AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON NOVEMBER 30, 1995.
FILE NO. 33-8982
ICA NO. 811-4852
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. _____ [ ]
POST-EFFECTIVE AMENDMENT NO. 24 [X]
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 25 [X]
THE VICTORY PORTFOLIOS
(FORMERLY, THE SOCIETY FUNDS)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN DECLARATION OF TRUST)
3435 STELZER ROAD
COLUMBUS, OHIO 43219
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
(800) 362-5365
(AREA CODE AND TELEPHONE NUMBER)
COPIES TO:
GEORGE O. MARTINEZ CARL FRISCHLING, ESQ.
BISYS FUND SERVICES, INC. KRAMER, LEVIN, NAFTALIS,
3435 STELZER ROAD NESSEN, KAMIN & FRANKEL
COLUMBUS, OHIO 43219 919 THIRD AVENUE
NEW YORK, NEW YORK 10022
- --------------------------------------------------------------------------------
(NAME AND ADDRESS OF AGENT FOR SERVICE)
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
|_| IMMEDIATELY UPON FILING PURSUANT TO |_| ON ( ) PURSUANT TO
----------
PARAGRAPH (B) PARAGRAPH (B)
|_| 60 DAYS AFTER FILING PURSUANT TO |X| ON FEBRUARY 1, 1996 PURSUANT TO
PARAGRAPH (A)(1) PARAGRAPH (A)(1)
|_| 75 DAYS AFTER FILING PURSUANT TO |_| ON ( ) PURSUANT TO
PARAGRAPH (A)(2) OF PARAGRAPH (A)(2) RULE 485.
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
|_| THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF SHARES PURSUANT TO RULE 24F-2
AND ITS RULE 24F-2 NOTICE FOR ITS APRIL 30, 1995 FISCAL YEAR WAS FILED ON
JUNE 30, 1995, FOR ITS AUGUST 31, 1995 FISCAL YEAR WAS FILED ON OCTOBER 25,
1995, AND WILL FILE ON OR ABOUT DECEMBER 29, 1995 ITS RULE 24F-2 NOTICE FOR ITS
OCTOBER 31, 1995 FISCAL YEAR, IN ACCORDANCE WITH RULE 24F-2.
<PAGE>
EXHIBIT INDEX AT PAGE .
THE VICTORY PORTFOLIOS
CROSS-REFERENCE SHEET
Form N-1A Part A Item Prospectus Caption
i. Cover Page Cover Page
ii. Synopsis Summary of Fund Expenses
iii. Condensed Financial Information Financial Highlights
iv. General Description of Registrant Investment Objective and Policies;
Limiting Investment Risks;
Additional Information; Additional
Information Regarding Securities
in which the Fund May Invest
v. Management of the Fund Fund Organization and Fees
v.A. Management's Discussion of Fund Portfolio Management
Performance
vi. Capital Stock and Other Securities How to Invest, Exchange and
Redeem; Dividends, Distributions
and Taxes; Additional Information
vii. Purchase of Securities Being How to Invest, Exchange and Redeem
Offered
viii. Redemption or Repurchase How to Invest, Exchange and Redeem
ix. Pending Legal Proceedings Inapplicable
<PAGE>
CROSS REFERENCE SHEET
THE VICTORY PORTFOLIOS - STATEMENT OF
ADDITIONAL INFORMATION
Form N-1A Part B Item
x. Cover Page Cover Page
xi. Table of Contents Table of Contents
xii. General Information and History The Victory Portfolios; Additional
Information-Description of Shares
xiii. Investment Objectives and Investment Objective and Policies
Policies
xiv. Management of the Fund Management of the Victory Portfolios
xv. Control Persons and Principal Additional Information -
Holders of Securities Miscellaneous
xvi. Investment Advisory and Other Management of The Victory Portfolios
Services
xvii. Brokerage Allocation and Management of The Victory Portfolios
Other Practices - Portfolio Transactions
xviii. Capital Stock and Other Valuation; Additional Purchase and
Securities Redemption Information; Matters
Affecting Redemption; Additional
Information
xix. Purchase, Redemption and Pricing Valuation; Additional Purchase and
of Securities Being Offered Redemption Information; Management
of the Victory Portfolios
xx. Tax Status Additional Purchase and Redemption
Information; Additional Tax
Information
xxi. Underwriters Management of the Funds-Distributor
xxii. Calculation of Performance Data Additional Information - Calculation
of Performance Data
xxiii. Financial Statements
<PAGE>
PART A
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE VICTORY PORTFOLIOS
THE BALANCED FUND
February 1, 1996
This Statement of Additional Information is not a Prospectus, but
should be read in conjunction with the Prospectus of The Victory Portfolios -
The Balanced Fund, dated the same date as the date hereof (the "Prospectus").
This Statement of Additional Information is incorporated by reference in its
entirety into the Prospectus. Copies of the Prospectus may be obtained by
writing The Victory Portfolios at Primary Funds Service Corporation, P.O. Box
9741, Providence, RI 02940-9741, or by telephoning toll free 800-539-FUND or
800-539-3863.
Investment Policies and Limitations 1 INVESTMENT ADVISER
Valuation of Portfolio Securities 12 KeyCorp Mutual Fund Advisers, Inc.
Additional Purchase and
Redemption Information 16
Management of the Victory Portfolios 21 INVESTMENT SUB-ADVISER
Advisory and Other Contracts 29 Society Asset Management, Inc.
Additional Information 37
Independent Auditor's Report 41 ADMINISTRATOR
Financial Statements 41 Concord Holding Corporation
Appendix 42
DISTRIBUTOR
Victory Broker-Dealer Services, Inc.
TRANSFER AGENT
Primary Funds Services Corporation
CUSTODIAN
Key Trust Company of Ohio, N.A.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
The Victory Portfolios (the "Victory Portfolios") is an open-end
management investment company. The Victory Portfolios consist of twenty- eight
series of units of beneficial interest ("shares"), representing interests in
twenty- eight separate investment portfolios . This Statement of Additional
Information relates to The Balanced Fund (the "Fund") only. Much of the
information contained in this Statement of Additional Information expands on
subjects discussed in the Prospectus. Capitalized terms not defined herein are
used as defined in the Prospectus . No investment in shares of the Fund should
be made without first reading the Fund's Prospectus.
INVESTMENT POLICIES AND LIMITATIONS
Additional Information on Fund Instruments
The following policies supplement the investment objectives and policies
of the Fund as set forth in the Prospectus.
Bankers' Acceptances and Certificates of Deposit. The Fund may invest
in bankers' acceptances, certificates of deposit, and demand and time deposits.
Bankers' acceptances are negotiable drafts or bills of exchange typically drawn
by an importer or exporter to pay for specific merchandise, which are "accepted"
by a bank, meaning, in effect, that the bank unconditionally agrees to pay the
face value of the instrument on maturity. Certificates of deposit are negotiable
certificates issued against funds deposited in a commercial bank or a savings
and loan association for a definite period of time and earning a specified
return.
Bankers' acceptances will be those guaranteed by domestic and foreign
banks, if at the time of purchase such banks have capital, surplus, and
undivided profits in excess of $100,000,000 (as of the date of their most
recently published financial statements). Certificates of deposit and demand and
time deposits invested in by the Fund will be those of domestic and foreign
banks and savings and loan associations, if (a) at the time of purchase such
financial institutions have capital, surplus, and undivided profits in excess of
$100,000,000 (as of the date of their most recently published financial
statements) or (b) the principal amount of the instrument is insured in full by
the Federal Deposit Insurance Corporation or the Savings Association Insurance
Fund.
The Fund may also invest in Eurodollar Certificates of Deposit ("ECDs")
which are U.S. dollar-denominated certificates of deposit issued by branches of
foreign and domestic banks located outside the United States, Yankee
Certificates of Deposit ("Yankee CDs") which are certificates of deposit issued
by a U.S. branch of a foreign bank denominated in U.S. dollars and held in the
United States, Eurodollar Time Deposits ("ETDs") which are U.S.
dollar-denominated deposits in a foreign branch of a U.S. bank or a foreign
bank, and Canadian Time Deposits ("CTDs") which are U.S. dollar-denominated
certificates of deposit issued by Canadian offices of major Canadian Banks.
Commercial Paper. Commercial paper consists of unsecured promissory
notes issued by corporations. Except as noted below with respect to variable
amount master demand notes, issues of commercial paper normally have maturities
of less than nine months and fixed rates of return.
The Fund will purchase only commercial paper rated in one of the two
highest categories at the time of purchase by an NRSRO or, if not rated, found
by the Victory Portfolios' Board of Trustees to present minimal credit risks and
to be of comparable quality to instruments that are
rated high quality (i.e., in one of the two top ratings categories) by a NRSRO
that is neither controlling, controlled by, or under common control with the
issuer of, or any issuer, guarantor, or provider of credit support for, the
instruments.
<PAGE>
For a description of the rating symbols of each NRSRO see the Appendix to this
Statement of Additional Information.
Variable Amount Master Demand Notes. Variable amount master demand
notes in which the Fund may invest are unsecured demand notes that permit the
indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate according to the terms of the instrument. Although there is no
secondary market for these notes, the Fund may demand payment of principal and
accrued interest at any time and may resell the notes at any time to a third
party. The absence of an active secondary market, however, could make it
difficult for the Fund to dispose of a variable amount master demand note if the
issuer defaulted on its payment obligations, and the Fund could, for this or
other reasons, suffer a loss to the extent of the default. While the notes are
not typically rated by credit rating agencies, issuers of variable amount master
demand notes must satisfy the same criteria as set forth above for unrated
commercial paper, and Key Advisers or the Sub-Adviser will continuously monitor
the issuer's financial status and ability to make payments due under the
instrument. Where necessary to ensure that a note is of "high quality," the Fund
will require that the issuer's obligation to pay the principal of the note be
backed by an unconditional bank letter or line of credit, guarantee or
commitment to lend. For purposes of the Fund's investment policies, a variable
amount master note will be deemed to have a maturity equal to the longer of the
period of time remaining until the next readjustment of its interest rate or the
period of time remaining until the principal amount can be recovered from the
issuer through demand. (See Variable and Floating Rate Notes.)
Foreign Investment. The Fund may invest in securities issued by foreign
branches of U.S. banks, foreign banks, or other foreign issuers, including
American Depository Receipts ("ADRs") and securities purchased on foreign
securities exchanges. Such investment may subject the Fund to investment risks
that differ in some respects from those related to investments in obligations of
U.S. domestic issuers or in U.S. securities markets. Such risks include future
adverse political and economic developments, possible seizure, nationalization,
or expropriation of foreign investments, less stringent disclosure requirements,
the possible establishment of exchange controls or taxation at the source, and
the adoption of other foreign governmental restrictions. Additional risks
include currency exchange risks, less publicly available information, the risk
that companies may not be subject to the accounting, auditing and financial
reporting standards and requirements of U.S. companies, the risk that foreign
securities markets may have less volume and therefore many securities traded in
these markets may be less liquid and their prices are more volatile than U.S.
securities, and the risk that custodian and brokerage costs may be higher.
Permissible investments include obligations or securities of foreign issuers,
foreign branches of U.S. banks and of foreign banks. The Fund will acquire such
securities only when Key Advisers or the Sub-Adviser believes the risks
associated with such investments are minimal.
<PAGE>
Variable and Floating Rate Notes. The Fund may acquire variable and
floating rate notes, subject to its investment objectives, policies and
restrictions. A variable rate note is one whose terms provide for the
readjustment of its interest rate on set dates and which, upon such
readjustment, can reasonably be expected to have a market value that
approximates its par value. A floating rate note is one whose terms provide for
the readjustment of its interest rate whenever a specified interest rate changes
and which, at any time, can reasonably be expected to have a market value that
approximates its par value. Such notes are frequently not rated by credit
rating agencies; however, unrated variable and floating rate notes purchased by
the Fund will only be those determined by Key Advisers or the Sub-Adviser, under
guidelines established by the Trustees, to pose minimal credit risks and to be
of comparable quality, at the time of purchase, to rated instruments eligible
for purchase under the Fund's investment policies. In making such
determinations, Key Advisers or the Sub-Adviser will consider the earning power,
cash flow and other liquidity ratios of the issuers of such notes (such issuers
include financial, merchandising, bank holding and other companies) and will
continuously monitor their financial condition. Although there may be no active
secondary market with respect to a particular variable or floating rate note
purchased by the Fund, the Fund may resell the note at any time to a third
party. The absence of an active secondary market, however, could make it
difficult for the Fund to dispose of a variable or floating rate note in the
event the issuer of the note defaulted on its payment obligations and the Fund
could, for this or other reasons, suffer a loss to the extent of the default.
Variable or floating rate notes may be secured by bank letters of credit.
Variable or floating rate notes may have maturities of more than one
year, as follows:
1. A note that is issued or guaranteed by the United States government
or any agency thereof and which has a variable rate of interest readjusted no
less frequently than annually will be deemed by the Fund to have a maturity
equal to the period remaining until the next readjustment of the interest rate.
2. A variable rate note, the principal amount of which is scheduled on
the face of the instrument to be paid in one year or less, will be deemed by the
Fund to have a maturity equal to the period remaining until the next
readjustment of the interest rate.
3. A variable rate note that is subject to a demand feature scheduled
to be paid in one year or more will be deemed by the Fund to have a maturity
equal to the longer of the period remaining until the next readjustment of the
interest rate or the period remaining until the principal amount can be
recovered through demand.
4. A floating rate note that is subject to a demand feature will be
deemed by the Fund to have a maturity equal to the period remaining until the
principal amount can be recovered through demand.
As used above, a note is "subject to a demand feature" where the Fund
is entitled to receive the principal amount of the note either at any time on no
more than 30 days' notice or at specified intervals not exceeding one year and
upon no more than 30 days' notice.
<PAGE>
Options. The Fund may sell (write) call options which are traded on
national securities exchanges with respect to common stock in its portfolio.
The Fund must at all times have in its portfolio the securities which it may be
obligated to deliver if the option is exercised. The Fund may write call
options on its common stocks in an attempt to realize a greater current return
than would be realized on the securities alone. The Fund may also write call
options as a partial hedge against a possible stock market decline or to extend
a holding period on a stock which is under consideration for sale in order to
create a long-term capital gain. In view of its investment objective, the Fund
generally would write call options only in circumstances where Key Advisers or
the SubAdviser does not anticipate significant appreciation of the underlying
security in the near future or has otherwise determined to dispose of the
security. As the writer of a call option, the Fund receives a premium for
undertaking the obligation to sell the underlying security at a fixed price
during the option period, if the option is exercised. So long as the Fund
remains obligated as a writer of a call option, it forgoes the opportunity to
profit from increases in the market price of the underlying security above the
exercise price of the option, except insofar as the premium represents such a
profit (and retains the risk of loss should the value of the underlying security
decline). The Fund may also enter into "closing purchase transactions" in order
to terminate its obligation as a writer of a call option prior to the expiration
of the option. Although the writing of call options only on national securities
exchanges increases the likelihood of the Fund's ability to make closing
purchase transactions, there is no assurance that the Fund will be able to
effect such transactions at any particular time or at any acceptable price. The
writing of call options could result in increases in the Fund's portfolio
turnover rate, especially during periods when market prices of the underlying
securities appreciate.
Futures Contracts.The Fund may enter into futures contracts, options on
futures contracts and stock index futures contracts and options thereon for the
purposes of remaining fully invested and reducing transaction costs. Futures
contracts provide for the future sale by one party and purchase by another party
of a specified amount of a specific security, class of securities, or an index
at a specified future time and at a specified price. A stock index futures
contract is a bilateral agreement pursuant to which two parties agree to take or
make delivery of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of trading of the
contracts and the price at which the futures contract is originally struck.
Futures contracts which are standardized as to maturity date and underlying
financial instrument are traded on national futures exchanges. Futures exchanges
and trading are regulated under the Commodity Exchange Act by the Commodity
Futures Trading Commission ("CFTC"), a U.S. Government agency.
<PAGE>
Although futures contracts by their terms call for actual delivery and
acceptance of the underlying securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery. Closing
out an open futures position is done by taking an opposite position ("buying" a
contract which has previously been "sold," or "selling" a contract previously
purchased) in an identical contract to terminate the position. 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. The
acquisition of put and call options on futures contracts will, respectively,
give the Fund 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. Brokerage commissions are incurred when a
futures contract is bought or sold.
Futures traders are required to make a good faith margin deposit in
cash or government securities with a broker or custodian to initiate and
maintain open positions in futures contracts. A margin deposit is intended to
assure completion of the contract (delivery or acceptance of the underlying
security) if it is not terminated prior to the specified delivery date. Minimal
initial margin requirements are established by the futures exchange and may be
changed. Brokers may establish deposit requirements which are higher than the
exchange minimums. Initial margin deposits on futures contracts are customarily
set at levels much lower than the prices at which the underlying securities are
purchased and sold, typically ranging upward from less than 5% of the value of
the contract being traded.
After a futures contract position is opened, the value of the contract
is marked-to-market daily. If the futures contract price changes to the extent
that the margin on deposit does not satisfy margin requirements, payment of
additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to and
from the futures broker for as long as the contract remains open. The Fund
expects to earn interest income on its margin deposits.
When interest rates are expected to rise or market values of portfolio
securities are expected to fall, the Fund can seek through the sale of futures
contracts to offset a decline in the value of its portfolio securities. When
interest rates are expected to fall or market values are expected to rise, the
Fund, through the purchase of such contracts, can attempt to secure better rates
or prices than might later be available in the market when it effects
anticipated purchases.
The Fund will only sell futures contracts to protect securities it owns
against price declines or purchase contracts to protect against an increase in
the price of securities it intends to purchase.
The Fund's ability to effectively utilize futures trading depends on
several factors. First, it is possible that there will not be a perfect price
correlation between the futures contracts and their underlying stock index.
Second, it is possible that a lack of liquidity for futures contracts could
exist in the secondary market, resulting in an inability to close a futures
position prior to its maturity date. Third, the purchase of a futures contract
involves the risk that the Fund could lose more than the original margin deposit
required to initiate a futures transaction.
Restrictions on the Use of Futures Contracts. The Fund will not enter
into futures contract transactions for purposes other than bona fide hedging
purposes to the extent that, immediately thereafter, the sum of its initial
margin deposits on open contracts exceeds 5% of the market value of the Fund's
total assets. In addition, the Fund will not enter into futures contracts to the
extent that the value of the futures contracts held would exceed 1/3 of the
Fund's total assets. Futures transactions will be limited to the extent
necessary to maintain the Fund's qualification as a regulated investment
company.
<PAGE>
The Fund has undertaken to restrict its futures contract trading as
follows: first, the Fund will not engage in transactions in futures contracts
for speculative purposes; second, the Fund will not market itself to the public
as commodity pool or otherwise as a vehicle for trading in the commodities
futures or commodity options markets; third, the Fund will disclose to all
prospective shareholders the purpose of and limitations on its commodity futures
trading; fourth, the Fund will submit to the CFTC special calls for information.
Accordingly, registration as a commodities pool operator with the CFTC is not
required.
In addition to the margin restrictions discussed above, transactions in
futures contracts may involve the segregation of funds pursuant to requirements
imposed by the Commission. Under those requirements, where the Fund has a long
position in a futures contract, it may be required to establish a segregated
account (not with a futures commission merchant or broker) containing cash or
certain liquid assets equal to the purchase price of the contract (less any
margin on deposit). For a short position in futures or forward contracts held by
the Fund, those requirements may mandate the establishment of a segregated
account (not with a futures commission merchant or broker) with cash or certain
liquid assets that, when added to the amounts deposited as margin, equal the
market value of the instruments underlying the futures contracts (but are not
less than the price at which the short positions were established). However,
segregation of assets is not required if the Fund "covers" a long position. For
example, instead of segregating assets, the Fund, when holding a long position
in a futures contract, could purchase a put option on the same futures contract
with a strike price as high or higher than the price of the contract held by the
Fund. In addition, where the Fund takes short positions, or engages in sales of
call options, it need not segregate assets if it "covers" these positions. For
example, where the Fund holds a short position in a futures contract, it may
cover by owning the instruments underlying the contract. The Fund may also cover
such a position by holding a call option permitting it to purchase the same
futures contract at a price no higher than the price at which the short position
was established. Where the Fund sells a call option on a futures contract, it
may cover either by entering into a long position in the same contract at a
price no higher than the strike price of the call option or by owning the
instruments underlying the futures contract. The Fund could also cover this
position by holding a separate call option permitting it to purchase the same
futures contract at a price no higher than the strike price of the call option
sold by the Fund.
In addition, the extent to which the Fund may enter into transactions
involving futures contracts may be limited by the Internal Revenue Code's
requirements for qualification as a registered investment company and the Fund's
intention to qualify as such.
Risk Factors in Futures Transactions. Positions in futures contracts
may be closed out only on an exchange which provides a secondary market for such
futures. However, there can be no assurance that a liquid secondary market will
exist for any particular futures contract at any specific time. Thus, it may not
be possible to close a futures position. In the event of adverse price
movements, the Fund would continue to be required to make daily cash payments to
maintain the required margin. In such situations, if the Fund has insufficient
cash, it may have to sell portfolio securities to meet daily margin requirements
at a time when it may be disadvantageous to do so. In addition, the Fund may be
required to make delivery of the instruments underlying futures contracts it
holds. The inability to close options and futures positions also could have an
adverse impact on the ability to effectively hedge them. The Fund will minimize
the risk that it will be unable to close out a futures contract by only entering
into futures contracts which are traded on national futures exchanges and for
which there appears to be a liquid secondary market.
The risk of loss in trading futures contracts in some strategies can be
substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in futures pricing. Because the deposit
requirements in the futures markets are less onerous than margin requirements in
the securities market, there may be increased participation by speculators in
the futures market which may also cause temporary price distortions. A
relatively small price movement in a futures contract may result in immediate
and substantial loss (as well as gain) to the investor. For example, if at the
time of purchase, 10% of the value of the futures contract is deposited as
margin, a subsequent 10% decrease in the value of the futures contract would
result in a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out. A 15% decrease would
result in a loss equal to 150% of the original margin deposit if the contract
were closed out. Thus, a purchase or sale of a futures contract may result in
losses in excess of the amount invested in the contract. However, because the
futures strategies engaged in by the Fund are only for hedging purposes, the Key
Advisers and The SubAdviser do not believe that the Fund is subject to the risks
of loss frequently associated with futures transactions. The Fund would
presumably have sustained comparable losses if, instead of the futures contract,
it had invested in the underlying financial instrument and sold it after the
decline.
<PAGE>
Utilization of futures transactions by the Fund does involve the risk
of imperfect or no correlation where the securities underlying futures contract
have different maturities than the portfolio securities being hedged. It is also
possible that the Fund could both lose money on futures contracts and also
experience a decline in value of its portfolio securities. There is also the
risk of loss by the Fund of margin deposits in the event of bankruptcy of a
broker with whom the Fund has an open position in a futures contract or related
option.
The Fund may also acquire and sell put options on the securities held
in its portfolio.
A put is a right to sell a specified security (or securities) within a
specified period of time at a specified exercise price. The Fund may sell,
transfer, or assign a put only in conjunction with the sale, transfer, or
assignment of the underlying security or securities. The amount payable to the
Fund upon its exercise of a "put" is normally (i) the Fund's acquisition cost of
the securities (excluding any accrued interest which the Fund paid on the
acquisition), less any amortized market premium or plus any amortized market or
original issue discount during the period the Fund owned the securities, plus
(ii) all interest accrued on the securities since the last interest payment date
during that period.
Puts may be acquired by the Fund to facilitate the liquidity of its
portfolio assets. Puts may also be used to facilitate the reinvestment of the
Fund's assets at a rate of return more favorable than that of the underlying
security. Puts may, under certain circumstances, also be used to shorten the
maturity of underlying variable rate or floating rate securities for purposes of
calculating the remaining maturity of those securities and the dollar-weighted
average portfolio maturity of the Fund's assets. See "Variable and Floating Rate
Notes" and "VALUATION" in this Statement of Additional Information.
Miscellaneous Securities. The Fund can invest in various securities
issued by domestic and foreign corporations, including preferred stocks and
investment grade corporate bonds, notes, and warrants. Bonds are long-term
corporate debt instruments secured by some or all of the issuer's assets,
debentures are general corporate debt obligations backed only by the integrity
of the borrower, and warrants are instruments that entitle the holder to
purchase a certain amount of common stock at a specified price, which price is
usually higher than the current market price at the time of issuance. Preferred
stocks are instruments that combine qualities both of equity and debt
securities. Individual issues of preferred stock will have those rights and
liabilities that are spelled out in the governing document. Preferred stocks
usually pay a fixed dividend per quarter (or annum) and are senior to common
stock in terms of liquidation and dividends rights, and preferred stocks
typically do not have voting rights. The Fund will only purchase preferred
stocks where the issuer is publicly traded and has capital in excess of $200
million.
The Fund also may invest, consistent with its investment objective and
policies, in zero coupon bonds, which are debt instruments that do not pay
current interest and are typically sold at prices greatly discounted from par
value. The return on a zero-coupon obligation, when held to maturity, equals the
difference between the par value and the original purchase price. Zero-coupon
obligations have greater price volatility than coupon obligations.
"When-Issued" Securities. As discussed in the Prospectus, the Fund may
purchase securities on a "when issued" basis (i.e., for delivery beyond the
normal settlement date at a stated price and yield). When the Fund agrees to
purchase securities on a "when issued" basis, the Victory Portfolios' custodian
will set aside cash or liquid portfolio securities equal to the amount of the
commitment in a separate account. Normally, the custodian will set aside
portfolio securities to satisfy the purchase commitment, and in such a case, the
Fund may be required subsequently to place additional assets in the separate
account in order to assure that the value of the account remains equal to the
amount of the Fund's commitment. It may be expected that the Fund's net assets
will fluctuate to a greater degree when it sets aside portfolio securities to
cover such purchase commitments than when it sets aside cash.
When the Fund engages in "when-issued" transactions, it relies on the
seller to consummate the trade. Failure of the seller to do so may result in the
Fund incurring a loss or missing the opportunity to obtain a price considered to
be advantageous. The Fund does not intend to purchase "when issued" securities
for speculative purposes, but only in furtherance of its investment objective.
Government "Mortgage-backed" Securities. The Fund may invest in
obligations of certain agencies and instrumentalities of the U.S. Government.
Some such obligations, such as those issued by GNMA or the Export-Import Bank of
the United States, are supported by the full faith and credit of the U.S.
Treasury; others, such as those of FNMA, are supported by the right of the
issuer to borrow from the Treasury; others are supported by the discretionary
authority of the U.S. Government to purchase the agency's obligations; still
others, such as those of the Federal Farm Credit Banks or FHLMC, are supported
only by the credit of the instrumentality. No assurance can be given that the
U.S. Government would provide financial support to U.S. Government-sponsored
agencies and instrumentalities if it is not obligated to do so by law.
The principal governmental (i.e., backed by the full faith and credit
of the U.S. Government) guarantor of mortgage-related securities is GNMA. GNMA
is a wholly owned U.S. Government corporation within the Department of Housing
and Urban Development. GNMA is authorized to guarantee, with the full faith and
credit of the U.S. Government, the timely payment of principal and interest on
securities issued by institutions approved by GNMA (such as savings and loan
institutions, commercial banks and mortgage bankers) and pools of FHA-insured or
VA-guaranteed mortgages. Government-related (i.e., not backed by the full faith
and credit of the U.S. Government) guarantors include FNMA and FHLMC. FNMA and
FHLMC are government-sponsored corporations owned entirely by private
stockholders. Pass-through securities issued by FNMA and FHLMC are guaranteed as
to timely payment of principal and interest by FNMA and FHLMC, respectively, but
are not backed by the full faith and credit of the U.S. Government.
MORTGAGE-RELATED SECURITIES -- IN GENERAL
Mortgage-related securities are backed by mortgage obligations
including, among others, conventional 30-year fixed rate mortgage obligations,
graduated payment mortgage obligations, 15-year mortgage obligations, and
adjustable rate mortgage obligations. All of these mortgage obligations can be
used to create pass-through securities. A pass-through security is created when
mortgage obligations are pooled together and undivided interests in the pool or
pools are sold. The cash flow from the mortgage obligations is passed through to
the holders of the securities in the form of periodic payments of interest,
principal and prepayments (net of a service fee). Prepayments occur when the
holder of an individual mortgage obligation prepays the remaining principal
before the mortgage obligation's scheduled maturity date. As a result of the
pass-through of prepayments of principal on the underlying securities,
mortgage-backed securities are often subject to more rapid prepayment of
principal than their stated maturity would indicate. Because the prepayment
characteristics of the underlying mortgage obligations vary, it is not possible
to predict accurately the realized yield or average life of a particular issue
of pass-through certificates. Prepayment rates are important because of their
effect on the yield and price of the securities. Accelerated prepayments have an
adverse impact on yields for pass-throughs purchased at a premium (i.e., a price
in excess of principal amount) and may involve additional risk of loss of
principal because the premium may not have been fully amortized at the time the
obligation is repaid. The opposite is true for pass-throughs purchased at a
discount. The Victory Portfolios may purchase mortgage-related securities at a
premium or at a discount. Among the U.S. Government securities in which the
Victory Portfolios may invest are government "mortgage-backed" (or government
guaranteed mortgage related securities). Such guarantees do not extend to the
value of yield of the mortgage-backed securities themselves or of the Fund's
shares.
<PAGE>
GNMA Certificates. Certificates of the Government National Mortgage
Association ("GNMA") are mortgage-backed securities which evidence an undivided
interest in a pool or pools of mortgages. GNMA Certificates that the Fund may
purchase are the "modified pass-through" type, which entitle the holder to
receive timely payment of all interest and principal payments due on the
mortgage pool, net of fees paid to the "issuer" and GNMA, regardless of whether
or not the mortgagor actually makes the payment.
The National Housing Act authorizes GNMA to guarantee the timely
payment of principal and interest on securities backed by a pool of mortgages
insured by the Federal Housing Administration ("FHA") or guaranteed by the
Veterans Administration ("VA"). The GNMA guarantee is backed by the full faith
and credit of the U.S. Government. GNMA is also empowered to borrow without
limitation from the U.S. Treasury if necessary to make any payments required
under its guarantee.
The estimated average life of a GNMA Certificate is likely to be
substantially shorter than the original maturity of the mortgages underlying the
securities. Prepayments of principal by mortgagors and mortgage foreclosures
will usually result in the return of the greater part of principal investment
long before the maturity of the mortgages in the pool. Foreclosures impose no
risk to principal investment because of the GNMA guarantee, except to the extent
that the Fund has purchased the certificates above par in the secondary market.
FHLMC Securities. The Federal Home Loan Mortgage Corporation ("FHLMC")
was created in 1970 to promote development of a nationwide secondary market in
conventional residential mortgages. The FHLMC issues two types of mortgage
pass-through securities ("FHLMC Certificates"), mortgage participation
certificates ("PCs") and collateralized mortgage obligations ("CMOs"). PCs
resemble GNMA Certificates in that each PC represents a pro rata share of all
interest and principal payments made and owed on the underlying pool. The FHLMC
guarantees timely monthly payment of interest on PCs and the ultimate payment of
principal. Recently introduced FHLMC Gold PCs guarantee the timely payment of
both principal and interest.
CMOs are securities backed by a pool of mortgages in which the
principal and interest cash flows of the pool are channeled on a prioritized
basis into two or more classes, or tranches, of bonds. FHLMC CMOs are backed by
pools of agency mortgage-backed securities and the timely payment of principal
and interest of each tranche is guaranteed by the FHLMC. The FHLMC guarantee is
not backed by the full faith and credit of the U.S. Government.
FNMA Securities. The Federal National Mortgage Association ("FNMA") was
established in 1938 to create a secondary market in mortgages insured by the
FHA, but has expanded its activity to the secondary market for conventional
residential mortgages. FNMA primarily issues two types of mortgage-backed
securities, guaranteed mortgage pass-through certificates ("FNMA Certificates")
and CMOs. FNMA Certificates resemble GNMA Certificates in that each FNMA
Certificate represents a pro rata share of all interest and principal payments
made and owed on the underlying pool. FNMA guarantees timely payment of interest
and principal on FNMA Certificates and CMOs. The FNMA guarantee is not backed by
the full faith and credit of the U.S. Government.
<PAGE>
U.S. Government Obligations. The Fund may invest in obligations issued
or guaranteed by the U.S. Government, its agencies and instrumentalities.
Obligations of certain agencies and instrumentalities of the U.S. Government are
supported by the full faith and credit of the U.S. Treasury; others are
supported by the right of the issuer to borrow from the U.S. Treasury; others
are supported by the discretionary authority of the U.S. Government to purchase
the agency's obligations; and still others are supported only by the credit of
the agency or instrumentality. No assurance can be given that the U.S.
Government will provide financial support to U.S. Government-sponsored agencies
or instrumentalities if it is not obligated to do so by law. The Fund will
invest in the obligations of such agencies and instrumentalities only when Key
Advisers or the Sub-Adviser believes that the credit risk with respect thereto
is minimal.
Securities Lending. The Fund may lend its portfolio securities to
broker-dealers, banks or institutional borrowers of securities. The Fund must
receive a minimum of 100% collateral, plus any interest due in the form of cash
or U.S. Government securities. This collateral must be valued daily and should
the market value of the loaned securities increase, the borrower must furnish
additional collateral to the Fund. During the time portfolio securities are on
loan, the borrower will pay the Fund any dividends or interest paid on such
securities plus any interest negotiated between the parties to the lending
agreement. Loans will be subject to termination by the Fund or the borrower at
any time. While the Fund will not have the right to vote securities on loan, it
intends to terminate the loan and regain the right to vote if that is considered
important with respect to the investment. The Fund will only enter into loan
arrangements with broker-dealers, banks or other institutions which Key Advisers
or the Sub-Adviser has determined are creditworthy under guidelines established
by the Victory Portfolios' Trustees. The Fund intends to limit its securities
lending to 33 1/3% of total assets.
Other Investment Companies. The Fund may invest up to 5% of its total
assets in the securities of any one investment company, but may not own more
than 3% of the securities of any one investment company or invest more than 10%
of its total assets in the securities of other investment companies. Pursuant to
an exemptive order received by the Victory Portfolios from the Commission, the
Fund may invest in money market funds of the Victory Portfolios. Key Advisers
and/or the Sub-Adviser will waive its investment advisory fee as to all assets
invested in other investment companies. Because such other investment companies
employ an investment adviser, such investment by the Fund will cause
shareholders to bear duplicative fees, such as management fees.
<PAGE>
Repurchase Agreements. Securities held by the Fund may be subject to
repurchase agreements. Under the terms of a repurchase agreement, the Fund would
acquire securities from financial institutions or registered broker-dealers
deemed creditworthy by Key Advisers or the Sub-Adviser pursuant to guidelines
adopted by the Victory Portfolios' Trustees, subject to the seller's agreement
to repurchase such securities at a mutually agreed upon date and price. The
seller is required to maintain the value of collateral held pursuant to the
agreement at not less than the repurchase price (including accrued interest). If
the seller were to default on its repurchase obligation or become insolvent, the
Fund would suffer a loss to the extent that the proceeds from a sale of the
underlying portfolio securities were less than the repurchase price, or to the
extent that the disposition of such securities by the Fund is delayed pending
court action. Repurchase agreements are considered by the staff of the
Commission to be loans by the Fund.
Reverse Repurchase Agreements. The Fund may borrow funds for temporary
purposes by entering into reverse repurchase agreements in accordance with the
investment restrictions described below. Pursuant to such agreements, the Fund
would sell portfolio securities to financial institutions such as banks and
broker-dealers, and agree to repurchase them at a mutually agreed-upon date and
price. At the time the Fund enters into a reverse repurchase agreement, it will
place in a segregated custodial account assets (such as cash or other liquid
high-grade securities) consistent with the Fund's investment restrictions having
a value equal to the repurchase price (including the accrued interest); the
collateral will be marked-to-market on a daily basis, and will be continuously
monitored to ensure that such equivalent value is maintained. Reverse repurchase
agreements involve the risk that the market value of the securities sold by the
Fund may decline below the price at which the Fund is obligated to repurchase
the securities. Reverse repurchase agreements are considered to be borrowings
under the Investment Company Act of 1940, as amended (the "1940 Act").
Investment Restrictions
The following investment restrictions are fundamental with respect to
the Fund and may be changed only by a vote of a majority of the outstanding
shares of the Fund as defined in "ADDITIONAL INFORMATION -Miscellaneous" of this
Statement of Additional Information).
THE FUND MAY NOT:
1. Participate on a joint or joint and several basis in any
securities trading account.
2. Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Fund from purchasing or selling options and futures contracts or from investing
in securities or other instruments backed by physical commodities).
3. Purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Fund from
investing in securities or other instruments backed by real estate or securities
of companies engaged in the real estate business). Investments by the Fund in
securities backed by mortgages on real estate or in marketable securities of
companies engaged in such activities are not hereby precluded.
<PAGE>
4. Issue any senior security (as defined in the 1940 Act), except that
(a)the Fund may engage in transactions that may result in the issuance of senior
securities to the extent permitted under applicable regulations and
interpretations of the 1940 Act or an exemptive order; (b) the Fund may
acquire other securities, the acquisition of which may result in the issuance of
a senior security, to the extent permitted under applicable regulations or
interpretations of the 1940 Act; (c) subject to the restrictions set forth
below, the Fund may borrow money as authorized by the 1940 Act.
5. Borrow money, except that (a) the Fund may enter into commitments to
purchase securities in accordance with its investment program, including
delayeddelivery and when-issued securities and reverse repurchase agreements,
provided that the total amount of any such borrowing does not exceed 33 1/3% of
the Fund's total assets; and (b) the Fund may borrow money for temporary or
emergency purposes in an amount not exceeding 5% of the value of its total
assets at the time when the loan is made. Any borrowings representing more than
5% of the Fund's total assets must be repaid before the Fund may make additional
investments.
6. Lend any security or make any other loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties, but this limitation
does not apply to purchases of publicly issued debt securities or to repurchase
agreements.
7. Underwrite securities issued by others, except to the extent that the
Fund may be considered an underwriter within the meaning of the Securities Act
of 1933 in the disposition of restricted securities.
8. With respect to 75% of the Fund's total assets, the Fund may not
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or instrumentalities)
if, as a result, (a) more than 5% of the Fund's total assets would be invested
in the securities of that issuer, or (b) the Fund would hold more than 10% of
the outstanding voting securities of that issuer.
9. Purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. Government or any of its agencies or
instrumentalities, or repurchase agreements secured thereby) if, as a result,
more than 25% of the Fund's total assets would be invested in the securities of
companies whose principal business activities are in the same industry. In the
utilities category, the industry shall be determined according to the service
provided. For example, gas, electric, water and telephone will be considered as
separate industries.
The following restrictions are not fundamental and may be changed
without shareholder approval:
1. The Fund will not purchase or retain securities of any issuer if the
officers or Trustees of the Victory Portfolios or the officers or directors of
its investment adviser owning beneficially more than one half of 1% of the
securities of such issuer together own beneficially more than 5% of such
securities.
2. The Fund will not invest more than 10% of its total assets in the
securities of issuers which together with any predecessors have a record of less
than three years of continuous operation.
3. The Fund will not write or sell puts, straddles, spreads or
combinations thereof or write or purchase put options or purchase call options.
<PAGE>
4. The Fund will not invest more than 15% of its net assets in illiquid
securities. Illiquid securities are securities that are not readily marketable
or cannot be disposed of promptly within seven days and in the usual course of
business at approximately the price at which the Fund has valued them. Such
securities include, but are not limited to, time deposits and repurchase
agreements with maturities longer than seven days. Securities that may be resold
under Rule 144A ("Restricted Securities"), or securities offered pursuant to
Section 4(2) of, the 1933 Act, shall not be deemed illiquid solely by reason of
being unregistered. Key Advisers or the Sub-Adviser determine whether a
particular security is deemed to be liquid based on the trading markets for the
specific security and other factors. However, because state securities laws may
limit the Fund's investment in Restricted Securities (regardless of the
liquidity of the investment), investments in Restricted Securities resalable
under Rule 144A will continue to be subject to applicable state law requirements
until such time, if ever, that such limitations are changed.
5. The Fund will not make short sales of securities, other than short
sales "against the box," or purchase securities on margin except for short-term
credits necessary for clearance of portfolio transactions, provided that this
restriction will not be applied to limit the use of options, futures contracts
and related options, in the manner otherwise permitted by the investment
restrictions, policies and investment program of the Fund.
6. The Fund may invest up to 5% of its total assets in the securities of
any one investment company, but may not own more than 3% of the securities of
any one investment company or invest more than 10% of its total assets in the
securities of other investment companies. Pursuant to an exemptive order
received by the Victory Portfolios from the Commission, the Fund may invest in
the money market funds of the Victory Portfolios.
State Regulations
In addition, each of the Victory Portfolios, so long as its shares are
registered under the securities laws of the State of Texas and such restrictions
are required as a consequence of such registration, is subject to the following
non-fundamental policies, which may be modified in the future by the Trustees
without a vote of the Victory Portfolios' shareholders: (i) the Victory
Portfolios has represented to the Texas State Securities Board, on behalf of the
investment portfolios registered in that state, that those investment portfolios
will not invest in oil, gas or mineral leases or purchase or sell real property
(including limited partnership interests, but excluding readily marketable
securities of companies which invest in real estate); and (ii) the Victory
Portfolios has represented to the Texas State Securities Board on behalf of the
investment portfolios registered in that state, that those investment portfolios
will not invest more than 5% of their net assets in warrants valued at the lower
of cost or market; provided that, included within that amount, but not to exceed
2% of net assets, may be warrants which are not listed on the New York or
American Stock Exchanges. For purposes of this restriction, warrants acquired in
units or attached to securities are deemed to be without value.
The policies and limitations listed above supplement those set forth in
the Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of the Fund's assets that may be invested
in any security or other asset, or sets forth a policy regarding quality
standards, such standard or percentage limitation will be determined immediately
after and as a result of the Fund's acquisition of such security or other asset
except in the case of borrowing (or other activities that may be deemed to
result in the issuance of a "senior security" under the 1940 Act). Accordingly,
any subsequent change in values, net assets, or other circumstances will not be
considered when determining whether the investment complies with the Fund's
investment policies and limitations. If the value of the Fund's holdings of
illiquid securities at any time exceeds the percentage limitation applicable at
the time of acquisition due to subsequent fluctuations in value or other
reasons, the Board of Trustees will consider what actions, if any, are
appropriate to maintain adequate liquidity.
FUTURE DEVELOPMENTS
The Fund may take advantage of other investment practices which are not
at present contemplated for use by the Fund or which currently are not available
but which may be developed, to the extent such investment practices are both
consistent with the Fund's investment objective and are legally permissible for
the Fund. Such investment practices, if they arise, may involve risks which
exceed those involved in the activities described in the Prospectus and
Statement of Additional Information. Prior to commencing any new investment
practice, the Fund will notify shareholders by means of prospectus supplement.
<PAGE>
Portfolio Turnover
The turnover rate for the Fund's investment portfolio is calculated by
dividing the lesser of the Fund's purchases or sales of portfolio securities for
the year by the monthly average value of the portfolio securities. The
calculation excludes all securities whose maturities, at the time of
acquisition, were one year or less.
In the fiscal years ended October 31, 1994 and 1993, the Fund's
portfolio turnover rates were ____% and ____%, respectively.
VALUATION OF PORTFOLIO SECURITIES
Investment securities held by the Fund are valued on the basis of
valuations provided by an independent pricing service, approved by the Board of
Trustees, which uses information with respect to transactions of a security,
quotations from dealers, market transactions in comparable securities, and
various relationships between securities, in determining value. Specific
investment securities which are not priced by the approved pricing service will
be valued according to quotations obtained from dealers who are market makers in
those securities. Investment securities with less than 60 days to maturity when
purchased are valued at amortized cost which approximates market value.
Investment securities not having readily available market quotations will be
priced at fair value using a methodology approved in good faith by the Board of
Trustees.
PERFORMANCE
As described in the Prospectus, from time to time the "standardized
yield," "dividend yield," "average annual total return," "total return," and
"total return at net asset value" of an investment in each class of Fund shares
may be advertised. An explanation of how yields and total returns are calculated
for each class and the components of those calculations are set forth below.
Yield and total return information may be useful to investors in
reviewing the Victory Portfolios' performance. The Fund's advertisement of its
performance must, under applicable Commission rules, include the average annual
total returns for each class of shares of the Fund for the 1, 5 and 10-year
period (or the life of the class, if less) as of the most recently ended
calendar quarter. This enables an investor to compare the Fund's performance to
the performance of other funds for the same periods. However, a number of
factors should be considered before using such information as a basis for
comparison with other investments. An investment in the Fund is not insured; its
yield and total return are not guaranteed and normally will fluctuate on a daily
basis. When redeemed, an investor's shares may be worth more or less than their
original cost. Yield and total return for any given past period are not a
prediction or representation by the Victory Portfolios of future yields or rates
of return on its shares. The yield and total returns of the Class A and Class B
shares of the Fund are affected by portfolio quality, portfolio maturity, the
type of investments the Fund holds and its operating expenses.
<PAGE>
STANDARDIZED YIELDS. The Fund's "yield" (referred to as "standardized
yield") for a given 30-day period for a class of shares is calculated using the
following formula set forth in rules adopted by the Commission that apply to all
funds that quote yields:
Standardized Yield = 2 [[(a-b + 1)to the sixth power] - 1]
-----------
cd
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense
reimbursements).
c = the average daily number of shares of that class outstanding
during the 30-day period that were entitled to receive
dividends.
d = the maximum offering price per share of the class on the last
day of the period, adjusted for undistributed net investment
income.
The standardized yield of a class of shares for a 30-day period may
differ from its yield for any other period. The Commission formula assumes that
the standardized yield for a 30-day period occurs at a constant rate for a
six-month period and is annualized at the end of the six-month period. This
standardized yield is not based on actual distributions paid by the Fund to
shareholders in the 30-day period, but is a hypothetical yield based upon the
net investment income from the Fund's portfolio investments calculated for that
period. The standardized yield may differ from the "dividend yield" of that
class, described below. Additionally, because each class of shares is subject to
different expenses, it is likely that the standardized yields of the Fund
classes of shares will differ. The yield on Class A shares for the 30-day period
ended April 30, 1995 was ____% .
DIVIDEND YIELD AND DISTRIBUTION RETURN. From time to time the Fund may
quote a "dividend yield" or a "distribution return" for each class. Dividend
yield is based on the Class A or Class B share dividends derived from net
investment income during a stated period. Distribution return includes dividends
derived from net investment income and from realized capital gains declared
during a stated period. Under those calculations, the dividends and/or
distributions for that class declared during a stated period of one year or less
(for example, 30 days) are added together, and the sum is divided by the maximum
offering price per share of that class A) on the last day of the period. When
the result is annualized for a period of less than one year, the "dividend
yield" is calculated as follows:
Dividend Yield of the Class =
Dividends of the Class + Number of days (accrual period) x 365
-----------------------------------------------------------
Max. Offering Price of the Class (last day of period)
The maximum offering price for Class A shares includes the maximum
front-end sales charge. For Class B shares, the maximum offering price is the
net asset value per share, without considering the effect of contingent deferred
sales charges.
From time to time similar yield or distribution return calculations may
also be made using the Class A net asset value (instead of its respective
maximum offering price) at the end of the period. The dividend yields on Class A
shares at maximum offering price and net asset value for the 30-day period ended
________, 1995 were ____% and ____%, respectively.
TOTAL RETURNS. The "average annual total return" of each class is an
average annual compounded rate of return for each year in a specified number of
years. It is the rate of return based on the change in value of a hypothetical
initial investment of $1,000 ("P" in the formula below) held for a number of
years ("n") to achieve an Ending Redeemable Value ("ERV"), according to the
following formula:
[(ERV)1]to the Nth - 1 = Average Annual Total Return
----------
(P)
<PAGE>
The cumulative "total return" calculation measures the change in value
of a hypothetical investment of $1,000 over an entire period of years. Its
calculation uses some of the same factors as average annual total return, but it
does not average the rate of return on an annual basis. Total return is
determined as follows:
ERV - P = Total Return
P
In calculating total returns for Class A shares, the current maximum
sales charge of 4.75% (as a percentage of the offering price) is deducted from
the initial investment ("P") (unless the return is shown at net asset value, as
discussed below). For Class B shares, the payment of the applicable contingent
deferred sales charge (5.0% for the first year, 4.0% for the second year, 3.0%
for the third and fourth years, 2.0% in the fifth year, 1.0% in the sixth year
and none thereafter) is applied to the investment result for the time period
shown (unless the total return is shown any net asset value, as described
below). Total returns also assume that all dividends and capital gains
distributions during the period are reinvested to buy additional shares at net
asset value per share, and that the investment is redeemed at the end of the
period. The average annual total return and cumulative total return on Class A
shares for the period December 10, 1993 (commencement of operations) to ____,
1995 (life of fund) at maximum offering price were ___% and ____%, respectively.
For the one year period ended _______________, 1995 annual total return for
Class A was ______%.
From time to time the Fund may also quote an "average annual total
return at net asset value" or a cumulative "total return at net asset value" for
Class A or Class B shares. It is based on the difference in net asset value per
share at the beginning and the end of the period for a hypothetical investment
in that class of shares (without considering front-end or contingent sales
charges) and takes into consideration the reinvestment of dividends and capital
gains distributions. The average annual total return and cumulative total return
on Class A shares for the period December 10, 1993 (commencement of operations)
to ________, 1995 (life of fund), at net asset value, was ____% and ___%,
respectively. For the one year period ended _______, 1995, average annual total
return for Class A shares was ___%.
OTHER PERFORMANCE COMPARISONS. From time to time the Fund may publish
the ranking of the performance of its Class A or Class B shares by Lipper
Analytical Services, Inc. ("Lipper"), a widely-recognized independent mutual
fund monitoring service. Lipper monitors the performance of regulated investment
companies, including the Fund, and ranks the performance of the Fund's classes
against (i) all other funds, excluding money market funds, and (ii) all other
government bond funds. The Lipper performance rankings are based on total return
that includes the reinvestment of capital gains distributions and income
dividends but does not take sales charges or taxes into consideration.
From time to time the Fund may publish the ranking of the performance
of its Class A or Class B shares by Morningstar, Inc., an independent mutual
fund monitoring service that ranks mutual funds, including the Fund, in broad
investment categories (equity, taxable bond, tax-exempt and other) monthly,
based upon each fund's three, five and ten-year average annual total returns
(when available) and a risk adjustment factor that reflects Fund performance
relative to three-month U.S. Treasury bill monthly returns. Such returns are
adjusted for fees and sales loads. There are five ranking categories with a
corresponding number of stars: highest (5), above average (4), neutral (3),
below average (2) and lowest (1). Ten percent of the funds, series or classes in
an investment category receive 5 stars, 22.5% receive 4 stars, 35% receive 3
stars, 22.5% receive 2 stars, and the bottom 10% receive one star. Morningstar
ranks the Class A and Class B shares of the Fund in relation to other taxable
bond funds.
<PAGE>
The total return on an investment made in Class A or Class B shares of
the Fund may be compared with the performance for the same period of one or more
of the following indices: the Consumer Price Index, the Salomon Brothers World
Government Bond Index, the Standard & Poor's 500 Index, the Shearson Lehman
Government/Corporate Bond Index, the Lehman Aggregate Bond Index, and the J.P.
Morgan Government Bond Index. Other indices may be used from time to time. The
Consumer Price Index is generally considered to be a measure of inflation. The
Salomon Brothers World Government Bond Index generally represents the
performance of government debt securities of various markets throughout the
world, including the United States. The Lehman Government/Corporate Bond Index
generally represents the performance of intermediate and long-term government
and investment grade corporate debt securities. The Lehman Aggregate Bond Index
measures the performance of U.S. corporate bond issues, U.S. government
securities and mortgaged-backed securities. The J.P. Morgan Government Bond
Index generally represents the performance of government bonds issued by various
countries including the United States. The S&P 500 Index is a composite index
of 500 common stocks generally regarded as an index of U.S. stock market
performance. The foregoing bond indices are unmanaged indices of securities
that do not reflect reinvestment of capital gains or take investment costs into
consideration, as these items are not application to indices.
From time to time, the yields and the total returns of Class A or Class
B shares of the Fund may be quoted in and compared to other mutual funds with
similar investment objective in advertisements, shareholder reports or other
communications to shareholders. The Fund may also include calculations in such
communications that describe hypothetical investment results. (Such performance
examples will be based on an express set of assumptions and are not indicative
of the performance of any Fund.) Such calculations may from time to time include
discussions or illustrations of the effects of compounding in advertisements.
"Compounding" refers to the fact that, if dividends or other distributions on a
Fund investment are reinvested by being paid in additional Fund shares, any
future income or capital appreciation of a Fund would increase the value, not
only of the original Fund investment, but also of the additional Fund shares
received through reinvestment. As a result, the value of the Fund investment
would increase more quickly than if dividends or other distributions had been
paid in cash. The Fund may also include discussions or illustrations of the
potential investment goals of a prospective investor (including but not limited
to tax and/or retirement planning), investment management techniques, policies
or investment suitability of Fund, economic conditions, legislative developments
(including pending legislation), the effects of inflation and historical
performance of various asset classes, including but not limited to stocks, bonds
and Treasury bills. From time to time advertisements or communications to
shareholders may summarize the substance of information contained in shareholder
reports (including the investment composition of a Fund, as well as the views of
the investment adviser as to current market, economic, trade and interest rate
trends, legislative, regulatory and monetary developments, investment strategies
and related matters believed to be of relevance to Fund. The Fund may also
include in advertisements, charts, graphs or drawings which illustrate the
potential risks and rewards of investment in various investment vehicles,
including but not limited to stock, bonds, Treasury bills and shares of Fund as
well as charts or graphs which illustrate strategies such as dollar cost
averaging, and comparisons of hypothetical yields of investment in tax-exempt
versus taxable investments. In addition, advertisements or shareholder
communications may include a discussion of certain attributes or benefits to be
derived by an investment in Fund. Such advertisements or communications may
include symbols, headlines or other material which highlight or summarize the
information discussed in more detail therein. With proper authorization, Fund
may reprint articles (or excerpts) written regarding the Fund and provide them
to prospective shareholders. Performance information with respect to the Fund is
generally available by calling 1-800-539-3863.
Investors may also judge, and the Fund may at times advertise,
performance of Class A or Class B shares by comparing it to the performance of
other mutual funds or mutual fund portfolios with comparable investment
objectives and policies, which performance may be contained in various unmanaged
mutual fund or market indices or rankings such as those prepared by Dow Jones &
Co., Inc., Standard & Poor's Corporation, Lehman Brothers, Merrill Lynch, and
Salomon Brothers, and in publications issued by Lipper Analytical Services, Inc.
and in the following publications: IBC/Donoghue's Money Fund Reports, Ibottson
Associates, Inc., Morningstar, CDA/Wiesenberger, Money Magazine, Forbes,
Barron's, The Wall Street Journal, The New York Times, Business Week, American
Banker, Fortune, Institutional Investor, U.S.A. Today. In addition to yield
information, general information about the Fund that appears in a publication
such as those mentioned above may also be quoted or reproduced in advertisements
or in reports to shareholders.
Advertisements and sales literature may include discussions of
specifics of the portfolio manager's investment strategy and process, including,
but not limited to, descriptions of security selection and analysis.
Advertisements may also include descriptive information about the
investment adviser, including, but not limited to, its status within the
industry, other services and products it makes available, total assets under
management, its investment philosophy.
When comparing yield, total return and investment risk of an investment
in Class A or Class B shares of the Fund with other investments, investors
should understand that certain other investments have different risk
characteristics than an investment in shares of the Fund. For example,
certificates of deposit may have fixed rates of return and may be insured as to
principal and interest by the FDIC, while the Fund's returns will fluctuate and
its share values and returns are not guaranteed. Money market accounts offered
by banks also may be insured by the FDIC and may offer stability of principal.
U.S. Treasury securities are guaranteed as to principal and interest by the full
faith and credit of the U.S. government. Money market mutual funds may seek to
offer a fixed price per share.
ADDITIONAL PURCHASE EXCHANGE AND REDEMPTION INFORMATION
The Victory Portfolios (see "Description of Victory Portfolios" below)
is open for business and the NAV of each class of shares of the Fund is
calculated on each Business Day. A Business Day is every day on which the NYSE
is open for business, the Federal Reserve Bank of Cleveland is open and any
other day (other than a day on which no shares of the Fund are tendered for
redemption and no order to purchase any shares is received) during which there
is sufficient trading in portfolio instruments that the Fund's net asset value
per share might be materially affected. The NAV of each class is determined
and its shares are priced as of the close of regular trading of the NYSE
(enerally 4:00 p.m. Eastern time (the "Valuation Time")) on each Business Day
of the Fund. The NYSE or the Federal Reserve Bank of Cleveland will not be open
in observance of the following holidays: New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day.
The holiday closing schedule is subject to change.
When the NYSE is closed, or when trading is restricted for any reason
other than its customary weekend or holiday closings, or under emergency
circumstances as determined by the Commission to warrant such action, the Fund's
Transfer Agent will determine the Fund's NAVs at Valuation Time. A Fund's NAV
may be affected to the extent that its securities are traded on days that are
not Business Days.
[If, in the opinion of the Trustees, conditions exist which make cash
payment undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing the NAV of each class of the Fund. Shareholders receiving securities
or other property on redemption may realize a gain or loss for tax purposes and
will incur any costs of sale as well as the associated inconveniences.]
Pursuant to Rule 11a-3 under the 1940 Act, the Fund is required to give
shareholders at least 60 days' notice prior to terminating or modifying the
Fund's exchange privilege. Under the Rule, the 60-day notification requirement
may be waived if (i) the only effect of a modification would be to reduce or
eliminate an administrative fee, redemption fee or deferred sales charge
ordinarily payable at the time of exchange or (ii) the Fund temporarily suspends
the offering of shares as permitted under the 1940 Act or by the SEC or because
it is unable to invest amounts effectively in accordance with its investment
objective and policies.
<PAGE>
In the Prospectus, the Victory Portfolios, Key Advisers and the
Sub-Adviser have notified shareholders that they reserve the right at any time
without prior notice to shareholders to refuse exchange purchases by any person
or group if, in Key Advisers or the Sub-Adviser's judgment, the Fund would be
unable to invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
ADDITIONAL PURCHASE INFORMATION
ALTERNATIVE SALES ARRANGEMENTS - CLASS A AND CLASS B SHARES. The
Alternative Sales Arrangements permit an investor to choose the method of
purchasing shares that is more beneficial to the investor depending on the
amount of the purchase, the length of time the investor expects to hold shares
and other relevant circumstances. Investors should understand that the purpose
and function of the deferred sales charge and asset-based sales charge with
respect to Class B shares are the same as those of the initial sales charge with
respect to Class A shares. Any salesperson or other person entitled to receive
compensation for selling Fund shares may receive different compensation with
respect to one class of shares on behalf of a single investor (not including
dealer "street name" or omnibus accounts) because generally it will be more
advantageous for that investor to purchase Class A shares of the Fund instead.
The two classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different shareholder
privileges and features. The net income attributable to Class B shares and the
dividends payable on Class B shares will be reduced by incremental expenses
borne solely by that class, including the asset-based sales charge to which
Class B shares are subject.
CLASS B CONVERSION FEATURE. Ninety-six months after an investor's
purchase order for Class B shares is accepted, such "Matured Class B Shares"
automatically will convert to Class A shares, on the basis of the relative net
asset value of the two classes, without the imposition of any sales load or
other charge. Each time any Matured Class B shares convert to Class A shares,
any Class B shares acquired by the reinvestment of dividends or distributions on
such Matured Class B shares that are still held will also convert to Class A
shares, on the same basis. The conversion feature is intended to relieve holders
of Matured Class B shares of the asset-based sales charge under the Class B
Distribution Plan after such shares have been outstanding long enough that the
Distributor may have been compensated for distribution expenses related to such
shares.
The conversion of Matured Class B shares to Class A shares is subject
to the continuing availability of a private letter ruling from the Internal
Revenue Service, or an opinion of counsel or tax adviser, to the effect that the
conversion of Matured Class B shares does not constitute a taxable event for the
holder under Federal income tax law. If such a revenue ruling or opinion is no
longer available, the automatic conversion feature may be suspended, in which
event no further conversion of Matured Class B shares would occur while such
suspension remained in effect. Although Matured Class B shares could then be
exchanged for Class A shares on the basis of relative net asset value of the two
classes, without the imposition of a sales charge or fee, such exchange could
constitute a taxable event for the holder, and absent such exchange, Class B
shares might continue to be subject to the asset-based sales charge for longer
than six years.
The methodology for calculating the net asset value, dividends and
distributions of the Fund Class A and Class B shares recognizes two types of
expenses. General expenses that do not pertain specifically to either class are
allocated pro rata to the shares of each class, based on the percentage of the
net assets of such class to the Fund's total net assets, and then equally to
each outstanding share within a given class. Such general expenses include (i)
management fees, (ii) legal, bookkeeping and audit fees, (iii) printing and
mailing costs of shareholder reports, prospectuses, statements of additional
information and other materials for current shareholders, (iv) fees to
unaffiliated Trustees, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and brokerage
commissions, and (ix) non-recurring expenses, such as litigation costs. Other
expenses that are directly attributable to a class are allocated equally to each
outstanding share within that class. Such expenses included (i) Distribution
Plan fees, (ii) incremental transfer and shareholder servicing agent fees and
expenses, (iii) registration fees and (iv) shareholder meeting expenses, to the
extent that such expenses pertain to a specific class rather than to the Fund as
a whole.
REDUCED SALES CHARGE. Reduced sales charges are applicable to purchases
of $50,000 or more of Class A shares of the Fund alone or in combination with
purchases of shares of other Victory Portfolios made at any one time. To obtain
the reduction of the sales charge, you or your investment professional must
notify the Transfer Agent at the time of purchase whenever a quantity discount
is applicable to your purchase. Upon such notification, you will receive the
lowest applicable sales charge.
The contingent deferred sales charge is waived on Class B shares in the
following cases: (i) shares sold to Key Advisers, the Sub-Adviser or their
affiliates; (ii) shares issued in plans of reorganization to which the Fund is a
party; and (iii) shares redeemed in involuntary redemptions.
In addition to investing at one time in any combination of Class A
shares of the Victory Portfolios in an amount entitling you to a reduced sales
charge, you may qualify for a reduction in the sales charge under the following
programs:
COMBINED PURCHASES. When you invest in Class A shares of the Victory
Portfolios for several accounts at the same time, you may combine these
investments into a single transaction if purchased through one investment
professional, and if the total is $50,000 or more. The following may qualify for
this privilege: an individual, or "company" as defined in Section 2(a)(8) of the
1940 Act; an individual, spouse, and their children under age 21 purchasing for
his, her, or their own account; a trustee, administrator or other fiduciary
purchasing for a single trust estate or single fiduciary account or for a single
or a parent-subsidiary group of "employee benefit plans" (as defined in Section
3(3) of ERISA); and tax-exempt organizations under Section 501(c)(3) of the
Internal Revenue Code.
RIGHTS OF ACCUMULATION. Your "Rights of Accumulation" permit reduced
sales charges on future purchases of Class A shares after you have reached a new
breakpoint. You can add the value of existing Victory Portfolios shares held by
you, your spouse, and your children under age 21, determined at the previous
day's NAV at the close of business, to the amount of your new purchase valued at
the current offering price to determine your reduced sales charge.
LETTER OF INTENT. If you anticipate purchasing $50,000 or more of
shares of the Fund alone or in combination with Class A shares of certain other
Victory Portfolios within a 13-month period, you may obtain shares of the
portfolios at the same reduced sales charge as though the total quantity were
invested in one lump sum, by filing a non-binding Letter of Intent (the
"Letter") within 90 days of the start of the purchases. Each investment you make
after signing the Letter will be entitled to the sales charge applicable to the
total investment indicated in the Letter. For example, a $2,500 purchase toward
a $60,000 Letter would receive the same reduced sales charge as if the $60,000
had been invested at one time. To ensure that the reduced price will be received
on future purchases, you or your investment professional must inform the
transfer agent that the Letter is in effect each time shares are purchased.
Neither income dividends nor capital gain distributions taken in additional
shares will apply toward the completion of the Letter.
<PAGE>
Your initial investment must be at least 5% of the total amount you
plan to invest. Out of the initial purchase, 5% of the dollar amount specified
in the Letter will be registered in your name and held in escrow. The shares
held in escrow cannot be redeemed or exchanged until the Letter is satisfied or
the additional sales charges have been paid. You will earn income dividends and
capital gain distributions on escrowed shares. The escrow will be released when
your purchase of the total amount has been completed. You are not obligated to
complete the Letter.
If you purchase more than the amount specified in the Letter and
qualify for a further sales charge reduction, the sales charge will be adjusted
to reflect your total purchase at the end of 13 months. Surplus funds will be
applied to the purchase of additional shares at the then current offering price
applicable to the total purchase.
If you do not complete your purchase under the Letter within the
13-month period, your sales charge will be adjusted upward, corresponding to the
amount actually purchased, and if after written notice, you do not pay the
increased sales charge, sufficient escrowed shares will be redeemed to pay such
charge.
ADDITIONAL EXCHANGE INFORMATION
Class A shares of the Victory Portfolios (see "Description of Victory
Portfolios" below) may be exchanged for shares of any Victory money market fund
or any Victory Portfolios with a reduced sales charge. Shares of any Victory
money market portfolio or any Victory Portfolios with a reduced sales charge may
be exchanged for shares of the Fund upon payment of the difference in the sales
charge (or, if applicable, shares of any Victory money market portfolio may be
used to purchase Class B shares of the Fund.)
Class B shares of the Fund may be exchanged for shares of other Victory
Portfolios that offer Class B shares. The CDSC applicable to Class B shares is
imposed on Class B shares redeemed within six years of the initial purchase of
the exchanged Class B shares. When Class B shares are redeemed to effect an
exchange, the priorities described in "How to Invest" in the Prospectus for the
imposition of the Class B CDSC will be followed in determining the order in
which the shares are exchanged. Shareholders should take into account the effect
of any exchange on the applicability and rate of any CDSC that might be imposed
in the subsequent redemption of remaining shares. Shareholders owning shares of
both classes must specify whether they intend to exchange Class A or Class B
shares.
ADDITIONAL REDEMPTION INFORMATION
REINSTATEMENT PRIVILEGE. Within 90 days of a redemption, a shareholder
may reinvest all or part of the redemption proceeds of (i) Class A shares, or
(ii) Class B shares that were subject to the Class B contingent deferred sales
charge when redeemed, in Class A shares of the Fund or any of the other Victory
Portfolios into which shares of the Fund are exchangeable as described below, at
the net asset value next computed after receipt by the Transfer Agent of the
reinvestment order. No charge is currently made for reinvestment in shares of
the Fund but a reinvestment in shares of certain other Victory Portfolios is
subject to a $5.00 service fee. The shareholder must ask the Distributor for
such privilege at the time of reinvestment. Any capital gain that was realized
when the shares were redeemed is taxable, and reinvestment will not alter any
capital gains tax payable on that gain. If there has been a capital loss on the
redemption, some or all of the loss may not be tax deductible, depending on the
timing and amount of the reinvestment. Under the Internal Revenue Code, if the
redemption proceeds of Fund shares on which a sales charge was paid are
reinvested in shares of the Fund or another of the Victory Portfolios within 90
days of payment of the sales charge, the shareholder's basis in the shares of
the Fund that were redeemed may not include the amount of the sales charge paid.
That would reduce the loss or increase the gain recognized from redemption. The
Fund may amend, suspend or cease offering this reinvestment privilege at any
time as to shares redeemed after the date of such amendment, suspension or
cessation. You must reinstate your shares into an account with the same
registration. This privilege may be exercised only once by a shareholder with
respect to the Fund. For information on which funds are available for the
Reinstatement Privilege, please consult your program materials.
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
The Fund ordinarily declares and pays dividends separately for Class A
and Class B shares from its net investment income quarterly. The Fund
distributes sbstantially all of its net investment income and net capital gains,
if any, to shareholders within each calendar year as well as on a fiscal year
basis to the extent required for the Fund to qualify for favorable federal tax
treatment.
The amount of a class's distributions may vary from time to time
depending on market conditions, the composition of the Fund's portfolio, and
expenses borne by the Fund or borne separately by a class, as described in
"Alternative Sales Arrangements - Class A and Class B," above. Dividends are
calculated in the same manner, at the same time and on the same day for shares
of each class. However, dividends on Class B shares are expected to be lower as
a result of the asset-based sales charge on Class B shares, and Class B
dividends will also differ in amount as a consequence of any difference in net
asset value between Class A and Class B shares.
For this purpose, the net income of the Fund, from the time of the
immediately preceding determination thereof, shall consist of all interest
income accrued on the portfolio assets of the Fund, dividend income, if any,
income from securities loans, if any, and realized capital gains and losses on
the Fund assets, less all expenses and liabilities of the Fund chargeable
against income. Interest income shall include discount earned, including both
original issue and market discount, on discount paper accrued ratably to the
date of maturity. Expenses, including the compensation payable to Key Advisers
or the Sub-Adviser, are accrued each day. The expenses and liabilities of the
Fund shall include those appropriately allocable to the Fund as well as a share
of the general expenses and liabilities of the Victory Portfolios in proportion
to the Fund's share of the total net assets of the Victory Portfolios.
Additional Tax Information
It is the policy of each fund of the Victory Portfolios to qualify for
the favorable tax treatment accorded regulated investment companies ("RICs")
under Subchapter M of the Code, for so long as such qualification is in the best
interest of its shareholders. By following such policy and distributing its
income and gains currently with respect to each taxable year, the Victory
Portfolios expects to eliminate or reduce to a nominal amount the federal income
and excise taxes to which it may otherwise be subject.
In order to qualify as a RIC, each fund must, among other things, (1)
derive at least 90% of its gross income from dividends, interest, payments with
respect to securities loans, and gains from the sale or other disposition of
stock or securities, foreign currencies or other income (including gains from
options, futures or forward contracts) derived with respect to its business of
investing in stock, securities or currencies, (2) derive less than 30% of its
gross income from the sale or other disposition of stock, securities, options,
futures, forward contracts, and certain foreign currencies (or options, futures,
or forward contracts on foreign currencies) held for less than three months, and
(3) diversify its holdings so that at the end of each quarter of its taxable
year (i) at least 50% of the market value of the fund's assets is represented by
cash or cash items, U.S. Government securities, securities of other RICs and
other securities limited, in respect of any one issuer, to an amount not greater
than 5% of the value of the fund's total assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of its
total assets is invested in the securities of any one issuer (other than U.S.
Government securities) or of two or more issuers that the Victory Portfolios
control and that are engaged in the same, similar, or related trades or
businesses. These requirements may restrict the degree to which the Victory
Portfolios may engage in short-term trading and concentrate investments. If a
fund qualifies as a RIC, it will not be subject to federal income tax on the
part of its net investment income and net realized capital gains, if any, that
it distributes to shareholders with respect to each taxable year within the time
limits specified in the Code.
A non-deductible excise tax is imposed on regulated investment
companies that do not distribute in each calendar year an amount equal to 98% of
their ordinary income for the year plus 98% of their capital gain net income for
the 1-year period ending on October 31 of such calendar year. The balance of
such income must be distributed during the following calendar year. If
distributions during a calendar year are less than the required amount, the fund
is subject to a non-deductible excise tax equal to 4% of the deficiency.
Certain investment and hedging activities of a fund, including
transactions in options, futures contracts, hedging transactions, forward
contracts, straddles, foreign currencies, and foreign securities, are subject to
special tax rules. In a given case, these rules may accelerate income to the
fund, defer losses to the fund, cause adjustments in the holding periods of the
fund's securities, convert short-term capital losses into long-term capital
losses, or otherwise affect the character of the fund's income. These rules
could therefore affect the amount, timing and character of distributions to
shareholders. The Victory Portfolios will endeavor to make any available
elections pertaining to such transactions in a manner believed to be in the
best interest of the Victory Portfolios and their securities.
Each fund will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of taxable dividends paid to any shareholder who has
failed to provide (or provided an incorrect) tax identification number, or is
subject to withholding pursuant to a notice from the Internal Revenue Service
for failure to properly include on his or her income tax return payments of
interest or dividends. This "backup withholding" is not an additional tax, and
any amounts withheld may be credited against the shareholder's ultimate U.S. tax
liability.
Information set forth in the Prospectus and this Statement of
Additional Information that relates to federal taxation is only a summary of
certain key federal tax considerations generally affecting purchasers of shares
of the Victory Portfolios. No attempt has been made to present a complete
explanation of the federal tax treatment of a fund or its shareholders, and this
discussion is not intended as a substitute for careful tax planning.
Accordingly, potential purchasers of shares of a fund of these Portfolios are
urged to consult their tax advisers with specific reference to their own tax
circumstances. In addition, the tax discussion in the Prospectus and this
Statement of Additional Information is based on tax law in effect on the date of
the Prospectus and this Statement of Additional Information; such laws and
regulations may be changed by legislative, judicial or administrative action,
sometimes with retroactive effect.
<PAGE>
MANAGEMENT OF THE VICTORY PORTFOLIOS
Board of Trustees
Overall responsibility for management of the Victory Portfolios rests
with the Trustees, who are elected by the shareholders of the Victory
Portfolios. The Victory Portfolios are managed by the Trustees in accordance
with the laws of the Commonwealth of Massachusetts governing business trusts.
There are currently seven Trustees, six of whom are not "interested persons" of
the Victory Portfolios within the meaning of that term under the 1940 Act. The
Trustees, in turn, elect the officers of the Victory Portfolios to supervise
actively its day-to-day operations.
The Trustees of the Victory Portfolios, their addresses, ages and their
principal occupations during the past five years are as follows:
<TABLE>
Position(s) Held
With the Victory Principal Occupation
Name, Address and Age Portfolios During Past 5 Years
- --------------------- -------------------- -------------------
<S> <C> <C>
Robert G. Brown, 72
5460 N. Ocean Drive
Singer Island, FL 33404 Trustee Retired; from October 1983 to November 1990, President,
Cleveland Advanced Manufacturing Program (non-profit
corporation engaged in regional economic development);
Trustee, The Victory Funds.
Edward P. Campbell, 45
Nordson Corporation
28601 Clemens Road
Westlake, OH 44145 Trustee From March, 1994 to present, Executive Vice President and
Chief Operating Officer of Nordson Corporation
(manufacturer of application equipment); from May, 1988
March 1994, Vice President of Nordson Corporation; from
1987 to August 1994, member of the Supervisory
Committee of Society's Collective Investment Retirement
Fund; from May 1991 to August 1994, Trustee, Financial
Reserves Fund and from May 1993 to August 1994,
Trustee, Ohio Municipal Money Market Fund; Trustee, The
Victory Funds and Spears, Benzak, Salomon and Farrell
("SBSF") Funds.
Dr. Harry Gazelle, 67
17822 Lake Road
Lakewood, Ohio 44107 Trustee Retired radiologist, Drs. Hill and Thomas Corp. Trustee,
The Victory Funds.
<PAGE>
Dr. Thomas F. Morrissey, 62
Weatherhead School of
Management
Case Western Reserve
University
10900 Euclid Avenue
Cleveland, OH 44106-7235 Trustee 1995 Visiting Scholar, Bond University, Queensland,
Australia; Professor, Weatherhead School of Management,
Case Western Reserve University; from 1989 to 1995,
Associate Dean of Weatherhead School of Management;
from 1987 to August 1994, Member of the Supervisory
Committee of Society's Collective Investment Retirement
Fund; from May 1991 to August 1994, Trustee, Financial
Reserves Fund and from May 1993 to August 1994,
Trustee, Ohio Municipal Money Market Fund; Trustee, The
Victory Funds.
Stanley I. Landgraf, 70
41 Traditional Lane
Albany, NY 12211 Trustee Retired; currently, Trustee, Rensselaer Polytechnic Institute;
Director, Elenel Corporation, Albany International
Corporation and Mechanical Technology, Inc.; Member,
Board of Overseers, School of Management, Rensselaer
Polytechnic Institute; Member, The Fifty Group (a Capital
Region business organization); Trustee, The Victory Funds.
Leigh A. Wilson*, 51
River Tower
420 East 54th Street
Apt. 10H
New York, NY 10022 Trustee and President From 1989 to present, Chairman and Chief Executive
Officer, Glenleigh
International Limited;
from 1984-1989, Chief
Executive Officer,
Paribas North America and
Paribas Corporation;
Trustee, The Victory
Funds and SBSF Funds.
Dr. H. Patrick Swygert, 52
Howard University
2400 6th Street, N.W.
Suite 320
Washington, D.C. ___ Trustee Currently President, Howard University; Trustee, The
Victory Funds; formerly President, State University of New
York at Albany; formerly, Executive Vice President,
Temple University.
</TABLE>
- ------------
* Mr. Wilson is deemed to be an "interested person" of The Victory Portfolios
under the 1940 Act solely by reason of his position as President.
The Board presently has an Investment Policy Committee and a Business,
Legal, and Audit Committee. The members of the Investment Policy Committee are
Messrs. Morrissey, Brown and Landgraf (Chairman), who will serve until May 1996.
The function of the Investment Policy Committee is to review the existing
investment policies of the Victory Portfolios, including the levels of risk and
types of funds available to shareholders, and make recommendations to the Board
of Trustees regarding the revision of such policies or, if necessary, the
submission
<PAGE>
of such revisions to the Victory Portfolios' shareholders for their
consideration. The members of the Business, Legal and Audit Committee are
Messrs. Swygert (Chairman), Campbell and Gazelle who will serve until May 1996.
The function of the Business, Legal and Audit Committee is to recommend
independent auditors and monitor accounting and financial matters; to nominate
persons to serve as disinterested Trustees and Trustees to serve on committees
of the Board; and to review compliance and contract matters.
The Investment Policy Committee met four times during the current
fiscal year commencing November 1, 1994. The Business, Legal and Audit Committee
was constituted on May 24, 1995 (and has met once since then) and replaced the
Audit Committee, the Legal Committee and the Nominating Committee, which met
three times, one time and one time, respectively, during the current fiscal year
prior to May 31, 1995.
REMUNERATION OF TRUSTEES AND CERTAIN EXECUTIVE OFFICERS
Effective June 1, 1995, each Trustee (other than Leigh A. Wilson)
receives an annual fee of $27,000 for serving as Trustee of all the Funds of the
Victory Portfolios, and an additional per meeting fee ($2,400 in person and
$1,200 per telephonic meeting).
Effective June 1, 1995, Leigh A. Wilson receives an annual fee of
$33,000 for serving as President and Trustee for all of the Funds of the Victory
Portfolios, and an additional per meeting fee ($3,000 in person and $1,500 per
telephonic meeting).
The following tables indicate the compensation received by each Trustee
during the fiscal year of the Funds which ended on October 31, 1995:
<TABLE>
The Victory The Victory The Victory The Victory
The Victory Diversified Government The Victory Intermediate International
Balanced Fund1/ Stock Fund Mortgage Fund1/ Growth Fund2/ Income Fund Growth Fund2/
--------------- ---------- --------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee ........ $1,178.91 $2,331.48 $1,126.45 $1,168.23 $980.48 $880.52
Edward P. Campbell,
Trustee .......... 1,539.75 2,009.87 1,174.17 740.45 841.67 670.63
Harry Gazelle,
Trustee .......... 974.79 1,929.86 919.93 987.41 809.59 735.72
John W. Kemper,
Trustee* ......... 541.57 1,060.05 589.95 843.06 458.81 506.60
Thomas F. Morrissey,
Trustee .......... 1,539.75 2,009.87 1,174.17 1,151.74 841.67 802.87
Stanley I. Landgraf,
Trustee .......... 1,014.75 2,009.87 949.17 842.51 841.67 708.01
Leigh A. Wilson,
Trustee .......... 1,112.55 2,206.35 1,021.27 1,213.17 920.59 865.44
H. Patrick Swygert,
Trustee .......... 1,014.75 2,009.87 949.17 1,151.74 841.67 802.87
John Buckingham,*
Trustee .......... 541.57 1,060.05 589.95 226.15 458.81 409.93
John R. Young,*
Trustee .......... 577.04 1,132.82 621.95 750.08 488.98 494.95
</TABLE>
*Resigned
- ------------------------------------------------
1/ For certain Trustees, these amounts include payments made by the Society
Collective Investment Retirement Funds, which were reorganized into these
Funds as of December 19, 1994.
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
<TABLE>
The Victory The Victory The Victory The Victory The Victory The Victory
Investment Quality Limited Term Ohio Municipal Ohio Regional Prime Obligations Special
Bond Fund2/ Income Fund2/ Bond Fund Stock Fund Fund Value Fund
------------- ------------- ----------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee .......... $1,052.54 $1,155.92 $443.98 $271.80 $4,747.58 $1,091.75
Edward P. Campbell,
Trustee .......... 776.01 922.20 376.72 231.79 3,921.95 942.58
Harry Gazelle,
Trustee .......... 876.72 969.26 364.09 223.52 3,832.26 904.37
John W. Kemper,*
Trustee .......... 644.08 581.73 223.59 133.11 2,818.92 489.58
Thomas F. Morrissey,
Trustee .......... 966.09 1,045.87 376.72 231.79 3,921.95 942.58
Stanley I. Landgraf,
Trustee ......... 827.74 960.31 376.72 231.79 3,921.95 942.58
Leigh A. Wilson,
Trustee .......... 1,033.38 1,143.77 407.85 252.05 4,143.70 1,036.09
H. Patrick Swygert,
Trustee .......... 966.09 1,045.87 376.72 231.79 3,921.95 942.58
John D. Buckingham,*
Trustee .......... 504.76 495.35 223.59 133.11 2,818.92 489.58
John R. Young,*
Trustee .......... 619.72 590.17 236.57 140.98 2,915.30 523.93
</TABLE>
* Resigned
- ------------------------------------------------
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
<TABLE>
The Victory The Victory Victory
Tax-Free The Victory U.S. The Victory Institutional Stock
Money Government The Victory The Victory Government Money Index
Market Fund Obligations Fund2/ Value Fund2/ Fund for Income3/ Bond Fund3/ Market Fund3/ Fund
----------- ------------------ ------------ ----------------- ----------- ------------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee .......... $ 1,781.03 $ 5,774.42 $ 1,842.48 $ 217.14 $ 773.66 $ 3,820.17 $ 797.69
Edward P. Campbell,
Trustee .......... 1,523.27 4,324.24 1,581.23 114.18 389.76 2,204.64 689.90
Harry Gazelle,
Trustee .......... 1,467.67 4,922.46 1,522.01 189.79 675.74 3,425.47 661.40
John W. Kemper,*
Trustee .......... 853.51 3,098.06 841.91 161.55 624.83 2,554.32 356.16
Thomas F. Morrissey,
Trustee .......... 1,523.57 5,336.76 1,583.17 228.46 819.94 4,004.82 689.90
Stanley I. Landgraf,
Trustee .......... 1,523.57 4,828.66 1,580.86 157.16 535.10 2,927.66 689.90
Leigh A. Wilson,
Trustee .......... 1,661.60 5,902.24 1,732.57 248.70 874.92 4,397.12 759.38
H. Patrick Swygert,
Trustee .......... 1,523.57 5,336.76 1,583.17 228.46 819.94 4,004.82 689.90
John D. Buckingham,*
Trustee .......... 853.51 2,478.65 840.54 82.92 318.60 1,333.87 356.16
John R. Young,*
Trustee .......... 900.37 3,074.28 899.81 140.67 535.81 2,223.97 379.85
</TABLE>
* Resigned
- ------------------------------------------------
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
3/ For certain Trustees, these amounts include amounts paid by this Fund's
successor, a Portfolio of The Victory Funds, which was reorganized as the
Fund as of June 5, 1995.
<TABLE>
The Victory
The Victory The Victory The Victory Ohio The Victory Financial
National Municipal New York Municipal Money Special Growth Reserves
Bond Fund3/ Tax-Free Fund3/ Market Fund3/ ____Fund2/ Funds 3/
<S> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee .......... $39.89 $141.29 $2,962.00 $401.99 $4,834.58
Edward P. Campbell,
Trustee .......... 26.78 76.45 4,899.18 272.35 3,549.91
Harry Gazelle,
Trustee........... 37.48 123.38 3,548.52 341.34 5,474.20
John W. Kemper,*
Trustee .......... 18.20 100.45 1,893.61 260.65 2,913.01
Thomas F. Morrissey,
Trustee .......... 40.09 148.08 5,602.37 388.49 4,996.26
Stanley I. Landgraf,
Trustee .......... 38.83 104.47 3,183.11 307.57 5,112.02
Leigh A. Wilson,
Trustee .......... 49.44 162.90 3,424.84 417.32 5,729.73
H. Patrick Swygert,
Trustee .......... 40.09 148.08 3,102.37 388.49 4,996.26
John D. Buckingham,*
Trustee .......... 13.33 51.65 1,784.96 177.06 2,598.87
John R. Young,*
Trustee .......... 18.91 88.31 1,661.29 238.89 2,709.16
</TABLE>
- ------------------------------------------------
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
3/ For certain Trustees, these amounts include amounts paid by this Fund's
predecessor, a Portfolio of The Victory Funds, which was reorganized as the
Fund as of June 5, 1995.
<PAGE>
<TABLE>
Total Compensation
Pension or Retirement Benefits Estimated Annual from Victory
Accrued as Portfolio Expenses Benefits "Fund Complex"
Upon Retirement 4/
<S> <C> <C> <C>
Robert G. Brown, Trustee -0- -0- $39,815.98
Edward P. Campbell, Trustee -0- -0- 33,799.68
Harry Gazelle, Trustee -0- -0- 35,916.98
John W. Kemper, Trustee* -0- -0- 22,567.31
Thomas F. Morrissey, Trustee -0- -0- 40,366.98
Stanley I. Landgraf, Trustee -0- -0- 34,615.98
Leigh A. Wilson, Trustee -0- -0- 46,716.97
H. Patrick Swygert, Trustee -0- -0- 37,116.98
John D. Buckingham, Trustee -0- -0- 18,841.89
John R. Young, Trustee* -0- -0- 21,963.81
</TABLE>
* Resigned
- ------------------------------------
4/ For certain Trustees, these amounts include compensation received from
The Victory Funds (which were reorganized into the Current Company as
of June 5, 1995), the SBSF Funds (the investment adviser of which was
acquired by KeyCorp effective April, 1995) and Society's Collective
Investment Retirement Funds, which were reorganized into the Balanced
Fund and Government Mortgage Fund as of December 19, 1994. There are
presently 24 mutual funds from which the above-named Trustees are
compensated in the Victory "Fund Complex," but not all of the
above-named Trustees serve on the boards of each fund in the "Fund
Complex."
<TABLE>
Total Compensation
Pension or Retirement Benefits Estimated Annual from Victory
Accrued as Portfolio Expenses Benefits "Fund Complex"
Upon Retirement 4/
<S> <C> <C> <C>
Robert G. Brown, Trustee -0- -0- $39,815.98
Edward P. Campbell, Trustee -0- -0- 33,799.68
Harry Gazelle, Trustee -0- -0- 35,916.98
John W. Kemper, Trustee* -0- -0- 22,567.31
Thomas F. Morrissey, Trustee -0- -0- 40,366.98
Stanley I. Landgraf, Trustee -0- -0- 34,615.98
Leigh A. Wilson, Trustee -0- -0- 46,716.97
H. Patrick Swygert, Trustee -0- -0- 37,116.98
John D. Buckingham, Trustee -0- -0- 18,841.89
John R. Young, Trustee* -0- -0- 21,963.81
* Resigned
- ------------------------------------
4/ For certain Trustees, these amounts include compensation received from
The Victory Funds (which were reorganized into the Current Company as
of June 5, 1995), the SBSF Funds (the investment adviser of which was
acquired by KeyCorp effective April, 1995) and Society's Collective
Investment Retirement Funds, which were reorganized into the Balanced
Fund and Government Mortgage Fund as of December 19, 1994. There are
presently 24 mutual funds from which the above-named Trustees are
compensated in the Victory "Fund Complex," but not all of the
above-named Trustees serve on the boards of each fund in the "Fund
Complex."
</TABLE>
Officers
The officers of the Victory Portfolios, their addresses, ages
and principal occupations during the past five years are as follows:
<TABLE>
Position with the Principal occupation
Name Victory Portfolios during past 5 years
<S> <C> <C>
Leigh A. Wilson, 51 President and Trustee From 1989 to present, Chairman and
Chief Executive Officer, Glenleigh
International Limited; from 1984-1989,
Chief Executive Officer, Paribas North
America and Paribas Corporation; Trustee
to The Victory Funds and SBSF Funds.
William B. Blundin, 57 Vice President Senior Vice President of BISYS Fund
Services; officer of other investment
companies administered by BISYS Fund
Services; President and Chief Executive
Officer of Vista Broker-Dealer Services,
Inc., Emerald Asset Management, Inc. and
BNY Hamilton Distributors, Inc.,
registered broker/dealers.
<PAGE>
J. David Huber, 49 Vice President Executive Vice President, BISYS Fund
Services.
Scott A. Englehart, 33 Secretary From October 1990 to present, employee
of BISYS Fund Services, Inc.; from 1985
to October 1990, Manager of Banking
Center, Fifth Third Bank.
George O. Martinez, 36 Assistant Secretary From March 1995 to present, Senior Vice
President and Director of Legal and
Compliance Services, BISYS Fund
Services; from June 1989-March 1995,
Vice President and Associate General
Counsel, Alliance Capital Management.
