realized gains
- -------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.42) (0.32) (0.26) (0.18)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.01 $ 9.62 $ 12.50 $ 10.18
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 19.24% (0.57)%(b) 25.72% 3.66%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 201,073 $127,285 $ 160,822 $89,686
Ratio of expenses to average net assets 0.98% 0.87%(c) 0.55% 0.58%(c)
Ratio of net investment income to average net
assets 4.05% 3.97%(c) 2.53% 2.35%(c)
Ratio of expenses to average net assets* 1.36% 1.49%(c) 0.87% 1.10%(c)
Ratio of net investment income to average net
assets* 3.67% 3.35%(c) 2.21% 1.82%(c)
Portfolio turnover 69.22% 118.49% 11.91% 1.44%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced and/or reimbursed. If such voluntary fee reductions
and/or reimbursements had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
153
<PAGE> 156
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE FUND
DIVERSIFIED STOCK FUND ------------------------------
--------------------------------------------------------- DECEMBER 3,
YEAR ENDED OCTOBER 31, YEAR ENDED 1993
--------------------------------------------------------- OCTOBER 31, TO OCTOBER 31,
1995 1994 1993 1992 1991 1995(d) 1994(a)
-------- --------- -------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 12.68 $ 13.39 $ 12.16 $ 11.44 $ 9.25 $ 10.13 $ 10.00
- -------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.27 0.25 0.18 0.19 0.23 0.27 0.21
Net realized and
unrealized gains from
investments 2.33 0.64 1.50 1.11 2.20 1.92 0.11
- -------------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 2.60 0.89 1.68 1.30 2.43 2.19 0.32
- -------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.28 ) (0.23 ) (0.21 ) (0.19 ) (0.24 ) (0.28) (0.19)
Net realized gains (1.38 ) (1.37 ) (0.24 ) (0.39 ) (0.17)
- -------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.66 ) (1.60 ) (0.45 ) (0.58 ) (0.24 ) (0.45) (0.19)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END
OF PERIOD $ 13.62 $ 12.68 $ 13.39 $ 12.16 $ 11.44 $ 11.87 $ 10.13
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes
sales charges) 23.54 % 7.39 % 14.04 % 11.57 % 27.50 % 22.28% 3.27%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period
(000) $409,549 $263,227 $257,405 $227,839 $177,472 $ 295,871 $ 188,184
Ratio of expenses to
average net assets 0.92 % 0.89 % 0.89 % 0.91 % 0.91 % 0.99% 0.92%(c)
Ratio of net investment
income to average net
assets 2.11 % 2.06 % 1.45 % 1.63 % 2.06 % 2.55% 2.32%(c)
Ratio of expenses to
average net assets* 0.95 % 1.10 % 0.90 % 1.30% 1.48%(c)
Ratio of net investment
income to average net
assets* 2.07 % 1.86 % 1.43 % 2.24% 1.76%(c)
Portfolio turnover 75.05 % 103.62 % 86.32 % 74.83 % 50.78 % 23.03% 39.05%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the
ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Effective June 5, 1995, the Victory Equity Income Portfolio merged into the Value Fund. Financial highlights for
the periods prior to June 5, 1995 represent the Value Fund.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
154
<PAGE> 157
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SPECIAL GROWTH FUND
GROWTH FUND SPECIAL VALUE FUND ------------------------------------
---------------------------- ---------------------------- SIX JANUARY 11,
YEAR DECEMBER 3, YEAR DECEMBER 3, MONTHS YEAR 1994
ENDED 1993 ENDED 1993 ENDED ENDED TO APRIL 30,
OCTOBER 31, TO OCTOBER 31, OCTOBER 31, TO OCTOBER 31, OCTOBER 31, APRIL 30, 1994
1995(f) 1994(a)(g) 1995 1994(a) 1995 1995(d)(e) (a)(d)(e)
----------- -------------- ----------- -------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.23 $ 10.00 $ 10.49 $ 10.00 $ 10.54 $ 9.82 $ 10.00
- -------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment
income (loss) 0.11 0.10 0.15 0.11 0.02 (0.01)
Net realized and
unrealized gains
(losses) from
investments 1.97 0.22 1.71 0.48 1.27 0.72 (0.17)
- -------------------------------------------------------------------------------------------------------------------------
Total from
Investment
Activities 2.08 0.32 1.86 0.59 1.27 0.74 (0.18)
- -------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment
income (0.11) (0.09) (0.15) (0.10) (0.02)
Net realized gains (0.05) (0.05)
- -------------------------------------------------------------------------------------------------------------------------
Total
Distributions (0.16) (0.09) (0.20) (0.10) (0.02)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END
OF PERIOD $ 12.15 $ 10.23 $ 12.15 $ 10.49 $ 11.81 $ 10.54 $ 9.82
- ---------------------------------------------------------------------------------------------------------------------