Martin R. Dean, 31 Treasurer From May 1994 to present, employee of
BISYS Fund Services; from January 1987
- April 1994, Senior Manager, KPMG
Peat Marwick.
Adrian J. Waters, 32 Assistant Treasurer From May 1993 to present, employee of
BISYS Fund Services; from 1989-May
1993, Manager, Price Waterhouse.
</TABLE>
The mailing address of each of the officers of the Victory Portfolios
is 3435 Stelzer Road, Columbus, Ohio 43219-3035.
The officers of the Victory Portfolios receive no compensation directly
from the Victory Portfolios for performing the duties of their offices. BISYS
Fund Services, Inc. receives fees from the Victory Portfolios for acting as
Administrator.
As of January 6, 1996, the Trustees and officers as a group owned
beneficially less than 1% of the Fund.
Investment Adviser and Sub-Adviser
KeyCorp Mutual Fund Advisers, Inc. was organized as an Ohio corporation
on July 27, 1995 and is registered as an investment adviser under the 1940 Act.
It is a wholly-owned subsidiary of KeyCorp Asset Management Holdings, Inc.,
which is a wholly-owned subsidiary of Society National Bank, a wholly-owned
subsidiary of KeyCorp . Affiliates of Key Advisers manage approximately $37
billion for numerous clients including large corporate and public retirement
plans, Taft-Hartley plans, foundations and endowments, high net worth
individuals and mutual funds.
KeyCorp, a financial services holding company, is headquartered at 127
Public Square, Cleveland, Ohio 44114. As of June 30, 1995, KeyCorp had an asset
base of $67.5 billion, with banking offices in 25 states from Maine to Alaska,
and trust and investment offices in 16 states. KeyCorp is the resulting entity
of a merger between Society Corporation, the bank holding company of which
Society National Bank was a wholly-owned subsidiary, and KeyCorp, the former
bank holding company, which merger was consummated during the first quarter of
1994. KeyCorp's major business activities include providing traditional banking
and associated financial services to consumer, business and commercial
markets. Its non-bank subsidiaries include investment advisory, securities
brokerage, insurance, bank credit card processing, and mortgage leasing
companies. Society National Bank is the lead affiliate bank of KeyCorp.
<PAGE>
The following schedule lists the advisory fees for each mutual fund that is
advised by Key Advisers.
.25 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Institutional Money Market Fund
.35 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Prime Obligations Fund
Victory U.S. Government Obligations Fund
Victory Tax-Free Money Market Fund
.50 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Ohio Municipal Money Market Fund
Victory Limited Term Income Fund
Victory Government Mortgage Fund
Victory Financial Reserves Fund
Victory Fund for Income #
.55 OF 1% OF AVERAGE DAILY NET ASSETS
Victory National Municipal Bond Fund
Victory Government Bond Fund
Victory New York Tax-Free Fund
.60 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Ohio Municipal Bond Fund
Victory Stock Index Fund
.65 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Diversified Stock Fund
.75 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Intermediate Income Fund
Victory Investment Quality Bond Fund
Victory Ohio Regional Stock Fund
1% OF AVERAGE DAILY NET ASSETS
Victory Balanced Fund
Victory Value Fund
Victory Growth Fund
Victory Special Value Fund
Victory Special Growth Fund+/-
1.10% OF AVERAGE DAILY ASSETS
Victory International Growth Fund
# First Albany Asset Management Corporation serves as
sub-adviser to the Victory Fund for Income, for which it
receives .20% paid by Key Advisers.
+/- T. Rowe Price Associates, Inc. serves as sub-adviser to
Society Special Growth Fund, for which it receives .25% of
average daily net assets up to $100 million and .20% of
average daily net assets in excess of $100 million paid by Key
Advisers.
<PAGE>
ADVISORY AND OTHER CONTRACTS
Unless sooner terminated, the Investment Advisory Agreement between Key
Advisers and the Funds provides that it will continue in effect as to a
particular Fund for an initial two-year term and for consecutive one-year terms
thereafter, provided that such continuance is approved at least annually by the
Victory Portfolios' Trustees or by vote of a majority of the outstanding shares
of such Fund (as defined under "GENERAL INFORMATION - Miscellaneous" in the
Prospectuses), and, in either case, by a majority of the Trustees who are not
parties to the Investment Advisory Agreement or interested persons (as defined
in the 1940 Act) of any party to the Investment Advisory Agreement, by votes
cast in person at a meeting called for such purpose.
The Investment Advisory Agreement is terminable as to a particular Fund
at any time on 60 days' written notice without penalty by the Trustees, by vote
of a majority of the outstanding shares of that Fund, or by Key Advisers.
The Investment Advisory Agreement also terminates automatically in the event of
any assignment, as defined in the 1940 Act.
The Investment Advisory Agreement provides that Key Advisers shall not
be liable for any error of judgment or mistake of law or for any loss suffered
by the Victory Portfolios in connection with the performance of services
pursuant to the Investment Advisory Agreement, except a loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith, or gross
negligence on the part of Key Advisers in the performance of its duties, or from
reckless disregard by it of either duties and obligations thereunder.
Under the Investment Advisory Agreement, Key Advisers has agreed to
provide investment advisory services as described in the Prospectus. For the
services provided and expenses assumed pursuant to the Investment Advisory
Agreement, the Fund pays Key Advisers a fee, computed daily and paid monthly, at
the annual rate of sixty-five one-hundredths of one percent (.65%) of the
average daily net assets of the Fund.
From January, 1993 until , 1995, Society Asset Management, Inc. served
as investment adviser to the Fund. For the fiscal year ended October 31, 1994
the Fund paid investment advisory fees of $536,712 after fee reductions of
$396,767. For the six months ended April 30, 1995, the Fund paid investment
advisory fees of $______________.
Under an investment advisory agreement between the Victory Portfolios,
on behalf of the Fund, and Key Advisers, Key Advisers may delegate a portion of
its responsibilities to a subadviser. In addition, the investment advisory
agreement provides that Key Advisers may render services through its own
employees or the employees of one or more affiliated companies that are
qualified to act as an investment adviser of the Fund and are under the common
control of KeyCorp as long as all such persons are functioning as part of an
organized group of persons, managed by authorized officers of Key Advisers.
Key Advisers has entered into an investment sub-advisory agreement with
its affiliate, Society Asset Management, Inc. on behalf of each of the Victory
Portfolios except Fund for Income and Special Growth Fund. The Sub-Adviser is a
wholly-owned subsidiary of KeyCorp Asset Management Holdings, Inc. With respect
to the day to day management of the Fund, under the sub-advisory agreement, the
Sub-Adviser makes decisions concerning, and places all orders for, purchases and
sales of securities and helps maintain the records relating to such purchases
and sales. The Sub-Adviser may, in its discretion, provide such services through
its own employees or the employees of one or more affiliated companies that are
qualified to act as an investment adviser to the Company under applicable laws
and are under the common control of KeyCorp; provided that (i) all persons, when
providing services under the sub-advisory agreement, are functioning as part of
an organized group of persons, and (ii) such organized group of persons is
managed at all times by authorized officers of the Sub-Adviser. This arrangement
will not result in the payment of additional fees by the Fund. For its services
under the investment sub-advisory agreement, Key Advisers pays the Sub-Adviser
subadvisory fees at rates (based on an annual percentage of average daily net
assets) which vary according to the schedule below:
<PAGE>
For the Balanced Fund, Diversified For the International Growth Fund, Ohio
Stock Fund, Growth Fund, Stock Index Regional Stock Fund and Special Value
Fund and Value Fund: Fund:
Rate of Rate of
Sub-Advisory Sub-Advisory
Net Assets Fee* Net Assets Fee*
Up to $10,000,000 0.65% Up to $10,000,000 0.90%
Next $15,000,000 0.50% Next $15,000,000 0.70%
Next $25,000,000 0.40% Next $25,000,000 0.55%
Above $50,000,000 0.35% Above $50,000,000 0.45%
For the Intermediate Income Fund, For the Prime Obligations Fund, Tax-Free
Investment Quality Bond Fund, Limited Money Market Fund, U.S. Government
Term Income Fund, Ohio Municipal Bond Obligations Fund, Financial Reserves
Fund, Goverment Bond Fund, Government Fund, Institutional Money Market Fund and
Mortgage Fund, National Municipal Ohio Municipal Money Market Fund:
Bond Fund and New York Tax-Free Fund:
Rate of Rate of
Sub-Advisory Sub-Advisory
Net Assets Fee* Net Assets Fee*
Up to $10,000,000 0.40% Up to $10,000,000 0.25%
Next $15,000,000 0.30% Next $15,000,000 0.20%
Next $25,000,000 0.25% Next $25,000,000 0.15%
Above $50,000,000 0.20% Above $50,000,000 0.125%
- --------------------
* As a percentage of average daily net assets. Note, however, that the
Sub-Adviser shall have the right, but not the obligation, to
voluntarily waive any portion of the sub-advisory fee from time to
time. Any such voluntary waiver will be irrevocable and determined in
advance of rendering sub-investment advisory services by the
Sub-Adviser, and shall be in writing and signed by the parties hereto.
Glass-Steagall Act
In 1971 the United States Supreme Court held in Investment Company
Institute v. Camp that the federal statute commonly referred to as the
Glass-Steagall Act prohibits a national bank from operating a fund for the
collective investment of managing agency accounts. Subsequently, the Board of
Governors of the Federal Reserve System (the "Board") issued a regulation and
interpretation to the effect that the Glass-Steagall Act and such decision: (a)
forbid a bank holding company registered under the Federal Bank Holding Company
Act of 1956 (the "Holding Company Act") or any non-bank affiliate thereof from
sponsoring, organizing, or controlling a registered, open-end investment company
continuously engaged in the issuance of its shares, but (b) do not prohibit such
a holding company or affiliate from acting as investment adviser, transfer
agent, and custodian to such an investment company. In 1981 the United States
Supreme Court held in Board of Governors of the Federal Reserve System v.
Investment Company Institute that the Board did not exceed its authority under
the Holding Company Act when it adopted its regulation and interpretation
authorizing bank holding companies and their non-bank affiliates to act as
investment advisers to registered closed-end investment companies. In the Board
of Governors case, the Supreme Court also stated that if a national bank
complied with the restrictions imposed by the Board in its regulation and
interpretation authorizing bank holding companies and their non-bank affiliates
to act as investment advisers to investment companies, a national bank
performing investment advisory services for an investment company would not
violate the Glass-Steagall Act.
Key Advisers and the Sub-Adviser believe that they may perform the
services for the Victory Portfolios contemplated by the Prospectus, this
Statement of Additional Information, and the Investment Advisory (Sub-Advisory)
Agreement with the Victory Portfolios without violation of applicable statutes
and regulations and has so represented in its Investment Advisory (Sub-Advisory)
Agreement with the Victory Portfolios. Key Trust Company of Ohio, N.A. believes
that it may perform the services for the Victory Portfolios contemplated by the
Prospectus, this Statement of Additional Information, and the Shareholder
Servicing Agreement with the Victory Portfolios (as described below) without
violation of applicable statutes and regulations and has so represented in such
Shareholder Servicing Agreement. Future changes in either federal or state
statutes and regulations relating to the permissible activities of banks or bank
holding companies and the subsidiaries or affiliates of those entities, as well
as further judicial or administrative decisions or interpretations of present
and future statutes and regulations, could prevent or restrict Key Trust Company
of Ohio, N.A., Key Advisers or the Sub-Adviser from continuing to perform such
services for the Victory Portfolios. Depending upon the nature of any changes in
the services which could be provided by Key Trust Company of Ohio, N.A., Key
Advisers or the Sub-Adviser the Trustees of the Victory Portfolios would review
the Victory Portfolios' relationship with Key Trust Company of Ohio, N.A., Key
Advisers or the Sub-Adviser and consider taking all action necessary in the
circumstances.
<PAGE>
Should future legislative, judicial, or administrative action prohibit
or restrict the proposed activities of Key Trust Company of Ohio, N.A., Key
Advisers or the Sub-Adviser and its affiliated and correspondent banks and other
non-bank affiliates in connection with customer purchases of shares of the
Victory Portfolios, the banks and such non-bank affiliates might be required to
alter materially or discontinue the services offered by them to customers. It is
not anticipated, however, that any change in the Victory Portfolios' method of
operations would affect its net asset value per share or result in financial
losses to any customer.
From time to time, advertisements, supplemental sales literature and
information furnished to present or prospective shareholders of the Fund may
include descriptions of Key Trust Company of Ohio, N.A., Key Advisers and the
Sub-Adviser including, but not limited to, (i) descriptions of the operations of
Key Trust Company of Ohio, N.A., Key Advisers and the SubAdviser; (ii)
descriptions of certain personnel and their functions; and (iii) statistics and
rankings related to the operations of Key Trust Company of Ohio, N.A., Key
Advisers and the Sub-Adviser.
Portfolio Transactions
Pursuant to the Investment Advisory (Sub-Advisory) Agreement, Key
Advisers or the Sub-Adviser determines, subject to the general supervision of
the Trustees of the Victory Portfolios, and in accordance with each fund's
investment objective and restrictions, which securities are to be purchased and
sold by a fund, and which brokers are to be eligible to execute its portfolio
transactions. Purchases from underwriters and/or broker/dealers of portfolio
securities include a commission or concession paid by the issuer to the
underwriter and/or broker/dealer and purchases from dealers serving as market
makers may include the spread between the bid and asked price. While Key
Advisers and the Sub-Adviser generally seek competitive spreads or commissions,
the Fund may not necessarily pay the lowest spread or commission available on
each transaction, for reasons discussed below.
Allocation of transactions, including their frequency, to various
dealers is determined by Key Advisers or the Sub-Adviser in its best judgment
and in a manner deemed fair and reasonable to shareholders. The primary
consideration is prompt execution of orders in an effective manner at the most
favorable price. Subject to this consideration, dealers who provide supplemental
investment research to Key Advisers or the Sub-Adviser may receive orders for
transactions by the Victory Portfolios. Information so received is in addition
to and not in lieu of services required to be performed by Key Advisers or the
Sub-Adviser and does not reduce the advisory (sub-advisory) fees payable to Key
Advisers or the Sub-Adviser by the Victory Portfolios. Such information may be
useful to Key Advisers or the Sub-Adviser in serving both the Victory Portfolios
and other clients and, conversely, supplemental information obtained by the
placement of business or other clients may be useful to Key Advisers or the
Sub-Adviser in carrying out its obligations to the Victory Portfolios. In the
future, the Trustees may also authorize the allocation of brokerage to
affiliated broker-dealers on an agency basis to effect portfolio transactions.
In such event, the Trustees will adopt procedures incorporating the standards of
Rule 17e-1 of the 1940 Act, which require that the commission paid to affiliated
broker-dealers must be "reasonable and fair compared to the commission, fee or
other remuneration received, or to be received, by other brokers in connection
with comparable transactions involving similar securities during a comparable
period of time." At times, the Fund may also purchase portfolio securities
directly from dealers acting as principals, underwriters or market makers. As
these transactions are usually conducted on a net basis, no brokerage
commissions are paid by the Fund.
The Victory Portfolios will not execute portfolio transactions through,
acquire portfolio securities issued by, make savings deposits in, or enter into
repurchase or reverse repurchase agreements with Key Advisers, the Sub-Adviser,
Key Trust Company of Ohio, N.A. or its affiliates, Concord Holding Corporation,
Victory Broker-Dealer Services, Inc. or their affiliates, and will not give
preference to Key Trust Company Ohio, N.A.'s correspondent banks or
affiliates, or Concord Holding Corporation or Victory Broker-Dealer Services,
Inc. with respect to such transactions, securities, savings deposits,
repurchase agreements, and reverse repurchase agreements.
<PAGE>
Investment decisions for each fund are made independently from those
for the other funds or any other investment company or account managed by Key
Advisers or the Sub-Adviser. Any such other investment company or account may
also invest in the same securities as a particular fund. When a purchase or sale
of the same security is made at substantially the same time on behalf of a fund
and another fund, investment company or account, the transaction will be
averaged as to price, and available investments allocated as to amount, in a
manner which Key Advisers or the SubAdviser believes to be equitable to a fund
or the Victory Portfolios and such other investment company or account. In some
instances, this investment procedure may adversely affect the price paid or
received by a fund or the size of the position obtained by a fund. To the extent
permitted by law, Key Advisers or the Sub-Adviser may aggregate the securities
to be sold or purchased for a fund with those to be sold or purchased for the
other funds or for other investment companies or accounts in order to obtain
best execution. As provided by the Investment Advisory (Sub-Advisory) Agreement,
in making investment recommendations for the Victory Portfolios, Key Advisers
and the Sub-Adviser will not inquire or take into consideration whether an
issuer of securities proposed for purchase or sale by a Fund is a customer of
Key Advisers or the Sub-Adviser, their parents or subsidiaries or affiliates
and, in dealing with their commercial customers, Key Advisers or the
Sub-Adviser, their parents, subsidiaries, and affiliates will not inquire or
take into consideration whether securities of such customers are held by the
Victory Portfolios.
In the fiscal year ended October 31, 1994 and the six months emded
April 30, 1995, the Fund paid $238,762 and $________, respectively, in brokerage
commissions.
Administrator
Currently, Concord Holding Corporation ("CHC") serves as general
manager and administrator (the "Administrator") to the Fund. Prior to CHC
becoming administrator to the Fund, The Winsbury Company ("Winsbury") served as
administrator. The Administrator assists in supervising all operations of each
fund (other than those performed by Key Advisers or the Sub-Adviser under the
Investment Advisory (Sub-Advisory) Agreement). The Administrator is a
broker-dealer registered with the Commission, and is a member of the National
Association of Securities Dealers, Inc. The Administrator provides financial
services to institutional clients.
CHC receives a fee from each fund for its services as Administrator and
expenses assumed pursuant to the Administration Agreements, calculated daily and
paid monthly, at the annual rate of fifteen one hundredths of one percent (.15%)
of each fund's average daily net assets. CHC may periodically waive all or a
portion of its fee with respect to any fund in order to increase the net income
of one or more funds of the Victory Portfolios available for distribution as
dividends.
<PAGE>
Unless sooner terminated, the Administration Agreement will continue
in effect as to the Fund for a period of two years, and for consecutive one-year
terms thereafter, provided that such continuance is ratified at least annually
by the Victory Portfolios' Trustees or by vote of a majority of the outstanding
shares of that Fund, and in either case by a majority of the Trustees who are
not parties to the Administration Agreement or interested persons (as defined in
the 1940 Act) of any party to the Administration Agreement, by votes cast in
person at a meeting called for such purpose.
The Administration Agreement provides that CHC shall not be liable for
any error of judgment or mistake of law or any loss suffered by the Victory
Portfolios in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or from the reckless disregard by
it of its obligations and duties thereunder.
Under the Administration Agreement, CHC assists in the Fund's
administration and operation, including providing statistical and research data,
clerical services, internal compliance and various other administrative
services, including among other responsibilities, forwarding certain purchase
and redemption requests to the Transfer Agent, participation in the updating of
the prospectus, coordinating the preparation, filing, printing and dissemination
of reports to shareholders, coordinating the preparation of income tax returns,
arranging for the maintenance of books and records and providing the office
facilities necessary to carry out the duties thereunder. Under the
Administration Agreement, CHC may delegate all or any part of its
responsibilities thereunder.
CHC receives an annual fee of .15% of the Fund's average net assets,
paid monthly, for services performed under the Fund's Administration Agreement.
CHC may, from time to time, agree to reimburse the Fund for expenses above a
specified percentage of average net assets.
Victory Broker-Dealer Services, Inc. sells shares of the Fund as agent
on behalf of the Victory Portfolios at no cost to the Fund. Key Advisers and
the Sub-Adviser neither participate in nor are they responsible for the
underwriting of Victory Portfolios shares.
In the fiscal year ended October 31, 1994, the Fund paid to Winsbury
aggregate administration fees of $131,378 after fee reductions of $8,644. In the
six months ended April 30, 1995, the Fund paid administration fees of
$___________.
Class B Shares Distribution Plan
The Victory Portfolios has adopted a Distribution Plan for Class B shares of the
Fund under Rule 12b-1 of the Investment Company Act of 1940.
The Distribution Plan adopted by the Trustees with respect to the Class B shares
of the Fund provides that the Fund will pay the Distributor a distribution fee
under the Plan at the annual rate of 0.75% of the average daily net assets of
the Fund attributable to the Class B shares. The distribution fees may be used
by the Distributor for: (a) costs of printing and distributing the Fund's
prospectus, statement of additional information and reports to prospective
investors in the Fund; (b) costs involved in preparing, printing and
distributing sales literature pertaining to the Fund; (c) an allocation of
overhead and other branch office distribution-related expenses of the
Distributor; (d) payments to persons who provide support services in connection
with the distribution of the Fund's shares, including but not limited to, office
space and equipment, telephone facilities, answering routine inquiries regarding
the Fund, processing shareholder transactions and providing any other
shareholder services not otherwise provided by the Victory Portfolios' transfer
agent; (e) accruals for interest on the amount of the foregoing expenses that
exceed the Distribution Fee and the contingent deferred sales charge received by
the Distributor; and (f) any other expense primarily intended to result in the
sale of the Fund's shares, including, without limitation, payments to salesmen
and selling dealers at the time of the sale of shares, if applicable, and
continuing fees to each such salesmen and selling dealers, which fee shall begin
to accrue immediately after the sale of such shares.
The amount of the Distribution Fees payable by any Fund under the Distribution
Plan is not related directly to expenses incurred by the Distributor and the
Distribution Plan does not obligate the Fund to reimburse the Distributor for
such expenses. The Distribution Fees set forth in the Distribution Plan will be
paid by a Fund to the Distributor unless and until the Plan is terminated or not
renewed with respect to the Fund; any distribution or service expenses incurred
by the Distributor on behalf of a Fund in excess of payments of the Distribution
Fees specified above which the Distributor has accrued through the termination
date are the sole responsibility and liability of the Distributor and not an
obligation of the Fund.
The Distribution Plan for the Class B shares specifically recognizes that either
Key Advisers, the Sub-Adviser or the Distributor, directly or through an
affiliate, may use its fee revenue, past profits, or other resources, without
limitation, to pay promotional and administrative expenses in connection with
the offer and sale of shares of the Fund. In addition, the Plan provides that
Key Advisers, the Sub-Adviser and the Distributor may use their respective
resources, including fee revenues, to make payments to third parties that
provide assistance in selling the Fund's shares, or to third parties, including
banks, that render shareholder support services.
The Plan has been approved by the Trustees including a majority of the
Independent Trustees at a meeting called for that purpose and by the holders of
a majority of shares of the class. As required by the Rule, the Trustees
carefully considered all pertinent factors relating to the implementation of the
Plan prior to its approval, and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its shareholders. To the
extent that the Plan gives Key Advisers, the Sub-Adviser or the Distributor
greater flexibility in connection with the distribution of shares of the Fund,
additional sales of the Fund's shares may result. Additionally, certain
shareholder support services may be provided more effectively under the Plan by
local entities with whom shareholders have other relationships.
Business Management Agreement
In connection with its obligations under the investment sub-advisory
agreement, the Sub-Adviser has entered into a Business Management Agreement with
Key Advisers, pursuant to which Key Advisers provides certain administrative and
support services to the Sub-Adviser. Such services include preparing reports to
the Company's Board of Trustees, recordkeeping services, and services rendered
in connection with the preparation of regulatory filings and other reports, and
regulatory and other administrative and compliance systems and support services.
For such services, the Sub-Adviser pays fees to Key Advisers which vary
according to a sliding scale containing "breakpoints" at which decreases in the
business management fees correspond to increases in the average daily net asset
values of a Fund as follows:
For the Balanced Fund, Diversified For the International Growth Fund, Ohio
Stock Fund, Growth Fund, Stock Index Regional Stock Fund and Special Value
Fund and Value Fund: Fund:
Rate of Rate of
Business Business
Net Assets Management Fee* Net Assets Management Fee*
Up to $10,000,000 0.30% Up to $10,000,000 0.55%
Next $15,000,000 0.15% Next $15,000,000 0.35%
Next $25,000,000 0.05% Next $25,000,000 0.20%
Above $50,000,000 0.00% Above $50,000,000 0.15%
For the Intermediate Income Fund, For the Prime Obligations Fund, Tax-Free
Investment Quality Bond Fund, Limited Money Market Fund, U.S. Government
Term Income Fund, Ohio Municipal Bond Obligations Fund, Financial Reserves
Fund, Goverment Bond Fund, Government Fund, Institutional Money Market Fund and
Mortgage Fund, National Municipal Ohio Municipal Money Market Fund:
Bond Fund and New York Tax-Free Fund:
Rate of Rate of
Business Business
Net Assets Management Fee* Net Assets Management Fee*
Up to $10,000,000 0.25% Up to $10,000,000 0.20%
Next $15,000,000 0.15% Next $15,000,000 0.15%
Next $25,000,000 0.10% Next $25,000,000 0.10%
Above $50,000,000 0.05% Above $50,000,000 0.075%
- --------------------
* As a percentage of average daily net assets.
Shareholder Servicing Plan
The Victory Portfolios, on behalf of the Class A and Class B shares of the Fund,
has adopted a Shareholder Servicing Plan to provide payments to shareholder
servicing agents (each a "Shareholder Servicing Agent") that provide
administrative support services to customers who may from time to time
beneficially own shares, which include: (i) aggregating and processing purchase
and redemption requests for shares from customers and transmitting promptly net
purchase and redemption orders to our distributor or transfer agent; (ii)
providing customers with a service that invests the assets of their accounts in
shares pursuant to specific or pre-authorized instructions; (iii) processing
dividend and distribution payments from the Victory Portfolios on behalf of
customers; (iv) providing information periodically to customers showing their
positions in shares; (v) arranging for bank wires; (vi) responding to customer
inquiries concerning their investment in shares; (vii) providing subaccounting
with respect to shares beneficially owned by customers or providing the
information to us necessary for subaccounting; (viii) if required by law,
forwarding shareholder communications from us (such as proxies, shareholder
reports, annual and semi-annual financial statements and dividend, distribution
and tax notices) to customers; (ix) forwarding to customers proxy statements and
proxies containing any proposals regarding this Plan; and (x) providing such
other similar services as we may reasonably request to the extent you are
permitted to do so under applicable statutes, rules or regulations. For expenses
incurred and services provided as Shareholder Servicing Agent pursuant to its
respective Shareholder Servicing Agreement, the Victory Portfolios pays each
Shareholder Servicing Agent a fee computed daily and paid monthly, in amounts
aggregating not more than twenty-five one-hundredths of one percent (.25%) of
the average daily net assets of the Fund per year. A Shareholder Servicing Agent
may periodically waive all or a portion of its respective shareholder servicing
fees with respect to the Fund to increase the net income of the Fund available
for distribution as dividends.
Expenses
Each fund bears the following expenses relating to its respective
operations: taxes, interest, brokerage fees and commissions, fees of the
Trustees of the Victory Portfolios, Commission fees, state securities
qualification fees, costs of preparing and printing prospectuses for regulatory
purposes and for distribution to current shareholders, outside auditing and
legal expenses, advisory and administration fees, fees and out-of-pocket
expenses of the custodian and transfer agent, certain insurance premiums, costs
of maintenance of the fund's existence, costs of shareholders' reports and
meetings, and any extraordinary expenses incurred in the fund's operation.
If total expenses borne by any of the Victory Portfolios in any fiscal
year exceeds expense limitations imposed by applicable state securities
regulations, Key Advisers or the Sub-Adviser as applicable, and the
Administrator will waive their fees to the extent such excess expenses exceed
such expense limitation in proportion to their respective fees. As of the date
of this Statement of Additional Information, the most restrictive expense
limitation applicable to the Victory Portfolios limits each fund's aggregate
annual expenses, including management and advisory fees but excluding interest,
taxes, brokerage commissions, and certain other expenses, to 2.5% of the first
$30 million of a fund's average net assets, 2.0% of the next $70 million of a
fund's average net assets, and 1.5% of a Fund's remaining average net assets.
Any expenses to be borne by Key Advisers or the Sub-Adviser or the Administrator
will be estimated daily and reconciled and paid on a monthly basis. Fees imposed
upon customer accounts by Key Advisers, or the Sub-Adviser, Key Trust Company of
Ohio, N.A. or its correspondents, affiliated banks and other non-bank affiliates
for cash management services are not fund expenses for purposes of any such
expense limitation.
Distributor
Victory Broker-Dealer Services, Inc. (the "Distributor") serves as
distributor for the continuous offering of the shares of each fund of the
Victory Portfolios pursuant to a Distribution Agreement. Prior to Victory
BrokerDealer Services, Inc. becoming the Distributor, Winsbury served as
distributor of each Fund. Unless otherwise terminated, the Distribution
Agreement will remain in effect for two years, and thereafter for consecutive
one-year terms, provided that it is approved at least annually (i) by the
Victory Portfolios' Trustees or by the vote of a majority of the outstanding
shares of the Victory Portfolios, and (ii) by the vote of a majority of the
Trustees of the Victory Portfolios who are not parties to the Distribution
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval. The Distribution Agreement
may be terminated in the event of its assignment, as defined in the 1940 Act.
For the Victory Portfolios' fiscal years ended October 31, 1992, October 31,
1993, and October 31, 1994, Winsbury received $34,615, $77,258 and $212,021,
respectively, in underwriting commissions, and retained $0, $0 and $15,
respectively. For the six months ended April 30, 1995, the Distributor received
$__________ in underwriting commissions.
Fund Accountant
BISYS Fund Services Ohio, Inc. serves as fund accountant for each fund
pursuant to a fund accounting agreement with the Victory Portfolios dated June
5, 1995 (the "Fund Accounting Agreement"). As fund accountant for the Victory
Portfolios, BISYS Fund Services Ohio, Inc. calculates the Victory Portfolios'
net asset value, the dividend and capital gain distribution, if any, and the
yield. BISYS Fund Services Ohio, Inc. also provides a current security position
report, a summary report of transactions and pending maturities, a current cash
position report, and maintains the general ledger accounting records for each
Fund. Under its Fund Accounting Agreement with the Victory Portfolios, BISYS
Fund Services Ohio, Inc. is entitled to receive annual fees of .03% of the first
$100 million of a Fund's daily average net assets, .02% of the next $100 million
of a Fund's daily average net assets, and .01% of a Fund's remaining daily
average net assets. These annual fees are subject to a minimum monthly assets
charge of $2,500 per taxable Fund, $2,917 per tax-free Fund, and $3,333 per
international Fund and do not include out-of-pocket expenses or multiple class
charges of $833 per month assessed for each class of shares after the first
class.
In the fiscal years ended October 31, 1992, October 31, 1993,
and October 31, 1994, the Victory Portfolios paid The Winsbury Service
Corporation fund accounting fees (after fee waivers) of $119,516, $144,288 and
$152,663, respectively, for the Fund. For the six months ended April 30, 1995,
the Fund paid $__________ in fund accounting fees.
Custodian
Cash and securities owned by each fund of the Victory Portfolios
(except the International Growth Fund) are held by Key Trust Company of Ohio,
N.A. as custodian; cash and securities owned by the International Growth Fund
are held by The Bank of New York and certain foreign sub-custodians, and by Key
Trust Company of Ohio, N.A. as sub-custodian. Key Trust Company of Ohio, N.A.
serves as custodian to each fund of the Victory Portfolios (except the
International Growth Fund) pursuant to a Custodian Agreement dated May 24, 1995.
The Bank of New York serves as custodian to the International Growth Fund
pursuant to a Custodian Agreement dated _____________. Under these Agreements,
Key Trust Company of Ohio, N.A. and The Bank of New York each (i) maintain a
separate account or accounts in the name of each respective fund; (ii) make
receipts and disbursements of money on behalf of each fund; (iii) collect and
receive all income and other payments and distributions on account of portfolio
securities; (iv) respond to correspondence from security brokers and others
relating to its duties; and (v) make periodic reports to the Victory Portfolios'
Trustees concerning the Victory Portfolios' operations. Key Trust Company of
Ohio, N.A. and The Bank of New York each may, with the approval of a fund and at
the custodian's own expense, open and maintain a sub-custody account or accounts
on behalf of a fund, provided that Key Trust Company of Ohio, N.A. or The Bank
of New York shall remain liable for the performance of all of its duties under
its respective Custodian Agreement.
Transfer Agent
The Primary Funds Service Corporation serves as transfer agent and
dividend disbursing agent for each fund, pursuant to a Transfer Agency and
Shareholder Servicing Agreement. Under its agreement with the Victory
Portfolios, Primary Funds Service Corporation has agreed (i) to issue and redeem
shares of the Victory Portfolios; (ii) to address and mail all communications by
the Victory Portfolios to its shareholders, including reports to shareholders,
dividend and distribution notices, and proxy material for its meetings of
shareholders; (iii) to respond to correspondence or inquiries by shareholders
and others relating to its duties; (iv) to maintain shareholder accounts and
certain sub-accounts; and (v) to make periodic reports to the Victory
Portfolios' Trustees concerning the Victory Portfolios' operations. For the
services provided under the Transfer Agency and Shareholder Servicing Agreement,
Primary Funds Service Corporation receives a maximum monthly fee of $1,250 per
fund to a maximum of $3.50 per account per fund.
Auditors
The financial highlights appearing in the Prospectus for the Fund,
other than unaudited information marked as such, has been derived from financial
statements of the Victory Portfolios which have been audited by Coopers &
Lybrand L.L.P., independent accountants, as set forth in their report
incorporated by reference herein, and are incorporated by reference in reliance
upon such report and on the authority of such firm as experts in auditing and
accounting. Coopers & Lybrand L.L.P.'s address is 100 East Broad Street,
Columbus, Ohio 43215.
Legal Counsel
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, 919 Third Avenue, New
York, New York 10022 are counsel to the Victory Portfolios.
<PAGE>
ADDITIONAL INFORMATION
Description of Shares
The Victory Portfolios (sometimes referred to as the "Trust") is a
Massachusetts business trust. The Victory Portfolios' Declaration of Trust,
pursuant to which the Victory Portfolios was originally called the North Third
Street Fund, was filed with the Secretary of State of the Commonwealth of
Massachusetts on February 6, 1986. On September 22, 1986, an Amended and
Restated Declaration of Trust was filed to change the name of the Trust to The
Emblem Fund and to make certain other changes. A second amendment was filed
October 23, 1986 providing for voting of shares in the aggregate except where
voting of shares by series is otherwise required by law. An amendment to the
Amended and Restated Declaration of Trust was filed on March 15, 1993 to change
the name of the Trust to The Society Funds. An Amended and Restated Declaration
of Trust was then filed on September 2, 1994 to change the name of the Trust to
The Victory Portfolios. The Declaration of Trust, as amended, authorizes the
Trustees to issue an unlimited number of shares, which are units of beneficial
interest, without par value. On or about February 29, 1996, contingent upon
shareholder approval, the Victory Portfolios will convert from a Massachusetts
business trust to a Delaware business trust. The Victory Portfolios presently
has twenty- eight series of shares, which represent interests in the U.S.
Government Obligations Fund, the Prime Obligations Fund, the Tax-Free Money
Market Fund, the Balanced Fund, the Stock Index Fund, the Value Fund, the Fund,
the Growth Fund, the Special Value Fund, the Special Growth Fund, the Ohio
Regional Stock Fund, the International Growth Fund, the Limited Term Income
Fund, the Government Mortgage Fund, the Ohio Municipal Bond Fund, the
Intermediate Income Fund, the Investment Quality Bond Fund, the Florida Tax-Free
Bond Fund, the Municipal Bond Fund, the Convertible Securities Fund, the
Short-Term U.S. Government Income Fund, the Government Bond Fund, the Fund for
Income, the National Municipal Bond Fund, the New York Tax-Free Fund, the
Institutional Money Market Fund, the Financial Reserves Fund and the Ohio
Municipal Money Market Fund, respectively. The Victory Portfolios' Declaration
of Trust authorizes the Trustees to divide or redivide any unissued shares of
the Victory Portfolios into one or more additional series by setting or changing
in any one or more respects their respective preferences, conversion or other
rights, voting power, restrictions, limitations as to dividends, qualifications,
and terms and conditions of redemption.
Shares have no subscription or preemptive rights and only such
conversion or exchange rights as the Trustees may grant in its discretion. When
issued for payment as described in the Prospectus and this Statement of
Additional Information, the Victory Portfolios' shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Victory
Portfolios, shares of a fund are entitled to receive the assets available for
distribution belonging to the fund, and a proportionate distribution, based upon
the relative asset values of the respective funds, of any general assets not
belonging to any particular fund which are available for distribution.
As described in the Prospectus under the caption "ADDITIONAL
INFORMATION -- Voting Rights," shares of the Victory Portfolios are entitled to
one vote per share (with proportional voting for fractional shares) on such
matters as shareholders are entitled to vote. Shareholders vote as a single
class on all matters except (i) when required by the 1940 Act, shares shall be
voted by individual series, and (ii) when the Trustees have determined that the
matter affects only the interests of one or more series, then only shareholders
of such series shall be entitled to vote thereon. There will normally be no
meetings of shareholders for the purposes of electing Trustees unless and until
such time as less than a majority of the Trustees have been elected by the
shareholders, at which time the Trustees then in office will call a
shareholders' meeting for the election of Trustees. In addition, Trustees may be
removed from office by a written consent signed by the holders of two-thirds of
the outstanding shares of the Victory Portfolios and filed with the Victory
Portfolios' custodian or by a vote of the holders of two-thirds of the
outstanding shares of the Victory Portfolios at a meeting duly called for the
purpose, which meeting shall be held upon the written request of the holders of
not less than 10% of the outstanding shares. Upon written request by ten or more
shareholders, who have been such for at least six months, and who hold shares
constituting 1% of the outstanding shares, stating that such shareholders wish
to communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a Trustee, the
Victory Portfolios will provide a list of shareholders or disseminate
appropriate materials (at the expense of the requesting shareholders). Except as
set forth above, the Trustees shall continue to hold office and may appoint
their successors.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Victory Portfolios shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each fund of the Victory Portfolios affected by the
matter. For purposes of determining whether the approval of a majority of the
outstanding shares of a fund will be required in connection with a matter, a
fund will be deemed to be affected by a matter unless it is clear that the
interests of each fund in the matter are identical, or that the matter does
not affect any interest of the fund. Under Rule 18f-2, the approval of an
investment advisory agreement or any change in investment policy would be
effectively acted upon with respect to a fund only if approved by a majority of
the outstanding shares of such fund. However, Rule 18f-2 also provides that
the ratification of independent public accountants, the approval of principal
underwriting contracts, and the election of Trustees may be effectively acted
upon by shareholders of the Victory Portfolios voting without regard to series.
Shareholder and Trustee Liability
Under Massachusetts law, holders of units of interest in a business
trust may, under certain circumstances, be held personally liable as partners
for the obligations of the trust. However, the Victory Portfolios' Declaration
of Trust provides that shareholders shall not be subject to any personal
liability for the obligations of the Victory Portfolios, and that every written
agreement, obligation, instrument, or undertaking made by the Victory Portfolios
shall contain a provision to the effect that the shareholders are not personally
liable thereunder. The Declaration of Trust provides for indemnification out of
the trust property of any shareholder held personally liable solely by reason of
his or her being or having been a shareholder. The Declaration of Trust also
provides that the Victory Portfolios shall, upon request, assume the defense of
any claim made against any shareholder for any act or obligation of the Victory
Portfolios, and shall satisfy any judgment thereon. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Funds would be unable to meet its
obligations.
The Declaration of Trust states further that no Trustee, officer, or
agent of the Victory Portfolios shall be personally liable in connection with
the administration or preservation of the assets of the Funds or the conduct of
the Victory Portfolios' business; nor shall any Trustee, officer, or agent be
personally liable to any person for any action or failure to act except for his
own bad faith, willful misfeasance, gross negligence, or reckless disregard of
his duties. The Declaration of Trust also provides that all persons having any
claim against the Trustees or the Victory Portfolios shall look solely to the
assets of the Victory Portfolios for payment.
Delaware Law [to be inserted]
Miscellaneous
As used in the Prospectus and in this Statement of Additional
Information, "assets belonging to a fund" means the consideration received by
the Victory Portfolios upon the issuance or sale of shares in that fund,
together with all income, earnings, profits, and proceeds derived from the
investment thereof, including any proceeds from the sale, exchange, or
liquidation of such investments, and any funds or payments derived from any
reinvestment of such proceeds and any general assets of the Victory Portfolios,
which general liabilities and expenses are not readily identified as belonging
to a particular fund that are allocated to that fund by the Victory Portfolios'
Trustees. The Trustees may allocate such general assets in any manner they deem
fair and equitable. It is anticipated that the factor that will be used by the
Trustees in making allocations of general assets to a particular fund of the
Victory Portfolios will be the relative net asset value of the respective fund
at the time of allocation. Assets belonging to a particular fund are charged
with the direct liabilities and expenses in respect of that fund, and with a
share of the general liabilities and expenses of each of the funds not readily
identified as belonging to a particular fund but that are allocated to a fund in
proportion to the relative net asset values of the respective fund of the
Victory Portfolios at the time of allocation. The timing of allocations of
general assets and general liabilities and expenses of the Victory Portfolios to
a particular fund will be determined by the Trustees of the Victory Portfolios
and will be in accordance with generally accepted accounting principles.
Determinations by the Trustees of the Victory Portfolios as to the timing of the
allocation of general liabilities and expenses and as to the timing and
allocable portion of any general assets with respect to a particular fund are
conclusive.
As used in the Prospectus and in this Statement of Additional
Information, a "vote of a majority of the out standing shares" of the Victory
Portfolios or a particular fund means the affirmative vote of the lesser of (a)
67% or more of the shares of the Victory Portfolios or such fund present at a
meeting at which the holders of more than 50% of the outstanding shares of the
Victory Portfolios or such fund are represented in person or by proxy, or (b)
more than 50% of the outstanding votes of shareholders of the Victory Portfolios
or such fund.
Organizational expenses are allocated to each of the Victory Portfolios
and are amortized over a period of two years from the commencement of the public
offering of shares of the Victory Portfolios.
<PAGE>
Individual Trustees are elected by the shareholders and, subject to
removal by the vote of the holders of two-thirds of the outstanding shares of
the Victory Portfolios, serve for a term lasting until the next meeting of
shareholders at which trustees are elected. Such meetings are not required to be
held at any specific intervals. Individual Trustees may be removed by vote of
the shareholders voting not less than a majority of the shares then outstanding
cast in person or by proxy at any meeting called for that purpose, or by a
written declaration signed by shareholders voting not less than two-thirds of
the shares then outstanding.
The Victory Portfolios is registered with the Commission as a
management investment company. Such registration does not involve supervision by
the Commission of the management or policies of the Victory Portfolios.
The Prospectus and this Statement of Additional Information omit
certain of the information contained in the Registration Statement filed with
the Commission. Copies of such information may be obtained from the Commission
upon payment of the prescribed fee.
The Prospectus and this Statement of Additional Information are not an
offering of the securities herein described in any state in which such offering
may not lawfully be made. No salesman, dealer, or other person is authorized to
give any information or make any representation other than those contained in
the Prospectus and this Statement of Additional Information.
The 1994 Annual Report and 1995 Semi-Annual Report to shareholders of
The Victory Portfolios are incorporated herein in their entirety. These
reports include the financial statements for the fiscal year ended October 31,
1994 and for the semi-annual period ended April 30, 1995. The opinion in the
Annual Report of Coopers & Lybrand L.L.P., independent accountants, is
incorporated herein in its entirety to such Annual Report, and such financial
statements are incorporated in their entirety in reliance upon such report of
Coopers & Lybrand L.L.P. and on the authority of such firm as experts in
auditing and accounting.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
FINANCIAL STATEMENTS
<PAGE>
APPENDIX
The nationally recognized statistical rating organizations
(individually, an "NRSRO") that may be utilized by Key Advisers or the
Sub-Adviser with regard to portfolio investments for the Funds include Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P"),
Duff & Phelps, Inc. ("Duff"), Fitch Investors Service, Inc. ("Fitch"), IBCA
Limited and its affiliate, IBCA Inc. (collectively, "IBCA"), and Thomson
BankWatch, Inc. ("Thomson"). Set forth below is a description of the relevant
ratings of each such NRSRO. The NRSROs that may be utilized by Key Advisers or
the Sub-Adviser and the description of each NRSRO's ratings is as of the date of
this Statement of Additional Information, and may subsequently change.
Long-Term Debt Ratings (may be assigned, for example, to corporate and
municipal bonds).
Description of the five highest long-term debt ratings by Moody's
(Moody's applies numerical modifiers (e.g., 1, 2, and 3) in each rating category
to indicate the security's ranking within the category):
Aaa. Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa. Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than in Aaa securities.
A. Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.
Baa. Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba. Bonds which are rated Ba are judged to have speculative elements -
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times in the future. Uncertainty of
position characterizes bonds in this class.
Description of the five highest long-term debt ratings by S&P (S&P may
apply a plus (+) or minus (-) to a particular rating classification to show
relative standing within that classification):
AAA. Debt rated AAA has the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA. Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A. Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB. Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB. Debt rated BB is regarded, on balance, as predominately speculative
with respect to capacity to pay interest and repay principal in accordance with
the terms of the obligation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposure to adverse conditions.
Description of the three highest long-term debt ratings by Duff:
AAA. Highest credit quality. The risk factors are negligible being
only slightly more than for risk-free U.S. Treasury debt.
AA+. High credit quality Protection factors are strong.
AA. Risk is modest but may vary slightly from time to time
AA-. because of economic conditions.
A+. Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic
stress.
Description of the three highest long-term debt ratings by Fitch (plus
or minus signs are used with a rating symbol to indicate the relative position
of the credit within the rating category):
AAA. Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA. Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA." Because
bonds rated in the "AAA" and "AA" categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these
issues is generally rated "[-]+."
A. Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
IBCA's description of its three highest long-term debt ratings:
AAA. Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and
interest is substantial. Adverse changes in business, economic or
financial conditions are unlikely to increase investment risk
significantly.
AA. Obligations for which there is a very low expectation of investment
risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic, or financial
conditions may increase investment risk albeit not very significantly.
A. Obligations for which there is a low expectation of investment risk.
Capacity for timely repayment of principal and interest is strong,
although adverse changes in business, economic or financial conditions
may lead to increased investment risk.
Short-Term Debt Ratings (may be assigned, for example, to commercial
paper, master demand notes, bank instruments, and letters of credit)
Moody's description of its three highest short-term debt ratings:
Prime-1. Issuers rated Prime-1 (or supporting institutions) have a
superior capacity for repayment of senior short-term promissory obligations.
Prime-1 repayment capacity will normally be evidenced by many of the following
characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate reliance
on debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.
Prime-2. Issuers rated Prime-2 (or supporting institutions) have a
strong capacity for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Prime-3. Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
S&P's description of its three highest short-term debt ratings:
A-1. This designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to have extremely
strong safety characteristics are denoted with a plus sign (+).
A-2. Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated "A-1."
A-3. Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher
designations.
Duff's description of its five highest short-term debt ratings (Duff
incorporates gradations of "1+" (one plus) and "1-" (one minus) to assist
investors in recognizing quality differences within the highest rating
category):
Duff 1+. Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations.
Duff 1. Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk
factors are minor.
Duff 1-. High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk factors are
very small.
Duff 2. Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good.
Risk factors are small.
Duff 3. Satisfactory liquidity and other protection factors qualify
issue as to investment grade.
Risk factors are larger and subject to more variation. Nevertheless,
timely payment is expected.
Fitch's description of its four highest short-term debt ratings:
F-1+. Exceptionally Strong Credit Quality. Issues assigned this
rating are regarded as having the strongest degree of assurance for
timely payment.
F-1. Very Strong Credit Quality. Issues assigned this rating reflect
an assurance of timely payment only slightly less in degree than issues
rated F-1+.
F-2. Good Credit Quality. Issues assigned this rating have a
satisfactory degree of assurance for timely payment, but the margin of
safety is not as great as for issues assigned F-1+ or F-1 ratings.
F-3. Fair Credit Quality. Issues assigned this rating have
characteristics suggesting that the degree of assurance for timely
payment is adequate, however, near-term adverse changes could cause
these securities to be rated below investment grade.
IBCA's description of its three highest short-term debt ratings:
A+. Obligations supported by the highest capacity for timely repayment.
A1. Obligations supported by a very strong capacity for timely
repayment.
A2. Obligations supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
Short-Term Loan/Municipal Note Ratings
Moody's description of its two highest short-term loan/municipal note
ratings:
MIG-1/VMIG-1. This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support
or demonstrated broad-based access to the market for refinancing.
MIG-2/VMIG-2. This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
S&P's description of its two highest municipal note ratings:
SP-1. Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus (+) designation.
SP-2. Satisfactory capacity to pay principal and interest.
Short-Term Debt Ratings
Thomson BankWatch, Inc. ("TBW") ratings are based upon a qualitative
and quantitative analysis of all segments of the organization including, where
applicable, holding company and operating subsidiaries.
BankWatch Ratings do not constitute a recommendation to buy or sell
securities of any of these companies. Further, BankWatch does not suggest
specific investment criteria for individual clients.
The TBW Short-Term Ratings apply to commercial paper, other senior
short-term obligations and deposit obligations of the entities to which the
rating has been assigned.
The TBW Short-Term Ratings apply only to unsecured instruments that
have a maturity of one year or less.
The TBW Short-Term Ratings specifically assess the likelihood of an
untimely payment of principal or interest.
TBW-1. The highest category; indicates a very high degree of likelihood
that principal and interest will be paid on a timely basis.
TBW-2. The second highest category; while the degree of safety
regarding timely repayment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated "TBW-1".
TBW-3. The lowest investment grade category; indicates that while more
susceptible to adverse developments (both internal and external) than
obligations with higher ratings, capacity to service principal and interest in a
timely fashion is considered adequate.
TBW-4. The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.
Definitions of Certain Money Market Instruments
Commercial Paper
Commercial paper consists of unsecured promissory notes issued by
corporations. Issues of commercial paper normally have maturities of less than
nine months and fixed rates of return.
Certificates of Deposit
Certificates of Deposit are negotiable certificates issued against
funds deposited in a commercial bank or a savings and loan association for a
definite period of time and earning a specified return.
Bankers' Acceptances
Bankers' acceptances are negotiable drafts or bills of exchange,
normally drawn by an importer or exporter to pay for specific merchandise, which
are "accepted" by a bank, meaning, in effect, that the bank unconditionally
agrees to pay the face value of the instrument on maturity.
U.S. Treasury Obligations
U.S. Treasury Obligations are obligations issued or guaranteed as to
payment of principal and interest by the full faith and credit of the U.S.
Government. These obligations may include Treasury bills, notes and bonds, and
issues of agencies and instrumentalities of the U.S. Government, provided such
obligations are guaranteed as to payment of principal and interest by the full
faith and credit of the U.S. Government.
U.S. Government Agency and Instrumentality Obligations
Obligations issued by agencies and instrumentalities of the U.S.
Government include such agencies and instrumentalities as the Government
National Mortgage Association, the Export-Import Bank of the United States, the
Tennessee Valley Authority, the Farmers Home Administration, the Federal Home
Loan Banks, the Federal Intermediate Credit Banks, the Federal Farm Credit
Banks, the Federal Land Banks, the Federal Housing Administration, the Federal
National Mortgage Association, the Federal Home Loan Mortgage Corporation, and
the Student Loan Marketing Association. Some of these obligations, such as those
of the Government National Mortgage Association are supported by the full faith
and credit of the U.S. Treasury; others, such as those of the Export-Import Bank
of the United States, are supported by the right of the issuer to borrow from
the Treasury; others, such as those of the Federal National Mortgage
Association, are supported by the discretionary authority of the U.S. Government
to purchase the agency's obligations; still others, such as those of the Student
Loan Marketing Association, are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored instrumentalities if it
is not obligated to do so by law. A Fund will invest in the obligations of such
instrumentalities only when the investment adviser believes that the credit risk
with respect to the instrumentality is minimal.
<PAGE>
[LOGO]
THE VICTORY FUNDS
SEMI-ANNUAL
REPORT
---------------------
THE VICTORY PORTFOLIOS
APRIL 30, 1995
<PAGE>
C O N T E N T S
<TABLE>
<S> <C>
Shareholder Letter 1
Investment Review and Outlook 2
FINANCIAL STATEMENTS
--------------------
Understanding Your Financial Statements 3
Statements of Assets and Liabilities 5
Statements of Operations 10
Statements of Changes in Net Assets 15
Schedules of Portfolio Investments 22
Notes to Financial Statements 73
Financial Highlights 83
</TABLE>
Society Asset Management, Inc. ("SAM"), a subsidiary of KeyCorp, is the
investment adviser to The Victory Portfolios. The Victory Portfolios is
sponsored and distributed by Victory Broker Dealer Services, Inc., which is not
affiliated with SAM, KeyCorp, any KeyCorp bank or their affiliates. SAM and
Society National Bank, also a subsidiary of KeyCorp, receive fees from The
Victory Portfolios for their services.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus for The Victory Portfolios.
Yields will fluctuate, and there can be no assurance that the money market funds
of The Victory Portfolios will be able to maintain a stable net asset value of
$1.00 per share. An investment in these portfolios is neither insured nor
guaranteed by the U.S. Government. The composition of the fund's holdings is
subject to change.
- --------------------------------------------------------------------------------
NOT
FDIC
INSURED
- --------------------------------------------------------------------------------
SHARES OF THE VICTORY PORTFOLIOS ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR
GUARANTEED BY, ANY KEYCORP BANK, SOCIETY ASSET MANAGEMENT, INC., OR THEIR
AFFILIATES, AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE
PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------
<PAGE>
THE VICTORY
PORTFOLIOS
DEAR SHAREHOLDER:
The Victory Portfolios is pleased to provide you with this semi-annual report
for the six-month period ended April 30, 1995. We are very proud to inform you
that the Diversified Stock Fund, the Ohio Regional Stock Fund and the Fund for
Income Portfolio all received 4 star ratings by Morningstar as of April 30,
1995.* For more information about your funds, rankings or for article reprints
call 1-800-KEY-FUND (539-3863).
Last year, when we changed our name to The Victory Portfolios, we also added a
number of convenient service and investment features. These initiatives marked
the beginning of a broader plan to restructure and expand our products and
services. Most recently, shareholders of The Victory Funds, an affiliated group
of funds with 14 investment portfolios, approved a reorganization that took
place on June 5, 1995. This date marked the final steps of a year-long process
focused on streamlining our product offerings and increasing the efficiency of
other services necessary to support the funds' operations. On June 5, The
Victory Funds merged with The Victory Portfolios. Seven portfolios of our
affiliate were merged with comparable investment portfolios, and seven new
portfolios were added. In all, there are now 24 Victory Portfolios available to
investors as part of the combined $5.1 billion complex.
I won't go into the enormous detail of this restructuring effort except to thank
management, our service providers and our investment professionals for their
support.
WOULDN'T IT BE NICE IF . . . (some summertime thoughts)
- - the information superhighway actually cut our commute time
- - major league baseball players had to get real jobs at real wages (at least for
a while)
- - the Paperwork Reduction Act actually resulted in less paperwork for America's
businesses
Thank you for choosing to invest in The Victory Portfolios. Our goal is to
become America's First Choice for Investors.
LEIGH A. WILSON
Leigh A. Wilson, President
THE VICTORY PORTFOLIOS
P.S. For more information about any of The Victory Portfolios, please request a
prospectus by calling 1-800-KEY-FUND (539-3863). The prospectus contains more
complete information, including charges and expenses. Read the prospectus
carefully before you invest or send money.
*Morningstar proprietary ratings reflect historical risk-adjusted performance as
of April 30, 1995. The ratings are subject to change every month. Star ratings
are calculated from the fund's three- and five-year average annual returns in
excess of 90-day Treasury bill returns with appropriate fee adjustments, and a
risk factor that reflects fund performance below 90-day Treasury bill returns.
For the three- and five-year periods ended April 30, 1995, 1,190 and 891 equity
funds, 561 and 372 fixed-income funds were rated. Diversified is rated 4 stars
for the three- and five-year periods; Ohio Regional is rated 3 stars for the
three-year period and 4 stars for the five-year period; and Fund for Income is
rated 3 stars for the three-year period and 4 stars for the five-year period.
Ten percent of the funds in an investment category receive 5 stars, 22.5%
receive 4 stars, 35% receive 3 stars, 22.5% receive 2 stars, and 10% receive 1
star. Past performance is no guarantee of future results. These ratings do not
include the effect of a sales charge. Fees have been waived for certain periods;
without the effect of these waivers performance and ratings may have varied.
1
<PAGE>
INVESTMENT
REVIEW
AND
OUTLOOK
(AS OF MAY 5, 1995)
IN OUR OPINION . . .
FROM 75 TO 45 (mph)
The widely predicted SOFT LANDING of the U.S. economy is not "on the way" . . .
it's already "arrived." More and more fresh economic data depict an economy
which, in recent months, has "slowed" from a "75 mile-per-hour" pace throughout
1994 (especially during the fourth quarter) to a more modest "speed" of roughly
"45 miles per hour." This slowing appears to be very satisfying to the economy's
primary "traffic cop" . . . the Federal Reserve.
The latest economic numbers describe an "economic vehicle" with the "brakes" now
firmly applied. The May 3 release of the Index of Leading Economic Indicators
for March recorded its largest decline in two years. February and March also
registered as the largest back-to-back monthly declines since the summer of
1992. Equally exciting (only to economists) was a surprising 0.1% decline in
factory orders during March, another sign of some "bad gas" in the "economic
engine." In addition, factory inventories rose more than expected in March and
were revised higher for February. This stronger inventory buildup suggests that
the most recent U.S. Commerce Department estimate of a 2.8% real GDP growth
"speed" during the first quarter of 1995 will be revised to a "faster speed."
This expected upward revision will come at the expense of a weak current
quarter . . . perhaps as "sluggish" as a 1.2-1.8% real annual rate.
The May 5 release of the April unemployment numbers, which jumped from 5.5% to
5.8%, shed further light on the "engine's diagnosis." These particularly weak
numbers could "fuel" additional near-term strength in both stocks and bonds.
IS THE FED FINISHED TIGHTENING?
The data of recent days provided more "high octane" fuel to the financial
markets' belief that the Fed will likely "stay on cruise control" for some time
to come. Many economists now suggest the Fed's next move will be to "step on the
gas" (ease policy). Although we would like to believe that, we expect a modest
resurgence of the economy during the second half of 1995, "fueled" by rising
exports, solid manufacturing output, strong capital spending, and improved
consumer interest in housing. This combination, added to some worrisome economic
"exhaust" (inflation pressure), could force the Fed's foot to the "brake pedal"
once again.
Society Asset Management, Inc.
2
<PAGE>
UNDERSTANDING YOUR FINANCIAL STATEMENTS
o The FINANCIAL STATEMENTS summarize and describe a fund's financial
transactions. They are broken down into four different statements,
which are illustrated below:
THE STATEMENTS OF ASSETS AND LIABILITIES lists all of the assets and
liabilities of the mutual fund. This is the individual fund's "balance sheet."
Also disclosed on this statement is the fund's net asset value per share and
its maximum offering price per share as of the date of the statement. The
statement also lists the accounts that comprise the mutual fund's net assets
(capital stock, undistributed income, etc.).
[FORM] SUMMARY OF THE MUTUAL FUND'S INVESTMENTS AND ALL
OTHER ASSETS OWNED BY THE FUND, INCLUDING AMOUNTS
OWED TO THE FUND BY OUTSIDE PARTIES
SUMMARY OF ALL AMOUNTS OWED TO OUTSIDE PARTIES BY
THE MUTUAL FUND
NET RESULT OF ASSETS LESS LIABILITIES
THE MARKET WORTH OF THE MUTUAL FUND'S TOTAL ASSETS
DIVIDED BY THE NUMBER OF SHARES OUTSTANDING
THE CURRENT NET ASSET VALUE PER SHARE PLUS SALES CHARGE
THE STATEMENT OF OPERATIONS shows the amount of dividend and interest income
earned from the mutual fund's investments, the expenses incurred by the fund
from its operations, and any gains or losses recognized by the fund from
holding and/or selling any investments.
[FORM] ANY INCOME EARNED FROM THE MUTUAL FUND'S INVESTMENTS
OPERATING EXPENSES INCURRED BY THE MUTUAL FUND DURING
THE PERIOD
GAINS OR LOSSES REALIZED UPON THE SALE OF THE MUTUAL
FUND'S INVESTMENTS ALONG WITH UNREALIZED GAINS OR LOSSES
ON FUND HOLDINGS AT THE REPORT DATE
NET CHANGE DUE TO MUTUAL FUND OPERATIONS
3
<PAGE>
THE STATEMENT OF CHANGES IN NET ASSETS shows the total assets of the mutual
fund for the two most recent reporting periods. The changes in net assets are
generally broken down into four distinct sections:
[FORM] OPERATIONS - SEE STATEMENT OF OPERATIONS
DIVIDENDS TO SHAREHOLDERS - TOTAL INCOME DIVIDENDS PAID
TO SHAREHOLDERS DURING THE PERIODS
NET REALIZED GAINS - TOTAL REALIZED GAINS DISTRIBUTED TO
SHAREHOLDERS DURING THE PERIODS
CAPITAL STOCK TRANSACTIONS - DOLLAR VALUE OF MUTUAL FUND
SHARES PURCHASED, REDEEMED OR REINVESTED DURING THE
PERIODS
THE PORTFOLIO OF INVESTMENTS lists each investment holding in the mutual fund
as of the date of the report. Investments may be grouped by category (by
industry or security type, for example). The percentage of the mutual fund's
net assets that these groupings represent is also disclosed.
[FORM] TYPE OF SECURITY
INDUSTRY SECTOR AND PERCENTAGE OF THE MUTUAL FUND's
NET ASSETS REPRESENTED BY INVESTMENTS IN THAT SECTOR
(IF APPLICABLE)
ACTUAL PORTFOLIO HOLDINGS WITH SHARES AND MARKET
VALUE AS OF REPORT DATE
o The NOTES TO FINANCIAL STATEMENTS are footnotes to the statements listed
above. 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.
o The FINANCIAL HIGHLIGHTS show, for a single share outstanding throughout the
period, the net investment income, the realized and unrealized gains and
losses, and the dividends and distributions of the fund. It also shows key
data and ratios, such as the total return for the period, the portfolio
turnover rate for funds other than money market mutual funds, and the
ratio of net investment income to average net assets.
4
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. TAX-FREE
GOVERNMENT PRIME MONEY
OBLIGATIONS OBLIGATIONS MARKET
FUND FUND FUND
(000) (000) (000)
-------- -------- --------
<S> <C> <C> <C>
ASSETS:
Investments, at value $228,336 $392,425 $208,031
Repurchase agreements 296,998 37,315
- ---------------------------------------------------------------------------------------------------------
525,334 429,740 208,031
Cash 322
Interest receivable 1,525 2,467 2,066
Prepaid expenses 5 34 7
- ---------------------------------------------------------------------------------------------------------
Total Assets 526,864 432,241 210,426
- ---------------------------------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 2,381 1,867 675
Accrued expenses and other payables:
Investment advisory fees 153 125 62
Administration fees 66 54 27
Accounting and transfer agent fees 44 52 22
Other 77 143 34
- ---------------------------------------------------------------------------------------------------------
Total Liabilities 2,721 2,241 820
- ---------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 524,337 432,505 209,606
Accumulated undistributed net realized losses from investment
transactions (194) (2,505)
- ---------------------------------------------------------------------------------------------------------
Net Assets $524,143 $430,000 $209,606
- ---------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) 524,337 430,000 209,606
- ---------------------------------------------------------------------------------------------------------
Net asset value--redemption and offering price per share $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------
Investments, at cost $525,334 $429,740 $208,031
- ---------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
5
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY FUNDS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK
TAX- FUND FOR
FREE INCOME
PORTFOLIO PORTFOLIO
(000) (000)
------------ ---------
<S> <C> <C>
ASSETS
Investments, at value $ 16,410 $23,678
Repurchase agreements 1,003
- -----------------------------------------------------------------------------------------------------
16,410 24,681
Interest receivable 338 183
Cash 4
Receivable for capital shares issued 429
Receivable from brokers for investments sold 93
Receivable from fund adviser 41 36
- -----------------------------------------------------------------------------------------------------
Total Assets 17,218 24,997
- -----------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 58
Payable to brokers for investments purchased 195 64
Payable for capital shares redeemed 111 85
Dividends payable 44 119
Accrued expenses and other payables:
Administrative fee 2 3
Other 13
- -----------------------------------------------------------------------------------------------------
Total Liabilities 410 284
- -----------------------------------------------------------------------------------------------------
NET ASSETS
Capital 15,880 26,101
Undistributed (distributions in excess of) net investment income 6 (90)
Net unrealized appreciation on investments 925 509
Accumulated undistributed net realized losses on investments (3) (1,807)
- -----------------------------------------------------------------------------------------------------
Net Assets $ 16,808 $24,713
- -----------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) -- class A 1,277 2,571
- -----------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) -- class B 67
- -----------------------------------------------------------------------------------------------------
Net asset value -- redemption price per share -- class A $ 12.51 $ 9.61
- -----------------------------------------------------------------------------------------------------
Offering price (100%/(100% --
Maximum Sales Charge) of net asset value adjusted to
nearest cent) per share -- class A $ 13.13 $ 9.81
- -----------------------------------------------------------------------------------------------------
Maximum Sales Charge -- class A 4.75% 2.00%
- -----------------------------------------------------------------------------------------------------
Net asset value -- offering and redemption price per share -- class B $ 12.50
- -----------------------------------------------------------------------------------------------------
Investments at cost $ 15,485 $24,172
- -----------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
6
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED INVESTMENT OHIO
TERM GOVERNMENT INTERMEDIATE QUALITY MUNICIPAL
INCOME MORTGAGE INCOME BOND BOND
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value $ 165,669 $142,962 $130,878 $ 91,366 $ 57,871
Interest receivable 2,571 983 2,429 1,453 1,157
Receivable for capital shares issued 21 24
Receivable from brokers for investments sold 2,753 2,048 2,035
Unamortized organization costs 8 9
Prepaid expenses 14 16 13 3
- ---------------------------------------------------------------------------------------------------------------
Total Assets 168,240 146,733 133,331 94,889 61,090
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable to brokers for investments purchased 3,136 2,542 2,845
Payable for capital shares redeemed 1 4
Accrued expenses and other payables:
Investment advisory fees 65 59 52 38 14
Administration fees 21 18 16 11 7
Accounting and transfer agent fees 15 13 13 11 9
Other 26 68 25 85 78
- ---------------------------------------------------------------------------------------------------------------
Total Liabilities 128 3,298 106 2,687 2,953
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 169,603 150,214 139,577 99,169 58,717
Undistributed net investment income 190 194 168 122 55
Net unrealized appreciation (depreciation) from
investments (519) (4,357) (2,607) (2,022) 275
Accumulated undistributed net realized losses
from investment transactions (1,162) (2,616) (3,913) (5,067) (910)
- ---------------------------------------------------------------------------------------------------------------
Net Assets $ 168,112 $143,435 $133,225 $ 92,202 $ 58,137
- ---------------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest
(shares) 16,853 13,587 14,164 9,827 5,356
- ---------------------------------------------------------------------------------------------------------------
Net asset value--redemption price per share $ 9.98 $ 10.56 $ 9.41 $ 9.38 $ 10.85
- ---------------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%--Maximum
Sales Charge) of net asset value adjusted to
nearest cent) per share $ 10.18 $ 11.09 $ 9.88 $ 9.85 $ 11.39
- ---------------------------------------------------------------------------------------------------------------
Maximum Sales Charge 2.00% 4.75% 4.75% 4.75% 4.75%
- ---------------------------------------------------------------------------------------------------------------
Investments, at cost $ 166,188 $147,319 $133,485 $ 93,388 $ 57,596
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
7
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK DIVERSIFIED
BALANCED INDEX VALUE STOCK GROWTH
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value $158,944 $105,660 $263,048 $323,032 $43,646
Cash 1
Foreign currency (Cost $509) 504
Interest and dividends receivable 1,163 201 484 404 51
Receivable for capital shares issued 13 239
Receivable from brokers for investments sold 2,497 658 10,016 203
Net variation margin on open futures contracts 25 5
Unamortized organization costs 6 4 10 4
Prepaid expenses 18 10 23 9 9
- --------------------------------------------------------------------------------------------------------------
Total Assets 163,145 105,901 264,228 333,700 43,913
- --------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for capital shares redeemed 3 14
Payable to brokers for investments purchased 4,141 2,178 11,833
Accrued expenses and other payables:
Investment advisory fees 78 38 134 156 23
Administration fees 19 33 39 5
Accounting and transfer agent fees 18 7 21 24 7
Other 124 22 32 41 17
- --------------------------------------------------------------------------------------------------------------
Total Liabilities 4,383 67 2,398 12,107 52
- --------------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 153,504 95,719 241,936 281,878 40,340
Undistributed (distributions in excess of) net
investment income (411) 179 406 151 8
Net unrealized appreciation from investments 7,080 9,685 17,472 30,351 3,288
Net unrealized depreciation from translation of
assets and liabilities in foreign currencies (12)
Accumulated undistributed net realized gains
(losses) from investment and foreign currency
transactions (1,399) 251 2,016 9,213 225
- --------------------------------------------------------------------------------------------------------------
Net Assets $158,762 $105,834 $261,830 $321,593 $43,661
- --------------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) 15,549 9,545 24,346 26,055 4,054
- --------------------------------------------------------------------------------------------------------------
Net asset value--redemption price per share $ 10.21 $ 11.09 $ 10.75 $ 12.34 $ 10.82
- --------------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%--Maximum Sales
Charge) of net asset value adjusted to nearest
cent) per share $ 10.72 $ 11.64 $ 11.29 $ 12.96 $ 11.36
- --------------------------------------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 4.75% 4.75% 4.75% 4.75%
- --------------------------------------------------------------------------------------------------------------
Investments, at cost $151,871 $ 95,975 $245,576 $292,681 $40,358
- --------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
8
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO
SPECIAL SPECIAL REGIONAL INTERNATIONAL
VALUE GROWTH STOCK GROWTH
FUND FUND FUND FUND
(000) (000) (000) (000)
-------- ------- ------- -------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value $153,966 $19,539 $35,164 $84,863
Foreign currency (Cost $2,485) 2,542
Interest and dividends receivable 275 16 41 181
Receivable for capital shares issued 9 27 26
Receivable from brokers for investments sold 980 259
Unamortized organization costs 5 2
Prepaid expenses 20 4 10
- ----------------------------------------------------------------------------------------------------------
Total Assets 155,255 19,561 35,232 87,881
- ----------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for capital shares redeemed 3 2
Payable to brokers for investments purchased 1,519 142 1,193
Accrued expenses and other payables:
Investment advisory fees 86 10 20 67
Administration fees 19 2 4 11
Accounting and transfer agent fees 14 6 8 52
Other 26 15 14 26
- ----------------------------------------------------------------------------------------------------------
Total Liabilities 1,664 175 49 1,351
- ----------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 139,501 22,102 23,813 84,285
Undistributed (distributions in excess of) net
investment income 155 (3) 5 (613)
Net unrealized appreciation from investments 11,380 1,362 10,524 (5,172)
Net unrealized appreciation from translation of assets
and liabilities in foreign currencies 9,285
Accumulated undistributed net realized gains (losses)
from investment and foreign currency transactions 2,555 (4,075) 841 (1,255)
- ----------------------------------------------------------------------------------------------------------
Net Assets $153,591 $19,386 $35,183 $86,530
- ----------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) 13,646 2,073 2,398 7,268
- ----------------------------------------------------------------------------------------------------------
Net asset value--redemption price per share $ 11.26 $ 9.35 $ 14.67 $ 11.91
- ----------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%--Maximum Sales
Charge) of net asset value adjusted to nearest cent)
per share $ 11.82 $ 9.82 $ 15.40 $ 12.50
- ----------------------------------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 4.75% 4.75% 4.75%
- ----------------------------------------------------------------------------------------------------------
Investments, at cost $142,586 $18,177 $24,640 $80,807
- ----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
9
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S.
GOVERNMENT PRIME TAX-FREE
OBLIGATIONS OBLIGATIONS MONEY MARKET
FUND FUND FUND
(000) (000) (000)
------- ------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $13,510 $18,407 $4,368
- ----------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 820 1,128 389
Administration fees 351 484 167
Shareholder service fees 222
Accounting fees 141 193 68
Legal and audit fees 41 86 22
Trustees' fees and expenses 16 29 8
Transfer agent fees 21 36 14
Registration and filing fees 24 21 10
Printing fees 27 28 14
Other 6 11 3
Expenses voluntarily reduced (16)
- ----------------------------------------------------------------------------------------------------------
Total Expenses 1,447 2,238 679
- ----------------------------------------------------------------------------------------------------------
Net Investment Income 12,063 16,169 3,689
- ----------------------------------------------------------------------------------------------------------
REALIZED GAINS FROM INVESTMENTS:
Net realized gains from investment transactions 54 1
- ----------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $12,117 $16,170 $3,689
- ----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
10
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY FUNDS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK FUND FOR
TAX-FREE INCOME
PORTFOLIO PORTFOLIO
(000) (000)
-------- ---------
<S> <C> <C>
INVESTMENT INCOME
Interest income $530 $ 1,054
- -----------------------------------------------------------------------------------------------------------
EXPENSES
Investment advisory fees 44 65
Administration fees 12 19
Registration fees 18 37
Shareholder servicing fees 19 32
Accounting fees 16 9
Transfer agent fees 11 14
Legal 5 6
Custodian fees and expenses 2
Trustees' fees and expenses 1
Other 9 8
Expenses voluntarily reduced (41) (43)
- -----------------------------------------------------------------------------------------------------------
Total Expenses 94 149
- -----------------------------------------------------------------------------------------------------------
Net Investment Income 436 905
- -----------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS
(LOSSES) FROM INVESTMENTS
Net realized losses from investment transactions (3) (369)
Net change in unrealized appreciation from investments 353 834
- -----------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments 350 465
- -----------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $786 $ 1,370
- -----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
11
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED INVESTMENT OHIO
TERM GOVERNMENT INTERMEDIATE QUALITY MUNICIPAL
INCOME MORTGAGE INCOME BOND BOND
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 3,810 $ 5,718 $ 4,461 $ 3,544 $ 1,533
- ------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 287 368 448 344 167
Administration fees 86 110 90 69 42
Accounting fees 38 48 39 33 20
Legal and audit fees 9 16 12 9 5
Organization fees 7 7
Trustees' fees and expenses 3 6 4 3 2
Transfer agent fees 10 11 10 10 9
Registration and filing fees 10 9 22 20 7
Printing fees 10 11 11 10 10
Other 2 3 3 1
Expenses voluntarily reduced (11) (12) (161) (122) (85)
- ------------------------------------------------------------------------------------------------------------
Total Expenses 444 570 485 384 177
- ------------------------------------------------------------------------------------------------------------
Net Investment Income 3,366 5,148 3,976 3,160 1,356
- ------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized losses from investment transactions (491) (1,978) (1,415) (1,048) (511)
Change in unrealized appreciation from investments 2,323 6,541 3,611 3,845 3,179
- ------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments 1,832 4,563 2,196 2,797 2,668
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 5,198 $ 9,711 $ 6,172 $ 5,957 $ 4,024
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
12
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK DIVERSIFIED
BALANCED INDEX VALUE STOCK GROWTH
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 2,504 $ 301 $ 952 $ 491 $ 30
Dividend income 1,262 1,141 3,381 4,004 522
- ----------------------------------------------------------------------------------------------------------------
Total Income 3,766 1,442 4,333 4,495 552
- ----------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 722 283 1,142 906 259
Administration fees 108 71 171 209 39
Accounting fees 48 28 70 85 17
Legal and audit fees 13 9 19 24 6
Organization fees 5 3 8 3
Trustees' fees and expenses 5 3 7 9 2
Transfer agent fees 15 10 12 15 9
Registration and filing fees 24 16 30 7 15
Printing fees 12 11 13 14 9
Other 2 1 4 3
Expenses voluntarily reduced (294) (161) (434) (59) (93)
- ----------------------------------------------------------------------------------------------------------------
Total Expenses 660 274 1,042 1,213 266
- ----------------------------------------------------------------------------------------------------------------
Net Investment Income 3,106 1,168 3,291 3,282 286
- ----------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND
FOREIGN CURRENCY:
Net realized gains from investment transactions 203 257 2,038 9,257 225
Net realized gains from foreign currency transactions 514
Net change in unrealized appreciation from investments 9,034 8,129 18,512 18,099 1,924
Change in unrealized depreciation from translation of assets
and liabilities in foreign currencies (5)
- ----------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments and foreign
currency 9,746 8,366 20,550 27,356 2,149
- ----------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $12,852 $9,554 $23,841 $30,638 $2,435
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
13
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO
SPECIAL SPECIAL REGIONAL INTERNATIONAL
VALUE GROWTH STOCK GROWTH
FUND FUND FUND FUND
(000) (000) (000) (000)
------- ------- ------ -------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 240 $ 41 $ 49 $ 62
Dividend income 1,431 104 352 421
Foreign tax withholding (48)
- ------------------------------------------------------------------------------------------------------------
Total Income 1,671 145 401 435
- ------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 647 103 123 436
Administration fees 97 16 25 60
Custodian and accounting fees 41 8 12 120
Legal and audit fees 12 3 4 7
Organization fees 4 1
Trustees' fees and expenses 4 1 1 3
Transfer agent fees 10 8 18 11
Registration and filing fees 19 10 7 13
Printing fees 11 9 10 10
Other 2 1
Expenses voluntarily reduced (193) (40) (7) (61)
- ------------------------------------------------------------------------------------------------------------
Total Expenses 654 120 193 599
- ------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 1,017 25 208 (164)
- ------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gains (losses) from investment transactions 2,555 (3,750) 840 (2,264)
Net realized loss from foreign currency transactions 1,440
Net change in unrealized appreciation (depreciation) from
investments 8,232 4,497 1,267 (3,388)
Change in unrealized appreciation from translation of assets and
liabilities in foreign currencies 42
- ------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains (losses) from investments and
foreign currency 10,787 747 2,107 (4,170)
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $11,804 $ 772 $2,315 $(4,334)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
14
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT TAX-FREE MONEY
OBLIGATIONS FUND PRIME OBLIGATIONS FUND MARKET FUND
------------------------ -------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
YEAR
ENDED
YEAR ENDED YEAR ENDED OCTOBER
OCTOBER 31, OCTOBER 31, 31,
1994 1994 1994
(000) (000) (000)
----------- ----------- ---------
SIX SIX MONTHS SIX
MONTHS ENDED MONTHS
ENDED APRIL 30, ENDED
APRIL 30, 1995 APRIL 30,
1995 (000) 1995
(000) ----------- (000)
--------- ---------
(UNAUDITED)
(UNAUDITED) (UNAUDITED)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 12,063 $ 14,747 $ 16,169 $ 26,637 $ 3,689 $ 4,538
Net realized gains (losses) from
investment transactions 54 (167) 1 (2,506) 7
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
operations 12,117 14,580 16,170 24,131 3,689 4,545
- -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (12,063) (14,747) (16,169) (26,637) (3,689) (4,538)
From net realized gains on
investments (81) (7)
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (12,063) (14,828) (16,169) (26,637) (3,689) (4,545)
- -------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 729,038 935,449 1,021,057 2,109,682 256,968 534,878
Dividends reinvested 1,416 1,179 7,281 8,381 350 355
Cost of shares redeemed (618,413) (1,040,066) (1,380,642) (2,055,784) (246,273) (526,023)
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions (112,041) (103,438) (352,304) 62,279 11,045 9,210
- -------------------------------------------------------------------------------------------------------------------------
Contribution by KeyCorp 2,506
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets (112,095) (103,686) 352,303 62,279 11,045 9,210
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 412,048 515,734 782,303 720,024 198,561 189,351
- -------------------------------------------------------------------------------------------------------------------------
End of period $ 524,143 $ 412,048 $ 430,000 $ 782,303 $ 209,606 $ 198,561
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 729,038 935,449 1,021,057 2,109,682 256,968 534,878
Dividends reinvested 1,416 1,179 7,281 8,381 350 355
Redeemed (618,413) (1,040,066) (1,380,642) (2,055,784) (246,273) (526,023)
- -------------------------------------------------------------------------------------------------------------------------
Change in shares 112,041 (103,438) (352,304) 62,279 11,045 9,210
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
15
<PAGE>
THE VICTORY FUNDS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK TAX-FREE FUND FOR INCOME
PORTFOLIO PORTFOLIO
------------------------ ------------------------
JANUARY 1, FEBRUARY
1994 TO 1, 1994 TO
OCTOBER OCTOBER
31, 1994 31, 1994
(000) (000)
SIX MONTHS ---------- SIX MONTHS ----------
ENDED ENDED
APRIL 30, APRIL 30,
1995 1995
(000) (000)
---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
OPERATIONS
Net investment income $ 436 $ 1,033 $ 905 $ 1,967
Net realized gains (losses) from investment
transactions (3) 229 (369) (654)
Net change in unrealized gain (loss) from
investments 353 (2,384) 834 (2,075)
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 786 (1,122) 1,370 (762)
- ------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders from net investment income
-- class A (421) (1,033) (946) (1,911)
Distributions in excess of net investment income
class A (49)
Dividends to shareholders from net investment income
-- class B (9)
Dividends to shareholders from net realized gains
class A (225)
Dividends to shareholders from net realized gains
class B (5)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from distributions to
shareholders (660) (1,033) (946) (1,960)
- ------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS(1)
Proceeds from shares issued 2,735 6,305 2,077 3,073
Dividends reinvested 234 455 185 525
Shares redeemed (4,127) (15,295) (7,331) (18,150)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from capital transactions (1,158) (8,535) (5,069) (14,552)
- ------------------------------------------------------------------------------------------------------------
Change in net assets (1,032) (10,690) (4,645) (17,274)
- ------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 17,840 28,530 29,358 46,632
- ------------------------------------------------------------------------------------------------------------
End of period $ 16,808 $ 17,840 $ 24,713 $ 29,358
- ------------------------------------------------------------------------------------------------------------
(1) SHARE TRANSACTIONS (IN DOLLARS):
Class A:
Issued 1,941 6,305 2,077 3,073
Distributions reinvested 221 455 185 525
Redeemed (4,127) (15,295) (7,331) (18,150)
- ------------------------------------------------------------------------------------------------------------
Net decrease (1,965) (8,535) (5,069) (14,552)
- ------------------------------------------------------------------------------------------------------------
Class B:
Issued 794
Distributions reinvested 13
Redeemed
- ------------------------------------------------------------------------------------------------------------
Net increase 807
- ------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS (IN SHARES):
Class A:
Issued 156 482 218 312
Distributions reinvested 18 35 20 54
Redeemed (337) (1,185) (779) (1,853)
- ------------------------------------------------------------------------------------------------------------
Net decrease in shares (163) (668) (541) (1,487)
- ------------------------------------------------------------------------------------------------------------
Class B:
Issued 67
Distributions reinvested
Redeemed
- ------------------------------------------------------------------------------------------------------------
Net increase in shares 67
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
16
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED TERM INCOME GOVERNMENT MORTGAGE INTERMEDIATE INCOME
FUND
FUND FUND ---------------------
-------------------- -------------------- DECEMBER
YEAR YEAR 10,
ENDED ENDED 1993 TO
OCTOBER OCTOBER OCTOBER
31, 31, 31,
1994 1994 1994 (A)
(000) (000) (000)
SIX -------- SIX -------- SIX --------
MONTHS MONTHS MONTHS
ENDED ENDED ENDED
APRIL APRIL APRIL
30, 30, 30,
1995 1995 1995
(000) (000) (000)
-------- -------- --------
(UNAUDITED (UNAUDITED (UNAUDITED
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 3,366 $ 4,521 $ 5,148 $ 10,593 $ 3,976 $ 5,951
Net realized gains (losses)
from investment
transactions (491) (671) (1,978) 615 (1,415) (2,498)
Net change in unrealized
appreciation (depreciation)
from investments 2,323 (4,406) 6,541 (16,536) 3,611 (6,218)
- ----------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 5,198 (556) 9,711 (5,328) 6,172 (2,765)
- ----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (3,314) (4,506) (5,273) (10,495) (4,036) (5,724)
From net realized gains from
investments (357) (1,233) (386)
- ----------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (3,314) (4,863) (6,506) (10,881) (4,036) (5,724)
- ----------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 102,064 34,263 25,202 119,347 34,623 159,988
Dividends reinvested 3,313 4,378 6,502 9,714 4,036 5,511
Cost of shares redeemed (18,299) (35,843) (39,642) (97,422) (20,493) (44,087)
- ----------------------------------------------------------------------------------------------------------
Change in net assets from
capital transactions 87,078 2,798 (7,938) 31,639 18,166 121,412
- ----------------------------------------------------------------------------------------------------------
Change in net assets 88,962 (2,621) (4,733) 15,430 20,302 112,923
- ----------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 79,150 81,771 148,168 132,738 112,923
- ----------------------------------------------------------------------------------------------------------
End of period $168,112 $ 79,150 $143,435 $148,168 $133,225 $112,923
- ----------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 10,367 3,336 2,439 10,724 3,739 16,205
Dividends reinvested 336 433 630 906 436 579
Redeemed (1,858) (3,529) (3,833) (8,967) (2,220) (4,575)
- ----------------------------------------------------------------------------------------------------------
Change in shares 8,845 240 (764) 2,663 1,955 12,209
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
17
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT QUALITY BOND
FUND BALANCED FUND
--------------------------- OHIO MUNICIPAL BOND FUND ---------------------------
DECEMBER 10, ----------------------------- DECEMBER 10,
1993 TO YEAR ENDED 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 ENDED 1994 (A)
(000) APRIL 30, (000) APRIL 30, (000)
------------ 1995 -------------- 1995 ------------
(000) (000)
---------- ----------
SIX MONTHS (UNAUDITED) (UNAUDITED)
ENDED
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 3,160 $ 5,712 $ 1,356 $ 2,580 $ 3,106 $ 3,706
Net realized gains (losses)
from investment transactions (1,048) (4,019) (511) (399) 203 (2,116)
Net realized gains from foreign
currency transactions 514
Net change in unrealized
appreciation (depreciation)
from investments 3,845 (5,867) 3,179 (4,662) 9,034 (1,961)
Change in unrealized
depreciation from translation
of assets and liabilities in
foreign currencies (5)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 5,957 (4,174) 4,024 (2,481) 12,852 (371)
- ----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (3,235) (5,516) (1,385) (2,557) (3,678) (3,545)
From net realized gains from
investments (1,169)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (3,235) (5,516) (1,385) (3,726) (3,678) (3,545)
- ----------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 18,694 139,893 8,944 28,815 66,281 176,193
Dividends reinvested 3,234 5,495 1,384 2,767 3,663 3,529
Cost of shares redeemed (27,133) (41,013) (12,534) (18,347) (47,641) (48,521)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions (5,205) 104,375 (2,206) 13,235 22,303 131,201
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets (2,483) 94,685 433 7,028 31,477 127,285
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 94,685 57,704 50,676 $127,285
- ----------------------------------------------------------------------------------------------------------------------------------
End of period $ 92,202 $ 94,685 $ 58,137 $ 57,704 $158,762 $127,285
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 2,032 14,142 845 2,625 6,905 17,854
Dividends reinvested 352 582 132 255 375 366
Redeemed (2,958) (4,323) (1,206) (1,693) (4,964) (4,987)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in shares (574) 10,401 (229) 1,187 2,316 13,233
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
18
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK INDEX FUND VALUE FUND DIVERSIFIED STOCK FUND
--------------------------- --------------------------- -------------------------
DECEMBER 3, DECEMBER 3, YEAR ENDED
1993 TO 1993 TO OCTOBER
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS 31,
1994 (A) ENDED 1994 (A) ENDED 1994
(000) APRIL 30, (000) APRIL 30, (000)
------------ 1995 ------------ 1995 ----------
(000) (000)
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 1,168 $ 1,515 $ 3,291 $ 3,602 $ 3,282 $ 5,177
Net realized gains (losses)
from investment transactions 257 (6) 2,038 3,124 9,257 30,135
Net change in unrealized
appreciation (depreciation)
from investments 8,129 1,556 18,512 (1,040) 18,099 (18,237)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 9,554 3,065 23,841 5,686 30,638 17,075
- ------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (1,173) (1,331) (3,198) (3,289) (3,481) (4,738)
From net realized gains from
investments (3,146) (29,668) (26,397)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (1,173) (1,331) (6,344) (3,289) (33,149) (31,135)
- ------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 30,344 114,187 120,235 229,389 64,652 94,732
Dividends reinvested 1,173 1,321 6,344 3,283 33,132 22,231
Cost of shares redeemed (23,750) (27,556) (70,430) (46,885) (36,907) (97,081)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions 7,767 87,952 56,149 185,787 60,877 19,882
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets 16,148 89,686 73,646 188,184 58,366 5,822
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 89,686 188,184 263,227 257,405
- ------------------------------------------------------------------------------------------------------------------------------
End of period $105,834 $ 89,686 $261,830 $188,184 $321,593 $263,227
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 2,981 11,441 11,942 22,949 5,494 7,718
Dividends reinvested 114 135 639 336 2,997 1,830
Redeemed (2,356) (2,770) (6,813) (4,707) (3,199) (8,003)
- ------------------------------------------------------------------------------------------------------------------------------
Change in shares 739 8,806 5,768 18,578 5,292 1,545
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
19
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND SPECIAL VALUE FUND SPECIAL GROWTH FUND
-------------------------- -------------------------- --------------------------
DECEMBER 3, DECEMBER 3, DECEMBER 3,
1993 TO 1993 TO 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 (A) ENDED 1994 (A)
(000) APRIL 30, (000) APRIL 30, (000)
----------- 1995 ----------- 1995 -----------
(000) (000)
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 286 $ 636 $ 1,017 $ 1,020 $ 25 $ 60
Net realized gains (losses) from
investment transactions 225 298 2,555 588 (3,750) (325)
Net change in unrealized appreciation
(depreciation) from investments 1,924 1,364 8,232 3,148 4,497 (3,135)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
operations 2,435 2,298 11,804 4,756 772 (3,400)
- -----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (328) (586) (955) (927) (29) (59)
From net realized gains from
investments (298) (588)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from distributions
to shareholders (626) (586) (1,543) (927) (29) (59)
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 7,230 92,029 46,521 137,158 3,811 44,544
Dividends reinvested 626 584 1,542 924 29 56
Cost of shares redeemed (32,725) (27,404) (23,333) (23,311) (9,790) (16,548)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions (24,869) 65,209 24,730 114,771 (5,950) 28,052
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets (23,060) 66,921 34,991 118,600 (5,207) 24,593
NET ASSETS:
Beginning of period 66,921 118,600 24,593
- -----------------------------------------------------------------------------------------------------------------------------------
End of period $ 43,861 $ 66,921 $153,591 $ 118,600 $ 19,386 $ 24,593
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 712 9,240 4,410 13,472 441 4,515
Dividends reinvested 63 60 148 91 3 6
Redeemed (3,262) (2,759) (2,217) (2,258) (1,134) (1,758)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in shares (2,487) 6,541 2,341 11,305 (690) 2,763
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
20
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO REGIONAL STOCK INTERNATIONAL GROWTH
FUND FUND
----------------------- -----------------------
YEAR ENDED YEAR ENDED
OCTOBER OCTOBER
31, 31,
1994 SIX MONTHS 1994
(000) ENDED (000)
---------- APRIL 30, ----------
1995
(000)
SIX MONTHS ----------
ENDED (UNAUDITED)
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 208 $ 438 $ (164) $ (136)
Net realized gains (losses) from investment
transactions 840 1,699 (2,264) 4,064
Net realized losses from foreign currency transactions 1,440 (152)
Net change in unrealized appreciation (depreciation)
from investments 1,267 (867) (3,388) 2,879
Change in unrealized appreciation from translation of
assets and liabilities in foreign currencies 42 15
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 2,315 1,270 (4,334) 6,670
- ------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (221) (409)
From net realized gains from investments (1,699) (1,293) (3,925)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from distributions to shareholders (1,920) (1,702) (3,925)
- ------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 4,152 16,543 23,300 53,804
Dividends reinvested 1,917 1,560 3,922
Cost of shares redeemed (5,246) (18,632) (13,740) (9,796)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from capital transactions 823 (529) 13,482 44,008
- ------------------------------------------------------------------------------------------------------------
Change in net assets 1,218 (961) 5,223 50,678
- ------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 33,965 34,926 81,307 30,629
- ------------------------------------------------------------------------------------------------------------
End of period $ 35,183 $ 33,965 $ 86,530 $ 81,307
- ------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 297 1,143 2,012 4,323
Dividends reinvested 144 109 337
Redeemed (376) (1,297) (1,187) (784)
- ------------------------------------------------------------------------------------------------------------
Change in shares 65 (45) 1,162 3,539
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
21
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
U.S. GOVERNMENT OBLIGATIONS FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- -------------------------------------------
U.S. TREASURY BILLS (4.7%)
25,000 5.73%, 6/29/95 $ 24,765
- -------------------------------------------------------
TOTAL U.S. TREASURY BILLS 24,765
- -------------------------------------------------------
- -------------------------------------------------------
U.S. TREASURY NOTES (38.8%)
30,000 4.25%, 7/31/95 29,862
150,000 3.875%, 8/31/95 148,923
25,000 3.875%, 9/30/95 24,786
- -------------------------------------------------------
TOTAL U.S. TREASURY NOTES 203,571
- -------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE 228,336
- -------------------------------------------------------
- -------------------------------------------------------
REPURCHASE AGREEMENTS (56.6%)
15,000 Barclays Bank
5.90%, 5/1/95
(Collateralized by 14,778
U.S. Treasury Notes,
7.38%-7.88%, 11/15/97-
4/15/98, market value-
$15,301) 15,000
20,000 Chase Securities
5.92%, 5/1/95
(Collateralized by 20,444
U.S. Treasury Bills,
5/4/95-5/18/95,
market value-$20,401) 20,000
20,000 Dean Witter
5.93%, 5/1/95
(Collateralized by 23,287
various U.S. Treasury
securities, 5/15/95-
2/29/00, 0.00%-7.13%,
market value-$20,401) 20,000
22,998 Donaldson, Lufkin &
Jennerette
5.93%, 5/1/95
(Collateralized by 25,691
various U.S. Treasury
securities, 5/15/95-
11/15/98, 0.00%-5.13%,
market value-$23,458) 22,998
15,000 Goldman Sachs
5.90%, 5/1/95
(Collateralized by 19,050
U.S. Treasury securities,
8/15/98, 0.00% market
value-$15,301) 15,000
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
20,000 Harris Securities
5.95%, 5/1/95
(Collateralized by 20,372
various U.S. Treasury
securities, 6/8/95-
10/15/98, 0.00%-8.75%,
market value-$20,400 $ 20,000
15,000 Lehman Brothers
5.90%, 5/1/95
(Collateralized by 14,455
U.S. Treasury Notes,
8.63%, 8/15/97, market
value-$15,054) 15,000
129,000 NationsBank
5.96%, 5/1/95
(Collateralized by 131,793
various U.S. Treasury
securities, 0.00%-
11.25%, 4/30/95-4/15/00,
market value-$131,585 129,000
20,000 Nomura Securities
5.92%, 5/1/95
(Collateralized by 20,217
U.S. Treasury Notes,
4.63%-7.75%, 2/29/96-
1/31/00, market value-
$20,400) 20,000
20,000 UBS Securities
5.93%, 5/1/95
(Collateralized by 19,630
U.S. Treasury Notes,
7.50%, 12/31/96, market
value-$20,405) 20,000
- -------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 296,998
- -------------------------------------------------------
TOTAL (COST $525,334)(B) $525,334
- -------------------------------------------------------
</TABLE>
(a) Percentages indicated are based on net assets of $524,143.