Total Return
(excludes sales
charges) 20.54 % 3.22%(b) 18.01 % 5.92%(b) 12.05%(b) 7.51% (1.80)%(b)
RATIOS/SUPPLEMENTAL
DATA:
Net Assets, End of
Period (000) $108,253 $ 66,921 $194,700 $118,600 $54,335 $20,796 $30,867
Ratio of expenses to
average net assets 1.07 % 0.94%(c) 1.04 % 1.00%(c) 0.65%(c) 1.04% 0.82%(c)
Ratio of net
investment income
to average net
assets 1.00 % 1.10%(c) 1.35 % 1.23%(c) (0.13)%(c) 0.17% (0.27)%(c)
Ratio of expenses to
average net assets* 1.42 % 1.51%(c) 1.30 % 1.49%(c) 1.40%(c) 1.35% 1.47%(c)
Ratio of net
investment income
(loss) to average
net assets* 0.65 % 0.52%(c) 1.09 % 0.74%(c) (0.88)%(c) (0.14)% (0.92)%
Portfolio turnover 107.13 % 28.09% 38.57 % 17.90% 54.37% 102.00% 61.00%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the
ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Audited by other auditors.
(e) Effective June 5, 1995, the Victory Aggressive Growth Portfolio merged into the Special Growth Fund. Financial
highlights for the periods prior to June 5, 1995 represent the Aggressive Growth Portfolio.
(f) Effective June 5, 1995, the Victory Equity Portfolio merged into the Growth Fund. Financial highlights for the
period prior to June 5, 1995 represent the Growth Fund.
(g) Effective March 17, 1994, the Society Earnings Momentum Fund merged into the Growth Fund. Financial highlights for
the period prior to March 17, 1994 represent the Growth Fund.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
155
<PAGE> 158
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO REGIONAL STOCK FUND
-----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.56 $ 14.69 $ 12.12 $ 11.15 $ 6.75
- ----------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.17 0.18 0.16 0.20 0.21
Net realized and unrealized gains
from investments 2.13 0.39 2.63 1.07 4.39
- ----------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.30 0.57 2.79 1.27 4.60
- ----------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.18) (0.17) (0.18) (0.21) (0.20)
Net realized gains (0.74) (0.53) (0.04) (0.09)
- ----------------------------------------------------------------------------------------------------------
Total Distributions (0.92) (0.70) (0.22) (0.30) (0.20)
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 15.94 $ 14.56 $ 14.69 $ 12.12 $ 11.15
- ----------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 16.93% 3.96% 23.16% 11.50% 68.68%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 39,048 $33,965 $ 34,926 $ 36,115 $ 27,092
Ratio of expenses to average net assets 1.20% 1.04% 1.04% 1.04% 1.08%
Ratio of net investment income to
average net assets 1.13% 1.27% 1.17% 1.73% 2.16%
Ratio of expenses to average net
assets* 1.24% 1.27% 1.06%
Ratio of net investment income to
average net assets* 1.09% 1.04% 1.15%
Portfolio turnover 11.44% 14.38% 7.25% 7.56% 14.59%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the
ratios would have been as indicated.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
156
<PAGE> 159
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH FUND
-----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------
1995(A) 1994 1993 1992 1991
---------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.32 $ 11.93 $ 8.93 $ 9.20 $ 9.46
- ----------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) 0.05 (0.01) (0.03) (0.02) 0.51
Net realized and unrealized gains
(losses) from investments and
foreign currencies (0.42) 1.40 3.03 (0.17) (0.25)
- ----------------------------------------------------------------------------------------------------------
Total from Investment Activities (0.37) 1.39 3.00 (0.19) 0.26
- ----------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.01) (0.52)
Net realized gains (0.55) (0.07)
Tax return of capital (0.07)
- ----------------------------------------------------------------------------------------------------------
Total Distributions (0.62) (0.08) (0.52)
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.33 $ 13.32 $ 11.93 $ 8.93 $ 9.20
- ----------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) (2.50)% 11.65% 33.59% (2.08)% 2.93%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $106,477 $81,307 $ 30,629 $ 11,091 $5,682
Ratio of expenses to average net assets 1.53% 1.48% 1.46% 1.56% 1.72%
Ratio of net investment income (loss)
to average net assets 0.75% (0.51)% (0.74)% (0.20)% 5.97%
Ratio of expenses to average net
assets* 1.65% 1.83% 1.63% 1.72%
Ratio of net investment loss to average
net assets* 0.63% (0.86)% (0.91)% (0.35)%
Portfolio turnover 68.09% 50.66% 45.43% 91.92% 102.53%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the
ratios would have been as indicated.