(b) Cost and value for federal income tax and financial reporting purposes are
the same.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
22
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments
PRIME OBLIGATIONS FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
CERTIFICATES OF DEPOSIT (3.5%)
BANKING (3.5%):
15,000 Canadian Imperial Bank
Commerce
6.45%, 8/7/95 $ 14,999
- ------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT 14,999
- ------------------------------------------------------------
- ----------------------------------------------
COMMERCIAL PAPER (42.1%)
BANKING (2.3%):
10,000 Cogentrix of Richmond
Virginia
6.02%, 5/18/95 9,972
----------
BEVERAGES (4.3%):
3,373 PepsiCo, Inc.
5.95%, 5/17/95 3,364
15,000 PepsiCo, Inc.
6.25%, 8/24/95 15,000
----------
18,364
----------
FINANCIAL SERVICES (20.7%):
5,000 American Express Co.
5.95%, 5/22/95 4,983
15,000 Bankers Trust
6.23%, 7/10/95 14,818
5,000 Broadway Capital Corp.
6.00%, 5/9/95 4,993
11,218 Fleet Funding Corp.
6.02%, 5/10/95 11,201
5,138 Fleet Funding Corp.
6.00%, 5/24/95 5,118
5,000 Ford Motor Credit Corp.
6.00%, 5/8/95 4,994
6,000 Ford Motor Credit Corp.
6.00%, 5/31/95 5,970
15,000 Hanson Finance
6.05%, 6/1/95 14,922
5,000 Transamerica Finance Corp.
5.98%, 5/15/95 4,988
11,050 Retailer Funding Corp.
6.00%, 5/24/95 11,008
6,044 Retailer Funding Corp.
6.00%, 5/31/95 6,014
----------
89,009
----------
INDUSTRIAL GOODS & SERVICES (2.3%):
10,000 Xerox Co.
6.00%, 5/15/95 9,977
----------
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MISCELLANEOUS (3.5%):
15,000 135 Bishopgate Funding
6.02%, 5/19/95 $ 14,955
----------
OFFICE EQUIPMENT & SERVICES (3.5%):
15,000 Canon USA, Inc.
5.98%, 5/12/95 14,973
----------
OIL & GAS EXPLORATION (1.2%):
5,000 British Oil New Zealand Ltd.
Discount
5.95%, 5/15/95 4,988
----------
PRINTING & PUBLISHING (1.2%):
5,000 Reed Publishing
6.05%, 6/27/95 4,952
----------
RECEIVABLE (3.2%):
5,000 Blue Hawk Funding
6.00%, 5/24/95 4,981
5,000 Blue Hawk Funding
5.98%, 5/31/95 4,975
3,840 Blue Hawk Funding
6.02%, 5/9/95 3,835
----------
13,791
- ------------------------------------------------------------
TOTAL COMMERCIAL PAPER 180,981
- ------------------------------------------------------------
- ----------------------------------------------
CORPORATE BONDS (3.3%)
BEVERAGES (0.2%):
1,000 PepsiCo, Inc.
5.63%, 7/1/95 1,000
----------
FINANCIAL SERVICES (1.9%):
8,050 Associates Corp. of N.A.
8.88%, 8/1/95 8,113
----------
MISCELLANEOUS (1.2%):
5,000 Hanson Overseas
5.50%, 1/15/96 4,960
- ------------------------------------------------------------
TOTAL CORPORATE BONDS 14,073
- ------------------------------------------------------------
- ----------------------------------------------
FLOATING RATE NOTES (14.3%)
MASTER DEMAND NOTES (5.1%):
22,000 Lehman Government
Securities
6.20%*, 5/1/95 22,000
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
23
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments -- Continued
PRIME OBLIGATIONS FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
SECURITY BROKER, DEALER (8.1%):
10,000 Goldman Sachs Group
6.03%*, 6/15/95** $ 10,000
10,000 Goldman Sachs Group
6.03%*, 6/16/95** 10,000
10,000 Lehman Brothers Holdings,
Inc.
6.16%*, 7/28/95** 10,000
5,000 Lehman Brothers Holdings,
Inc.
6.42%*, 3/11/96** 5,000
----------
35,000
----------
TAXABLE MUNICIPAL DEMAND NOTES (1.0%):
4,500 Springfield
6.08%*, 12/31/10** 4,500
- ------------------------------------------------------------
TOTAL FLOATING RATE NOTES 61,500
- ------------------------------------------------------------
- ----------------------------------------------
MEDIUM TERM NOTES (5.8%)
FINANCE (3.7%):
1,000 Ford Motor Credit Corp.
9.20%, 5/1/95 1,000
5,000 General Electric Capital
Corp.
6.25%, 5/1/95 5,000
10,000 General Electric Capital
Corp.
4.89%, 5/29/95 9,999
----------
15,999
----------
TOBACCO (2.1%):
9,000 Philip Morris Co.
6.25%, 5/22/95 9,003
- ------------------------------------------------------------
TOTAL MEDIUM TERM NOTES 25,002
- ------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (3.5%)
FEDERAL HOME LOAN BANK
10,000 5.19%, 6/13/95 9,999
5,000 6.60%, 4/25/95 5,000
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 14,999
- ------------------------------------------------------------
- ----------------------------------------------
VARIABLE RATE NOTES (18.8%)
5,034 Adesa Funding Corp.
6.08%*, 1/1/99** 5,034
2,500 Astro Alum
6.15%*, 4/1/05** 2,500
3,500 Baylis Group Partnership
6.30%*, 1/1/10** 3,500
15,000 C-River Maritime Exxon
Shipping
6.09%*, 10/1/01** 15,000
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
3,517 Capital One Funding Corp.
Service
6.08%*, 6/2/08** $ 3,517
2,725 Carelife, Inc.
6.15%*, 8/1/11** 2,725
1,600 Cleveland Steel Container
6.15%*, 12/1/08** 1,600
2,000 Cuyahoga County Ohio
Taxable Economic
Development Revenue
6.51%*, 6/1/22** 2,000
925 Dietz Road Ltd Partnership
6.15%*, 11/1/08** 925
3,000 Dome Corp -- Dome Corp
Project
6.15%*, 8/31/16** 3,000
8,388 Erie Funding
6.25%*, 11/1/16** 8,388
320 Fremont Plastics
6.15%*, 4/1/03** 320
1,500 GMH Enterprises
6.15%*, 7/1/03** 1,500
455 Highland Rd Partners
6.15%*, 10/1/04** 455
975 McKinley Air Transport
6.15%*, 8/1/09** 975
1,000 MCMC Pob LII
6.15%*, 8/1/14** 1,000
1,000 Olen Corp.
6.15%*, 12/1/04** 1,000
1,655 Olen Corp.
6.15%*, 8/1/08** 1,655
1,400 Pellerin Melnor Corp.
6.15%*, 9/1/02** 1,400
5,842 Primex Funding
6.08%*, 2/1/00** 5,842
700 Rivnut Engineered Products
6.15%*, 2/1/01** 700
980 S & SLP Project
6.15%*, 12/1/07** 980
420 Schipper-DJA Properties
6.17%*, 10/1/05** 420
3,060 Schipper Enterprises
6.17%*, 4/1/09** 3,060
1,295 Technisand, Inc.
6.15%*, 11/1/01** 1,295
1,800 Tell-Schipper Properties,
Inc.
6.17%*, 10/1/03** 1,800
8,300 Tyler Health Facilities
6.35%*, 11/1/25** 8,300
1,980 Zanetos Partnership Project
6.15%*, 7/1/13** 1,980
- ------------------------------------------------------------
TOTAL VARIABLE RATE NOTES 80,871
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
24
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments -- Continued
PRIME OBLIGATIONS FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
REPURCHASE AGREEMENTS (8.7%)
12,000 Chase Securities
5.92%, 5/2/95
(Collateralized by 12,287
U.S. Treasury Bills,
5/18/95-5/25/95,
market value-$12,244) $ 12,000
13,315 Donaldson-Lufkin Jenrette
5.93%, 5/1/95
(Collateralized by 15,318
various U.S. Treasury
securities, 0.00%-5.13%,
8/15/95-2/15/00,
market value-$13,582) 13,315
12,000 UBS Securities, Inc.
5.93%, 5/2/95
(Collateralized by 11,780
U.S. Treasury Notes,
7.90%, 12/31/96, market
value-$12,245) 12,000
- ------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 37,315
- ------------------------------------------------------------
TOTAL (COST $429,740)(B) $ 429,740
- ----------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $430,000.
(b) Cost and value for federal income tax and financial reporting purposes are
the same.
* Floating Rate Demand Notes are securities with yields that vary with a
designated market index or market rate. These securities are payable on the
date of demand. The rate reflected on the Schedule of Portfolio Investments is
the effective rate at April 30, 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 ON PAGES 73 TO 78.
25
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
TAX-FREE MONEY MARKET FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (98.6%)
ALABAMA (2.1%):
2,530 Ardmore Industrial
Development Revenue,
4.95%*, 6/1/04** $ 2,530
1,800 Montgomery, Alabama BMC,
4.75%*, 12/1/30** 1,800
--------
4,330
--------
ARKANSAS (2.4%):
5,000 University of Arkansas,
4.80%*, 12/1/19** 5,000
--------
CALIFORNIA (6.8%):
5,000 California Housing Finance
GIC, 4.60%, 8/1/27** 5,000
6,000 California School Cash
Reserve, 4.50%, 7/5/95 6,008
3,080 Los Angeles, California
Redevelopment, 8.85%,
7/1/95 3,115
--------
14,123
--------
COLORADO (1.3%):
2,645 Arapahoe County, Capital
Improvement, 4.45%,
8/31/96** 2,645
--------
FLORIDA (8.3%):
4,500 Broward County, Housing
Finance Authority, 4.95%*,
12/1/29** 4,500
9,700 Dade County, Housing Finance
Authority, Highway
Revenue, 4.95%*, 8/1/05** 9,700
490 Florida State Board of
Education, 5.50%, 1/1/96 492
2,500 Hillsborough County,
Ringhaven, 4.75%*,
12/1/11** 2,500
--------
17,192
--------
ILLINOIS (7.5%):
1,700 Illinois Development,
Kindlen, 4.80%*, 5/1/06** 1,700
5,000 Illinois Development, Power
& Light, 4.10%, 5/31/95** 5,000
5,000 Illinois Health Facility,
4.50%*, 11/15/24** 5,000
1,000 Illinois State, 8.13%,
6/1/95 1,023
2,700 Kankakee County, Industrial
Development Revenue,
4.95%*, 12/1/07** 2,700
--------
15,423
--------
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INDIANA (4.5%):
4,000 Indiana Bond Bank, 5.25%,
7/10/95 $ 4,005
1,150 Indianapolis, Indiana
Calderon, 4.95%*, 2/1/99** 1,150
1,995 Scottsburg, Indiana, 5.20%*,
10/1/09** 1,995
1,020 Syracuse, Economic
Development Revenue,
4.80%*, 12/1/05** 1,020
1,220 Wakarusa, Economic
Development Revenue,
4.80%*, 7/1/03** 1,220
--------
9,390
--------
IOWA (5.0%):
4,325 City of Urbandale, 4.25%*,
10/1/15** 4,325
6,000 Iowa Schools, 4.25%, 7/17/95 6,008
--------
10,333
--------
KANSAS (1.8%):
2,300 Fairway, Kansas, 4.25%*,
11/1/14** 2,300
1,500 Wamego Pollution Control
Revenue, 4.10%*, 11/1/14** 1,500
--------
3,800
--------
KENTUCKY (2.4%):
2,475 Boone County, 5.20%*,
12/1/09** 2,475
2,465 Covington, Kentucky, 4.70%*,
4/1/05** 2,465
--------
4,940
--------
MICHIGAN (1.3%):
1,725 Michigan State Strategic,
4.75%*, 4/1/06** 1,725
1,000 Oakland County Economic,
5.80%, 9/1/95 1,012
--------
2,737
--------
MINNESOTA (1.6%):
3,340 St. Cloud, Housing Webway,
4.95%*, 11/1/05** 3,340
--------
MISSOURI (5.3%):
3,600 Kansas City, J.C. Nichols
Project, 4.25%*, 5/1/15** 3,600
2,860 St. Charles County, Cedar
Ridge, 4.75%*, 10/1/07** 2,860
4,600 St. Louis Industrial
Development, Multi Family
Housing Revenue Bond,
Series 86, 5.05%*,
2/1/07** 4,600
--------
11,060
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
26
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
TAX-FREE MONEY MARKET FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
NEBRASKA (2.4%):
4,000 Nebraska Investment Finance
Authority, 4.75%,
7/15/95** $ 4,000
915 Nebraska Investment Finance
Authority, 5.00%, 7/1/15** 915
--------
4,915
--------
NEVADA (1.4%):
1,300 Director State Nevada H2W
Part, 4.95%*, 8/1/14** 1,300
1,600 Director State Nevada No.
Sail, 4.95%*, 8/1/01** 1,600
--------
2,900
--------
NEW YORK (0.8%):
1,700 New York, New York, 5.00%*,
2/1/20** 1,700
--------
NORTH CAROLINA (4.0%):
8,240 Person County, Pollution
Control Revenue, Carolina
Power & Light Project,
4.80%*, 11/1/19** 8,240
--------
OHIO (18.1%):
440 Akron Bath Copley, Ohio
Township Hospital, 4.80%*,
5/1/13** 440
2,000 Berea, Ohio, 4.50%, 10/25/95 2,002
1,500 Cuyahoga County, 4.80%*,
12/1/12** 1,500
2,850 Dublin School District,
5.57%, 12/20/95 2,854
885 Fairfield County, 4.88%,
10/26/95 887
2,550 Fayetteville Perry, Ohio,
4.68%, 4/12/96 2,554
2,500 Franklin County Hospital,
4.70%*, 6/1/16** 2,500
4,380 Franklin County, Wesley
Glen, 4.82%*, 4/1/13** 4,380
2,680 Gallia County, Industrial
Development Revenue,
Scenic Hills Nursing
Center, 4.40%*, 12/15/10** 2,680
3,400 Greene County, Ohio Apple
Valley, 4.30%*, 8/1/09** 3,400
3,000 Highland Heights, 5.65%,
12/28/95 3,008
3,800 Kings School District,
5.45%, 6/21/95 3,803
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
4,000 Lakewood, Ohio, 3.72%,
5/11/95 $ 4,000
2,495 Student Loan Funding Corp.,
Cincinnati, Ohio, Student
Loan Revenue, 4.60%*,
12/29/98** 2,495
790 Summit County, Ohio, Texler
Project, 4.40%, 5/1/09** 790
--------
37,293
--------
PENNSYLVANIA (2.7%):
3,100 Sayre, Health Care Facility,
4.75%*, 12/1/20** 3,100
2,450 Williamsport, Area School
District, 3.89%, 6/30/95 2,451
--------
5,551
--------
SOUTH CAROLINA (1.2%):
2,500 Job Economic Development
Revenue, 4.95%*, 12/1/99** 2,500
--------
TENNESSEE (3.0%):
6,200 Hawkins County, Kingston,
5.00%*, 8/1/09** 6,200
--------
TEXAS (3.6%):
4,140 Harris County, 4.95%*,
10/1/16** 4,140
2,240 Texas A&M University, 8.50%,
7/1/95 2,255
950 Texas A&M University, 9.00%,
7/1/95 957
--------
7,352
--------
UTAH (0.3%):
500 Intermountain Power Agency,
9.90%, 7/1/95 517
--------
VIRGINIA (1.5%):
3,000 State Housing Development,
3.90%, 5/10/95 3,000
--------
WASHINGTON (0.7%):
500 Everett Water & Sewer,
8.20%, 7/1/95 503
1,000 Pierce County, 4.55%,
11/1/04** 1,000
--------
1,503
--------
WISCONSIN (8.6%):
1,200 Appleton, Pensor, 4.95%*,
8/1/01** 1,200
1,525 Berlin Wenninger, 4.95%*,
4/1/07** 1,525
4,000 Evansville, Wisconsin,
4.95%*, 12/1/08** 4,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
27
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
TAX-FREE MONEY MARKET FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
4,000 Kenosha Metalmen, 4.95%*,
9/1/14** $ 4,000
1,000 Milwaukee, Wisconsin, 5.25%,
9/1/95 1,003
1,400 Oshkosh, Schloesser, 4.95%*,
3/1/02** 1,400
2,800 Plymouth, Industrial
Development Revenue,
4.95%*, 8/1/04** 2,800
1,800 Prairie Du Chien, Wisconsin,
4.80%*, 6/1/02** 1,800
--------
17,728
- ----------------------------------------------------------
TOTAL MUNICIPAL BONDS 203,712
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (2.1%)
4,318 Federated #15 Tax-Free Money
Market Fund 4,318
1 Fidelity Ohio Tax Free Fund 1
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 4,319
- ----------------------------------------------------------
TOTAL (COST $208,031)(B) $208,031
- ---------------------------------------------------------
</TABLE>
- ------------
(a) Percentages indicated are based on net assets of $206,606.
(b) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities collateralized by bank letters of credit or other
bank credit 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 Portfolio Investments is the rate in
effect at April 30, 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 ON PAGES 73 TO 78.
28
<PAGE>
Schedule of Portfolio Investments
THE VICTORY FUNDS April 30, 1995
NEW YORK TAX-FREE PORTFOLIO (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (94.5%)
250 Metropolitan Transportation
Authority, New York,
Revenue Bond, Series I,
AMBAC, 7.00%, 7/1/09 $ 282
1,200 Metropolitan Transportation
Authority, New York,
Service Contract, Refunding
Revenue Bond, Series K,
AMBAC, 7.50%, 7/1/17 1,318
250 Nassau County, New York,
Industrial Development
Agency, Civic Facilities
Revenue Bond, Hofstra
University Project, AMBAC,
6.75%, 8/01/11 263
700 New York City, New York, City
Housing Development,
Refunding Revenue Bond,
Multi-Unit Mortgage, Series
A, FHA, 7.30%, 6/1/10 741
335 New York City, New York, City
Housing Development,
Revenue Bond, Series 1,
MBIA, 7.38%, 4/1/17 352
675 New York City, New York, City
Housing Development,
Refunding Revenue Bond,
Multi-Unit Mortgage, Series
A, FHA, 7.35%, 6/1/19 717
200 New York City, New York,
Industrial Development
Agency, Civic Facilities
Revenue Bonds, USTA
National Tennis Center,
6.38%, 11/15/14 205
220 New York City, New York, City
Transportation Authority,
Revenue Bond, Livingston
Plaza Project, FSA, 7.50%,
1/1/20 247
680 New York City, New York,
Cultural Resources, Revenue
Bond, AMBAC, 6.63%, 1/1/11 711
300 New York City, New York,
General Obligation Bond,
Series B, FSA, 7.00%,
10/1/18 312
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
$ 350 New York City, New York,
General Obligation Bond,
Series C, FGIC, 7.00%,
2/1/12 $ 360
750 New York City, New York,
Municipal Water Finance
Authority, Water & Sewer
System Revenue Bonds,
Series A, FGIC, 6.75%,
6/15/16 780
700 New York State Dormitory
Authority Revenue Bonds,
City University, Series 2,
MBIA 6.75%, 7/01/24 738
750 New York State Dormitory
Authority, Revenue Bonds,
Ithaca College, MBIA,
6.50%, 7/1/10 782
400 New York State Dormitory
Authority, Revenue Bonds,
State University
Educational System, Series
B, AMBAC, 6.00%, 5/15/17 395
225 New York State Dormitory
Authority, Revenue Bond,
Judicial Facilities Leases,
Series B, MBIA, 7.00%,
4/15/16 239
370 New York State General
Obligation Bonds, AMBAC,
6.75%, 8/1/18 392
325 New York State General
Obligation Bonds, AMBAC,
6.75%, 8/1/19 343
500 New York State Medical Care
Facilities Finance Agency,
Unrefunded/Revenue Bond,
MBIA, 7.38%, 8/15/19 543
200 New York State Medical Care
Facilities Finance Agency,
Montefiore Medical Center,
AMBAC, 5.75%, 2/15/25 188
815 New York State Medical Care
Facilities Finance Agency,
Refunding Revenue Bond,
North Shore University
Hospital, MBIA, 7.20%,
11/1/20 879
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
29
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY FUNDS April 30, 1995
NEW YORK TAX-FREE PORTFOLIO (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
550 New York State Medical Care
Facilities Finance Agency,
Revenue Bond, Series A,
BIG, 7.10%, 2/15/27 $ 575
340 New York State Medical Care
Facilities Finance Agency,
Revenue Bond, St. Luke's,
Series B, MBIA, 7.45%,
2/15/29 382
550 New York State TWY Authority
General Revenue Bonds,
Series C, FGIC, 6.00%,
1/01/25 539
1,000 New York State Urban
Development Correctional
Facilities, Revenue Bond,
Series D, AMBAC, 7.50%,
1/1/12 1,088
400 New York State Urban
Development Correctional
Facilities, Series 1, FSA,
7.50%, 1/1/20 449
900 Triborough Bridge & Tunnel
Authority, Revenue Bond,
Series T, MBIA, 7.00%,
1/1/20 1,002
1,000 Triborough Bridge & Tunnel
Authority, Special
Obligation Refunding
Revenue Bond, Series B,
AMBAC, 6.88%, 1/1/15 1,061
- ---------------------------------------------------------
TOTAL MUNICIPAL BONDS $15,883
- ---------------------------------------------------------
- ---------------------------------------------------------
INVESTMENT COMPANIES (3.1%)
527 Municipal Fund for New York $ 527
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 527
- ---------------------------------------------------------
TOTAL (COST $15,485)(b) $16,410
- ---------------------------------------------------------
</TABLE>
- ------------
(a) Percentages indicated are based on net assets of $16,808.
(b) 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 $ 925
Unrealized depreciation
-------
Net unrealized appreciation $ 925
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
30
<PAGE>
Schedule of Portfolio Investments
THE VICTORY FUNDS April 30, 1995
FUND FOR INCOME (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
U.S. TREASURY OBLIGATION (1.2%)
U.S. TREASURY STRIP
2,000 zero%, 8/15/20 $ 296
- ---------------------------------------------------------
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (40.3%)
1,084 Bear Stearns Mortgage Capital
Corp., Series 1991-A/B1,
9.40%, 6/25/21 1,084
2,220 Bear Stearns Secured
Investors Trust, Series
1991-2/H, 7.50%, 9/20/20 2,151
104 Drexel, Burnham & Lambert
Trust, Series U/1, 6.30%,
8/1/17 107
1,000 General Electric Capital
Mortgage, Series 93-4f,
7.00%, 3/25/08 896
1,985 Housing Securities, Inc.,
Series 1993-B/B4M, 7.25%,
4/25/08 1,878
1,000 Kidder, Peabody Acceptance
Corp., Series 1993-C1/A3,
6.80%, 9/1/06 927
153 Merrill Lynch Trust, Series
27/D, 8.90%, 10/20/15 155
1,366 Prudential Home Mortgage,
Series 1992-42/M, 7.00%,
1/25/08 1,291
1,500 Resolution Trust Corp.,
Series 1992-2/B4, 8.20%,
11/25/21 1,476
- ---------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 9,965
- ---------------------------------------------------------
- ---------------------------------------------------------
U.S. GOVERNMENT AGENCIES (41.7%)
FEDERAL HOME LOAN MORTGAGE CORPORATION:
335 8.85%, 4/15/20 338
115 9.30%, 8/15/15 117
1,337 9.50%, 8/1/19-12/1/22 1,389
237 10.00%, 2/1/17-9/1/19 253
18 12.00%, 10/1/10-7/1/14 21
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION:
1,304 8.00%, 11/25/20 $ 1,221
1,683 8.50%, 8/1/24-1/13/25 1,712
25 9.50%, 1/1/19 28
154 10.00%, 5/1/13-2/1/18 172
10 10.50%, 1/1/18 11
55 12.00%, 8/1/13-4/1/15 61
36 13.00%, 12/1/12 41
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION:
2,272 9.50%, 8/15/17-10/15/19 2,390
2,115 10.00%, 3/15/16-6/15/21 2,289
97 10.25%, 3/15/19-6/15/19 103
82 10.50%, 2/15/16 90
66 11.00%, 9/20/14 74
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 10,310
- ---------------------------------------------------------
- ---------------------------------------------------------
REAL ESTATE MORTGAGE INVESTMENT
CONDUITS (12.6%)
1,000 Federal National Mortgage
Association, Series 1991-
13/C, 8.25%, 3/25/04 1,017
76 Federal National Mortgage
Association, Series G-18/6,
8.75%, 7/25/01 76
1,920 Federal National Mortgage
Association, Series
1988-4/Z, 9.25%, 3/25/18 2,014
- ---------------------------------------------------------
TOTAL REAL ESTATE MORTGAGE INVESTMENT
CONDUITS 3,107
- ---------------------------------------------------------
- ---------------------------------------------------------
REPURCHASE AGREEMENT (4.1%)
1,003 Donaldson, Lufkin & Jenrette
Securities Corp., 5.93%,
dated 4/28/95, due 5/1/95
(Collateralized by various
U.S. Treasury securities) 1,003
- ---------------------------------------------------------
TOTAL REPURCHASE AGREEMENT 1,003
- ---------------------------------------------------------
TOTAL (COST $24,172)(B) $ 24,681
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $24,713.
(b) 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 $ 842
Unrealized depreciation (333)
--------
Net unrealized appreciation $ 509
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
31
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
LIMITED TERM INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
ASSET BACKED SECURITIES (1.8%)
1,000 American Express Co., 6.05%,
7/15/97 $ 978
1,000 Capital Auto Receivables
Trust, 5.35%, 2/15/98 989
955 Capital Auto Receivables
Trust, 4.90%, 2/17/98 952
201 GMAC 1993 A Grantor Trust,
4.15%, 3/15/98 198
- ----------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 3,117
- ----------------------------------------------------------
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (8.6%)
FEDERAL HOME LOAN MORTGAGE CORP.:
1,540 7.00%, 7/15/98 1,535
2,000 5.50%, 10/15/02 1,933
2,000 5.50%, 11/15/03 1,924
482 8.40%, 1/15/05 487
937 6.00%, 2/15/13 933
258 8.00%, 1/15/18 258
1,300 8.50%, 9/15/19 1,316
FEDERAL NATIONAL MORTGAGE ASSOC.:
2,000 6.00%, 10/25/03 1,965
1,000 8.00%, 3/25/04 1,007
1,522 5.75%, 6/25/06 1,471
849 7.00%, 2/25/18 844
883 7.50%, 7/25/18 879
--------
14,552
--------
- ---------------------------------------------------------
CORPORATE BONDS (18.5%)
AUTOMOTIVE (0.3%):
500 Ford Motor, 7.88%, 10/15/96 506
--------
BANKING & FINANCIAL SERVICES (0.3%):
500 Bankers Trust, 7.25%, 11/1/96 502
--------
BROKERAGE SERVICES (2.0%):
2,000 Lehman Brothers, 5.75%,
11/15/98 1,858
1,500 Lehman Brothers Holding,
5.50%, 6/15/96 1,474
--------
3,332
--------
BUSINESS EQUIPMENT (1.3%):
2,175 International Business
Machines Corp., 6.38%,
11/1/97 2,145
--------
CHEMICALS (0.6%):
1,000 Dow Capital, 5.75%, 9/15/97 972
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
CONSUMER GOODS & SERVICES (0.6%):
1,000 PepsiCo, Inc., 5.63%, 7/1/95 $ 1,000
--------
FINANCIAL SERVICES (6.5%):
2,000 American General Corp.,
6.88%, 7/1/99 1,957
1,000 Associates Corp.,6.88%,
1/15/97 1,000
1,500 Associates Corp.,7.25%,
9/1/99 1,492
3,000 Ford Motor Credit Corp.,
7.13%, 12/1/97 3,004
1,000 ITT Finance, 7.38%, 10/15/95 1,005
2,000 Norwest Corp., 7.75%,
12/31/96 2,030
500 Norwest Financial, 7.10%,
11/15/96 502
--------
10,990
--------
FOOD PRODUCTS (0.4%):
775 H.J. Heinz Co., 5.50%,
9/15/97 756
--------
GOVERNMENTS (FOREIGN) (0.6%):
1,000 Province of Ontario Global
Bonds, 5.70%, 10/1/97 973
--------
INDUSTRIAL GOODS & SERVICES (1.2%):
2,000 Burlington Resources, 7.15%,
5/1/99 1,985
--------
INSURANCE (2.1%):
500 International Lease Finance
Corp., 6.38%, 11/1/96 496
2,000 International Lease Finance
Corp., 8.35%, 10/1/98 2,063
1,000 Transamerica Finance, 5.40%,
9/1/95 997
--------
3,556
--------
POLLUTION CONTROL SERVICES (1.5%):
500 Waste Management, 6.38%,
7/1/97 493
2,000 WMX Technologies, 7.13%,
3/22/97 2,005
--------
2,498
--------
UTILITIES -- ELECTRIC & GAS (1.1%):
1,000 Northern Illinois Gas, 5.50%,
2/1/97 976
1,000 Northern States Power, 5.50%,
2/1/99 944
--------
1,920
- ----------------------------------------------------------
TOTAL CORPORATE BONDS 31,135
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 73 TO 78.
32
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
LIMITED TERM INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
U.S. GOVERNMENT AGENCIES (1.7%)
FEDERAL NATIONAL MORTGAGE ASSOC.:
3,000 5.23%, 11/25/98 $ 2,826
- ----------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 2,826
- ----------------------------------------------------------
- ---------------------------------------------------------
U.S. TREASURY NOTES (64.8%)
4,000 5.50%, 4/30/96 3,968
1,000 7.63%, 5/31/96 1,013
8,000 6.50%, 9/30/96 8,002
9,000 7.50%, 12/31/96 9,136
18,000 7.50%, 1/31/97 18,273
1,000 6.75%, 2/28/97 1,003
16,000 6.88%, 2/28/97 16,078
10,000 6.63%, 3/31/97 10,005
7,000 6.50%, 8/15/97 6,978
3,000 7.38%, 11/15/97 3,046
1,500 6.00%, 12/31/97 1,475
4,500 5.13%, 4/30/98 4,306
6,500 8.25%, 7/15/98 6,774
7,000 5.25%, 7/31/98 6,689
12,000 7.13%, 2/29/00 12,110
- ----------------------------------------------------------
TOTAL U.S. TREASURY NOTES 108,856
- ----------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
INVESTMENT COMPANIES (3.1%)
5,183 Shearson U.S. Treasury Fund $ 5,183
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 5,183
- ----------------------------------------------------------
TOTAL (COST $166,188)(B) $165,669
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $168,112.
(b) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 1,161
Unrealized depreciation (1,681)
--------
Net unrealized depreciation $ (520)
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 73 TO 78.
33
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
GOVERNMENT MORTGAGE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATIONS (10.6%)
FEDERAL HOME LOAN MORTGAGE CORP.:
5,000 5.50%, 10/15/02 $ 4,832
500 5.00%, 8/15/11 492
FEDERAL NATIONAL MORTGAGE ASSOC.:
10,000 7.50%, 8/25/22 9,809
- ---------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS 15,133
- ---------------------------------------------------------
- ---------------------------------------------------------
U.S. GOVERNMENT
AGENCIES (86.8%)
FEDERAL HOME LOAN MORTGAGE CORP.:
5,927 8.00%, 1/1/00 5,922
209 9.50%, 8/1/21 218
3,128 5.99%, 12/1/23 3,136
19,787 7.50%, 4/1/24 19,351
FEDERAL NATIONAL MORTGAGE ASSOC.:
1,395 8.00%, 5/1/17 1,394
2,322 9.50%, 6/1/22 2,420
9,768 6.50%, 4/1/24 9,050
3,888 8.50%, 8/1/24 3,952
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
105 8.50%, 6/15/16 107
252 8.50%, 7/15/16 257
109 9.00%, 9/15/16 113
181 8.50%, 10/15/16 185
108 9.50%, 11/15/16 114
726 8.50%, 1/15/17 740
578 8.50%, 2/15/17 589
233 8.50%, 4/15/17 238
200 8.50%, 5/15/17 204
473 8.50%, 6/15/17 483
2,093 9.50%, 11/15/17 2,195
113 10.00%, 1/15/18 121
517 9.00%, 11/15/18 536
423 9.50%, 1/15/19 444
317 10.50%, 8/15/19 344
469 8.50%, 12/15/19 478
45 8.50%, 2/15/20 46
1,426 9.50%, 5/15/20 1,496
3,278 9.75%, 1/15/21 3,504
1,551 9.00%, 3/15/21 1,606
121 8.50%, 5/15/21 124
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
1,185 9.00%, 5/15/21 $ 1,227
311 8.00%, 6/15/21 311
1,332 9.00%, 6/15/21 1,379
2,307 9.50%, 6/15/21 2,422
13,249 8.00%, 5/15/22 13,257
4,043 8.00%, 10/15/22 4,046
3,088 9.00%, 2/15/23 3,202
2,870 8.50%, 3/15/23 2,928
803 7.50%, 6/15/23 786
4,591 7.50%, 7/15/23 4,490
1,527 8.00%, 8/15/23 1,528
4,887 7.00%, 9/15/23 4,636
2,833 7.00%, 10/15/23 2,687
4,619 7.00%, 12/15/23 4,384
8,295 7.50%, 1/15/24 8,106
3,933 7.50%, 2/15/24 3,842
4,048 8.50%, 10/15/24 4,134
1,714 8.75%, 8/15/25 1,739
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 124,471
- ---------------------------------------------------------
- ---------------------------------------------
U.S. TREASURY NOTES (1.5%)
1,000 5.50%, 4/30/96 992
1,100 8.75%, 8/15/00 1,189
- ---------------------------------------------------------
TOTAL U.S. TREASURY NOTES 2,181
- ---------------------------------------------------------
- ---------------------------------------------
INVESTMENT COMPANIES (0.8%)
1,177 Shearson U.S. Treasury Fund 1,177
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,177
- ---------------------------------------------------------
TOTAL (COST $147,319)(B) $142,962
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $143,435.
(b) 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 $41. Cost for federal income tax purposes differs from value
by net unrealized depreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 422
Unrealized depreciation (4,820)
--------
Net unrealized depreciation $ (4,398)
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
34
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
INTERMEDIATE INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
ASSET BACKED SECURITIES (0.7%)
CAPITAL AUTO RECEIVABLES TRUST
1,000 5.35%, 2/15/98 $ 989
- ---------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 989
- ---------------------------------------------------------
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (17.0%)
FEDERAL HOME LOAN MORTAGAGE CORP.
1,000 7.00%, 5/15/99 992
1,800 6.50%, 5/15/03 1,713
1,406 5.00%, 11/15/04 1,401
2,500 5.80%, 4/15/14 2,468
1,994 6.50%, 7/15/16 1,959
258 8.00%, 1/15/18 258
1,968 7.50%, 9/15/20 1,963
2,500 8.40%, 1/15/21 2,520
FEDERAL NATIONAL MORTGAGE ASSOC.
2,475 6.00%, 10/25/03 2,432
1,103 7.50%, 7/25/18 1,098
4,000 6.25%, 5/25/19 3,755
2,000 8.50%, 8/25/19 2,051
- ---------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 22,610
- ---------------------------------------------------------
- ---------------------------------------------------------
CORPORATE BONDS (39.1%)
APPLIANCES (0.8%):
1,000 Whirlpool Corp. Notes
9.50%, 6/15/00 1,089
--------
AUTOMOTIVE (2.8%):
1,000 Ford Motor Co.
9.00%, 9/15/01 1,076
500 Ford Motor Credit Co.
9.50%, 4/15/00 542
500 Ford Motor Holdings, Inc.
9.25%, 3/1/00 534
500 General Motors Corp.
9.75%, 5/15/99 514
1,000 General Motors Corp.
9.63%, 12/1/00 1,086
--------
3,752
--------
BANKING (0.4%):
500 Comerica, Inc.
10.13%, 6/1/98 537
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
BROKERAGE SERVICES (10.9%):
4,000 Bear Stearns Co.
9.38%, 6/1/01 $ 4,305
5,000 Lehman Brothers Holdings
5.75%, 11/15/98 4,643
2,500 Merrill Lynch & Co.
8.25%, 11/15/99 2,563
3,500 Salomon, Inc.
6.75%, 1/15/06 2,993
--------
14,504
--------
CHEMICALS (1.5%):
1,000 Dow Chemical
5.75%, 9/15/97 973
1,000 Monsanto Defined
8.13%, 12/15/06 1,032
--------
2,005
--------
FINANCIAL SERVICES (7.0%):
2,000 American Express
8.50%, 8/15/01 2,115
3,000 American General Corp.
7.70%, 10/15/99 3,034
1,000 Norwest Corp.
7.75%, 12/31/96 1,015
3,000 Transamerica Financial
8.75%, 10/1/99 3,138
--------
9,302
--------
FOOD PRODUCTS (0.7%):
1,000 Super Valu, Inc.
5.88%, 11/15/95 998
--------
GOVERNMENT AGENCY (0.4%):
500 Private Export Funding
9.00%, 1/31/96 508
--------
INDUSTRIAL GOODS & SERVICES (8.4%):
2,000 American Home Products
7.70%, 2/15/00 2,025
3,000 Amoco Canada
7.25%, 12/1/02 2,985
1,000 Grand Metropolitan Investment
Corp.
8.63%, 8/15/01 1,070
3,000 Service Corp. International
8.38%, 12/15/04 3,131
2,000 WMX Technologies Waste
Management
7.13%, 3/22/97 2,005
--------
11,216
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
35
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERMEDIATE INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INSURANCE (0.4%):
500 St. Paul Cos., Inc.
9.38%, 6/15/97 $ 526
--------
OIL & GAS EXPLORATION (1.2%):
500 British Petroleum America
10.15%, 3/15/96 514
1,000 Cheveron Corp. Amortization
Notes
8.11%, 12/1/04 1,044
--------
1,558
--------
PRINTING & PUBLISHING (1.6%):
1,000 Knight Ridder, Inc.
8.50%, 9/1/01 1,063
1,000 R.R. Donnelly & Sons Co.
9.13%, 12/1/00 1,095
--------
2,158
--------
RETAIL STORES (0.8%):
500 J.C. Penney, Inc.
9.05%, 3/1/01 538
500 Sears Roebuck & Co.
9.50%, 6/1/99 537
--------
1,075
--------
TELECOMMUNICATIONS (2.2%):
750 Communications Satellite
8.13%, 4/1/04 775
2,000 GTE Corp. Notes
9.10%, 6/1/03 2,143
--------
2,918
- ---------------------------------------------------------
TOTAL CORPORATE BONDS 52,146
- ---------------------------------------------------------
- ---------------------------------------------------------
U.S. GOVERNMENT AGENCIES (1.4%)
FEDERAL NATIONAL MORTAGE ASSOC.:
2,000 5.23%, 11/25/98 1,884
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 1,884
- ---------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
U.S. TREASURY NOTES (38.6%)
7,500 9.25%, 1/15/96 $ 7,651
3,000 9.38%, 4/15/96 3,087
2,000 5.50%, 4/30/96 1,984
5,000 7.38%, 5/15/96 5,049
6,500 6.88%, 4/30/97 6,534
2,000 5.63%, 1/31/98 1,945
5,000 7.25%, 2/15/98 5,068
7,000 7.00%, 4/15/99 7,050
2,000 7.50%, 10/31/99 2,048
1,000 6.38%, 1/15/00 980
8,000 7.13%, 2/29/00 8,073
2,000 6.88%, 3/31/00 1,997
- ---------------------------------------------------------
TOTAL U.S. TREASURY NOTES 51,466
- ---------------------------------------------------------
- ---------------------------------------------------------
INVESTMENT COMPANIES (1.3%)
1,783 Shearson U.S. Treasury Fund 1,783
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,783
- ---------------------------------------------------------
TOTAL (COST $133,485)(B) $130,878
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $133,225.
(b) 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 $ 885
Unrealized depreciation (3,492)
--------
Net unrealized depreciation $ (2,607)
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
36
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
INVESTMENT QUALITY BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
ASSET BACKED SECURITIES (1.6%)
CAPITAL AUTO RECEIVABLES ASSET TRUST
979 4.90%, 2/17/98 $ 976
RAILCAR TRUST, SERIES 92-1
459 7.75%, 6/1/04 465
- ------------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 1,441
- ------------------------------------------------------------
- ----------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (1.5%)
FEDERAL HOME LOAN MORTGAGE CORP.:
1,180 7.50%, 4/1/07 1,178
FEDERAL NATIONAL MORTGAGE ASSOC.:
67 7.00%, 3/25/18 67
155 7.25%, 6/25/18 154
- ------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATION 1,399
- ------------------------------------------------------------
- ----------------------------------------------
CORPORATE BONDS (28.4%)
AUTOMOTIVE (1.7%):
1,000 Ford Motor Co.
9.00%, 9/15/01 1,076
500 General Motors
9.13%, 7/15/95 535
----------
1,611
----------
BANKING (6.2%):
600 BankAmerica Corp.
9.63%, 2/13/01 657
1,500 Crestar Finance Corp.
8.75%, 11/15/04 1,591
500 First Bank System
8.00%, 7/2/04 514
1,020 First Union Corp.
9.45%, 6/15/99 1,095
800 SunTrust Banks, Inc.
7.38%, 7/1/02 799
1,000 Wells Fargo & Co.
8.75%, 5/1/02 1,061
----------
5,717
----------
BROKERAGE SERVICES (2.3%):
1,000 Morgan Stanley
8.88%, 10/15/01 1,056
1,280 Morgan Stanley
7.25%, 10/15/23 1,069
----------
2,125
----------
COMPUTER (0.6%):
510 International Business
Machines
9.00%, 5/1/98 510
----------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
CREDIT INSTITUTIONS -- PERSONAL (0.6%):
510 General Electric Credit
Corp.
8.75%, 11/26/96 $ 524
----------
FINANCIAL SERVICES (7.6%):
1,025 BHP Finance Ltd.
6.75%, 11/1/13 880
255 Ford Motor Credit Co.
9.40%, 11/16/95 259
1,000 General Motors Acceptance
Co.
6.28%*, 6/7/96 999
1,000 General Motors Acceptance
Co.
7.13%, 6/1/99 985
1,000 General Motors Acceptance
Co.
5.50%, 12/15/01 886
1,020 Merrill Lynch
8.25%, 11/15/99 1,046
2,000 Salomon Brothers
4.44%, 8/9/95 1,988
----------
7,043
----------
GOVERNMENTS (FOREIGN) (0.5%):
500 Republic of Iceland
6.13%, 2/1/04 449
----------
INDUSTRIAL GOODS & SERVICES (4.4%):
1,000 American Home Products
7.70%, 2/15/00 1,013
1,000 Georgia-Pacific
9.95%, 6/15/02 1,116
700 Philip Morris Co.
9.00%, 1/1/01 746
1,200 RJR Nabisco, Inc.
8.00%, 1/15/00 1,182
----------
4,057
----------
INSURANCE (1.0%):
1,100 Nationwide Mutual
Insurance Surplus
7.50%, 2/15/24 954
----------
OIL & GAS EXPLORATION (0.8%):
700 Atlantic Richfield Co.
9.00%, 4/1/21 765
----------
OIL & GAS TRANSMISSION (0.6%):
510 Shell Oil Co.
7.00%, 9/15/95 511
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
37
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INVESTMENT QUALITY BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TELECOMMUNICATIONS (2.1%):
510 GTE Hawaiian Telephone
Service
9.00%, 12/1/00 $ 525
510 MCI Communications
7.63%, 11/7/96 514
360 Northern Telecom Ltd.
8.25%, 6/13/96 366
510 Southwestern Bell Co.
8.30%, 6/1/96 518
----------
1,923
- ------------------------------------------------------------
TOTAL CORPORATE BONDS 26,189
- ------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (38.0%)
FEDERAL HOME LOAN MORTGAGE CORP.:
150 8.00%, 5/1/02 151
350 8.00%, 8/1/02 354
238 8.00%, 6/1/08 237
277 8.00%, 11/1/08 276
FEDERAL NATIONAL MORTGAGE ASSOC.:
994 8.00%, 1/1/23 993
1,562 7.50%, 3/1/24 1,529
1,500 9.00%, 5/1/25 1,549
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
2,815 6.50%, 2/15/09 2,705
1,597 9.00%, 2/15/17 1,654
1,513 8.50%, 9/15/17 1,544
891 9.00%, 6/15/18 923
1,667 9.00%, 10/15/19 1,727
2,738 9.00%, 12/15/19 2,836
1,742 9.00%, 1/15/20 1,809
1,128 9.00%, 2/15/20 1,168
740 8.50%, 11/15/21 756
2,657 7.50%, 8/15/22 2,600
1,646 8.50%, 8/15/22 1,681
1,228 8.50%, 2/15/23 1,253
1,464 7.00%, 10/15/23 1,389
1,378 7.50%, 10/15/23 1,345
4,794 7.50%, 1/15/24 4,683
1,962 7.50%, 5/15/24 1,916
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 35,078
- ------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BONDS (12.5%)
2,600 8.88%, 2/15/19 $ 3,001
3,000 8.00%, 11/15/21 3,188
2,900 7.13%, 2/15/23 2,798
1,500 7.50%, 11/15/24 1,520
1,000 7.63%, 2/15/25 1,035
- ------------------------------------------------------------
TOTAL U.S. TREASURY BONDS 11,542
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY NOTES (14.9%)
3,000 7.50%, 2/29/96 3,029
1,000 7.50%, 12/31/96 1,015
1,000 8.00%, 1/15/97 1,024
1,000 7.75%, 12/31/99 1,034
2,500 7.75%, 1/31/00 2,585
3,000 7.13%, 2/29/00 3,027
2,000 7.50%, 2/15/05 2,061
- ------------------------------------------------------------
TOTAL U.S. TREASURY NOTES 13,775
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (2.1%)
1,942 Shearson U.S. Treasury Fund 1,942
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,942
- ------------------------------------------------------------
TOTAL (COST $93,388) (B) $ 91,366
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $92,202.
(b) Represents costs 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 $ 646
Unrealized depreciation (2,668)
----------
Net unrealized depreciation $ (2,022)
==========
</TABLE>
* Corporate Bonds with floating rates are securities with yields that vary with
a designated market index or market rate. These securities are payable on the
date of demand. The rate reflected on the Schedule of Portfolio Investments
is the effective rate at April 30, 1995.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
38
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
OHIO MUNICIPAL BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (97.6%)
ALTERNATIVE MINIMUM TAX PAPER (11.1%):
2,500 Student Loan Funding Corp.,
Series A
5.50%, 12/1/01 $ 2,463
4,000 Student Loan Funding Corp.,
Series A
5.85%, 8/1/04 4,005
- ------------------------------------------------------------
TOTAL ALTERNATIVE MINIMUM TAX PAPER 6,468
- ------------------------------------------------------------
- ----------------------------------------------
GENERAL OBLIGATION BONDS (43.2%)
COUNTY, CITY, SPECIAL DISTRICT & SCHOOLS (39.7%):
1,500 Batavia, Ohio Local School
District
7.00%, 12/1/14 1,656
750 Batavia, Ohio Local School
District
6.30%, 12/1/22 769
500 Canton, Waterworks System
5.75%, 12/1/10 491
1,325 Clyde-Green Springs Village,
Ohio School District
6.10%, 12/1/19 1,302
500 Columbus, Ohio, Series B
6.10%, 1/1/03 531
1,500 Columbus, Ohio
6.20%, 1/1/04 1,604
1,385 Crawford County, Ohio,
AMBAC
6.75%, 12/1/19 1,477
1,000 Cuyahoga Falls, Ohio, MBIA
6.00%, 12/1/15 987
2,500 Franklin County, Ohio
Courthouse
6.38%, 12/1/01 2,724
1,000 Hilliard, Ohio School
District
6.15%, 12/1/06 1,035
2,500 Indian Valley, Ohio Local
School District
7.00%, 12/1/14 2,760
750 Kings, Ohio Local School
District
7.00%, 12/1/09 795
1,250 Lakeview, Ohio Local School
District
AMBAC
6.95%, 12/1/19 1,380
540 Lakewood, Ohio
5.40%, 12/1/05 540
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
600 Madison County, Ohio
7.00%, 12/1/19 $ 667
1,000 Munroe Falls, Ohio, Series A
AMBAC
6.95%, 12/1/14 1,103
500 Toledo, Ohio, AMBAC
6.10%, 12/1/14 501
1,820 Trumbull County, Ohio
5.75%, 12/1/03 1,892
880 Tuscarawas Valley, Ohio
Local
School District, AMBAC
6.00%, 12/1/19 863
----------
23,077
----------
STATE (3.5%):
2,000 Ohio State, Refunding &
Improvement
5.50%, 8/1/03 2,044
- ------------------------------------------------------------
TOTAL GENERAL OBLIGATION BONDS 25,121
- ------------------------------------------------------------
- ----------------------------------------------
REVENUE BONDS (43.3%)
HOSPITALS, NURSING HOMES & HEALTH CARE (17.7%):
2,250 Butler County, Ohio
Middletown Regional
Hospital, GFIC
6.75%, 11/15/10 2,411
1,000 Clermont County Hospital
Facility
6.00%, 9/1/19 977
1,720 Franklin County, Riverside
Hospital
7.25%, 5/15/20 1,864
1,000 Garfield Heights, Ohio
Marymount Hospital,
Refunding & Improvement
6.70%, 11/15/15 1,016
2,400 Lake County Hospital
Improvement Facilities
6.38%, 8/15/03 2,523
1,480 Lucas County, Ohio Hospital,
Series B
5.75%, 8/15/03 1,526
----------
10,317
----------
HOUSING (3.1%):
1,775 Ohio Cap Corp.
6.35%, 7/1/22 1,775
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
39
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
OHIO MUNICIPAL BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
PUBLIC FACILITIES (CONVENTION, SPORT) (5.3%):
2,000 Ohio State Building
Authority,
Adult Correctional
Facilities
6.00%, 10/1/07 $ 2,048
1,000 Ohio State Public
Facilities,
Higher Education
5.88%, 12/1/04 1,029
----------
3,077
----------
UTILITIES (SEWERS, TELEPHONE, ELECTRIC) (17.2%):
540 Cambridge, Ohio Water
System
5.50%, 12/1/08 526
1,935 Cleveland Public Power
Systems, MBIA
7.00%, 11/15/24 2,147
1,000 Cleveland Public Power
Systems, MBIA
6.00%, 11/15/02 1,051
1,750 Cleveland Regional Sewer
District
6.75%, 5/15/04 1,940
1,000 Cleveland, Ohio Waterworks
Series 1-92B
6.25%, 1/1/05 1,055
1,950 Columbus, Ohio Sewer
6.25%, 6/1/08 2,006
750 Columbus, Ohio Water
Systems
6.38%, 11/1/10 769
500 Southwest Regional Water,
MBIA
6.00%, 12/1/20 488
----------
9,982
----------
TOTAL REVENUE BONDS 25,151
- ------------------------------------------------------------
TOTAL MUNICIPAL BONDS 56,740
- ------------------------------------------------------------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (1.9%)
Dreyfus Ohio Money Market
1,131 Institutional Fund $ 1,131
- ------------------------------------------------------------
Total Investment Companies 1,131
- ------------------------------------------------------------
TOTAL (COST $57,596) (B) 57,871
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of 58,137.
(b) 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 $26. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation 1,006
Unrealized depreciation (757)
----------
Net unrealized appreciation $ 249
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
40
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATION (2.4%)
FEDERAL HOME LOAN MORTGAGE CORP.:
465,548 7.50%, 4/1/07 $ 465
FEDERAL NATIONAL MORTGAGE ASSOC.:
968,818 7.40%, 7/25/17 968
925,817 6.50%, 4/25/22 872
1,500,000 9.00%, 5/1/25 1,548
- ------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 3,853
- ------------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (53.7%)
AEROSPACE/DEFENSE (3.3%):
21,400 Boeing Co. 1,177
11,800 General Dynamics Corp. 547
20,300 Lockheed Martin Corp.(c) 1,173
33,650 Raytheon Co. 2,448
----------
5,345
----------
ALUMINUM (1.4%):
50,300 Aluminum Co. of America 2,257
----------
AUTOMOBILES (1.0%):
8,000 Chrysler Corp. 345
1,200 Fiat - ADR 24
45,000 Ford Motor Co. 1,215
----------
1,584
----------
BANKS (4.7%):
900 BBV - ADR 24
54,900 BankAmerica Corp. 2,718
28,200 Comerica, Inc. 811
13,800 CoreStates Financial Corp. 450
27,600 First Union Corp. 1,249
1,300 IMI - ADR 24
33,150 J.P. Morgan & Co., Inc. 2,176
----------
7,452
----------
BEVERAGES (1.3%):
33,900 Anheuser Busch Co., Inc. 1,971
1,300 Coca-Cola Femsa - ADR 26
----------
1,997
----------
CHEMICALS (1.2%):
10,100 Dow Chemical Co. 702
8,300 Eastman Chemical 471
1,200 Imperial Chemical - ADR 58
18,200 Lubrizol Corp. 635
3,200 Montedison - ADR(c) 24
1,000 Norsk Hydro - ADR 40
----------
1,930
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
COMPUTERS & PERIPHERALS (0.9%):
13,600 Cisco Systems(c) $ 542
13,400 Hewlett Packard Co. 886
----------
1,428
----------
CONGLOMERATES (0.0%):
3,000 Hanson PLC, ADR 57
----------
CONTAINERS (0.4%):
28,600 Newell Co. 676
----------
COSMETICS & RELATED (0.6%):
15,400 Avon Products 974
----------
ELECTRICAL EQUIPMENT (1.8%):
13,100 Emerson Electric Co. 881
34,400 General Electric Co. 1,926
900 Hitachi - ADR 92
----------
2,899
----------
ELECTRONIC COMPUTING EQUIPMENT (0.7%)
26,900 Compaq Computer Corp.(c) 1,022
----------
ENTERTAINMENT (0.1%)
450 Matsushita Electric - ADR 76
1,500 Sony - ADR 76
----------
152
----------
FINANCIAL SERVICES (2.2%):
26,400 American Express Co. 917
15,300 Federal National Mortgage
Assoc. 1,350
27,300 Household International,
Inc. 1,280
----------
3,547
----------
FOOD DISTRIBUTORS (0.3%):
16,500 Supervalu, Inc. 435
----------
FOOD PROCESSING & PACKAGING (0.2%):
10,000 Sara Lee Corp. 279
----------
FOREST PRODUCTS (2.8%):
20,300 Georgia Pacific Corp. 1,611
25,000 International Paper Co. 1,925
19,700 Union Camp Corp. 987
----------
4,523
----------
HEAVY MACHINERY (0.5%):
9,000 Deere & Co. 738
----------
HOSPITAL & NURSING EQUIPMENT (0.1%):
3,100 Johnson & Johnson, Inc. 202
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
41
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INSURANCE (1.3%):
25,100 Allstate $ 762
12,000 American General Corp. 396
9,200 Chubb Corp. 736
3,200 St. Paul Cos., Inc. 154
----------
2,048
----------
MANUFACTURING (0.9%):
24,700 Allied Signal, Inc. 979
12,300 Litton Industries, Inc.(c) 426
----------
1,405
----------
MEDICAL SUPPLIES (0.3%):
6,600 Medtronic, Inc. 491
----------
METALS (0.3%):
1,300 SKF Corp. - ADR(c) 27
17,100 USX U.S. Steel Group 522
----------
549
----------
OFFICE EQUIPMENT & SUPPLIES (0.3%):
1,000 Canon - ADR 83
9,700 Pitney Bowes, Inc. 360
----------
443
----------
OIL (7.0%):
12,000 Atlantic Richfield Co. 1,374
700 British Petroleum Co., PLC,
ADR 60
49,800 Chevron Corp. 2,359
15,000 Exxon Corp. 1,044
28,700 Mobil Corp. 2,723
1,400 Repsol - ADR 45
400 Royal Dutch Petroleum - ADR 50
49,500 Texaco, Inc. 3,385
1,000 YPF S.A. - ADR(c) 20
----------
11,060
----------
OIL & GAS EXPLORATION (2.5%):
52,600 Enron Corp. 1,788
60,200 Phillips Petroleum Co. 2,107
----------
3,895
----------
OILFIELD EQUIPMENT & SERVICES (0.7%):
46,500 Baker Hughes, Inc. 1,046
----------
PAINT, VARNISHES & ENAMELS (0.2%):
7,700 Sherwin Williams Co. 274
----------
PAPER (0.0%):
800 Fletcher Challange - ADR 22
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
PHARMACEUTICALS (3.4%):
49,000 Abbott Laboratories $ 1,929
11,400 American Home Products Corp. 879
13,600 Merck & Co., Inc. 583
11,900 Pfizer, Inc. 1,031
12,100 Schering-Plough 912
1,400 SmithKline Beecham 54
----------
5,388
----------
PUBLISHING (0.2%):
3,800 Dun & Bradstreet Corp. 198
2,500 News Corp. - ADR(c) 49
----------
247
----------
RETAIL (1.7%):
9,700 Dayton Hudson Corp. 651
21,900 Pep Boys-Manny, Moe & Jack 564
14,500 Sears & Roebuck Co. 787
7,500 Wal Mart Stores, Inc. 178
10,900 Walgreen Co. 512
----------
2,692
----------
SEMICONDUCTORS (0.8%):
11,850 Intel Corp. 1,213
600 Kyocera - ADR 94
----------
1,307
----------
SHOES, LEATHER GOODS & CLOTHING (0.1%):
4,400 Reebok International Ltd. 138
----------
SOAPS & CLEANING AGENTS (0.1%):
1,300 Procter & Gamble Co. 91
----------
SOFTWARE & COMPUTER SERVICES (1.1%):
13,650 Microsoft Corp.(c) 1,118
32,000 Novell, Inc.(c) 696
----------
1,814
----------
STEEL (0.1%):
2,100 British Steel - ADR 57
800 Broken Hill Proprietary -
ADR 46
2,300 Worthington Industries, Inc. 43
----------
146
TELECOMMUNICATIONS (0.3%):
26,800 Comsat Corp. 536
----------
TOBACCO & TOBACCO PRODUCTS (0.8%):
4,000 B.A.T. Industries - ADR 60
16,500 Philip Morris Cos., Inc. 1,118
3,900 UST, Inc. 110
----------
1,288
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
42
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TOOLS & HARDWARE MANUFACTURING (0.3%):
11,100 Stanley Works $ 440
----------
TRANSPORTATION (0.0%):
900 British Airways -ADR 58
3,000 TMM - ADR 20
----------
78
----------
UTILITIES - ELECTRIC & GAS (3.3%):
64,900 Consolidated Edison Co. NY,
Inc. 1,801
20,300 Duquesne Light Co. 685
83,300 Texas Utilities Co. 2,718
----------
5,204
----------
UTILITIES - TELECOMMUNICATIONS (4.5%):
68,600 A T & T Corp. 3,481
900 British Telecom - ADR 56
60,500 GTE Corp. 2,065
1,000 Hong Kong Telecom - ADR 20
9,000 MCI Telecommunications
Corp. 196
31,000 Nynex Corp. 1,267
1,000 Telefonica De Espana -
ADR(c) 37
1,000 Telephones De Mexico - ADR 30
700 Telephonos De Chile - ADR 48
----------
7,200
- ------------------------------------------------------------
TOTAL COMMON STOCKS 85,299
- ------------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS - FOREIGN (0.7%)
BRITAIN (0.0%):
PUBLISHING (0.0%):
2,200 Reed Elsevier International 28
----------
FOOD MANUFACTURING (0.0%):
5,000 United Biscuits 28
- ------------------------------------------------------------
TOTAL BRITAIN 56
- ------------------------------------------------------------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FRANCE (0.1%):
AUTOMOBILES (0.0%):
200 PSA Peugeot Citroen $ 29
----------
BANKS (0.0%):
500 Cie Financiere De Paribas-A 30
----------
BUILDING MATERIALS (0.0%):
250 Compagnie De Saint Gobain 32
----------
OIL & GAS PRODUCTION (0.0%):
400 Elf Aquitaine 32
----------
TELECOMMUNICATIONS (0.0%):
300 Alcatel-Alsthom 28
----------
UTILITIES - WATER (0.0%):
300 Cie Generale Des Eaux 32
- ------------------------------------------------------------
TOTAL FRANCE 183
- ------------------------------------------------------------
GERMANY (0.1%):
AUTOMOBILES (0.0%):
90 Volkswagen 25
----------
CHEMICALS (0.0%):
100 Bayer 25
----------
MACHINERY & ENGINEERING (0.0%):
100 Mannesmann 27
----------
MANUFACTURING (0.0%):
50 Siemens(c) 25
----------
UTILITIES - ELECTRIC (0.0%):
70 Veba 26
- ------------------------------------------------------------
TOTAL GERMANY 128
- ------------------------------------------------------------
HOLLAND (0.1%):
BANKING (0.0%):
700 ABN/Amro Holding 27
----------
CHEMICALS (0.0%):
200 Akzo Nobel NV 23
----------
TELECOMMUNICATIONS (0.0%):
700 Koninklijke PTT NED NV 25
- ------------------------------------------------------------
TOTAL HOLLAND 75
- ------------------------------------------------------------
HONG KONG (0.0%):
BROKERAGE (0.0%):
20,000 Peregrine Inv 21
----------
REAL ESTATE (0.0%):
5,000 Cheung Kong 21
- ------------------------------------------------------------
TOTAL HONG KONG 42
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
43
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
JAPAN (0.3%):
AUTOMOBILES (0.0%):
2,000 Nippon Denso Co., Ltd. $ 40
----------
BANKS (0.1%):
2,000 Mitsubishi Bank 49
2,000 Sumitomo Bank 43
----------
92
----------
CHEMICALS (0.0%):
6,000 Mitsubishi Chemical, Inc. 35
5,000 Toray Industries, Inc.(c) 35
----------
70
----------
CONSTRUCTION (0.0%):
4,000 Kajima Corp. 40
----------
HOUSEHOLD PRODUCTS (0.0%):
3,000 Kao Corp. 37
----------
PAPER (0.0%):
3,000 New Oji Paper Co., Ltd. 34
----------
PHARMACEUTICALS (0.0%):
1,000 Sankyo Co., Ltd. 24
----------
RETAIL (0.1%):
1,000 Ito Yokado Co. 54
2,000 Marui Co., Ltd. 31
----------
85
----------
RUBBER & RUBBER PRODUCTS (0.0%):
2,000 Bridgestone 32
----------
UTILITIES - ELECTRIC (0.0%):
1,100 Tokyo Electric Power 35
----------
UTILITIES - WATER (0.0%):
1,000 Kurita Water Ind. 24
- ------------------------------------------------------------
TOTAL JAPAN 513
- ------------------------------------------------------------
SWITZERLAND (0.1%):
ENGINEERING (0.0%):
25 Brown Boveri Series A 25
----------
FOOD MANUFACTURING (0.0%):
25 Nestle SA Registered 24
----------
PHARMACEUTICALS (0.0%):
5 Roche Genussshein 30
- ------------------------------------------------------------
TOTAL SWITZERLAND 79
- ------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS 1,076
- ------------------------------------------------------------
- ----------------------------------------------
CONVERTIBLE PREFERRED STOCKS (0.2%)
AUTOMOTIVE (0.2%):
4300 Ford Motor Co. 379
- ------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS 379
- ------------------------------------------------------------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
CORPORATE BONDS (11.1%)
BANKING (3.1%):
300,000 BankAmerica Corp., 9.63%,
2/13/01 $ 328
800,000 Crestar Finance Corp.,
8.75%,
11/15/04 849
1,000,000 First Bank System, 8.00%,
7/2/04 1,027
1,200,000 First Union Corp., 9.45%,
8/15/01 1,329
500,000 NationsBank Corp., 5.38%,
12/1/95 497
300,000 SunTrust Banks Inc., 7.38%,
7/1/02 300
500,000 Wells Fargo & Co., 8.75%,
5/1/02 531
----------
4,861
----------
BROKERAGE SERVICES (0.5%):
750,000 Morgan Stanley, 8.88%,
10/15/01 792
----------
COMPUTER (0.2%):
300,000 International Business
Machines, 9.00%, 5/1/98 300
----------
FINANCIAL SERVICES (2.9%):
1,000,000 Associates, 7.50%, 10/15/96 1,010
800,000 BHP Finance Ltd., 6.75%,
11/1/13 687
500,000 General Motors Acceptance
Corp., 5.50%, 12/15/01 443
1,000,000 Merrill Lynch Corp., 8.25%,
11/15/99 1,025
500,000 Merrill Lynch Corp., 4.75%,
6/24/96 488
1,000,000 Morgan Stanley, 7.25%,
10/15/23 835
200,000 U.S. West Capital Funding,
Inc., 8.00%, 10/15/96 203
----------
4,691
----------
GOVERNMENTS (FOREIGN) (0.2%):
300,000 Republic of Iceland, 6.13%,
2/1/04 269
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
44
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INDUSTRIAL GOODS & SERVICES (3.0%):
500,000 American Home Products,
7.70%, 2/15/00 $ 506
1,500,000 General Motors, 9.13%,
7/15/01 1,605
500,000 Georgia-Pacific, 9.95%,
6/15/02 558
900,000 Philip Morris, 9.00%, 1/1/01 960
700,000 RJR Nabisco, Inc., 8.00%,
1/15/00 690
500,000 Waste Management, 7.88%,
8/15/96 506
----------
4,825
----------
INSURANCE (0.7%):
1,200,000 Nationwide Mutual Insurance
Surplus, 7.50%, 2/15/24 1,041
----------
OIL & GAS EXPLORATION (0.3%):
500,000 Atlantic Richfield Co.,
9.00%,
4/1/21 546
----------
TELECOMMUNICATIONS (0.2%):
300,000 Southwestern Bell Co.,
8.30%,
6/1/96 305
- ------------------------------------------------------------
TOTAL CORPORATE BONDS 17,630
- ------------------------------------------------------------
- ----------------------------------------------
FLOATING RATE NOTES (0.3%)
500,000 General Motors Acceptance
Corp., 5.66%*, 6/7/96 499
- ------------------------------------------------------------
TOTAL FLOATING RATE NOTES 499
- ------------------------------------------------------------
- ----------------------------------------------
MEDIUM TERM NOTES (0.9%)
1,500,000 Salomon Brothers, 4.44%,
8/9/95 1,491
- ------------------------------------------------------------
TOTAL MEDIUM TERM NOTES 1,491
- ------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (15.7%)
FEDERAL HOME LOAN MORTGAGE CORP.:
133,439 8.00%, 5/1/02 135
FEDERAL NATIONAL MORTGAGE ASSOC.:
2,250,200 6.00%, 11/1/08 2,116
1,837,646 7.50%, 3/1/24 1,798
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
1,802,848 6.50%, 2/15/09 $ 1,730
251,367 9.50%, 7/15/09 264
1,514,925 9.00%, 10/15/16 1,573
226,173 9.00%, 11/15/16 234
850,334 9.00%, 6/15/18 881
25,890 10.00%, 10/15/18 28
779,707 9.00%, 9/15/19 807
1,188,568 9.00%, 10/15/19 1,231
1,483,116 9.00%, 12/15/19 1,536
870,959 9.00%, 1/15/20 904
557,334 9.00%, 2/15/20 577
1,667,441 8.50%, 5/15/20 1,701
610,779 8.50%, 4/15/21 623
828,801 7.50%, 12/15/22 811
462,219 8.50%, 3/15/23 472
951,881 7.50%, 11/15/23 930
2,013,452 7.50%, 1/15/24 1,967
1,471,279 7.50%, 5/15/24 1,437
3,046,512 8.50%, 9/15/24 3,111
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 24,866
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY BONDS (2.6%)
700,000 8.88%, 2/15/19 808
2,000,000 7.13%, 2/15/23 1,929
1,400,000 7.50%, 11/15/24 1,419
- ------------------------------------------------------------
TOTAL U.S. TREASURY BONDS 4,156
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY NOTES (7.7%)
1,300,000 5.88%, 5/15/95 1,300
1,000,000 7.50%, 12/31/96 1,015
500,000 7.13%, 9/30/99 505
1,000,000 7.75%, 12/31/99 1,034
4,700,000 7.75%, 1/31/00 4,860
1,000,000 7.13%, 2/29/00 1,009
1,500,000 7.25%, 5/15/04 1,518
1,000,000 7.50%, 2/15/05 1,031
- ------------------------------------------------------------
TOTAL U.S. TREASURY NOTES 12,272
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
45
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (4.7%)
126,487 Federated Treasury
Obligation
Fund $ 127
5,600 Global Privatization Fund 68
6,000 Italy Fund, Inc. - ADR 49
2,300 Latin American Equity
Fund(c) 34
2,000 Malaysian Fund 35
7,109,522 Shearson U.S. Treasury Fund 7,110
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 7,423
- ------------------------------------------------------------
TOTAL (COST - $151,871)(B) $ 158,944
- ---------------------------------------------------------
CURRENCY
200 French Franc 0
42,346,513 Japanese Yen 504
- ------------------------------------------------------------
TOTAL CURRENCY 504
- ------------------------------------------------------------
</TABLE>
- ---------------
* Floating Rate Demand Notes are securities with yields that vary with a
designated market index or market rate. These securities are payable on the
date of demand. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect at April 30, 1995.
(a) Percentages indicated are based on net assets of $158,762.
(b) 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 $1,136. 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 $ 6,153
Unrealized depreciation (216)
----------
Net unrealized appreciation $ 5,937
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
46
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMERCIAL PAPER (7.9%)
FINANCIAL SERVICES (7.9%):
1,500,000 American Express, 5.90%,
5/3/95 $ 1,500
2,000,000 Ford Motor Credit Co.,
5.91%, 5/1/95 2,000
2,000,000 General Motors Acceptance
Corp., 6.00%, 5/10/95 2,000
2,000,000 General Motors Acceptance
Corp., 6.16%, 5/10/95 2,000
900,000 Prudential Funding, 5.91%,
5/10/95 900
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 8,400
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (90.6%)
ADVERTISING (0.1%):
1,986 Interpublic Group Cos., Inc. 75
--------
AEROSPACE/DEFENSE (1.4%):
8,666 Boeing Co. 477
1,600 General Dynamics Corp. 74
4,761 Lockheed Martin Corp.(c) 275
3,046 McDonnell Douglas 189
1,298 Northrop Grumman Corp. 64
5,620 Rockwell International Corp. 245
2,280 Textron, Inc. 130
--------
1,454
--------
AIRCRAFT & AIRCRAFT PARTS (0.2%):
3,204 United Technologies Corp. 234
--------
AIR FREIGHT (0.1%):
1,906 AMR Corp. Delaware(c) 128
1,534 U.S. Air Group, Inc.(c) 11
--------
139
--------
AIRLINES (0.1%):
1,237 Delta Air Lines 81
--------
ALUMINUM (0.2%):
4,560 Aluminum Co. of America 205
--------
APPAREL (0.0%):
2,002 Liz Claiborne, Inc. 36
--------
AUTOMOBILES (1.9%):
9,021 Chrysler Corp. 389
26,094 Ford Motor Co. 704
19,240 General Motors 868
1,900 Navistar International
Corp.(c) 27
972 Paccar, Inc. 45
--------
2,033
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
AUTOMOTIVE PARTS (0.5%):
1,104 Cummins Engine, Inc. $ 49
2,558 Dana Corp. 66
1,928 Eaton Corp. 111
1,454 Echlin, Inc. 53
3,114 Genuine Parts Co. 121
294 SPX Corp. 4
145 Strattec Strategy Corp.(c) 2
1,631 TRW, Inc. 121
--------
527
--------
BANKS (3.3%):
2,733 Bank of Boston Corp. 91
9,491 BankAmerica Corp. 470
2,022 Bankers Trust New York 110
2,516 Barnett Banks, Inc. 118
3,236 Boatmens Bancshares, Inc. 107
4,577 Chase Manhattan Corp. 200
6,187 Chemical Banking Corp. 258
2,322 First Chicago Corp. 128
2,064 First Fidelity Bancorp. 99
1,906 First Interstate Bancorp. 146
4,464 First Union Corp. 202
4,813 J.P. Morgan & Co., Inc. 316
7,014 NationsBank Corp. 351
7,849 Norwest Corp. 208
6,014 PNC Bank Corp. 151
3,024 SunTrust Banks, Inc. 164
4,322 Wachovia Corp. 152
1,315 Wells Fargo & Co. 218
--------
3,489
--------
BANKS -- MONEY CENTERS (REGIONAL) (0.8%):
10,090 Citicorp 468
3,607 CoreStates Financial Corp. 118
1,531 Golden West Financial Corp.
Delaware 70
3,947 NBD Bancorp., Inc. 121
3,850 National City Corp. 105
--------
882
--------
BANKS -- OUTSIDE MONEY CENTER (0.3%):
10,348 Banc One Corp. 305
--------
BEVERAGES (3.3%):
6,558 Anheuser Busch Co., Inc. 381
1,721 Brown Forman Corp., Class B 57
32,812 Coca Cola Co. 1,907
943 Coors Adolph Co., Class B 15
20,182 PepsiCo, Inc. 840
9,471 Seagram Co. Limited 257
--------
3,457
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
47
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
BUILDING MATERIALS (0.6%):
943 Armstrong World Industries,
Inc. $ 43
766 Centex Corp. 18
746 Crane Co. 26
1,160 Fleetwood Enterprises, Inc. 27
804 Kaufman & Broad Home Corp. 10
4,031 Masco Corp. 103
2,946 Monsanto Co. 245
3,754 Morton International, Inc. 116
1,121 Owens Corning Fiberglas
Corp.(c) 41
707 Pulte Corp. 15
255 Skyline Corp. 4
--------
648
--------
CHEMICALS (0.1%):
1,748 Great Lakes Chemical 103
--------
CHEMICALS -- GENERAL (2.8%):
2,868 Air Products & Chemicals,
Inc. 144
7,106 Dow Chemical Co. 494
17,394 E.I. Du Pont De Nemours Co. 1,146
2,073 Eastman Chemical 118
1,732 Ecolab, Inc. 40
924 FMC Corp.(c) 57
491 First Mississippi Corp. 12
2,963 Hercules, Inc. 148
1,925 Mallinckrodt 69
1,709 Nalco Chemical Co. 60
5,404 PPG Industries, Inc. 213
3,459 Praxair, Inc. 82
1,689 Rohm & Haas Co. 98
1,300 Sigma-Aldrich 57
3,812 Union Carbide Corp. 122
2,358 W.R. Grace & Co. 126
--------
2,986
--------
CHEMICALS -- SPECIALTY (0.1%):
1,354 Avery Dennison Corp. 55
--------
COMPUTERS & PERIPHERALS (3.1%):
2,968 Amdahl Corp.(c) 35
2,988 Apple Computer, Inc. 114
6,550 Cisco Systems(c) 261
1,356 Computer Sciences Corp.(c) 67
688 Cray Research, Inc.(c) 13
904 Data General Corp.(c) 7
3,621 Digital Equipment Corp.(c) 167
13,010 Hewlett Packard Corp.(c) 860
14,942 International Business
Machines Corp. 1,416
1,098 Integraph Corp.(c) 12
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
3,650 Silicon Graphics(c) $ 137
2,452 Sun Microsystems, Inc.(c) 98
2,949 Tandem Computers, Inc.(c) 37
4,386 Unisys Corp.(c) 45
--------
3,269
--------
CONGLOMERATES (0.8%):
5,849 Corning Glass Works 195
10,724 Minnesota Mining &
Manufacturing Co. 639
--------
834
--------
CONSTRUCTION (0.0%):
924 Foster Wheeler Corp. 34
--------
CONSUMER CREDIT (0.2%):
4,384 Dean Witter Discover & Co. 186
--------
CONSUMER GOODS (0.1%):
1,867 American Greetings Corp. 51
1,160 Jostens, Inc. 23
--------
74
--------
CONTAINERS -- METAL, GLASS, PAPER, PLASTIC (0.4%):
727 Ball Corp. 25
1,257 Bemis, Inc. 35
2,280 Crown, Cork & Seal, Inc.(c) 97
1,121 Federal Paper Board, Inc. 33
3,990 Newell Co. 94
4,147 Rubbermaid, Inc. 122
2,343 Stone Container Corp.(c) 46
--------
452
--------
COSMETICS & RELATED (0.8%):
727 Alberto Culver Co. 23
1,748 Avon Products 110
2,358 Dial Corp. 57
5,620 Gillette Co. 461
2,789 International Flavor &
Fragrance, Inc. 143
--------
794
--------
DEPARTMENT STORES (0.4%):
2,849 Dillard Department Stores,
Inc., Class A 74
5,934 J. C. Penney 260
943 Mercantile Stores, Inc. 42
--------
376
--------
DIVERSIFIED -- CONGLOMERATES, HOLDINGS (0.3%):
2,746 International Telephone &
Telegraph 287
1,218 National Service Industries,
Inc. 34
--------
321
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
48
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
DRUG STORES (0.1%):
491 Longs Drug Stores Corp. $ 17
2,180 Rite Aid Corp. 51
--------
68
--------
ELECTRICAL EQUIPMENT (3.1%):
1,179 Bally Manufacturing Corp.(c) 12
2,890 DSC Communications Corp.(c) 107
5,698 Emerson Electric Co. 383
43,648 General Electric Co. 2,444
1,082 Johnson Controls, Inc. 59
472 Thomas & Betts Corp. 30
1,257 W.W. Grainger, Inc. 76
9,121 Westinghouse Electric Corp. 137
--------
3,248
--------
ELECTRICAL SERVICES (0.1%):
2,950 General Public Utilities
Corp. 84
--------
ELECTRONIC COMPUTING EQUIPMENT (0.2%):
6,609 Compaq Computer Corp.(c) 251
--------
ELECTRONIC & ELECTRICAL -- GENERAL (2.1%):
2,419 Advanced Micro Devices(c) 87
5,366 Amp, Inc. 229
967 Andrew Corp.(c) 48
2,968 Cooper Industries 116
1,415 E G & G, Inc. 24
1,179 General Signal Corp. 44
982 Harris Corp. 46
3,259 Honeywell, Inc. 126
14,954 Motorola, Inc. 850
3,111 National Semiconductor
Corp.(c) 71
3,179 Raytheon Co. 231
1,825 Tandy Corp. 90
746 Tektronix, Inc. 34
2,322 Texas Instruments, Inc. 246
--------
2,242
--------
ELECTRONICS -- DEFENSE RELATED (0.1%):
885 E Systems, Inc. 56
2,103 Loral Corp. 99
--------
155
--------
ENTERTAINMENT (1.1%):
2,397 Brunswick Corp. 51
2,280 Hasbro, Inc. 72
943 King World Productions(c) 38
4,034 Lowes Cos., Inc. 116
2,634 Promus Cos., Inc.(c) 101
13,668 Walt Disney Co. 757
--------
1,135
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ENVIRONMENTAL CONTROL (0.1%):
7,000 Laidlaw, Inc., Class B $ 63
--------
FINANCIAL SERVICES (3.3%):
12,900 American Express Co. 448
3,576 Automatic Data Processing,
Inc. 230
4,700 Bank of New York Co., Inc. 155
1,376 Beneficial Corp. 56
1,121 Ceridian Corp.(c) 39
4,619 Federal Home Loan Mortgage
Corp. 301
6,996 Federal National Mortgage
Corp. 617
3,498 Fleet Financial Group 115
2,103 Fluor Corp. 108
3,421 Great Western Financial
Corp. 72
3,007 H.F. Ahmanson & Co. 63
2,477 Household International,
Inc. 116
3,782 MBNA Corp. 114
3,746 Mellon Bank Corp. 147
4,904 Merrill Lynch & Co., Inc. 223
2,710 Salomon, Inc. 98
3,077 Shawmut National Corp. 82
1,745 Transamerica Corp. 99
8,168 Travelers, Inc. 338
2,545 U.S. Bancorp 70
--------
3,491
--------
FOOD DISTRIBUTORS (0.2%):
6,505 Albertsons, Inc. 206
--------
FOOD DISTRIBUTORS (SUPERMARKETS &
WHOLESALERS) (0.4%):
943 Fleming Cos., Inc. 23
963 Great Atlantic & Pacific
Tea,
Inc. 24
2,952 Kroger Co.(c) 75
1,848 Supervalu, Inc. 49
4,716 Sysco Corp. 132
1,925 Winn Dixie Stores, Inc. 107
--------
410
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
49
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FOOD PROCESSING & PACKAGING (2.6%):
13,201 Archer Daniels Midland Co. $ 241
3,731 CPC International, Inc. 219
6,286 Campbell Soup Co. 322
6,286 ConAgra, Inc. 209
4,047 General Mills 247
6,325 H.J. Heinz Co. 266
2,219 Hershey Foods Corp. 116
5,656 Kellogg Co. 359
2,209 Pioneer Hi-Bred
International,
Inc. 83
3,396 Quaker Oats Co. 122
2,513 Ralston-Ralston Purina Group 119
12,300 Sara Lee Corp. 343
3,007 Wm. Wrigley Jr., Co. 133
--------
2,779
--------
FOREST PRODUCTS -- LUMBER & PAPER (1.7%):
1,379 Alco Standard Corp. 98
1,163 Boise Casacade Corp. 38
2,358 Champion International Corp. 104
2,319 Georgia Pacific Corp. 184
3,204 International Paper Co. 247
2,083 James River Corp. Virginia 57
4,047 Kimberly Clark Corp. 229
2,810 Louisiana Pacific Corp. 72
1,554 Mead Corp. 80
2,555 Moore Corp. Ltd. 50
727 Potlatch Corp. 31
1,886 Scott Paper Co. 168
1,415 Temple Inland, Inc. 62
1,828 Union Camp Corp. 92
1,670 Westvaco Corp. 70
5,288 Weyerhauser Co. 222
--------
1,804
--------
FUNERAL SERVICES (0.1%):
2,422 Service Corp. International 68
--------
FURNITURE (0.1%):
2,771 Maytag Corp. 48
1,100 Zenith Electronics(c) 8
--------
56
--------
GOLD & SILVER MINING (0.0%):
3,300 Santa Fe Pacific Gold Corp. 42
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
HEALTH CARE (0.4%):
9,278 Columbia HCA Healthcare $ 390
--------
HEAVY MACHINERY (0.9%):
3,556 Baker Hughes, Inc. 80
5,148 Caterpillar Tractor, Inc. 301
452 Clark Equipment Co.(c) 39
2,222 Deere & Co. 182
1,169 Harnischfeger Industries,
Inc. 34
2,733 Ingersoll Rand Co. 98
1,357 McDermott International,
Inc. 37
1,879 Tyco Laboratories, Inc. 99
1,118 Varity Corp.(c) 47
--------
917
--------
HOSPITAL & NURSING EQUIPMENT (1.0%):
1,357 Bard C.R., Inc. 40
16,383 Johnson & Johnson, Inc. 1,065
--------
1,105
--------
HOTELS & MOTELS (0.1%):
1,198 Hilton Hotels Corp. 91
--------
HOUSEHOLD GOODS -- APPLIANCES & FURNITURE
(0.2%):
316 Bassett Furniture Ind. 8
1,732 Premark International, Inc. 84
1,928 Whirlpool Corp. 106
--------
198
--------
INDUSTRIAL SERVICES (0.7%):
7,820 American Home Products Corp. 603
1,434 Dover Corp. 93
--------
696
--------
INSURANCE -- LIFE (0.5%):
1,237 Jefferson Pilot Corp. 70
2,474 Providian Corp. 84
1,867 Torchmark Corp. 73
4,350 United Healthcare 158
4,050 U.S. Healthcare, Inc. 108
530 USLIFE Corp. 20
--------
513
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
50
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INSURANCE -- MULTI-LINE (2.0%):
2,910 Aetna Life & Casualty Co. $ 166
1,101 Alexander & Alexander
Services, Inc. 26
5,262 American General Corp. 174
8,091 American International
Group, Inc. 864
1,848 Cigna Corp. 134
1,415 Continental Corp. 28
2,142 General Re Corp. 273
2,377 Lincoln National Corp. 97
1,867 Marsh & McLennan Cos., Inc. 146
1,612 SafeCo Corp. 91
2,142 St. Paul Cos., Inc. 103
2,242 USF & G Corp. 33
--------
2,135
--------
INSURANCE -- PROPERTY, CASUALTY, HEALTH (0.2%):
2,180 Chubb Corp. 174
1,800 UNUM Corp. 77
--------
251
--------
LEISURE -- RECREATION, GAMING (0.0%):
885 Handleman Co. 9
--------
MACHINE TOOLS (0.0%):
885 Cincinnati Milacron, Inc. 24
904 Giddings & Lewis, Inc. 16
--------
40
--------
MANUFACTURING -- CAPITAL GOODS (0.2%):
2,949 Illinois Tool Works, Inc. 148
707 Trinova Corp. 25
--------
173
--------
MANUFACTURING -- CONSUMER GOODS (0.1%):
491 Outboard Marine Corp. 11
1,415 Teledyne, Inc.(c) 35
1,360 Western Atlas(c) 61
--------
107
--------
MANUFACTURING -- MISCELLANEOUS (1.0%):
7,212 Allied Signal, Inc. 286
726 Briggs & Stratton Corp. 26
607 Millipore Corp. 37
866 Morrison Knudsen Corp. 7
2,901 Pall Corp. 68
1,218 Parker-Hannifin Corp. 63
4,047 Unilever N.V. 541
2,671 Whitman Corp. 49
--------
1,077
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (0.2%):
2,203 Beverly Enterprises, Inc.(c) $ 32
1,121 Community Psychiatric
Centers, Inc. 15
1,544 Manor Care, Inc. 45
5,025 National Medical
Enterprises, Inc.(c) 85
--------
177
--------
MEDICAL SUPPLIES (0.7%):
1,473 Bausch & Lomb, Inc. 57
7,235 Baxter International, Inc. 251
1,706 Becton Dickinson & Co. 95
2,888 Biomet, Inc.(c) 51
200 Boston Scientific Corp.(c) 5
2,908 Medtronic, Inc. 216
1,179 St. Jude Medical, Inc. 51
1,415 United States Surgical Corp. 31
--------
757
--------
METALS -- FABRICATION (0.6%):
5,769 Alcan Aluminum Ltd. 164
1,101 Asarco, Inc. 30
2,400 Cyprus Amax Minerals 67
3,498 Homestake Mining Co. 59
1,124 Inland Steel Industries,
Inc. 29
2,227 Newmont Mining Corp. 93
1,828 Phelps Dodge Corp. 104
1,573 Reynolds Metals Co. 79
--------
625
--------
METAL & MINERAL PRODUCTION (0.6%):
2,713 Armco, Inc. 19
8,877 Barrick Gold Corp. 214
2,839 Bethlehem Steel Corp.(c) 40
2,830 Echo Bay Mines Ltd. 27
2,447 Englehard Corp. 94
3,010 Inco Ltd. 78
2,261 Nucor Corp. 109
1,913 USX U.S. Steel Group 58
--------
639
--------
NEWSPAPERS (0.5%):
3,534 Gannett Co., Inc. 186
1,395 Knight-Ridder, Inc. 76
2,552 New York Times Co., Class A 58
3,282 Times Mirror Co., Class A 59
1,670 Tribune Co. 99
--------
478
--------
OFFICE EQUIPMENT & SUPPLIES (0.5%):
4,009 Pitney Bowes, Inc. 149
2,713 Xerox Corp. 334
--------
483
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
51
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
OIL & GAS EXPLORATION AND PRODUCTION (1.7%):
2,358 Amerada Hess Corp. $ 119
1,573 Ashland, Inc. 58
2,623 Coastal Corp. 78
1,237 Columbia Gas System(c) 36
530 Eastern Enterprises 16
6,473 Enron Corp. 220
1,670 Enserch Corp. 29
669 Helmerich & Payne, Inc. 20
1,298 Kerr-McGee Corp. 67
885 Louisiana Land &
Exploration Co. 32
3,085 Noram Energy Corp. 19
7,962 Occidental Petroleum Corp. 183
688 Oneok, Inc. 13
2,516 Oryx Energy Co.(c) 35
1,160 Pennzoil Co. 57
6,622 Phillips Petroleum Co. 232
2,122 Rowan Cos.(c) 15
2,319 Sante Fe Energy Resources,
Inc.(c) 22
2,261 Sonat, Inc. 69
2,752 Sun Co., Inc. 83
7,290 USX - Marathon Group 137
6,231 Unocal Corp. 179
2,294 Williams Co., Inc. 75
--------
1,794
--------
OIL & GAS PRODUCTION (1.2%):
3,201 Burlington Resource, Inc. 125
10,139 Mobil Corp. 962
4,664 Tenneco, Inc. 214
--------
1,301
--------
OIL -- INTEGRATED COMPANIES (6.0%):
12,655 Amoco Corp. 830
4,128 Atlantic Richfield Co. 473
16,606 Chevron Corp. 787
31,639 Exxon Corp. 2,203
13,637 Royal Dutch Petroleum Co. 1,691
6,583 Texaco, Inc. 450
--------
6,434
--------
OILFIELD EQUIPMENT & SERVICES (0.6%):
4,718 Dresser Industries, Inc. 103
2,868 Halliburton Co. 110
6,231 Schlumberger Limited 392
--------
605
--------
PAINT, VARNISHES & ENAMELS (0.1%):
2,200 Sherwin Williams Co. 78
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
PHARMACEUTICALS (4.9%):
20,544 Abbott Laboratories $ 809
1,570 Allergan, Inc. 43
2,106 Alza Corp., Class A(c) 41
13,066 Bristol-Myers Squibb Co. 851
7,468 Eli Lilly & Co. 558
32,116 Merck & Co., Inc. 1,377
8,037 Pfizer, Inc. 696
4,852 Schering-Plough 366
4,441 Upjohn Co. 161
3,379 Warner-Lambert Co. 269
--------
5,171
--------
PHOTOGRAPHY (0.5%):
8,692 Eastman Kodak Co. 500
1,179 Polaroid Corp. 40
--------
540
--------
POLLUTION CONTROL SERVICES & EQUIPMENT (0.5%):
5,022 Browning-Ferris
Industries, Inc. 166
1,444 Safety Kleen 25
12,342 WMX Technologies, Inc. 336
275 Zurn Industries, Inc. 6
--------
533
--------
PRECISION INSTRUMENTS & RELATED (0.0%):
1,040 Perkin Elmer 32
--------
PUBLISHING, EXCEPT NEWSPAPER (0.9%):
2,103 Deluxe Corp. 65
2,455 Dow Jones & Co., Inc. 86
4,300 Dun & Bradstreet Corp. 224
766 John H. Harland Co. 17
1,218 McGraw Hill, Inc. 91
626 Meredith Corp. 16
3,870 R.R. Donnelley & Sons Co. 132
9,682 Time Warner, Inc. 355
--------
986
--------
RADIO & TELEVISION (1.2%):
1,555 CBS, Inc. 100
3,930 Capital Cities ABC, Inc. 332
5,775 Comcast Class A Special
Shares 91
300 Comcast Corp., Class A 5
204 Cox Communications, Inc.,
Class A(c) 3
15,585 Tele-Communications, Inc.,
Class A(c) 298
9,087 Viacom, Class B(c) 417
--------
1,246
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
52
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RAILROAD & RAILROAD HOLDING COMPANIES (0.8%):
2,300 Burlington Northern, Inc. $ 137
2,713 CSX Corp. 216
1,964 Conrail, Inc. 107
3,845 Santa Fe Southern Pacific
Corp. 90
5,188 Union Pacific Corp. 285
--------
835
--------
RAILROADS (0.2%):
3,437 Norfolk Southern Corp. 232
--------
RESTAURANTS (0.7%):
607 Luby's Cafeterias, Inc. 12
17,820 McDonald's Corp. 624
1,376 Ryan's Family Steak House(c) 10
1,082 Shoney's, Inc.(c) 12
2,555 Wendy's International 43
--------
701
--------
RETAIL (2.9%):
3,656 American Stores Co. 94
1,945 Brunos, Inc. 24
2,594 Charming Shoppes, Inc. 14
1,848 Dayton Hudson Corp. 124
2,025 Harcourt General, Inc. 83
11,656 K-Mart Corp. 162
3,194 Marriott International, Inc. 115
6,328 May Department Stores 229
2,103 Nordstrom, Inc. 81
5,012 Price/Costco, Inc.(c) 73
8,921 Sears & Roebuck Co. 484
58,600 Wal Mart Stores, Inc. 1,392
3,104 Walgreen Co. 146
3,421 Woolworth Corp. 55
--------
3,076
--------
RETAIL -- SPECIALTY STORES (1.2%):
2,497 Circuit City Stores, Inc. 65
3,715 The Gap 118
1,473 Giant Food, Inc. 40
11,531 Home Depot, Inc. 481
9,096 The Limited, Inc. 194
2,733 Melville Corp. 98
1,592 Pep Boys -- Manny, Moe &
Jack 41
1,867 TJX Cos., Inc. 21
7,268 Toys R Us, Inc.(c) 184
--------
1,242
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RUBBER & RUBBER PRODUCTS (0.2%):
669 B.F. Goodrich, Inc. $ 31
2,122 Cooper Tire & Rubber Co. 52
3,834 Goodyear Tire & Rubber Co. 146
--------
229
--------
SEMICONDUCTORS (1.3%):
2,100 Applied Materials, Inc.(c) 129
10,550 Intel Corp. 1,080
2,550 Micron Technology, Inc. 210
--------
1,419
--------
SERVICES (NON-FINANCIAL) (0.4%):
3,379 Amgen, Inc.(c) 246
3,050 First Data Corp. 172
1,240 Ogden Corp. 25
--------
443
--------
SHOES, LEATHER GOODS & CLOTHING (0.2%):
452 Brown Group, Inc. 13
1,906 Nike, Inc. 146
2,061 Reebok International Ltd. 64
1,237 Stride Rite Corp. 15
--------
238
--------
SOAPS & CLEANING AGENTS (1.5%):
1,395 Clorox Co. 82
3,670 Colgate Palmolive, Inc. 258
17,471 Procter & Gamble Co. 1,221
--------
1,561
--------
SOFTWARE & COMPUTER SERVICES (2.0%):
1,198 Autodesk, Inc. 41
4,125 Computer Associates
International, Inc. 266
1,271 Lotus Development Corp.(c) 40
14,900 Microsoft Corp.(c) 1,220
9,462 Novell, Inc.(c) 206
10,919 Oracle Systems Corp.(c) 333
630 Shared Medical Systems 24
--------
2,130
--------
STEEL (0.0%):
2,319 Worthington Industries, Inc. 44
--------
TAX RETURN PREPARATION (0.1%):
2,652 H. & R. Block 112
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
53
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TELECOMMUNICATIONS (2.3%):
12,612 Airtouch Communications(c) $ 339
4,800 Alltel Corp. 119
11,144 Bell Atlantic Corp. 612
649 M A Com, Inc.(c) 8
6,447 Northern Telecom Ltd. 235
10,772 Pacific Telesis Group 333
1,966 Scientific-Atlanta, Inc. 45
8,866 Sprint Corp. 293
11,591 U.S. West, Inc. 480
--------
2,464
--------
TEXTILE MANUFACTURING (0.1%):
866 Hartmarx Corp.(c) 5
313 Oshkosh B Gosh, Inc. 5
1,001 Russell Corp. 30
452 Springs Industries, Inc.,
Class A 18
1,631 V.F. Corp. 82
--------
140
--------
TOBACCO & TOBACCO PRODUCTS (1.7%):
5,149 American Brands, Inc. 209
21,904 Philip Morris Cos., Inc. 1,484
5,146 UST, Inc. 145
--------
1,838
--------
TOOLS & HARDWARE MANUFACTURING (0.2%):
2,122 Black & Decker Corp. 64
1,121 Snap On Tools, Inc. 42
1,160 Stanley Works 46
746 Timken Co. 30
--------
182
--------
TOYS & BICYCLES -- MANUFACTURING (0.1%):
5,725 Mattel, Inc. 136
--------
TRANSPORTATION -- AIR (0.1%):
3,650 Southwest Airlines Co. 84
--------
TRANSPORTATION LEASING & TRUCKING (0.2%):
924 Consolidated Freightways,
Inc.(c) 24
1,395 Federal Express Corp.(c) 95
1,101 Pittston Services Group 26
963 Roadway Services, Inc. 47
2,006 Ryder Systems, Inc. 47
707 Yellow Corp. 13
--------
252
--------
TRUCKS -- MANUFACTURING (0.1%):
236 Nacco Industries, Inc. 13
6,073 Placer Dome, Inc. 144
--------
157
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
UTILITIES -- ELECTRIC (3.0%):
4,697 American Electric Power $ 154
4,047 Carolina Power & Light 111
4,855 Central & South West Corp. 120
3,728 Cinergy Corp. 94
6,014 Consolidated Edison Co. NY,
Inc. 167
3,653 Detroit Edison Co. 103
4,415 Dominion Resources 161
5,188 Duke Power Co. 205
5,761 Entergy Corp. 125
4,735 FPL Group, Inc. 174
3,301 Houston Industries 130
3,676 Niagara Mohawk Power Corp. 51
1,670 Northern States Power Co.
Minnesota 74
3,931 Ohio Edison 79
7,196 Pacificorp 137
5,640 Peco Energy Co. 145
6,231 Public Service Enterprise 171
1,101 Raychem Corp. 39
11,438 SCEcorp. 192
16,712 Southern Co. 345
5,759 Texas Utilities Co. 188
5,423 Unicom Corp. 142
2,594 Union Electric Co. 92
--------
3,199
--------
UTILITIES -- ELECTRIC & GAS (0.4%):
3,724 Baltimore Gas & Electric 88
11,024 Pacific Gas & Electric Co. 296
904 Peoples Energy Corp. 23
--------
407
--------
UTILITIES -- NATURAL GAS (0.3%):
2,358 Consolidated Natural Gas 93
1,315 Nicor, Inc. 32
4,022 Pacific Enterprises 99
3,827 Panhandle Eastern Corp. 92
--------
316
--------
UTILITIES -- TELECOMMUNICATIONS (5.4%):
39,898 A T & T Corp. 2,025
14,016 Ameritech Corp. 631
12,636 Bellsouth Corp. 774
24,513 GTE Corp. 837
17,340 MCI Telecommunications Corp. 377
10,733 Nynex Corp. 439
15,249 SBC Communication, Inc. 673
--------
5,756
- ----------------------------------------------------------
TOTAL COMMON STOCKS 95,925
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
54
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BILLS (0.4%)
400,000 5.76%, 6/15/95 $ 397
- ----------------------------------------------------------
Total U.S. Treasury Bills 397
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (0.9%)
938,389 Shearson U.S. Treasury Fund 938
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 938
- ----------------------------------------------------------
TOTAL (COST $96,230)(B) $105,660
- ----------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $105,834.
(b) 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 $498. 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 $ 11,629
Unrealized depreciation (2,697)
--------
Net unrealized appreciation $ 8,932
=========
</TABLE>
(c) Represents non-income producing securities.
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------
FUTURES CONTRACTS
</TABLE>
<TABLE>
<CAPTION>
MARKET
NUMBER OF VALUE
CONTRACTS (000)
<S> <C> <C>
Short, Standard & Poor's 500
Index Futures Contracts, face
amount $8,788, expiring
6/16/95 35 $9,043
------
Total Futures Contracts $9,043
=======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
55
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMERCIAL PAPER (5.4%)
FINANCIAL SERVICES (5.4%):
7,000,000 Ford Motor Credit Corp.,
5.94%, 5/8/95 $ 7,000
7,000,000 General Electric Credit
Corp., 5.94%, 5/8/95 7,000
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 14,000
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (91.8%)
AEROSPACE/DEFENSE (5.0%):
73,000 Boeing Co. 4,015
48,000 General Dynamics Corp. 2,226
34,500 Lockheed Martin Corp.(c) 1,992
65,000 Raytheon Co. 4,729
--------
12,962
--------
AUTOMOTIVE (3.4%):
65,000 Chrysler Corp. 2,803
86,000 Ford Motor Co. 2,322
47,000 Pep Boys-Manny, Moe & Jack 1,210
35,900 TRW, Inc. 2,670
--------
9,005
--------
BANKS (7.4%):
93,000 BankAmerica Corp. 4,603
95,000 Comerica, Inc. 2,731
76,000 CoreStates Financial Corp. 2,479
77,000 First Union Corp. 3,484
81,000 J.P. Morgan & Co., Inc. 5,316
30,000 Norwest Corp. 795
--------
19,408
--------
BEVERAGES (1.2%):
53,000 Anheuser Busch Co., Inc. 3,081
--------
CHEMICALS (2.6%):
25,000 Dow Chemical Co. 1,738
31,000 Eastman Chemical 1,759
45,000 Lubrizol Corp. 1,569
15,000 Nalco Chemical Co. 525
60,000 RPM, Inc., Ohio 1,185
--------
6,776
--------
COMPUTER SOFTWARE (1.5%):
29,000 Microsoft Corp.(c) 2,374
67,000 Novell, Inc.(c) 1,457
--------
3,831
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
COMPUTERS & OFFICE EQUIPMENT (1.2%):
12,000 International Business
Machines Corp. $ 1,137
53,000 Pitney Bowes, Inc. 1,968
--------
3,105
--------
ELECTRICAL EQUIPMENT (2.6%):
22,500 Emerson Electric Co. 1,513
95,000 General Electric Co. 5,320
--------
6,833
--------
ELECTRONICS (2.5%):
50,000 Hewlett Packard Co. 3,306
31,000 Intel Corp. 3,174
--------
6,480
--------
FINANCIAL SERVICES (4.3%):
70,000 American Express Co. 2,433
105,000 American General Corp. 3,465
32,000 Federal National Mortgage
Assoc. 2,824
52,500 Household International,
Inc. 2,461
--------
11,183
--------
FOOD (0.4%):
31,000 Pioneer Hi-Bred
International, Inc. 1,163
--------
HEALTH CARE (1.1%):
75,000 Abbott Laboratories 2,953
--------
HOME PRODUCTS (1.9%):
57,000 Newell Co. 1,347
45,000 Sherwin Williams Co. 1,603
51,500 Stanley Works 2,041
--------
4,991
--------
INSURANCE (3.4%):
64,000 Aetna Life & Casualty Co. 3,648
77,000 Allstate 2,339
23,000 Chubb Corp. 1,840
25,000 St. Paul Cos., Inc.(c) 1,203
--------
9,030
--------
INDUSTRIAL - MISCELLANEOUS (2.6%):
42,000 Allied Signal, Inc. 1,664
35,000 Minnesota Mining &
Manufacturing Co. 2,087
25,000 Textron, Inc. 1,425
62,000 WMX Technologies, Inc. 1,690
--------
6,866
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
56
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MACHINERY & MANUFACTURING (1.5%):
45,000 Cooper Industries $ 1,755
27,000 Deere & Co. 2,214
--------
3,969
--------
MEDIA (1.9%):
30,001 Cox Communications, Inc.
Class A(c) 458
40,000 Dun & Bradstreet Corp. 2,085
43,000 Time Warner, Inc. 1,575
50,000 Times Mirror Co., Class A 906
--------
5,024
--------
METALS & MINING (2.8%):
63,000 Aluminum Co. of America 2,827
70,000 Cyprus Amax Minerals 1,951
80,000 USX U.S. Steel Group 2,440
--------
7,218
--------
OIL - INTEGRATED (DOMESTIC) (3.1%):
34,000 Atlantic Richfield Co. 3,893
117,500 Phillips Petroleum Co. 4,113
--------
8,006
--------
OIL - INTEGRATED (INTERNATIONAL) (8.4%):
111,500 Chevron Corp. 5,282
34,000 Exxon Corp. 2,367
73,000 Mobil Corp. 6,926
107,000 Texaco, Inc. 7,316
--------
21,891
--------
OILFIELD WELL EQUIPMENT & SERVICES (1.3%):
110,000 Baker Hughes, Inc. 2,475
13,000 Schlumberger Ltd. 817
--------
3,292
--------
PAPER & FOREST PRODUCTS (3.9%):
47,000 Georgia Pacific Corp. 3,731
61,500 International Paper Co. 4,736
37,500 Union Camp Corp. 1,880
--------
10,347
--------
PHARMACEUTICALS (3.6%):
13,800 American Home Products Corp. 1,064
55,000 Merck & Co., Inc. 2,358
40,000 Pfizer, Inc. 3,465
35,000 Schering-Plough 2,638
--------
9,525
--------
RESTAURANTS (0.9%):
65,000 McDonald's Corp. 2,275
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RETAIL - FOOD & DRUGS (1.2%):
75,000 Supervalu, Inc. $ 1,978
25,000 Walgreen Co. 1,175
--------
3,153
--------
RETAIL - TRADE (4.0%):
51,000 Dayton Hudson Corp. 3,423
83,000 Sears & Roebuck Co. 4,503
--------
7,926
--------
SOAPS & PERSONAL CARE (1.8%):
45,000 Avon Products 2,846
25,000 Procter & Gamble Co. 1,747
--------
4,593
--------
TELECOMMUNICATIONS (7.3%):
168,500 A T & T Corp. 8,551
15,000 Ameritech Corp. 675
43,000 Comsat Corp. 860
155,000 GTE Corp. 5,289
90,000 Nynex Corp. 3,679
--------
19,054
--------
TOBACCO (1.7%):
47,000 Philip Morris Cos., Inc. 3,184
42,000 UST, Inc. 1,181
--------
4,365
--------
TRANSPORTATION (1.2%):
8,000 Burlington Northern, Inc. 476
18,500 Norfolk Southern Corp. 1,246
28,000 Roadway Services, Inc. 1,358
--------
3,080
--------
UTILITIES - ELECTRIC (5.1%):
130,000 Consolidated Edison Co. NY,
Inc. 3,608
70,000 Duquesne Light Co. 2,363
95,000 Public Service Co. of
Colorado 2,862
141,000 Texas Utilities Co. 4,600
--------
13,433
--------
UTILITIES - NATURAL GAS (2.2%):
65,500 Consolidated Natural Gas 2,579
39,000 Enron Corp. 1,326
30,000 Enserch Corp. 518
48,000 Peoples Energy Corp. 1,212
--------
5,635
- ----------------------------------------------------------
TOTAL COMMON STOCKS 240,453
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
57
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BILLS (0.2%)
410,000 4.13%, 6/22/95 $ 407
- ----------------------------------------------------------
TOTAL U.S. TREASURY BILLS 407
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (3.1%)
8,188,301 Shearson U.S. Treasury Fund 8,188
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 8,188
- ----------------------------------------------------------
TOTAL (COST 245,679)(B) $263,048
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $261,830.
(b) 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 $168. 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 $ 23,151
Unrealized depreciation (5,950)
--------
Net unrealized appreciation $ 17,201
=========
</TABLE>
(c) Represents non-income producing securities.
- ---------------------------------------------------------
FUTURES CONTRACTS
<TABLE>
<CAPTION>
MARKET
NUMBER OF VALUE
CONTRACTS (000)
<S> <C> <C>
Short, Standard & Poor's 500
Index Futures Contracts,
face amount $2,480, expiring
6/16/95 10 $2,584
------
Total Futures Contracts $2,584
------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
58
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
DIVERSIFIED STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMERCIAL PAPER (1.5%)
FINANCIAL SERVICES (1.5%):
5,000,000 General Motors Acceptance
Corp. 5.94%, 5/3/95 $ 5,000
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 5,000
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (93.9%)
AEROSPACE/DEFENSE (4.7%):
128,500 Boeing Co. 7,067
78,000 General Dynamics Corp. 3,617
80,000 Lockheed Martin Corp.(c) 4,620
--------
15,304
--------
ALUMINUM (1.0%):
70,200 Aluminum Co. of America 3,150
--------
BANKS (6.9%):
125,800 BankAmerica Corp. 6,227
225,000 Comerica, Inc. 6,469
81,800 J.P. Morgan & Co., Inc. 5,368
24,800 National City Corp. 679
132,400 Norwest Corp. 3,509
--------
22,252
--------
BEVERAGES (2.7%):
66,400 Anheuser Busch Co., Inc. 3,859
120,000 PepsiCo, Inc. 4,995
--------
8,854
--------
CHEMICALS (1.8%):
40,200 Dow Chemical Co. 2,794
145,000 RPM, Inc., Ohio 2,864
--------
5,658
--------
COMPUTERS & PERIPHERALS (0.6%):
20,000 International Business
Machines Corp. 1,895
--------
CONGLOMERATES (0.6%):
30,000 Minnesota Mining &
Manufacturing Co. 1,789
--------
COSMETICS & RELATED (2.0%):
100,300 Avon Products 6,344
--------
ELECTRICAL EQUIPMENT (3.3%):
30,000 Emerson Electric Co. 2,017
150,800 General Electric Co. 8,445
--------
10,462
--------
ELECTRONIC COMPUTING EQUIPMENT (0.6%):
50,000 Compaq Computer Corp.(c) 1,900
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ELECTRONIC & ELECTRICAL - GENERAL (2.1%):
85,000 Motorola, Inc. $ 4,834
18,900 Texas Instruments, Inc. 2,003
--------
6,837
--------
ENGINEERING & CONSTRUCTION (1.8%):
113,700 Fluor Corp. 5,855
--------
ENTERTAINMENT (0.8%):
70,400 Promus Cos., Inc.(c) 2,710
--------
FINANCIAL SERVICES (1.1%):
39,000 Federal National Mortgage
Assoc. 3,442
--------
FOREST PRODUCTS (3.5%):
50,000 International Paper Co. 3,850
66,900 Mead Corp. 3,462
78,900 Union Camp Corp. 3,955
--------
11,267
--------
FUNERAL SERVICES (0.5%):
61,000 Service Corp. International 1,723
--------
INDUSTRIAL - MISCELLANEOUS (1.0%):
54,000 Textron, Inc. 3,078
--------
INSURANCE (4.2%):
40,000 Aetna Life & Casualty Co.(c) 2,280
52,900 American International
Group, Inc. 5,647
70,000 Chubb Corp. 5,600
--------
13,527
--------
MANUFACTURING MISCELLANEOUS (1.2%):
100,000 Allied Signal, Inc. 3,962
--------
METALS (1.3%):
134,300 USX U.S. Steel Group 4,096
--------
OFFICE EQUIPMENT & SUPPLIES (1.6%):
136,100 Pitney Bowes, Inc. 5,053
--------
OIL (10.9%):
40,400 Atlantic Richfield Co. 4,626
250,000 Chevron Corp. 11,844
105,500 Exxon Corp. 7,345
165,500 Texaco, Inc. 11,316
--------
35,131
--------
OIL & GAS EXPLORATION (3.6%):
170,000 Enron Corp. 5,780
170,000 Phillips Petroleum Co. 5,950
--------
11,730
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
59
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
DIVERSIFIED STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
OILFIELD EQUIPMENT & SERVICES (4.7%):
235,000 Baker Hughes, Inc. $ 5,287
227,600 Dresser Industries, Inc. 4,979
75,100 Schlumberger Ltd. 4,722
--------
14,988
--------
PHARMACEUTICALS (3.4%):
75,000 Merck & Co., Inc. 3,216
25,000 Pfizer, Inc. 2,166
20,000 Schering-Plough 1,507
50,000 Warner-Lambert Co. 3,988
--------
10,877
--------
POLLUTION CONTROL SERVICES (1.2%):
142,000 WMX Technologies, Inc. 3,870
--------
REAL ESTATE INVESTMENT TRUSTS (0.3%):
28,500 Weingarten Realty Investors 998
--------
RETAIL (1.0%):
46,500 Dayton Hudson Corp. 3,121
--------
RETAIL - SPECIALTY STORES (1.1%):
133,000 Pep Boys - Manny, Moe & Jack 3,425
--------
RUBBER & RUBBER PRODUCTS (2.3%):
120,000 Cooper Tire & Rubber Co.(c) 2,940
119,600 Goodyear Tire & Rubber Co. 4,545
--------
7,485
--------
SEMICONDUCTORS (1.8%):
30,000 Applied Materials, Inc.(c) 1,849
40,000 Intel Corp. 4,095
--------
5,944
--------
SHIPPING (1.1%):
152,650 TNT Freightways Corp. 3,587
--------
SOFTWARE & COMPUTER SERVICES (4.0%):
111,800 Microsoft(c) 9,154
175,000 Novell, Inc.(c) 3,806
--------
12,960
--------
TOBACCO & TOBACCO PRODUCTS (1.7%):
80,000 Philip Morris Cos., Inc. 5,420
--------
UTILITIES - ELECTRIC (5.4%):
200,000 Consolidated Edison Co. NY,
Inc. 5,550
20,000 Duquesne Light Co. 675
150,000 Southern Co. 3,094
248,500 Texas Utilities Co. 8,107
--------
17,426
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
UTILITIES - TELECOMMUNICATIONS (8.1%):
230,000 A T & T Corp. $ 11,673
300,000 GTE Corp. 10,238
98,100 Nynex Corp. 4,010
--------
25,921
- ----------------------------------------------------------
TOTAL COMMON STOCKS 302,041
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (5.0%)
2,433,734 Federated Treasury
Obligation Fund 2,434
13,557,653 Shearson U.S. Treasury Fund 13,557
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 15,991
- ----------------------------------------------------------
TOTAL (COST $292,681)(B) $323,032
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $321,593.
(b) 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 $366. 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 $ 33,693
Unrealized depreciation (3,708)
--------
Net unrealized appreciation $ 29,985
=========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
60
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (97.4%)
BANKS (4.6%):
20,500 BankAmerica Corp. $ 1,015
37,500 Norwest Corp. 994
----------
2,009
----------
BEVERAGES (2.8%):
21,300 Coca Cola Co. 1,238
----------
COMPUTERS & PERIPHERALS (1.1%):
9,000 3Com Corp.(c) 504
----------
CONGLOMERATES (2.7%):
36,000 Corning Glass Works 1,202
----------
COSMETICS & RELATED (3.2%):
17,000 Gillette Co. 1,394
----------
ELECTRICAL EQUIPMENT (5.7%):
26,300 General Electric Co. 1,473
18,700 Johnson Controls, Inc. 1,014
----------
2,487
----------
ELECTRONICS & ELECTRICAL (3.4%):
26,200 Motorola, Inc. 1,490
----------
ENTERTAINMENT (3.0%):
24,000 Walt Disney Co. 1,329
----------
FINANCIAL SERVICES (5.8%):
16,900 Federal National Mortgage
Assoc. 1,491
25,000 First USA, Inc. 1,063
----------
2,554
----------
FOREST PRODUCTS (4.1%):
13,000 Georgia Pacific Corp. 1,032
10,000 International Paper Co. 770
----------
1,802
----------
HOUSEHOLD PRODUCTS (3.2%):
34,300 Newell Co. 810
20,400 Rubbermaid, Inc. 602
----------
1,412
----------
INSURANCE (2.9%):
11,900 American International
Group, Inc. 1,270
----------
LEISURE-RECREATION, GAMING (1.3%):
43,700 International Game
Technology 563
----------
MEDICAL-BIOTECHNOLOGY (0.7%):
4,200 Amgen, Inc.(c) 305
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (1.5%):
23,900 Health Care & Retirement
Corp.(c) $ 675
----------
OIL & GAS EXPLORATION, PRODUCTION (1.6%):
18,000 Burlington Resource, Inc. 704
----------
OIL-INTEGRATED COMPANIES (11.3%):
11,800 Amoco Corp. 774
9,600 Atlantic Richfield Co. 1,099
25,000 Chevron Corp. 1,184
14,100 Mobil Corp. 1,338
8,100 Texaco, Inc. 554
----------
4,949
----------
PHARMACEUTICALS (3.4%):
20,000 Ivax Corp. 517
13,000 Schering-Plough 980
----------
1,497
----------
POLLUTION CONTROL SERVICES (1.8%):
29,000 WMX Technologies, Inc. 790
----------
RETAIL (5.3%):
30,000 The Gap 956
33,300 Home Depot, Inc. 1,390
----------
2,346
----------
SEMICONDUCTORS (3.7%):
16,000 Intel Corp. 1,638
----------
SOAPS & CLEANING AGENTS (3.0%):
18,800 Procter & Gamble Co. 1,814
----------
SOFTWARE & COMPUTER SERVICES (6.0%):
20,000 Microsoft Corp.(c) 1,638
45,000 Novell, Inc.(c) 979
----------
2,617
----------
TELECOMMUNICATIONS (6.8%):
22,400 Telefonos de Mexico 678
21,900 AT&T Corp. 1,111
20,300 SBC Communication, Inc. 1,191
----------
2,980
----------
TOBACCO & TOBACCO RELATED (1.0%):
6,600 Philip Morris Cos., Inc. 447
----------
TRANSPORTATION-AIR (2.3%):
43,700 Southwest Airlines Co. 1,011
----------
UTILITIES-NATURAL GAS (5.0%):
36,500 El Paso Natural Gas 1,068
33,300 Enron Corp. 1,132
----------
2,200
- ------------------------------------------------------------
TOTAL COMMON STOCKS 42,727
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
61
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (2.1%)
98,561 Shearson U.S. Treasury Fund $ 919
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 919
- ------------------------------------------------------------
TOTAL (COST $40,358)(B) $ 43,646
- ---
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $43,861.
(b) 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 $ 5,809
Unrealized depreciation (2,521)
----------
Net unrealized appreciation $ 3,288
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
62
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
SPECIAL VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (94.6%)
AEROSPACE/DEFENSE (3.4%):
113,400 GenCorp, Inc. $ 1,432
29,500 General Dynamics Corp. 1,368
86,700 Thiokol Corp. Delaware 2,416
----------
5,216
----------
AUTOMOTIVE PARTS (4.7%):
44,200 Genuine Parts Co. 1,713
46,600 Hayes Wheels 874
72,200 Kaydon Corp. 1,985
51,600 Mascotech, Inc. 574
13,000 Stewart & Stevenson
Services,
Inc. 487
95,775 T B C Corp.(c) 1,017
33,915 Walbro Corp. 634
----------
7,284
----------
BANKS (5.7%):
30,100 Central Fidelity Banks, Inc. 769
119,200 Comerica, Inc. 3,427
36,401 Michigan National Corp. 3,818
17,500 Star Bank 731
----------
8,745
----------
BEVERAGES (1.0%):
71,000 Coca Cola Enterprises, Inc. 1,588
----------
CHEMICALS (7.8%):
57,875 A. Schulman, Inc. 1,816
42,550 Avery Dennison Corp. 1,729
22,400 Geon Co. 605
32,000 Lubrizol Corp. 1,116
12,900 Lyondell Petrochemical 320
57,500 Olin Corp. 3,213
96,500 RPM, Inc. 1,905
30,000 WD 40 Co. 1,320
----------
12,024
----------
CONSTRUCTION (1.2%):
71,100 Foster Wheeler Corp. 2,631
----------
CONTAINERS (1.1%):
71,000 Sonoco Products Co. 1,766
----------
ELECTRICAL EQUIPMENT (8.4%):
39,200 Arrow Electronics, Inc.(c) 1,823
22,500 W.W. Grainger, Inc. 1,361
121,332 Mark IV Industries 2,184
33,300 Molex Corp. 1,257
45,400 Teleflex, Inc. 1,878
75,529 Vishay Intertechnology,
Inc.(c) 4,466
----------
12,969
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ENVIRONMENTAL CONTROL (1.1%):
179,650 Laidlaw, Inc. Class B $ 1,617
----------
FINANCIAL SERVICES (4.6%):
53,300 Equifax, Inc. 1,726
61,850 MBNA Corp. 1,870
42,800 PMI Group, Inc.(c) 1,594
69,100 UJB Financial Corp. 1,892
----------
7,082
----------
FOOD DISTRIBUTORS (0.3%):
15,500 SuperValu, Inc. 409
----------
FOOD PROCESSING & PACKAGING (2.4%):
72,100 Dean Foods Co. 2,055
45,250 IBP, Inc. 1,674
----------
3,729
----------
FOREST PRODUCTS (1.9%):
62,262 Pentair, Inc. 2,848
----------
FUNERAL SERVICES (1.8%)
95,500 Service Corp. International 2,698
----------
FURNITURE (0.7%):
28,300 Leggett & Platt, Inc. 1,090
----------
HEAVY MACHINERY (2.3%):
61,800 Baker Hughes, Inc. 1,391
40,650 Tyco Laboratories, Inc. 2,134
----------
3,525
----------
HOLDING COMPANIES (0.2%):
7,900 Northern Trust Corp.(c) 289
----------
HOTELS & MOTELS (1.4%):
72,300 Mirage Resorts, Inc.(c) 2,169
----------
INSURANCE (5.4%):
46,200 American Re Corp. 1,756
55,200 Kemper Corp. 2,498
47,500 Progressive Corp. 1,793
34,500 TransAtlantic Holdings 2,190
----------
8,237
----------
MACHINE TOOLS (2.9%):
90,900 Albany International Corp. 1,988
22,900 Greenfield Industries 676
67,200 Manitowoc Industries 1,756
----------
4,420
----------
MANUFACTURING (2.2%):
38,000 Briggs & Stratton Corp. 1,335
19,100 Hillenbrand 566
56,466 Pall Corp. 1,320
11,100 Paragon Trade Brands, 172
Inc.(c)
----------
3,393
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
63
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
SPECIAL VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (3.8%):
139,300 Community Psychiatric
Centers, Inc.(c) $ 1,845
43,200 Lincare Holdings(c) 1,334
60,100 Quorum Health Group(c) 1,240
7,100 Ventritex(c) 107
42,437 Vivra, Inc.(c) 1,363
----------
5,889
----------
MEDICAL SUPPLIES (0.2%):
10,000 Sunrise Medical, Inc.(c) 303
----------
METALS (3.3%):
86,100 CBI Industries, Inc. 2,132
28,000 Kennametal, Inc. 938
31,800 Minerals Technologies, Inc. 1,057
32,500 USX U.S. Steel Group 991
----------
5,118
----------
NEWSPAPERS (1.6%):
41,100 Tribune Co. 2,430
----------
OIL & GAS EXPLORATION (2.1%):
80,100 Anadarko Petroleum 3,294
----------
OIL & GAS PRODUCTION (1.2%):
46,100 Snyder Oil Corp. 663
42,500 Vastar Resources, Inc. 1,137
----------
1,800
----------
RETAIL (1.7%):
70,800 Hannaford Brothers 1,867
22,500 TJX Companies, Inc. 259
13,800 Tiffany & Co. 443
----------
2,569
----------
RUBBER (1.0%):
15,800 Bandag, Inc. 938
4,500 Bandag, Inc. Class A 249
19,125 Standard Products Co. 378
----------
1,565
----------
SEMICONDUCTORS (0.5%):
13,500 Applied Materials Inc.(c) 832
----------
SHOES, LEATHER GOODS (1.3%):
25,600 Nike, Inc. 1,962
----------
SOFTWARE & COMPUTER SERVICES (1.2%):
10,000 American Software, Inc. 41
14,750 Analysts International Corp. 372
28,300 Policy Management
Systems(c) 1,426
----------
1,839
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
STEEL (1.5%):
36,700 A.K. Steel Holding Corp.(c) $ 987
68,620 Worthington Industries, Inc. 1,295
----------
2,282
----------
TELECOMMUNICATIONS (0.8%):
4,600 Comsat Corp. 92
53,333 Federal Signal Corp. 1,207
----------
1,299
----------
TOBACCO (0.4%):
23,773 Universal Corp. 544
----------
TRANSPORTATION (3.8%):
45,350 Gatx Corp. 2,041
40,800 Pittston Services Group 969
80,750 Illinois Central Corp. 2,836
----------
5,846
----------
UTILITIES -- ELECTRIC & GAS (8.0%):
32,400 Brooklyn Union Gas Co. 786
27,020 DQE Co. 912
118,600 Florida Progress Corp. 3,617
148,300 Northeast Utilities 3,244
79,400 Public Service Co. of 2,392
Colorado
8,500 Raychem Corp. 303
27,700 Washington Gas Light Co. 1,080
----------
12,334
----------
UTILITIES -- TELECOMMUNICATIONS (1.1%):
69,400 LDDS Communications(c) 1,665
- ------------------------------------------------------------
TOTAL COMMON STOCKS 145,300
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (5.6%)
1,806,695 Federated Treasury 1,806
Obligation
6,859,515 Shearson U.S. Treasury Fund 6,860
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 8,666
- ------------------------------------------------------------
TOTAL (COST $142,586)(A) $ 153,966
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $153,591.
(b) 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 $ 16,787
Unrealized depreciation (5,407)
----------
Net unrealized appreciation $ 11,380
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
64
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments
SPECIAL GROWTH FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (94.8%)
AUTOMOTIVE PARTS (3.8%):
8,900 Breed Technologies, Inc. $ 179
20,000 Kaydon Corp. 550
----------
729
----------
BANKS (1.7%):
8,163 First Bank Systems, Inc. 331
----------
COMPUTERS & PERIPHERALS (4.9%):
12,000 Optical Data Systems(c) 486
10,000 Sungard Data Systems,
Inc.(c) 466
----------
952
----------
DRUG STORES (1.0%):
7,000 Eckerd Corp.(c) 204
----------
ELECTRONIC & ELECTRICAL (2.5%):
11,000 Avnet, Inc. 490
----------
FINANCIAL SERVICES (4.0%):
34,300 Aames Financial Corp. 429
8,500 Green Tree Financial Corp. 347
----------
776
----------
FURNITURE (4.1%):
24,000 Juno Lighting 498
11,000 LaZBoy Chair Co. 297
----------
795
----------
HOSPITAL & NURSING EQUIPMENT (3.1%):
15,000 Invacare Corp. 593
----------
INSURANCE -- LIFE (5.3%):
48,090 Gainsco, Inc. 511
14,500 Reliastar Financial Corp. 520
----------
1,031
----------
LEISURE -- RECREATION, GAMING (2.2%):
16,000 Aldila(c) 98
26,200 Callaway Golf Co. 324
----------
422
----------
MISCELLANEOUS MANUFACTURING (5.0%):
18,000 Keystone International, Inc. 378
25,000 Pall Corp. 584
----------
962
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (7.4%):
15,800 Lincare Holdings(c) $ 488
14,300 Mid Atlantic Medical
Services,
Inc.(c) 247
5,400 Pacificare Health System(c) 335
15,200 Sun Healthcare Group(c) 366
----------
1,436
----------
METALS (7.3%):
40,000 Addington Resources, Inc.(c) 450
13,000 Commercial Metals Co. 345
15,000 Mueller Industries, Inc.(c) 624
----------
1,419
----------
OFFICE EQUIPMENT & SUPPLIES (2.5%):
50,000 Checkmate Electronics(c) 481
----------
OIL & GAS EXPLORATION (5.6%):
10,000 Barrett Resources Corp.(c) 235
13,000 Devon Energy Corp. 270
10,000 H.S. Resource, Inc.(c) 165
18,000 Newfield Exploration(c) 414
----------
1,084
----------
PHARMACEUTICALS (3.2%):
18,000 Teva Pharmaceutical
Industries Ltd. 617
----------
PUBLISHING (2.9%):
5,000 Belo Corp. 300
15,000 Valassis Communications(c) 263
----------
563
----------
RETAIL (5.1%):
23,000 Lillian Vernon Corp. 469
16,000 Medicine Shoppe
International, Inc. 512
----------
981
----------
SEMICONDUCTORS (11.7%):
12,000 Advanced Micro Devices(c) 432
5,300 Alliance Semiconductor
Corp.(c) 215
14,100 Atmel Corp.(c) 620
30,000 Integrated Circuit 311
Systems(c)
5,000 Lam Research Corp.(c) 253
7,400 Linear Technology 442
----------
2,273
----------
SERVICES (NON-FINANCIAL) (1.8%):
20,000 Safecard Services 350
----------
TELECOMMUNICATIONS (2.4%):
21,000 Digi International, Inc.(c) 467
352 Intellicall, Inc.(c) 2
----------
469
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
65
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments -- Continued
SPECIAL GROWTH FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TRANSPORTATION -- RAIL (2.3%):
16,000 Railtex, Inc.(c) $ 444
----------
TRUCKING (5.0%):
21,000 American Freightways, 491
Inc.(c)
20,500 TNT Freightways Corp. 481
----------
972
- ------------------------------------------------------------
TOTAL COMMON STOCKS 18,374
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (6.0%)
295,621 Federated Treasury 296
Obligation
868,947 Shearson U.S. Treasury Fund 869
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,165
- ------------------------------------------------------------
TOTAL (COST $18,177)(B) $ 19,539
- ----------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $19,386.
(b) 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 $34. 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 $ 2,271
Unrealized depreciation (943)
----------
Net unrealized appreciation $ 1,328
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
66
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
OHIO REGIONAL STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (94.7%)
AEROSPACE/DEFENSE (0.2%):
5,361 GenCorp, Inc. $ 67
----------
AMUSEMENT & RECREATION SERVICES (0.6%):
7,000 Cedar Fair L.P. 219
----------
AUTOMOTIVE PARTS (5.2%):
24,000 Dana Corp. 617
15,000 Lamson & Sessions Co.(c) 96
15,000 TRW, Inc. 1,115
----------
1,828
----------
BANKS (7.2%):
26,000 Charter One Financial, Inc. 594
14,000 First Merit Corp. 324
9,375 Huntington Bancshares, Inc. 176
23,000 National City Corp. 630
15,000 Provident Bancorp 506
2,000 Second Bancorp 45
6,000 Star Bank 250
----------
2,525
----------
BUILDING MATERIALS (1.2%):
10,000 Medusa Corp. 226
5,000 Owens Corning Fiberglas
Corp.(c) 183
----------
409
----------
CHEMICALS (8.1%):
12,500 A. Schulman, Inc. 392
16,000 Chemed Corp. 492
23,500 Chempower, Inc.(c) 73
20,000 Ferro Corp. 568
6,000 Lesco, Inc. 95
20,000 Lubrizol Corp. 697
26,250 RPM, Inc. 518
----------
2,835
----------
CONSUMER GOODS (2.1%):
12,000 American Greetings Corp. 327
43,000 Gibson Greetings, Inc. 430
----------
757
----------
ELECTRICAL EQUIPMENT (4.7%):
60,000 Pioneer-Standard
Electronics,
Inc. 1,170
20,000 Robbins & Myers Inc. 485
----------
1,655
----------
ENGINEERING (0.3%):
5,000 Corrpro(c) 93
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FINANCIAL SERVICES (2.4%):
15,000 Haverfield Corp. $ 203
16,000 McDonald & Co. Investments 232
24,000 State Auto Financial 402
----------
837
----------
FOOD DISTRIBUTORS (0.9%):
10,000 Chiquita Brands 134
International
7,000 Kroger Co.(c) 178
----------
312
----------
FOREST PRODUCTS (2.9%):
12,000 Mead Corp. 621
15,000 Reynolds & Reynolds Co. 398
----------
1,019
----------
HEALTH CARE (0.4%):
9,000 Health Power, Inc.(c) 138
----------
HOSPITAL & NURSING EQUIPMENT (5.6%):
25,000 Invacare Corp. 988
20,000 Omnicare, Inc. 972
----------
1,960
----------
HOUSEHOLD GOODS (3.1%):
26,221 Lancaster Colony Corp. 911
20,000 Sun Television & Appliance 168
----------
1,079
----------
INDUSTRIAL SERVICES (3.9%):
45,000 ACME Cleveland Corp. 934
22,000 Amcast Industrial Corp. 440
----------
1,374
----------
INSURANCE (2.4%):
10,000 Ohio Casualty 293
15,000 Progressive Corp. 566
----------
859
----------
MACHINE TOOLS (8.3%):
15,750 Bearings, Inc. 488
17,000 Cincinnati Milacron, Inc. 455
37,050 Commercial Intertech Corp. 820
46,500 Gorman Rupp Co. 703
8,250 LDI Corp.(c) 27
5,000 Monarch Machine Tool Co. 49
25,000 Telxon Corp. 393
----------
2,935
----------
MANUFACTURING (2.2%):
10,000 Parker-Hannifin Corp. 520
7,000 TRINOVA Corp. 243
----------
763
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
67
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
OHIO REGIONAL STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
METALS (1.0%):
10,000 Brush Wellman, Inc. $ 197
5,000 Cold Metal Products, Inc.(c) 34
10,000 Park-Ohio Industries, 114
Inc.(c)
----------
345
----------
OFFICE EQUIPMENT & SUPPLIES (2.7%):
23,000 Diebold, Inc. 955
----------
OIL & GAS EXPLORATION (1.8%):
33,000 USX -- Marathon Group 619
----------
PAINT, VARNISHES & ENAMELS (1.4%):
14,000 Sherwin Williams Co. 499
----------
POLLUTION CONTROL SERVICES (0.7%):
51,100 Mid American Waste
Systems(c) 243
----------
PRECISION INSTRUMENTS (1.4%):
30,000 Keithley Instruments, Inc. 506
----------
PRINTING (0.3%):
20,000 Multi-Color Corp.(c) 98
----------
PUBLISHING (2.0%):
25,000 Scripps (E.W.) Co. 716
----------
REAL ESTATE INVESTMENT TRUSTS (1.0%):
16,000 Health Care REIT, Inc. 348
----------
RESTAURANTS (3.3%):
30,000 Bob Evans Farms, Inc. 615
20,000 Frisch's Restaurants 185
22,000 Wendy's International 374
----------
1,174
----------
RETAIL (2.8%):
15,000 Consolidated Stores Corp.(c) 257
17,000 Fabri-Centers of America, 315
Inc.(c)
15,000 The Limited, Inc. 320
10,000 Value City Department
Stores,
Inc.(c) 90
----------
982
----------
RUBBER & RUBBER PRODUCTS (1.6%):
5,000 Cooper Tire & Rubber Co. 123
12,000 Goodyear Tire & Rubber Co. 456
----------
579
----------
SERVICES (NON-FINANCIAL) (0.3%):
4,200 Roto Rooter, Inc. 103
----------
SHIPPING (0.3%):
3,000 Oglebay Norton Co. 98
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
STEEL (3.3%):
35,000 Shiloh(c) $ 333
9,000 Timken Co. 363
25,000 Worthington Industries, Inc. 472
----------
1,168
----------
TEXTILE MANUFACTURING (1.1%):
25,000 Essef Corp.(c) 394
----------
TRANSPORTATION (1.6%):
22,500 Comair Holding, Inc. 567
----------
TRUCKS (1.2%):
20,000 Thor Industries, Inc. 418
----------
UTILITIES -- ELECTRIC (3.2%):
14,000 American Electric Power 459
22,500 D.P.L., Inc. 470
10,000 Ohio Edison 200
----------
1,129
----------
UTILITIES -- TELECOMMUNICATIONS (2.0%):
30,000 Cincinnati Bell 720
- ------------------------------------------------------------
TOTAL COMMON STOCKS 33,325
- ------------------------------------------------------------
- ----------------------------------------------
RIGHTS & WARRANTS (0.2%)
10,000 Cincinnati Microwave, 59
Inc.(c)
- ------------------------------------------------------------
TOTAL RIGHTS & WARRANTS 59
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (5.1%)
303,843 Federated Treasury 304
Obligation
1,476,549 Shearson U.S. Treasury Fund 1,476
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,780
- ------------------------------------------------------------
TOTAL (COST $24,640)(B) $ 35,164
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $35,183.
(b) 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 $ 12,135
Unrealized depreciation (1,611)
----------
Net unrealized appreciation $ 10,524
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
68
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
CORPORATE BONDS (0.1%)
FRANCE (0.1%):
1,313 Axa SA Convertible(c),
4.50%, 1/1/99 $ 78
- ----------------------------------------------------------
TOTAL CORPORATE BONDS 78
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (97.2%)
AUSTRALIA (1.0%):
Energy Sources
60,000 The Broken Hill Proprietary
Co., Ltd.(c) 873
- ----------------------------------------------------------
TOTAL AUSTRALIA 873
- ----------------------------------------------------------
BRITAIN (9.1%):
BANKS (1.3%):
231,000 Standard Chartered Bank 1,119
--------
BROADCASTING & PUBLISHING (1.2%):
78,400 Reed International 1,009
--------
BUSINESS & PUBLIC SERVICES (4.3%):
122,200 British Airport Authority 932
122,600 Cable Wireless 792
65,800 Carlton Communications Plc. 1,000
127,800 Reuters 972
--------
3,696
--------
OIL & GAS PRODUCTION (1.2%):
144,400 British Petroleum 1,040
--------
TELECOMMUNICATIONS EQUIPMENT (1.1%):
311,000 Vodafone 973
- ----------------------------------------------------------
TOTAL BRITAIN 7,837
- ----------------------------------------------------------
FINLAND (1.2%):
ELECTRONIC & ELECTRICAL (1.2%):
25,000 Nokia AB 1,022
- ----------------------------------------------------------
TOTAL FINLAND 1,022
- ----------------------------------------------------------
FRANCE (9.9%):
ADVERTISING (0.7%):
5,750 Euro RSCG Worldwide 634
--------
AUTOMOTIVE PARTS (1.3%):
18,700 Valeo 1,067
--------
ELECTRONIC & ELECTRICAL (2.3%):
680 LeGrand 987
13,300 Schneider 1,024
--------
2,011
--------
INSURANCE (1.2%):
19,700 Axa 1,040
--------
MANUFACTURING - CONSUMER GOODS (1.3%):
4,550 Pinault-Printemps 1,031
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RECREATION/OTHER CONSUMER GOODS (1.9%):
6,700 BIC Corp. $ 1,119
3,600 Castorama(c) 597
--------
1,716
--------
RETAIL (1.2%):
2,120 Carrefour 1,065
- ----------------------------------------------------------
TOTAL FRANCE 8,564
- ----------------------------------------------------------
GERMANY (7.6%):
BANKS (2.1%):
1,980 Depfa Bank 1,007
1,620 Deutsche Bank(c) 796
--------
1,803
--------
COSMETICS & RELATED (1.2%):
1,360 Beiersdorf AG 1,061
--------
ENGINEERING/INDUSTRIAL
CONSTRUCTION (1.0%):
2,620 AGIV 844
--------
HEALTH & PERSONAL CARE (1.1%):
1,260 Schering 938
--------
MACHINE TOOLS (1.1%):
3,550 Mannesmann 970
--------
UTILITIES - ELECTRIC (1.1%):
2,660 Veba 994
- ----------------------------------------------------------
TOTAL GERMANY 6,610
- ----------------------------------------------------------
HOLLAND (8.4%):
BREWERIES (1.0%):
6,400 Heineken Holdings 839
--------
COMPUTERS & PERIPHERALS (0.5%):
10,900 Getronics 447
--------
FOREST PRODUCTS (1.0%):
29,300 Koninklijke KNP 885
--------
INSURANCE (1.1%):
18,600 Internationale Nederlanden 982
--------
LEISURE (1.2%):
18,400 Polygram 1,040
--------
POLLUTION CONTROL SERVICES (1.0%):
7,500 Ver Ned Uitgevers(c) 840
--------
SERVICES (NON-FINANCIAL) (1.2%):
16,600 Randstad Holdings 996
--------
SHIPPING & SHIPBUILDING (1.0%):
32,600 IHC Caland 892
--------
WHOLESALE & INTERNATIONAL TRADE (0.4%):
4,500 Hagemeyer 389
- ----------------------------------------------------------
TOTAL HOLLAND 7,310
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
69
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
HONG KONG (5.3%):
BANKS (1.0%):
217,000 Guoco Group $ 824
--------
DIVERSIFIED (1.9%):
197,000 Hutchinson Whampoa 855
122,000 Swire Pacific "A" 816
--------
1,671
--------
RADIO & TELEVISION (0.8%):
179,000 Television Broadcast 666
--------
REAL ESTATE (1.6%):
3,000,000 China Resources 752
124,000 Henderson Land 639
--------
1,391
- ----------------------------------------------------------
TOTAL HONG KONG 4,552
- ----------------------------------------------------------
ITALY (1.8%):
AUTOMOBILES (0.4%):
37,800 Pininfarina 363
--------
INSURANCE (0.5%):
20,000 Assicurazioni Generali 481
--------
UTILITIES - TELECOMMUNICATIONS (0.9%):
282,000 Telecom Italia 751
- ----------------------------------------------------------
TOTAL ITALY 1,595
- ----------------------------------------------------------
JAPAN (33.3%):
AEROSPACE/DEFENSE (0.8%):
100,000 Mitsubishi Heavy Industry 726
--------
BANKS (4.0%):
62,000 Asahi Bank 797
32,000 Mitsubishi Bank 785
47,000 Sanwa Bank 1,027
38,000 Sumitomo Bank 823
--------
3,432
--------
BUILDING MATERIALS (0.9%):
22,000 Tostem Corp. 799
--------
BUSINESS & PUBLIC SERVICE (0.6%):
17,600 Mos Food Services 517
--------
CHEMICALS (1.6%):
36,000 Shin Etsu Chemical 698
127,000 Tosoh Corp.(c) 676
--------
1,374
--------
ELECTRICAL EQUIPMENT (3.5%):
7,300 Keyence(c) 779
14,000 Kyocera 1,083
28,000 Murata Manufacturing 1,126
--------
2,988
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ELECTRONIC & ELECTRICAL (5.2%):
52,000 Canon, Inc. $ 860
88,000 Hitachi, Ltd. 896
9,000 Riso Kagaku 614
25,000 Rohm Co., Ltd. 1,157
32,000 Tokyo Electron 998
--------
4,525
--------
ENGINEERING/INDUSTRIAL CONSTRUCTION (0.3%):
11,000 Kinden 219
--------
FINANCE (1.6%):
50,000 Daiwa Securities 631
12,000 Nichiei Co. 767
--------
1,398
--------
HOUSEHOLD GOODS (0.9%):
20,400 Amway Japan 760
--------
MANUFACTURING - CAPITAL GOODS (1.2%):
16,000 Secom & Co. 1,044
--------
MERCHANDISING (0.9%):
11,000 Seven-eleven Japan 792
--------
PHARMACEUTICALS (1.3%):
51,000 Yamanouchi Pharmaceutical 1,147
--------
RADIO & TELEVISION (0.9%):
3,270 Nippon Television Network 728
--------
REAL ESTATE (0.9%):
60,000 Sekisui House 793
--------
RUBBER & RUBBER PRODUCTS (1.0%):
56,000 Bridgestone 906
--------
STEEL (1.8%):
195,000 Nippon Steel 775
268,000 NKK Corp.(c) 750
--------
1,525
--------
STORAGE & WAREHOUSING (1.0%):
51,000 Mitsubishi Warehouse 880
--------
TELECOMMUNICATIONS EQUIPMENT (1.0%):
98 DDI Corp. 863
--------
UTILITIES - ELECTRIC (0.9%):
66,000 Matsushita Electric Works 793
--------
UTILITIES - TELECOMMUNICATIONS (1.0%):
99 Nippon Telephone & Telegraph 875
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
70
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
WHOLESALE & INTERNATIONAL TRADE (2.0%):
33,000 Canon Sales $ 872
122,000 Itochu Corp. 828
--------
1,700
- ----------------------------------------------------------
TOTAL JAPAN 28,784
- ----------------------------------------------------------
MALAYSIA (1.9%):
DIVERSIFIED (0.9%):
496,000 Renong Berhad 759
--------
FINANCIAL SERVICES (0.5%):
125,000 Hong Leong Credit 456
--------
FOREST PRODUCTS (0.5%):
99,000 Adkam Perdana 445
- ----------------------------------------------------------
TOTAL MALAYSIA 1,660
- ----------------------------------------------------------
NEW ZEALAND (1.1%):
FOREST PRODUCTS (1.1%):
338,000 Fletcher Challenge 910
- ----------------------------------------------------------
TOTAL NEW ZEALAND 910
- ----------------------------------------------------------
SINGAPORE (2.0%):
AIRLINES (1.0%):
84,000 Singapore Airlines, Series F 808
--------
BANKS (1.0%):
81,000 Overseas Chinese Banking
Corp. 884
- ----------------------------------------------------------
TOTAL SINGAPORE 1,692
- ----------------------------------------------------------
SPAIN (1.3%):
DIVERSIFIED (0.3%):
92,000 Cofir 299
--------
FOOD DISTRIBUTORS (1.0%):
48,600 Pryca 861
- ----------------------------------------------------------
TOTAL SPAIN 1,160
- ----------------------------------------------------------
SWEDEN (5.1%):
AUTOMOBILES (0.9%):
41,400 Volvo AB 777
--------
COSMETICS & RELATED (1.3%):
37,300 Astra A Free(c) 1,088
--------
ELECTRONIC & ELECTRICAL (0.9%):
41,000 Allgon 804
--------
MANUFACTURING (1.2%):
16,000 Ericsson (L.M.) Series B 1,059
--------
MEDICAL SUPPLIES (0.8%):
45,000 Arjo 700
- ----------------------------------------------------------
TOTAL SWEDEN 4,428
- ----------------------------------------------------------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
SWITZERLAND (4.3%):
DIVERSIFIED (0.9%):
750 Baer Holdings Bearer $ 788
--------
FOOD PROCESSING (1.1%):
960 Nestle Registered 941
--------
PHARMACEUTICALS (1.1%):
165 Roche Holdings AG
Genusscheine NPV 995
--------
UTILITIES - ELECTRIC (1.2%):
1,020 Brown Boveri, Series A 1,010
- ----------------------------------------------------------
TOTAL SWITZERLAND 3,734
- ----------------------------------------------------------
UNITED STATES (3.9%):
BROKERAGE FIRMS & SECURITY DEALERS (0.3%):
8,700 Brazilian Investment Co. 273
--------
INDUSTRIAL SERVICES (0.9%):
750,000 China North Industries(c) 750
--------
INVESTMENT FUNDS - CLOSED END (2.2%):
17,000 Chile Fund 805
12,700 India Magnum Fund NV A(c) 722
122 Korea Eurofund(c) 435
--------
1,962
--------
UTILITIES - TELECOMMUNICATIONS (0.5%):
25,700 Videotron Holdings PLC.(c) 402
- ----------------------------------------------------------
TOTAL UNITED STATES 3,387
- ----------------------------------------------------------
TOTAL COMMON STOCKS 84,118
- ----------------------------------------------------------
- ---------------------------------------------------------
INVESTMENT COMPANIES (0.8%)
667,222 Shearson U.S. Treasury Fund 667
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 667
- ----------------------------------------------
TOTAL (COST $80,808)(B) $ 84,863
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $86,530.
(b) 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 $ 6,255
Unrealized depreciation (2,199)
-------
Net unrealized
appreciation $ 4,056
========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
71
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
- ---------------------------------------------------------
FORWARD CURRENCY CONTRACTS
<TABLE>
<CAPTION>
CONTRACT
VALUE
CONTRACT (U.S. APPRECIATION DELIVERY
CURRENCY PRICE DOLLARS) (DEPRECIATION) DATE
- ----------------------------------------- --------- ---------- -------- -------
<S> <C> <C> <C> <C>
CURRENCY SOLD:
Japanese Yen 84.125032 $ (258,668) $ (331) 5/2/95
---------- --------
Total currency sold $ (258,668) $ (331)
========= ========
CURRENCY PURCHASED:
Dutch Guilder 1.514748 $ 258,668 $ (5,760) 5/2/95
---------- --------
Total currency purchased $ 258,668 $ (5,760)
========= ========
Net payable for forward currency
contracts purchased and sold $ (6,091)
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
72
<PAGE>
Notes to Financial Statements
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
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, Tax-Free Money Market Fund, Limited
Term Income Fund, Government Mortgage Fund, Intermediate Income Fund, Investment
Quality Bond Fund, Ohio Municipal Bond Fund, Balanced Fund, Stock Index Fund,
Value Fund, Diversified Stock Fund, Growth Fund, Special Value Fund, Special
Growth Fund, Ohio Regional Stock Fund, and International Growth Fund.
2. SIGNIFICANT ACCOUNTING POLICIES:
SECURITIES VALUATION:
- --------------------
Investments of the U.S. Government Obligations Fund, the Prime Obligations Fund
and the Tax-Free 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, the
Government Mortgage Fund, the Intermediate Income Fund, the Investment Quality
Bond Fund, the Ohio Municipal Bond Fund, the Balanced Fund, the Stock Index
Fund, the Value Fund, the Diversified Stock Fund, the Growth Fund, the Special
Value Fund, the Special Growth Fund, the Ohio Regional Stock Fund, and the
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 in the Balanced Fund and the
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 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.
The Funds isolate that portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuation arising
from changes in market prices of securities held.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, purchases
and sales of foreign currencies, currency gains or losses realized between the
trade and settlement dates on securities transactions and the difference between
the amount of interest recorded on a Fund's books, 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 the
exchange rate.
73
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
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
an unrealized gain or loss. When the Forward is closed, the Fund records a
realized gain or loss equal to the difference between the value at the time it
was opened and the value at the time it was closed. 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:
- -----------------
Each 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. The 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 move 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; during the period
between purchase and settlement no payment is made and no interest accrues. A
segregated account is established and maintains cash and marketable securities
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.
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 and distributable net realized capital gains, if any, are declared and
distributed at least annually for the Stock Index Fund, the Value Stock Fund,
the Diversified Stock Fund, the Growth Fund, the Special Value Fund, the Special
Growth Fund, the Ohio Regional Stock Fund, and the International Growth Fund.
Dividends from net investment income are declared and paid monthly and
distributable net realized capital gains, if any, are declared and distributed
at least annually for the Limited Term Income Fund, the Government Mortgage
Fund, the Intermediate Income Fund, the Investment Quality Bond Fund, the Ohio
Municipal Bond Fund, and the Balanced Fund.
74
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
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, 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.
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.
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the six
months ended April 30, 1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Limited Term Income Fund............. $108,053,386 $ 27,036,296
Government Mortgage Fund............. $ 34,141,401 $ 41,957,068
Intermediate Income Fund............. $ 45,696,863 $ 32,245,604
Investment Quality Bond Fund......... $ 53,718,571 $ 49,102,816
Ohio Municipal Bond Fund............. $ 35,466,334 $ 36,043,062
Balanced Fund........................ $ 79,112,448 $ 62,383,648
Stock Index Fund..................... $ 20,540,742 $ 9,328,966
Value Fund........................... $ 63,655,162 $ 17,814,533
Diversified Stock Fund............... $142,784,968 $116,116,919
Growth Fund.......................... $ 1,331,614 $ 25,478,542
Special Value Fund................... $ 47,216,203 $ 23,119,184
Special Growth Fund.................. $ 7,686,792 $ 11,925,297
Ohio Regional Stock Fund............. $ 1,531,661 $ 2,110,048
International Growth Fund............ $ 30,178,013 $ 19,936,541
</TABLE>
4. 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 and sub-investment advisory agreements, SAM is entitled to receive
fees based on a percentage of the average net assets of the Funds. Society
serves the Funds as custodian for all funds except the International Growth
Fund. Society received no fees from the Funds for providing custodian services
except for reimbursement of actual out-of-pocket expenses incurred. During the
year ended October 31, 1994, KeyCorp made a capital contribution of $2,506,027
to the Prime Obligations Fund.
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,
75
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
and assisting shareholders in changing dividend options, account designations
and addresses. For providing such services, Society may receive a fee computed
daily as a percentage of the average net assets of the Funds.
Affiliates of The BISYS Group, Inc. ("BISYS") serve as the Fund's administrator
and distributor. Effective March 29, 1995, Concord Holding Corporation (the
"Administrator"), an indirect, wholly-owned subsidiary of BISYS, became the
administrator to the Funds and Victory Broker Dealer Services, Inc. (the
"Distributor") became the distributor to the Funds. Prior to March 29, 1995,
other affiliates of BISYS served as the Fund's administrator and distributor.
Certain officers of the Funds are affiliated with BISYS. Such officers receive
no direct payments from the Funds for serving as officers of the Funds. Such
officers are paid no fees directly by the Funds for serving as officers of the
Funds.
Under the terms of the administration agreement, the Administrator's fees
are computed daily as a percentage of the average net assets of the Funds. The
Distributor receives no fees from the Funds for providing distribution services
and is entitled to receive commissions on sales of shares of the variable net
asset value funds. For the six months ended April 30, 1995, the Distributor
received $171,000 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 $74,000 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 net assets.
Fees may be voluntarily reduced to assist the Funds in maintaining competitive
expense ratios.
Information regarding related party transactions is as follows for the six
months ended April 30, 1995:
<TABLE>
<CAPTION>
U.S. TAX-FREE
GOVERNMENT PRIME MONEY
OBLIGATIONS OBLIGATIONS MARKET
FUND FUND FUND
-------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .35% .35% .35%
Voluntary fee reductions $ 16,151
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15%
Voluntary fee reductions $ 260
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $140,500 $193,436 $ 67,915
</TABLE>
<TABLE>
<CAPTION>
LIMITED INVESTMENT
TERM GOVERNMENT INTERMEDIATE QUALITY
INCOME MORTGAGE INCOME BOND
FUND FUND FUND FUND
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .50% .50% .75% .75%
Voluntary fee reductions $ 11,015 $ 12,348 $160,661 $122,074
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15% .15%
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 38,451 $ 48,386 $ 39,466 $ 32,928
</TABLE>
76
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO
MUNICIPAL STOCK
BOND BALANCED INDEX
FUND FUND FUND
-------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .60% 1.00% .60%
Voluntary fee reductions $ 85,187 $293,792 $ 72,524
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15%
Voluntary fee reductions $ 70,657
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 20,140 $ 47,761 $ 10,560
Voluntary fee reductions: $ 17,703
</TABLE>
<TABLE>
<CAPTION>
DIVERSIFIED
VALUE STOCK GROWTH
FUND FUND FUND
-------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) 1.00% .65% 1.00%
Voluntary fee reductions $434,192 $ 58,363 $ 93,184
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15%
Voluntary fee reductions $ 303 $ 240
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 70,468 $ 84,805 $ 16,607
</TABLE>
<TABLE>
<CAPTION>
OHIO
SPECIAL SPECIAL REGIONAL INTERNATIONAL
VALUE GROWTH STOCK GROWTH
FUND FUND FUND FUND
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) 1.00% 1.00% .75% 1.10%
Voluntary fee reductions $192,792 $ 39,953 $ 7,022 $ 61,413
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15% .15%
Voluntary fee reductions $ 144
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 40,759 $ 7,725 $ 11,588 $ 59,708
</TABLE>
77
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
5. 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>
Aggressive Growth Portfolio1 to Special Growth Fund
Corporate Bond Portfolio1 to Investment Quality Bond Fund
Equity Income Portfolio1 to Value Fund
Equity Portfolio1 to Growth Fund
Foreign Markets Portfolio1 to International Growth Fund
Short-Term Government Income Portfolio1 to Limited Term Income Fund
U.S. Treasury Money Market Portfolio1 to U.S. Government Obligations Money Fund
</TABLE>
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 Portfolio1 to Financial Reserves Fund
Fund for Income Portfolio to Fund for Income
Government Bond Portfolio1 to Government Bond Fund
Institutional Money Market Portfolio1 to Institutional Money Market Fund
National Municipal Bond Portfolio1 to National Municipal Bond Fund
New York Tax-Free Portfolio to New York Tax-Free Fund
Ohio Municipal Money Market Portfolio1 to Ohio Municipal Money Market 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 acquisition was
accomplished by a tax-free exchange of 858,745 shares of the Growth Fund for the
882,905 shares of the Society Earnings Momentum Fund outstanding on March 17,
1994. These share transactions are included in the Growth Fund's statement of
changes in net assets. The Society Earnings Momentum Fund's net assets at March
17, 1994 of approximately $8,794,000, including $649,000 of unrealized
appreciation, were combined with those of the Growth Fund. The combined net
assets immediately after the acquisition were approximately $70,777,000.
- ---------------
1 Not included in this report.
78
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION:
The Victory Funds (the "Fund"), organized as a Massachusetts business trust on
January 6, 1982, is an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"). The Fund's
Declaration of Trust permits the Board of Trustees (the "Trustees") to create an
unlimited number of Portfolios. Victory New York Tax-Free Portfolio and the Fund
for Income Portfolio are two series (of a total of 14 series) of the Fund. Each
Portfolio's capitalization consists of an unlimited number of shares of
beneficial interest without par value.
On April 30, 1994, all of the assets and liabilities of the Investors Preference
New York Tax-Free Fund, Inc. ("IPNY") and the Investors Preference Fund for
Income, Inc. ("IPFFI") were acquired by the New York Tax-Free Portfolio and the
Fund for Income Portfolio, respectively, of the Fund pursuant to separate
Agreements and Plans of Reorganization approved by the shareholders of each IPNY
and IPFFI.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies for New York
Tax-Free Portfolio and Fund for Income Portfolio (the "Portfolios").
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles.
SECURITIES VALUATION:
- --------------------
The securities of the Fund for Income Portfolio that are traded on an exchange
or on the over-the-counter market are valued based upon the last sale price, or
if no sale has occurred, at the closing bid price. Securities for which market
quotations are not readily available are valued at the closing over-the counter
bid price, if available, or at their fair value as determined in good faith by
management following procedures approved by the Fund's Trustees. Short term debt
instruments with remaining maturities of 60 days or less at the time of purchase
are valued at amortized cost or original cost plus accrued interest, both of
which approximates market value.
The securities of New York Tax-Free Portfolio are valued by a pricing service
based upon a computerized matrix system or appraisals, in each case in reliance
upon information concerning market transactions and quotations from recognized
municipal securities dealers. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by
management following procedures approved by the Fund's Trustees.
REPURCHASE AGREEMENTS:
- -----------------------
When each Portfolio enters into a repurchase agreement, the repurchase price of
the securities will generally equal the amount paid by each Portfolio plus a
negotiated interest amount. The seller under the repurchase agreement will be
required to provide securities (collateral) to each Portfolio whose value will
be at least equal to the repurchase agreement amount. Each Portfolio monitors
the value of the collateral on a daily basis, and if the value of the collateral
falls below required levels, each Portfolio intends to seek additional
collateral from the seller to terminate the repurchase agreements. If the seller
defaults, each Portfolio would suffer a loss to the extent that the proceeds
from the sale of the underlying securities were less than the repurchase price.
Any such loss would be increased by any cost incurred on the disposing of such
securities. A repurchase agreement entered into by each Portfolio will be
limited to transactions with broker-dealers or domestic banks believed to
present minimal credit risks, and each Portfolio will take delivery of all
securities underlying the repurchase agreement until such agreement expires.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTION:
- ----------------------------------------------
The New York Tax-Free Portfolio may engage in when-issued or delayed delivery
transactions. To the extent the Portfolio engages in such transactions, it will
do so for the purpose of acquiring portfolio securities consistent with its
investment objectives and policies and not for the purpose of investment
leverage. The Portfolio will record a when-issued security and the related
liability on the trade date. Until the securities are received and paid for, the
Portfolio will maintain security positions such that sufficient liquid assets
will be available to make payments for the securities purchased. Securities
purchased on a when-issued or delayed delivery basis are marked to market daily
and begin earning interest on settlement date.
79
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements--Continued
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
INCOME TAXES:
- -------------
It is the policy of each Portfolio 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.
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. 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.
DIVIDENDS TO SHAREHOLDERS:
- -------------------------
Dividends from net investment income are declared and paid monthly and
distributable net realized capital gains, if any, are declared and distributed
at least annually for the New York Tax-Free Portfolio and the Fund for Income
Portfolio.
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, 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.
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the six
months ended April 30, 1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
New York Tax-Free $ 1,117,454 $ 1,736,206
Fund for Income $ 7,973,666 $ 15,709,007
</TABLE>
4. RELATED PARTY TRANSACTIONS:
ADVISORY AGREEMENT:
- -------------------
Key Trust Company ("Key Trust") is the investment adviser for each Portfolio and
receives a fee based on average daily net assets at an annual rate of 0.55% and
0.50% for New York Tax-Free Portfolio and Fund for Income Portfolio,
respectively. For the six months ended April 30, 1995, Key Trust accrued $44,599
and $64,663 in advisory fees, of which $41,068 and $42,981 was voluntarily
waived, for New York Tax-Free Portfolio and Fund for Income Portfolio,
respectively.
ADMINISTRATION AGREEMENT:
- -------------------------
Concord Financial Group (the "Administrator" or "Concord") is the Administrator
to each Portfolio under an Administration Agreement with respect to each
Portfolio. The Administrator receives an annual fee of 0.15% of each Portfolio's
average net assets for services performed under each Portfolio's Administration
Agreement. For the six months ended April 30, 1995, the administrator accrued
$12,094 and $19,284 from the New York Tax-Free Portfolio and Fund for Income
Portfolio, respectively, in administration fees, none of which were waived.
Effective March 29, 1995 Concord became BISYS Investment Services Inc., a wholly
owned subsidiary of The BISYS Group, Inc. ("BISYS"). BISYS serves as
administrator on substantially identical terms as described above.
80
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements--Continued
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
DISTRIBUTION AGREEMENT:
- -----------------------
Victory Broker Dealer Services, Inc. (the "Distributor"), an affiliate of the
Administrator, serves as Distributor to each
Portfolio. The Distributor sells shares of the Portfolios as agent on behalf of
the Fund at no cost to the Portfolios. The Fund has adopted a Distribution and
Service Plan (the "Plan") for the Class A shares of New York Tax-Free Portfolio
and The Fund for Income Portfolio under Rule 12b-1 under the Investment Company
Act of 1940. Under the Plan, the Adviser or Administrator may use their fee
revenues, or other resources to pay expenses associated with activities
primarily intended to result in the sale of the shares of the Portfolios. The
Fund has adopted a Distribution Plan for Class B shares of New York Tax-Free
Portfolio to compensate the Distributor for its services and costs in
distributing Class B shares and servicing accounts. Under the Distribution Plan,
the Fund pays the Distributor an annual "asset-based sales charge" of 0.75% per
year on Class B shares that are outstanding for six years or less. This fee is
computed on the average annual net assets of Class B shares, determined as of
the close of each regular business day.
* Directors fees and expenses for the six months ended April 30, 1995 of $777
for New York Tax-Free Portfolio and $126 for Fund for Income Portfolio were paid
to directors having no affiliation with the Fund other than in their capacity as
directors.
5. MERGERS:
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 Portfolio of the Victory Funds to a
corresponding investment fund of the Victory Portfolios in exchange for the
assumption of liabilities of each Victory Fund. The following Portfolios of The
Victory Funds merged into existing funds of The Victory Portfolios:
<TABLE>
<CAPTION>
THE VICTORY FUNDS THE VICTORY PORTFOLIOS
- ---------------------------------------- ------------------------------------------------------
<S> <C> <C>
Aggressive Growth Portfolio1 to Special Growth Fund
Corporate Bond Portfolio1 to Investment Quality Bond Fund
Equity Income Portfolio1 to Value Fund
Equity Portfolio1 to Growth Fund
Foreign Markets Portfolio1 to International Growth Fund
Short-Term Government Income Portfolio1 to Limited Term Income Fund
U.S. Treasury Money Market Portfolio1 to U.S. Government Obligations Money Fund
</TABLE>
Additionally, the following series of The Victory Funds merged into newly
created series of The Victory Portfolios:
<TABLE>
<CAPTION>
THE VICTORY FUNDS THE VICTORY PORTFOLIOS
- ---------------------------------------- ------------------------------------------------------
<S> <C> <C>
Financial Reserves Portfolio1 to Financial Reserves Fund
Fund for Income Portfolio to Fund for Income
Government Bond Portfolio1 to Government Bond Fund
Institutional Money Market Portfolio1 to Institutional Money Market Fund
National Municipal Bond Portfolio1 to National Municipal Bond Fund
New York Tax-Free Portfolio to New York Tax-Free Fund
Ohio Municipal Money Market Portfolio1 to Ohio Municipal Money Market Fund
</TABLE>
As of June 2, 1995 the fund accounting for the Portfolios is being performed by
BISYS Fund Services Ohio, Inc., a wholly owned subsidiary of the The BISYS
Group, Inc.
6. SPECIAL SHAREHOLDER MEETING:
On April 28, 1995, a special meeting of the shareholders of The Victory Funds
was held to consider various proposals, including, among other things, the
approval of an Agreement and Plan of Reorganization whereby the 14 series
portfolios of The Victory Funds were reorganized into corresponding series of
The Victory Portfolios, the election of certain nominees to serve on the Board
of Trustees of The Victory Funds and the ratification of the selection of
Coopers & Lybrand L.L.P. as independent auditors for each portfolio of The
Victory Funds2.
- ---------------
1 Not included in this report.
2 The April 28, 1995 meeting was adjourned until May 26, 1995 with respect to
the New York Tax Free and Fund For Income Portfolios due to a lack of a quorum
on such date. On May 26, 1995, a quorum was present and voted the shares of
such portfolios as indicated.
81
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements--Continued
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
Election of Trustees -- The shareholders of The Victory Funds, as a group, were
requested to direct the proxies to vote for or withhold authority to vote for
the election of certain individuals to serve as Trustees of The Victory Funds.
The shareholders of The Victory Funds approved each nominee. The results of such
solicitation are as follows:
<TABLE>
<CAPTION>
NOMINEE VOTES FOR VOTES WITHHELD
------------------------------------------ -------------- ---------------
<S> <C> <C>
Robert G. Brown 1,306,537,258 38,671,464
Edward P. Cambell 1,308,422,096 36,786,627
Harry Gazelle 1,307,262,991 37,945,462
Thomas F. Morrissey 1,310,379,551 34,828,901
Stanley I. Landgraf 1,308,450,924 36,757,800
Leigh A. Wilson 1,310,734,626 34,474,098
H. Patrick Swygert 1,311,252,568 34,456,155
</TABLE>
Agreement and Plan of Reorganization -- the shareholders of each Portfolio
approved an Agreement and Plan of Reorganization with respect to each Portfolio
as follows:
<TABLE>
<CAPTION>
PORTFOLIO IN FAVOR OPPOSED ABSTAIN
------------------------------------ ------------ ---------- -----------
<S> <C> <C> <C>
NY Tax Free-Class A 871,430 15,011 37,413
NY Tax Free-Class B 29,267 -- 1,666
Fund For Income 1,834,471 11,902 105,207
</TABLE>
Reclassification and Changes in Fundamental Policies -- The shareholders of the
below-listed Portfolios approved certain reclassifications and changes in
fundamental policies of the relevant Portfolio (and the successor Portfolio
post-reorganization) by the following votes:
<TABLE>
<CAPTION>
PORTFOLIO IN FAVOR OPPOSED ABSTAIN
------------------------------------ ------------ ---------- -----------
<S> <C> <C> <C>
NY Tax Free-Class A 871,550 15,011 37,293
NY Tax Free-Class B 29,267 -- 1,666
Fund for Income 1,803,283 40,439 107,858
</TABLE>
Ratification of Independent Auditors -- the shareholders of each Portfolio
ratified the appointment of Coopers & Lybrand L.L.P. as independent auditors for
each Portfolio for the next fiscal year as follows:
<TABLE>
<CAPTION>
PORTFOLIO IN FAVOR OPPOSED ABSTAIN
------------------------------------ ------------ ---------- -----------
<S> <C> <C> <C>
NY Tax Free-Class A 891,636 727 31,490
NY Tax Free-Class B 29,267 -- 1,666
Fund For Income 1,860,529 7,123 83,928
</TABLE>
- --------------------------------------------------------------------------------
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Fund. The report is not
authorized for distribution to prospective investors in the Fund, unless
preceded or accompanied by an effective prospectus. Neither the Fund nor Victory
Broker Dealer Services, Inc. is a bank and Fund shares are not backed or
guaranteed by any bank or insured by the FDIC, the Federal Reserve Board, or any
other agency. Victory Broker Dealer Services, Inc., which distributes The
Victory Funds, is not affiliated with Key Trust Company. Investing in mutual
funds involves risks, including the possible loss of principal amount invested.
An investment in a money market Portfolio is not insured or guaranteed by the
U.S. Government, and there can be no assurance that a money market Portfolio
will maintain a stable $1.00 share price.