(a) Effective June 5, 1995, the Victory Foreign Markets Portfolio merged into the International Growth Fund. Financial
highlights for the periods prior to June 5, 1995 represent the International Growth Portfolio.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
157
<PAGE> 160
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
The Victory Portfolios
We have audited the accompanying statements of assets and liabilities of The
Victory Portfolios (comprising, respectively, the U.S. Government Obligations
Fund, Prime Obligations Fund, Financial Reserves Fund (formerly the Financial
Reserves Portfolio), Institutional Money Market Fund (formerly the Institutional
Money Market Portfolio), Tax-Free Money Market Fund, Ohio Municipal Money Market
Fund (formerly the Ohio Municipal Money Market Portfolio), Limited Term Income
Fund, Intermediate Income Fund, Investment Quality Bond Fund, Government Bond
Fund (formerly the Government Bond Portfolio), Government Mortgage Fund, Fund
for Income (formerly the Fund for Income Portfolio), National Municipal Bond
Fund (formerly the National Municipal Bond Portfolio), New York Tax-Free Fund
(formerly the New York Tax-Free Portfolio), Ohio Municipal Bond Fund, Balanced
Fund, Stock Index Fund, Diversified Stock Fund, Value Fund, Growth Fund, Special
Value Fund, Special Growth Fund, Ohio Regional Stock Fund, and International
Growth Fund), including the schedules of investments, as of October 31, 1995,
and the related statements of operations and changes in net assets, and the
financial highlights for each period presented except as noted in the next
paragraph. These financial statements and financial highlights are the
responsibility of The Victory Portfolios' management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
The Financial Reserves Fund's statement of changes in net assets for the
year ended October 31, 1994 and the financial highlights for each of the four
years in the period ended October 31, 1994 were audited by other auditors, whose
reports dated December 2, 1994 and December 17, 1993, respectively, expressed
unqualified opinions on those financial statements and financial highlights. The
Institutional Money Market Fund's statement of changes in net assets for each of
the two years in the period ended April 30, 1995 and the financial highlights
for each of the five years in the period ended April 30, 1995 were audited by
other auditors, whose report dated June 20, 1995 expressed an unqualified
opinion on those financial statements and financial highlights. The Ohio
Municipal Money Market Fund's statement of changes in net assets for the year
ended August 31, 1994 and the financial highlights for each of the four years in
the period ended August 31, 1994 were audited by other auditors, whose reports
dated October 7, 1994 and October 13, 1993, respectively, expressed unqualified
opinions on those financial statements and financial highlights. The Government
Bond Fund's statements of changes in net assets and financial highlights for the
periods ended April 30, 1995 and 1994 were audited by other auditors, whose
report dated June 20, 1995 expressed an unqualified opinion on those financial
statements and financial highlights. The Fund for Income's statements of changes
in net assets for the period ended October 31, 1994 and the financial highlights
for the period ended October 31, 1994 and for each of the three years in the
period ended January 31, 1994 were audited by other auditors, whose reports
dated December 2, 1994 and February 28, 1994, respectively, expressed
unqualified opinions on those financial statements and financial highlights. The
National Municipal Bond Fund's statements of changes in net assets and financial
highlights for the periods ended April 30, 1995 and 1994 were audited by other
auditors, whose report dated June 20, 1995 expressed an unqualified opinion on
those financial statements and financial highlights. The New York Tax-Free
Fund's statement of changes in net assets for the periods ended October 31, 1994