- --------------------------------------------------------------------------------
82
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT OBLIGATIONS FUND
---------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.025 0.032 0.026 0.036 0.060 0.076
Distributions
Net investment income (0.025) (0.032) (0.026) (0.036) (0.060) (0.076)
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Total Return 2.57%(a) 3.30% 2.62% 3.66% 6.14% 7.83%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $524,143 $412,048 $515,734 $579,836 $430,248 $376,021
Ratio of expenses to
average net assets 0.62%(b) 0.63% 0.60% 0.60% 0.60% 0.62%
Ratio of net investment income
to average net assets 5.15%(b) 3.20% 2.57% 3.50% 5.92% 7.56%
Ratio of expenses to
average net assets* 0.80%
Ratio of net investment income
to average net assets* 3.03%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
<TABLE>
<CAPTION>
PRIME OBLIGATIONS FUND
---------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.025 0.035 0.030 0.037 0.061 0.078
Net realized losses on investments (0.003)
- ----------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 0.025 0.032 0.030 0.037 0.061 0.078
- ----------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.025) (0.035) (0.030) (0.037) (0.061) (0.078)
Capital transactions 0.003
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Total Return 2.53%(a) 3.57% 3.05% 3.77% 6.32% 8.06%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $430,000 $782,303 $720,024 $524,338 $442,263 $444,238
Ratio of expenses to average net assets 0.69%(b) 0.62% 0.60% 0.61% 0.62% 0.62%
Ratio of net investment income to
average net assets 5.02%(b) 3.52% 2.96% 3.68% 6.14% 7.76%
Ratio of expenses to average net
assets* 0.79%
Ratio of net investment income to
average net assets* 3.35%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
83
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND
----------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 100
- -----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.016 0.021 0.020 0.027 0.043 0.054
Distributions
Net investment income (0.016) (0.021) (0.020) (0.027) (0.043) (0.054)
- -----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Total Return 1.66%(a) 2.17% 2.06% 2.77% 4.44% 5.48%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 209,606 $198,561 $189,351 $151,012 $129,601 $134,652
Ratio of expenses to average net assets 0.61%(b) 0.60% 0.59% 0.61% 0.62% 0.63%
Ratio of net investment income to
average net assets 3.32%(b) 2.14% 2.04% 2.70% 4.29% 5.32%
Ratio of expenses to average net
assets* 0.63%(b) 0.79% 0.60%
Ratio of net investment income to
average net assets* 3.30%(b) 1.95% 2.02%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
84
<PAGE>
THE VICTORY FUNDS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK TAX-FREE PORTFOLIO
-----------------------------------------------------------------------------------
CLASS A
-------------------------------------------------
CLASS B PERIOD
----------------------------- FROM
PERIOD FROM JANUARY 1,
SEPTEMBER 26, 1994 TO YEARS ENDED
1994 TO OCTOBER DECEMBER 31,
OCTOBER 31, 31, -------------------
1994 SIX MONTHS 1994 1993 1992
------------- ENDED ---------- ------- -------
APRIL 30,
1995
----------
SIX MONTHS (UNAUDITED)
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 12.39 $12.62 $ 12.39 $ 13.54 $ 12.76 $ 12.50
- -------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.31 0.07 0.32 0.57 0.70 0.74
Net realized and unrealized
gains (losses) on
investments 0.27 (0.23) 0.30 (1.15) 0.84 0.26
- -------------------------------------------------------------------------------------------------------------------------
Total from investment
activities 0.58 (0.16) 0.62 (0.58) 1.54 1.00
- -------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.30) (0.07) (0.33) (0.57) (0.70) (0.74)
Net realized gains (0.17) -- (0.17) -- (0.06) --
- -------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.47) (0.07) (0.50) (0.57) (0.76) (0.74)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.50 $12.39 $ 12.51 $ 12.39 $ 13.54 $ 12.76
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charge) 4.80%(b) (1.25)%(b) 5.16%(b) (4.31)%(b) 12.34% 8.26%
RATIOS -- SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $ 834 -- $ 15,974 $ 17,840 $28,530 $26,034
Ratio of expenses to average net
assets 2.72%(c) 0.52%(c) 1.10%(c) 0.91%(c) 0.87% 0.66%
Ratio of net investment income to
average net assets 9.48%(c) 5.94%(c) 5.18%(c) 5.33%(c) 5.28% 5.89%
Ratio of expenses to average net
assets* 3.07%(c) 0.86%(c) 1.45%(c) 1.25%(c) 0.96% 0.96%
Ratio of net investment income to
average net assets* 9.13%(c) 5.60%(c) 4.83%(c) 4.99%(c) 5.19% 5.59%
Portfolio turnover rate 17.00% 18.00% 17.00% 18.00% 12.00% 14.00%
<CAPTION>
PERIOD FROM
FEBRUARY 11,
1991 TO
DECEMBER 31,
1991(A)
------------
<S> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 12.00
- ----------------------------------
Investment Activities
Net investment income 0.64
Net realized and unrealized
gains (losses) on
investments 0.50
- ----------------------------------
Total from investment
activities 1.14
- ----------------------------------
Distributions
Net investment income (0.64)
Net realized gains --
- ----------------------------------
Total Distributions (0.64)
- ----------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.50
- ----------------------------------
Total Return (excludes sales
charge) 11.06%(b)
RATIOS -- SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $ 20,995
Ratio of expenses to average net
assets 0.45%(c)
Ratio of net investment income to
average net assets 6.28%(c)
Ratio of expenses to average net
assets* 0.95%(c)
Ratio of net investment income to
average net assets* 5.78%(c)
Portfolio turnover rate 61.00%
</TABLE>
- ---------------
*During the period, certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
FUND FOR INCOME PORTFOLIO
--------------------------------------------------------------------------------------
PERIOD FROM
FEBRUARY 1,
1994 TO YEARS ENDED JANUARY 31,
OCTOBER 31, -------------------------------------------------------
1994 1994 1993 1992 1991 1990
SIX MONTHS ----------- ------- ------- ------- ------- -------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.43 $ 10.14 $ 10.57 $ 10.55 $ 10.19 $ 9.90 $ 9.73
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (0.05) 0.52 0.80 0.80 0.85 0.91 0.93
Net realized and unrealized gains
(losses) on investments 0.58 (0.71) (0.41) 0.06 0.36 0.29 0.17
- ----------------------------------------------------------------------------------------------------------------------------------
Total from investment activities 0.53 (0.19) 0.39 0.86 1.21 1.20 1.10
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.35) (0.52) (0.80) (0.80) (0.85) (0.91) (0.93)
Net realized gains -- -- (0.02) (0.04) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.35) (0.52) (0.82) (0.84) (0.85) (0.91) (0.93)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.61 $ 9.43 $ 10.14 $ 10.57 $ 10.55 $ 10.19 $ 9.90
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charge) 5.70%(a) (1.99)%(a) 3.75% 8.45% 12.34% 12.75% 11.77%
RATIOS -- SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $ 24,713 $29,358 $46,632 $55,075 $58,055 $44,097 $35,788
Ratio of expenses to average net assets 0.57%(b) 1.12%(b) 1.13% 1.12% 0.92% 0.50% 0.29%
Ratio of net investment income to
average net assets 3.51%(b) 7.21%(b) 7.65% 7.56% 8.18% 9.15% 9.34%
Ratio of expenses to average net assets* 0.74%(b) 1.26%(b)
Ratio of net investment income to
average net assets* 3.34%(b) 7.07%(b)
Portfolio turnover 27.00% 18.00% 47.00% 23.00% 24.00% 5.00% 5.00%
</TABLE>
- ---------------
*During the period, certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
85
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED TERM INCOME FUND
----------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.88 $ 10.53 $ 10.45 $ 10.33 $ 10.02 $ 10.04
- ---------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.27 0.54 0.57 0.64 0.73 0.76
Net realized and unrealized gains
(losses) on investments 0.11 (0.61) 0.08 0.13 0.31 (0.01)
- ---------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.38 (0.07) 0.65 0.77 1.04 0.75
- ---------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.28) (0.54) (0.57) (0.64) (0.73) (0.77)
Net realized gains (0.04) (0.01)
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions (0.28) (0.58) (0.57) (0.65) (0.73) (0.77)
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.98 $ 9.88 $ 10.53 $ 10.45 $ 10.33 $ 10.02
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 3.80%(a) (0.66)% 6.39% 7.77% 10.82% 7.75%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 168,112 $ 79,150 $ 81,771 $ 55,565 $ 43,763 $ 31,303
Ratio of expenses to average net
assets 0.77%(b) 0.79% 0.77% 0.78% 0.80% 0.82%
Ratio of net investment income to
average net assets 5.86%(b) 5.29% 5.49% 6.18% 7.20% 7.63%
Ratio of expenses to average net
assets* 0.79%(b) 0.97% 0.78%
Ratio of net investment income to
average net assets* 5.84%(b) 5.10% 5.48%
Portfolio turnover 24.49% 41.26% 50.27% 14.97% 9.79%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
<TABLE>
<CAPTION>
GOVERNMENT MORTGAGE FUND
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31, MAY 18, 1990
ENDED APRIL ---------------------------------------------- TO OCTOBER 31,
30, 1995 1994 1993 1992 1991 1990(A)
----------- -------- -------- -------- ------- --------------
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.33 $ 11.36 $ 11.07 $ 10.73 $ 10.18 $ 10.00
- --------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.36 0.68 0.66 0.74 0.80 0.35
Net realized and unrealized gains
(losses) on investments 0.32 (1.02) 0.32 0.34 0.55 0.18
- --------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.68 (0.34) 0.98 1.08 1.35 0.53
- --------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.37) (0.67) (0.66) (0.74) (0.80) (0.35)
Net realized gains (0.08) (0.02) (0.03)
- --------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.45) (0.69) (0.69) (0.74) (0.80) (0.35)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.56 $ 10.33 $ 11.36 $ 11.07 $ 10.73 $ 10.18
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 6.64%(b) (3.01)% 9.05% 10.34% 13.77% 5.37%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 143,435 $148,168 $132,738 $ 73,660 $42,616 $ 31,972
Ratio of expenses to average net
assets 0.77%(c) 0.76% 0.75% 0.77% 0.78% 0.82%(c)
Ratio of net investment income to
average net assets 6.99%(c) 6.38% 5.92% 6.82% 7.68% 7.98%(c)
Ratio of expenses to average net
assets* 0.79%(c) 0.96% 0.76%
Ratio of net investment income to
average net assets* 6.97%(c) 6.18% 5.92%
Portfolio turnover 24.12% 131.63% 50.18% 11.19% 20.70%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
86
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE INCOME FUND INVESTMENT QUALITY BOND FUND
---------------------------------- ----------------------------------
DECEMBER 10, DECEMBER 10,
1993 1993
TO OCTOBER 31, TO OCTOBER 31,
1994(A) 1994(A)
SIX MONTHS ENDED ---------------- SIX MONTHS ENDED ----------------
APRIL 30, APRIL 30,
1995 1995
---------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.25 $ 10.00 $ 9.10 $ 10.00
- -----------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.30 0.52 0.31 0.53
Net realized and unrealized gains
(losses) on investments 0.17 (0.76) 0.29 (0.92)
- -----------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.47 (0.24) 0.60 (0.39)
- -----------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.31) (0.51) (0.32) (0.51)
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.41 $ 9.25 $ 9.38 $ 9.10
- -----------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 5.07%(b) (2.48)%(b) 6.74%(b) (3.92)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $133,225 $112,923 $ 92,202 $ 94,685
Ratio of expenses to average net
assets 0.81%(c) 0.79%(c) 0.84%(c) 0.79%(c)
Ratio of net investment income to
average net assets 6.65%(c) 6.23%(c) 6.89%(c) 6.33%(c)
Ratio of expenses to average net
assets* 1.08%(c) 1.25%(c) 1.10%(c) 1.25%(c)
Ratio of net investment income to
average net assets* 6.38%(c) 5.77%(c) 6.63%(c) 5.87%(c)
Portfolio turnover 28.74% 55.06% 54.92% 89.92%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
OHIO MUNICIPAL BOND FUND
-----------------------------------------------------------------------------
YEARS ENDED OCTOBER 31, MAY 18, 1990
------------------------------------------ TO OCTOBER 31,
1994 1993 1992 1991 1990(A)
SIX MONTHS ------- ------- ------- ------ --------------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.33 $ 11.52 $ 10.52 $ 10.37 $10.06 $10.00
- ------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.26 0.49 0.52 0.60 0.65 0.28
Net realized and unrealized gains
(losses) on investments 0.52 (0.94) 1.00 0.15 0.31 0.04
- ------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.78 (0.45) 1.52 0.75 0.96 0.32
- ------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income 0.26 (0.49) (0.52) (0.60) (0.65) (0.26)
Net realized gains (0.25)
- ------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.26) (0.74) (0.52) (0.60) (0.65) (0.26)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.85 $ 10.33 $ 11.52 $ 10.52 $10.37 $10.06
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 7.67%(b) (4.08)% 14.75% 7.34% 9.87% 3.27%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $58,137 $57,704 $50,676 $17,676 $8,042 $6,315
Ratio of expenses to average net
assets 0.64%(c) 0.51% 0.42% 0.09% 0.01% 0.38%(c)
Ratio of net investment income to
average net assets 4.88%(c) 4.58% 4.77% 5.76% 6.39% 6.11%(c)
Ratio of expenses to average net
assets* 0.95%(c) 1.09% 0.86% 0.84% 0.82% 1.17%(c)
Ratio of net investment income to
average net assets* 4.58%(c) 4.01% 4.33% 5.01% 5.58% 5.32%(c)
Portfolio turnover 64.80% 52.59% 150.76% 47.28% 15.06% 17.62%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
87
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED FUND STOCK INDEX FUND VALUE FUND
--------------------------- -------------------------- ---------------------------
DECEMBER 10, DECEMBER 3, DECEMBER 3,
1993 TO 1993 TO 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 (A) ENDED 1994 (A)
------------ APRIL 30, ----------- APRIL 30, ------------
1995 1995
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.62 $ 10.00 $ 10.18 $ 10.00 $ 10.13 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.21 0.33 0.12 0.20 0.14 0.21
Net realized and unrealized gains
(losses) on investments 0.62 (0.39) 0.92 0.16 0.79 0.11
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.83 (0.06) 1.04 0.36 0.93 0.32
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.24) (0.32) (0.13) (0.18) (0.14) (0.19)
Net realized gains (0.17)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.24) (0.32) (0.13) (0.18) (0.31) (0.19)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.21 $ 9.62 $ 11.09 $ 10.18 $ 10.75 $ 10.13
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 8.77%(b) (0.57)%(b) 10.28%(b) 3.66%(b) 9.43%(b) 3.27%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $158,762 $127,285 $105,834 $ 89,686 $261,830 $188,184
Ratio of expenses to average net
assets 0.91%(c) 0.87%(c) 0.58%(c) 0.58%(c) 0.91%(c) 0.92%(c)
Ratio of net investment income to
average net assets 4.30%(c) 3.97%(c) 2.48%(c) 2.35%(c) 2.88%(c) 2.32%(c)
Ratio of expenses to average net assets* 1.32%(c) 1.49%(c) 0.92%(c) 1.10%(c) 1.29%(c) 1.48%(c)
Ratio of net investment income to
average net assets* 3.89%(c) 3.35%(c) 2.14%(c) 1.82%(c) 2.50%(c) 1.76%(c)
Portfolio turnover 45.32% 118.49% 11.06% 1.44% 8.95% 39.05%
</TABLE>
- ------------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
DIVERSIFIED STOCK FUND
---------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.68 $ 13.39 $ 12.16 $ 11.44 $ 9.25 $ 9.90
- -------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.14 0.25 0.18 0.19 0.23 0.26
Net realized and unrealized gains
(losses) on investments 1.05 0.64 1.50 1.11 2.20 (0.67)
- -------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.19 0.89 1.68 1.30 2.43 (0.41)
- -------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.15) (0.23) (0.21) (0.19) (0.24) (0.24)
Net realized gains (1.38) (1.37) (0.24) (0.39)
- -------------------------------------------------------------------------------------------------------------------
Total Distributions (1.53) (1.60) (0.45) (0.58) (0.24) (0.24)
- -------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.34 $ 12.68 $ 13.39 $ 12.16 $ 11.44 $ 9.25
- -------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 10.83%(a) 7.39% 14.04% 11.57% 27.50% (4.29)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $321,593 $263,227 $257,405 $227,839 $177,472 $121,754
Ratio of expenses to average net
assets 0.87%(b) 0.89% 0.89% 0.91% 0.91% 0.91%
Ratio of net investment income to
average net assets 2.35%(b) 2.06% 1.45% 1.63% 2.06% 2.75%
Ratio of expenses to average net
assets* 0.91%(b) 1.10% 0.90%
Ratio of net investment income to
average net assets* 2.31%(b) 1.86% 1.43%
Portfolio turnover 43.76% 103.62% 86.32% 74.83% 50.78% 63.10%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
88
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND SPECIAL VALUE FUND SPECIAL GROWTH FUND
--------------------------- --------------------------- ---------------------------
DECEMBER 3, DECEMBER 3, DECEMBER 3,
1993 TO 1993 TO 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 (A) ENDED 1994 (A)
------------ APRIL 30, ------------ APRIL 30, ------------
1995 1995
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.23 $ 10.00 $ 10.49 $ 10.00 $ 8.90 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.06 0.10 0.08 0.11 0.01 0.02
Net realized and unrealized gains
(losses) on investments 0.64 0.22 0.82 0.48 0.45 (1.10)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.70 0.32 0.90 0.59 0.46 (1.08)
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.06) (0.09) (0.08) (0.10) (0.01) (0.02)
Net realized gains (0.05) (0.05)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.11) (0.09) (0.13) (0.10) (0.01) (0.02)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.82 $ 10.23 $ 11.26 $ 10.49 $ 9.35 $ 8.90
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 6.91%(b) 3.22%(b) 8.65%(b) 5.92%(b) 5.20%(b) (10.81)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 43,861 $ 66,921 $153,591 $118,600 $ 19,386 $ 24,593
Ratio of expenses to average net
assets 1.03%(c) 0.94%(c) 1.01%(c) 1.00%(c) 1.16%(c) 0.98%(c)
Ratio of net investment income to
average net assets 1.11%(c) 1.10%(c) 1.57%(c) 1.23%(c) 0.25%(c) 0.24%(c)
Ratio of expenses to average net assets* 1.39%(c) 1.51%(c) 1.31%(c) 1.49%(c) 1.54%(c) 1.58%(c)
Ratio of net investment income
(loss) to average net assets* 0.75%(c) 0.52%(c) 1.27%(c) 0.74%(c) (0.14)%(c) (0.36)(c)
Portfolio turnover 2.56% 28.09% 18.88% 17.90% 39.58% 118.39%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
OHIO REGIONAL STOCK FUND
------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
--------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS ------- ------- ------- ------- --------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.56 $ 14.69 $ 12.12 $ 11.15 $ 6.75 $ 9.72
- -----------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.09 0.18 0.16 0.20 0.21 0.24
Net realized and unrealized gains
(losses) on investments 0.85 0.39 2.63 1.07 4.39 (2.98)
- -----------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.94 0.57 2.79 1.27 4.60 (2.74)
- -----------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.09) (0.17) (0.18) (0.21) (0.20) (0.23)
Net realized gains (0.74) (0.53) (0.04) (0.09)
- -----------------------------------------------------------------------------------------------------------------
Total Distributions (0.83) (0.70) (0.22) (0.30) (0.20) (0.23)
- -----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 14.67 $ 14.56 $ 14.69 $ 12.12 $ 11.15 $ 6.75
- -----------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 7.06%(a) 3.96% 23.16% 11.50% 68.68% (28.63)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $35,183 $33,965 $34,926 $36,115 $27,092 $ 13,039
Ratio of expenses to average net
assets 1.18%(b) 1.04% 1.04% 1.04% 1.08% 1.11%
Ratio of net investment income to
average net assets 1.27%(b) 1.27% 1.17% 1.73% 2.16% 2.66%
Ratio of expenses to average net
assets* 1.22%(b) 1.27% 1.06%
Ratio of net investment income to
average net assets* 1.22%(b) 1.04% 1.15%
Portfolio turnover 4.86% 14.38% 7.25% 7.56% 14.59% 11.17%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
89
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH FUND
-------------------------------------------------------------------------------
SIX MONTHS
ENDED YEARS ENDED OCTOBER 31, MAY 18, 1990
APRIL 30, -------------------------------------------- TO OCTOBER 31,
1995 1994 1993 1992 1991 1990(A)
----------- ------- -------- ------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.32 $ 11.93 $ 8.93 $ 9.20 $ 9.46 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (0.01) (0.03) (0.02) 0.51 0.09
Net realized and unrealized gains
(losses) on investments (0.79) 1.40 3.03 (0.17) (0.25) (0.55)
- ------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities (0.79) 1.39 3.00 (0.19) 0.26 (0.46)
- ------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.01) (0.52) (0.08)
Net realized gains (0.62) (0.07)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.91 $ 13.32 $ 11.93 $ 8.93 $ 9.20 $ 9.46
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) (5.82)%(b) 11.65% 33.59% (2.08)% 2.93% (4.54)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 86,530 $81,307 $ 30,629 $11,091 $ 5,682 $ 9,878
Ratio of expenses to average net
assets 1.51%(c) 1.48% 1.46% 1.56% 1.72% 1.70%(c)
Ratio of net investment income
(loss) to average net assets (0.29)%(c) (0.51)% (0.74)% (0.20)% 5.97% 2.51%%(c)
Ratio of expenses to average net
assets* 1.66%(c) 1.83% 1.63% 1.72%
Ratio of net investment loss to
average net assets* (0.45)%(c) (0.86)% (0.91)% (0.35)%
Portfolio turnover 26.04% 50.66% 45.43% 91.92% 102.53% 12.16%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations
(b) Aggregate.
(c) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
90
<PAGE>
[LOGO]
THE VICTORY FUNDS
1-800-539-FUND
RS/VP-001 5/95
<PAGE>
BULK RATE
U.S. POSTAGE
PAID
CLEVELAND, OH
Permit 469
[LOGO]
THE VICTORY FUNDS
1-800-539-FUND
RS/VP-001 5/95
<PAGE>
[This page left blank intentionally]
<PAGE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE VICTORY PORTFOLIOS
THE DIVERSIFIED STOCK FUND
February 1, 1996
This Statement of Additional Information is not a Prospectus, but should be
read in conjunction with the Prospectus of The Victory Portfolios - The
Diversified Stock Fund, dated the same date as the date hereof (the
"Prospectus"). This Statement of Additional Information is incorporated by
reference in its entirety into the Prospectus. Copies of the Prospectus may be
obtained by writing The Victory Portfolios at Primary Funds Service Corporation,
P.O. Box 9741, Providence, RI 02940-9741, or by telephoning toll free
800-539-FUND or 800-539-3863.
Investment Policies and Limitations 1 INVESTMENT ADVISER
Valuation of Portfolio Securities 7 KeyCorp Mutual Fund Advisers, Inc.
Additional Purchase and
Redemption Information 8
Management of the Victory Portfolios 10 INVESTMENT SUB-ADVISER
Advisory and Other Contracts 19 Society Asset Management, Inc.
Additional Information 26
Independent Auditor's Report 31 ADMINISTRATOR
Financial Statements 31 Concord Holding Corporation
Appendix 32
DISTRIBUTOR
Victory Broker-Dealer Services, Inc.
TRANSFER AGENT
Primary Funds Services Corporation
CUSTODIAN
Key Trust Company of Ohio, N.A.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
The Victory Portfolios (the "Victory Portfolios") is an open-end
management investment company. The Victory Portfolios consist of twenty-eight
series of units of beneficial interest ("shares"), representing interests in
twenty-eight separate investment portfolios . This Statement of Additional
Information relates to The Diversified Stock Fund (the "Fund") only. Much of
the information contained in this Statement of Additional Information
expands on subjects discussed in the Prospectus. Capitalized terms not defined
herein are used as defined in the Prospectus . No investment in shares of the
Fund should be made without first reading the Fund's Prospectus.
INVESTMENT POLICIES AND LIMITATIONS
Additional Information on Fund Instruments
The following policies supplement the investment objectives and
policies of the Fund as set forth in the Prospectus.
Bankers' Acceptances and Certificates of Deposit. The Fund may invest
in bankers' acceptances, certificates of deposit, and demand and time deposits.
Bankers' acceptances are negotiable drafts or bills of exchange typically
drawn by an importer or exporter to pay for specific merchandise,
which are "accepted" by a bank, meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Certificates of deposit are negotiable certificates issued against funds
deposited in a commercial bank or a savings and loan association for a definite
period of time and earning a specified return.
Bankers' acceptances will be those guaranteed by domestic and foreign
banks, if at the time of purchase such banks have capital, surplus, and
undivided profits in excess of $100,000,000 (as of the date of their most
recently published financial statements). Certificates of deposit and demand
and time deposits invested in by the Fund will be those of domestic and foreign
banks and savings and loan associations, if (a) at the time of purchase such
financial institutions have capital, surplus, and undivided profits in excess of
$100,000,000 (as of the date of their most recently published financial
statements) or (b) the principal amount of the instrument is insured in full by
the Federal Deposit Insurance Corporation or the Savings Association Insurance
Fund.
The Fund may also invest in Eurodollar Certificates of Deposit
("ECDs") which are U.S. dollar-denominated certificates of deposit issued by
branches of foreign and domestic banks located outside the United States,
Yankee Certificates of Deposit ("Yankee CDs") which are certificates of deposit
issued by a U.S. branch of a foreign bank denominated in U.S. dollars and held
in the United States, Eurodollar Time Deposits ("ETDs") which are U.S.
dollar-denominated deposits in a foreign branch of a U.S. bank or a foreign
bank, and Canadian Time Deposits ("CTDs") which are U.S. dollar-denominated
certificates of deposit issued by Canadian offices of major Canadian Banks.
Commercial Paper. Commercial paper consists of unsecured promissory
notes issued by corporations. Except as noted below with respect to variable
amount master demand notes, issues of commercial paper normally have maturities
of less than nine months and fixed rates of return.
The Fund will purchase only commercial paper rated in one of the two
highest categories at the time of purchase by an NRSRO or, if not rated,
found by the Victory Portfolios' Board of Trustees to present minimal credit
risks and to be of comparable quality to instruments that are rated high quality
(i.e., in one of the two top ratings categories) by a NRSRO that is neither
controlling, controlled by, or under common control with the issuer of, or any
issuer, guarantor, or provider of credit support for, the instruments. For a
description of the rating symbols of each NRSRO see the Appendix to this
Statement of Additional Information.
Variable Amount Master Demand Notes. Variable amount master demand
notes in which the Fund may invest are unsecured demand notes that permit the
indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate according to the terms of the instrument. Although there is no
secondary market for these notes, the Fund may demand payment of principal and
accrued interest at any time and may resell the notes at any time to a third
party. The absence of an active secondary market, however, could make it
difficult for the Fund to dispose of a variable amount master demand note if the
issuer defaulted on its payment obligations, and the Fund could, for this or
other reasons, suffer a loss to the extent of the default. While the notes are
not typically rated by credit rating agencies, issuers of variable amount master
demand notes must satisfy the same criteria as set forth above for unrated
commercial paper, and Key Advisers or the Sub-Adviser will continuously monitor
the issuer's financial status and ability to make payments due under the
instrument. Where necessary to ensure that a note is of "high quality," the Fund
will require that the issuer's obligation to pay the principal of the note be
backed by an unconditional bank letter or line of credit, guarantee or
commitment to lend. For purposes of the Fund's investment policies, a variable
amount master note will be deemed to have a maturity equal to the longer of the
period of time remaining until the next readjustment of its interest rate or the
period of time remaining until the principal amount can be recovered from the
issuer through demand. (See Variable and Floating Rate Notes.)
Foreign Investment. The Fund may invest in securities issued by
foreign branches of U.S. banks, foreign banks, or other foreign issuers,
including American Depository Receipts ("ADRs") and securities purchased on
foreign securities exchanges. Such investment may subject the Fund to investment
risks that differ in some respects from those related to investments in
obligations of U.S. domestic issuers or in U.S. securities markets. Such risks
include future adverse political and economic developments, possible seizure,
nationalization, or expropriation of foreign investments, less stringent
disclosure requirements, the possible establishment of exchange controls or
taxation at the source, and the adoption of other foreign governmental
restrictions. Additional risks include currency exchange risks, less publicly
available information, the risk that companies may not be subject to the
accounting, auditing and financial reporting standards and requirements of U.S.
companies, the risk that foreign securities markets may have less volume and
therefore many securities traded in these markets may be less liquid and their
prices are more volatile than U.S. securities, and the risk that custodian and
brokerage costs may be higher. Permissible investments include obligations or
securities of foreign issuers, foreign branches of U.S. banks and of foreign
banks. The Fund will acquire such securities only when Key Advisers or the
Sub-Adviser believes the risks associated with such investments are minimal.
Variable and Floating Rate Notes. The Fund may acquire variable and
floating rate notes, subject to its investment objectives, policies and
restrictions. A variable rate note is one whose terms provide for the
readjustment of its interest rate on set dates and which, upon such
readjustment,can reasonably be expected tohave a market value that approximates
its par value. A floating rate note is one whose terms provide for the
readjustment of its interest rate whenever a specified interest rate changes
and which, at any time, can reasonably be expected to have a market value that
approximates its par value. Such notes are frequently not rated by credit rating
agencies; however, unrated variable and floating rate notes purchased by the
Fund will only be those determined by Key Advisers or the SubAdviser, under
guidelines established by the Trustees, to pose minimal credit risks and to be
of comparable quality, at the time of purchase, to rated instruments eligible
for purchase under the Fund's investment policies. In making such
determinations, Key Advisers or the Sub-Adviser willconsider the earning power,
cash flow and other liquidity ratios of the issuers of such notes (such issuers
include financial, merchandising, bank holding and other companies) and will
continuously monitor their financial condition. Although there may be no active
secondary market with respect to a particular variable or floating rate note
purchased by the Fund, the Fund may resell the note at any time to a third
party. The absence of an active secondary market, however, could make it
difficult for the Fund to dispose of a variable or floating rate note in
the event the issuer of the note defaulted on its payment obligations and the
Fund could, for this or other reasons, suffer a loss to the extent of the
default. Variable or floating rate notes may be secured by bank letters of
credit.
Variable or floating rate notes may have maturities of more than one
year, as follows:
1. A note that is issued or guaranteed by the United States
government or any agency thereof and which has a variable rate of interest
readjusted no less frequently than annually will be deemed by the Fund to have
a maturity equal to the period remaining until the next readjustment of the
interest rate.
2. A variable rate note, the principal amount of which is scheduled
on the face of the instrument to be paid in one year or less, will be deemed by
the Fund to have a maturity equal to the period remaining until the next
readjustment of the interest rate.
3. A variable rate note that is subject to a demand feature scheduled
to be paid in one year or more will be deemed by the Fund to have a maturity
equal to the longer of the period remaining until the next readjustment of the
interest rate or the period remaining until the principal amount can be
recovered through demand.
4. A floating rate note that is subject to a demand feature will be
deemed by the Fund to have a maturity equal to the period remaining until the
principal amount can be recovered through demand.
As used above, a note is "subject to a demand feature" where the Fund is
entitled to receive the principal amount of the note either at any time on no
more than 30 days' notice or at specified intervals not exceeding one year and
upon no more than 30 days' notice.
Options. The Fund may sell (write) call options which are traded on
national securities exchanges with respect to common stock in its portfolio.
The Fund must at all times have in its portfolio the securities which it may be
obligated to deliver if the option is exercised. The Fund may write call options
on its common stocks in an attempt to realize a greater current return than
would be realized on the securities alone. The Fund may also write call options
as a partial hedge against a possible stock market decline or to extend a
holding period on a stock which is under consideration for sale in order to
create a long-term capital gain. In view of its investment objective, the Fund
generally would write call options only in circumstances where Key Advisers or
the Sub-Adviser does not anticipate significant appreciation of the underlying
security in the near future or has otherwise determined to dispose of the
security. As the writer of a call option, the Fund receives a premium for
undertaking the obligation to sell the underlying security at a fixed price
during the option period, if the option is exercised. So long as the Fund
remains obligated as a writer of a call option, it forgoes the opportunity to
profit from increases in the market price of the underlying security above the
exercise price of the option, except insofar as the premium represents such a
profit (and retains the risk of loss should the value of the underlying security
decline). The Fund may also enter into "closing purchase transactions" in order
to terminate its obligation as a writer of a call option prior to the expiration
of the option. Although the writing of call options only on national securities
exchanges increases the likelihood of the Fund's ability to make closing
purchase transactions, there is no assurance that the Fund will be able to
effect such transactions at any particular time or at any acceptable price. The
writing of call options could result in increases in the Fund's portfolio
turnover rate, especially during periods when market prices of the underlying
securities appreciate.
<PAGE>
Miscellaneous Securities. The Fund can invest in various securities
issued by domestic and foreign corporations, including preferred stocks and
investment grade corporate bonds, notes, and warrants. Bonds are long-term
corporate debt instruments secured by some or all of the issuer's assets,
debentures are general corporate debt obligations backed only by the integrity
of the borrower, and warrants are instruments that entitle the holder to
purchase a certain amount of common stock at a specified price, which price is
usually higher than the current market price at the time of issuance. Preferred
stocks are instruments that combine qualities both of equity and debt
securities. Individual issues of preferred stock will have those rights and
liabilities that are spelled out in the governing document. Preferred stocks
usually pay a fixed dividend per quarter (or annum) and are senior to common
stock in terms of liquidation and dividends rights, and preferred stocks
typically do not have voting rights. The Fund will only purchase preferred
stocks where the issuer is publicly traded and has capital in excess of $200
million.
The Fund also may invest, consistent with its investment objective and
policies, in zero coupon bonds, which are debt instruments that do not pay
current interest and are typically sold at prices greatly discounted from par
value. The return on a zero-coupon obligation, when held to maturity, equals the
difference between the par value and the original purchase price. Zero-coupon
obligations have greater price volatility than coupon obligations.
"When-Issued" Securities. As discussed in the Prospectus, the Fund may
purchase securities on a "when issued" basis (i.e., for delivery beyond the
normal settlement date at a stated price and yield). When the Fund agrees to
purchase securities on a "when issued" basis, the Victory Portfolios' custodian
will set aside cash or liquid portfolio securities equal to the amount of the
commitment in a separate account. Normally, the custodian will set aside
portfolio securities to satisfy the purchase commitment, and in such a case, the
Fund may be required subsequently to place additional assets in the separate
account in order to assure that the value of the account remains equal to the
amount of the Fund's commitment. It may be expected that the Fund's net assets
will fluctuate to a greater degree when it sets aside portfolio securities to
cover such purchase commitments than when it sets aside cash.
When the Fund engages in "when-issued" transactions, it relies on the
seller to consummate the trade. Failure of the seller to do so may result
in the Fund incurring a loss or missing the opportunity to obtain a price
considered to be advantageous. The Fund does not intend to purchase "when
issued" securities for speculative purposes, but only in furtherance of its
investment objective.
U.S. Government Obligations. The Fund may invest in obligations issued
or guaranteed by the U.S. Government, its agencies and instrumentalities.
Obligations of certain agencies and instrumentalities of the U.S. Government are
supported by the full faith and credit of the U.S. Treasury; others are
supported by the right of the issuer to borrow from the U.S. Treasury; others
are supported by the discretionary authority of the U.S. Government to purchase
the agency's obligations; and still others are supported only by the credit of
the agency or instrumentality. No assurance can be given that the U.S.
Government will provide financial support to U.S. Government-sponsored agencies
or instrumentalities if it is not obligated to do so by law. The Fund will
invest in the obligations of such agencies and instrumentalities only when Key
Advisers or the Sub-Adviser believes that the credit risk with respect thereto
is minimal.
Securities Lending. The Fund may lend its portfolio securities to
broker-dealers, banks or institutional borrowers of securities. The Fund must
receive a minimum of 100% collateral, plus any interest due in the form of cash
or U.S. Government securities. This collateral must be valued daily and should
the market value of the loaned securities increase, the borrower must furnish
additional collateral to the Fund. During the time portfolio securities are on
loan, the borrower will pay the Fund any dividends or interest paid on such
securities plus any interest negotiated between the parties to the lending
agreement. Loans will be subject to termination by the Fund or the borrower at
any time. While the Fund will not have the right to vote securities on loan,
it intends to terminate the loan and regain the right to vote if that is
considered important with respect to the investment. The Fund will only enter
into loan arrangements with broker-dealers, banks or other institutions which
Key Advisers or the Sub-Adviser has determined are creditworthy under guidelines
established by the Victory Portfolios' Trustees. The Fund intends to limit its
securities lending to 33 1/3% of total assets.
Other Investment Companies. The Fund may invest up to 5% of its total
assets in the securities of any one investment company, but may not own more
than 3% of the securities of any one investment company or invest more than 10%
of its total assets in the securities of other investment companies. Pursuant to
an exemptive order received by the Victory Portfolios from the Commission, the
Fund may invest in money market funds of the Victory Portfolios. Key Advisers
and/or the Sub-Adviser will waive its investment advisory fee as to all assets
invested in other investment companies. Because such other investment companies
employ an investment adviser, such investment by the Fund will cause
shareholders to bear duplicative fees, such as management fees.
<PAGE>
Repurchase Agreements. Securities held by the Fund may be subject to
repurchase agreements. Under the terms of a repurchase agreement, the Fund would
acquire securities from financial institutions or registered broker-dealers
deemed creditworthy by Key Advisers or the Sub-Adviser pursuant to guidelines
adopted by the Victory Portfolios' Trustees, subject to the seller's agreement
to repurchase such securities at a mutually agreed upon date and price. The
seller is required to maintain the value of collateral held pursuant to the
agreement at not less than the repurchase price (including accrued interest). If
the seller were to default on its repurchase obligation or become insolvent, the
Fund would suffer a loss to the extent that the proceeds from a sale of the
underlying portfolio securities were less than the repurchase price, or to the
extent that the disposition of such securities by the Fund is delayed pending
court action. Repurchase agreements are considered by the staff of the
Commission to be loans by the Fund.
Reverse Repurchase Agreements. The Fund may borrow funds for temporary
purposes by entering into reverse repurchase agreements in accordance with the
investment restrictions described below. Pursuant to such agreements, the Fund
would sell portfolio securities to financial institutions such as banks and
broker-dealers, and agree to repurchase them at a mutually agreed-upon date and
price. At the time the Fund enters into a reverse repurchase agreement, it will
place in a segregated custodial account assets (such as cash or other liquid
high-grade securities) consistent with the Fund's investment restrictions having
a value equal to the repurchase price (including the accrued interest); the
collateral will be marked-to-market on a daily basis, and will be continuously
monitored to ensure that such equivalent value is maintained. Reverse repurchase
agreements involve the risk that the market value of the securities sold by the
Fund may decline below the price at which the Fund is obligated to repurchase
the securities. Reverse repurchase agreements are considered to be borrowings
under the Investment Company Act of 1940, as amended (the "1940 Act").
<PAGE>
Investment Restrictions
The following investment restrictions are fundamental with respect to
the Fund and may be changed only by a vote of a majority of the outstanding
shares of the Fund as defined in "ADDITIONAL INFORMATION - Miscellaneous" of
this Statement of Additional Information).
THE FUND MAY NOT:
1. Participate on a joint or joint and several basis in any
securities trading account.
2. Purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not prevent
the Fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical commodities).
3. Purchase or sell real estate unless acquired as a result
of ownership of securities or other instruments (but this shall not prevent the
Fund from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business). Investments by the
Fund in securities backed by mortgages on real estate or in marketable
securities of companies engaged in such activities are not hereby precluded.
4. Issue any senior security (as defined in the 1940 Act), except
that (a) the Fund may engage in transactions that may result in the
issuance of senior securities to the extent permitted under applicable
regulations and interpretations of the 1940 Act or an exemptive order; (b) the
Fund may acquire other securities, the acquisition of which may result in the
issuance of a senior security, to the extent permitted under applicable
regulations or interpretations of the 1940 Act; (c) subject to the restrictions
set forth below, the Fund may borrow money as authorized by the 1940 Act.
5. Borrow money, except that (a) the Fund may enter into commitments
to purchase securities in accordance with its investment program, including
delayed-delivery and when-issued securities and reverse repurchase agreements,
provided that the total amount of any such borrowing does not exceed 33 1/3% of
the Fund's total assets; and (b) the Fund may borrow money for temporary or
emergency purposes in an amount not exceeding 5% of the value of its total
assets at the time when the loan is made. Any borrowings representing more than
5% of the Fund's total assets must be repaid before the Fund may make
additional investments.
6. Lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of publicly issued debt securities or to
repurchase agreements.
7. Underwrite securities issued by others, except to the extent that
the Fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities.
8. With respect to 75% of the Fund's total assets, the Fund may not
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or instrumentalities)
if, as a result, (a) more than 5% of the Fund's total assets would be invested
in the securities of that issuer, or (b) the Fund would hold more than 10% of
the outstanding voting securities of that issuer.
9. Purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities, or repurchase agreements secured thereby) if, as a result,
more than 25% of the Fund's total assets would be invested in the securities of
companies whose principal business activities are in the same industry. In the
utilities category, the industry shall be determined according to the service
provided. For example, gas, electric, water and telephone will be considered as
separate industries.
The following restrictions are not fundamental and may be changed
without shareholder approval:
1. The Fund will not purchase or retain securities of any issuer if
the officers or Trustees of the Victory Portfolios or the officers or directors
of its investment adviser owning beneficially more than one half of 1% of the
securities of such issuer together own beneficially more than 5% of such
securities.
2. The Fund will not invest more than 10% of its total assets in the
securities of issuers which together with any predecessors have a record of less
than three years of continuous operation.
3. The Fund will not write or sell puts, straddles, spreads or
combinations thereof or write or purchase put options or purchase call options.
4. The Fund will not invest more than 15% of its net assets in
illiquid securities. Illiquid securities are securities that are not readily
marketable or cannot be disposed of promptly within seven days and in the usual
course of business at approximately the price at which the Fund has valued them.
Such securities include, but are not limited to, time deposits and repurchase
agreements with maturities longer than seven days. Securities that may be
resold under Rule 144A ("Restricted Securities"), or securities offered pursuant
to Section 4(2) of, the 1933 Act, shall not be deemed illiquid solely by
reason of being unregistered. Key Advisers or the Sub-Adviser determine whether
a particular security is deemed to be liquid based on the trading markets for
the specific security and other factors. However, because state securities laws
may limit the Fund's investment in Restricted Securities (regardless of the
liquidity of the investment), investments in Restricted Securities resalable
under Rule 144A will continue to be subject to applicable state law requirements
until such time, if ever, that such limitations are changed.
5. The Fund will not make short sales of securities, other than short
sales "against the box," or purchase securities on margin except for short-term
credits necessary for clearance of portfolio transactions, provided that this
restriction will not be applied to limit the use of options, futures contracts
and related options, in the manner otherwise permitted by the investment
restrictions, policies and investment program of the Fund.
6. The Fund may invest up to 5% of its total assets in the securities
of any one investment company, but may not own more than 3% of the securities of
any one investment company or invest more than 10% of its total assets in the
securities of other investment companies. Pursuant to an exemptive order
received by the Victory Portfolios from the Commission, the Fund may invest in
the money market funds of the Victory Portfolios.
7. Buy state, municipal, or private activity bonds.
State Regulations
In addition, each of the Victory Portfolios, so long as its shares are
registered under the securities laws of the State of Texas and such
restrictions are required as a consequence of such registration, is subject to
the following non-fundamental policies, which may be modified in the future by
the Trustees without a vote of the Victory Portfolios' shareholders: (i) the
Victory Portfolios has represented to the Texas State Securities Board, on
behalf of the investment portfolios registered in that state, that those
investment portfolios will not invest in oil, gas or mineral leases or purchase
or sell real property (including limited partnership interests, but excluding
readily marketable securities of companies which invest in real estate); and
(ii) the Victory Portfolios has represented to the Texas State Securities Board
on behalf of the investment portfolios registered in that state, that those
investment portfolios will not invest more than 5% of their net assets in
warrants valued at the lower of cost or market; provided that, included within
that amount, but not to exceed 2% of net assets, may be warrants which are not
listed on the New York or American Stock Exchanges. For purposes of this
restriction, warrants acquired in units or attached to securities are deemed to
be without value.
The policies and limitations listed above supplement those
set forth in the Prospectus. Unless otherwise noted, whenever an investment
policy or limitation states a maximum percentage of the Fund's assets that may
be invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be determined
immediately after and as a result of the Fund's acquisition of such security or
other asset except in the case of borrowing (or other activities that may be
deemed to result in the issuance of a "senior security" under the 1940 Act).
Accordingly, any subsequent change in values, net assets, or other circumstances
will not be considered when determining whether the investment complies with the
Fund's investment policies and limitations. If the value of the Fund's holdings
of illiquid securities at any time exceeds the percentage limitation applicable
at the time of acquisition due to subsequent fluctuations in value or other
reasons, the Board of Trustees will consider what actions, if any, are
appropriate to maintain adequate liquidity.
FUTURE DEVELOPMENTS
The Fund may take advantage of other investment practices
which are not at present contemplated for use by the Fund or which currently are
not available but which may be developed, to the extent such investment
practices are both consistent with the Fund's investment objective and are
legally permissible for the Fund. Such investment practices, if they arise, may
involve risks which exceed those involved in the activities described in the
Prospectus and Statement of Additional Information. Prior to commencing any new
investment practice, the Fund will notify shareholders by means of prospectus
supplement.
Portfolio Turnover
The turnover rate for the Fund's investment portfolio is
calculated by dividing the lesser of the Fund's purchases or sales of portfolio
securities for the year by the monthly average value of the portfolio
securities. The calculation excludes all securities whose maturities, at the
time of acquisition, were one year or less.
In the fiscal years ended October 31, 1994 and 1993, the Fund's portfolio
turnover rates were 103.62% and 86%, respectively.
<PAGE>
VALUATION OF PORTFOLIO SECURITIES
Investment securities held by the Fund are valued on the
basis of valuations provided by an independent pricing service, approved by the
Board of Trustees, which uses information with respect to transactions of a
security, quotations from dealers, market transactions in comparable securities,
and various relationships between securities, in determining value. Specific
investment securities which are not priced by the approved pricing service will
be valued according to quotations obtained from dealers who are market makers in
those securities. Investment securities with less than 60 days to maturity when
purchased are valued at amortized cost which approximates market value.
Investment securities not having readily available market quotations will be
priced at fair value using a methodology approved in good faith by the Board of
Trustees.
PERFORMANCE
As described in the Prospectus, from time to time the
"standardized yield," "dividend yield," "average annual total return," "total
return," and "total return at net asset value" of an investment in each class of
Fund shares may be advertised. An explanation of how yields and total returns
are calculated for each class and the components of those calculations are set
forth below.
Yield and total return information may be useful to
investors in reviewing the Victory Portfolios' performance. The Fund's
advertisement of its performance must, under applicable Commission rules,
include the average annual total returns for each class of shares of the Fund
for the 1, 5 and 10-year period (or the life of the class, if less) as of the
most recently ended calendar quarter. This enables an investor to compare the
Fund's performance to the performance of other funds for the same periods.
However, a number of factors should be considered before using such information
as a basis for comparison with other investments. An investment in the Fund is
not insured; its yield and total return are not guaranteed and normally will
fluctuate on a daily basis. When redeemed, an investor's shares may be worth
more or less than their original cost. Yield and total return for any given past
period are not a prediction or representation by the Victory Portfolios of
future yields or rates of return on its shares. The yield and total returns of
the Class A and Class B shares of the Fund are affected by portfolio quality,
portfolio maturity, the type of investments the Fund holds and its operating
expenses.
STANDARDIZED YIELDS. The Fund's "yield" (referred to as
"standardized yield") for a given 30-day period for a class of shares is
calculated using the following formula set forth in rules adopted by the
Commission that apply to all funds that quote yields:
Standardized Yield = 2 [[(a-b + 1)to the sixth power] - 1]
---------
cd
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense
reimbursements).
c = the average daily number of shares of that class
outstanding during the 30-day period
that were entitled to receive dividends.
d = the maximum offering price per share of the class on the
last day of the period, adjusted for undistributed net
investment income.
The standardized yield of a class of shares for a 30-day period may
differ from its yield for any other period. The Commission formula assumes that
the standardized yield for a 30-day period occurs at a constant rate for a
six-month period and is annualized at the end of the six-month period. This
standardized yield is not based on actual distributions paid by the Fund to
shareholders in the 30-day period, but is a hypothetical yield based upon the
net investment income from the Fund's portfolio investments calculated for
that period. The standardized yield may differ from the "dividend yield" of that
class, described below. Additionally, because each class of shares is subject to
different expenses, it is likely that the standardized yields of the Fund
classes of shares will differ. The yield on Class A shares for the 30-day period
ended April 30, 1995 was ____% .
DIVIDEND YIELD AND DISTRIBUTION RETURN. From time to time the Fund may
quote a "dividend yield" or a "distribution return" for each class. Dividend
yield is based on the Class A or Class B share dividends derived from net
investment income during a stated period. Distribution return includes dividends
derived from net investment income and from realized capital gains declared
during a stated period. Under those calculations, the dividends and/or
distributions for that class declared during a stated period of one year or less
(for example, 30 days) are added together, and the sum is divided by the maximum
offering price per share of that class A) on the last day of the period. When
the result is annualized for a period of less than one year, the "dividend
yield" is calculated as follows:
Dividend Yield of the Class =
Dividends of the Class + Number of days (accrual period) x 365
-----------------------------------------------------------
Max. Offering Price of the Class (last day of period)
<PAGE>
The maximum offering price for Class A shares includes the maximum
front-end sales charge. For Class B shares, the maximum offering price is the
net asset value per share, without considering the effect of contingent deferred
sales charges.
From time to time similar yield or distribution return calculations
may also be made using the Class A net asset value (instead of its respective
maximum offering price) at the end of the period. The dividend yields on Class A
shares at maximum offering price and net asset value for the 30-day period ended
April 30, 1995 were ____% and ____%, respectively.
TOTAL RETURNS. The "average annual total return" of each class is an
average annual compounded rate of return for each year in a specified number of
years. It is the rate of return based on the change in value of a hypothetical
initial investment of $1,000 ("P" in the formula below) held for a number of
years ("n") to achieve an Ending Redeemable Value ("ERV"), according to the
following formula:
( ERV )1 to the Nth - 1 = Average Annual Total Return
-----
( P )
The cumulative "total return" calculation measures the change in value
of a hypothetical investment of $1,000 over an entire period of years. Its
calculation uses some of the same factors as average annual total return, but it
does not average the rate of return on an annual basis. Total return is
determined as follows:
ERV - P = Total Return
P
In calculating total returns for Class A shares, the current maximum
sales charge of 4.75% (as a percentage of the offering price) is deducted from
the initial investment ("P") (unless the return is shown at net asset value, as
discussed below). For Class B shares, the payment of the applicable contingent
deferred sales charge (5.0% for the first year, 4.0% for the second year, 3.0%
for the third and fourth years, 2.0% in the fifth year, 1.0% in the sixth year
and none thereafter) is applied to the investment result for the time period
shown (unless the total return is shown any net asset value, as described
below). Total returns also assume that all dividends and capital gains
distributions during the period are reinvested to buy additional shares at net
asset value per share, and that the investment is redeemed at the end of the
period. The average annual total return and cumulative total return on Class A
shares for the period October 20, 1989 (commencement of operations) to April 30,
1995 (life of fund) at maximum offering price were ___% and ____%, respectively.
For the one and five year periods ended April 30, 1995 annual total returns for
Class A were ______% and _____%, respectively.
From time to time the Fund may also quote an "average annual total
return at net asset value" or a cumulative "total return at net asset value" for
Class A or Class B shares. It is based on the difference in net asset value per
share at the beginning and the end of the period for a hypothetical investment
in that class of shares (without considering front-end or contingent sales
charges) and takes into consideration the reinvestment of dividends and capital
gains distributions. The average annual total return and cumulative total return
on Class A shares for the period October 20, 1989 (commencement of operations)
to April 30, 1995 (life of fund), at net asset value, was ____% and ___%,
respectively. For the one and five year periods ended April 30, 1995, average
annual total return for Class A shares was ___% and ___%, respectively.
OTHER PERFORMANCE COMPARISONS. From time to time the Fund may publish
the ranking of the performance of its Class A or Class B shares by Lipper
Analytical Services, Inc. ("Lipper"), a widely-recognized independent mutual
fund monitoring service. Lipper monitors the performance of regulated investment
companies, including the Fund, and ranks the performance of the Fund's classes
against (i) all other funds, excluding money market funds, and (ii) all other
government bond funds. The Lipper performance rankings are based on total return
that includes the reinvestment of capital gains distributions and income
dividends but does not take sales charges or taxes into consideration.
From time to time the Fund may publish the ranking of the performance
of its Class A or Class B shares by Morningstar, Inc., an independent mutual
fund monitoring service that ranks mutual funds, including the Fund, in broad
investment categories (equity, taxable bond, tax-exempt and other) monthly,
based upon each fund's three, five and ten-year average annual total returns
(when available) and a risk adjustment factor that reflects Fund performance
relative to three-month U.S. Treasury bill monthly returns. Such returns are
adjusted for fees and sales loads. There are five ranking categories with a
corresponding number of stars: highest (5), above average (4), neutral (3),
below average (2) and lowest (1). Ten percent of the funds, series or classes in
an investment category receive 5 stars, 22.5% receive 4 stars, 35% receive 3
stars, 22.5% receive 2 stars, and the bottom 10% receive one star. Morningstar
ranks the Class A and Class B shares of the Fund in relation to other taxable
bond funds.
The total return on an investment made in Class A or Class B shares of
the Fund may be compared with the performance for the same period of one or more
of the following indices: the Consumer Price Index, the Salomon Brothers World
Government Bond Index, the Standard & Poor's 500 Index, the Shearson Lehman
Government/Corporate Bond Index, the Lehman Aggregate Bond Index, and the J.P.
Morgan Government Bond Index. Other indices may be used from time to time. The
Consumer Price Index is generally considered to be a measure of inflation. The
Salomon Brothers World Government Bond Index generally represents the
performance of government debt securities of various markets throughout the
world, including the United States. The Lehman Government/Corporate Bond Index
generally represents the performance of intermediate and long-term government
and investment grade corporate debt securities. The Lehman Aggregate Bond Index
measures the performance of U.S. corporate bond issues, U.S. government
securities and mortgaged-backed securities. The J.P. Morgan Government Bond
Index generally represents the performance of government bonds issued by various
countries including the United States. The S&P 500 Index is a composite index of
500 common stocks generally regarded as an index of U.S. stock market
performance. The foregoing bond indices are unmanaged indices of securities that
do not reflect reinvestment of capital gains or take investment costs into
consideration, as these items are not application to indices.
From time to time, the yields and the total returns of Class A or
Class B shares of the Fund may be quoted in and compared to other mutual funds
with similar investment objective in advertisements, shareholder reports or
other communications to shareholders. The Fund may also include calculations in
such communications that describe hypothetical investment results. (Such
performance examples will be based on an express set of assumptions and are not
indicative of the performance of any Fund.) Such calculations may from time to
time include discussions or illustrations of the effects of compounding in
advertisements. "Compounding" refers to the fact that, if dividends or other
distributions on a Fund investment are reinvested by being paid in additional
Fund shares, any future income or capital appreciation of a Fund would increase
the value, not only of the original Fund investment, but also of the additional
Fund shares received through reinvestment. As a result, the value of the Fund
investment would increase more quickly than if dividends or other distributions
had been paid in cash. The Fund may also include discussions or illustrations of
the potential investment goals of a prospective investor (including but not
limited to tax and/or retirement planning), investment management techniques,
policies or investment suitability of Fund, economic conditions, legislative
developments (including pending legislation), the effects of inflation and
historical performance of various asset classes, including but not limited to
stocks, bonds and Treasury bills. From time to time advertisements or
communications to shareholders may summarize the substance of information
contained in shareholder reports (including the investment composition of a
Fund, as well as the views of the investment adviser as to current market,
economic, trade and interest rate trends, legislative, regulatory and monetary
developments, investment strategies and related matters believed to be of
relevance to Fund. The Fund may also include in advertisements, charts, graphs
or drawings which illustrate the potential risks and rewards of investment in
various investment vehicles, including but not limited to stock, bonds, Treasury
bills and shares of Fund as well as charts or graphs which illustrate strategies
such as dollar cost averaging, and comparisons of hypothetical yields of
investment in tax-exempt versus taxable investments. In addition, advertisements
or shareholder communications may include a discussion of certain attributes or
benefits to be derived by an investment in Fund. Such advertisements or
communications may include symbols, headlines or other material which highlight
or summarize the information discussed in more detail therein. With proper
authorization, Fund may reprint articles (or excerpts) written regarding the
Fund and provide them to prospective shareholders. Performance information with
respect to the Fund is generally available by calling 1-800-539-3863.
Investors may also judge, and the Fund may at times advertise,
performance of Class A or Class B shares by comparing it to the performance of
other mutual funds or mutual fund portfolios with comparable investment
objectives and policies, which performance may be contained in various unmanaged
mutual fund or market indices or rankings such as those prepared by Dow Jones &
Co., Inc., Standard & Poor's Corporation, Lehman Brothers, Merrill Lynch, and
Salomon Brothers, and in publications issued by Lipper Analytical Services, Inc.
and in the following publications: IBC/Donoghue's Money Fund Reports, Ibottson
Associates, Inc., Morningstar, CDA/Wiesenberger, Money Magazine, Forbes,
Barron's, The Wall Street Journal, The New York Times, Business Week, American
Banker, Fortune, Institutional Investor, U.S.A. Today. In addition to yield
information, general information about the Fund that appears in a publication
such as those mentioned above may also be quoted or reproduced in advertisements
or in reports to shareholders.
Advertisements and sales literature may include discussions of
specifics of the portfolio manager's investment strategy and process, including,
but not limited to, descriptions of security selection and analysis.
Advertisements may also include descriptive information about the
investment adviser, including, but not limited to, its status within the
industry, other services and products it makes available, total assets under
management, its investment philosophy.
When comparing yield, total return and investment risk of an
investment in Class A or Class B shares of the Fund with other investments,
investors should understand that certain other investments have different risk
characteristics than an investment in shares of the Fund. For example,
certificates of deposit may have fixed rates of return and may be insured as to
principal and interest by the FDIC, while the Fund's returns will fluctuate and
its share values and returns are not guaranteed. Money market accounts offered
by banks also may be insured by the FDIC and may offer stability of principal.
U.S. Treasury securities are guaranteed as to principal and interest by the full
faith and credit of the U.S. government. Money market mutual funds may seek to
offer a fixed price per share.
ADDITIONAL PURCHASE EXCHANGE AND REDEMPTION INFORMATION
The Victory Portfolios (see "Description of Victory Portfolios" below) is open
for business and the NAV of each class of shares of the Fund is calculated on
each Business Day. A Business Day is every day on which the NYSE is open for
business, the Federal Reserve Bank of Cleveland is open and any other day (other
than a day on which no shares of the Fund are tendered for redemption and no
order to purchase any shares is received) during which there is sufficient
trading in portfolio instruments that the Fund's net asset value per share might
be materially affected. The NAV of each class is determined and its shares are
priced as of the close of regular trading of the NYSE (generally 4:00 p.m.
Eastern time (the "Valuation Time")) on each Business Day of the Fund. The NYSE
or the Federal Reserve Bank of Cleveland will not be open in observance of the
following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veterans Day, Thanksgiving Day, and Christmas Day. The holiday closing schedule
is subject to change.
When the NYSE is closed, or when trading is restricted for any reason
other than its customary weekend or holiday closings, or under emergency
circumstances as determined by the Commission to warrant such action, the Fund's
Transfer Agent will determine the Fund's NAVs at Valuation Time. A Fund's NAV
may be affected to the extent that its securities are traded on days that are
not Business Days.
[If, in the opinion of the Trustees, conditions exist which make cash
payment undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing the NAV of each class of the Fund. Shareholders receiving securities
or other property on redemption may realize a gain or loss for tax purposes and
will incur any costs of sale as well as the associated inconveniences.]
Pursuant to Rule 11a-3 under the 1940 Act, the Fund is required to
give shareholders at least 60 days' notice prior to terminating or modifying the
Fund's exchange privilege. Under the Rule, the 60-day notification requirement
may be waived if (i) the only effect of a modification would be to reduce or
eliminate an administrative fee, redemption fee or deferred sales charge
ordinarily payable at the time of exchange or (ii) the Fund temporarily suspends
the offering of shares as permitted under the 1940 Act or by the SEC or because
it is unable to invest amounts effectively in accordance with its investment
objective and policies.
In the Prospectus, the Victory Portfolios, Key Advisers and the
Sub-Adviser have notified shareholders that they reserve the right at any time
without prior notice to shareholders to refuse exchange purchases by any person
or group if, in Key Advisers or the Sub-Adviser's judgment, the Fund would be
unable to invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
ADDITIONAL PURCHASE INFORMATION
ALTERNATIVE SALES ARRANGEMENTS - CLASS A AND CLASS B SHARES. The
Alternative Sales Arrangements permit an investor to choose the method of
purchasing shares that is more beneficial to the investor depending on the
amount of the purchase, the length of time the investor expects to hold shares
and other relevant circumstances. Investors should understand that the purpose
and function of the deferred sales charge and asset-based sales charge with
respect to Class B shares are the same as those of the initial sales charge with
respect to Class A shares. Any salesperson or other person entitled to receive
compensation for selling Fund shares may receive different compensation with
respect to one class of shares on behalf of a single investor (not including
dealer "street name" or omnibus accounts) because generally it will be more
advantageous for that investor to purchase Class A shares of the Fund instead.
The two classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different shareholder
privileges and features. The net income attributable to Class B shares and the
dividends payable on Class B shares will be reduced by incremental expenses
borne solely by that class, including the asset-based sales charge to which
Class B shares are subject.
CLASS B CONVERSION FEATURE. Ninety-six months after an investor's
purchase order for Class B shares is accepted, such "Matured Class B Shares"
automatically will convert to Class A shares, on the basis of the relative net
asset value of the two classes, without the imposition of any sales load or
other charge. Each time any Matured Class B shares convert to Class A shares,
any Class B shares acquired by the reinvestment of dividends or distributions on
such Matured Class B shares that are still held will also convert to Class A
shares, on the same basis. The conversion feature is intended to relieve
holders of Matured Class B shares of the asset-based sales charge under the
Class B Distribution Plan after such shares have been outstanding long enough
that the Distributor may have been compensated for distribution expenses related
to such shares.
The conversion of Matured Class B shares to Class A shares is subject
to the continuing availability of a private letter ruling from the Internal
Revenue Service, or an opinion of counsel or tax adviser, to the effect that the
conversion of Matured Class B shares does not constitute a taxable event for the
holder under Federal income tax law. If such a revenue ruling or opinion is no
longer available, the automatic conversion feature may be suspended, in which
event no further conversion of Matured Class B shares would occur while such
suspension remained in effect. Although Matured Class B shares could then be
exchanged for Class A shares on the basis of relative net asset value of the two
classes, without the imposition of a sales charge or fee, such exchange could
constitute a taxable event for the holder, and absent such exchange, Class B
shares might continue to be subject to the asset-based sales charge for longer
than six years.
The methodology for calculating the net asset value, dividends and
distributions of the Fund Class A and Class B shares recognizes two types of
expenses. General expenses that do not pertain specifically to either class are
allocated pro rata to the shares of each class, based on the percentage of the
net assets of such class to the Fund's total net assets, and then equally to
each outstanding share within a given class. Such general expenses include (i)
management fees, (ii) legal, bookkeeping and audit fees, (iii) printing and
mailing costs of shareholder reports, prospectuses, statements of additional
information and other materials for current shareholders, (iv) fees to
unaffiliated Trustees, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and brokerage
commissions, and (ix) non-recurring expenses, such as litigation costs. Other
expenses that are directly attributable to a class are allocated equally to each
outstanding share within that class. Such expenses included (i) Distribution
Plan fees, (ii) incremental transfer and shareholder servicing agent fees and
expenses, (iii) registration fees and (iv) shareholder meeting expenses, to the
extent that such expenses pertain to a specific class rather than to the Fund as
a whole.
REDUCED SALES CHARGE. Reduced sales charges are applicable to
purchases of $50,000 or more of Class A shares of the Fund alone or in
combination with purchases of shares of other Victory Portfolios made at any one
time. To obtain the reduction of the sales charge, you or your investment
professional must notify the Transfer Agent at the time of purchase whenever a
quantity discount is applicable to your purchase. Upon such notification, you
will receive the lowest applicable sales charge.
The contingent deferred sales charge is waived on Class B shares in
the following cases: (i) shares sold to Key Advisers, the Sub-Adviser or their
affiliates; (ii) shares issued in plans of reorganization to which the Fund is a
party; and (iii) shares redeemed in involuntary redemptions.
In addition to investing at one time in any combination of Class A
shares of the Victory Portfolios in an amount entitling you to a reduced sales
charge, you may qualify for a reduction in the sales charge under the following
programs:
COMBINED PURCHASES. When you invest in Class A shares of the Victory
Portfolios for several accounts at the same time, you may combine these
investments into a single transaction if purchased through one investment
professional, and if the total is $50,000 or more. The following may qualify for
this privilege: an individual, or "company" as defined in Section 2(a)(8) of the
1940 Act; an individual, spouse, and their children under age 21 purchasing for
his, her, or their own account; a trustee, administrator or other fiduciary
purchasing for a single trust estate or single fiduciary account or for a single
or a parent-subsidiary group of "employee benefit plans" (as defined in Section
3(3) of ERISA); and tax-exempt organizations under Section 501(c)(3) of the
Internal Revenue Code.
<PAGE>
RIGHTS OF ACCUMULATION. Your "Rights of Accumulation" permit reduced
sales charges on future purchases of Class A shares after you have reached a new
breakpoint. You can add the value of existing Victory Portfolios shares held by
you, your spouse, and your children under age 21, determined at the previous
day's NAV at the close of business, to the amount of your new purchase valued at
the current offering price to determine your reduced sales charge.
LETTER OF INTENT. If you anticipate purchasing $50,000 or more of
shares of the Fund alone or in combination with Class A shares of certain other
Victory Portfolios within a 13-month period, you may obtain shares of the
portfolios at the same reduced sales charge as though the total quantity were
invested in one lump sum, by filing a non-binding Letter of Intent (the
"Letter") within 90 days of the start of the purchases. Each investment you make
after signing the Letter will be entitled to the sales charge applicable to the
total investment indicated in the Letter. For example, a $2,500 purchase toward
a $60,000 Letter would receive the same reduced sales charge as if the $60,000
had been invested at one time. To ensure that the reduced price will be received
on future purchases, you or your investment professional must inform the
transfer agent that the Letter is in effect each time shares are purchased.
Neither income dividends nor capital gain distributions taken in additional
shares will apply toward the completion of the Letter.
Your initial investment must be at least 5% of the total amount you
plan to invest. Out of the initial purchase, 5% of the dollar amount specified
in the Letter will be registered in your name and held in escrow. The shares
held in escrow cannot be redeemed or exchanged until the Letter is satisfied or
the additional sales charges have been paid. You will earn income dividends and
capital gain distributions on escrowed shares. The escrow will be released when
your purchase of the total amount has been completed. You are not obligated to
complete the Letter.
If you purchase more than the amount specified in the Letter and
qualify for a further sales charge reduction, the sales charge will be adjusted
to reflect your total purchase at the end of 13 months. Surplus funds will be
applied to the purchase of additional shares at the then current offering price
applicable to the total purchase.
If you do not complete your purchase under the Letter within the
13-month period, your sales charge will be adjusted upward, corresponding to the
amount actually purchased, and if after written notice, you do not pay the
increased sales charge, sufficient escrowed shares will be redeemed to pay such
charge.
ADDITIONAL EXCHANGE INFORMATION
Class A shares of the Victory Portfolios (see "Description of Victory
Portfolios" below) may be exchanged for shares of any Victory money market fund
or any Victory Portfolios with a reduced sales charge. Shares of any Victory
money market portfolio or any Victory Portfolios with a reduced sales charge may
be exchanged for shares of the Fund upon payment of the difference in the sales
charge (or, if applicable, shares of any Victory money market portfolio may be
used to purchase Class B shares of the Fund.)
Class B shares of the Fund may be exchanged for shares of other
Victory Portfolios that offer Class B shares. The CDSC applicable to Class B
shares is imposed on Class B shares redeemed within six years of the initial
purchase of the exchanged Class B shares. When Class B shares are redeemed to
effect an exchange, the priorities described in "How to Invest" in the
Prospectus for the imposition of the Class B CDSC will be followed in
determining the order in which the shares are exchanged. Shareholders should
take into account the effect of any exchange on the applicability and rate of
any CDSC that might be imposed in the subsequent redemption of remaining shares.
Shareholders owning shares of both classes must specify whether they intend to
exchange Class A or Class B shares.
<PAGE>
ADDITIONAL REDEMPTION INFORMATION
REINSTATEMENT PRIVILEGE. Within 90 days of a redemption, a shareholder
may reinvest all or part of the redemption proceeds of (i) Class A shares, or
(ii) Class B shares that were subject to the Class B contingent deferred sales
charge when redeemed, in Class A shares of the Fund or any of the other Victory
Portfolios into which shares of the Fund are exchangeable as described below, at
the net asset value next computed after receipt by the Transfer Agent of the
reinvestment order. No charge is currently made for reinvestment in shares of
the Fund but a reinvestment in shares of certain other Victory Portfolios is
subject to a $5.00 service fee. The shareholder must ask the Distributor for
such privilege at the time of reinvestment. Any capital gain that was realized
when the shares were redeemed is taxable, and reinvestment will not alter any
capital gains tax payable on that gain. If there has been a capital loss on the
redemption, some or all of the loss may not be tax deductible, depending on the
timing and amount of the reinvestment. Under the Internal Revenue Code, if the
redemption proceeds of Fund shares on which a sales charge was paid are
reinvested in shares of the Fund or another of the Victory Portfolios within 90
days of payment of the sales charge, the shareholder's basis in the shares of
the Fund that were redeemed may not include the amount of the sales charge paid.
That would reduce the loss or increase the gain recognized from redemption. The
Fund may amend, suspend or cease offering this reinvestment privilege at any
time as to shares redeemed after the date of such amendment, suspension or
cessation. You must reinstate your shares into an account with the same
registration. This privilege may be exercised only once by a shareholder with
respect to the Fund. For information on which funds are available for the
Reinstatement Privilege, please consult your program materials.
DIVIDENDS AND DISTRIBUTIONS
The Fund ordinarily declares and pays dividends separately for Class A
and Class B shares from its net investment income quarterly. The Fund
distributes substantially all of its net investment income and net capital
gains, if any, to shareholders within each calendar year as well as on a fiscal
year basis to the extent required for the Fund to qualify for favorable federal
tax treatment.
The amount of a class's distributions may vary from time to time
depending on market conditions, the composition of the Fund's portfolio, and
expenses borne by the Fund or borne separately by a class, as described in
"Alternative Sales Arrangements - Class A and Class B," above. Dividends are
calculated in the same manner, at the same time and on the same day for shares
of each class. However, dividends on Class B shares are expected to be lower as
a result of the asset-based sales charge on Class B shares, and Class B
dividends will also differ in amount as a consequence of any difference in net
asset value between Class A and Class B shares.
For this purpose, the net income of the Fund, from the time of the
immediately preceding determination thereof, shall consist of all interest
income accrued on the portfolio assets of the Fund, dividend income, if any,
income from securities loans, if any, and realized capital gains and losses on
the Fund assets, less all expenses and liabilities of the Fund chargeable
against income. Interest income shall include discount earned, including both
original issue and market discount, on discount paper accrued ratably to the
date of maturity. Expenses, including the compensation payable to Key Advisers
or the Sub-Adviser, are accrued each day. The expenses and liabilities of the
Fund shall include those appropriately allocable to the Fund as well as a share
of the general expenses and liabilities of the Victory Portfolios in proportion
to the Fund's share of the total net assets of the Victory Portfolios.
Additional Tax Information
It is the policy of each fund of the Victory Portfolios to qualify for
the favorable tax treatment accorded regulated investment companies ("RICs")
under Subchapter M of the Code, for so long as such qualification is in the best
interest of its shareholders. By following such policy and distributing its
income and gains currently with respect to each taxable year, the Victory
Portfolios expects to eliminate or reduce to a nominal amount the federal income
and excise taxes to which it may otherwise be subject.
In order to qualify as a RIC, each fund must, among other things, (1)
derive at least 90% of its gross income from dividends, interest, payments with
respect to securities loans, and gains from the sale or other disposition of
stock or securities, foreign currencies or other income (including gains from
options, futures or forward contracts) derived with respect to its business of
investing in stock, securities or currencies, (2) derive less than 30% of its
gross income from the sale or other disposition of stock, securities, options,
futures, forward contracts, and certain foreign currencies (or options, futures,
or forward contracts on foreign currencies) held for less than three months, and
(3) diversify its holdings so that at the end of each quarter of its taxable
year (i) at least 50% of the market value of the fund's assets is represented by
cash or cash items, U.S. Government securities, securities of other RICs and
other securities limited, in respect of any one issuer, to an amount not greater
than 5% of the value of the fund's total assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of its
total assets is invested in the securities of any one issuer (other than U.S.
Government securities) or of two or more issuers that the Victory Portfolios
control and that are engaged in the same, similar, or related trades or
businesses. These requirements may restrict the degree to which the Victory
Portfolios may engage in short-term trading and concentrate investments. If a
fund qualifies as a RIC, it will not be subject to federal income tax on the
part of its net investment income and net realized capital gains, if any, that
it distributes to shareholders with respect to each taxable year within the time
limits specified in the Code.
A non-deductible excise tax is imposed on regulated investment
companies that do not distribute in each calendar year an amount equal to 98% of
their ordinary income for the year plus 98% of their capital gain net income for
the 1-year period ending on October 31 of such calendar year. The balance of
such income must be distributed during the following calendar year. If
distributions during a calendar year are less than the required amount, the fund
is subject to a non-deductible excise tax equal to 4% of the deficiency.
Certain investment and hedging activities of a fund, including
transactions in options, futures contracts, hedging transactions, forward
contracts, straddles, foreign currencies, and foreign securities, are subject to
special tax rules. In a given case, these rules may accelerate income to the
fund, defer losses to the fund, cause adjustments in the holding periods of the
fund's securities, convert short-term capital losses into long-term capital
losses, or otherwise affect the character of the fund's income. These rules
could therefore affect the amount, timing and character of distributions to
shareholders. The Victory Portfolios will endeavor to make any available
elections pertaining to such transactions in a manner believed to be in the best
interest of the Victory Portfolios and their securities.
Each fund will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of taxable dividends paid to any shareholder who has
failed to provide (or provided an incorrect) tax identification number, or is
subject to withholding pursuant to a notice from the Internal Revenue Service
for failure to properly include on his or her income tax return payments of
interest or dividends. This "backup withholding" is not an additional tax, and
any amounts withheld may be credited against the shareholder's ultimate U.S. tax
liability.
Information set forth in the Prospectus and this Statement of
Additional Information that relates to federal taxation is only a summary of
certain key federal tax considerations generally affecting purchasers of shares
of the Victory Portfolios. No attempt has been made to present a complete
explanation of the federal tax treatment of a fund or its shareholders, and this
discussion is not intended as a substitute for careful tax planning.
Accordingly, potential purchasers of shares of a fund of these Portfolios are
urged to consult their tax advisers with specific reference to their own tax
circumstances. In addition, the tax discussion in the Prospectus and this
Statement of Additional Information is based on tax law in effect on the date of
the Prospectus and this Statement of Additional Information; such laws and
regulations may be changed by legislative, judicial or administrative action,
sometimes with retroactive effect.
<PAGE>
MANAGEMENT OF THE VICTORY PORTFOLIOS
Board of Trustees
Overall responsibility for management of the Victory Portfolios rests
with the Trustees, who are elected by the shareholders of the Victory
Portfolios. The Victory Portfolios are managed by the Trustees in accordance
with the laws of the Commonwealth of Massachusetts governing business trusts.
There are currently seven Trustees, six of whom are not "interested persons" of
the Victory Portfolios within the meaning of that term under the 1940 Act. The
Trustees, in turn, elect the officers of the Victory Portfolios to supervise
actively its day-to-day operations.
The Trustees of the Victory Portfolios, their addresses, ages and their
principal occupations during the past five years are as follows:
<TABLE>
Position(s) Held
With the Victory Principal Occupation
Name, Address and Age Portfolios During Past 5 Years
- --------------------- -------------------- -------------------
<S> <C> <C>
Robert G. Brown, 72
5460 N. Ocean Drive
Singer Island, FL 33404 Trustee Retired; from October 1983 to November 1990, President,
Cleveland Advanced Manufacturing Program (non-profit
corporation engaged in regional economic development);
Trustee, The Victory Funds.
Edward P. Campbell, 45
Nordson Corporation
28601 Clemens Road
Westlake, OH 44145 Trustee From March, 1994 to present, Executive Vice President and
Chief Operating Officer of Nordson Corporation
(manufacturer of application equipment); from May, 1988
March 1994, Vice President of Nordson Corporation; from
1987 to August 1994, member of the Supervisory
Committee of Society's Collective Investment Retirement
Fund; from May 1991 to August 1994, Trustee, Financial
Reserves Fund and from May 1993 to August 1994,
Trustee, Ohio Municipal Money Market Fund; Trustee, The
Victory Funds and Spears, Benzak, Salomon and Farrell
("SBSF") Funds.
Dr. Harry Gazelle, 67
17822 Lake Road
Lakewood, Ohio 44107 Trustee Retired radiologist, Drs. Hill and Thomas Corp. Trustee,
The Victory Funds.
<PAGE>
Dr. Thomas F. Morrissey, 62
Weatherhead School of
Management
Case Western Reserve
University
10900 Euclid Avenue
Cleveland, OH 44106-7235 Trustee 1995 Visiting Scholar, Bond University, Queensland,
Australia; Professor, Weatherhead School of Management,
Case Western Reserve University; from 1989 to 1995,
Associate Dean of Weatherhead School of Management;
from 1987 to August 1994, Member of the Supervisory
Committee of Society's Collective Investment Retirement
Fund; from May 1991 to August 1994, Trustee, Financial
Reserves Fund and from May 1993 to August 1994,
Trustee, Ohio Municipal Money Market Fund; Trustee, The
Victory Funds.
Stanley I. Landgraf, 70
41 Traditional Lane
Albany, NY 12211 Trustee Retired; currently, Trustee, Rensselaer Polytechnic Institute;
Director, Elenel Corporation, Albany International
Corporation and Mechanical Technology, Inc.; Member,
Board of Overseers, School of Management, Rensselaer
Polytechnic Institute; Member, The Fifty Group (a Capital
Region business organization); Trustee, The Victory Funds.
Leigh A. Wilson*, 51
River Tower
420 East 54th Street
Apt. 10H
New York, NY 10022 Trustee and President From 1989 to present, Chairman and Chief Executive
Officer, Glenleigh
International Limited;
from 1984-1989, Chief
Executive Officer,
Paribas North America and
Paribas Corporation;
Trustee, The Victory
Funds and SBSF Funds.
Dr. H. Patrick Swygert, 52
Howard University
2400 6th Street, N.W.
Suite 320
Washington, D.C. ___ Trustee Currently President, Howard University; Trustee, The
Victory Funds; formerly President, State University of New
York at Albany; formerly, Executive Vice President,
Temple University.
</TABLE>
- ------------
* Mr. Wilson is deemed to be an "interested person" of The Victory Portfolios
under the 1940 Act solely by reason of his position as President.
The Board presently has an Investment Policy Committee and a Business,
Legal, and Audit Committee. The members of the Investment Policy Committee are
Messrs. Morrissey, Brown and Landgraf (Chairman), who will serve until May 1996.
The function of the Investment Policy Committee is to review the existing
investment policies of the Victory Portfolios, including the levels of risk and
types of funds available to shareholders, and make recommendations to the Board
of Trustees regarding the revision of such policies or, if necessary, the
submission
<PAGE>
of such revisions to the Victory Portfolios' shareholders for their
consideration. The members of the Business, Legal and Audit Committee are
Messrs. Swygert (Chairman), Campbell and Gazelle who will serve until May 1996.
The function of the Business, Legal and Audit Committee is to recommend
independent auditors and monitor accounting and financial matters; to nominate
persons to serve as disinterested Trustees and Trustees to serve on committees
of the Board; and to review compliance and contract matters.
The Investment Policy Committee met four times during the current
fiscal year commencing November 1, 1994. The Business, Legal and Audit Committee
was constituted on May 24, 1995 (and has met once since then) and replaced the
Audit Committee, the Legal Committee and the Nominating Committee, which met
three times, one time and one time, respectively, during the current fiscal year
prior to May 31, 1995.
REMUNERATION OF TRUSTEES AND CERTAIN EXECUTIVE OFFICERS
Effective June 1, 1995, each Trustee (other than Leigh A. Wilson)
receives an annual fee of $27,000 for serving as Trustee of all the Funds of the
Victory Portfolios, and an additional per meeting fee ($2,400 in person and
$1,200 per telephonic meeting).
Effective June 1, 1995, Leigh A. Wilson receives an annual fee of
$33,000 for serving as President and Trustee for all of the Funds of the Victory
Portfolios, and an additional per meeting fee ($3,000 in person and $1,500 per
telephonic meeting).
The following tables indicate the compensation received by each Trustee
during the fiscal year of the Funds which ended on October 31, 1995:
<TABLE>
The Victory The Victory The Victory The Victory
The Victory Diversified Government The Victory Intermediate International
Balanced Fund1/ Stock Fund Mortgage Fund1/ Growth Fund2/ Income Fund Growth Fund2/
--------------- ---------- --------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee ........ $1,178.91 $2,331.48 $1,126.45 $1,168.23 $980.48 $880.52
Edward P. Campbell,
Trustee .......... 1,539.75 2,009.87 1,174.17 740.45 841.67 670.63
Harry Gazelle,
Trustee .......... 974.79 1,929.86 919.93 987.41 809.59 735.72
John W. Kemper,
Trustee* ......... 541.57 1,060.05 589.95 843.06 458.81 506.60
Thomas F. Morrissey,
Trustee .......... 1,539.75 2,009.87 1,174.17 1,151.74 841.67 802.87
Stanley I. Landgraf,
Trustee .......... 1,014.75 2,009.87 949.17 842.51 841.67 708.01
Leigh A. Wilson,
Trustee .......... 1,112.55 2,206.35 1,021.27 1,213.17 920.59 865.44
H. Patrick Swygert,
Trustee .......... 1,014.75 2,009.87 949.17 1,151.74 841.67 802.87
John Buckingham,*
Trustee .......... 541.57 1,060.05 589.95 226.15 458.81 409.93
John R. Young,*
Trustee .......... 577.04 1,132.82 621.95 750.08 488.98 494.95
</TABLE>
*Resigned
- ------------------------------------------------
1/ For certain Trustees, these amounts include payments made by the Society
Collective Investment Retirement Funds, which were reorganized into these
Funds as of December 19, 1994.
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
<TABLE>
The Victory The Victory The Victory The Victory The Victory The Victory
Investment Quality Limited Term Ohio Municipal Ohio Regional Prime Obligations Special
Bond Fund2/ Income Fund2/ Bond Fund Stock Fund Fund Value Fund
------------- ------------- ----------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee .......... $1,052.54 $1,155.92 $443.98 $271.80 $4,747.58 $1,091.75
Edward P. Campbell,
Trustee .......... 776.01 922.20 376.72 231.79 3,921.95 942.58
Harry Gazelle,
Trustee .......... 876.72 969.26 364.09 223.52 3,832.26 904.37
John W. Kemper,*
Trustee .......... 644.08 581.73 223.59 133.11 2,818.92 489.58
Thomas F. Morrissey,
Trustee .......... 966.09 1,045.87 376.72 231.79 3,921.95 942.58
Stanley I. Landgraf,
Trustee ......... 827.74 960.31 376.72 231.79 3,921.95 942.58
Leigh A. Wilson,
Trustee .......... 1,033.38 1,143.77 407.85 252.05 4,143.70 1,036.09
H. Patrick Swygert,
Trustee .......... 966.09 1,045.87 376.72 231.79 3,921.95 942.58
John D. Buckingham,*
Trustee .......... 504.76 495.35 223.59 133.11 2,818.92 489.58
John R. Young,*
Trustee .......... 619.72 590.17 236.57 140.98 2,915.30 523.93
</TABLE>
* Resigned
- ------------------------------------------------
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
<TABLE>
The Victory The Victory Victory
Tax-Free The Victory U.S. The Victory Institutional Stock
Money Government The Victory The Victory Government Money Index
Market Fund Obligations Fund2/ Value Fund2/ Fund for Income3/ Bond Fund3/ Market Fund3/ Fund
----------- ------------------ ------------ ----------------- ----------- ------------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee .......... $ 1,781.03 $ 5,774.42 $ 1,842.48 $ 217.14 $ 773.66 $ 3,820.17 $ 797.69
Edward P. Campbell,
Trustee .......... 1,523.27 4,324.24 1,581.23 114.18 389.76 2,204.64 689.90
Harry Gazelle,
Trustee .......... 1,467.67 4,922.46 1,522.01 189.79 675.74 3,425.47 661.40
John W. Kemper,*
Trustee .......... 853.51 3,098.06 841.91 161.55 624.83 2,554.32 356.16
Thomas F. Morrissey,
Trustee .......... 1,523.57 5,336.76 1,583.17 228.46 819.94 4,004.82 689.90
Stanley I. Landgraf,
Trustee .......... 1,523.57 4,828.66 1,580.86 157.16 535.10 2,927.66 689.90
Leigh A. Wilson,
Trustee .......... 1,661.60 5,902.24 1,732.57 248.70 874.92 4,397.12 759.38
H. Patrick Swygert,
Trustee .......... 1,523.57 5,336.76 1,583.17 228.46 819.94 4,004.82 689.90
John D. Buckingham,*
Trustee .......... 853.51 2,478.65 840.54 82.92 318.60 1,333.87 356.16
John R. Young,*
Trustee .......... 900.37 3,074.28 899.81 140.67 535.81 2,223.97 379.85
</TABLE>
* Resigned
- ------------------------------------------------
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
3/ For certain Trustees, these amounts include amounts paid by this Fund's
successor, a Portfolio of The Victory Funds, which was reorganized as the
Fund as of June 5, 1995.
<TABLE>
The Victory
The Victory The Victory The Victory Ohio The Victory Financial
National Municipal New York Municipal Money Special Growth Reserves
Bond Fund3/ Tax-Free Fund3/ Market Fund3/ ____Fund2/ Funds 3/
<S> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee .......... $39.89 $141.29 $2,962.00 $401.99 $4,834.58
Edward P. Campbell,
Trustee .......... 26.78 76.45 4,899.18 272.35 3,549.91
Harry Gazelle,
Trustee........... 37.48 123.38 3,548.52 341.34 5,474.20
John W. Kemper,*
Trustee .......... 18.20 100.45 1,893.61 260.65 2,913.01
Thomas F. Morrissey,
Trustee .......... 40.09 148.08 5,602.37 388.49 4,996.26
Stanley I. Landgraf,
Trustee .......... 38.83 104.47 3,183.11 307.57 5,112.02
Leigh A. Wilson,
Trustee .......... 49.44 162.90 3,424.84 417.32 5,729.73
H. Patrick Swygert,
Trustee .......... 40.09 148.08 3,102.37 388.49 4,996.26
John D. Buckingham,*
Trustee .......... 13.33 51.65 1,784.96 177.06 2,598.87
John R. Young,*
Trustee .......... 18.91 88.31 1,661.29 238.89 2,709.16
</TABLE>
- ------------------------------------------------
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
3/ For certain Trustees, these amounts include amounts paid by this Fund's
predecessor, a Portfolio of The Victory Funds, which was reorganized as the
Fund as of June 5, 1995.
<PAGE>
<TABLE>
Total Compensation
Pension or Retirement Benefits Estimated Annual from Victory
Accrued as Portfolio Expenses Benefits "Fund Complex"
Upon Retirement 4/
<S> <C> <C> <C>
Robert G. Brown, Trustee -0- -0- $39,815.98
Edward P. Campbell, Trustee -0- -0- 33,799.68
Harry Gazelle, Trustee -0- -0- 35,916.98
John W. Kemper, Trustee* -0- -0- 22,567.31
Thomas F. Morrissey, Trustee -0- -0- 40,366.98
Stanley I. Landgraf, Trustee -0- -0- 34,615.98
Leigh A. Wilson, Trustee -0- -0- 46,716.97
H. Patrick Swygert, Trustee -0- -0- 37,116.98
John D. Buckingham, Trustee -0- -0- 18,841.89
John R. Young, Trustee* -0- -0- 21,963.81
</TABLE>
* Resigned
- ------------------------------------
4/ For certain Trustees, these amounts include compensation received from
The Victory Funds (which were reorganized into the Current Company as
of June 5, 1995), the SBSF Funds (the investment adviser of which was
acquired by KeyCorp effective April, 1995) and Society's Collective
Investment Retirement Funds, which were reorganized into the Balanced
Fund and Government Mortgage Fund as of December 19, 1994. There are
presently 24 mutual funds from which the above-named Trustees are
compensated in the Victory "Fund Complex," but not all of the
above-named Trustees serve on the boards of each fund in the "Fund
Complex."
<TABLE>
Total Compensation
Pension or Retirement Benefits Estimated Annual from Victory
Accrued as Portfolio Expenses Benefits "Fund Complex"
Upon Retirement 4/
<S> <C> <C> <C>
Robert G. Brown, Trustee -0- -0- $39,815.98
Edward P. Campbell, Trustee -0- -0- 33,799.68
Harry Gazelle, Trustee -0- -0- 35,916.98
John W. Kemper, Trustee* -0- -0- 22,567.31
Thomas F. Morrissey, Trustee -0- -0- 40,366.98
Stanley I. Landgraf, Trustee -0- -0- 34,615.98
Leigh A. Wilson, Trustee -0- -0- 46,716.97
H. Patrick Swygert, Trustee -0- -0- 37,116.98
John D. Buckingham, Trustee -0- -0- 18,841.89
John R. Young, Trustee* -0- -0- 21,963.81
* Resigned
- ------------------------------------
4/ For certain Trustees, these amounts include compensation received from
The Victory Funds (which were reorganized into the Current Company as
of June 5, 1995), the SBSF Funds (the investment adviser of which was
acquired by KeyCorp effective April, 1995) and Society's Collective
Investment Retirement Funds, which were reorganized into the Balanced
Fund and Government Mortgage Fund as of December 19, 1994. There are
presently 24 mutual funds from which the above-named Trustees are
compensated in the Victory "Fund Complex," but not all of the
above-named Trustees serve on the boards of each fund in the "Fund
Complex."
</TABLE>
Officers
The officers of the Victory Portfolios, their addresses, ages
and principal occupations during the past five years are as follows:
<TABLE>
Position with the Principal occupation
Name Victory Portfolios during past 5 years
<S> <C> <C>
Leigh A. Wilson, 51 President and Trustee From 1989 to present, Chairman and
Chief Executive Officer, Glenleigh
International Limited; from 1984-1989,
Chief Executive Officer, Paribas North
America and Paribas Corporation; Trustee
to The Victory Funds and SBSF Funds.
William B. Blundin, 57 Vice President Senior Vice President of BISYS Fund
Services; officer of other investment
companies administered by BISYS Fund
Services; President and Chief Executive
Officer of Vista Broker-Dealer Services,
Inc., Emerald Asset Management, Inc. and
BNY Hamilton Distributors, Inc.,
registered broker/dealers.
<PAGE>
J. David Huber, 49 Vice President Executive Vice President, BISYS Fund
Services.
Scott A. Englehart, 33 Secretary From October 1990 to present, employee
of BISYS Fund Services, Inc.; from 1985
to October 1990, Manager of Banking
Center, Fifth Third Bank.
George O. Martinez, 36 Assistant Secretary From March 1995 to present, Senior Vice
President and Director of Legal and
Compliance Services, BISYS Fund
Services; from June 1989-March 1995,
Vice President and Associate General
Counsel, Alliance Capital Management.
Martin R. Dean, 31 Treasurer From May 1994 to present, employee of
BISYS Fund Services; from January 1987
- April 1994, Senior Manager, KPMG
Peat Marwick.
Adrian J. Waters, 32 Assistant Treasurer From May 1993 to present, employee of
BISYS Fund Services; from 1989-May
1993, Manager, Price Waterhouse.
</TABLE>
The mailing address of each of the officers of the Victory Portfolios
is 3435 Stelzer Road, Columbus, Ohio 43219-3035.
The officers of the Victory Portfolios receive no compensation directly
from the Victory Portfolios for performing the duties of their offices. BISYS
Fund Services, Inc. receives fees from the Victory Portfolios for acting as
Administrator.
As of January 6, 1996, the Trustees and officers as a group owned
beneficially less than 1% of the Fund.
Investment Adviser and Sub-Adviser
KeyCorp Mutual Fund Advisers, Inc. was organized as an Ohio corporation on July
27, 1995 and is registered as an investment adviser under the 1940 Act. It is a
wholly-owned subsidiary of KeyCorp Asset Management Holdings, Inc., which is a
wholly-owned subsidiary of Society National Bank, a wholly-owned subsidiary of
KeyCorp . Affiliates of Key Advisers manage approximately $37 billion for
numerous clients including large corporate and public retirement plans,
Taft-Hartley plans, foundations and endowments, high net worth individuals and
mutual funds.
KeyCorp, a financial services holding company, is headquartered at 127
Public Square, Cleveland, Ohio 44114. As of June 30, 1995, KeyCorp had an asset
base of $67.5 billion, with banking offices in 25 states from Maine to Alaska,
and trust and investment offices in 16 states. KeyCorp is the resulting entity
of a merger between Society Corporation, the bank holding company of which
Society National Bank was a wholly-owned subsidiary, and KeyCorp, the former
bank holding company, which merger was consummated during the first quarter of
1994. KeyCorp's major business activities include providing traditional banking
and associated financial services to consumer, business and commercial markets.