and the financial highlights for the period ended October 31, 1994, two years in
the period ended December 31, 1993 and the period ended December 31, 1991 were
audited by other auditors, whose reports dated December 2, 1994 and January 13,
1994, respectively, expressed unqualified opinions on those financial statements
and financial highlights. The Special Growth Fund's statements of changes in net
assets and financial highlights for the year ended April 30, 1995 and period
ended April 30, 1994 were audited by other auditors, whose report dated June 20,
1995 expressed an unqualified opinion on those financial statements and
financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation and verification by examination
of securities owned as of October 31, 1995, by correspondence with the
custodians and brokers or other auditing procedures where confirmations from
brokers were not received. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above, except as noted in the second paragraph present fairly, in all
material respects, the financial position of each of the respective funds
comprising The Victory Portfolios as of October 31, 1995, and the results of
their operations, the changes in their net assets and the financial highlights
for the periods then ended in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Columbus, Ohio
December 19, 1995
158
<PAGE> 161
THE VICTORY PORTFOLIOS Special Shareholder Meeting
- --------------------------------------------------------------------------------
On December 1, 1995, a special meeting of the shareholders of The Victory
Portfolios was held to consider various proposals.
The shareholders approved each of the following proposals:
With respect to all of the Funds:
1. To convert The Victory Portfolios to a Delaware business trust.
2. To designate KeyCorp Mutual Fund Advisers, Inc. as investment adviser
pursuant to a new investment advisory agreement between each of the
Funds and KeyCorp Mutual Fund Advisers, Inc.
3(a). To elect the following Trustees: Robert G. Brown, Edward P. Campbell,
Dr. Harry Gazelle, Dr. Thomas F. Morrissey, Stanley I. Landgraf, Leigh
A. Wilson and Dr. H. Patrick Swygert.
3(b). To select Coopers & Lybrand L.L.P. as independent accountants.
With respect to all of the Funds other than the Fund for Income and Special
Growth Fund:
4. To designate Society Asset Management, Inc. as sub-investment adviser
pursuant to a new sub-investment advisory agreement between Society
Asset Management, Inc. and KeyCorp Mutual Fund Advisors, Inc.
With respect to the Fund for Income:
5. To designate First Albany Asset Management Corporation as
sub-investment adviser pursuant to a new sub-investment advisory
agreement between First Albany Asset Management Corporation and
KeyCorp Mutual Fund Advisers, Inc.
With respect to the Special Growth Fund:
6. To designate T. Rowe Price Associates, Inc. as sub-investment adviser
pursuant to a new sub-investment advisory agreement between T. Rowe
Price Associates, Inc. and KeyCorp Mutual Fund Advisers, Inc.
With respect to the U.S. Government Obligations Fund, Prime Obligations Fund and
Tax-Free Money Market Fund:
7. To increase the maximum remaining maturity for each security purchased
to 397 days.
With respect to all of the Funds other than the Financial Reserves Fund,
Institutional Money Market Fund, Ohio Municipal Money Market Fund, Government
Bond Fund, Fund for Income, National Municipal Bond Fund, New York Tax-Free Bond
Fund, Ohio Municipal Bond Fund and Value Fund:
8. To restate each Fund's investment objective; and
With respect to all of the Funds other than the Financial Reserves Fund,
Institutional Money Market Fund, Ohio Municipal Money Market Fund, Government
Bond Fund, Fund for Income, National Municipal Bond Fund, New York Tax-Free Bond
Fund and Value Fund:
9. To amend certain fundamental investment restrictions.
159
<PAGE> 162
Bulk Rate
U.S. Postage
PAID
Cleveland,OH
Permit No. 469
VICTORY FUNDS
1-800-539-FUND
AR/VP-001 12/95