Its non-bank subsidiaries include investment advisory, securities brokerage,
insurance, bank credit card processing, and mortgage leasing companies. Society
National Bank is the lead affiliate bank of KeyCorp.
<PAGE>
The following schedule lists the advisory fees for each mutual fund that is
advised by Key Advisers.
.25 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Institutional Money Market Fund
.35 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Prime Obligations Fund
Victory U.S. Government Obligations Fund
Victory Tax-Free Money Market Fund
.50 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Ohio Municipal Money Market Fund
Victory Limited Term Income Fund Victory
Government Mortgage Fund Victory Financial Reserves Fund
Victory Fund for Income #
.55 OF 1% OF AVERAGE DAILY NET ASSETS
Victory National Municipal Bond Fund
Victory Government Bond Fund
Victory New York Tax-Free Fund
.60 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Ohio Municipal Bond Fund
Victory Stock Index Fund
.65 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Diversified Stock Fund
.75 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Intermediate Income Fund
Victory Investment Quality Bond Fund
Victory Ohio Regional Stock Fund
1% OF AVERAGE DAILY NET ASSETS
Victory Balanced Fund
Victory Value Fund
Victory Growth Fund
Victory Special Value Fund
Victory Special Growth Fund+/-
1.10% OF AVERAGE DAILY ASSETS
Victory International Growth Fund
# First Albany Asset Management Corporation serves as
sub-adviser to the Victory Fund for Income, for which it
receives .20% paid by Key Advisers.
+/- T. Rowe Price Associates, Inc. serves as sub-adviser to
Society Special Growth Fund, for which it receives .25% of
average daily net assets up to $100 million and .20% of
average daily net assets in excess of $100 million paid by
Key Advisers.
<PAGE>
ADVISORY AND OTHER CONTRACTS
Unless sooner terminated, the Investment Advisory Agreement between Key
Advisers and the Funds provides that it will continue in effect as to a
particular Fund for an initial two-year term and for consecutive one-year terms
thereafter, provided that such continuance is approved at least annually by the
Victory Portfolios' Trustees or by vote of a majority of the outstanding shares
of such Fund (as defined under "GENERAL INFORMATION - Miscellaneous" in the
Prospectuses), and, in either case, by a majority of the Trustees who are not
parties to the Investment Advisory Agreement or interested persons (as defined
in the 1940 Act) of any party to the Investment Advisory Agreement, by votes
cast in person at a meeting called for such purpose.
The Investment Advisory Agreement is terminable as to a particular Fund
at any time on 60 days' written notice without penalty by the Trustees, by vote
of a majority of the outstanding shares of that Fund, or by Key Advisers. The
Investment Advisory Agreement also terminates automatically in the event of any
assignment, as defined in the 1940 Act.
The Investment Advisory Agreement provides that Key Advisers shall not
be liable for any error of judgment or mistake of law or for any loss suffered
by the Victory Portfolios in connection with the performance of services
pursuant to the Investment Advisory Agreement, except a loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith, or gross
negligence on the part of Key Advisers in the performance of its duties, or from
reckless disregard by it of either duties and obligations thereunder.
Under the Investment Advisory Agreement, Key Advisers has agreed to
provide investment advisory services as described in the Prospectus. For the
services provided and expenses assumed pursuant to the Investment Advisory
Agreement, the Fund pays Key Advisers a fee, computed daily and paid monthly, at
the annual rate of sixty-five one-hundredths of one percent (.65%) of the
average daily net assets of the Fund.
Prior to January, 1993, Society National Bank served as investment
adviser to the Fund. From January, 1993 until , 1995, Society Asset Management,
Inc. served as investment adviser to the Fund. For the fiscal years ended
October 31, 1992, 1993 and 1994 the Fund paid investment advisory fees of
$1,296,372, $1,563,647 and $1,548,683, respectively, after fee reductions of $0,
$33,190 and $82,207, respectively. For the six months ended April 30, 1995, the
Fund paid investment advisory fees of $______________.
Under an investment advisory agreement between the Victory Portfolios,
on behalf of the Fund, and Key Advisers, Key Advisers may delegate a portion of
its responsibilities to a subadviser. In addition, the investment advisory
agreement provides that Key Advisers may render services through its own
employees or the employees of one or more affiliated companies that are
qualified to act as an investment adviser of the Fund and are under the common
control of KeyCorp as long as all such persons are functioning as part of an
organized group of persons, managed by authorized officers of Key Advisers.
Key Advisers has entered into an investment sub-advisory agreement with
its affiliate, Society Asset Management, Inc. on behalf of each of the Victory
Portfolios except Fund for Income and Special Growth Fund. The Sub-Adviser is a
wholly-owned subsidiary of KeyCorp Asset Management Holdings, Inc. With respect
to the day to day management of the Fund, under the sub-advisory agreement, the
Sub-Adviser makes decisions concerning, and places all orders for, purchases and
sales of securities and helps maintain the records relating to such purchases
and sales. The Sub-Adviser may, in its discretion, provide such services through
its own employees or the employees of one or more affiliated companies that are
qualified to act as an investment adviser to the Company under applicable laws
and are under the common control of KeyCorp; provided that (i) all persons, when
providing services under the sub-advisory agreement, are functioning as part of
an organized group of persons, and (ii) such organized group of persons is
managed at all times by authorized officers of the Sub-Adviser. This arrangement
will not result in the payment of additional fees by the Fund. For its services
under the investment sub-advisory agreement, Key Advisers pays the Sub-Adviser
subadvisory fees at rates (based on an annual percentage of average daily net
assets) which vary according to the schedule below:
For the Balanced Fund, Diversified For the International Growth Fund, Ohio
Stock Fund, Growth Fund, Stock Index Regional Stock Fund and Special Value
Fund and Value Fund: Fund:
Rate of Rate of
Sub-Advisory Sub-Advisory
Net Assets Fee* Net Assets Fee*
Up to $10,000,000 0.65% Up to $10,000,000 0.90%
Next $15,000,000 0.50% Next $15,000,000 0.70%
Next $25,000,000 0.40% Next $25,000,000 0.55%
Above $50,000,000 0.35% Above $50,000,000 0.45%
For the Intermediate Income Fund, For the Prime Obligations Fund, Tax-Free
Investment Quality Bond Fund, Limited Money Market Fund, U.S. Government
Term Income Fund, Ohio Municipal Bond Obligations Fund, Financial Reserves
Fund, Goverment Bond Fund, Government Fund, Institutional Money Market Fund and
Mortgage Fund, National Municipal Ohio Municipal Money Market Fund:
Bond Fund and New York Tax-Free Fund:
Rate of Rate of
Sub-Advisory Sub-Advisory
Net Assets Fee* Net Assets Fee*
Up to $10,000,000 0.40% Up to $10,000,000 0.25%
Next $15,000,000 0.30% Next $15,000,000 0.20%
Next $25,000,000 0.25% Next $25,000,000 0.15%
Above $50,000,000 0.20% Above $50,000,000 0.125%
- --------------------
* As a percentage of average daily net assets. Note, however, that the
Sub-Adviser shall have the right, but not the obligation, to
voluntarily waive any portion of the sub-advisory fee from time to
time. Any such voluntary waiver will be irrevocable and determined in
advance of rendering sub-investment advisory services by the
Sub-Adviser, and shall be in writing and signed by the parties hereto.
<PAGE>
Glass-Steagall Act
In 1971 the United States Supreme Court held in Investment Company
Institute v. Camp that the federal statute commonly referred to as the
Glass-Steagall Act prohibits a national bank from operating a fund for the
collective investment of managing agency accounts. Subsequently, the Board of
Governors of the Federal Reserve System (the "Board") issued a regulation and
interpretation to the effect that the Glass-Steagall Act and such decision: (a)
forbid a bank holding company registered under the Federal Bank Holding Company
Act of 1956 (the "Holding Company Act") or any non-bank affiliate thereof from
sponsoring, organizing, or controlling a registered, open-end investment company
continuously engaged in the issuance of its shares, but (b) do not prohibit such
a holding company or affiliate from acting as investment adviser, transfer
agent, and custodian to such an investment company. In 1981 the United States
Supreme Court held in Board of Governors of the Federal Reserve System v.
Investment Company Institute that the Board did not exceed its authority under
the Holding Company Act when it adopted its regulation and interpretation
authorizing bank holding companies and their non-bank affiliates to act as
investment advisers to registered closed-end investment companies. In the Board
of Governors case, the Supreme Court also stated that if a national bank
complied with the restrictions imposed by the Board in its regulation and
interpretation authorizing bank holding companies and their non-bank affiliates
to act as investment advisers to investment companies, a national bank
performing investment advisory services for an investment company would not
violate the Glass-Steagall Act.
Key Advisers and the Sub-Adviser believe that they may perform the
services for the Victory Portfolios contemplated by the Prospectus, this
Statement of Additional Information, and the Investment Advisory (Sub-Advisory)
Agreement with the Victory Portfolios without violation of applicable statutes
and regulations and has so represented in its Investment Advisory (Sub-Advisory)
Agreement with the Victory Portfolios. Key Trust Company of Ohio, N.A. believes
that it may perform the services for the Victory Portfolios contemplated by the
Prospectus, this Statement of Additional Information, and the Shareholder
Servicing Agreement with the Victory Portfolios (as described below) without
violation of applicable statutes and regulations and has so represented in such
Shareholder Servicing Agreement. Future changes in either federal or state
statutes and regulations relating to the permissible activities of banks or bank
holding companies and the subsidiaries or affiliates of those entities, as well
as further judicial or administrative decisions or interpretations of present
and future statutes and regulations, could prevent or restrict Key Trust Company
of Ohio, N.A., Key Advisers or the Sub-Adviser from continuing to perform such
services for the Victory Portfolios. Depending upon the nature of any changes in
the services which could be provided by Key Trust Company of Ohio, N.A., Key
Advisers or the Sub-Adviser the Trustees of the Victory Portfolios would review
the Victory Portfolios' relationship with Key Trust Company of Ohio, N.A., Key
Advisers or the Sub-Adviser and consider taking all action necessary in the
circumstances.
Should future legislative, judicial, or administrative action prohibit
or restrict the proposed activities ofKey Trust Company of Ohio, N.A., Key
Advisers or the Sub-Adviser and its affiliated and correspondent banks and other
non-bank affiliates in connection with customer purchases of shares of the
Victory Portfolios, the banks and such non-bank affiliates might be required to
alter materially or discontinue the services offered by them to customers. It is
not anticipated, however, that any change in the Victory Portfolios' method of
operations would affect its net asset value per share or result in financial
losses to any customer.
From time to time, advertisements, supplemental sales literature and
information furnished to present or prospective shareholders of the Fund may
include descriptions of Key Trust Company of Ohio, N.A., Key Advisers and the
Sub-Adviser including, but not limited to, (i) descriptions of the operations of
Key Trust Company of Ohio, N.A., Key Advisers and the SubAdviser; (ii)
descriptions of certain personnel and their functions; and (iii) statistics and
rankings related to the operations of Key Trust Company of Ohio, N.A., Key
Advisers and the Sub-Adviser.
Portfolio Transactions
Pursuant to the Investment Advisory (Sub-Advisory) Agreement, Key
Advisers or the Sub-Adviser determines, subject to the general supervision of
the Trustees of the Victory Portfolios, and in accordance with each fund's
investment objective and restrictions, which securities are to be purchased and
sold by a fund, and which brokers are to be eligible to execute its portfolio
transactions. Purchases from underwriters and/or broker/dealers of portfolio
securities include a commission or concession paid by the issuer to the
underwriter and/or broker/dealer and purchases from dealers serving as market
makers may include the spread between the bid and asked price. While Key
Advisers and the Sub-Adviser generally seek competitive spreads or commissions,
the Fund may not necessarily pay the lowest spread or commission available on
each transaction, for reasons discussed below.
Allocation of transactions, including their frequency, to various
dealers is determined by Key Advisers or the Sub-Adviser in its best judgment
and in a manner deemed fair and reasonable to shareholders. The primary
consideration is prompt execution of orders in an effective manner at the most
favorable price. Subject to this consideration, dealers who provide supplemental
investment research to Key Advisers or the Sub-Adviser may receive orders for
transactions by the Victory Portfolios. Information so received is in addition
to and not in lieu of services required to be performed by Key Advisers or the
Sub-Adviser and does not reduce the advisory (sub-advisory) fees payable to Key
Advisers or the Sub-Adviser by the Victory Portfolios. Such information may be
useful to Key Advisers or the Sub-Adviser in serving both the Victory Portfolios
and other clients and, conversely, supplemental information obtained by the
placement of business or other clients may be useful to Key Advisers or the
Sub-Adviser in carrying out its obligations to the Victory Portfolios. In the
future, the Trustees may also authorize the allocation of brokerage to
affiliated broker-dealers on an agency basis to effect portfolio transactions.
In such event, the Trustees will adopt procedures incorporating the standards of
Rule 17e-1 of the 1940 Act, which require that the commission paid to affiliated
broker-dealers must be "reasonable and fair compared to the commission, fee or
other remuneration received, or to be received, by other brokers in connection
with comparable transactions involving similar securities during a comparable
period of time." At times, the Fund may also purchase portfolio securities
directly from dealers acting as principals, underwriters or market makers. As
these transactions are usually conducted on a net basis, no brokerage
commissions are paid by the Fund.
The Victory Portfolios will not execute portfolio transactions through,
acquire portfolio securities issued by, make savings deposits in, or enter into
repurchase or reverse repurchase agreements with Key Advisers, the Sub-Adviser,
Key Trust Company of Ohio, N.A. or its affiliates, Concord Holding Corporation,
Victory Broker-Dealer Services, Inc. or their affiliates, and will not give
preference to Key Trust Company of Ohio, N.A.'s correspondent banks or
affiliates, or Concord Holding Corporation or Victory Broker-Dealer Services,
Inc. with respect to such transactions, securities, savings deposits, repurchase
agreements, and reverse repurchase agreements.
Investment decisions for each fund are made independently from those
for the other funds or any other investment company or account managed by Key
Advisers or the Sub-Adviser. Any such other investment company or account may
also invest in the same securities as a particular fund. When a purchase or sale
of the same security is made at substantially the same time on behalf of a fund
and another fund, investment company or account, the transaction will be
averaged as to price, and available investments allocated as to amount, in a
manner which Key Advisers or the SubAdviser believes to be equitable to a fund
or the Victory Portfolios and such other investment company or account. In some
instances, this investment procedure may adversely affect the price paid or
received by a fund or the size of the position obtained by a fund. To the extent
permitted by law, Key Advisers or the Sub-Adviser may aggregate the securities
to be sold or purchased for a fund with those to be sold or purchased for the
other funds or for other investment companies or accounts in order to obtain
best execution. As provided by the Investment Advisory (Sub-Advisory) Agreement,
in making investment recommendations for the Victory Portfolios, Key Advisers
and the Sub-Adviser will not inquire or take into consideration whether an
issuer of securities proposed for purchase or sale by a Fund is a customer of
Key Advisers or the Sub-Adviser, their parents or subsidiaries or affiliates
and, in dealing with their commercial customers, Key Advisers or the
Sub-Adviser, their parents, subsidiaries, and affiliates will not inquire or
take into consideration whether securities of such customers are held by the
Victory Portfolios.
<PAGE>
In the fiscal years ended October 31, 1992, 1993 and 1994, the Fund
paid $360,443, $421,782 and $550,131, respectively, in brokerage commissions.
For the six months ended April 30, 1995, the Fund paid $______________ in
brokerage commissions.
Administrator
Currently, Concord Holding Corporation ("CHC") serves as general
manager and administrator (the "Administrator") to the Fund. Prior to CHC
becoming administrator to the Fund, The Winsbury Company ("Winsbury") served as
administrator. The Administrator assists in supervising all operations of each
fund (other than those performed by Key Advisers or the Sub-Adviser under the
Investment Advisory (Sub-Advisory) Agreement). The Administrator is a
broker-dealer registered with the Commission, and is a member of the National
Association of Securities Dealers, Inc. The Administrator provides financial
services to institutional clients.
CHC receives a fee from each fund for its services as Administrator and
expenses assumed pursuant to the Administration Agreements, calculated daily and
paid monthly, at the annual rate of fifteen one hundredths of one percent (.15%)
of each fund's average daily net assets. CHC may periodically waive all or a
portion of its fee with respect to any fund in order to increase the net income
of one or more funds of the Victory Portfolios available for distribution as
dividends.
Unless sooner terminated, the Administration Agreement will continue in
effect as to the Fund for a period of two years, and for consecutive one-year
terms thereafter, provided that such continuance is ratified at least annually
by the Victory Portfolios' Trustees or by vote of a majority of the outstanding
shares of that Fund , and in either case by a majority of the Trustees who are
not parties to the Administration Agreement or interested persons (as defined in
the 1940 Act) of any party to the Administration Agreement, by votes cast in
person at a meeting called for such purpose.
The Administration Agreement provides that CHC shall not be liable for
any error of judgment or mistake of law or any loss suffered by the Victory
Portfolios in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or from the reckless disregard by
it of its obligations and duties thereunder.
Under the Administration Agreement, CHC assists in the Fund's
administration and operation, including providing statistical and research data,
clerical services, internal compliance and various other administrative
services, including among other responsibilities, forwarding certain purchase
and redemption requests to the Transfer Agent, participation in the updating of
the prospectus, coordinating the preparation, filing, printing and dissemination
of reports to shareholders, coordinating the preparation of income tax returns,
arranging for the maintenance of books and records and providing the office
facilities necessary to carry out the duties thereunder. Under the
Administration Agreement, CHC may delegate all or any part of its
responsibilities thereunder.
CHC receives an annual fee of .15% of the Fund's average net assets,
paid monthly, for services performed under the Fund's Administration Agreement.
CHC may, from time to time, agree to reimburse the Fund for expenses above a
specified percentage of average net assets.
Victory Broker-Dealer Services, Inc. sells shares of the Fund as agent
on behalf of the Victory Portfolios at no cost to the Fund. Key Advisers and
the Sub-Adviser neither participate in nor are they responsible for the
underwriting of Victory Portfolios shares.
In the fiscal years ended October 31, 1992, October 31, 1993 and
October 31, 1994, the Fund paid to Winsbury aggregate administration fees of
$298,791, $360,842 and $364,211, respectively, after fee reductions of $0,
$1,520 and $12,148, respectively. In the six months ended April 30, 1995, the
Fund paid administration fees of $______________.
Class B Shares Distribution Plan
The Victory Portfolios has adopted a Distribution Plan for Class B
shares of the Fund under Rule 12b-1 of the Investment Company Act of 1940.
The Distribution Plan adopted by the Trustees with respect to the Class
B shares of the Fund provides that the Fund will pay the Distributor a
distribution fee under the Plan at the annual rate of 0.75% of the average daily
net assets of the Fund attributable to the Class B shares. The distribution fees
may be used by the Distributor for: (a) costs of printing and distributing the
Fund's prospectus, statement of additional information and reports to
prospective investors in the Fund; (b) costs involved in preparing, printing and
distributing sales literature pertaining to the Fund; (c) an allocation of
overhead and other branch office distribution-related expenses of the
Distributor; (d) payments to persons who provide support services in connection
with the distribution of the Fund's shares, including but not limited to, office
space and equipment, telephone facilities, answering routine inquiries regarding
the Fund, processing shareholder transactions and providing any other
shareholder services not otherwise provided by the Victory Portfolios' transfer
agent; (e) accruals for interest on the amount of the foregoing expenses that
exceed the Distribution Fee and the contingent deferred sales charge received by
the Distributor; and (f) any other expense primarily intended to result in the
sale of the Fund's shares, including, without limitation, payments to salesmen
and selling dealers at the time of the sale of shares, if applicable, and
continuing fees to each such salesmen and selling dealers, which fee shall begin
to accrue immediately after the sale of such shares.
<PAGE>
The amount of the Distribution Fees payable by any Fund under the
Distribution Plan is not related directly to expenses incurred by the
Distributor and the Distribution Plan does not obligate the Fund to reimburse
the Distributor for such expenses. The Distribution Fees set forth in the
Distribution Plan will be paid by a Fund to the Distributor unless and until the
Plan is terminated or not renewed with respect to the Fund; any distribution or
service expenses incurred by the Distributor on behalf of a Fund in excess of
payments of the Distribution Fees specified above which the Distributor has
accrued through the termination date are the sole responsibility and liability
of the Distributor and not an obligation of the Fund.
The Distribution Plan for the Class B shares specifically recognizes
that either Key Advisers, the Sub-Adviser or the Distributor, directly or
through an affiliate, may use its fee revenue, past profits, or other resources,
without limitation, to pay promotional and administrative expenses in connection
with the offer and sale of shares of the Fund. In addition, the Plan provides
that Key Advisers, the Sub-Adviser and the Distributor may use their respective
resources, including fee revenues, to make payments to third parties that
provide assistance in selling the Fund's shares, or to third parties, including
banks, that render shareholder support services.
The Plan has been approved by the Trustees including a majority of the
Independent Trustees at a meeting called for that purpose and by the holders of
a majority of shares of the class. As required by the Rule, the Trustees
carefully considered all pertinent factors relating to the implementation of the
Plan prior to its approval, and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its shareholders. To the
extent that the Plan gives Key Advisers, the Sub-Adviser or the Distributor
greater flexibility in connection with the distribution of shares of the Fund,
additional sales of the Fund's shares may result. Additionally, certain
shareholder support services may be provided more effectively under the Plan by
local entities with whom shareholders have other relationships.
Business Management Agreement
In connection with its obligations under the investment sub-advisory
agreement, the Sub-Adviser has entered into a Business Management Agreement with
Key Advisers, pursuant to which Key Advisers provides certain administrative and
support services to the Sub-Adviser. Such services include preparing reports to
the Company's Board of Trustees, recordkeeping services, and services rendered
in connection with the preparation of regulatory filings and other reports, and
regulatory and other administrative and compliance systems and support services.
For such services, the Sub-Adviser pays fees to Key Advisers which vary
according to a sliding scale containing "breakpoints" at which decreases in the
business management fees correspond to increases in the average daily net asset
values of a Fund as follows:
For the Balanced Fund, Diversified For the International Growth Fund, Ohio
Stock Fund, Growth Fund, Stock Index Regional Stock Fund and Special Value
Fund and Value Fund: Fund:
Rate of Rate of
Business Business
Net Assets Management Fee* Net Assets Management Fee*
Up to $10,000,000 0.30% Up to $10,000,000 0.55%
Next $15,000,000 0.15% Next $15,000,000 0.35%
Next $25,000,000 0.05% Next $25,000,000 0.20%
Above $50,000,000 0.00% Above $50,000,000 0.15%
For the Intermediate Income Fund, For the Prime Obligations Fund, Tax-Free
Investment Quality Bond Fund, Limited Money Market Fund, U.S. Government
Term Income Fund, Ohio Municipal Bond Obligations Fund, Financial Reserves
Fund, Goverment Bond Fund, Government Fund, Institutional Money Market Fund and
Mortgage Fund, National Municipal Ohio Municipal Money Market Fund:
Bond Fund and New York Tax-Free Fund:
Rate of Rate of
Business Business
Net Assets Management Fee* Net Assets Management Fee*
Up to $10,000,000 0.25% Up to $10,000,000 0.20%
Next $15,000,000 0.15% Next $15,000,000 0.15%
Next $25,000,000 0.10% Next $25,000,000 0.10%
Above $50,000,000 0.05% Above $50,000,000 0.075%
- --------------------
* As a percentage of average daily net assets.
Shareholder Servicing Plan
The Victory Portfolios, on behalf of the Class A and Class B shares of
the Fund, has adopted a Shareholder Servicing Plan to provide payments to
shareholder servicing agents (each a "Shareholder Servicing Agent") that provide
administrative support services to customers who may from time to time
beneficially own shares, which include: (i) aggregating and processing purchase
and redemption requests for shares from customers and transmitting promptly net
purchase and redemption orders to our distributor or transfer agent; (ii)
providing customers with a service that invests the assets of their accounts in
shares pursuant to specific or pre-authorized instructions; (iii) processing
dividend and distribution payments from the Victory Portfolios on behalf of
customers; (iv) providing information periodically to customers showing their
positions in shares; (v) arranging for bank wires; (vi) responding to customer
inquiries concerning their investment in shares; (vii) providing subaccounting
with respect to shares beneficially owned by customers or providing the
information to us necessary for subaccounting; (viii) if required by law,
forwarding shareholder communications from us (such as proxies, shareholder
reports, annual and semi-annual financial statements and dividend, distribution
and tax notices) to customers; (ix) forwarding to customers proxy statements and
proxies containing any proposals regarding this Plan; and (x) providing such
other similar services as we may reasonably request to the extent you are
permitted to do so under applicable statutes, rules or regulations. For expenses
incurred and services provided as Shareholder Servicing Agent pursuant to its
respective Shareholder Servicing Agreement, the Victory Portfolios pays each
Shareholder Servicing Agent a fee computed daily and paid monthly, in amounts
aggregating not more than twenty-five one-hundredths of one percent (.25%) of
the average daily net assets of the Fund per year. A Shareholder Servicing Agent
may periodically waive all or a portion of its respective shareholder servicing
fees with respect to the Fund to increase the net income of the Fund available
for distribution as dividends.
Expenses
Each fund bears the following expenses relating to its respective
operations: taxes, interest, brokerage fees and commissions, fees of the
Trustees of the Victory Portfolios, Commission fees, state securities
qualification fees, costs of preparing and printing prospectuses for regulatory
purposes and for distribution to current shareholders, outside auditing and
legal expenses, advisory and administration fees, fees and out-of-pocket
expenses of the custodian and transfer agent, certain insurance premiums, costs
of maintenance of the fund's existence, costs of shareholders' reports and
meetings, and any extraordinary expenses incurred in the fund's operation.
If total expenses borne by any of the Victory Portfolios in any fiscal
year exceeds expense limitations imposed by applicable state securities
regulations, Key Advisers or the Sub-Adviser as applicable, and the
Administrator will waive their fees to the extent such excess expenses exceed
such expense limitation in proportion to their respective fees. As of the date
of this Statement of Additional Information, the most restrictive expense
limitation applicable to the Victory Portfolios limits each fund's aggregate
annual expenses, including management and advisory fees but excluding interest,
taxes, brokerage commissions, and certain other expenses, to 2.5% of the first
$30 million of a fund's average net assets, 2.0% of the next $70 million of a
fund's average net assets, and 1.5% of a Fund's remaining average net assets.
Any expenses to be borne by Key Advisers or the Sub-Adviser or the Administrator
will be estimated daily and reconciled and paid on a monthly basis. Fees
imposed upon customer accounts by Key Advisers, the Sub-Adviser, Key Trust
Company of Ohio, N.A. or its correspondents, affiliated banks and other non-bank
affiliates for cash management services are not fund expenses for purposes of
any such expense limitation.
Distributor
Victory Broker-Dealer Services, Inc. (the "Distributor") serves as
distributor for the continuous offering of the shares of each fund of the
Victory Portfolios pursuant to a Distribution Agreement. Prior to Victory
BrokerDealer Services, Inc. becoming the Distributor, Winsbury served as
distributor of each Fund. Unless otherwise terminated, the Distribution
Agreement will remain in effect for two years, and thereafter for consecutive
one-year terms, provided that it is approved at least annually (i) by the
Victory Portfolios' Trustees or by the vote of a majority of the outstanding
shares of the Victory Portfolios, and (ii) by the vote of a majority of the
Trustees of the Victory Portfolios who are not parties to the Distribution
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval. The Distribution Agreement
may be terminated in the event of its assignment, as defined in the 1940 Act.
For the Victory Portfolios' fiscal years ended October 31, 1992, October 31,
1993, and October 31, 1994, Winsbury received $34,615, $77,258 and $212,021,
respectively, in underwriting commissions, and retained $0, $0 and $15,
respectively. For the six months ended April 30, 1995, the Distributor received
$______________ in underwriting commissions.
Fund Accountant
BISYS Fund Services Ohio, Inc. serves as fund accountant for each fund
pursuant to a fund accounting agreement with the Victory Portfolios dated June
5, 1995 (the "Fund Accounting Agreement"). As fund accountant for the Victory
Portfolios, BISYS Fund Services Ohio, Inc. calculates the Victory Portfolios'
net asset value, the dividend and capital gain distribution, if any, and the
yield. BISYS Fund Services Ohio, Inc. also provides a current security position
report, a summary report of transactions and pending maturities, a current cash
position report, and maintains the general ledger accounting records for each
Fund. Under its Fund Accounting Agreement with the Victory Portfolios, BISYS
Fund Services Ohio, Inc. is entitled to receive annual fees of .03% of the first
$100 million of a Fund's daily average net assets, .02% of the next $100 million
of a Fund's daily average net assets, and .01% of a Fund's remaining daily
average net assets. These annual fees are subject to a minimum monthly assets
charge of $2,500 per taxable Fund, $2,917 per tax-free Fund, and $3,333 per
international Fund and do not include out-of-pocket expenses or multiple class
charges of $833 per month assessed for each class of shares after the first
class.
In the fiscal years ended October 31, 1992, October 31, 1993, and October 31,
1994, the Victory Portfolios paid The Winsbury Service Corporation fund
accounting fees (after fee waivers) of $119,516, $144,288 and $152,663,
respectively, for the Fund. For the six months ended April 30, 1995, the Fund
paid $______________ in Fund accounting fees.
<PAGE>
Custodian
Cash and securities owned by each fund of the Victory Portfolios
(except the International Growth Fund) are held by Key Trust Company of Ohio,
N.A. as custodian; cash and securities owned by the International Growth Fund
are held by The Bank of New York and certain foreign sub-custodians, and by Key
Trust Company of Ohio, N.A. as sub-custodian. Key Trust Company of Ohio, N.A.
serves as custodian to each fund of the Victory Portfolios (except the
International Growth Fund) pursuant to a Custodian Agreement dated May 24, 1995.
The Bank of New York serves as custodian to the International Growth Fund
pursuant to a Custodian Agreement dated _____________. Under these Agreements,
Key Trust Company of Ohio, N.A. and The Bank of New York each (i) maintain a
separate account or accounts in the name of each respective fund; (ii) make
receipts and disbursements of money on behalf of each fund; (iii) collect and
receive all income and other payments and distributions on account of portfolio
securities; (iv) respond to correspondence from security brokers and others
relating to its duties; and (v) make periodic reports to the Victory Portfolios'
Trustees concerning the Victory Portfolios' operations. Key Trust Company of
Ohio, N.A. and The Bank of New York each may, with the approval of a fund and at
the custodian's own expense, open and maintain a sub-custody account or accounts
on behalf of a fund, provided that Key Trust Company of Ohio, N.A. or The Bank
of New York shall remain liable for the performance of all of its duties under
its respective Custodian Agreement.
Transfer Agent
The Primary Funds Service Corporation serves as transfer agent and
dividend disbursing agent for each fund, pursuant to a Transfer Agency and
Shareholder Servicing Agreement. Under its agreement with the Victory
Portfolios, Primary Funds Service Corporation has agreed (i) to issue and redeem
shares of the Victory Portfolios; (ii) to address and mail all communications by
the Victory Portfolios to its shareholders, including reports to shareholders,
dividend and distribution notices, and proxy material for its meetings of
shareholders; (iii) to respond to correspondence or inquiries by shareholders
and others relating to its duties; (iv) to maintain shareholder accounts and
certain sub-accounts; and (v) to make periodic reports to the Victory
Portfolios' Trustees concerning the Victory Portfolios' operations. For the
services provided under the Transfer Agency and Shareholder Servicing Agreement,
Primary Funds Service Corporation receives a maximum monthly fee of $1,250 per
fund to a maximum of $3.50 per account per fund.
Auditors
The financial highlights for the fiscal year ended October 31, 1994
appearing in the Prospectus for the Fund, other than unaudited information
marked as such, has been derived from financial statements of the Victory
Portfolios which have been audited by Coopers & Lybrand L.L.P., independent
accountants, as set forth in their report incorporated by reference herein, and
are incorporated by reference in reliance upon such report and on the authority
of such firm as experts in auditing and accounting. Coopers & Lybrand L.L.P.'s
address is 100 East Broad Street, Columbus, Ohio 43215.
Legal Counsel
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, 919 Third Avenue, New
York, New York 10022 are counsel to the Victory Portfolios.
ADDITIONAL INFORMATION
Description of Shares
The Victory Portfolios (sometimes referred to as the "Trust") is a
Massachusetts business trust. The Victory Portfolios' Declaration of Trust,
pursuant to which the Victory Portfolios was originally called the North Third
Street Fund, was filed with the Secretary of State of the Commonwealth of
Massachusetts on February 6, 1986. On September 22, 1986, an Amended and
Restated Declaration of Trust was filed to change the name of the Trust to The
Emblem Fund and to make certain other changes. A second amendment was filed
October 23, 1986 providing for voting of shares in the aggregate except where
voting of shares by series is otherwise required by law. An amendment to the
Amended and Restated Declaration of Trust was filed on March 15, 1993 to
change the name of the Trust to The Society Funds. An Amended and Restated
Declaration of Trust was then filed on September 2, 1994 to change the name of
the Trust to The Victory Portfolios. The Declaration of Trust, as amended,
authorizes the Trustees to issue an unlimited number of shares, which are units
of beneficial interest, without par value. On or about February 29, 1996,
contingent upon shareholder approval, the Victory Portfolios will convert from a
Massachusetts business trust to a Delaware business trust. The Victory
Portfolios presently has twenty-eight series of shares, which representinterests
in the U.S. Government Obligations Fund, the Prime Obligations Fund, the
Tax-Free Money Market Fund, the Balanced Fund, the Stock Index Fund, the Value
Fund, the Fund, the Growth Fund, the Special Value Fund, the Special Growth
Fund, the Ohio Regional Stock Fund, the International Growth Fund, the Limited
Term Income Fund, the Government Mortgage Fund, the Ohio Municipal Bond Fund,
the Intermediate Income Fund, the Investment Quality Bond Fund, the Florida Tax-
Free Bond Fund, the Municipal Bond Fund, the Convertible Securities Fund, the
Short-Term U.S. Government Income Fund, the Government Bond Fund, the Fund for
Income, the National Municipal Bond Fund, the New York Tax-Free Fund, the
Institutional Money Market Fund, the Financial Reserves Fund and the Ohio
Municipal Money Market Fund, respectively. The Victory Portfolios' Declaration
of Trust authorizes the Trustees to divide or redivide any unissued shares
of the Victory Portfolios into one or more additional series by setting or
changing in any one or more respects their respective preferences,conversion or
other rights, voting power, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption.
Shares have no subscription or preemptive rights and only such
conversion or exchange rights as the Trustees may grant in its discretion. When
issued for payment as described in the Prospectus and this Statement of
Additional Information, the Victory Portfolios' shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Victory
Portfolios, shares of a fund are entitled to receive the assets available for
distribution belonging to the fund, and a proportionate distribution, based upon
the relative asset values of the respective funds, of any general assets not
belonging to any particular fund which are available for distribution.
As described in the Prospectus under the caption "ADDITIONAL
INFORMATION -- Voting Rights," shares of the Victory Portfolios are entitled to
one vote per share (with proportional voting for fractional shares) on such
matters as shareholders are entitled to vote. Shareholders vote as a single
class on all matters except (i) when required by the 1940 Act, shares shall be
voted by individual series, and (ii) when the Trustees have determined that the
matter affects only the interests of one or more series, then only shareholders
of such series shall be entitled to vote thereon. There will normally be no
meetings of shareholders for the purposes of electing Trustees unless and until
such time as less than a majority of the Trustees have been elected by the
shareholders, at which time the Trustees then in office will call a
shareholders' meeting for the election of Trustees. In addition, Trustees may be
removed from office by a written consent signed by the holders of two-thirds of
the outstanding shares of the Victory Portfolios and filed with the Victory
Portfolios' custodian or by a vote of the holders of two-thirds of the
outstanding shares of the Victory Portfolios at a meeting duly called for the
purpose, which meeting shall be held upon the written request of the holders of
not less than 10% of the outstanding shares. Upon written request by ten or more
shareholders, who have been such for at least six months, and who hold shares
constituting 1% of the outstanding shares, stating that such shareholders wish
to communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a Trustee, the
Victory Portfolios will provide a list of shareholders or disseminate
appropriate materials (at the expense of the requesting shareholders). Except as
set forth above, the Trustees shall continue to hold office and may appoint
their successors.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Victory Portfolios shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each fund of the Victory Portfolios affected by the
matter. For purposes of determining whether the approval of a majority of the
outstanding shares of a fund will be required in connection with a matter, a
fund will be deemed to be affected by a matter unless it is clear that the
interests of each fund in the matter are identical, or that the matter does not
affect any interest of the fund. Under Rule 18f-2, the approval of an investment
advisory agreement or any change in investment policy would be effectively acted
upon with respect to a fund only if approved by a majority of the outstanding
shares of such fund. However, Rule 18f-2 also provides that the ratification of
independent public accountants, the approval of principal underwriting
contracts, and the election of Trustees may be effectively acted upon by
shareholders of the Victory Portfolios voting without regard to series.
Shareholder and Trustee Liability
Under Massachusetts law, holders of units of interest in a business
trust may, under certain circumstances, be held personally liable as partners
for the obligations of the trust. However, the Victory Portfolios' Declaration
of Trust provides that shareholders shall not be subject to any personal
liability for the obligations of the Victory Portfolios, and that every written
agreement, obligation, instrument, or undertaking made by the Victory Portfolios
shall contain a provision to the effect that the shareholders are not personally
liable thereunder. The Declaration of Trust provides for indemnification out of
the trust property of any shareholder held personally liable solely by reason of
his or her being or having been a shareholder. The Declaration of Trust also
provides that the Victory Portfolios shall, upon request, assume the defense of
any claim made against any shareholder for any act or obligation of the Victory
Portfolios, and shall satisfy any judgment thereon. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Funds would be unable to meet its
obligations.
The Declaration of Trust states further that no Trustee, officer, or
agent of the Victory Portfolios shall be personally liable in connection with
the administration or preservation of the assets of the Funds or the conduct of
the Victory Portfolios' business; nor shall any Trustee, officer, or agent be
personally liable to any person for any action or failure to act except for his
own bad faith, willful misfeasance, gross negligence, or reckless disregard of
his duties. The Declaration of Trust also provides that all persons having any
claim against the Trustees or the Victory Portfolios shall look solely to the
assets of the Victory Portfolios for payment.
Delaware Law (to be inserted)
Miscellaneous
As used in the Prospectus and in this Statement of Additional
Information, "assets belonging to a fund" means the consideration received by
the Victory Portfolios upon the issuance or sale of shares in that fund,
together with all income, earnings, profits, and proceeds derived from the
investment thereof, including any proceeds from the sale, exchange, or
liquidation of such investments, and any funds or payments derived from any
reinvestment of such proceeds and any general assets of the Victory Portfolios,
which general liabilities and expenses are not readily identified as belonging
to a particular fund that are allocated to that fund by the Victory Portfolios'
Trustees. The Trustees may allocate such general assets in any manner they deem
fair and equitable. It is anticipated that the factor that will be used by the
Trustees in making allocations of general assets to a particular fund of the
Victory Portfolios will be the relative net asset value of the respective fund
at the time of allocation. Assets belonging to a particular fund are charged
with the direct liabilities and expenses in respect of that fund, and with a
share of the general liabilities and expenses of each of the funds not readily
identified as belonging to a particular fund but that are allocated to a fund in
proportion to the relative net asset values of the respective fund of the
Victory Portfolios at the time of allocation. The timing of allocations of
general assets and general liabilities and expenses of the Victory Portfolios to
a particular fund will be determined by the Trustees of the Victory Portfolios
and will be in accordance with generally accepted accounting principles.
Determinations by the Trustees of the Victory Portfolios as to the timing of the
allocation of general liabilities and expenses and as to the timing and
allocable portion of any general assets with respect to a particular fund are
conclusive.
As used in the Prospectus and in this Statement of Additional
Information, a "vote of a majority of the out standing shares" of the Victory
Portfolios or a particular fund means the affirmative vote of the lesser of (a)
67% or more of the shares of the Victory Portfolios or such fund present at a
meeting at which the holders of more than 50% of the outstanding shares of the
Victory Portfolios or such fund are represented in person or by proxy, or (b)
more than 50% of the outstanding votes of shareholders of the Victory Portfolios
or such fund.
Organizational expenses are allocated to each of the Victory Portfolios
and are amortized over a period of two years from the commencement of the public
offering of shares of the Victory Portfolios.
Individual Trustees are elected by the shareholders and, subject to
removal by the vote of the holders of two-thirds of the outstanding shares of
the Victory Portfolios, serve for a term lasting until the next meeting of
shareholders at which trustees are elected. Such meetings are not required to be
held at any specific intervals. Individual Trustees may be removed by vote of
the shareholders voting not less than a majority of the shares then outstanding
cast in person or by proxy at any meeting called for that purpose, or by a
written declaration signed by shareholders voting not less than two-thirds of
the shares then outstanding.
The Victory Portfolios is registered with the Commission as a
management investment company. Such registration does not involve supervision by
the Commission of the management or policies of the Victory Portfolios.
The Prospectus and this Statement of Additional Information omit
certain of the information contained in the Registration Statement filed with
the Commission. Copies of such information may be obtained from the Commission
upon payment of the prescribed fee.
The Prospectus and this Statement of Additional Information are not an
offering of the securities herein described in any state in which such offering
may not lawfully be made. No salesman, dealer, or other person is authorized to
give any information or make any representation other than those contained in
the Prospectus and this Statement of Additional Information.
The 1994 Annual Report and 1995 Semi-Annual Report to shareholders of
The Victory Portfolios are incorporated herein in their entirety. These reports
include the financial statements for the fiscal year ended October 31, 1994 and
for the semi-annual period ended April 30, 1995. The opinion in the Annual
Report of Coopers & Lybrand L.L.P., independent accountants, is incorporated
herein in its entirety to such Annual Report, and such financial statements are
incorporated in their entirety in reliance upon such report of Coopers & Lybrand
L.L.P. and on the authority of such firm as experts in auditing and accounting.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
FINANCIAL STATEMENTS
<PAGE>
APPENDIX
The nationally recognized statistical rating organizations
(individually, an "NRSRO") that may be utilized by Key Advisers or the
Sub-Adviser with regard to portfolio investments for the Funds include Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P"),
Duff & Phelps, Inc. ("Duff"), Fitch Investors Service, Inc. ("Fitch"), IBCA
Limited and its affiliate, IBCA Inc. (collectively, "IBCA"), and Thomson
BankWatch, Inc. ("Thomson"). Set forth below is a description of the
relevant ratings of each such NRSRO. The NRSROs that may be utilized by
Key Advisers or the Sub-Adviser and the description of each NRSRO's ratings is
as of the date of this Statement of Additional Information, and may subsequently
change.
Long-Term Debt Ratings (may be assigned, for example, to corporate and
municipal bonds)
Description of the five highest long-term debt ratings by Moody's
(Moody's applies numerical modifiers (e.g., 1, 2, and 3) in each rating category
to indicate the security's ranking within the category):
Aaa. Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa. Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than in Aaa securities.
A. Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.
Baa. Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba. Bonds which are rated Ba are judged to have speculative elements -
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times in the future. Uncertainty of
position characterizes bonds in this class.
Description of the five highest long-term debt ratings by S&P (S&P may
apply a plus (+) or minus (-) to a particular rating classification to show
relative standing within that classification):
AAA. Debt rated AAA has the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA. Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A. Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB. Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB. Debt rated BB is regarded, on balance, as predominately speculative
with respect to capacity to pay interest and repay principal in accordance with
the terms of the obligation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposure to adverse conditions.
Description of the three highest long-term debt ratings by Duff:
AAA. Highest credit quality. The risk factors are negligible being
only slightly more than for risk-free U.S. Treasury debt.
AA+. High credit quality Protection factors are strong.
AA. Risk is modest but may vary slightly from time to time
AA-. because of economic conditions.
A+. Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic stress.
Description of the three highest long-term debt ratings by Fitch (plus
or minus signs are used with a rating symbol to indicate the relative position
of the credit within the rating category):
AAA. Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA. Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA." Because
bonds rated in the "AAA" and "AA" categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these
issues is generally rated "[-]+."
A. Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
IBCA's description of its three highest long-term debt ratings:
AAA. Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and
interest is substantial. Adverse changes in business, economic or
financial conditions are unlikely to increase investment risk
significantly.
AA. Obligations for which there is a very low expectation of investment
risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic, or financial
conditions may increase investment risk albeit not very significantly.
A. Obligations for which there is a low expectation of investment risk.
Capacity for timely repayment of principal and interest is strong,
although adverse changes in business, economic or financial conditions
may lead to increased investment risk.
Short-Term Debt Ratings (may be assigned, for example, to commercial
paper, master demand notes, bank instruments, and letters of credit)
Moody's description of its three highest short-term debt ratings:
Prime-1. Issuers rated Prime-1 (or supporting institutions) have a
superior capacity for repayment of senior short-term promissory obligations.
Prime-1 repayment capacity will normally be evidenced by many of the following
characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate reliance
on debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.
Prime-2. Issuers rated Prime-2 (or supporting institutions) have a
strong capacity for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Prime-3. Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
S&P's description of its three highest short-term debt ratings:
A-1. This designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to have extremely
strong safety characteristics are denoted with a plus sign (+).
A-2. Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated "A-1."
A-3. Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher
designations.
Duff's description of its five highest short-term debt ratings (Duff
incorporates gradations of "1+" (one plus) and "1-" (one minus) to assist
investors in recognizing quality differences within the highest rating
category):
Duff 1+. Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations.
Duff 1. Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk
factors are minor.
Duff 1-. High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk factors are
very small.
Duff 2. Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good.
Risk factors are small.
Duff 3. Satisfactory liquidity and other protection factors qualify
issue as to investment grade.
Risk factors are larger and subject to more variation. Nevertheless,
timely payment is expected.
Fitch's description of its four highest short-term debt ratings:
F-1+. Exceptionally Strong Credit Quality. Issues assigned this
rating are regarded as having the strongest degree of assurance for
timely payment.
F-1. Very Strong Credit Quality. Issues assigned this rating reflect
an assurance oftimely payment only slightly less in degree than issues
rated F-1+.
F-2. Good Credit Quality. Issues assigned this rating have a
satisfactory degree of assurance for timely payment, but the margin of
safety is not as great as for issues assigned F-1+ or F-1 ratings.
F-3. Fair Credit Quality. Issues assigned this rating have
characteristics suggesting that the degree of assurance for timely
payment is adequate, however, near-term adverse changes could cause
these securities to be rated below investment grade.
IBCA's description of its three highest short-term debt ratings:
A+. Obligations supported by the highest capacity for timely
repayment.
A1. Obligations supported by a very strong capacity for timely
repayment.
A2. Obligations supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
Short-Term Loan/Municipal Note Ratings
Moody's description of its two highest short-term loan/municipal note
ratings:
MIG-1/VMIG-1. This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support
or demonstrated broad-based access to the market for refinancing.
MIG-2/VMIG-2. This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
S&P's description of its two highest municipal note ratings:
SP-1. Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus (+) designation.
SP-2. Satisfactory capacity to pay principal and interest.
Short-Term Debt Ratings
Thomson BankWatch, Inc. ("TBW") ratings are based upon a qualitative
and quantitative analysis of all segments of the organization including, where
applicable, holding company and operating subsidiaries.
BankWatch Ratings do not constitute a recommendation to buy or sell
securities of any of these companies. Further, BankWatch does not suggest
specific investment criteria for individual clients.
The TBW Short-Term Ratings apply to commercial paper, other senior
short-term obligations and deposit obligations of the entities to which the
rating has been assigned.
The TBW Short-Term Ratings apply only to unsecured instruments that
have a maturity of one year or less.
The TBW Short-Term Ratings specifically assess the likelihood of an
untimely payment of principal or interest.
TBW-1. The highest category; indicates a very high degree of likelihood
that principal and interest will be paid on a timely basis.
TBW-2. The second highest category; while the degree of safety
regarding timely repayment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated "TBW-1".
TBW-3. The lowest investment grade category; indicates that while more
susceptible to adverse developments (both internal and external) than
obligations with higher ratings, capacity to service principal and interest in a
timely fashion is considered adequate.
TBW-4. The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.
Definitions of Certain Money Market Instruments
Commercial Paper
Commercial paper consists of unsecured promissory notes issued by
corporations. Issues of commercial paper normally have maturities of less than
nine months and fixed rates of return.
Certificates of Deposit
Certificates of Deposit are negotiable certificates issued against
funds deposited in a commercial bank or a savings and loan association for a
definite period of time and earning a specified return.
Bankers' Acceptances
Bankers' acceptances are negotiable drafts or bills of exchange,
normally drawn by an importer or exporter to pay for specific merchandise, which
are "accepted" by a bank, meaning, in effect, that the bank unconditionally
agrees to pay the face value of the instrument on maturity.
U.S. Treasury Obligations
U.S. Treasury Obligations are obligations issued or guaranteed as to
payment of principal and interest by the full faith and credit of the U.S.
Government. These obligations may include Treasury bills, notes and bonds, and
issues of agencies and instrumentalities of the U.S. Government, provided such
obligations are guaranteed as to payment of principal and interest by the full
faith and credit of the U.S. Government.
U.S. Government Agency and Instrumentality Obligations
Obligations issued by agencies and instrumentalities of the U.S.
Government include such agencies and instrumentalities as the Government
National Mortgage Association, the Export-Import Bank of the United States, the
Tennessee Valley Authority, the Farmers Home Administration, the Federal Home
Loan Banks, the Federal Intermediate Credit Banks, the Federal Farm Credit
Banks, the Federal Land Banks, the Federal Housing Administration, the Federal
National Mortgage Association, the Federal Home Loan Mortgage Corporation, and
the Student Loan Marketing Association. Some of these obligations, such as those
of the Government National Mortgage Association are supported by the full faith
and credit of the U.S. Treasury; others, such as those of the Export-Import Bank
of the United States, are supported by the right of the issuer to borrow from
the Treasury; others, such as those of the Federal National Mortgage
Association, are supported by the discretionary authority of the U.S. Government
to purchase the agency's obligations; still others, such as those of the Student
Loan Marketing Association, are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored instrumentalities if it
is not obligated to do so by law. A Fund will invest in the obligations of such
instrumentalities only when the investment adviser believes that the credit risk
with respect to the instrumentality is minimal.
<PAGE>
[LOGO]
THE VICTORY FUNDS
SEMI-ANNUAL
REPORT
---------------------
THE VICTORY PORTFOLIOS
APRIL 30, 1995
<PAGE>
C O N T E N T S
<TABLE>
<S> <C>
Shareholder Letter 1
Investment Review and Outlook 2
FINANCIAL STATEMENTS
--------------------
Understanding Your Financial Statements 3
Statements of Assets and Liabilities 5
Statements of Operations 10
Statements of Changes in Net Assets 15
Schedules of Portfolio Investments 22
Notes to Financial Statements 73
Financial Highlights 83
</TABLE>
Society Asset Management, Inc. ("SAM"), a subsidiary of KeyCorp, is the
investment adviser to The Victory Portfolios. The Victory Portfolios is
sponsored and distributed by Victory Broker Dealer Services, Inc., which is not
affiliated with SAM, KeyCorp, any KeyCorp bank or their affiliates. SAM and
Society National Bank, also a subsidiary of KeyCorp, receive fees from The
Victory Portfolios for their services.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus for The Victory Portfolios.
Yields will fluctuate, and there can be no assurance that the money market funds
of The Victory Portfolios will be able to maintain a stable net asset value of
$1.00 per share. An investment in these portfolios is neither insured nor
guaranteed by the U.S. Government. The composition of the fund's holdings is
subject to change.
- --------------------------------------------------------------------------------
NOT
FDIC
INSURED
- --------------------------------------------------------------------------------
SHARES OF THE VICTORY PORTFOLIOS ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR
GUARANTEED BY, ANY KEYCORP BANK, SOCIETY ASSET MANAGEMENT, INC., OR THEIR
AFFILIATES, AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE
PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------
<PAGE>
THE VICTORY
PORTFOLIOS
DEAR SHAREHOLDER:
The Victory Portfolios is pleased to provide you with this semi-annual report
for the six-month period ended April 30, 1995. We are very proud to inform you
that the Diversified Stock Fund, the Ohio Regional Stock Fund and the Fund for
Income Portfolio all received 4 star ratings by Morningstar as of April 30,
1995.* For more information about your funds, rankings or for article reprints
call 1-800-KEY-FUND (539-3863).
Last year, when we changed our name to The Victory Portfolios, we also added a
number of convenient service and investment features. These initiatives marked
the beginning of a broader plan to restructure and expand our products and
services. Most recently, shareholders of The Victory Funds, an affiliated group
of funds with 14 investment portfolios, approved a reorganization that took
place on June 5, 1995. This date marked the final steps of a year-long process
focused on streamlining our product offerings and increasing the efficiency of
other services necessary to support the funds' operations. On June 5, The
Victory Funds merged with The Victory Portfolios. Seven portfolios of our
affiliate were merged with comparable investment portfolios, and seven new
portfolios were added. In all, there are now 24 Victory Portfolios available to
investors as part of the combined $5.1 billion complex.
I won't go into the enormous detail of this restructuring effort except to thank
management, our service providers and our investment professionals for their
support.
WOULDN'T IT BE NICE IF . . . (some summertime thoughts)
- - the information superhighway actually cut our commute time
- - major league baseball players had to get real jobs at real wages (at least for
a while)
- - the Paperwork Reduction Act actually resulted in less paperwork for America's
businesses
Thank you for choosing to invest in The Victory Portfolios. Our goal is to
become America's First Choice for Investors.
LEIGH A. WILSON
Leigh A. Wilson, President
THE VICTORY PORTFOLIOS
P.S. For more information about any of The Victory Portfolios, please request a
prospectus by calling 1-800-KEY-FUND (539-3863). The prospectus contains more
complete information, including charges and expenses. Read the prospectus
carefully before you invest or send money.
*Morningstar proprietary ratings reflect historical risk-adjusted performance as
of April 30, 1995. The ratings are subject to change every month. Star ratings
are calculated from the fund's three- and five-year average annual returns in
excess of 90-day Treasury bill returns with appropriate fee adjustments, and a
risk factor that reflects fund performance below 90-day Treasury bill returns.
For the three- and five-year periods ended April 30, 1995, 1,190 and 891 equity
funds, 561 and 372 fixed-income funds were rated. Diversified is rated 4 stars
for the three- and five-year periods; Ohio Regional is rated 3 stars for the
three-year period and 4 stars for the five-year period; and Fund for Income is
rated 3 stars for the three-year period and 4 stars for the five-year period.
Ten percent of the funds in an investment category receive 5 stars, 22.5%
receive 4 stars, 35% receive 3 stars, 22.5% receive 2 stars, and 10% receive 1
star. Past performance is no guarantee of future results. These ratings do not
include the effect of a sales charge. Fees have been waived for certain periods;
without the effect of these waivers performance and ratings may have varied.
1
<PAGE>
INVESTMENT
REVIEW
AND
OUTLOOK
(AS OF MAY 5, 1995)
IN OUR OPINION . . .
FROM 75 TO 45 (mph)
The widely predicted SOFT LANDING of the U.S. economy is not "on the way" . . .
it's already "arrived." More and more fresh economic data depict an economy
which, in recent months, has "slowed" from a "75 mile-per-hour" pace throughout
1994 (especially during the fourth quarter) to a more modest "speed" of roughly
"45 miles per hour." This slowing appears to be very satisfying to the economy's
primary "traffic cop" . . . the Federal Reserve.
The latest economic numbers describe an "economic vehicle" with the "brakes" now
firmly applied. The May 3 release of the Index of Leading Economic Indicators
for March recorded its largest decline in two years. February and March also
registered as the largest back-to-back monthly declines since the summer of
1992. Equally exciting (only to economists) was a surprising 0.1% decline in
factory orders during March, another sign of some "bad gas" in the "economic
engine." In addition, factory inventories rose more than expected in March and
were revised higher for February. This stronger inventory buildup suggests that
the most recent U.S. Commerce Department estimate of a 2.8% real GDP growth
"speed" during the first quarter of 1995 will be revised to a "faster speed."
This expected upward revision will come at the expense of a weak current
quarter . . . perhaps as "sluggish" as a 1.2-1.8% real annual rate.
The May 5 release of the April unemployment numbers, which jumped from 5.5% to
5.8%, shed further light on the "engine's diagnosis." These particularly weak
numbers could "fuel" additional near-term strength in both stocks and bonds.
IS THE FED FINISHED TIGHTENING?
The data of recent days provided more "high octane" fuel to the financial
markets' belief that the Fed will likely "stay on cruise control" for some time
to come. Many economists now suggest the Fed's next move will be to "step on the
gas" (ease policy). Although we would like to believe that, we expect a modest
resurgence of the economy during the second half of 1995, "fueled" by rising
exports, solid manufacturing output, strong capital spending, and improved
consumer interest in housing. This combination, added to some worrisome economic
"exhaust" (inflation pressure), could force the Fed's foot to the "brake pedal"
once again.
Society Asset Management, Inc.
2
<PAGE>
UNDERSTANDING YOUR FINANCIAL STATEMENTS
o The FINANCIAL STATEMENTS summarize and describe a fund's financial
transactions. They are broken down into four different statements,
which are illustrated below:
THE STATEMENTS OF ASSETS AND LIABILITIES lists all of the assets and
liabilities of the mutual fund. This is the individual fund's "balance sheet."
Also disclosed on this statement is the fund's net asset value per share and
its maximum offering price per share as of the date of the statement. The
statement also lists the accounts that comprise the mutual fund's net assets
(capital stock, undistributed income, etc.).
[FORM] SUMMARY OF THE MUTUAL FUND'S INVESTMENTS AND ALL
OTHER ASSETS OWNED BY THE FUND, INCLUDING AMOUNTS
OWED TO THE FUND BY OUTSIDE PARTIES
SUMMARY OF ALL AMOUNTS OWED TO OUTSIDE PARTIES BY
THE MUTUAL FUND
NET RESULT OF ASSETS LESS LIABILITIES
THE MARKET WORTH OF THE MUTUAL FUND'S TOTAL ASSETS
DIVIDED BY THE NUMBER OF SHARES OUTSTANDING
THE CURRENT NET ASSET VALUE PER SHARE PLUS SALES CHARGE
THE STATEMENT OF OPERATIONS shows the amount of dividend and interest income
earned from the mutual fund's investments, the expenses incurred by the fund
from its operations, and any gains or losses recognized by the fund from
holding and/or selling any investments.
[FORM] ANY INCOME EARNED FROM THE MUTUAL FUND'S INVESTMENTS
OPERATING EXPENSES INCURRED BY THE MUTUAL FUND DURING
THE PERIOD
GAINS OR LOSSES REALIZED UPON THE SALE OF THE MUTUAL
FUND'S INVESTMENTS ALONG WITH UNREALIZED GAINS OR LOSSES
ON FUND HOLDINGS AT THE REPORT DATE
NET CHANGE DUE TO MUTUAL FUND OPERATIONS
3
<PAGE>
THE STATEMENT OF CHANGES IN NET ASSETS shows the total assets of the mutual
fund for the two most recent reporting periods. The changes in net assets are
generally broken down into four distinct sections:
[FORM] OPERATIONS - SEE STATEMENT OF OPERATIONS
DIVIDENDS TO SHAREHOLDERS - TOTAL INCOME DIVIDENDS PAID
TO SHAREHOLDERS DURING THE PERIODS
NET REALIZED GAINS - TOTAL REALIZED GAINS DISTRIBUTED TO
SHAREHOLDERS DURING THE PERIODS
CAPITAL STOCK TRANSACTIONS - DOLLAR VALUE OF MUTUAL FUND
SHARES PURCHASED, REDEEMED OR REINVESTED DURING THE
PERIODS
THE PORTFOLIO OF INVESTMENTS lists each investment holding in the mutual fund
as of the date of the report. Investments may be grouped by category (by
industry or security type, for example). The percentage of the mutual fund's
net assets that these groupings represent is also disclosed.
[FORM] TYPE OF SECURITY
INDUSTRY SECTOR AND PERCENTAGE OF THE MUTUAL FUND's
NET ASSETS REPRESENTED BY INVESTMENTS IN THAT SECTOR
(IF APPLICABLE)
ACTUAL PORTFOLIO HOLDINGS WITH SHARES AND MARKET
VALUE AS OF REPORT DATE
o The NOTES TO FINANCIAL STATEMENTS are footnotes to the statements listed
above. 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.
o The FINANCIAL HIGHLIGHTS show, for a single share outstanding throughout the
period, the net investment income, the realized and unrealized gains and
losses, and the dividends and distributions of the fund. It also shows key
data and ratios, such as the total return for the period, the portfolio
turnover rate for funds other than money market mutual funds, and the
ratio of net investment income to average net assets.
4
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. TAX-FREE
GOVERNMENT PRIME MONEY
OBLIGATIONS OBLIGATIONS MARKET
FUND FUND FUND
(000) (000) (000)
-------- -------- --------
<S> <C> <C> <C>
ASSETS:
Investments, at value $228,336 $392,425 $208,031
Repurchase agreements 296,998 37,315
- ---------------------------------------------------------------------------------------------------------
525,334 429,740 208,031
Cash 322
Interest receivable 1,525 2,467 2,066
Prepaid expenses 5 34 7
- ---------------------------------------------------------------------------------------------------------
Total Assets 526,864 432,241 210,426
- ---------------------------------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 2,381 1,867 675
Accrued expenses and other payables:
Investment advisory fees 153 125 62
Administration fees 66 54 27
Accounting and transfer agent fees 44 52 22
Other 77 143 34
- ---------------------------------------------------------------------------------------------------------
Total Liabilities 2,721 2,241 820
- ---------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 524,337 432,505 209,606
Accumulated undistributed net realized losses from investment
transactions (194) (2,505)
- ---------------------------------------------------------------------------------------------------------
Net Assets $524,143 $430,000 $209,606
- ---------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) 524,337 430,000 209,606
- ---------------------------------------------------------------------------------------------------------
Net asset value--redemption and offering price per share $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------
Investments, at cost $525,334 $429,740 $208,031
- ---------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
5
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY FUNDS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK
TAX- FUND FOR
FREE INCOME
PORTFOLIO PORTFOLIO
(000) (000)
------------ ---------
<S> <C> <C>
ASSETS
Investments, at value $ 16,410 $23,678
Repurchase agreements 1,003
- -----------------------------------------------------------------------------------------------------
16,410 24,681
Interest receivable 338 183
Cash 4
Receivable for capital shares issued 429
Receivable from brokers for investments sold 93
Receivable from fund adviser 41 36
- -----------------------------------------------------------------------------------------------------
Total Assets 17,218 24,997
- -----------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 58
Payable to brokers for investments purchased 195 64
Payable for capital shares redeemed 111 85
Dividends payable 44 119
Accrued expenses and other payables:
Administrative fee 2 3
Other 13
- -----------------------------------------------------------------------------------------------------
Total Liabilities 410 284
- -----------------------------------------------------------------------------------------------------
NET ASSETS
Capital 15,880 26,101
Undistributed (distributions in excess of) net investment income 6 (90)
Net unrealized appreciation on investments 925 509
Accumulated undistributed net realized losses on investments (3) (1,807)
- -----------------------------------------------------------------------------------------------------
Net Assets $ 16,808 $24,713
- -----------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) -- class A 1,277 2,571
- -----------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) -- class B 67
- -----------------------------------------------------------------------------------------------------
Net asset value -- redemption price per share -- class A $ 12.51 $ 9.61
- -----------------------------------------------------------------------------------------------------
Offering price (100%/(100% --
Maximum Sales Charge) of net asset value adjusted to
nearest cent) per share -- class A $ 13.13 $ 9.81
- -----------------------------------------------------------------------------------------------------
Maximum Sales Charge -- class A 4.75% 2.00%
- -----------------------------------------------------------------------------------------------------
Net asset value -- offering and redemption price per share -- class B $ 12.50
- -----------------------------------------------------------------------------------------------------
Investments at cost $ 15,485 $24,172
- -----------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
6
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED INVESTMENT OHIO
TERM GOVERNMENT INTERMEDIATE QUALITY MUNICIPAL
INCOME MORTGAGE INCOME BOND BOND
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value $ 165,669 $142,962 $130,878 $ 91,366 $ 57,871
Interest receivable 2,571 983 2,429 1,453 1,157
Receivable for capital shares issued 21 24
Receivable from brokers for investments sold 2,753 2,048 2,035
Unamortized organization costs 8 9
Prepaid expenses 14 16 13 3
- ---------------------------------------------------------------------------------------------------------------
Total Assets 168,240 146,733 133,331 94,889 61,090
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable to brokers for investments purchased 3,136 2,542 2,845
Payable for capital shares redeemed 1 4
Accrued expenses and other payables:
Investment advisory fees 65 59 52 38 14
Administration fees 21 18 16 11 7
Accounting and transfer agent fees 15 13 13 11 9
Other 26 68 25 85 78
- ---------------------------------------------------------------------------------------------------------------
Total Liabilities 128 3,298 106 2,687 2,953
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 169,603 150,214 139,577 99,169 58,717
Undistributed net investment income 190 194 168 122 55
Net unrealized appreciation (depreciation) from
investments (519) (4,357) (2,607) (2,022) 275
Accumulated undistributed net realized losses
from investment transactions (1,162) (2,616) (3,913) (5,067) (910)
- ---------------------------------------------------------------------------------------------------------------
Net Assets $ 168,112 $143,435 $133,225 $ 92,202 $ 58,137
- ---------------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest
(shares) 16,853 13,587 14,164 9,827 5,356
- ---------------------------------------------------------------------------------------------------------------
Net asset value--redemption price per share $ 9.98 $ 10.56 $ 9.41 $ 9.38 $ 10.85
- ---------------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%--Maximum
Sales Charge) of net asset value adjusted to
nearest cent) per share $ 10.18 $ 11.09 $ 9.88 $ 9.85 $ 11.39
- ---------------------------------------------------------------------------------------------------------------
Maximum Sales Charge 2.00% 4.75% 4.75% 4.75% 4.75%
- ---------------------------------------------------------------------------------------------------------------
Investments, at cost $ 166,188 $147,319 $133,485 $ 93,388 $ 57,596
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
7
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK DIVERSIFIED
BALANCED INDEX VALUE STOCK GROWTH
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value $158,944 $105,660 $263,048 $323,032 $43,646
Cash 1
Foreign currency (Cost $509) 504
Interest and dividends receivable 1,163 201 484 404 51
Receivable for capital shares issued 13 239
Receivable from brokers for investments sold 2,497 658 10,016 203
Net variation margin on open futures contracts 25 5
Unamortized organization costs 6 4 10 4
Prepaid expenses 18 10 23 9 9
- --------------------------------------------------------------------------------------------------------------
Total Assets 163,145 105,901 264,228 333,700 43,913
- --------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for capital shares redeemed 3 14
Payable to brokers for investments purchased 4,141 2,178 11,833
Accrued expenses and other payables:
Investment advisory fees 78 38 134 156 23
Administration fees 19 33 39 5
Accounting and transfer agent fees 18 7 21 24 7
Other 124 22 32 41 17
- --------------------------------------------------------------------------------------------------------------
Total Liabilities 4,383 67 2,398 12,107 52
- --------------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 153,504 95,719 241,936 281,878 40,340
Undistributed (distributions in excess of) net
investment income (411) 179 406 151 8
Net unrealized appreciation from investments 7,080 9,685 17,472 30,351 3,288
Net unrealized depreciation from translation of
assets and liabilities in foreign currencies (12)
Accumulated undistributed net realized gains
(losses) from investment and foreign currency
transactions (1,399) 251 2,016 9,213 225
- --------------------------------------------------------------------------------------------------------------
Net Assets $158,762 $105,834 $261,830 $321,593 $43,661
- --------------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) 15,549 9,545 24,346 26,055 4,054
- --------------------------------------------------------------------------------------------------------------
Net asset value--redemption price per share $ 10.21 $ 11.09 $ 10.75 $ 12.34 $ 10.82
- --------------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%--Maximum Sales
Charge) of net asset value adjusted to nearest
cent) per share $ 10.72 $ 11.64 $ 11.29 $ 12.96 $ 11.36
- --------------------------------------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 4.75% 4.75% 4.75% 4.75%
- --------------------------------------------------------------------------------------------------------------
Investments, at cost $151,871 $ 95,975 $245,576 $292,681 $40,358
- --------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
8
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO
SPECIAL SPECIAL REGIONAL INTERNATIONAL
VALUE GROWTH STOCK GROWTH
FUND FUND FUND FUND
(000) (000) (000) (000)
-------- ------- ------- -------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value $153,966 $19,539 $35,164 $84,863
Foreign currency (Cost $2,485) 2,542
Interest and dividends receivable 275 16 41 181
Receivable for capital shares issued 9 27 26
Receivable from brokers for investments sold 980 259
Unamortized organization costs 5 2
Prepaid expenses 20 4 10
- ----------------------------------------------------------------------------------------------------------
Total Assets 155,255 19,561 35,232 87,881
- ----------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for capital shares redeemed 3 2
Payable to brokers for investments purchased 1,519 142 1,193
Accrued expenses and other payables:
Investment advisory fees 86 10 20 67
Administration fees 19 2 4 11
Accounting and transfer agent fees 14 6 8 52
Other 26 15 14 26
- ----------------------------------------------------------------------------------------------------------
Total Liabilities 1,664 175 49 1,351
- ----------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 139,501 22,102 23,813 84,285
Undistributed (distributions in excess of) net
investment income 155 (3) 5 (613)
Net unrealized appreciation from investments 11,380 1,362 10,524 (5,172)
Net unrealized appreciation from translation of assets
and liabilities in foreign currencies 9,285
Accumulated undistributed net realized gains (losses)
from investment and foreign currency transactions 2,555 (4,075) 841 (1,255)
- ----------------------------------------------------------------------------------------------------------
Net Assets $153,591 $19,386 $35,183 $86,530
- ----------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) 13,646 2,073 2,398 7,268
- ----------------------------------------------------------------------------------------------------------
Net asset value--redemption price per share $ 11.26 $ 9.35 $ 14.67 $ 11.91
- ----------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%--Maximum Sales
Charge) of net asset value adjusted to nearest cent)
per share $ 11.82 $ 9.82 $ 15.40 $ 12.50
- ----------------------------------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 4.75% 4.75% 4.75%
- ----------------------------------------------------------------------------------------------------------
Investments, at cost $142,586 $18,177 $24,640 $80,807
- ----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
9
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S.
GOVERNMENT PRIME TAX-FREE
OBLIGATIONS OBLIGATIONS MONEY MARKET
FUND FUND FUND
(000) (000) (000)
------- ------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $13,510 $18,407 $4,368
- ----------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 820 1,128 389
Administration fees 351 484 167
Shareholder service fees 222
Accounting fees 141 193 68
Legal and audit fees 41 86 22
Trustees' fees and expenses 16 29 8
Transfer agent fees 21 36 14
Registration and filing fees 24 21 10
Printing fees 27 28 14
Other 6 11 3
Expenses voluntarily reduced (16)
- ----------------------------------------------------------------------------------------------------------
Total Expenses 1,447 2,238 679
- ----------------------------------------------------------------------------------------------------------
Net Investment Income 12,063 16,169 3,689
- ----------------------------------------------------------------------------------------------------------
REALIZED GAINS FROM INVESTMENTS:
Net realized gains from investment transactions 54 1
- ----------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $12,117 $16,170 $3,689
- ----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
10
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY FUNDS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK FUND FOR
TAX-FREE INCOME
PORTFOLIO PORTFOLIO
(000) (000)
-------- ---------
<S> <C> <C>
INVESTMENT INCOME
Interest income $530 $ 1,054
- -----------------------------------------------------------------------------------------------------------
EXPENSES
Investment advisory fees 44 65
Administration fees 12 19
Registration fees 18 37
Shareholder servicing fees 19 32
Accounting fees 16 9
Transfer agent fees 11 14
Legal 5 6
Custodian fees and expenses 2
Trustees' fees and expenses 1
Other 9 8
Expenses voluntarily reduced (41) (43)
- -----------------------------------------------------------------------------------------------------------
Total Expenses 94 149
- -----------------------------------------------------------------------------------------------------------
Net Investment Income 436 905
- -----------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS
(LOSSES) FROM INVESTMENTS
Net realized losses from investment transactions (3) (369)
Net change in unrealized appreciation from investments 353 834
- -----------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments 350 465
- -----------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $786 $ 1,370
- -----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
11
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED INVESTMENT OHIO
TERM GOVERNMENT INTERMEDIATE QUALITY MUNICIPAL
INCOME MORTGAGE INCOME BOND BOND
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 3,810 $ 5,718 $ 4,461 $ 3,544 $ 1,533
- ------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 287 368 448 344 167
Administration fees 86 110 90 69 42
Accounting fees 38 48 39 33 20
Legal and audit fees 9 16 12 9 5
Organization fees 7 7
Trustees' fees and expenses 3 6 4 3 2
Transfer agent fees 10 11 10 10 9
Registration and filing fees 10 9 22 20 7
Printing fees 10 11 11 10 10
Other 2 3 3 1
Expenses voluntarily reduced (11) (12) (161) (122) (85)
- ------------------------------------------------------------------------------------------------------------
Total Expenses 444 570 485 384 177
- ------------------------------------------------------------------------------------------------------------
Net Investment Income 3,366 5,148 3,976 3,160 1,356
- ------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized losses from investment transactions (491) (1,978) (1,415) (1,048) (511)
Change in unrealized appreciation from investments 2,323 6,541 3,611 3,845 3,179
- ------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments 1,832 4,563 2,196 2,797 2,668
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 5,198 $ 9,711 $ 6,172 $ 5,957 $ 4,024
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
12
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK DIVERSIFIED
BALANCED INDEX VALUE STOCK GROWTH
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 2,504 $ 301 $ 952 $ 491 $ 30
Dividend income 1,262 1,141 3,381 4,004 522
- ----------------------------------------------------------------------------------------------------------------
Total Income 3,766 1,442 4,333 4,495 552
- ----------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 722 283 1,142 906 259
Administration fees 108 71 171 209 39
Accounting fees 48 28 70 85 17
Legal and audit fees 13 9 19 24 6
Organization fees 5 3 8 3
Trustees' fees and expenses 5 3 7 9 2
Transfer agent fees 15 10 12 15 9
Registration and filing fees 24 16 30 7 15
Printing fees 12 11 13 14 9
Other 2 1 4 3
Expenses voluntarily reduced (294) (161) (434) (59) (93)
- ----------------------------------------------------------------------------------------------------------------
Total Expenses 660 274 1,042 1,213 266
- ----------------------------------------------------------------------------------------------------------------
Net Investment Income 3,106 1,168 3,291 3,282 286
- ----------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND
FOREIGN CURRENCY:
Net realized gains from investment transactions 203 257 2,038 9,257 225
Net realized gains from foreign currency transactions 514
Net change in unrealized appreciation from investments 9,034 8,129 18,512 18,099 1,924
Change in unrealized depreciation from translation of assets
and liabilities in foreign currencies (5)
- ----------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments and foreign
currency 9,746 8,366 20,550 27,356 2,149
- ----------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $12,852 $9,554 $23,841 $30,638 $2,435
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
13
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO
SPECIAL SPECIAL REGIONAL INTERNATIONAL
VALUE GROWTH STOCK GROWTH
FUND FUND FUND FUND
(000) (000) (000) (000)
------- ------- ------ -------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 240 $ 41 $ 49 $ 62
Dividend income 1,431 104 352 421
Foreign tax withholding (48)
- ------------------------------------------------------------------------------------------------------------
Total Income 1,671 145 401 435
- ------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 647 103 123 436
Administration fees 97 16 25 60
Custodian and accounting fees 41 8 12 120
Legal and audit fees 12 3 4 7
Organization fees 4 1
Trustees' fees and expenses 4 1 1 3
Transfer agent fees 10 8 18 11
Registration and filing fees 19 10 7 13
Printing fees 11 9 10 10
Other 2 1
Expenses voluntarily reduced (193) (40) (7) (61)
- ------------------------------------------------------------------------------------------------------------
Total Expenses 654 120 193 599
- ------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 1,017 25 208 (164)
- ------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gains (losses) from investment transactions 2,555 (3,750) 840 (2,264)
Net realized loss from foreign currency transactions 1,440
Net change in unrealized appreciation (depreciation) from
investments 8,232 4,497 1,267 (3,388)
Change in unrealized appreciation from translation of assets and
liabilities in foreign currencies 42
- ------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains (losses) from investments and
foreign currency 10,787 747 2,107 (4,170)
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $11,804 $ 772 $2,315 $(4,334)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
14
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT TAX-FREE MONEY
OBLIGATIONS FUND PRIME OBLIGATIONS FUND MARKET FUND
------------------------ -------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
YEAR
ENDED
YEAR ENDED YEAR ENDED OCTOBER
OCTOBER 31, OCTOBER 31, 31,
1994 1994 1994
(000) (000) (000)
----------- ----------- ---------
SIX SIX MONTHS SIX
MONTHS ENDED MONTHS
ENDED APRIL 30, ENDED
APRIL 30, 1995 APRIL 30,
1995 (000) 1995
(000) ----------- (000)
--------- ---------
(UNAUDITED)
(UNAUDITED) (UNAUDITED)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 12,063 $ 14,747 $ 16,169 $ 26,637 $ 3,689 $ 4,538
Net realized gains (losses) from
investment transactions 54 (167) 1 (2,506) 7
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
operations 12,117 14,580 16,170 24,131 3,689 4,545
- -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (12,063) (14,747) (16,169) (26,637) (3,689) (4,538)
From net realized gains on
investments (81) (7)
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (12,063) (14,828) (16,169) (26,637) (3,689) (4,545)
- -------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 729,038 935,449 1,021,057 2,109,682 256,968 534,878
Dividends reinvested 1,416 1,179 7,281 8,381 350 355
Cost of shares redeemed (618,413) (1,040,066) (1,380,642) (2,055,784) (246,273) (526,023)
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions (112,041) (103,438) (352,304) 62,279 11,045 9,210
- -------------------------------------------------------------------------------------------------------------------------
Contribution by KeyCorp 2,506
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets (112,095) (103,686) 352,303 62,279 11,045 9,210
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 412,048 515,734 782,303 720,024 198,561 189,351
- -------------------------------------------------------------------------------------------------------------------------
End of period $ 524,143 $ 412,048 $ 430,000 $ 782,303 $ 209,606 $ 198,561
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 729,038 935,449 1,021,057 2,109,682 256,968 534,878
Dividends reinvested 1,416 1,179 7,281 8,381 350 355
Redeemed (618,413) (1,040,066) (1,380,642) (2,055,784) (246,273) (526,023)
- -------------------------------------------------------------------------------------------------------------------------
Change in shares 112,041 (103,438) (352,304) 62,279 11,045 9,210
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
15
<PAGE>
THE VICTORY FUNDS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK TAX-FREE FUND FOR INCOME
PORTFOLIO PORTFOLIO
------------------------ ------------------------
JANUARY 1, FEBRUARY
1994 TO 1, 1994 TO
OCTOBER OCTOBER
31, 1994 31, 1994
(000) (000)
SIX MONTHS ---------- SIX MONTHS ----------
ENDED ENDED
APRIL 30, APRIL 30,
1995 1995
(000) (000)
---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
OPERATIONS
Net investment income $ 436 $ 1,033 $ 905 $ 1,967
Net realized gains (losses) from investment
transactions (3) 229 (369) (654)
Net change in unrealized gain (loss) from
investments 353 (2,384) 834 (2,075)
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 786 (1,122) 1,370 (762)
- ------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders from net investment income
-- class A (421) (1,033) (946) (1,911)
Distributions in excess of net investment income
class A (49)
Dividends to shareholders from net investment income
-- class B (9)
Dividends to shareholders from net realized gains
class A (225)
Dividends to shareholders from net realized gains
class B (5)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from distributions to
shareholders (660) (1,033) (946) (1,960)
- ------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS(1)
Proceeds from shares issued 2,735 6,305 2,077 3,073
Dividends reinvested 234 455 185 525
Shares redeemed (4,127) (15,295) (7,331) (18,150)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from capital transactions (1,158) (8,535) (5,069) (14,552)
- ------------------------------------------------------------------------------------------------------------
Change in net assets (1,032) (10,690) (4,645) (17,274)
- ------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 17,840 28,530 29,358 46,632
- ------------------------------------------------------------------------------------------------------------
End of period $ 16,808 $ 17,840 $ 24,713 $ 29,358
- ------------------------------------------------------------------------------------------------------------
(1) SHARE TRANSACTIONS (IN DOLLARS):
Class A:
Issued 1,941 6,305 2,077 3,073
Distributions reinvested 221 455 185 525
Redeemed (4,127) (15,295) (7,331) (18,150)
- ------------------------------------------------------------------------------------------------------------
Net decrease (1,965) (8,535) (5,069) (14,552)
- ------------------------------------------------------------------------------------------------------------
Class B:
Issued 794
Distributions reinvested 13
Redeemed
- ------------------------------------------------------------------------------------------------------------
Net increase 807
- ------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS (IN SHARES):
Class A:
Issued 156 482 218 312
Distributions reinvested 18 35 20 54
Redeemed (337) (1,185) (779) (1,853)
- ------------------------------------------------------------------------------------------------------------
Net decrease in shares (163) (668) (541) (1,487)
- ------------------------------------------------------------------------------------------------------------
Class B:
Issued 67
Distributions reinvested
Redeemed
- ------------------------------------------------------------------------------------------------------------
Net increase in shares 67
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
16
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED TERM INCOME GOVERNMENT MORTGAGE INTERMEDIATE INCOME
FUND
FUND FUND ---------------------
-------------------- -------------------- DECEMBER
YEAR YEAR 10,
ENDED ENDED 1993 TO
OCTOBER OCTOBER OCTOBER
31, 31, 31,
1994 1994 1994 (A)
(000) (000) (000)
SIX -------- SIX -------- SIX --------
MONTHS MONTHS MONTHS
ENDED ENDED ENDED
APRIL APRIL APRIL
30, 30, 30,
1995 1995 1995
(000) (000) (000)
-------- -------- --------
(UNAUDITED (UNAUDITED (UNAUDITED
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 3,366 $ 4,521 $ 5,148 $ 10,593 $ 3,976 $ 5,951
Net realized gains (losses)
from investment
transactions (491) (671) (1,978) 615 (1,415) (2,498)
Net change in unrealized
appreciation (depreciation)
from investments 2,323 (4,406) 6,541 (16,536) 3,611 (6,218)
- ----------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 5,198 (556) 9,711 (5,328) 6,172 (2,765)
- ----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (3,314) (4,506) (5,273) (10,495) (4,036) (5,724)
From net realized gains from
investments (357) (1,233) (386)
- ----------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (3,314) (4,863) (6,506) (10,881) (4,036) (5,724)
- ----------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 102,064 34,263 25,202 119,347 34,623 159,988
Dividends reinvested 3,313 4,378 6,502 9,714 4,036 5,511
Cost of shares redeemed (18,299) (35,843) (39,642) (97,422) (20,493) (44,087)
- ----------------------------------------------------------------------------------------------------------
Change in net assets from
capital transactions 87,078 2,798 (7,938) 31,639 18,166 121,412
- ----------------------------------------------------------------------------------------------------------
Change in net assets 88,962 (2,621) (4,733) 15,430 20,302 112,923
- ----------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 79,150 81,771 148,168 132,738 112,923
- ----------------------------------------------------------------------------------------------------------
End of period $168,112 $ 79,150 $143,435 $148,168 $133,225 $112,923
- ----------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 10,367 3,336 2,439 10,724 3,739 16,205
Dividends reinvested 336 433 630 906 436 579
Redeemed (1,858) (3,529) (3,833) (8,967) (2,220) (4,575)
- ----------------------------------------------------------------------------------------------------------
Change in shares 8,845 240 (764) 2,663 1,955 12,209
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
17
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT QUALITY BOND
FUND BALANCED FUND
--------------------------- OHIO MUNICIPAL BOND FUND ---------------------------
DECEMBER 10, ----------------------------- DECEMBER 10,
1993 TO YEAR ENDED 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 ENDED 1994 (A)
(000) APRIL 30, (000) APRIL 30, (000)
------------ 1995 -------------- 1995 ------------
(000) (000)
---------- ----------
SIX MONTHS (UNAUDITED) (UNAUDITED)
ENDED
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 3,160 $ 5,712 $ 1,356 $ 2,580 $ 3,106 $ 3,706
Net realized gains (losses)
from investment transactions (1,048) (4,019) (511) (399) 203 (2,116)
Net realized gains from foreign
currency transactions 514
Net change in unrealized
appreciation (depreciation)
from investments 3,845 (5,867) 3,179 (4,662) 9,034 (1,961)
Change in unrealized
depreciation from translation
of assets and liabilities in
foreign currencies (5)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 5,957 (4,174) 4,024 (2,481) 12,852 (371)
- ----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (3,235) (5,516) (1,385) (2,557) (3,678) (3,545)
From net realized gains from
investments (1,169)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (3,235) (5,516) (1,385) (3,726) (3,678) (3,545)
- ----------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 18,694 139,893 8,944 28,815 66,281 176,193
Dividends reinvested 3,234 5,495 1,384 2,767 3,663 3,529
Cost of shares redeemed (27,133) (41,013) (12,534) (18,347) (47,641) (48,521)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions (5,205) 104,375 (2,206) 13,235 22,303 131,201
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets (2,483) 94,685 433 7,028 31,477 127,285
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 94,685 57,704 50,676 $127,285
- ----------------------------------------------------------------------------------------------------------------------------------
End of period $ 92,202 $ 94,685 $ 58,137 $ 57,704 $158,762 $127,285
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 2,032 14,142 845 2,625 6,905 17,854
Dividends reinvested 352 582 132 255 375 366
Redeemed (2,958) (4,323) (1,206) (1,693) (4,964) (4,987)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in shares (574) 10,401 (229) 1,187 2,316 13,233
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
18
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK INDEX FUND VALUE FUND DIVERSIFIED STOCK FUND
--------------------------- --------------------------- -------------------------
DECEMBER 3, DECEMBER 3, YEAR ENDED
1993 TO 1993 TO OCTOBER
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS 31,
1994 (A) ENDED 1994 (A) ENDED 1994
(000) APRIL 30, (000) APRIL 30, (000)
------------ 1995 ------------ 1995 ----------
(000) (000)
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 1,168 $ 1,515 $ 3,291 $ 3,602 $ 3,282 $ 5,177
Net realized gains (losses)
from investment transactions 257 (6) 2,038 3,124 9,257 30,135
Net change in unrealized
appreciation (depreciation)
from investments 8,129 1,556 18,512 (1,040) 18,099 (18,237)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 9,554 3,065 23,841 5,686 30,638 17,075
- ------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (1,173) (1,331) (3,198) (3,289) (3,481) (4,738)
From net realized gains from
investments (3,146) (29,668) (26,397)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (1,173) (1,331) (6,344) (3,289) (33,149) (31,135)
- ------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 30,344 114,187 120,235 229,389 64,652 94,732
Dividends reinvested 1,173 1,321 6,344 3,283 33,132 22,231
Cost of shares redeemed (23,750) (27,556) (70,430) (46,885) (36,907) (97,081)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions 7,767 87,952 56,149 185,787 60,877 19,882
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets 16,148 89,686 73,646 188,184 58,366 5,822
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 89,686 188,184 263,227 257,405
- ------------------------------------------------------------------------------------------------------------------------------
End of period $105,834 $ 89,686 $261,830 $188,184 $321,593 $263,227
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 2,981 11,441 11,942 22,949 5,494 7,718
Dividends reinvested 114 135 639 336 2,997 1,830
Redeemed (2,356) (2,770) (6,813) (4,707) (3,199) (8,003)
- ------------------------------------------------------------------------------------------------------------------------------
Change in shares 739 8,806 5,768 18,578 5,292 1,545
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
19
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND SPECIAL VALUE FUND SPECIAL GROWTH FUND
-------------------------- -------------------------- --------------------------
DECEMBER 3, DECEMBER 3, DECEMBER 3,
1993 TO 1993 TO 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 (A) ENDED 1994 (A)
(000) APRIL 30, (000) APRIL 30, (000)
----------- 1995 ----------- 1995 -----------
(000) (000)
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 286 $ 636 $ 1,017 $ 1,020 $ 25 $ 60
Net realized gains (losses) from
investment transactions 225 298 2,555 588 (3,750) (325)
Net change in unrealized appreciation
(depreciation) from investments 1,924 1,364 8,232 3,148 4,497 (3,135)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
operations 2,435 2,298 11,804 4,756 772 (3,400)
- -----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (328) (586) (955) (927) (29) (59)
From net realized gains from
investments (298) (588)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from distributions
to shareholders (626) (586) (1,543) (927) (29) (59)
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 7,230 92,029 46,521 137,158 3,811 44,544
Dividends reinvested 626 584 1,542 924 29 56
Cost of shares redeemed (32,725) (27,404) (23,333) (23,311) (9,790) (16,548)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions (24,869) 65,209 24,730 114,771 (5,950) 28,052
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets (23,060) 66,921 34,991 118,600 (5,207) 24,593
NET ASSETS:
Beginning of period 66,921 118,600 24,593
- -----------------------------------------------------------------------------------------------------------------------------------
End of period $ 43,861 $ 66,921 $153,591 $ 118,600 $ 19,386 $ 24,593
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 712 9,240 4,410 13,472 441 4,515
Dividends reinvested 63 60 148 91 3 6
Redeemed (3,262) (2,759) (2,217) (2,258) (1,134) (1,758)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in shares (2,487) 6,541 2,341 11,305 (690) 2,763
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
20
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO REGIONAL STOCK INTERNATIONAL GROWTH
FUND FUND
----------------------- -----------------------
YEAR ENDED YEAR ENDED
OCTOBER OCTOBER
31, 31,
1994 SIX MONTHS 1994
(000) ENDED (000)
---------- APRIL 30, ----------
1995
(000)
SIX MONTHS ----------
ENDED (UNAUDITED)
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 208 $ 438 $ (164) $ (136)
Net realized gains (losses) from investment
transactions 840 1,699 (2,264) 4,064
Net realized losses from foreign currency transactions 1,440 (152)
Net change in unrealized appreciation (depreciation)
from investments 1,267 (867) (3,388) 2,879
Change in unrealized appreciation from translation of
assets and liabilities in foreign currencies 42 15
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 2,315 1,270 (4,334) 6,670
- ------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (221) (409)
From net realized gains from investments (1,699) (1,293) (3,925)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from distributions to shareholders (1,920) (1,702) (3,925)
- ------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 4,152 16,543 23,300 53,804
Dividends reinvested 1,917 1,560 3,922
Cost of shares redeemed (5,246) (18,632) (13,740) (9,796)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from capital transactions 823 (529) 13,482 44,008
- ------------------------------------------------------------------------------------------------------------
Change in net assets 1,218 (961) 5,223 50,678
- ------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 33,965 34,926 81,307 30,629
- ------------------------------------------------------------------------------------------------------------
End of period $ 35,183 $ 33,965 $ 86,530 $ 81,307
- ------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 297 1,143 2,012 4,323
Dividends reinvested 144 109 337
Redeemed (376) (1,297) (1,187) (784)
- ------------------------------------------------------------------------------------------------------------
Change in shares 65 (45) 1,162 3,539
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
21
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
U.S. GOVERNMENT OBLIGATIONS FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- -------------------------------------------
U.S. TREASURY BILLS (4.7%)
25,000 5.73%, 6/29/95 $ 24,765
- -------------------------------------------------------
TOTAL U.S. TREASURY BILLS 24,765
- -------------------------------------------------------
- -------------------------------------------------------
U.S. TREASURY NOTES (38.8%)
30,000 4.25%, 7/31/95 29,862
150,000 3.875%, 8/31/95 148,923
25,000 3.875%, 9/30/95 24,786
- -------------------------------------------------------
TOTAL U.S. TREASURY NOTES 203,571
- -------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE 228,336
- -------------------------------------------------------
- -------------------------------------------------------
REPURCHASE AGREEMENTS (56.6%)
15,000 Barclays Bank
5.90%, 5/1/95
(Collateralized by 14,778
U.S. Treasury Notes,
7.38%-7.88%, 11/15/97-
4/15/98, market value-
$15,301) 15,000
20,000 Chase Securities
5.92%, 5/1/95
(Collateralized by 20,444
U.S. Treasury Bills,
5/4/95-5/18/95,
market value-$20,401) 20,000
20,000 Dean Witter
5.93%, 5/1/95
(Collateralized by 23,287
various U.S. Treasury
securities, 5/15/95-
2/29/00, 0.00%-7.13%,
market value-$20,401) 20,000
22,998 Donaldson, Lufkin &
Jennerette
5.93%, 5/1/95
(Collateralized by 25,691
various U.S. Treasury
securities, 5/15/95-
11/15/98, 0.00%-5.13%,
market value-$23,458) 22,998
15,000 Goldman Sachs
5.90%, 5/1/95
(Collateralized by 19,050
U.S. Treasury securities,
8/15/98, 0.00% market
value-$15,301) 15,000
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
20,000 Harris Securities
5.95%, 5/1/95
(Collateralized by 20,372
various U.S. Treasury
securities, 6/8/95-
10/15/98, 0.00%-8.75%,
market value-$20,400 $ 20,000
15,000 Lehman Brothers
5.90%, 5/1/95
(Collateralized by 14,455
U.S. Treasury Notes,
8.63%, 8/15/97, market
value-$15,054) 15,000
129,000 NationsBank
5.96%, 5/1/95
(Collateralized by 131,793
various U.S. Treasury
securities, 0.00%-
11.25%, 4/30/95-4/15/00,
market value-$131,585 129,000
20,000 Nomura Securities
5.92%, 5/1/95
(Collateralized by 20,217
U.S. Treasury Notes,
4.63%-7.75%, 2/29/96-
1/31/00, market value-
$20,400) 20,000
20,000 UBS Securities
5.93%, 5/1/95
(Collateralized by 19,630
U.S. Treasury Notes,
7.50%, 12/31/96, market
value-$20,405) 20,000
- -------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 296,998
- -------------------------------------------------------
TOTAL (COST $525,334)(B) $525,334
- -------------------------------------------------------
</TABLE>
(a) Percentages indicated are based on net assets of $524,143.
(b) Cost and value for federal income tax and financial reporting purposes are
the same.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
22
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments
PRIME OBLIGATIONS FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
CERTIFICATES OF DEPOSIT (3.5%)
BANKING (3.5%):
15,000 Canadian Imperial Bank
Commerce
6.45%, 8/7/95 $ 14,999
- ------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT 14,999
- ------------------------------------------------------------
- ----------------------------------------------
COMMERCIAL PAPER (42.1%)
BANKING (2.3%):
10,000 Cogentrix of Richmond
Virginia
6.02%, 5/18/95 9,972
----------
BEVERAGES (4.3%):
3,373 PepsiCo, Inc.
5.95%, 5/17/95 3,364
15,000 PepsiCo, Inc.
6.25%, 8/24/95 15,000
----------
18,364
----------
FINANCIAL SERVICES (20.7%):
5,000 American Express Co.
5.95%, 5/22/95 4,983
15,000 Bankers Trust
6.23%, 7/10/95 14,818
5,000 Broadway Capital Corp.
6.00%, 5/9/95 4,993
11,218 Fleet Funding Corp.
6.02%, 5/10/95 11,201
5,138 Fleet Funding Corp.
6.00%, 5/24/95 5,118
5,000 Ford Motor Credit Corp.
6.00%, 5/8/95 4,994
6,000 Ford Motor Credit Corp.
6.00%, 5/31/95 5,970
15,000 Hanson Finance
6.05%, 6/1/95 14,922
5,000 Transamerica Finance Corp.
5.98%, 5/15/95 4,988
11,050 Retailer Funding Corp.
6.00%, 5/24/95 11,008
6,044 Retailer Funding Corp.
6.00%, 5/31/95 6,014
----------
89,009
----------
INDUSTRIAL GOODS & SERVICES (2.3%):
10,000 Xerox Co.
6.00%, 5/15/95 9,977
----------
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MISCELLANEOUS (3.5%):
15,000 135 Bishopgate Funding
6.02%, 5/19/95 $ 14,955
----------
OFFICE EQUIPMENT & SERVICES (3.5%):
15,000 Canon USA, Inc.
5.98%, 5/12/95 14,973
----------
OIL & GAS EXPLORATION (1.2%):
5,000 British Oil New Zealand Ltd.
Discount
5.95%, 5/15/95 4,988
----------
PRINTING & PUBLISHING (1.2%):
5,000 Reed Publishing
6.05%, 6/27/95 4,952
----------
RECEIVABLE (3.2%):
5,000 Blue Hawk Funding
6.00%, 5/24/95 4,981
5,000 Blue Hawk Funding
5.98%, 5/31/95 4,975
3,840 Blue Hawk Funding
6.02%, 5/9/95 3,835
----------
13,791
- ------------------------------------------------------------
TOTAL COMMERCIAL PAPER 180,981
- ------------------------------------------------------------
- ----------------------------------------------
CORPORATE BONDS (3.3%)
BEVERAGES (0.2%):
1,000 PepsiCo, Inc.
5.63%, 7/1/95 1,000
----------
FINANCIAL SERVICES (1.9%):
8,050 Associates Corp. of N.A.
8.88%, 8/1/95 8,113
----------
MISCELLANEOUS (1.2%):
5,000 Hanson Overseas
5.50%, 1/15/96 4,960
- ------------------------------------------------------------
TOTAL CORPORATE BONDS 14,073
- ------------------------------------------------------------
- ----------------------------------------------
FLOATING RATE NOTES (14.3%)
MASTER DEMAND NOTES (5.1%):
22,000 Lehman Government
Securities
6.20%*, 5/1/95 22,000
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
23
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments -- Continued
PRIME OBLIGATIONS FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
SECURITY BROKER, DEALER (8.1%):
10,000 Goldman Sachs Group
6.03%*, 6/15/95** $ 10,000
10,000 Goldman Sachs Group
6.03%*, 6/16/95** 10,000
10,000 Lehman Brothers Holdings,
Inc.
6.16%*, 7/28/95** 10,000
5,000 Lehman Brothers Holdings,
Inc.
6.42%*, 3/11/96** 5,000
----------
35,000
----------
TAXABLE MUNICIPAL DEMAND NOTES (1.0%):
4,500 Springfield
6.08%*, 12/31/10** 4,500
- ------------------------------------------------------------
TOTAL FLOATING RATE NOTES 61,500
- ------------------------------------------------------------
- ----------------------------------------------
MEDIUM TERM NOTES (5.8%)
FINANCE (3.7%):
1,000 Ford Motor Credit Corp.
9.20%, 5/1/95 1,000
5,000 General Electric Capital
Corp.
6.25%, 5/1/95 5,000
10,000 General Electric Capital
Corp.
4.89%, 5/29/95 9,999
----------
15,999
----------
TOBACCO (2.1%):
9,000 Philip Morris Co.
6.25%, 5/22/95 9,003
- ------------------------------------------------------------
TOTAL MEDIUM TERM NOTES 25,002
- ------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (3.5%)
FEDERAL HOME LOAN BANK
10,000 5.19%, 6/13/95 9,999
5,000 6.60%, 4/25/95 5,000
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 14,999
- ------------------------------------------------------------
- ----------------------------------------------
VARIABLE RATE NOTES (18.8%)
5,034 Adesa Funding Corp.
6.08%*, 1/1/99** 5,034
2,500 Astro Alum
6.15%*, 4/1/05** 2,500
3,500 Baylis Group Partnership
6.30%*, 1/1/10** 3,500
15,000 C-River Maritime Exxon
Shipping
6.09%*, 10/1/01** 15,000
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
3,517 Capital One Funding Corp.
Service
6.08%*, 6/2/08** $ 3,517
2,725 Carelife, Inc.
6.15%*, 8/1/11** 2,725
1,600 Cleveland Steel Container
6.15%*, 12/1/08** 1,600
2,000 Cuyahoga County Ohio
Taxable Economic
Development Revenue
6.51%*, 6/1/22** 2,000
925 Dietz Road Ltd Partnership
6.15%*, 11/1/08** 925
3,000 Dome Corp -- Dome Corp
Project
6.15%*, 8/31/16** 3,000
8,388 Erie Funding
6.25%*, 11/1/16** 8,388
320 Fremont Plastics
6.15%*, 4/1/03** 320
1,500 GMH Enterprises
6.15%*, 7/1/03** 1,500
455 Highland Rd Partners
6.15%*, 10/1/04** 455
975 McKinley Air Transport
6.15%*, 8/1/09** 975
1,000 MCMC Pob LII
6.15%*, 8/1/14** 1,000
1,000 Olen Corp.
6.15%*, 12/1/04** 1,000
1,655 Olen Corp.
6.15%*, 8/1/08** 1,655
1,400 Pellerin Melnor Corp.
6.15%*, 9/1/02** 1,400
5,842 Primex Funding
6.08%*, 2/1/00** 5,842
700 Rivnut Engineered Products
6.15%*, 2/1/01** 700
980 S & SLP Project
6.15%*, 12/1/07** 980
420 Schipper-DJA Properties
6.17%*, 10/1/05** 420
3,060 Schipper Enterprises
6.17%*, 4/1/09** 3,060
1,295 Technisand, Inc.
6.15%*, 11/1/01** 1,295
1,800 Tell-Schipper Properties,
Inc.
6.17%*, 10/1/03** 1,800
8,300 Tyler Health Facilities
6.35%*, 11/1/25** 8,300
1,980 Zanetos Partnership Project
6.15%*, 7/1/13** 1,980
- ------------------------------------------------------------
TOTAL VARIABLE RATE NOTES 80,871
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
24
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments -- Continued
PRIME OBLIGATIONS FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
REPURCHASE AGREEMENTS (8.7%)
12,000 Chase Securities
5.92%, 5/2/95
(Collateralized by 12,287
U.S. Treasury Bills,
5/18/95-5/25/95,
market value-$12,244) $ 12,000
13,315 Donaldson-Lufkin Jenrette
5.93%, 5/1/95
(Collateralized by 15,318
various U.S. Treasury
securities, 0.00%-5.13%,
8/15/95-2/15/00,
market value-$13,582) 13,315
12,000 UBS Securities, Inc.
5.93%, 5/2/95
(Collateralized by 11,780
U.S. Treasury Notes,
7.90%, 12/31/96, market
value-$12,245) 12,000
- ------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 37,315
- ------------------------------------------------------------
TOTAL (COST $429,740)(B) $ 429,740
- ----------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $430,000.
(b) Cost and value for federal income tax and financial reporting purposes are
the same.
* Floating Rate Demand Notes are securities with yields that vary with a
designated market index or market rate. These securities are payable on the
date of demand. The rate reflected on the Schedule of Portfolio Investments is
the effective rate at April 30, 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 ON PAGES 73 TO 78.
25
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
TAX-FREE MONEY MARKET FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (98.6%)
ALABAMA (2.1%):
2,530 Ardmore Industrial
Development Revenue,
4.95%*, 6/1/04** $ 2,530
1,800 Montgomery, Alabama BMC,
4.75%*, 12/1/30** 1,800
--------
4,330
--------
ARKANSAS (2.4%):
5,000 University of Arkansas,
4.80%*, 12/1/19** 5,000
--------
CALIFORNIA (6.8%):
5,000 California Housing Finance
GIC, 4.60%, 8/1/27** 5,000
6,000 California School Cash
Reserve, 4.50%, 7/5/95 6,008
3,080 Los Angeles, California
Redevelopment, 8.85%,
7/1/95 3,115
--------
14,123
--------
COLORADO (1.3%):
2,645 Arapahoe County, Capital
Improvement, 4.45%,
8/31/96** 2,645
--------
FLORIDA (8.3%):
4,500 Broward County, Housing
Finance Authority, 4.95%*,
12/1/29** 4,500
9,700 Dade County, Housing Finance
Authority, Highway
Revenue, 4.95%*, 8/1/05** 9,700
490 Florida State Board of
Education, 5.50%, 1/1/96 492
2,500 Hillsborough County,
Ringhaven, 4.75%*,
12/1/11** 2,500
--------
17,192
--------
ILLINOIS (7.5%):
1,700 Illinois Development,
Kindlen, 4.80%*, 5/1/06** 1,700
5,000 Illinois Development, Power
& Light, 4.10%, 5/31/95** 5,000
5,000 Illinois Health Facility,
4.50%*, 11/15/24** 5,000
1,000 Illinois State, 8.13%,
6/1/95 1,023
2,700 Kankakee County, Industrial
Development Revenue,
4.95%*, 12/1/07** 2,700
--------
15,423
--------
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INDIANA (4.5%):
4,000 Indiana Bond Bank, 5.25%,
7/10/95 $ 4,005
1,150 Indianapolis, Indiana
Calderon, 4.95%*, 2/1/99** 1,150
1,995 Scottsburg, Indiana, 5.20%*,
10/1/09** 1,995
1,020 Syracuse, Economic
Development Revenue,
4.80%*, 12/1/05** 1,020
1,220 Wakarusa, Economic
Development Revenue,
4.80%*, 7/1/03** 1,220
--------
9,390
--------
IOWA (5.0%):
4,325 City of Urbandale, 4.25%*,
10/1/15** 4,325
6,000 Iowa Schools, 4.25%, 7/17/95 6,008
--------
10,333
--------
KANSAS (1.8%):
2,300 Fairway, Kansas, 4.25%*,
11/1/14** 2,300
1,500 Wamego Pollution Control
Revenue, 4.10%*, 11/1/14** 1,500
--------
3,800
--------
KENTUCKY (2.4%):
2,475 Boone County, 5.20%*,
12/1/09** 2,475
2,465 Covington, Kentucky, 4.70%*,
4/1/05** 2,465
--------
4,940
--------
MICHIGAN (1.3%):
1,725 Michigan State Strategic,
4.75%*, 4/1/06** 1,725
1,000 Oakland County Economic,
5.80%, 9/1/95 1,012
--------
2,737
--------
MINNESOTA (1.6%):
3,340 St. Cloud, Housing Webway,
4.95%*, 11/1/05** 3,340
--------
MISSOURI (5.3%):
3,600 Kansas City, J.C. Nichols
Project, 4.25%*, 5/1/15** 3,600
2,860 St. Charles County, Cedar
Ridge, 4.75%*, 10/1/07** 2,860
4,600 St. Louis Industrial
Development, Multi Family
Housing Revenue Bond,
Series 86, 5.05%*,
2/1/07** 4,600
--------
11,060
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
26
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
TAX-FREE MONEY MARKET FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
NEBRASKA (2.4%):
4,000 Nebraska Investment Finance
Authority, 4.75%,
7/15/95** $ 4,000
915 Nebraska Investment Finance
Authority, 5.00%, 7/1/15** 915
--------
4,915
--------
NEVADA (1.4%):
1,300 Director State Nevada H2W
Part, 4.95%*, 8/1/14** 1,300
1,600 Director State Nevada No.
Sail, 4.95%*, 8/1/01** 1,600
--------
2,900
--------
NEW YORK (0.8%):
1,700 New York, New York, 5.00%*,
2/1/20** 1,700
--------
NORTH CAROLINA (4.0%):
8,240 Person County, Pollution
Control Revenue, Carolina
Power & Light Project,
4.80%*, 11/1/19** 8,240
--------
OHIO (18.1%):
440 Akron Bath Copley, Ohio
Township Hospital, 4.80%*,
5/1/13** 440
2,000 Berea, Ohio, 4.50%, 10/25/95 2,002
1,500 Cuyahoga County, 4.80%*,
12/1/12** 1,500
2,850 Dublin School District,
5.57%, 12/20/95 2,854
885 Fairfield County, 4.88%,
10/26/95 887
2,550 Fayetteville Perry, Ohio,
4.68%, 4/12/96 2,554
2,500 Franklin County Hospital,
4.70%*, 6/1/16** 2,500
4,380 Franklin County, Wesley
Glen, 4.82%*, 4/1/13** 4,380
2,680 Gallia County, Industrial
Development Revenue,
Scenic Hills Nursing
Center, 4.40%*, 12/15/10** 2,680
3,400 Greene County, Ohio Apple
Valley, 4.30%*, 8/1/09** 3,400
3,000 Highland Heights, 5.65%,
12/28/95 3,008
3,800 Kings School District,
5.45%, 6/21/95 3,803
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
4,000 Lakewood, Ohio, 3.72%,
5/11/95 $ 4,000
2,495 Student Loan Funding Corp.,
Cincinnati, Ohio, Student
Loan Revenue, 4.60%*,
12/29/98** 2,495
790 Summit County, Ohio, Texler
Project, 4.40%, 5/1/09** 790
--------
37,293
--------
PENNSYLVANIA (2.7%):
3,100 Sayre, Health Care Facility,
4.75%*, 12/1/20** 3,100
2,450 Williamsport, Area School
District, 3.89%, 6/30/95 2,451
--------
5,551
--------
SOUTH CAROLINA (1.2%):
2,500 Job Economic Development
Revenue, 4.95%*, 12/1/99** 2,500
--------
TENNESSEE (3.0%):
6,200 Hawkins County, Kingston,
5.00%*, 8/1/09** 6,200
--------
TEXAS (3.6%):
4,140 Harris County, 4.95%*,
10/1/16** 4,140
2,240 Texas A&M University, 8.50%,
7/1/95 2,255
950 Texas A&M University, 9.00%,
7/1/95 957
--------
7,352
--------
UTAH (0.3%):
500 Intermountain Power Agency,
9.90%, 7/1/95 517
--------
VIRGINIA (1.5%):
3,000 State Housing Development,
3.90%, 5/10/95 3,000
--------
WASHINGTON (0.7%):
500 Everett Water & Sewer,
8.20%, 7/1/95 503
1,000 Pierce County, 4.55%,
11/1/04** 1,000
--------
1,503
--------
WISCONSIN (8.6%):
1,200 Appleton, Pensor, 4.95%*,
8/1/01** 1,200
1,525 Berlin Wenninger, 4.95%*,
4/1/07** 1,525
4,000 Evansville, Wisconsin,
4.95%*, 12/1/08** 4,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
27
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
TAX-FREE MONEY MARKET FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
4,000 Kenosha Metalmen, 4.95%*,
9/1/14** $ 4,000
1,000 Milwaukee, Wisconsin, 5.25%,
9/1/95 1,003
1,400 Oshkosh, Schloesser, 4.95%*,
3/1/02** 1,400
2,800 Plymouth, Industrial
Development Revenue,
4.95%*, 8/1/04** 2,800
1,800 Prairie Du Chien, Wisconsin,
4.80%*, 6/1/02** 1,800
--------
17,728
- ----------------------------------------------------------
TOTAL MUNICIPAL BONDS 203,712
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (2.1%)
4,318 Federated #15 Tax-Free Money
Market Fund 4,318
1 Fidelity Ohio Tax Free Fund 1
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 4,319
- ----------------------------------------------------------
TOTAL (COST $208,031)(B) $208,031
- ---------------------------------------------------------
</TABLE>
- ------------
(a) Percentages indicated are based on net assets of $206,606.
(b) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities collateralized by bank letters of credit or other
bank credit 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 Portfolio Investments is the rate in
effect at April 30, 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 ON PAGES 73 TO 78.
28
<PAGE>
Schedule of Portfolio Investments
THE VICTORY FUNDS April 30, 1995
NEW YORK TAX-FREE PORTFOLIO (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (94.5%)
250 Metropolitan Transportation
Authority, New York,
Revenue Bond, Series I,
AMBAC, 7.00%, 7/1/09 $ 282
1,200 Metropolitan Transportation
Authority, New York,
Service Contract, Refunding
Revenue Bond, Series K,
AMBAC, 7.50%, 7/1/17 1,318
250 Nassau County, New York,
Industrial Development
Agency, Civic Facilities
Revenue Bond, Hofstra
University Project, AMBAC,
6.75%, 8/01/11 263
700 New York City, New York, City
Housing Development,
Refunding Revenue Bond,
Multi-Unit Mortgage, Series
A, FHA, 7.30%, 6/1/10 741
335 New York City, New York, City
Housing Development,
Revenue Bond, Series 1,
MBIA, 7.38%, 4/1/17 352
675 New York City, New York, City
Housing Development,
Refunding Revenue Bond,
Multi-Unit Mortgage, Series
A, FHA, 7.35%, 6/1/19 717
200 New York City, New York,
Industrial Development
Agency, Civic Facilities
Revenue Bonds, USTA
National Tennis Center,
6.38%, 11/15/14 205
220 New York City, New York, City
Transportation Authority,
Revenue Bond, Livingston
Plaza Project, FSA, 7.50%,
1/1/20 247
680 New York City, New York,
Cultural Resources, Revenue
Bond, AMBAC, 6.63%, 1/1/11 711
300 New York City, New York,
General Obligation Bond,
Series B, FSA, 7.00%,
10/1/18 312
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
$ 350 New York City, New York,
General Obligation Bond,
Series C, FGIC, 7.00%,
2/1/12 $ 360
750 New York City, New York,
Municipal Water Finance
Authority, Water & Sewer
System Revenue Bonds,
Series A, FGIC, 6.75%,
6/15/16 780
700 New York State Dormitory
Authority Revenue Bonds,
City University, Series 2,
MBIA 6.75%, 7/01/24 738
750 New York State Dormitory
Authority, Revenue Bonds,
Ithaca College, MBIA,
6.50%, 7/1/10 782
400 New York State Dormitory
Authority, Revenue Bonds,
State University
Educational System, Series
B, AMBAC, 6.00%, 5/15/17 395
225 New York State Dormitory
Authority, Revenue Bond,
Judicial Facilities Leases,
Series B, MBIA, 7.00%,
4/15/16 239
370 New York State General
Obligation Bonds, AMBAC,
6.75%, 8/1/18 392
325 New York State General
Obligation Bonds, AMBAC,
6.75%, 8/1/19 343
500 New York State Medical Care
Facilities Finance Agency,
Unrefunded/Revenue Bond,
MBIA, 7.38%, 8/15/19 543
200 New York State Medical Care
Facilities Finance Agency,
Montefiore Medical Center,
AMBAC, 5.75%, 2/15/25 188
815 New York State Medical Care
Facilities Finance Agency,
Refunding Revenue Bond,
North Shore University
Hospital, MBIA, 7.20%,
11/1/20 879
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
29
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY FUNDS April 30, 1995
NEW YORK TAX-FREE PORTFOLIO (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
550 New York State Medical Care
Facilities Finance Agency,
Revenue Bond, Series A,
BIG, 7.10%, 2/15/27 $ 575
340 New York State Medical Care
Facilities Finance Agency,
Revenue Bond, St. Luke's,
Series B, MBIA, 7.45%,
2/15/29 382
550 New York State TWY Authority
General Revenue Bonds,
Series C, FGIC, 6.00%,
1/01/25 539
1,000 New York State Urban
Development Correctional
Facilities, Revenue Bond,
Series D, AMBAC, 7.50%,
1/1/12 1,088
400 New York State Urban
Development Correctional
Facilities, Series 1, FSA,
7.50%, 1/1/20 449
900 Triborough Bridge & Tunnel
Authority, Revenue Bond,
Series T, MBIA, 7.00%,
1/1/20 1,002
1,000 Triborough Bridge & Tunnel
Authority, Special
Obligation Refunding
Revenue Bond, Series B,
AMBAC, 6.88%, 1/1/15 1,061
- ---------------------------------------------------------
TOTAL MUNICIPAL BONDS $15,883
- ---------------------------------------------------------
- ---------------------------------------------------------
INVESTMENT COMPANIES (3.1%)
527 Municipal Fund for New York $ 527
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 527
- ---------------------------------------------------------
TOTAL (COST $15,485)(b) $16,410
- ---------------------------------------------------------
</TABLE>
- ------------
(a) Percentages indicated are based on net assets of $16,808.
(b) 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 $ 925
Unrealized depreciation
-------
Net unrealized appreciation $ 925
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
30
<PAGE>
Schedule of Portfolio Investments
THE VICTORY FUNDS April 30, 1995
FUND FOR INCOME (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
U.S. TREASURY OBLIGATION (1.2%)
U.S. TREASURY STRIP
2,000 zero%, 8/15/20 $ 296
- ---------------------------------------------------------
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (40.3%)
1,084 Bear Stearns Mortgage Capital
Corp., Series 1991-A/B1,
9.40%, 6/25/21 1,084
2,220 Bear Stearns Secured
Investors Trust, Series
1991-2/H, 7.50%, 9/20/20 2,151
104 Drexel, Burnham & Lambert
Trust, Series U/1, 6.30%,
8/1/17 107
1,000 General Electric Capital
Mortgage, Series 93-4f,
7.00%, 3/25/08 896
1,985 Housing Securities, Inc.,
Series 1993-B/B4M, 7.25%,
4/25/08 1,878
1,000 Kidder, Peabody Acceptance
Corp., Series 1993-C1/A3,
6.80%, 9/1/06 927
153 Merrill Lynch Trust, Series
27/D, 8.90%, 10/20/15 155
1,366 Prudential Home Mortgage,
Series 1992-42/M, 7.00%,
1/25/08 1,291
1,500 Resolution Trust Corp.,
Series 1992-2/B4, 8.20%,
11/25/21 1,476
- ---------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 9,965
- ---------------------------------------------------------
- ---------------------------------------------------------
U.S. GOVERNMENT AGENCIES (41.7%)
FEDERAL HOME LOAN MORTGAGE CORPORATION:
335 8.85%, 4/15/20 338
115 9.30%, 8/15/15 117
1,337 9.50%, 8/1/19-12/1/22 1,389
237 10.00%, 2/1/17-9/1/19 253
18 12.00%, 10/1/10-7/1/14 21
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION:
1,304 8.00%, 11/25/20 $ 1,221
1,683 8.50%, 8/1/24-1/13/25 1,712
25 9.50%, 1/1/19 28
154 10.00%, 5/1/13-2/1/18 172
10 10.50%, 1/1/18 11
55 12.00%, 8/1/13-4/1/15 61
36 13.00%, 12/1/12 41
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION:
2,272 9.50%, 8/15/17-10/15/19 2,390
2,115 10.00%, 3/15/16-6/15/21 2,289
97 10.25%, 3/15/19-6/15/19 103
82 10.50%, 2/15/16 90
66 11.00%, 9/20/14 74
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 10,310
- ---------------------------------------------------------
- ---------------------------------------------------------
REAL ESTATE MORTGAGE INVESTMENT
CONDUITS (12.6%)
1,000 Federal National Mortgage
Association, Series 1991-
13/C, 8.25%, 3/25/04 1,017
76 Federal National Mortgage
Association, Series G-18/6,
8.75%, 7/25/01 76
1,920 Federal National Mortgage
Association, Series
1988-4/Z, 9.25%, 3/25/18 2,014
- ---------------------------------------------------------
TOTAL REAL ESTATE MORTGAGE INVESTMENT
CONDUITS 3,107
- ---------------------------------------------------------
- ---------------------------------------------------------
REPURCHASE AGREEMENT (4.1%)
1,003 Donaldson, Lufkin & Jenrette
Securities Corp., 5.93%,
dated 4/28/95, due 5/1/95
(Collateralized by various
U.S. Treasury securities) 1,003
- ---------------------------------------------------------
TOTAL REPURCHASE AGREEMENT 1,003
- ---------------------------------------------------------
TOTAL (COST $24,172)(B) $ 24,681
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $24,713.
(b) 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 $ 842
Unrealized depreciation (333)
--------
Net unrealized appreciation $ 509
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
31
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
LIMITED TERM INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
ASSET BACKED SECURITIES (1.8%)
1,000 American Express Co., 6.05%,
7/15/97 $ 978
1,000 Capital Auto Receivables
Trust, 5.35%, 2/15/98 989
955 Capital Auto Receivables
Trust, 4.90%, 2/17/98 952
201 GMAC 1993 A Grantor Trust,
4.15%, 3/15/98 198
- ----------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 3,117
- ----------------------------------------------------------
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (8.6%)
FEDERAL HOME LOAN MORTGAGE CORP.:
1,540 7.00%, 7/15/98 1,535
2,000 5.50%, 10/15/02 1,933
2,000 5.50%, 11/15/03 1,924
482 8.40%, 1/15/05 487
937 6.00%, 2/15/13 933
258 8.00%, 1/15/18 258
1,300 8.50%, 9/15/19 1,316
FEDERAL NATIONAL MORTGAGE ASSOC.:
2,000 6.00%, 10/25/03 1,965
1,000 8.00%, 3/25/04 1,007
1,522 5.75%, 6/25/06 1,471
849 7.00%, 2/25/18 844
883 7.50%, 7/25/18 879
--------
14,552
--------
- ---------------------------------------------------------
CORPORATE BONDS (18.5%)
AUTOMOTIVE (0.3%):
500 Ford Motor, 7.88%, 10/15/96 506
--------
BANKING & FINANCIAL SERVICES (0.3%):
500 Bankers Trust, 7.25%, 11/1/96 502
--------
BROKERAGE SERVICES (2.0%):
2,000 Lehman Brothers, 5.75%,
11/15/98 1,858
1,500 Lehman Brothers Holding,
5.50%, 6/15/96 1,474
--------
3,332
--------
BUSINESS EQUIPMENT (1.3%):
2,175 International Business
Machines Corp., 6.38%,
11/1/97 2,145
--------
CHEMICALS (0.6%):
1,000 Dow Capital, 5.75%, 9/15/97 972
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
CONSUMER GOODS & SERVICES (0.6%):
1,000 PepsiCo, Inc., 5.63%, 7/1/95 $ 1,000
--------
FINANCIAL SERVICES (6.5%):
2,000 American General Corp.,
6.88%, 7/1/99 1,957
1,000 Associates Corp.,6.88%,
1/15/97 1,000
1,500 Associates Corp.,7.25%,
9/1/99 1,492
3,000 Ford Motor Credit Corp.,
7.13%, 12/1/97 3,004
1,000 ITT Finance, 7.38%, 10/15/95 1,005
2,000 Norwest Corp., 7.75%,
12/31/96 2,030
500 Norwest Financial, 7.10%,
11/15/96 502
--------
10,990
--------
FOOD PRODUCTS (0.4%):
775 H.J. Heinz Co., 5.50%,
9/15/97 756
--------
GOVERNMENTS (FOREIGN) (0.6%):
1,000 Province of Ontario Global
Bonds, 5.70%, 10/1/97 973
--------
INDUSTRIAL GOODS & SERVICES (1.2%):
2,000 Burlington Resources, 7.15%,
5/1/99 1,985
--------
INSURANCE (2.1%):
500 International Lease Finance
Corp., 6.38%, 11/1/96 496
2,000 International Lease Finance
Corp., 8.35%, 10/1/98 2,063
1,000 Transamerica Finance, 5.40%,
9/1/95 997
--------
3,556
--------
POLLUTION CONTROL SERVICES (1.5%):
500 Waste Management, 6.38%,
7/1/97 493
2,000 WMX Technologies, 7.13%,
3/22/97 2,005
--------
2,498
--------
UTILITIES -- ELECTRIC & GAS (1.1%):
1,000 Northern Illinois Gas, 5.50%,
2/1/97 976
1,000 Northern States Power, 5.50%,
2/1/99 944
--------
1,920
- ----------------------------------------------------------
TOTAL CORPORATE BONDS 31,135
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 73 TO 78.
32
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
LIMITED TERM INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
U.S. GOVERNMENT AGENCIES (1.7%)
FEDERAL NATIONAL MORTGAGE ASSOC.:
3,000 5.23%, 11/25/98 $ 2,826
- ----------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 2,826
- ----------------------------------------------------------
- ---------------------------------------------------------
U.S. TREASURY NOTES (64.8%)
4,000 5.50%, 4/30/96 3,968
1,000 7.63%, 5/31/96 1,013
8,000 6.50%, 9/30/96 8,002
9,000 7.50%, 12/31/96 9,136
18,000 7.50%, 1/31/97 18,273
1,000 6.75%, 2/28/97 1,003
16,000 6.88%, 2/28/97 16,078
10,000 6.63%, 3/31/97 10,005
7,000 6.50%, 8/15/97 6,978
3,000 7.38%, 11/15/97 3,046
1,500 6.00%, 12/31/97 1,475
4,500 5.13%, 4/30/98 4,306
6,500 8.25%, 7/15/98 6,774
7,000 5.25%, 7/31/98 6,689
12,000 7.13%, 2/29/00 12,110
- ----------------------------------------------------------
TOTAL U.S. TREASURY NOTES 108,856
- ----------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
INVESTMENT COMPANIES (3.1%)
5,183 Shearson U.S. Treasury Fund $ 5,183
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 5,183
- ----------------------------------------------------------
TOTAL (COST $166,188)(B) $165,669
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $168,112.
(b) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 1,161
Unrealized depreciation (1,681)
--------
Net unrealized depreciation $ (520)
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 73 TO 78.
33
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
GOVERNMENT MORTGAGE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATIONS (10.6%)
FEDERAL HOME LOAN MORTGAGE CORP.:
5,000 5.50%, 10/15/02 $ 4,832
500 5.00%, 8/15/11 492
FEDERAL NATIONAL MORTGAGE ASSOC.:
10,000 7.50%, 8/25/22 9,809
- ---------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS 15,133
- ---------------------------------------------------------
- ---------------------------------------------------------
U.S. GOVERNMENT
AGENCIES (86.8%)
FEDERAL HOME LOAN MORTGAGE CORP.:
5,927 8.00%, 1/1/00 5,922
209 9.50%, 8/1/21 218
3,128 5.99%, 12/1/23 3,136
19,787 7.50%, 4/1/24 19,351
FEDERAL NATIONAL MORTGAGE ASSOC.:
1,395 8.00%, 5/1/17 1,394
2,322 9.50%, 6/1/22 2,420
9,768 6.50%, 4/1/24 9,050
3,888 8.50%, 8/1/24 3,952
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
105 8.50%, 6/15/16 107
252 8.50%, 7/15/16 257
109 9.00%, 9/15/16 113
181 8.50%, 10/15/16 185
108 9.50%, 11/15/16 114
726 8.50%, 1/15/17 740
578 8.50%, 2/15/17 589
233 8.50%, 4/15/17 238
200 8.50%, 5/15/17 204
473 8.50%, 6/15/17 483
2,093 9.50%, 11/15/17 2,195
113 10.00%, 1/15/18 121
517 9.00%, 11/15/18 536
423 9.50%, 1/15/19 444
317 10.50%, 8/15/19 344
469 8.50%, 12/15/19 478
45 8.50%, 2/15/20 46
1,426 9.50%, 5/15/20 1,496
3,278 9.75%, 1/15/21 3,504
1,551 9.00%, 3/15/21 1,606
121 8.50%, 5/15/21 124
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
1,185 9.00%, 5/15/21 $ 1,227
311 8.00%, 6/15/21 311
1,332 9.00%, 6/15/21 1,379
2,307 9.50%, 6/15/21 2,422
13,249 8.00%, 5/15/22 13,257
4,043 8.00%, 10/15/22 4,046
3,088 9.00%, 2/15/23 3,202
2,870 8.50%, 3/15/23 2,928
803 7.50%, 6/15/23 786
4,591 7.50%, 7/15/23 4,490
1,527 8.00%, 8/15/23 1,528
4,887 7.00%, 9/15/23 4,636
2,833 7.00%, 10/15/23 2,687
4,619 7.00%, 12/15/23 4,384
8,295 7.50%, 1/15/24 8,106
3,933 7.50%, 2/15/24 3,842
4,048 8.50%, 10/15/24 4,134
1,714 8.75%, 8/15/25 1,739
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 124,471
- ---------------------------------------------------------
- ---------------------------------------------
U.S. TREASURY NOTES (1.5%)
1,000 5.50%, 4/30/96 992
1,100 8.75%, 8/15/00 1,189
- ---------------------------------------------------------
TOTAL U.S. TREASURY NOTES 2,181
- ---------------------------------------------------------
- ---------------------------------------------
INVESTMENT COMPANIES (0.8%)
1,177 Shearson U.S. Treasury Fund 1,177
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,177
- ---------------------------------------------------------
TOTAL (COST $147,319)(B) $142,962
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $143,435.
(b) 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 $41. Cost for federal income tax purposes differs from value
by net unrealized depreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 422
Unrealized depreciation (4,820)
--------
Net unrealized depreciation $ (4,398)
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
34
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
INTERMEDIATE INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
ASSET BACKED SECURITIES (0.7%)
CAPITAL AUTO RECEIVABLES TRUST
1,000 5.35%, 2/15/98 $ 989
- ---------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 989
- ---------------------------------------------------------
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (17.0%)
FEDERAL HOME LOAN MORTAGAGE CORP.
1,000 7.00%, 5/15/99 992
1,800 6.50%, 5/15/03 1,713
1,406 5.00%, 11/15/04 1,401
2,500 5.80%, 4/15/14 2,468
1,994 6.50%, 7/15/16 1,959
258 8.00%, 1/15/18 258
1,968 7.50%, 9/15/20 1,963
2,500 8.40%, 1/15/21 2,520
FEDERAL NATIONAL MORTGAGE ASSOC.
2,475 6.00%, 10/25/03 2,432
1,103 7.50%, 7/25/18 1,098
4,000 6.25%, 5/25/19 3,755
2,000 8.50%, 8/25/19 2,051
- ---------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 22,610
- ---------------------------------------------------------
- ---------------------------------------------------------
CORPORATE BONDS (39.1%)
APPLIANCES (0.8%):
1,000 Whirlpool Corp. Notes
9.50%, 6/15/00 1,089
--------
AUTOMOTIVE (2.8%):
1,000 Ford Motor Co.
9.00%, 9/15/01 1,076
500 Ford Motor Credit Co.
9.50%, 4/15/00 542
500 Ford Motor Holdings, Inc.
9.25%, 3/1/00 534
500 General Motors Corp.
9.75%, 5/15/99 514
1,000 General Motors Corp.
9.63%, 12/1/00 1,086
--------
3,752
--------
BANKING (0.4%):
500 Comerica, Inc.
10.13%, 6/1/98 537
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
BROKERAGE SERVICES (10.9%):
4,000 Bear Stearns Co.
9.38%, 6/1/01 $ 4,305
5,000 Lehman Brothers Holdings
5.75%, 11/15/98 4,643
2,500 Merrill Lynch & Co.
8.25%, 11/15/99 2,563
3,500 Salomon, Inc.
6.75%, 1/15/06 2,993
--------
14,504
--------
CHEMICALS (1.5%):
1,000 Dow Chemical
5.75%, 9/15/97 973
1,000 Monsanto Defined
8.13%, 12/15/06 1,032
--------
2,005
--------
FINANCIAL SERVICES (7.0%):
2,000 American Express
8.50%, 8/15/01 2,115
3,000 American General Corp.
7.70%, 10/15/99 3,034
1,000 Norwest Corp.
7.75%, 12/31/96 1,015
3,000 Transamerica Financial
8.75%, 10/1/99 3,138
--------
9,302
--------
FOOD PRODUCTS (0.7%):
1,000 Super Valu, Inc.
5.88%, 11/15/95 998
--------
GOVERNMENT AGENCY (0.4%):
500 Private Export Funding
9.00%, 1/31/96 508
--------
INDUSTRIAL GOODS & SERVICES (8.4%):
2,000 American Home Products
7.70%, 2/15/00 2,025
3,000 Amoco Canada
7.25%, 12/1/02 2,985
1,000 Grand Metropolitan Investment
Corp.
8.63%, 8/15/01 1,070
3,000 Service Corp. International
8.38%, 12/15/04 3,131
2,000 WMX Technologies Waste
Management
7.13%, 3/22/97 2,005
--------
11,216
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
35
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERMEDIATE INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INSURANCE (0.4%):
500 St. Paul Cos., Inc.
9.38%, 6/15/97 $ 526
--------
OIL & GAS EXPLORATION (1.2%):
500 British Petroleum America
10.15%, 3/15/96 514
1,000 Cheveron Corp. Amortization
Notes
8.11%, 12/1/04 1,044
--------
1,558
--------
PRINTING & PUBLISHING (1.6%):
1,000 Knight Ridder, Inc.
8.50%, 9/1/01 1,063
1,000 R.R. Donnelly & Sons Co.
9.13%, 12/1/00 1,095
--------
2,158
--------
RETAIL STORES (0.8%):
500 J.C. Penney, Inc.
9.05%, 3/1/01 538
500 Sears Roebuck & Co.
9.50%, 6/1/99 537
--------
1,075
--------
TELECOMMUNICATIONS (2.2%):
750 Communications Satellite
8.13%, 4/1/04 775
2,000 GTE Corp. Notes
9.10%, 6/1/03 2,143
--------
2,918
- ---------------------------------------------------------
TOTAL CORPORATE BONDS 52,146
- ---------------------------------------------------------
- ---------------------------------------------------------
U.S. GOVERNMENT AGENCIES (1.4%)
FEDERAL NATIONAL MORTAGE ASSOC.:
2,000 5.23%, 11/25/98 1,884
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 1,884
- ---------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
U.S. TREASURY NOTES (38.6%)
7,500 9.25%, 1/15/96 $ 7,651
3,000 9.38%, 4/15/96 3,087
2,000 5.50%, 4/30/96 1,984
5,000 7.38%, 5/15/96 5,049
6,500 6.88%, 4/30/97 6,534
2,000 5.63%, 1/31/98 1,945
5,000 7.25%, 2/15/98 5,068
7,000 7.00%, 4/15/99 7,050
2,000 7.50%, 10/31/99 2,048
1,000 6.38%, 1/15/00 980
8,000 7.13%, 2/29/00 8,073
2,000 6.88%, 3/31/00 1,997
- ---------------------------------------------------------
TOTAL U.S. TREASURY NOTES 51,466
- ---------------------------------------------------------
- ---------------------------------------------------------
INVESTMENT COMPANIES (1.3%)
1,783 Shearson U.S. Treasury Fund 1,783
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,783
- ---------------------------------------------------------
TOTAL (COST $133,485)(B) $130,878
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $133,225.
(b) 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 $ 885
Unrealized depreciation (3,492)
--------
Net unrealized depreciation $ (2,607)
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
36
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
INVESTMENT QUALITY BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
ASSET BACKED SECURITIES (1.6%)
CAPITAL AUTO RECEIVABLES ASSET TRUST
979 4.90%, 2/17/98 $ 976
RAILCAR TRUST, SERIES 92-1
459 7.75%, 6/1/04 465
- ------------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 1,441
- ------------------------------------------------------------
- ----------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (1.5%)
FEDERAL HOME LOAN MORTGAGE CORP.:
1,180 7.50%, 4/1/07 1,178
FEDERAL NATIONAL MORTGAGE ASSOC.:
67 7.00%, 3/25/18 67
155 7.25%, 6/25/18 154
- ------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATION 1,399
- ------------------------------------------------------------
- ----------------------------------------------
CORPORATE BONDS (28.4%)
AUTOMOTIVE (1.7%):
1,000 Ford Motor Co.
9.00%, 9/15/01 1,076
500 General Motors
9.13%, 7/15/95 535
----------
1,611
----------
BANKING (6.2%):
600 BankAmerica Corp.
9.63%, 2/13/01 657
1,500 Crestar Finance Corp.
8.75%, 11/15/04 1,591
500 First Bank System
8.00%, 7/2/04 514
1,020 First Union Corp.
9.45%, 6/15/99 1,095
800 SunTrust Banks, Inc.
7.38%, 7/1/02 799
1,000 Wells Fargo & Co.
8.75%, 5/1/02 1,061
----------
5,717
----------
BROKERAGE SERVICES (2.3%):
1,000 Morgan Stanley
8.88%, 10/15/01 1,056
1,280 Morgan Stanley
7.25%, 10/15/23 1,069
----------
2,125
----------
COMPUTER (0.6%):
510 International Business
Machines
9.00%, 5/1/98 510
----------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
CREDIT INSTITUTIONS -- PERSONAL (0.6%):
510 General Electric Credit
Corp.
8.75%, 11/26/96 $ 524
----------
FINANCIAL SERVICES (7.6%):
1,025 BHP Finance Ltd.
6.75%, 11/1/13 880
255 Ford Motor Credit Co.
9.40%, 11/16/95 259
1,000 General Motors Acceptance
Co.
6.28%*, 6/7/96 999
1,000 General Motors Acceptance
Co.
7.13%, 6/1/99 985
1,000 General Motors Acceptance
Co.
5.50%, 12/15/01 886
1,020 Merrill Lynch
8.25%, 11/15/99 1,046
2,000 Salomon Brothers
4.44%, 8/9/95 1,988
----------
7,043
----------
GOVERNMENTS (FOREIGN) (0.5%):
500 Republic of Iceland
6.13%, 2/1/04 449
----------
INDUSTRIAL GOODS & SERVICES (4.4%):
1,000 American Home Products
7.70%, 2/15/00 1,013
1,000 Georgia-Pacific
9.95%, 6/15/02 1,116
700 Philip Morris Co.
9.00%, 1/1/01 746
1,200 RJR Nabisco, Inc.
8.00%, 1/15/00 1,182
----------
4,057
----------
INSURANCE (1.0%):
1,100 Nationwide Mutual
Insurance Surplus
7.50%, 2/15/24 954
----------
OIL & GAS EXPLORATION (0.8%):
700 Atlantic Richfield Co.
9.00%, 4/1/21 765
----------
OIL & GAS TRANSMISSION (0.6%):
510 Shell Oil Co.
7.00%, 9/15/95 511
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
37
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INVESTMENT QUALITY BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TELECOMMUNICATIONS (2.1%):
510 GTE Hawaiian Telephone
Service
9.00%, 12/1/00 $ 525
510 MCI Communications
7.63%, 11/7/96 514
360 Northern Telecom Ltd.
8.25%, 6/13/96 366
510 Southwestern Bell Co.
8.30%, 6/1/96 518
----------
1,923
- ------------------------------------------------------------
TOTAL CORPORATE BONDS 26,189
- ------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (38.0%)
FEDERAL HOME LOAN MORTGAGE CORP.:
150 8.00%, 5/1/02 151
350 8.00%, 8/1/02 354
238 8.00%, 6/1/08 237
277 8.00%, 11/1/08 276
FEDERAL NATIONAL MORTGAGE ASSOC.:
994 8.00%, 1/1/23 993
1,562 7.50%, 3/1/24 1,529
1,500 9.00%, 5/1/25 1,549
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
2,815 6.50%, 2/15/09 2,705
1,597 9.00%, 2/15/17 1,654
1,513 8.50%, 9/15/17 1,544
891 9.00%, 6/15/18 923
1,667 9.00%, 10/15/19 1,727
2,738 9.00%, 12/15/19 2,836
1,742 9.00%, 1/15/20 1,809
1,128 9.00%, 2/15/20 1,168
740 8.50%, 11/15/21 756
2,657 7.50%, 8/15/22 2,600
1,646 8.50%, 8/15/22 1,681
1,228 8.50%, 2/15/23 1,253
1,464 7.00%, 10/15/23 1,389
1,378 7.50%, 10/15/23 1,345
4,794 7.50%, 1/15/24 4,683
1,962 7.50%, 5/15/24 1,916
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 35,078
- ------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BONDS (12.5%)
2,600 8.88%, 2/15/19 $ 3,001
3,000 8.00%, 11/15/21 3,188
2,900 7.13%, 2/15/23 2,798
1,500 7.50%, 11/15/24 1,520
1,000 7.63%, 2/15/25 1,035
- ------------------------------------------------------------
TOTAL U.S. TREASURY BONDS 11,542
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY NOTES (14.9%)
3,000 7.50%, 2/29/96 3,029
1,000 7.50%, 12/31/96 1,015
1,000 8.00%, 1/15/97 1,024
1,000 7.75%, 12/31/99 1,034
2,500 7.75%, 1/31/00 2,585
3,000 7.13%, 2/29/00 3,027
2,000 7.50%, 2/15/05 2,061
- ------------------------------------------------------------
TOTAL U.S. TREASURY NOTES 13,775
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (2.1%)
1,942 Shearson U.S. Treasury Fund 1,942
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,942
- ------------------------------------------------------------
TOTAL (COST $93,388) (B) $ 91,366
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $92,202.
(b) Represents costs 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 $ 646
Unrealized depreciation (2,668)
----------
Net unrealized depreciation $ (2,022)
==========
</TABLE>
* Corporate Bonds with floating rates are securities with yields that vary with
a designated market index or market rate. These securities are payable on the
date of demand. The rate reflected on the Schedule of Portfolio Investments
is the effective rate at April 30, 1995.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
38
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
OHIO MUNICIPAL BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (97.6%)
ALTERNATIVE MINIMUM TAX PAPER (11.1%):
2,500 Student Loan Funding Corp.,
Series A
5.50%, 12/1/01 $ 2,463
4,000 Student Loan Funding Corp.,
Series A
5.85%, 8/1/04 4,005
- ------------------------------------------------------------
TOTAL ALTERNATIVE MINIMUM TAX PAPER 6,468
- ------------------------------------------------------------
- ----------------------------------------------
GENERAL OBLIGATION BONDS (43.2%)
COUNTY, CITY, SPECIAL DISTRICT & SCHOOLS (39.7%):
1,500 Batavia, Ohio Local School
District
7.00%, 12/1/14 1,656
750 Batavia, Ohio Local School
District
6.30%, 12/1/22 769
500 Canton, Waterworks System
5.75%, 12/1/10 491
1,325 Clyde-Green Springs Village,
Ohio School District
6.10%, 12/1/19 1,302
500 Columbus, Ohio, Series B
6.10%, 1/1/03 531
1,500 Columbus, Ohio
6.20%, 1/1/04 1,604
1,385 Crawford County, Ohio,
AMBAC
6.75%, 12/1/19 1,477
1,000 Cuyahoga Falls, Ohio, MBIA
6.00%, 12/1/15 987
2,500 Franklin County, Ohio
Courthouse
6.38%, 12/1/01 2,724
1,000 Hilliard, Ohio School
District
6.15%, 12/1/06 1,035
2,500 Indian Valley, Ohio Local
School District
7.00%, 12/1/14 2,760
750 Kings, Ohio Local School
District
7.00%, 12/1/09 795
1,250 Lakeview, Ohio Local School
District
AMBAC
6.95%, 12/1/19 1,380
540 Lakewood, Ohio
5.40%, 12/1/05 540
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
600 Madison County, Ohio
7.00%, 12/1/19 $ 667
1,000 Munroe Falls, Ohio, Series A
AMBAC
6.95%, 12/1/14 1,103
500 Toledo, Ohio, AMBAC
6.10%, 12/1/14 501
1,820 Trumbull County, Ohio
5.75%, 12/1/03 1,892
880 Tuscarawas Valley, Ohio
Local
School District, AMBAC
6.00%, 12/1/19 863
----------
23,077
----------
STATE (3.5%):
2,000 Ohio State, Refunding &
Improvement
5.50%, 8/1/03 2,044
- ------------------------------------------------------------
TOTAL GENERAL OBLIGATION BONDS 25,121
- ------------------------------------------------------------
- ----------------------------------------------
REVENUE BONDS (43.3%)
HOSPITALS, NURSING HOMES & HEALTH CARE (17.7%):
2,250 Butler County, Ohio
Middletown Regional
Hospital, GFIC
6.75%, 11/15/10 2,411
1,000 Clermont County Hospital
Facility
6.00%, 9/1/19 977
1,720 Franklin County, Riverside
Hospital
7.25%, 5/15/20 1,864
1,000 Garfield Heights, Ohio
Marymount Hospital,
Refunding & Improvement
6.70%, 11/15/15 1,016
2,400 Lake County Hospital
Improvement Facilities
6.38%, 8/15/03 2,523
1,480 Lucas County, Ohio Hospital,
Series B
5.75%, 8/15/03 1,526
----------
10,317
----------
HOUSING (3.1%):
1,775 Ohio Cap Corp.
6.35%, 7/1/22 1,775
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
39
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
OHIO MUNICIPAL BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
PUBLIC FACILITIES (CONVENTION, SPORT) (5.3%):
2,000 Ohio State Building
Authority,
Adult Correctional
Facilities
6.00%, 10/1/07 $ 2,048
1,000 Ohio State Public
Facilities,
Higher Education
5.88%, 12/1/04 1,029
----------
3,077
----------
UTILITIES (SEWERS, TELEPHONE, ELECTRIC) (17.2%):
540 Cambridge, Ohio Water
System
5.50%, 12/1/08 526
1,935 Cleveland Public Power
Systems, MBIA
7.00%, 11/15/24 2,147
1,000 Cleveland Public Power
Systems, MBIA
6.00%, 11/15/02 1,051
1,750 Cleveland Regional Sewer
District
6.75%, 5/15/04 1,940
1,000 Cleveland, Ohio Waterworks
Series 1-92B
6.25%, 1/1/05 1,055
1,950 Columbus, Ohio Sewer
6.25%, 6/1/08 2,006
750 Columbus, Ohio Water
Systems
6.38%, 11/1/10 769
500 Southwest Regional Water,
MBIA
6.00%, 12/1/20 488
----------
9,982
----------
TOTAL REVENUE BONDS 25,151
- ------------------------------------------------------------
TOTAL MUNICIPAL BONDS 56,740
- ------------------------------------------------------------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (1.9%)
Dreyfus Ohio Money Market
1,131 Institutional Fund $ 1,131
- ------------------------------------------------------------
Total Investment Companies 1,131
- ------------------------------------------------------------
TOTAL (COST $57,596) (B) 57,871
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of 58,137.
(b) 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 $26. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation 1,006
Unrealized depreciation (757)
----------
Net unrealized appreciation $ 249
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
40
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATION (2.4%)
FEDERAL HOME LOAN MORTGAGE CORP.:
465,548 7.50%, 4/1/07 $ 465
FEDERAL NATIONAL MORTGAGE ASSOC.:
968,818 7.40%, 7/25/17 968
925,817 6.50%, 4/25/22 872
1,500,000 9.00%, 5/1/25 1,548
- ------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 3,853
- ------------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (53.7%)
AEROSPACE/DEFENSE (3.3%):
21,400 Boeing Co. 1,177
11,800 General Dynamics Corp. 547
20,300 Lockheed Martin Corp.(c) 1,173
33,650 Raytheon Co. 2,448
----------
5,345
----------
ALUMINUM (1.4%):
50,300 Aluminum Co. of America 2,257
----------
AUTOMOBILES (1.0%):
8,000 Chrysler Corp. 345
1,200 Fiat - ADR 24
45,000 Ford Motor Co. 1,215
----------
1,584
----------
BANKS (4.7%):
900 BBV - ADR 24
54,900 BankAmerica Corp. 2,718
28,200 Comerica, Inc. 811
13,800 CoreStates Financial Corp. 450
27,600 First Union Corp. 1,249
1,300 IMI - ADR 24
33,150 J.P. Morgan & Co., Inc. 2,176
----------
7,452
----------
BEVERAGES (1.3%):
33,900 Anheuser Busch Co., Inc. 1,971
1,300 Coca-Cola Femsa - ADR 26
----------
1,997
----------
CHEMICALS (1.2%):
10,100 Dow Chemical Co. 702
8,300 Eastman Chemical 471
1,200 Imperial Chemical - ADR 58
18,200 Lubrizol Corp. 635
3,200 Montedison - ADR(c) 24
1,000 Norsk Hydro - ADR 40
----------
1,930
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
COMPUTERS & PERIPHERALS (0.9%):
13,600 Cisco Systems(c) $ 542
13,400 Hewlett Packard Co. 886
----------
1,428
----------
CONGLOMERATES (0.0%):
3,000 Hanson PLC, ADR 57
----------
CONTAINERS (0.4%):
28,600 Newell Co. 676
----------
COSMETICS & RELATED (0.6%):
15,400 Avon Products 974
----------
ELECTRICAL EQUIPMENT (1.8%):
13,100 Emerson Electric Co. 881
34,400 General Electric Co. 1,926
900 Hitachi - ADR 92
----------
2,899
----------
ELECTRONIC COMPUTING EQUIPMENT (0.7%)
26,900 Compaq Computer Corp.(c) 1,022
----------
ENTERTAINMENT (0.1%)
450 Matsushita Electric - ADR 76
1,500 Sony - ADR 76
----------
152
----------
FINANCIAL SERVICES (2.2%):
26,400 American Express Co. 917
15,300 Federal National Mortgage
Assoc. 1,350
27,300 Household International,
Inc. 1,280
----------
3,547
----------
FOOD DISTRIBUTORS (0.3%):
16,500 Supervalu, Inc. 435
----------
FOOD PROCESSING & PACKAGING (0.2%):
10,000 Sara Lee Corp. 279
----------
FOREST PRODUCTS (2.8%):
20,300 Georgia Pacific Corp. 1,611
25,000 International Paper Co. 1,925
19,700 Union Camp Corp. 987
----------
4,523
----------
HEAVY MACHINERY (0.5%):
9,000 Deere & Co. 738
----------
HOSPITAL & NURSING EQUIPMENT (0.1%):
3,100 Johnson & Johnson, Inc. 202
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
41
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INSURANCE (1.3%):
25,100 Allstate $ 762
12,000 American General Corp. 396
9,200 Chubb Corp. 736
3,200 St. Paul Cos., Inc. 154
----------
2,048
----------
MANUFACTURING (0.9%):
24,700 Allied Signal, Inc. 979
12,300 Litton Industries, Inc.(c) 426
----------
1,405
----------
MEDICAL SUPPLIES (0.3%):
6,600 Medtronic, Inc. 491
----------
METALS (0.3%):
1,300 SKF Corp. - ADR(c) 27
17,100 USX U.S. Steel Group 522
----------
549
----------
OFFICE EQUIPMENT & SUPPLIES (0.3%):
1,000 Canon - ADR 83
9,700 Pitney Bowes, Inc. 360
----------
443
----------
OIL (7.0%):
12,000 Atlantic Richfield Co. 1,374
700 British Petroleum Co., PLC,
ADR 60
49,800 Chevron Corp. 2,359
15,000 Exxon Corp. 1,044
28,700 Mobil Corp. 2,723
1,400 Repsol - ADR 45
400 Royal Dutch Petroleum - ADR 50
49,500 Texaco, Inc. 3,385
1,000 YPF S.A. - ADR(c) 20
----------
11,060
----------
OIL & GAS EXPLORATION (2.5%):
52,600 Enron Corp. 1,788
60,200 Phillips Petroleum Co. 2,107
----------
3,895
----------
OILFIELD EQUIPMENT & SERVICES (0.7%):
46,500 Baker Hughes, Inc. 1,046
----------
PAINT, VARNISHES & ENAMELS (0.2%):
7,700 Sherwin Williams Co. 274
----------
PAPER (0.0%):
800 Fletcher Challange - ADR 22
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
PHARMACEUTICALS (3.4%):
49,000 Abbott Laboratories $ 1,929
11,400 American Home Products Corp. 879
13,600 Merck & Co., Inc. 583
11,900 Pfizer, Inc. 1,031
12,100 Schering-Plough 912
1,400 SmithKline Beecham 54
----------
5,388
----------
PUBLISHING (0.2%):
3,800 Dun & Bradstreet Corp. 198
2,500 News Corp. - ADR(c) 49
----------
247
----------
RETAIL (1.7%):
9,700 Dayton Hudson Corp. 651
21,900 Pep Boys-Manny, Moe & Jack 564
14,500 Sears & Roebuck Co. 787
7,500 Wal Mart Stores, Inc. 178
10,900 Walgreen Co. 512
----------
2,692
----------
SEMICONDUCTORS (0.8%):
11,850 Intel Corp. 1,213
600 Kyocera - ADR 94
----------
1,307
----------
SHOES, LEATHER GOODS & CLOTHING (0.1%):
4,400 Reebok International Ltd. 138
----------
SOAPS & CLEANING AGENTS (0.1%):
1,300 Procter & Gamble Co. 91
----------
SOFTWARE & COMPUTER SERVICES (1.1%):
13,650 Microsoft Corp.(c) 1,118
32,000 Novell, Inc.(c) 696
----------
1,814
----------
STEEL (0.1%):
2,100 British Steel - ADR 57
800 Broken Hill Proprietary -
ADR 46
2,300 Worthington Industries, Inc. 43
----------
146
TELECOMMUNICATIONS (0.3%):
26,800 Comsat Corp. 536
----------
TOBACCO & TOBACCO PRODUCTS (0.8%):
4,000 B.A.T. Industries - ADR 60
16,500 Philip Morris Cos., Inc. 1,118
3,900 UST, Inc. 110
----------
1,288
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
42
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TOOLS & HARDWARE MANUFACTURING (0.3%):
11,100 Stanley Works $ 440
----------
TRANSPORTATION (0.0%):
900 British Airways -ADR 58
3,000 TMM - ADR 20
----------
78
----------
UTILITIES - ELECTRIC & GAS (3.3%):
64,900 Consolidated Edison Co. NY,
Inc. 1,801
20,300 Duquesne Light Co. 685
83,300 Texas Utilities Co. 2,718
----------
5,204
----------
UTILITIES - TELECOMMUNICATIONS (4.5%):
68,600 A T & T Corp. 3,481
900 British Telecom - ADR 56
60,500 GTE Corp. 2,065
1,000 Hong Kong Telecom - ADR 20
9,000 MCI Telecommunications
Corp. 196
31,000 Nynex Corp. 1,267
1,000 Telefonica De Espana -
ADR(c) 37
1,000 Telephones De Mexico - ADR 30
700 Telephonos De Chile - ADR 48
----------
7,200
- ------------------------------------------------------------
TOTAL COMMON STOCKS 85,299
- ------------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS - FOREIGN (0.7%)
BRITAIN (0.0%):
PUBLISHING (0.0%):
2,200 Reed Elsevier International 28
----------
FOOD MANUFACTURING (0.0%):
5,000 United Biscuits 28
- ------------------------------------------------------------
TOTAL BRITAIN 56
- ------------------------------------------------------------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FRANCE (0.1%):
AUTOMOBILES (0.0%):
200 PSA Peugeot Citroen $ 29
----------
BANKS (0.0%):
500 Cie Financiere De Paribas-A 30
----------
BUILDING MATERIALS (0.0%):
250 Compagnie De Saint Gobain 32
----------
OIL & GAS PRODUCTION (0.0%):
400 Elf Aquitaine 32
----------
TELECOMMUNICATIONS (0.0%):
300 Alcatel-Alsthom 28
----------
UTILITIES - WATER (0.0%):
300 Cie Generale Des Eaux 32
- ------------------------------------------------------------
TOTAL FRANCE 183
- ------------------------------------------------------------
GERMANY (0.1%):
AUTOMOBILES (0.0%):
90 Volkswagen 25
----------
CHEMICALS (0.0%):
100 Bayer 25
----------
MACHINERY & ENGINEERING (0.0%):
100 Mannesmann 27
----------
MANUFACTURING (0.0%):
50 Siemens(c) 25
----------
UTILITIES - ELECTRIC (0.0%):
70 Veba 26
- ------------------------------------------------------------
TOTAL GERMANY 128
- ------------------------------------------------------------
HOLLAND (0.1%):
BANKING (0.0%):
700 ABN/Amro Holding 27
----------
CHEMICALS (0.0%):
200 Akzo Nobel NV 23
----------
TELECOMMUNICATIONS (0.0%):
700 Koninklijke PTT NED NV 25
- ------------------------------------------------------------
TOTAL HOLLAND 75
- ------------------------------------------------------------
HONG KONG (0.0%):
BROKERAGE (0.0%):
20,000 Peregrine Inv 21
----------
REAL ESTATE (0.0%):
5,000 Cheung Kong 21
- ------------------------------------------------------------
TOTAL HONG KONG 42
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
43
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
JAPAN (0.3%):
AUTOMOBILES (0.0%):
2,000 Nippon Denso Co., Ltd. $ 40
----------
BANKS (0.1%):
2,000 Mitsubishi Bank 49
2,000 Sumitomo Bank 43
----------
92
----------
CHEMICALS (0.0%):
6,000 Mitsubishi Chemical, Inc. 35
5,000 Toray Industries, Inc.(c) 35
----------
70
----------
CONSTRUCTION (0.0%):
4,000 Kajima Corp. 40
----------
HOUSEHOLD PRODUCTS (0.0%):
3,000 Kao Corp. 37
----------
PAPER (0.0%):
3,000 New Oji Paper Co., Ltd. 34
----------
PHARMACEUTICALS (0.0%):
1,000 Sankyo Co., Ltd. 24
----------
RETAIL (0.1%):
1,000 Ito Yokado Co. 54
2,000 Marui Co., Ltd. 31
----------
85
----------
RUBBER & RUBBER PRODUCTS (0.0%):
2,000 Bridgestone 32
----------
UTILITIES - ELECTRIC (0.0%):
1,100 Tokyo Electric Power 35
----------
UTILITIES - WATER (0.0%):
1,000 Kurita Water Ind. 24
- ------------------------------------------------------------
TOTAL JAPAN 513
- ------------------------------------------------------------
SWITZERLAND (0.1%):
ENGINEERING (0.0%):
25 Brown Boveri Series A 25
----------
FOOD MANUFACTURING (0.0%):
25 Nestle SA Registered 24
----------
PHARMACEUTICALS (0.0%):
5 Roche Genussshein 30
- ------------------------------------------------------------
TOTAL SWITZERLAND 79
- ------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS 1,076
- ------------------------------------------------------------
- ----------------------------------------------
CONVERTIBLE PREFERRED STOCKS (0.2%)
AUTOMOTIVE (0.2%):
4300 Ford Motor Co. 379
- ------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS 379
- ------------------------------------------------------------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
CORPORATE BONDS (11.1%)
BANKING (3.1%):
300,000 BankAmerica Corp., 9.63%,
2/13/01 $ 328
800,000 Crestar Finance Corp.,
8.75%,
11/15/04 849
1,000,000 First Bank System, 8.00%,
7/2/04 1,027
1,200,000 First Union Corp., 9.45%,
8/15/01 1,329
500,000 NationsBank Corp., 5.38%,
12/1/95 497
300,000 SunTrust Banks Inc., 7.38%,
7/1/02 300
500,000 Wells Fargo & Co., 8.75%,
5/1/02 531
----------
4,861
----------
BROKERAGE SERVICES (0.5%):
750,000 Morgan Stanley, 8.88%,
10/15/01 792
----------
COMPUTER (0.2%):
300,000 International Business
Machines, 9.00%, 5/1/98 300
----------
FINANCIAL SERVICES (2.9%):
1,000,000 Associates, 7.50%, 10/15/96 1,010
800,000 BHP Finance Ltd., 6.75%,
11/1/13 687
500,000 General Motors Acceptance
Corp., 5.50%, 12/15/01 443
1,000,000 Merrill Lynch Corp., 8.25%,
11/15/99 1,025
500,000 Merrill Lynch Corp., 4.75%,
6/24/96 488
1,000,000 Morgan Stanley, 7.25%,
10/15/23 835
200,000 U.S. West Capital Funding,
Inc., 8.00%, 10/15/96 203
----------
4,691
----------
GOVERNMENTS (FOREIGN) (0.2%):
300,000 Republic of Iceland, 6.13%,
2/1/04 269
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
44
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INDUSTRIAL GOODS & SERVICES (3.0%):
500,000 American Home Products,
7.70%, 2/15/00 $ 506
1,500,000 General Motors, 9.13%,
7/15/01 1,605
500,000 Georgia-Pacific, 9.95%,
6/15/02 558
900,000 Philip Morris, 9.00%, 1/1/01 960
700,000 RJR Nabisco, Inc., 8.00%,
1/15/00 690
500,000 Waste Management, 7.88%,
8/15/96 506
----------
4,825
----------
INSURANCE (0.7%):
1,200,000 Nationwide Mutual Insurance
Surplus, 7.50%, 2/15/24 1,041
----------
OIL & GAS EXPLORATION (0.3%):
500,000 Atlantic Richfield Co.,
9.00%,
4/1/21 546
----------
TELECOMMUNICATIONS (0.2%):
300,000 Southwestern Bell Co.,
8.30%,
6/1/96 305
- ------------------------------------------------------------
TOTAL CORPORATE BONDS 17,630
- ------------------------------------------------------------
- ----------------------------------------------
FLOATING RATE NOTES (0.3%)
500,000 General Motors Acceptance
Corp., 5.66%*, 6/7/96 499
- ------------------------------------------------------------
TOTAL FLOATING RATE NOTES 499
- ------------------------------------------------------------
- ----------------------------------------------
MEDIUM TERM NOTES (0.9%)
1,500,000 Salomon Brothers, 4.44%,
8/9/95 1,491
- ------------------------------------------------------------
TOTAL MEDIUM TERM NOTES 1,491
- ------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (15.7%)
FEDERAL HOME LOAN MORTGAGE CORP.:
133,439 8.00%, 5/1/02 135
FEDERAL NATIONAL MORTGAGE ASSOC.:
2,250,200 6.00%, 11/1/08 2,116
1,837,646 7.50%, 3/1/24 1,798
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
1,802,848 6.50%, 2/15/09 $ 1,730
251,367 9.50%, 7/15/09 264
1,514,925 9.00%, 10/15/16 1,573
226,173 9.00%, 11/15/16 234
850,334 9.00%, 6/15/18 881
25,890 10.00%, 10/15/18 28
779,707 9.00%, 9/15/19 807
1,188,568 9.00%, 10/15/19 1,231
1,483,116 9.00%, 12/15/19 1,536
870,959 9.00%, 1/15/20 904
557,334 9.00%, 2/15/20 577
1,667,441 8.50%, 5/15/20 1,701
610,779 8.50%, 4/15/21 623
828,801 7.50%, 12/15/22 811
462,219 8.50%, 3/15/23 472
951,881 7.50%, 11/15/23 930
2,013,452 7.50%, 1/15/24 1,967
1,471,279 7.50%, 5/15/24 1,437
3,046,512 8.50%, 9/15/24 3,111
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 24,866
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY BONDS (2.6%)
700,000 8.88%, 2/15/19 808
2,000,000 7.13%, 2/15/23 1,929
1,400,000 7.50%, 11/15/24 1,419
- ------------------------------------------------------------
TOTAL U.S. TREASURY BONDS 4,156
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY NOTES (7.7%)
1,300,000 5.88%, 5/15/95 1,300
1,000,000 7.50%, 12/31/96 1,015
500,000 7.13%, 9/30/99 505
1,000,000 7.75%, 12/31/99 1,034
4,700,000 7.75%, 1/31/00 4,860
1,000,000 7.13%, 2/29/00 1,009
1,500,000 7.25%, 5/15/04 1,518
1,000,000 7.50%, 2/15/05 1,031
- ------------------------------------------------------------
TOTAL U.S. TREASURY NOTES 12,272
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
45
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (4.7%)
126,487 Federated Treasury
Obligation
Fund $ 127
5,600 Global Privatization Fund 68
6,000 Italy Fund, Inc. - ADR 49
2,300 Latin American Equity
Fund(c) 34
2,000 Malaysian Fund 35
7,109,522 Shearson U.S. Treasury Fund 7,110
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 7,423
- ------------------------------------------------------------
TOTAL (COST - $151,871)(B) $ 158,944
- ---------------------------------------------------------
CURRENCY
200 French Franc 0
42,346,513 Japanese Yen 504
- ------------------------------------------------------------
TOTAL CURRENCY 504
- ------------------------------------------------------------
</TABLE>
- ---------------
* Floating Rate Demand Notes are securities with yields that vary with a
designated market index or market rate. These securities are payable on the
date of demand. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect at April 30, 1995.
(a) Percentages indicated are based on net assets of $158,762.
(b) 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 $1,136. 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 $ 6,153
Unrealized depreciation (216)
----------
Net unrealized appreciation $ 5,937
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
46
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMERCIAL PAPER (7.9%)
FINANCIAL SERVICES (7.9%):
1,500,000 American Express, 5.90%,
5/3/95 $ 1,500
2,000,000 Ford Motor Credit Co.,
5.91%, 5/1/95 2,000
2,000,000 General Motors Acceptance
Corp., 6.00%, 5/10/95 2,000
2,000,000 General Motors Acceptance
Corp., 6.16%, 5/10/95 2,000
900,000 Prudential Funding, 5.91%,
5/10/95 900
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 8,400
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (90.6%)
ADVERTISING (0.1%):
1,986 Interpublic Group Cos., Inc. 75
--------
AEROSPACE/DEFENSE (1.4%):
8,666 Boeing Co. 477
1,600 General Dynamics Corp. 74
4,761 Lockheed Martin Corp.(c) 275
3,046 McDonnell Douglas 189
1,298 Northrop Grumman Corp. 64
5,620 Rockwell International Corp. 245
2,280 Textron, Inc. 130
--------
1,454
--------
AIRCRAFT & AIRCRAFT PARTS (0.2%):
3,204 United Technologies Corp. 234
--------
AIR FREIGHT (0.1%):
1,906 AMR Corp. Delaware(c) 128
1,534 U.S. Air Group, Inc.(c) 11
--------
139
--------
AIRLINES (0.1%):
1,237 Delta Air Lines 81
--------
ALUMINUM (0.2%):
4,560 Aluminum Co. of America 205
--------
APPAREL (0.0%):
2,002 Liz Claiborne, Inc. 36
--------
AUTOMOBILES (1.9%):
9,021 Chrysler Corp. 389
26,094 Ford Motor Co. 704
19,240 General Motors 868
1,900 Navistar International
Corp.(c) 27
972 Paccar, Inc. 45
--------
2,033
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
AUTOMOTIVE PARTS (0.5%):
1,104 Cummins Engine, Inc. $ 49
2,558 Dana Corp. 66
1,928 Eaton Corp. 111
1,454 Echlin, Inc. 53
3,114 Genuine Parts Co. 121
294 SPX Corp. 4
145 Strattec Strategy Corp.(c) 2
1,631 TRW, Inc. 121
--------
527
--------
BANKS (3.3%):
2,733 Bank of Boston Corp. 91
9,491 BankAmerica Corp. 470
2,022 Bankers Trust New York 110
2,516 Barnett Banks, Inc. 118
3,236 Boatmens Bancshares, Inc. 107
4,577 Chase Manhattan Corp. 200
6,187 Chemical Banking Corp. 258
2,322 First Chicago Corp. 128
2,064 First Fidelity Bancorp. 99
1,906 First Interstate Bancorp. 146
4,464 First Union Corp. 202
4,813 J.P. Morgan & Co., Inc. 316
7,014 NationsBank Corp. 351
7,849 Norwest Corp. 208
6,014 PNC Bank Corp. 151
3,024 SunTrust Banks, Inc. 164
4,322 Wachovia Corp. 152
1,315 Wells Fargo & Co. 218
--------
3,489
--------
BANKS -- MONEY CENTERS (REGIONAL) (0.8%):
10,090 Citicorp 468
3,607 CoreStates Financial Corp. 118
1,531 Golden West Financial Corp.
Delaware 70
3,947 NBD Bancorp., Inc. 121
3,850 National City Corp. 105
--------
882
--------
BANKS -- OUTSIDE MONEY CENTER (0.3%):
10,348 Banc One Corp. 305
--------
BEVERAGES (3.3%):
6,558 Anheuser Busch Co., Inc. 381
1,721 Brown Forman Corp., Class B 57
32,812 Coca Cola Co. 1,907
943 Coors Adolph Co., Class B 15
20,182 PepsiCo, Inc. 840
9,471 Seagram Co. Limited 257
--------
3,457
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
47
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
BUILDING MATERIALS (0.6%):
943 Armstrong World Industries,
Inc. $ 43
766 Centex Corp. 18
746 Crane Co. 26
1,160 Fleetwood Enterprises, Inc. 27
804 Kaufman & Broad Home Corp. 10
4,031 Masco Corp. 103
2,946 Monsanto Co. 245
3,754 Morton International, Inc. 116
1,121 Owens Corning Fiberglas
Corp.(c) 41
707 Pulte Corp. 15
255 Skyline Corp. 4
--------
648
--------
CHEMICALS (0.1%):
1,748 Great Lakes Chemical 103
--------
CHEMICALS -- GENERAL (2.8%):
2,868 Air Products & Chemicals,
Inc. 144
7,106 Dow Chemical Co. 494
17,394 E.I. Du Pont De Nemours Co. 1,146
2,073 Eastman Chemical 118
1,732 Ecolab, Inc. 40
924 FMC Corp.(c) 57
491 First Mississippi Corp. 12
2,963 Hercules, Inc. 148
1,925 Mallinckrodt 69
1,709 Nalco Chemical Co. 60
5,404 PPG Industries, Inc. 213
3,459 Praxair, Inc. 82
1,689 Rohm & Haas Co. 98
1,300 Sigma-Aldrich 57
3,812 Union Carbide Corp. 122
2,358 W.R. Grace & Co. 126
--------
2,986
--------
CHEMICALS -- SPECIALTY (0.1%):
1,354 Avery Dennison Corp. 55
--------
COMPUTERS & PERIPHERALS (3.1%):
2,968 Amdahl Corp.(c) 35
2,988 Apple Computer, Inc. 114
6,550 Cisco Systems(c) 261
1,356 Computer Sciences Corp.(c) 67
688 Cray Research, Inc.(c) 13
904 Data General Corp.(c) 7
3,621 Digital Equipment Corp.(c) 167
13,010 Hewlett Packard Corp.(c) 860
14,942 International Business
Machines Corp. 1,416
1,098 Integraph Corp.(c) 12
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
3,650 Silicon Graphics(c) $ 137
2,452 Sun Microsystems, Inc.(c) 98
2,949 Tandem Computers, Inc.(c) 37
4,386 Unisys Corp.(c) 45
--------
3,269
--------
CONGLOMERATES (0.8%):
5,849 Corning Glass Works 195
10,724 Minnesota Mining &
Manufacturing Co. 639
--------
834
--------
CONSTRUCTION (0.0%):
924 Foster Wheeler Corp. 34
--------
CONSUMER CREDIT (0.2%):
4,384 Dean Witter Discover & Co. 186
--------
CONSUMER GOODS (0.1%):
1,867 American Greetings Corp. 51
1,160 Jostens, Inc. 23
--------
74
--------
CONTAINERS -- METAL, GLASS, PAPER, PLASTIC (0.4%):
727 Ball Corp. 25
1,257 Bemis, Inc. 35
2,280 Crown, Cork & Seal, Inc.(c) 97
1,121 Federal Paper Board, Inc. 33
3,990 Newell Co. 94
4,147 Rubbermaid, Inc. 122
2,343 Stone Container Corp.(c) 46
--------
452
--------
COSMETICS & RELATED (0.8%):
727 Alberto Culver Co. 23
1,748 Avon Products 110
2,358 Dial Corp. 57
5,620 Gillette Co. 461
2,789 International Flavor &
Fragrance, Inc. 143
--------
794
--------
DEPARTMENT STORES (0.4%):
2,849 Dillard Department Stores,
Inc., Class A 74
5,934 J. C. Penney 260
943 Mercantile Stores, Inc. 42
--------
376
--------
DIVERSIFIED -- CONGLOMERATES, HOLDINGS (0.3%):
2,746 International Telephone &
Telegraph 287
1,218 National Service Industries,
Inc. 34
--------
321
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
48
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
DRUG STORES (0.1%):
491 Longs Drug Stores Corp. $ 17
2,180 Rite Aid Corp. 51
--------
68
--------
ELECTRICAL EQUIPMENT (3.1%):
1,179 Bally Manufacturing Corp.(c) 12
2,890 DSC Communications Corp.(c) 107
5,698 Emerson Electric Co. 383
43,648 General Electric Co. 2,444
1,082 Johnson Controls, Inc. 59
472 Thomas & Betts Corp. 30
1,257 W.W. Grainger, Inc. 76
9,121 Westinghouse Electric Corp. 137
--------
3,248
--------
ELECTRICAL SERVICES (0.1%):
2,950 General Public Utilities
Corp. 84
--------
ELECTRONIC COMPUTING EQUIPMENT (0.2%):
6,609 Compaq Computer Corp.(c) 251
--------
ELECTRONIC & ELECTRICAL -- GENERAL (2.1%):
2,419 Advanced Micro Devices(c) 87
5,366 Amp, Inc. 229
967 Andrew Corp.(c) 48
2,968 Cooper Industries 116
1,415 E G & G, Inc. 24
1,179 General Signal Corp. 44
982 Harris Corp. 46
3,259 Honeywell, Inc. 126
14,954 Motorola, Inc. 850
3,111 National Semiconductor
Corp.(c) 71
3,179 Raytheon Co. 231
1,825 Tandy Corp. 90
746 Tektronix, Inc. 34
2,322 Texas Instruments, Inc. 246
--------
2,242
--------
ELECTRONICS -- DEFENSE RELATED (0.1%):
885 E Systems, Inc. 56
2,103 Loral Corp. 99
--------
155
--------
ENTERTAINMENT (1.1%):
2,397 Brunswick Corp. 51
2,280 Hasbro, Inc. 72
943 King World Productions(c) 38
4,034 Lowes Cos., Inc. 116
2,634 Promus Cos., Inc.(c) 101
13,668 Walt Disney Co. 757
--------
1,135
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ENVIRONMENTAL CONTROL (0.1%):
7,000 Laidlaw, Inc., Class B $ 63
--------
FINANCIAL SERVICES (3.3%):
12,900 American Express Co. 448
3,576 Automatic Data Processing,
Inc. 230
4,700 Bank of New York Co., Inc. 155
1,376 Beneficial Corp. 56
1,121 Ceridian Corp.(c) 39
4,619 Federal Home Loan Mortgage
Corp. 301
6,996 Federal National Mortgage
Corp. 617
3,498 Fleet Financial Group 115
2,103 Fluor Corp. 108
3,421 Great Western Financial
Corp. 72
3,007 H.F. Ahmanson & Co. 63
2,477 Household International,
Inc. 116
3,782 MBNA Corp. 114
3,746 Mellon Bank Corp. 147
4,904 Merrill Lynch & Co., Inc. 223
2,710 Salomon, Inc. 98
3,077 Shawmut National Corp. 82
1,745 Transamerica Corp. 99
8,168 Travelers, Inc. 338
2,545 U.S. Bancorp 70
--------
3,491
--------
FOOD DISTRIBUTORS (0.2%):
6,505 Albertsons, Inc. 206
--------
FOOD DISTRIBUTORS (SUPERMARKETS &
WHOLESALERS) (0.4%):
943 Fleming Cos., Inc. 23
963 Great Atlantic & Pacific
Tea,
Inc. 24
2,952 Kroger Co.(c) 75
1,848 Supervalu, Inc. 49
4,716 Sysco Corp. 132
1,925 Winn Dixie Stores, Inc. 107
--------
410
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
49
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FOOD PROCESSING & PACKAGING (2.6%):
13,201 Archer Daniels Midland Co. $ 241
3,731 CPC International, Inc. 219
6,286 Campbell Soup Co. 322
6,286 ConAgra, Inc. 209
4,047 General Mills 247
6,325 H.J. Heinz Co. 266
2,219 Hershey Foods Corp. 116
5,656 Kellogg Co. 359
2,209 Pioneer Hi-Bred
International,
Inc. 83
3,396 Quaker Oats Co. 122
2,513 Ralston-Ralston Purina Group 119
12,300 Sara Lee Corp. 343
3,007 Wm. Wrigley Jr., Co. 133
--------
2,779
--------
FOREST PRODUCTS -- LUMBER & PAPER (1.7%):
1,379 Alco Standard Corp. 98
1,163 Boise Casacade Corp. 38
2,358 Champion International Corp. 104
2,319 Georgia Pacific Corp. 184
3,204 International Paper Co. 247
2,083 James River Corp. Virginia 57
4,047 Kimberly Clark Corp. 229
2,810 Louisiana Pacific Corp. 72
1,554 Mead Corp. 80
2,555 Moore Corp. Ltd. 50
727 Potlatch Corp. 31
1,886 Scott Paper Co. 168
1,415 Temple Inland, Inc. 62
1,828 Union Camp Corp. 92
1,670 Westvaco Corp. 70
5,288 Weyerhauser Co. 222
--------
1,804
--------
FUNERAL SERVICES (0.1%):
2,422 Service Corp. International 68
--------
FURNITURE (0.1%):
2,771 Maytag Corp. 48
1,100 Zenith Electronics(c) 8
--------
56
--------
GOLD & SILVER MINING (0.0%):
3,300 Santa Fe Pacific Gold Corp. 42
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
HEALTH CARE (0.4%):
9,278 Columbia HCA Healthcare $ 390
--------
HEAVY MACHINERY (0.9%):
3,556 Baker Hughes, Inc. 80
5,148 Caterpillar Tractor, Inc. 301
452 Clark Equipment Co.(c) 39
2,222 Deere & Co. 182
1,169 Harnischfeger Industries,
Inc. 34
2,733 Ingersoll Rand Co. 98
1,357 McDermott International,
Inc. 37
1,879 Tyco Laboratories, Inc. 99
1,118 Varity Corp.(c) 47
--------
917
--------
HOSPITAL & NURSING EQUIPMENT (1.0%):
1,357 Bard C.R., Inc. 40
16,383 Johnson & Johnson, Inc. 1,065
--------
1,105
--------
HOTELS & MOTELS (0.1%):
1,198 Hilton Hotels Corp. 91
--------
HOUSEHOLD GOODS -- APPLIANCES & FURNITURE
(0.2%):
316 Bassett Furniture Ind. 8
1,732 Premark International, Inc. 84
1,928 Whirlpool Corp. 106
--------
198
--------
INDUSTRIAL SERVICES (0.7%):
7,820 American Home Products Corp. 603
1,434 Dover Corp. 93
--------
696
--------
INSURANCE -- LIFE (0.5%):
1,237 Jefferson Pilot Corp. 70
2,474 Providian Corp. 84
1,867 Torchmark Corp. 73
4,350 United Healthcare 158
4,050 U.S. Healthcare, Inc. 108
530 USLIFE Corp. 20
--------
513
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
50
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INSURANCE -- MULTI-LINE (2.0%):
2,910 Aetna Life & Casualty Co. $ 166
1,101 Alexander & Alexander
Services, Inc. 26
5,262 American General Corp. 174
8,091 American International
Group, Inc. 864
1,848 Cigna Corp. 134
1,415 Continental Corp. 28
2,142 General Re Corp. 273
2,377 Lincoln National Corp. 97
1,867 Marsh & McLennan Cos., Inc. 146
1,612 SafeCo Corp. 91
2,142 St. Paul Cos., Inc. 103
2,242 USF & G Corp. 33
--------
2,135
--------
INSURANCE -- PROPERTY, CASUALTY, HEALTH (0.2%):
2,180 Chubb Corp. 174
1,800 UNUM Corp. 77
--------
251
--------
LEISURE -- RECREATION, GAMING (0.0%):
885 Handleman Co. 9
--------
MACHINE TOOLS (0.0%):
885 Cincinnati Milacron, Inc. 24
904 Giddings & Lewis, Inc. 16
--------
40
--------
MANUFACTURING -- CAPITAL GOODS (0.2%):
2,949 Illinois Tool Works, Inc. 148
707 Trinova Corp. 25
--------
173
--------
MANUFACTURING -- CONSUMER GOODS (0.1%):
491 Outboard Marine Corp. 11
1,415 Teledyne, Inc.(c) 35
1,360 Western Atlas(c) 61
--------
107
--------
MANUFACTURING -- MISCELLANEOUS (1.0%):
7,212 Allied Signal, Inc. 286
726 Briggs & Stratton Corp. 26
607 Millipore Corp. 37
866 Morrison Knudsen Corp. 7
2,901 Pall Corp. 68
1,218 Parker-Hannifin Corp. 63
4,047 Unilever N.V. 541
2,671 Whitman Corp. 49
--------
1,077
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (0.2%):
2,203 Beverly Enterprises, Inc.(c) $ 32
1,121 Community Psychiatric
Centers, Inc. 15
1,544 Manor Care, Inc. 45
5,025 National Medical
Enterprises, Inc.(c) 85
--------
177
--------
MEDICAL SUPPLIES (0.7%):
1,473 Bausch & Lomb, Inc. 57
7,235 Baxter International, Inc. 251
1,706 Becton Dickinson & Co. 95
2,888 Biomet, Inc.(c) 51
200 Boston Scientific Corp.(c) 5
2,908 Medtronic, Inc. 216
1,179 St. Jude Medical, Inc. 51
1,415 United States Surgical Corp. 31
--------
757
--------
METALS -- FABRICATION (0.6%):
5,769 Alcan Aluminum Ltd. 164
1,101 Asarco, Inc. 30
2,400 Cyprus Amax Minerals 67
3,498 Homestake Mining Co. 59
1,124 Inland Steel Industries,
Inc. 29
2,227 Newmont Mining Corp. 93
1,828 Phelps Dodge Corp. 104
1,573 Reynolds Metals Co. 79
--------
625
--------
METAL & MINERAL PRODUCTION (0.6%):
2,713 Armco, Inc. 19
8,877 Barrick Gold Corp. 214
2,839 Bethlehem Steel Corp.(c) 40
2,830 Echo Bay Mines Ltd. 27
2,447 Englehard Corp. 94
3,010 Inco Ltd. 78
2,261 Nucor Corp. 109
1,913 USX U.S. Steel Group 58
--------
639
--------
NEWSPAPERS (0.5%):
3,534 Gannett Co., Inc. 186
1,395 Knight-Ridder, Inc. 76
2,552 New York Times Co., Class A 58
3,282 Times Mirror Co., Class A 59
1,670 Tribune Co. 99
--------
478
--------
OFFICE EQUIPMENT & SUPPLIES (0.5%):
4,009 Pitney Bowes, Inc. 149
2,713 Xerox Corp. 334
--------
483
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
51
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
OIL & GAS EXPLORATION AND PRODUCTION (1.7%):
2,358 Amerada Hess Corp. $ 119
1,573 Ashland, Inc. 58
2,623 Coastal Corp. 78
1,237 Columbia Gas System(c) 36
530 Eastern Enterprises 16
6,473 Enron Corp. 220
1,670 Enserch Corp. 29
669 Helmerich & Payne, Inc. 20
1,298 Kerr-McGee Corp. 67
885 Louisiana Land &
Exploration Co. 32
3,085 Noram Energy Corp. 19
7,962 Occidental Petroleum Corp. 183
688 Oneok, Inc. 13
2,516 Oryx Energy Co.(c) 35
1,160 Pennzoil Co. 57
6,622 Phillips Petroleum Co. 232
2,122 Rowan Cos.(c) 15
2,319 Sante Fe Energy Resources,
Inc.(c) 22
2,261 Sonat, Inc. 69
2,752 Sun Co., Inc. 83
7,290 USX - Marathon Group 137
6,231 Unocal Corp. 179
2,294 Williams Co., Inc. 75
--------
1,794
--------
OIL & GAS PRODUCTION (1.2%):
3,201 Burlington Resource, Inc. 125
10,139 Mobil Corp. 962
4,664 Tenneco, Inc. 214
--------
1,301
--------
OIL -- INTEGRATED COMPANIES (6.0%):
12,655 Amoco Corp. 830
4,128 Atlantic Richfield Co. 473
16,606 Chevron Corp. 787
31,639 Exxon Corp. 2,203
13,637 Royal Dutch Petroleum Co. 1,691
6,583 Texaco, Inc. 450
--------
6,434
--------
OILFIELD EQUIPMENT & SERVICES (0.6%):
4,718 Dresser Industries, Inc. 103
2,868 Halliburton Co. 110
6,231 Schlumberger Limited 392
--------
605
--------
PAINT, VARNISHES & ENAMELS (0.1%):
2,200 Sherwin Williams Co. 78
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
PHARMACEUTICALS (4.9%):
20,544 Abbott Laboratories $ 809
1,570 Allergan, Inc. 43
2,106 Alza Corp., Class A(c) 41
13,066 Bristol-Myers Squibb Co. 851
7,468 Eli Lilly & Co. 558
32,116 Merck & Co., Inc. 1,377
8,037 Pfizer, Inc. 696
4,852 Schering-Plough 366
4,441 Upjohn Co. 161
3,379 Warner-Lambert Co. 269
--------
5,171
--------
PHOTOGRAPHY (0.5%):
8,692 Eastman Kodak Co. 500
1,179 Polaroid Corp. 40
--------
540
--------
POLLUTION CONTROL SERVICES & EQUIPMENT (0.5%):
5,022 Browning-Ferris
Industries, Inc. 166
1,444 Safety Kleen 25
12,342 WMX Technologies, Inc. 336
275 Zurn Industries, Inc. 6
--------
533
--------
PRECISION INSTRUMENTS & RELATED (0.0%):
1,040 Perkin Elmer 32
--------
PUBLISHING, EXCEPT NEWSPAPER (0.9%):
2,103 Deluxe Corp. 65
2,455 Dow Jones & Co., Inc. 86
4,300 Dun & Bradstreet Corp. 224
766 John H. Harland Co. 17
1,218 McGraw Hill, Inc. 91
626 Meredith Corp. 16
3,870 R.R. Donnelley & Sons Co. 132
9,682 Time Warner, Inc. 355
--------
986
--------
RADIO & TELEVISION (1.2%):
1,555 CBS, Inc. 100
3,930 Capital Cities ABC, Inc. 332
5,775 Comcast Class A Special
Shares 91
300 Comcast Corp., Class A 5
204 Cox Communications, Inc.,
Class A(c) 3
15,585 Tele-Communications, Inc.,
Class A(c) 298
9,087 Viacom, Class B(c) 417
--------
1,246
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
52
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RAILROAD & RAILROAD HOLDING COMPANIES (0.8%):
2,300 Burlington Northern, Inc. $ 137
2,713 CSX Corp. 216
1,964 Conrail, Inc. 107
3,845 Santa Fe Southern Pacific
Corp. 90
5,188 Union Pacific Corp. 285
--------
835
--------
RAILROADS (0.2%):
3,437 Norfolk Southern Corp. 232
--------
RESTAURANTS (0.7%):
607 Luby's Cafeterias, Inc. 12
17,820 McDonald's Corp. 624
1,376 Ryan's Family Steak House(c) 10
1,082 Shoney's, Inc.(c) 12
2,555 Wendy's International 43
--------
701
--------
RETAIL (2.9%):
3,656 American Stores Co. 94
1,945 Brunos, Inc. 24
2,594 Charming Shoppes, Inc. 14
1,848 Dayton Hudson Corp. 124
2,025 Harcourt General, Inc. 83
11,656 K-Mart Corp. 162
3,194 Marriott International, Inc. 115
6,328 May Department Stores 229
2,103 Nordstrom, Inc. 81
5,012 Price/Costco, Inc.(c) 73
8,921 Sears & Roebuck Co. 484
58,600 Wal Mart Stores, Inc. 1,392
3,104 Walgreen Co. 146
3,421 Woolworth Corp. 55
--------
3,076
--------
RETAIL -- SPECIALTY STORES (1.2%):
2,497 Circuit City Stores, Inc. 65
3,715 The Gap 118
1,473 Giant Food, Inc. 40
11,531 Home Depot, Inc. 481
9,096 The Limited, Inc. 194
2,733 Melville Corp. 98
1,592 Pep Boys -- Manny, Moe &
Jack 41
1,867 TJX Cos., Inc. 21
7,268 Toys R Us, Inc.(c) 184
--------
1,242
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RUBBER & RUBBER PRODUCTS (0.2%):
669 B.F. Goodrich, Inc. $ 31
2,122 Cooper Tire & Rubber Co. 52
3,834 Goodyear Tire & Rubber Co. 146
--------
229
--------
SEMICONDUCTORS (1.3%):
2,100 Applied Materials, Inc.(c) 129
10,550 Intel Corp. 1,080
2,550 Micron Technology, Inc. 210
--------
1,419
--------
SERVICES (NON-FINANCIAL) (0.4%):
3,379 Amgen, Inc.(c) 246
3,050 First Data Corp. 172
1,240 Ogden Corp. 25
--------
443
--------
SHOES, LEATHER GOODS & CLOTHING (0.2%):
452 Brown Group, Inc. 13
1,906 Nike, Inc. 146
2,061 Reebok International Ltd. 64
1,237 Stride Rite Corp. 15
--------
238
--------
SOAPS & CLEANING AGENTS (1.5%):
1,395 Clorox Co. 82
3,670 Colgate Palmolive, Inc. 258
17,471 Procter & Gamble Co. 1,221
--------
1,561
--------
SOFTWARE & COMPUTER SERVICES (2.0%):
1,198 Autodesk, Inc. 41
4,125 Computer Associates
International, Inc. 266
1,271 Lotus Development Corp.(c) 40
14,900 Microsoft Corp.(c) 1,220
9,462 Novell, Inc.(c) 206
10,919 Oracle Systems Corp.(c) 333
630 Shared Medical Systems 24
--------
2,130
--------
STEEL (0.0%):
2,319 Worthington Industries, Inc. 44
--------
TAX RETURN PREPARATION (0.1%):
2,652 H. & R. Block 112
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
53
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TELECOMMUNICATIONS (2.3%):
12,612 Airtouch Communications(c) $ 339
4,800 Alltel Corp. 119
11,144 Bell Atlantic Corp. 612
649 M A Com, Inc.(c) 8
6,447 Northern Telecom Ltd. 235
10,772 Pacific Telesis Group 333
1,966 Scientific-Atlanta, Inc. 45
8,866 Sprint Corp. 293
11,591 U.S. West, Inc. 480
--------
2,464
--------
TEXTILE MANUFACTURING (0.1%):
866 Hartmarx Corp.(c) 5
313 Oshkosh B Gosh, Inc. 5
1,001 Russell Corp. 30
452 Springs Industries, Inc.,
Class A 18
1,631 V.F. Corp. 82
--------
140
--------
TOBACCO & TOBACCO PRODUCTS (1.7%):
5,149 American Brands, Inc. 209
21,904 Philip Morris Cos., Inc. 1,484
5,146 UST, Inc. 145
--------
1,838
--------
TOOLS & HARDWARE MANUFACTURING (0.2%):
2,122 Black & Decker Corp. 64
1,121 Snap On Tools, Inc. 42
1,160 Stanley Works 46
746 Timken Co. 30
--------
182
--------
TOYS & BICYCLES -- MANUFACTURING (0.1%):
5,725 Mattel, Inc. 136
--------
TRANSPORTATION -- AIR (0.1%):
3,650 Southwest Airlines Co. 84
--------
TRANSPORTATION LEASING & TRUCKING (0.2%):
924 Consolidated Freightways,
Inc.(c) 24
1,395 Federal Express Corp.(c) 95
1,101 Pittston Services Group 26
963 Roadway Services, Inc. 47
2,006 Ryder Systems, Inc. 47
707 Yellow Corp. 13
--------
252
--------
TRUCKS -- MANUFACTURING (0.1%):
236 Nacco Industries, Inc. 13
6,073 Placer Dome, Inc. 144
--------
157
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
UTILITIES -- ELECTRIC (3.0%):
4,697 American Electric Power $ 154
4,047 Carolina Power & Light 111
4,855 Central & South West Corp. 120
3,728 Cinergy Corp. 94
6,014 Consolidated Edison Co. NY,
Inc. 167
3,653 Detroit Edison Co. 103
4,415 Dominion Resources 161
5,188 Duke Power Co. 205
5,761 Entergy Corp. 125
4,735 FPL Group, Inc. 174
3,301 Houston Industries 130
3,676 Niagara Mohawk Power Corp. 51
1,670 Northern States Power Co.
Minnesota 74
3,931 Ohio Edison 79
7,196 Pacificorp 137
5,640 Peco Energy Co. 145
6,231 Public Service Enterprise 171
1,101 Raychem Corp. 39
11,438 SCEcorp. 192
16,712 Southern Co. 345
5,759 Texas Utilities Co. 188
5,423 Unicom Corp. 142
2,594 Union Electric Co. 92
--------
3,199
--------
UTILITIES -- ELECTRIC & GAS (0.4%):
3,724 Baltimore Gas & Electric 88
11,024 Pacific Gas & Electric Co. 296
904 Peoples Energy Corp. 23
--------
407
--------
UTILITIES -- NATURAL GAS (0.3%):
2,358 Consolidated Natural Gas 93
1,315 Nicor, Inc. 32
4,022 Pacific Enterprises 99
3,827 Panhandle Eastern Corp. 92
--------
316
--------
UTILITIES -- TELECOMMUNICATIONS (5.4%):
39,898 A T & T Corp. 2,025
14,016 Ameritech Corp. 631
12,636 Bellsouth Corp. 774
24,513 GTE Corp. 837
17,340 MCI Telecommunications Corp. 377
10,733 Nynex Corp. 439
15,249 SBC Communication, Inc. 673
--------
5,756
- ----------------------------------------------------------
TOTAL COMMON STOCKS 95,925
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
54
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BILLS (0.4%)
400,000 5.76%, 6/15/95 $ 397
- ----------------------------------------------------------
Total U.S. Treasury Bills 397
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (0.9%)
938,389 Shearson U.S. Treasury Fund 938
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 938
- ----------------------------------------------------------
TOTAL (COST $96,230)(B) $105,660
- ----------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $105,834.
(b) 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 $498. 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 $ 11,629
Unrealized depreciation (2,697)
--------
Net unrealized appreciation $ 8,932
=========
</TABLE>
(c) Represents non-income producing securities.
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------
FUTURES CONTRACTS
</TABLE>
<TABLE>
<CAPTION>
MARKET
NUMBER OF VALUE
CONTRACTS (000)
<S> <C> <C>
Short, Standard & Poor's 500
Index Futures Contracts, face
amount $8,788, expiring
6/16/95 35 $9,043
------
Total Futures Contracts $9,043
=======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
55
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMERCIAL PAPER (5.4%)
FINANCIAL SERVICES (5.4%):
7,000,000 Ford Motor Credit Corp.,
5.94%, 5/8/95 $ 7,000
7,000,000 General Electric Credit
Corp., 5.94%, 5/8/95 7,000
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 14,000
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (91.8%)
AEROSPACE/DEFENSE (5.0%):
73,000 Boeing Co. 4,015
48,000 General Dynamics Corp. 2,226
34,500 Lockheed Martin Corp.(c) 1,992
65,000 Raytheon Co. 4,729
--------
12,962
--------
AUTOMOTIVE (3.4%):
65,000 Chrysler Corp. 2,803
86,000 Ford Motor Co. 2,322
47,000 Pep Boys-Manny, Moe & Jack 1,210
35,900 TRW, Inc. 2,670
--------
9,005
--------
BANKS (7.4%):
93,000 BankAmerica Corp. 4,603
95,000 Comerica, Inc. 2,731
76,000 CoreStates Financial Corp. 2,479
77,000 First Union Corp. 3,484
81,000 J.P. Morgan & Co., Inc. 5,316
30,000 Norwest Corp. 795
--------
19,408
--------
BEVERAGES (1.2%):
53,000 Anheuser Busch Co., Inc. 3,081
--------
CHEMICALS (2.6%):
25,000 Dow Chemical Co. 1,738
31,000 Eastman Chemical 1,759
45,000 Lubrizol Corp. 1,569
15,000 Nalco Chemical Co. 525
60,000 RPM, Inc., Ohio 1,185
--------
6,776
--------
COMPUTER SOFTWARE (1.5%):
29,000 Microsoft Corp.(c) 2,374
67,000 Novell, Inc.(c) 1,457
--------
3,831
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
COMPUTERS & OFFICE EQUIPMENT (1.2%):
12,000 International Business
Machines Corp. $ 1,137
53,000 Pitney Bowes, Inc. 1,968
--------
3,105
--------
ELECTRICAL EQUIPMENT (2.6%):
22,500 Emerson Electric Co. 1,513
95,000 General Electric Co. 5,320
--------
6,833
--------
ELECTRONICS (2.5%):
50,000 Hewlett Packard Co. 3,306
31,000 Intel Corp. 3,174
--------
6,480
--------
FINANCIAL SERVICES (4.3%):
70,000 American Express Co. 2,433
105,000 American General Corp. 3,465
32,000 Federal National Mortgage
Assoc. 2,824
52,500 Household International,
Inc. 2,461
--------
11,183
--------
FOOD (0.4%):
31,000 Pioneer Hi-Bred
International, Inc. 1,163
--------
HEALTH CARE (1.1%):
75,000 Abbott Laboratories 2,953
--------
HOME PRODUCTS (1.9%):
57,000 Newell Co. 1,347
45,000 Sherwin Williams Co. 1,603
51,500 Stanley Works 2,041
--------
4,991
--------
INSURANCE (3.4%):
64,000 Aetna Life & Casualty Co. 3,648
77,000 Allstate 2,339
23,000 Chubb Corp. 1,840
25,000 St. Paul Cos., Inc.(c) 1,203
--------
9,030
--------
INDUSTRIAL - MISCELLANEOUS (2.6%):
42,000 Allied Signal, Inc. 1,664
35,000 Minnesota Mining &
Manufacturing Co. 2,087
25,000 Textron, Inc. 1,425
62,000 WMX Technologies, Inc. 1,690
--------
6,866
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
56
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MACHINERY & MANUFACTURING (1.5%):
45,000 Cooper Industries $ 1,755
27,000 Deere & Co. 2,214
--------
3,969
--------
MEDIA (1.9%):
30,001 Cox Communications, Inc.
Class A(c) 458
40,000 Dun & Bradstreet Corp. 2,085
43,000 Time Warner, Inc. 1,575
50,000 Times Mirror Co., Class A 906
--------
5,024
--------
METALS & MINING (2.8%):
63,000 Aluminum Co. of America 2,827
70,000 Cyprus Amax Minerals 1,951
80,000 USX U.S. Steel Group 2,440
--------
7,218
--------
OIL - INTEGRATED (DOMESTIC) (3.1%):
34,000 Atlantic Richfield Co. 3,893
117,500 Phillips Petroleum Co. 4,113
--------
8,006
--------
OIL - INTEGRATED (INTERNATIONAL) (8.4%):
111,500 Chevron Corp. 5,282
34,000 Exxon Corp. 2,367
73,000 Mobil Corp. 6,926
107,000 Texaco, Inc. 7,316
--------
21,891
--------
OILFIELD WELL EQUIPMENT & SERVICES (1.3%):
110,000 Baker Hughes, Inc. 2,475
13,000 Schlumberger Ltd. 817
--------
3,292
--------
PAPER & FOREST PRODUCTS (3.9%):
47,000 Georgia Pacific Corp. 3,731
61,500 International Paper Co. 4,736
37,500 Union Camp Corp. 1,880
--------
10,347
--------
PHARMACEUTICALS (3.6%):
13,800 American Home Products Corp. 1,064
55,000 Merck & Co., Inc. 2,358
40,000 Pfizer, Inc. 3,465
35,000 Schering-Plough 2,638
--------
9,525
--------
RESTAURANTS (0.9%):
65,000 McDonald's Corp. 2,275
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RETAIL - FOOD & DRUGS (1.2%):
75,000 Supervalu, Inc. $ 1,978
25,000 Walgreen Co. 1,175
--------
3,153
--------
RETAIL - TRADE (4.0%):
51,000 Dayton Hudson Corp. 3,423
83,000 Sears & Roebuck Co. 4,503
--------
7,926
--------
SOAPS & PERSONAL CARE (1.8%):
45,000 Avon Products 2,846
25,000 Procter & Gamble Co. 1,747
--------
4,593
--------
TELECOMMUNICATIONS (7.3%):
168,500 A T & T Corp. 8,551
15,000 Ameritech Corp. 675
43,000 Comsat Corp. 860
155,000 GTE Corp. 5,289
90,000 Nynex Corp. 3,679
--------
19,054
--------
TOBACCO (1.7%):
47,000 Philip Morris Cos., Inc. 3,184
42,000 UST, Inc. 1,181
--------
4,365
--------
TRANSPORTATION (1.2%):
8,000 Burlington Northern, Inc. 476
18,500 Norfolk Southern Corp. 1,246
28,000 Roadway Services, Inc. 1,358
--------
3,080
--------
UTILITIES - ELECTRIC (5.1%):
130,000 Consolidated Edison Co. NY,
Inc. 3,608
70,000 Duquesne Light Co. 2,363
95,000 Public Service Co. of
Colorado 2,862
141,000 Texas Utilities Co. 4,600
--------
13,433
--------
UTILITIES - NATURAL GAS (2.2%):
65,500 Consolidated Natural Gas 2,579
39,000 Enron Corp. 1,326
30,000 Enserch Corp. 518
48,000 Peoples Energy Corp. 1,212
--------
5,635
- ----------------------------------------------------------
TOTAL COMMON STOCKS 240,453
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
57
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BILLS (0.2%)
410,000 4.13%, 6/22/95 $ 407
- ----------------------------------------------------------
TOTAL U.S. TREASURY BILLS 407
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (3.1%)
8,188,301 Shearson U.S. Treasury Fund 8,188
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 8,188
- ----------------------------------------------------------
TOTAL (COST 245,679)(B) $263,048
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $261,830.
(b) 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 $168. 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 $ 23,151
Unrealized depreciation (5,950)
--------
Net unrealized appreciation $ 17,201
=========
</TABLE>
(c) Represents non-income producing securities.
- ---------------------------------------------------------
FUTURES CONTRACTS
<TABLE>
<CAPTION>
MARKET
NUMBER OF VALUE
CONTRACTS (000)
<S> <C> <C>
Short, Standard & Poor's 500
Index Futures Contracts,
face amount $2,480, expiring
6/16/95 10 $2,584
------
Total Futures Contracts $2,584
------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
58
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
DIVERSIFIED STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMERCIAL PAPER (1.5%)
FINANCIAL SERVICES (1.5%):
5,000,000 General Motors Acceptance
Corp. 5.94%, 5/3/95 $ 5,000
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 5,000
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (93.9%)
AEROSPACE/DEFENSE (4.7%):
128,500 Boeing Co. 7,067
78,000 General Dynamics Corp. 3,617
80,000 Lockheed Martin Corp.(c) 4,620
--------
15,304
--------
ALUMINUM (1.0%):
70,200 Aluminum Co. of America 3,150
--------
BANKS (6.9%):
125,800 BankAmerica Corp. 6,227
225,000 Comerica, Inc. 6,469
81,800 J.P. Morgan & Co., Inc. 5,368
24,800 National City Corp. 679
132,400 Norwest Corp. 3,509
--------
22,252
--------
BEVERAGES (2.7%):
66,400 Anheuser Busch Co., Inc. 3,859
120,000 PepsiCo, Inc. 4,995
--------
8,854
--------
CHEMICALS (1.8%):
40,200 Dow Chemical Co. 2,794
145,000 RPM, Inc., Ohio 2,864
--------
5,658
--------
COMPUTERS & PERIPHERALS (0.6%):
20,000 International Business
Machines Corp. 1,895
--------
CONGLOMERATES (0.6%):
30,000 Minnesota Mining &
Manufacturing Co. 1,789
--------
COSMETICS & RELATED (2.0%):
100,300 Avon Products 6,344
--------
ELECTRICAL EQUIPMENT (3.3%):
30,000 Emerson Electric Co. 2,017
150,800 General Electric Co. 8,445
--------
10,462
--------
ELECTRONIC COMPUTING EQUIPMENT (0.6%):
50,000 Compaq Computer Corp.(c) 1,900
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ELECTRONIC & ELECTRICAL - GENERAL (2.1%):
85,000 Motorola, Inc. $ 4,834
18,900 Texas Instruments, Inc. 2,003
--------
6,837
--------
ENGINEERING & CONSTRUCTION (1.8%):
113,700 Fluor Corp. 5,855
--------
ENTERTAINMENT (0.8%):
70,400 Promus Cos., Inc.(c) 2,710
--------
FINANCIAL SERVICES (1.1%):
39,000 Federal National Mortgage
Assoc. 3,442
--------
FOREST PRODUCTS (3.5%):
50,000 International Paper Co. 3,850
66,900 Mead Corp. 3,462
78,900 Union Camp Corp. 3,955
--------
11,267
--------
FUNERAL SERVICES (0.5%):
61,000 Service Corp. International 1,723
--------
INDUSTRIAL - MISCELLANEOUS (1.0%):
54,000 Textron, Inc. 3,078
--------
INSURANCE (4.2%):
40,000 Aetna Life & Casualty Co.(c) 2,280
52,900 American International
Group, Inc. 5,647
70,000 Chubb Corp. 5,600
--------
13,527
--------
MANUFACTURING MISCELLANEOUS (1.2%):
100,000 Allied Signal, Inc. 3,962
--------
METALS (1.3%):
134,300 USX U.S. Steel Group 4,096
--------
OFFICE EQUIPMENT & SUPPLIES (1.6%):
136,100 Pitney Bowes, Inc. 5,053
--------
OIL (10.9%):
40,400 Atlantic Richfield Co. 4,626
250,000 Chevron Corp. 11,844
105,500 Exxon Corp. 7,345
165,500 Texaco, Inc. 11,316
--------
35,131
--------
OIL & GAS EXPLORATION (3.6%):
170,000 Enron Corp. 5,780
170,000 Phillips Petroleum Co. 5,950
--------
11,730
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
59
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
DIVERSIFIED STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
OILFIELD EQUIPMENT & SERVICES (4.7%):
235,000 Baker Hughes, Inc. $ 5,287
227,600 Dresser Industries, Inc. 4,979
75,100 Schlumberger Ltd. 4,722
--------
14,988
--------
PHARMACEUTICALS (3.4%):
75,000 Merck & Co., Inc. 3,216
25,000 Pfizer, Inc. 2,166
20,000 Schering-Plough 1,507
50,000 Warner-Lambert Co. 3,988
--------
10,877
--------
POLLUTION CONTROL SERVICES (1.2%):
142,000 WMX Technologies, Inc. 3,870
--------
REAL ESTATE INVESTMENT TRUSTS (0.3%):
28,500 Weingarten Realty Investors 998
--------
RETAIL (1.0%):
46,500 Dayton Hudson Corp. 3,121
--------
RETAIL - SPECIALTY STORES (1.1%):
133,000 Pep Boys - Manny, Moe & Jack 3,425
--------
RUBBER & RUBBER PRODUCTS (2.3%):
120,000 Cooper Tire & Rubber Co.(c) 2,940
119,600 Goodyear Tire & Rubber Co. 4,545
--------
7,485
--------
SEMICONDUCTORS (1.8%):
30,000 Applied Materials, Inc.(c) 1,849
40,000 Intel Corp. 4,095
--------
5,944
--------
SHIPPING (1.1%):
152,650 TNT Freightways Corp. 3,587
--------
SOFTWARE & COMPUTER SERVICES (4.0%):
111,800 Microsoft(c) 9,154
175,000 Novell, Inc.(c) 3,806
--------
12,960
--------
TOBACCO & TOBACCO PRODUCTS (1.7%):
80,000 Philip Morris Cos., Inc. 5,420
--------
UTILITIES - ELECTRIC (5.4%):
200,000 Consolidated Edison Co. NY,
Inc. 5,550
20,000 Duquesne Light Co. 675
150,000 Southern Co. 3,094
248,500 Texas Utilities Co. 8,107
--------
17,426
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
UTILITIES - TELECOMMUNICATIONS (8.1%):
230,000 A T & T Corp. $ 11,673
300,000 GTE Corp. 10,238
98,100 Nynex Corp. 4,010
--------
25,921
- ----------------------------------------------------------
TOTAL COMMON STOCKS 302,041
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (5.0%)
2,433,734 Federated Treasury
Obligation Fund 2,434
13,557,653 Shearson U.S. Treasury Fund 13,557
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 15,991
- ----------------------------------------------------------
TOTAL (COST $292,681)(B) $323,032
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $321,593.
(b) 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 $366. 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 $ 33,693
Unrealized depreciation (3,708)
--------
Net unrealized appreciation $ 29,985
=========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
60
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (97.4%)
BANKS (4.6%):
20,500 BankAmerica Corp. $ 1,015
37,500 Norwest Corp. 994
----------
2,009
----------
BEVERAGES (2.8%):
21,300 Coca Cola Co. 1,238
----------
COMPUTERS & PERIPHERALS (1.1%):
9,000 3Com Corp.(c) 504
----------
CONGLOMERATES (2.7%):
36,000 Corning Glass Works 1,202
----------
COSMETICS & RELATED (3.2%):
17,000 Gillette Co. 1,394
----------
ELECTRICAL EQUIPMENT (5.7%):
26,300 General Electric Co. 1,473
18,700 Johnson Controls, Inc. 1,014
----------
2,487
----------
ELECTRONICS & ELECTRICAL (3.4%):
26,200 Motorola, Inc. 1,490
----------
ENTERTAINMENT (3.0%):
24,000 Walt Disney Co. 1,329
----------
FINANCIAL SERVICES (5.8%):
16,900 Federal National Mortgage
Assoc. 1,491
25,000 First USA, Inc. 1,063
----------
2,554
----------
FOREST PRODUCTS (4.1%):
13,000 Georgia Pacific Corp. 1,032
10,000 International Paper Co. 770
----------
1,802
----------
HOUSEHOLD PRODUCTS (3.2%):
34,300 Newell Co. 810
20,400 Rubbermaid, Inc. 602
----------
1,412
----------
INSURANCE (2.9%):
11,900 American International
Group, Inc. 1,270
----------
LEISURE-RECREATION, GAMING (1.3%):
43,700 International Game
Technology 563
----------
MEDICAL-BIOTECHNOLOGY (0.7%):
4,200 Amgen, Inc.(c) 305
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (1.5%):
23,900 Health Care & Retirement
Corp.(c) $ 675
----------
OIL & GAS EXPLORATION, PRODUCTION (1.6%):
18,000 Burlington Resource, Inc. 704
----------
OIL-INTEGRATED COMPANIES (11.3%):
11,800 Amoco Corp. 774
9,600 Atlantic Richfield Co. 1,099
25,000 Chevron Corp. 1,184
14,100 Mobil Corp. 1,338
8,100 Texaco, Inc. 554
----------
4,949
----------
PHARMACEUTICALS (3.4%):
20,000 Ivax Corp. 517
13,000 Schering-Plough 980
----------
1,497
----------
POLLUTION CONTROL SERVICES (1.8%):
29,000 WMX Technologies, Inc. 790
----------
RETAIL (5.3%):
30,000 The Gap 956
33,300 Home Depot, Inc. 1,390
----------
2,346
----------
SEMICONDUCTORS (3.7%):
16,000 Intel Corp. 1,638
----------
SOAPS & CLEANING AGENTS (3.0%):
18,800 Procter & Gamble Co. 1,814
----------
SOFTWARE & COMPUTER SERVICES (6.0%):
20,000 Microsoft Corp.(c) 1,638
45,000 Novell, Inc.(c) 979
----------
2,617
----------
TELECOMMUNICATIONS (6.8%):
22,400 Telefonos de Mexico 678
21,900 AT&T Corp. 1,111
20,300 SBC Communication, Inc. 1,191
----------
2,980
----------
TOBACCO & TOBACCO RELATED (1.0%):
6,600 Philip Morris Cos., Inc. 447
----------
TRANSPORTATION-AIR (2.3%):
43,700 Southwest Airlines Co. 1,011
----------
UTILITIES-NATURAL GAS (5.0%):
36,500 El Paso Natural Gas 1,068
33,300 Enron Corp. 1,132
----------
2,200
- ------------------------------------------------------------
TOTAL COMMON STOCKS 42,727
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
61
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (2.1%)
98,561 Shearson U.S. Treasury Fund $ 919
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 919
- ------------------------------------------------------------
TOTAL (COST $40,358)(B) $ 43,646
- ---
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $43,861.
(b) 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 $ 5,809
Unrealized depreciation (2,521)
----------
Net unrealized appreciation $ 3,288
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
62
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
SPECIAL VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (94.6%)
AEROSPACE/DEFENSE (3.4%):
113,400 GenCorp, Inc. $ 1,432
29,500 General Dynamics Corp. 1,368
86,700 Thiokol Corp. Delaware 2,416
----------
5,216
----------
AUTOMOTIVE PARTS (4.7%):
44,200 Genuine Parts Co. 1,713
46,600 Hayes Wheels 874
72,200 Kaydon Corp. 1,985
51,600 Mascotech, Inc. 574
13,000 Stewart & Stevenson
Services,
Inc. 487
95,775 T B C Corp.(c) 1,017
33,915 Walbro Corp. 634
----------
7,284
----------
BANKS (5.7%):
30,100 Central Fidelity Banks, Inc. 769
119,200 Comerica, Inc. 3,427
36,401 Michigan National Corp. 3,818
17,500 Star Bank 731
----------
8,745
----------
BEVERAGES (1.0%):
71,000 Coca Cola Enterprises, Inc. 1,588
----------
CHEMICALS (7.8%):
57,875 A. Schulman, Inc. 1,816
42,550 Avery Dennison Corp. 1,729
22,400 Geon Co. 605
32,000 Lubrizol Corp. 1,116
12,900 Lyondell Petrochemical 320
57,500 Olin Corp. 3,213
96,500 RPM, Inc. 1,905
30,000 WD 40 Co. 1,320
----------
12,024
----------
CONSTRUCTION (1.2%):
71,100 Foster Wheeler Corp. 2,631
----------
CONTAINERS (1.1%):
71,000 Sonoco Products Co. 1,766
----------
ELECTRICAL EQUIPMENT (8.4%):
39,200 Arrow Electronics, Inc.(c) 1,823
22,500 W.W. Grainger, Inc. 1,361
121,332 Mark IV Industries 2,184
33,300 Molex Corp. 1,257
45,400 Teleflex, Inc. 1,878
75,529 Vishay Intertechnology,
Inc.(c) 4,466
----------
12,969
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ENVIRONMENTAL CONTROL (1.1%):
179,650 Laidlaw, Inc. Class B $ 1,617
----------
FINANCIAL SERVICES (4.6%):
53,300 Equifax, Inc. 1,726
61,850 MBNA Corp. 1,870
42,800 PMI Group, Inc.(c) 1,594
69,100 UJB Financial Corp. 1,892
----------
7,082
----------
FOOD DISTRIBUTORS (0.3%):
15,500 SuperValu, Inc. 409
----------
FOOD PROCESSING & PACKAGING (2.4%):
72,100 Dean Foods Co. 2,055
45,250 IBP, Inc. 1,674
----------
3,729
----------
FOREST PRODUCTS (1.9%):
62,262 Pentair, Inc. 2,848
----------
FUNERAL SERVICES (1.8%)
95,500 Service Corp. International 2,698
----------
FURNITURE (0.7%):
28,300 Leggett & Platt, Inc. 1,090
----------
HEAVY MACHINERY (2.3%):
61,800 Baker Hughes, Inc. 1,391
40,650 Tyco Laboratories, Inc. 2,134
----------
3,525
----------
HOLDING COMPANIES (0.2%):
7,900 Northern Trust Corp.(c) 289
----------
HOTELS & MOTELS (1.4%):
72,300 Mirage Resorts, Inc.(c) 2,169
----------
INSURANCE (5.4%):
46,200 American Re Corp. 1,756
55,200 Kemper Corp. 2,498
47,500 Progressive Corp. 1,793
34,500 TransAtlantic Holdings 2,190
----------
8,237
----------
MACHINE TOOLS (2.9%):
90,900 Albany International Corp. 1,988
22,900 Greenfield Industries 676
67,200 Manitowoc Industries 1,756
----------
4,420
----------
MANUFACTURING (2.2%):
38,000 Briggs & Stratton Corp. 1,335
19,100 Hillenbrand 566
56,466 Pall Corp. 1,320
11,100 Paragon Trade Brands, 172
Inc.(c)
----------
3,393
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
63
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
SPECIAL VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (3.8%):
139,300 Community Psychiatric
Centers, Inc.(c) $ 1,845
43,200 Lincare Holdings(c) 1,334
60,100 Quorum Health Group(c) 1,240
7,100 Ventritex(c) 107
42,437 Vivra, Inc.(c) 1,363
----------
5,889
----------
MEDICAL SUPPLIES (0.2%):
10,000 Sunrise Medical, Inc.(c) 303
----------
METALS (3.3%):
86,100 CBI Industries, Inc. 2,132
28,000 Kennametal, Inc. 938
31,800 Minerals Technologies, Inc. 1,057
32,500 USX U.S. Steel Group 991
----------
5,118
----------
NEWSPAPERS (1.6%):
41,100 Tribune Co. 2,430
----------
OIL & GAS EXPLORATION (2.1%):
80,100 Anadarko Petroleum 3,294
----------
OIL & GAS PRODUCTION (1.2%):
46,100 Snyder Oil Corp. 663
42,500 Vastar Resources, Inc. 1,137
----------
1,800
----------
RETAIL (1.7%):
70,800 Hannaford Brothers 1,867
22,500 TJX Companies, Inc. 259
13,800 Tiffany & Co. 443
----------
2,569
----------
RUBBER (1.0%):
15,800 Bandag, Inc. 938
4,500 Bandag, Inc. Class A 249
19,125 Standard Products Co. 378
----------
1,565
----------
SEMICONDUCTORS (0.5%):
13,500 Applied Materials Inc.(c) 832
----------
SHOES, LEATHER GOODS (1.3%):
25,600 Nike, Inc. 1,962
----------
SOFTWARE & COMPUTER SERVICES (1.2%):
10,000 American Software, Inc. 41
14,750 Analysts International Corp. 372
28,300 Policy Management
Systems(c) 1,426
----------
1,839
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
STEEL (1.5%):
36,700 A.K. Steel Holding Corp.(c) $ 987
68,620 Worthington Industries, Inc. 1,295
----------
2,282
----------
TELECOMMUNICATIONS (0.8%):
4,600 Comsat Corp. 92
53,333 Federal Signal Corp. 1,207
----------
1,299
----------
TOBACCO (0.4%):
23,773 Universal Corp. 544
----------
TRANSPORTATION (3.8%):
45,350 Gatx Corp. 2,041
40,800 Pittston Services Group 969
80,750 Illinois Central Corp. 2,836
----------
5,846
----------
UTILITIES -- ELECTRIC & GAS (8.0%):
32,400 Brooklyn Union Gas Co. 786
27,020 DQE Co. 912
118,600 Florida Progress Corp. 3,617
148,300 Northeast Utilities 3,244
79,400 Public Service Co. of 2,392
Colorado
8,500 Raychem Corp. 303
27,700 Washington Gas Light Co. 1,080
----------
12,334
----------
UTILITIES -- TELECOMMUNICATIONS (1.1%):
69,400 LDDS Communications(c) 1,665
- ------------------------------------------------------------
TOTAL COMMON STOCKS 145,300
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (5.6%)
1,806,695 Federated Treasury 1,806
Obligation
6,859,515 Shearson U.S. Treasury Fund 6,860
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 8,666
- ------------------------------------------------------------
TOTAL (COST $142,586)(A) $ 153,966
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $153,591.
(b) 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 $ 16,787
Unrealized depreciation (5,407)
----------
Net unrealized appreciation $ 11,380
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
64
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments
SPECIAL GROWTH FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (94.8%)
AUTOMOTIVE PARTS (3.8%):
8,900 Breed Technologies, Inc. $ 179
20,000 Kaydon Corp. 550
----------
729
----------
BANKS (1.7%):
8,163 First Bank Systems, Inc. 331
----------
COMPUTERS & PERIPHERALS (4.9%):
12,000 Optical Data Systems(c) 486
10,000 Sungard Data Systems,
Inc.(c) 466
----------
952
----------
DRUG STORES (1.0%):
7,000 Eckerd Corp.(c) 204
----------
ELECTRONIC & ELECTRICAL (2.5%):
11,000 Avnet, Inc. 490
----------
FINANCIAL SERVICES (4.0%):
34,300 Aames Financial Corp. 429
8,500 Green Tree Financial Corp. 347
----------
776
----------
FURNITURE (4.1%):
24,000 Juno Lighting 498
11,000 LaZBoy Chair Co. 297
----------
795
----------
HOSPITAL & NURSING EQUIPMENT (3.1%):
15,000 Invacare Corp. 593
----------
INSURANCE -- LIFE (5.3%):
48,090 Gainsco, Inc. 511
14,500 Reliastar Financial Corp. 520
----------
1,031
----------
LEISURE -- RECREATION, GAMING (2.2%):
16,000 Aldila(c) 98
26,200 Callaway Golf Co. 324
----------
422
----------
MISCELLANEOUS MANUFACTURING (5.0%):
18,000 Keystone International, Inc. 378
25,000 Pall Corp. 584
----------
962
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (7.4%):
15,800 Lincare Holdings(c) $ 488
14,300 Mid Atlantic Medical
Services,
Inc.(c) 247
5,400 Pacificare Health System(c) 335
15,200 Sun Healthcare Group(c) 366
----------
1,436
----------
METALS (7.3%):
40,000 Addington Resources, Inc.(c) 450
13,000 Commercial Metals Co. 345
15,000 Mueller Industries, Inc.(c) 624
----------
1,419
----------
OFFICE EQUIPMENT & SUPPLIES (2.5%):
50,000 Checkmate Electronics(c) 481
----------
OIL & GAS EXPLORATION (5.6%):
10,000 Barrett Resources Corp.(c) 235
13,000 Devon Energy Corp. 270
10,000 H.S. Resource, Inc.(c) 165
18,000 Newfield Exploration(c) 414
----------
1,084
----------
PHARMACEUTICALS (3.2%):
18,000 Teva Pharmaceutical
Industries Ltd. 617
----------
PUBLISHING (2.9%):
5,000 Belo Corp. 300
15,000 Valassis Communications(c) 263
----------
563
----------
RETAIL (5.1%):
23,000 Lillian Vernon Corp. 469
16,000 Medicine Shoppe
International, Inc. 512
----------
981
----------
SEMICONDUCTORS (11.7%):
12,000 Advanced Micro Devices(c) 432
5,300 Alliance Semiconductor
Corp.(c) 215
14,100 Atmel Corp.(c) 620
30,000 Integrated Circuit 311
Systems(c)
5,000 Lam Research Corp.(c) 253
7,400 Linear Technology 442
----------
2,273
----------
SERVICES (NON-FINANCIAL) (1.8%):
20,000 Safecard Services 350
----------
TELECOMMUNICATIONS (2.4%):
21,000 Digi International, Inc.(c) 467
352 Intellicall, Inc.(c) 2
----------
469
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
65
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments -- Continued
SPECIAL GROWTH FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TRANSPORTATION -- RAIL (2.3%):
16,000 Railtex, Inc.(c) $ 444
----------
TRUCKING (5.0%):
21,000 American Freightways, 491
Inc.(c)
20,500 TNT Freightways Corp. 481
----------
972
- ------------------------------------------------------------
TOTAL COMMON STOCKS 18,374
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (6.0%)
295,621 Federated Treasury 296
Obligation
868,947 Shearson U.S. Treasury Fund 869
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,165
- ------------------------------------------------------------
TOTAL (COST $18,177)(B) $ 19,539
- ----------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $19,386.
(b) 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 $34. 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 $ 2,271
Unrealized depreciation (943)
----------
Net unrealized appreciation $ 1,328
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
66
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
OHIO REGIONAL STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (94.7%)
AEROSPACE/DEFENSE (0.2%):
5,361 GenCorp, Inc. $ 67
----------
AMUSEMENT & RECREATION SERVICES (0.6%):
7,000 Cedar Fair L.P. 219
----------
AUTOMOTIVE PARTS (5.2%):
24,000 Dana Corp. 617
15,000 Lamson & Sessions Co.(c) 96
15,000 TRW, Inc. 1,115
----------
1,828
----------
BANKS (7.2%):
26,000 Charter One Financial, Inc. 594
14,000 First Merit Corp. 324
9,375 Huntington Bancshares, Inc. 176
23,000 National City Corp. 630
15,000 Provident Bancorp 506
2,000 Second Bancorp 45
6,000 Star Bank 250
----------
2,525
----------
BUILDING MATERIALS (1.2%):
10,000 Medusa Corp. 226
5,000 Owens Corning Fiberglas
Corp.(c) 183
----------
409
----------
CHEMICALS (8.1%):
12,500 A. Schulman, Inc. 392
16,000 Chemed Corp. 492
23,500 Chempower, Inc.(c) 73
20,000 Ferro Corp. 568
6,000 Lesco, Inc. 95
20,000 Lubrizol Corp. 697
26,250 RPM, Inc. 518
----------
2,835
----------
CONSUMER GOODS (2.1%):
12,000 American Greetings Corp. 327
43,000 Gibson Greetings, Inc. 430
----------
757
----------
ELECTRICAL EQUIPMENT (4.7%):
60,000 Pioneer-Standard
Electronics,
Inc. 1,170
20,000 Robbins & Myers Inc. 485
----------
1,655
----------
ENGINEERING (0.3%):
5,000 Corrpro(c) 93
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FINANCIAL SERVICES (2.4%):
15,000 Haverfield Corp. $ 203
16,000 McDonald & Co. Investments 232
24,000 State Auto Financial 402
----------
837
----------
FOOD DISTRIBUTORS (0.9%):
10,000 Chiquita Brands 134
International
7,000 Kroger Co.(c) 178
----------
312
----------
FOREST PRODUCTS (2.9%):
12,000 Mead Corp. 621
15,000 Reynolds & Reynolds Co. 398
----------
1,019
----------
HEALTH CARE (0.4%):
9,000 Health Power, Inc.(c) 138
----------
HOSPITAL & NURSING EQUIPMENT (5.6%):
25,000 Invacare Corp. 988
20,000 Omnicare, Inc. 972
----------
1,960
----------
HOUSEHOLD GOODS (3.1%):
26,221 Lancaster Colony Corp. 911
20,000 Sun Television & Appliance 168
----------
1,079
----------
INDUSTRIAL SERVICES (3.9%):
45,000 ACME Cleveland Corp. 934
22,000 Amcast Industrial Corp. 440
----------
1,374
----------
INSURANCE (2.4%):
10,000 Ohio Casualty 293
15,000 Progressive Corp. 566
----------
859
----------
MACHINE TOOLS (8.3%):
15,750 Bearings, Inc. 488
17,000 Cincinnati Milacron, Inc. 455
37,050 Commercial Intertech Corp. 820
46,500 Gorman Rupp Co. 703
8,250 LDI Corp.(c) 27
5,000 Monarch Machine Tool Co. 49
25,000 Telxon Corp. 393
----------
2,935
----------
MANUFACTURING (2.2%):
10,000 Parker-Hannifin Corp. 520
7,000 TRINOVA Corp. 243
----------
763
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
67
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
OHIO REGIONAL STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
METALS (1.0%):
10,000 Brush Wellman, Inc. $ 197
5,000 Cold Metal Products, Inc.(c) 34
10,000 Park-Ohio Industries, 114
Inc.(c)
----------
345
----------
OFFICE EQUIPMENT & SUPPLIES (2.7%):
23,000 Diebold, Inc. 955
----------
OIL & GAS EXPLORATION (1.8%):
33,000 USX -- Marathon Group 619
----------
PAINT, VARNISHES & ENAMELS (1.4%):
14,000 Sherwin Williams Co. 499
----------
POLLUTION CONTROL SERVICES (0.7%):
51,100 Mid American Waste
Systems(c) 243
----------
PRECISION INSTRUMENTS (1.4%):
30,000 Keithley Instruments, Inc. 506
----------
PRINTING (0.3%):
20,000 Multi-Color Corp.(c) 98
----------
PUBLISHING (2.0%):
25,000 Scripps (E.W.) Co. 716
----------
REAL ESTATE INVESTMENT TRUSTS (1.0%):
16,000 Health Care REIT, Inc. 348
----------
RESTAURANTS (3.3%):
30,000 Bob Evans Farms, Inc. 615
20,000 Frisch's Restaurants 185
22,000 Wendy's International 374
----------
1,174
----------
RETAIL (2.8%):
15,000 Consolidated Stores Corp.(c) 257
17,000 Fabri-Centers of America, 315
Inc.(c)
15,000 The Limited, Inc. 320
10,000 Value City Department
Stores,
Inc.(c) 90
----------
982
----------
RUBBER & RUBBER PRODUCTS (1.6%):
5,000 Cooper Tire & Rubber Co. 123
12,000 Goodyear Tire & Rubber Co. 456
----------
579
----------
SERVICES (NON-FINANCIAL) (0.3%):
4,200 Roto Rooter, Inc. 103
----------
SHIPPING (0.3%):
3,000 Oglebay Norton Co. 98
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
STEEL (3.3%):
35,000 Shiloh(c) $ 333
9,000 Timken Co. 363
25,000 Worthington Industries, Inc. 472
----------
1,168
----------
TEXTILE MANUFACTURING (1.1%):
25,000 Essef Corp.(c) 394
----------
TRANSPORTATION (1.6%):
22,500 Comair Holding, Inc. 567
----------
TRUCKS (1.2%):
20,000 Thor Industries, Inc. 418
----------
UTILITIES -- ELECTRIC (3.2%):
14,000 American Electric Power 459
22,500 D.P.L., Inc. 470
10,000 Ohio Edison 200
----------
1,129
----------
UTILITIES -- TELECOMMUNICATIONS (2.0%):
30,000 Cincinnati Bell 720
- ------------------------------------------------------------
TOTAL COMMON STOCKS 33,325
- ------------------------------------------------------------
- ----------------------------------------------
RIGHTS & WARRANTS (0.2%)
10,000 Cincinnati Microwave, 59
Inc.(c)
- ------------------------------------------------------------
TOTAL RIGHTS & WARRANTS 59
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (5.1%)
303,843 Federated Treasury 304
Obligation
1,476,549 Shearson U.S. Treasury Fund 1,476
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,780
- ------------------------------------------------------------
TOTAL (COST $24,640)(B) $ 35,164
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $35,183.
(b) 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 $ 12,135
Unrealized depreciation (1,611)
----------
Net unrealized appreciation $ 10,524
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
68
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
CORPORATE BONDS (0.1%)
FRANCE (0.1%):
1,313 Axa SA Convertible(c),
4.50%, 1/1/99 $ 78
- ----------------------------------------------------------
TOTAL CORPORATE BONDS 78
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (97.2%)
AUSTRALIA (1.0%):
Energy Sources
60,000 The Broken Hill Proprietary
Co., Ltd.(c) 873
- ----------------------------------------------------------
TOTAL AUSTRALIA 873
- ----------------------------------------------------------
BRITAIN (9.1%):
BANKS (1.3%):
231,000 Standard Chartered Bank 1,119
--------
BROADCASTING & PUBLISHING (1.2%):
78,400 Reed International 1,009
--------
BUSINESS & PUBLIC SERVICES (4.3%):
122,200 British Airport Authority 932
122,600 Cable Wireless 792
65,800 Carlton Communications Plc. 1,000
127,800 Reuters 972
--------
3,696
--------
OIL & GAS PRODUCTION (1.2%):
144,400 British Petroleum 1,040
--------
TELECOMMUNICATIONS EQUIPMENT (1.1%):
311,000 Vodafone 973
- ----------------------------------------------------------
TOTAL BRITAIN 7,837
- ----------------------------------------------------------
FINLAND (1.2%):
ELECTRONIC & ELECTRICAL (1.2%):
25,000 Nokia AB 1,022
- ----------------------------------------------------------
TOTAL FINLAND 1,022
- ----------------------------------------------------------
FRANCE (9.9%):
ADVERTISING (0.7%):
5,750 Euro RSCG Worldwide 634
--------
AUTOMOTIVE PARTS (1.3%):
18,700 Valeo 1,067
--------
ELECTRONIC & ELECTRICAL (2.3%):
680 LeGrand 987
13,300 Schneider 1,024
--------
2,011
--------
INSURANCE (1.2%):
19,700 Axa 1,040
--------
MANUFACTURING - CONSUMER GOODS (1.3%):
4,550 Pinault-Printemps 1,031
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RECREATION/OTHER CONSUMER GOODS (1.9%):
6,700 BIC Corp. $ 1,119
3,600 Castorama(c) 597
--------
1,716
--------
RETAIL (1.2%):
2,120 Carrefour 1,065
- ----------------------------------------------------------
TOTAL FRANCE 8,564
- ----------------------------------------------------------
GERMANY (7.6%):
BANKS (2.1%):
1,980 Depfa Bank 1,007
1,620 Deutsche Bank(c) 796
--------
1,803
--------
COSMETICS & RELATED (1.2%):
1,360 Beiersdorf AG 1,061
--------
ENGINEERING/INDUSTRIAL
CONSTRUCTION (1.0%):
2,620 AGIV 844
--------
HEALTH & PERSONAL CARE (1.1%):
1,260 Schering 938
--------
MACHINE TOOLS (1.1%):
3,550 Mannesmann 970
--------
UTILITIES - ELECTRIC (1.1%):
2,660 Veba 994
- ----------------------------------------------------------
TOTAL GERMANY 6,610
- ----------------------------------------------------------
HOLLAND (8.4%):
BREWERIES (1.0%):
6,400 Heineken Holdings 839
--------
COMPUTERS & PERIPHERALS (0.5%):
10,900 Getronics 447
--------
FOREST PRODUCTS (1.0%):
29,300 Koninklijke KNP 885
--------
INSURANCE (1.1%):
18,600 Internationale Nederlanden 982
--------
LEISURE (1.2%):
18,400 Polygram 1,040
--------
POLLUTION CONTROL SERVICES (1.0%):
7,500 Ver Ned Uitgevers(c) 840
--------
SERVICES (NON-FINANCIAL) (1.2%):
16,600 Randstad Holdings 996
--------
SHIPPING & SHIPBUILDING (1.0%):
32,600 IHC Caland 892
--------
WHOLESALE & INTERNATIONAL TRADE (0.4%):
4,500 Hagemeyer 389
- ----------------------------------------------------------
TOTAL HOLLAND 7,310
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
69
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
HONG KONG (5.3%):
BANKS (1.0%):
217,000 Guoco Group $ 824
--------
DIVERSIFIED (1.9%):
197,000 Hutchinson Whampoa 855
122,000 Swire Pacific "A" 816
--------
1,671
--------
RADIO & TELEVISION (0.8%):
179,000 Television Broadcast 666
--------
REAL ESTATE (1.6%):
3,000,000 China Resources 752
124,000 Henderson Land 639
--------
1,391
- ----------------------------------------------------------
TOTAL HONG KONG 4,552
- ----------------------------------------------------------
ITALY (1.8%):
AUTOMOBILES (0.4%):
37,800 Pininfarina 363
--------
INSURANCE (0.5%):
20,000 Assicurazioni Generali 481
--------
UTILITIES - TELECOMMUNICATIONS (0.9%):
282,000 Telecom Italia 751
- ----------------------------------------------------------
TOTAL ITALY 1,595
- ----------------------------------------------------------
JAPAN (33.3%):
AEROSPACE/DEFENSE (0.8%):
100,000 Mitsubishi Heavy Industry 726
--------
BANKS (4.0%):
62,000 Asahi Bank 797
32,000 Mitsubishi Bank 785
47,000 Sanwa Bank 1,027
38,000 Sumitomo Bank 823
--------
3,432
--------
BUILDING MATERIALS (0.9%):
22,000 Tostem Corp. 799
--------
BUSINESS & PUBLIC SERVICE (0.6%):
17,600 Mos Food Services 517
--------
CHEMICALS (1.6%):
36,000 Shin Etsu Chemical 698
127,000 Tosoh Corp.(c) 676
--------
1,374
--------
ELECTRICAL EQUIPMENT (3.5%):
7,300 Keyence(c) 779
14,000 Kyocera 1,083
28,000 Murata Manufacturing 1,126
--------
2,988
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ELECTRONIC & ELECTRICAL (5.2%):
52,000 Canon, Inc. $ 860
88,000 Hitachi, Ltd. 896
9,000 Riso Kagaku 614
25,000 Rohm Co., Ltd. 1,157
32,000 Tokyo Electron 998
--------
4,525
--------
ENGINEERING/INDUSTRIAL CONSTRUCTION (0.3%):
11,000 Kinden 219
--------
FINANCE (1.6%):
50,000 Daiwa Securities 631
12,000 Nichiei Co. 767
--------
1,398
--------
HOUSEHOLD GOODS (0.9%):
20,400 Amway Japan 760
--------
MANUFACTURING - CAPITAL GOODS (1.2%):
16,000 Secom & Co. 1,044
--------
MERCHANDISING (0.9%):
11,000 Seven-eleven Japan 792
--------
PHARMACEUTICALS (1.3%):
51,000 Yamanouchi Pharmaceutical 1,147
--------
RADIO & TELEVISION (0.9%):
3,270 Nippon Television Network 728
--------
REAL ESTATE (0.9%):
60,000 Sekisui House 793
--------
RUBBER & RUBBER PRODUCTS (1.0%):
56,000 Bridgestone 906
--------
STEEL (1.8%):
195,000 Nippon Steel 775
268,000 NKK Corp.(c) 750
--------
1,525
--------
STORAGE & WAREHOUSING (1.0%):
51,000 Mitsubishi Warehouse 880
--------
TELECOMMUNICATIONS EQUIPMENT (1.0%):
98 DDI Corp. 863
--------
UTILITIES - ELECTRIC (0.9%):
66,000 Matsushita Electric Works 793
--------
UTILITIES - TELECOMMUNICATIONS (1.0%):
99 Nippon Telephone & Telegraph 875
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
70
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
WHOLESALE & INTERNATIONAL TRADE (2.0%):
33,000 Canon Sales $ 872
122,000 Itochu Corp. 828
--------
1,700
- ----------------------------------------------------------
TOTAL JAPAN 28,784
- ----------------------------------------------------------
MALAYSIA (1.9%):
DIVERSIFIED (0.9%):
496,000 Renong Berhad 759
--------
FINANCIAL SERVICES (0.5%):
125,000 Hong Leong Credit 456
--------
FOREST PRODUCTS (0.5%):
99,000 Adkam Perdana 445
- ----------------------------------------------------------
TOTAL MALAYSIA 1,660
- ----------------------------------------------------------
NEW ZEALAND (1.1%):
FOREST PRODUCTS (1.1%):
338,000 Fletcher Challenge 910
- ----------------------------------------------------------
TOTAL NEW ZEALAND 910
- ----------------------------------------------------------
SINGAPORE (2.0%):
AIRLINES (1.0%):
84,000 Singapore Airlines, Series F 808
--------
BANKS (1.0%):
81,000 Overseas Chinese Banking
Corp. 884
- ----------------------------------------------------------
TOTAL SINGAPORE 1,692
- ----------------------------------------------------------
SPAIN (1.3%):
DIVERSIFIED (0.3%):
92,000 Cofir 299
--------
FOOD DISTRIBUTORS (1.0%):
48,600 Pryca 861
- ----------------------------------------------------------
TOTAL SPAIN 1,160
- ----------------------------------------------------------
SWEDEN (5.1%):
AUTOMOBILES (0.9%):
41,400 Volvo AB 777
--------
COSMETICS & RELATED (1.3%):
37,300 Astra A Free(c) 1,088
--------
ELECTRONIC & ELECTRICAL (0.9%):
41,000 Allgon 804
--------
MANUFACTURING (1.2%):
16,000 Ericsson (L.M.) Series B 1,059
--------
MEDICAL SUPPLIES (0.8%):
45,000 Arjo 700
- ----------------------------------------------------------
TOTAL SWEDEN 4,428
- ----------------------------------------------------------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
SWITZERLAND (4.3%):
DIVERSIFIED (0.9%):
750 Baer Holdings Bearer $ 788
--------
FOOD PROCESSING (1.1%):
960 Nestle Registered 941
--------
PHARMACEUTICALS (1.1%):
165 Roche Holdings AG
Genusscheine NPV 995
--------
UTILITIES - ELECTRIC (1.2%):
1,020 Brown Boveri, Series A 1,010
- ----------------------------------------------------------
TOTAL SWITZERLAND 3,734
- ----------------------------------------------------------
UNITED STATES (3.9%):
BROKERAGE FIRMS & SECURITY DEALERS (0.3%):
8,700 Brazilian Investment Co. 273
--------
INDUSTRIAL SERVICES (0.9%):
750,000 China North Industries(c) 750
--------
INVESTMENT FUNDS - CLOSED END (2.2%):
17,000 Chile Fund 805
12,700 India Magnum Fund NV A(c) 722
122 Korea Eurofund(c) 435
--------
1,962
--------
UTILITIES - TELECOMMUNICATIONS (0.5%):
25,700 Videotron Holdings PLC.(c) 402
- ----------------------------------------------------------
TOTAL UNITED STATES 3,387
- ----------------------------------------------------------
TOTAL COMMON STOCKS 84,118
- ----------------------------------------------------------
- ---------------------------------------------------------
INVESTMENT COMPANIES (0.8%)
667,222 Shearson U.S. Treasury Fund 667
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 667
- ----------------------------------------------
TOTAL (COST $80,808)(B) $ 84,863
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $86,530.
(b) 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 $ 6,255
Unrealized depreciation (2,199)
-------
Net unrealized
appreciation $ 4,056
========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
71
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
- ---------------------------------------------------------
FORWARD CURRENCY CONTRACTS
<TABLE>
<CAPTION>
CONTRACT
VALUE
CONTRACT (U.S. APPRECIATION DELIVERY
CURRENCY PRICE DOLLARS) (DEPRECIATION) DATE
- ----------------------------------------- --------- ---------- -------- -------
<S> <C> <C> <C> <C>
CURRENCY SOLD:
Japanese Yen 84.125032 $ (258,668) $ (331) 5/2/95
---------- --------
Total currency sold $ (258,668) $ (331)
========= ========
CURRENCY PURCHASED:
Dutch Guilder 1.514748 $ 258,668 $ (5,760) 5/2/95
---------- --------
Total currency purchased $ 258,668 $ (5,760)
========= ========
Net payable for forward currency
contracts purchased and sold $ (6,091)
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
72
<PAGE>
Notes to Financial Statements
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
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, Tax-Free Money Market Fund, Limited
Term Income Fund, Government Mortgage Fund, Intermediate Income Fund, Investment
Quality Bond Fund, Ohio Municipal Bond Fund, Balanced Fund, Stock Index Fund,
Value Fund, Diversified Stock Fund, Growth Fund, Special Value Fund, Special
Growth Fund, Ohio Regional Stock Fund, and International Growth Fund.
2. SIGNIFICANT ACCOUNTING POLICIES:
SECURITIES VALUATION:
- --------------------
Investments of the U.S. Government Obligations Fund, the Prime Obligations Fund
and the Tax-Free 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, the
Government Mortgage Fund, the Intermediate Income Fund, the Investment Quality
Bond Fund, the Ohio Municipal Bond Fund, the Balanced Fund, the Stock Index
Fund, the Value Fund, the Diversified Stock Fund, the Growth Fund, the Special
Value Fund, the Special Growth Fund, the Ohio Regional Stock Fund, and the
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 in the Balanced Fund and the
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 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.
The Funds isolate that portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuation arising
from changes in market prices of securities held.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, purchases
and sales of foreign currencies, currency gains or losses realized between the
trade and settlement dates on securities transactions and the difference between
the amount of interest recorded on a Fund's books, 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 the
exchange rate.
73
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
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
an unrealized gain or loss. When the Forward is closed, the Fund records a
realized gain or loss equal to the difference between the value at the time it
was opened and the value at the time it was closed. 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:
- -----------------
Each 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. The 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 move 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; during the period
between purchase and settlement no payment is made and no interest accrues. A
segregated account is established and maintains cash and marketable securities
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.
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 and distributable net realized capital gains, if any, are declared and
distributed at least annually for the Stock Index Fund, the Value Stock Fund,
the Diversified Stock Fund, the Growth Fund, the Special Value Fund, the Special
Growth Fund, the Ohio Regional Stock Fund, and the International Growth Fund.
Dividends from net investment income are declared and paid monthly and
distributable net realized capital gains, if any, are declared and distributed
at least annually for the Limited Term Income Fund, the Government Mortgage
Fund, the Intermediate Income Fund, the Investment Quality Bond Fund, the Ohio
Municipal Bond Fund, and the Balanced Fund.
74
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
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, 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.
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.
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the six
months ended April 30, 1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Limited Term Income Fund............. $108,053,386 $ 27,036,296
Government Mortgage Fund............. $ 34,141,401 $ 41,957,068
Intermediate Income Fund............. $ 45,696,863 $ 32,245,604
Investment Quality Bond Fund......... $ 53,718,571 $ 49,102,816
Ohio Municipal Bond Fund............. $ 35,466,334 $ 36,043,062
Balanced Fund........................ $ 79,112,448 $ 62,383,648
Stock Index Fund..................... $ 20,540,742 $ 9,328,966
Value Fund........................... $ 63,655,162 $ 17,814,533
Diversified Stock Fund............... $142,784,968 $116,116,919
Growth Fund.......................... $ 1,331,614 $ 25,478,542
Special Value Fund................... $ 47,216,203 $ 23,119,184
Special Growth Fund.................. $ 7,686,792 $ 11,925,297
Ohio Regional Stock Fund............. $ 1,531,661 $ 2,110,048
International Growth Fund............ $ 30,178,013 $ 19,936,541
</TABLE>
4. 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 and sub-investment advisory agreements, SAM is entitled to receive
fees based on a percentage of the average net assets of the Funds. Society
serves the Funds as custodian for all funds except the International Growth
Fund. Society received no fees from the Funds for providing custodian services
except for reimbursement of actual out-of-pocket expenses incurred. During the
year ended October 31, 1994, KeyCorp made a capital contribution of $2,506,027
to the Prime Obligations Fund.
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,
75
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
and assisting shareholders in changing dividend options, account designations
and addresses. For providing such services, Society may receive a fee computed
daily as a percentage of the average net assets of the Funds.
Affiliates of The BISYS Group, Inc. ("BISYS") serve as the Fund's administrator
and distributor. Effective March 29, 1995, Concord Holding Corporation (the
"Administrator"), an indirect, wholly-owned subsidiary of BISYS, became the
administrator to the Funds and Victory Broker Dealer Services, Inc. (the
"Distributor") became the distributor to the Funds. Prior to March 29, 1995,
other affiliates of BISYS served as the Fund's administrator and distributor.
Certain officers of the Funds are affiliated with BISYS. Such officers receive
no direct payments from the Funds for serving as officers of the Funds. Such
officers are paid no fees directly by the Funds for serving as officers of the
Funds.
Under the terms of the administration agreement, the Administrator's fees
are computed daily as a percentage of the average net assets of the Funds. The
Distributor receives no fees from the Funds for providing distribution services
and is entitled to receive commissions on sales of shares of the variable net
asset value funds. For the six months ended April 30, 1995, the Distributor
received $171,000 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 $74,000 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 net assets.
Fees may be voluntarily reduced to assist the Funds in maintaining competitive
expense ratios.
Information regarding related party transactions is as follows for the six
months ended April 30, 1995:
<TABLE>
<CAPTION>
U.S. TAX-FREE
GOVERNMENT PRIME MONEY
OBLIGATIONS OBLIGATIONS MARKET
FUND FUND FUND
-------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .35% .35% .35%
Voluntary fee reductions $ 16,151
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15%
Voluntary fee reductions $ 260
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $140,500 $193,436 $ 67,915
</TABLE>
<TABLE>
<CAPTION>
LIMITED INVESTMENT
TERM GOVERNMENT INTERMEDIATE QUALITY
INCOME MORTGAGE INCOME BOND
FUND FUND FUND FUND
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .50% .50% .75% .75%
Voluntary fee reductions $ 11,015 $ 12,348 $160,661 $122,074
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15% .15%
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 38,451 $ 48,386 $ 39,466 $ 32,928
</TABLE>
76
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO
MUNICIPAL STOCK
BOND BALANCED INDEX
FUND FUND FUND
-------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .60% 1.00% .60%
Voluntary fee reductions $ 85,187 $293,792 $ 72,524
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15%
Voluntary fee reductions $ 70,657
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 20,140 $ 47,761 $ 10,560
Voluntary fee reductions: $ 17,703
</TABLE>
<TABLE>
<CAPTION>
DIVERSIFIED
VALUE STOCK GROWTH
FUND FUND FUND
-------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) 1.00% .65% 1.00%
Voluntary fee reductions $434,192 $ 58,363 $ 93,184
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15%
Voluntary fee reductions $ 303 $ 240
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 70,468 $ 84,805 $ 16,607
</TABLE>
<TABLE>
<CAPTION>
OHIO
SPECIAL SPECIAL REGIONAL INTERNATIONAL
VALUE GROWTH STOCK GROWTH
FUND FUND FUND FUND
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) 1.00% 1.00% .75% 1.10%
Voluntary fee reductions $192,792 $ 39,953 $ 7,022 $ 61,413
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15% .15%
Voluntary fee reductions $ 144
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 40,759 $ 7,725 $ 11,588 $ 59,708
</TABLE>
77
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
5. 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>
Aggressive Growth Portfolio1 to Special Growth Fund
Corporate Bond Portfolio1 to Investment Quality Bond Fund
Equity Income Portfolio1 to Value Fund
Equity Portfolio1 to Growth Fund
Foreign Markets Portfolio1 to International Growth Fund
Short-Term Government Income Portfolio1 to Limited Term Income Fund
U.S. Treasury Money Market Portfolio1 to U.S. Government Obligations Money Fund
</TABLE>
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 Portfolio1 to Financial Reserves Fund
Fund for Income Portfolio to Fund for Income
Government Bond Portfolio1 to Government Bond Fund
Institutional Money Market Portfolio1 to Institutional Money Market Fund
National Municipal Bond Portfolio1 to National Municipal Bond Fund
New York Tax-Free Portfolio to New York Tax-Free Fund
Ohio Municipal Money Market Portfolio1 to Ohio Municipal Money Market 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 acquisition was
accomplished by a tax-free exchange of 858,745 shares of the Growth Fund for the
882,905 shares of the Society Earnings Momentum Fund outstanding on March 17,
1994. These share transactions are included in the Growth Fund's statement of
changes in net assets. The Society Earnings Momentum Fund's net assets at March
17, 1994 of approximately $8,794,000, including $649,000 of unrealized
appreciation, were combined with those of the Growth Fund. The combined net
assets immediately after the acquisition were approximately $70,777,000.
- ---------------
1 Not included in this report.
78
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION:
The Victory Funds (the "Fund"), organized as a Massachusetts business trust on
January 6, 1982, is an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"). The Fund's
Declaration of Trust permits the Board of Trustees (the "Trustees") to create an
unlimited number of Portfolios. Victory New York Tax-Free Portfolio and the Fund
for Income Portfolio are two series (of a total of 14 series) of the Fund. Each
Portfolio's capitalization consists of an unlimited number of shares of
beneficial interest without par value.
On April 30, 1994, all of the assets and liabilities of the Investors Preference
New York Tax-Free Fund, Inc. ("IPNY") and the Investors Preference Fund for
Income, Inc. ("IPFFI") were acquired by the New York Tax-Free Portfolio and the
Fund for Income Portfolio, respectively, of the Fund pursuant to separate
Agreements and Plans of Reorganization approved by the shareholders of each IPNY
and IPFFI.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies for New York
Tax-Free Portfolio and Fund for Income Portfolio (the "Portfolios").
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles.
SECURITIES VALUATION:
- --------------------
The securities of the Fund for Income Portfolio that are traded on an exchange
or on the over-the-counter market are valued based upon the last sale price, or
if no sale has occurred, at the closing bid price. Securities for which market
quotations are not readily available are valued at the closing over-the counter
bid price, if available, or at their fair value as determined in good faith by
management following procedures approved by the Fund's Trustees. Short term debt
instruments with remaining maturities of 60 days or less at the time of purchase
are valued at amortized cost or original cost plus accrued interest, both of
which approximates market value.
The securities of New York Tax-Free Portfolio are valued by a pricing service
based upon a computerized matrix system or appraisals, in each case in reliance
upon information concerning market transactions and quotations from recognized
municipal securities dealers. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by
management following procedures approved by the Fund's Trustees.
REPURCHASE AGREEMENTS:
- -----------------------
When each Portfolio enters into a repurchase agreement, the repurchase price of
the securities will generally equal the amount paid by each Portfolio plus a
negotiated interest amount. The seller under the repurchase agreement will be
required to provide securities (collateral) to each Portfolio whose value will
be at least equal to the repurchase agreement amount. Each Portfolio monitors
the value of the collateral on a daily basis, and if the value of the collateral
falls below required levels, each Portfolio intends to seek additional
collateral from the seller to terminate the repurchase agreements. If the seller
defaults, each Portfolio would suffer a loss to the extent that the proceeds
from the sale of the underlying securities were less than the repurchase price.
Any such loss would be increased by any cost incurred on the disposing of such
securities. A repurchase agreement entered into by each Portfolio will be
limited to transactions with broker-dealers or domestic banks believed to
present minimal credit risks, and each Portfolio will take delivery of all
securities underlying the repurchase agreement until such agreement expires.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTION:
- ----------------------------------------------
The New York Tax-Free Portfolio may engage in when-issued or delayed delivery
transactions. To the extent the Portfolio engages in such transactions, it will
do so for the purpose of acquiring portfolio securities consistent with its
investment objectives and policies and not for the purpose of investment
leverage. The Portfolio will record a when-issued security and the related
liability on the trade date. Until the securities are received and paid for, the
Portfolio will maintain security positions such that sufficient liquid assets
will be available to make payments for the securities purchased. Securities
purchased on a when-issued or delayed delivery basis are marked to market daily
and begin earning interest on settlement date.
79
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements--Continued
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
INCOME TAXES:
- -------------
It is the policy of each Portfolio 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.
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. 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.
DIVIDENDS TO SHAREHOLDERS:
- -------------------------
Dividends from net investment income are declared and paid monthly and
distributable net realized capital gains, if any, are declared and distributed
at least annually for the New York Tax-Free Portfolio and the Fund for Income
Portfolio.
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, 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.
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the six
months ended April 30, 1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
New York Tax-Free $ 1,117,454 $ 1,736,206
Fund for Income $ 7,973,666 $ 15,709,007
</TABLE>
4. RELATED PARTY TRANSACTIONS:
ADVISORY AGREEMENT:
- -------------------
Key Trust Company ("Key Trust") is the investment adviser for each Portfolio and
receives a fee based on average daily net assets at an annual rate of 0.55% and
0.50% for New York Tax-Free Portfolio and Fund for Income Portfolio,
respectively. For the six months ended April 30, 1995, Key Trust accrued $44,599
and $64,663 in advisory fees, of which $41,068 and $42,981 was voluntarily
waived, for New York Tax-Free Portfolio and Fund for Income Portfolio,
respectively.
ADMINISTRATION AGREEMENT:
- -------------------------
Concord Financial Group (the "Administrator" or "Concord") is the Administrator
to each Portfolio under an Administration Agreement with respect to each
Portfolio. The Administrator receives an annual fee of 0.15% of each Portfolio's
average net assets for services performed under each Portfolio's Administration
Agreement. For the six months ended April 30, 1995, the administrator accrued
$12,094 and $19,284 from the New York Tax-Free Portfolio and Fund for Income
Portfolio, respectively, in administration fees, none of which were waived.
Effective March 29, 1995 Concord became BISYS Investment Services Inc., a wholly
owned subsidiary of The BISYS Group, Inc. ("BISYS"). BISYS serves as
administrator on substantially identical terms as described above.
80
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements--Continued
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
DISTRIBUTION AGREEMENT:
- -----------------------
Victory Broker Dealer Services, Inc. (the "Distributor"), an affiliate of the
Administrator, serves as Distributor to each
Portfolio. The Distributor sells shares of the Portfolios as agent on behalf of
the Fund at no cost to the Portfolios. The Fund has adopted a Distribution and
Service Plan (the "Plan") for the Class A shares of New York Tax-Free Portfolio
and The Fund for Income Portfolio under Rule 12b-1 under the Investment Company
Act of 1940. Under the Plan, the Adviser or Administrator may use their fee
revenues, or other resources to pay expenses associated with activities
primarily intended to result in the sale of the shares of the Portfolios. The
Fund has adopted a Distribution Plan for Class B shares of New York Tax-Free
Portfolio to compensate the Distributor for its services and costs in
distributing Class B shares and servicing accounts. Under the Distribution Plan,
the Fund pays the Distributor an annual "asset-based sales charge" of 0.75% per
year on Class B shares that are outstanding for six years or less. This fee is
computed on the average annual net assets of Class B shares, determined as of
the close of each regular business day.
* Directors fees and expenses for the six months ended April 30, 1995 of $777
for New York Tax-Free Portfolio and $126 for Fund for Income Portfolio were paid
to directors having no affiliation with the Fund other than in their capacity as
directors.
5. MERGERS:
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 Portfolio of the Victory Funds to a
corresponding investment fund of the Victory Portfolios in exchange for the
assumption of liabilities of each Victory Fund. The following Portfolios of The
Victory Funds merged into existing funds of The Victory Portfolios:
<TABLE>
<CAPTION>
THE VICTORY FUNDS THE VICTORY PORTFOLIOS
- ---------------------------------------- ------------------------------------------------------
<S> <C> <C>
Aggressive Growth Portfolio1 to Special Growth Fund
Corporate Bond Portfolio1 to Investment Quality Bond Fund
Equity Income Portfolio1 to Value Fund
Equity Portfolio1 to Growth Fund
Foreign Markets Portfolio1 to International Growth Fund
Short-Term Government Income Portfolio1 to Limited Term Income Fund
U.S. Treasury Money Market Portfolio1 to U.S. Government Obligations Money Fund
</TABLE>
Additionally, the following series of The Victory Funds merged into newly
created series of The Victory Portfolios:
<TABLE>
<CAPTION>
THE VICTORY FUNDS THE VICTORY PORTFOLIOS
- ---------------------------------------- ------------------------------------------------------
<S> <C> <C>
Financial Reserves Portfolio1 to Financial Reserves Fund
Fund for Income Portfolio to Fund for Income
Government Bond Portfolio1 to Government Bond Fund
Institutional Money Market Portfolio1 to Institutional Money Market Fund
National Municipal Bond Portfolio1 to National Municipal Bond Fund
New York Tax-Free Portfolio to New York Tax-Free Fund
Ohio Municipal Money Market Portfolio1 to Ohio Municipal Money Market Fund
</TABLE>
As of June 2, 1995 the fund accounting for the Portfolios is being performed by
BISYS Fund Services Ohio, Inc., a wholly owned subsidiary of the The BISYS
Group, Inc.
6. SPECIAL SHAREHOLDER MEETING:
On April 28, 1995, a special meeting of the shareholders of The Victory Funds
was held to consider various proposals, including, among other things, the
approval of an Agreement and Plan of Reorganization whereby the 14 series
portfolios of The Victory Funds were reorganized into corresponding series of
The Victory Portfolios, the election of certain nominees to serve on the Board
of Trustees of The Victory Funds and the ratification of the selection of
Coopers & Lybrand L.L.P. as independent auditors for each portfolio of The
Victory Funds2.
- ---------------
1 Not included in this report.
2 The April 28, 1995 meeting was adjourned until May 26, 1995 with respect to
the New York Tax Free and Fund For Income Portfolios due to a lack of a quorum
on such date. On May 26, 1995, a quorum was present and voted the shares of
such portfolios as indicated.
81
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements--Continued
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
Election of Trustees -- The shareholders of The Victory Funds, as a group, were
requested to direct the proxies to vote for or withhold authority to vote for
the election of certain individuals to serve as Trustees of The Victory Funds.
The shareholders of The Victory Funds approved each nominee. The results of such
solicitation are as follows:
<TABLE>
<CAPTION>
NOMINEE VOTES FOR VOTES WITHHELD
------------------------------------------ -------------- ---------------
<S> <C> <C>
Robert G. Brown 1,306,537,258 38,671,464
Edward P. Cambell 1,308,422,096 36,786,627
Harry Gazelle 1,307,262,991 37,945,462
Thomas F. Morrissey 1,310,379,551 34,828,901
Stanley I. Landgraf 1,308,450,924 36,757,800
Leigh A. Wilson 1,310,734,626 34,474,098
H. Patrick Swygert 1,311,252,568 34,456,155
</TABLE>
Agreement and Plan of Reorganization -- the shareholders of each Portfolio
approved an Agreement and Plan of Reorganization with respect to each Portfolio
as follows:
<TABLE>
<CAPTION>
PORTFOLIO IN FAVOR OPPOSED ABSTAIN
------------------------------------ ------------ ---------- -----------
<S> <C> <C> <C>
NY Tax Free-Class A 871,430 15,011 37,413
NY Tax Free-Class B 29,267 -- 1,666
Fund For Income 1,834,471 11,902 105,207
</TABLE>
Reclassification and Changes in Fundamental Policies -- The shareholders of the
below-listed Portfolios approved certain reclassifications and changes in
fundamental policies of the relevant Portfolio (and the successor Portfolio
post-reorganization) by the following votes:
<TABLE>
<CAPTION>
PORTFOLIO IN FAVOR OPPOSED ABSTAIN
------------------------------------ ------------ ---------- -----------
<S> <C> <C> <C>
NY Tax Free-Class A 871,550 15,011 37,293
NY Tax Free-Class B 29,267 -- 1,666
Fund for Income 1,803,283 40,439 107,858
</TABLE>
Ratification of Independent Auditors -- the shareholders of each Portfolio
ratified the appointment of Coopers & Lybrand L.L.P. as independent auditors for
each Portfolio for the next fiscal year as follows:
<TABLE>
<CAPTION>
PORTFOLIO IN FAVOR OPPOSED ABSTAIN
------------------------------------ ------------ ---------- -----------
<S> <C> <C> <C>
NY Tax Free-Class A 891,636 727 31,490
NY Tax Free-Class B 29,267 -- 1,666
Fund For Income 1,860,529 7,123 83,928
</TABLE>
- --------------------------------------------------------------------------------
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Fund. The report is not
authorized for distribution to prospective investors in the Fund, unless
preceded or accompanied by an effective prospectus. Neither the Fund nor Victory
Broker Dealer Services, Inc. is a bank and Fund shares are not backed or
guaranteed by any bank or insured by the FDIC, the Federal Reserve Board, or any
other agency. Victory Broker Dealer Services, Inc., which distributes The
Victory Funds, is not affiliated with Key Trust Company. Investing in mutual
funds involves risks, including the possible loss of principal amount invested.
An investment in a money market Portfolio is not insured or guaranteed by the
U.S. Government, and there can be no assurance that a money market Portfolio
will maintain a stable $1.00 share price.
- --------------------------------------------------------------------------------
82
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT OBLIGATIONS FUND
---------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.025 0.032 0.026 0.036 0.060 0.076
Distributions
Net investment income (0.025) (0.032) (0.026) (0.036) (0.060) (0.076)
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Total Return 2.57%(a) 3.30% 2.62% 3.66% 6.14% 7.83%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $524,143 $412,048 $515,734 $579,836 $430,248 $376,021
Ratio of expenses to
average net assets 0.62%(b) 0.63% 0.60% 0.60% 0.60% 0.62%
Ratio of net investment income
to average net assets 5.15%(b) 3.20% 2.57% 3.50% 5.92% 7.56%
Ratio of expenses to
average net assets* 0.80%
Ratio of net investment income
to average net assets* 3.03%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
<TABLE>
<CAPTION>
PRIME OBLIGATIONS FUND
---------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.025 0.035 0.030 0.037 0.061 0.078
Net realized losses on investments (0.003)
- ----------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 0.025 0.032 0.030 0.037 0.061 0.078
- ----------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.025) (0.035) (0.030) (0.037) (0.061) (0.078)
Capital transactions 0.003
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Total Return 2.53%(a) 3.57% 3.05% 3.77% 6.32% 8.06%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $430,000 $782,303 $720,024 $524,338 $442,263 $444,238
Ratio of expenses to average net assets 0.69%(b) 0.62% 0.60% 0.61% 0.62% 0.62%
Ratio of net investment income to
average net assets 5.02%(b) 3.52% 2.96% 3.68% 6.14% 7.76%
Ratio of expenses to average net
assets* 0.79%
Ratio of net investment income to
average net assets* 3.35%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
83
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND
----------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 100
- -----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.016 0.021 0.020 0.027 0.043 0.054
Distributions
Net investment income (0.016) (0.021) (0.020) (0.027) (0.043) (0.054)
- -----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Total Return 1.66%(a) 2.17% 2.06% 2.77% 4.44% 5.48%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 209,606 $198,561 $189,351 $151,012 $129,601 $134,652
Ratio of expenses to average net assets 0.61%(b) 0.60% 0.59% 0.61% 0.62% 0.63%
Ratio of net investment income to
average net assets 3.32%(b) 2.14% 2.04% 2.70% 4.29% 5.32%
Ratio of expenses to average net
assets* 0.63%(b) 0.79% 0.60%
Ratio of net investment income to
average net assets* 3.30%(b) 1.95% 2.02%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
84
<PAGE>
THE VICTORY FUNDS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK TAX-FREE PORTFOLIO
-----------------------------------------------------------------------------------
CLASS A
-------------------------------------------------
CLASS B PERIOD
----------------------------- FROM
PERIOD FROM JANUARY 1,
SEPTEMBER 26, 1994 TO YEARS ENDED
1994 TO OCTOBER DECEMBER 31,
OCTOBER 31, 31, -------------------
1994 SIX MONTHS 1994 1993 1992
------------- ENDED ---------- ------- -------
APRIL 30,
1995
----------
SIX MONTHS (UNAUDITED)
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 12.39 $12.62 $ 12.39 $ 13.54 $ 12.76 $ 12.50
- -------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.31 0.07 0.32 0.57 0.70 0.74
Net realized and unrealized
gains (losses) on
investments 0.27 (0.23) 0.30 (1.15) 0.84 0.26
- -------------------------------------------------------------------------------------------------------------------------
Total from investment
activities 0.58 (0.16) 0.62 (0.58) 1.54 1.00
- -------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.30) (0.07) (0.33) (0.57) (0.70) (0.74)
Net realized gains (0.17) -- (0.17) -- (0.06) --
- -------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.47) (0.07) (0.50) (0.57) (0.76) (0.74)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.50 $12.39 $ 12.51 $ 12.39 $ 13.54 $ 12.76
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charge) 4.80%(b) (1.25)%(b) 5.16%(b) (4.31)%(b) 12.34% 8.26%
RATIOS -- SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $ 834 -- $ 15,974 $ 17,840 $28,530 $26,034
Ratio of expenses to average net
assets 2.72%(c) 0.52%(c) 1.10%(c) 0.91%(c) 0.87% 0.66%
Ratio of net investment income to
average net assets 9.48%(c) 5.94%(c) 5.18%(c) 5.33%(c) 5.28% 5.89%
Ratio of expenses to average net
assets* 3.07%(c) 0.86%(c) 1.45%(c) 1.25%(c) 0.96% 0.96%
Ratio of net investment income to
average net assets* 9.13%(c) 5.60%(c) 4.83%(c) 4.99%(c) 5.19% 5.59%
Portfolio turnover rate 17.00% 18.00% 17.00% 18.00% 12.00% 14.00%
<CAPTION>
PERIOD FROM
FEBRUARY 11,
1991 TO
DECEMBER 31,
1991(A)
------------
<S> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 12.00
- ----------------------------------
Investment Activities
Net investment income 0.64
Net realized and unrealized
gains (losses) on
investments 0.50
- ----------------------------------
Total from investment
activities 1.14
- ----------------------------------
Distributions
Net investment income (0.64)
Net realized gains --
- ----------------------------------
Total Distributions (0.64)
- ----------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.50
- ----------------------------------
Total Return (excludes sales
charge) 11.06%(b)
RATIOS -- SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $ 20,995
Ratio of expenses to average net
assets 0.45%(c)
Ratio of net investment income to
average net assets 6.28%(c)
Ratio of expenses to average net
assets* 0.95%(c)
Ratio of net investment income to
average net assets* 5.78%(c)
Portfolio turnover rate 61.00%
</TABLE>
- ---------------
*During the period, certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
FUND FOR INCOME PORTFOLIO
--------------------------------------------------------------------------------------
PERIOD FROM
FEBRUARY 1,
1994 TO YEARS ENDED JANUARY 31,
OCTOBER 31, -------------------------------------------------------
1994 1994 1993 1992 1991 1990
SIX MONTHS ----------- ------- ------- ------- ------- -------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.43 $ 10.14 $ 10.57 $ 10.55 $ 10.19 $ 9.90 $ 9.73
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (0.05) 0.52 0.80 0.80 0.85 0.91 0.93
Net realized and unrealized gains
(losses) on investments 0.58 (0.71) (0.41) 0.06 0.36 0.29 0.17
- ----------------------------------------------------------------------------------------------------------------------------------
Total from investment activities 0.53 (0.19) 0.39 0.86 1.21 1.20 1.10
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.35) (0.52) (0.80) (0.80) (0.85) (0.91) (0.93)
Net realized gains -- -- (0.02) (0.04) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.35) (0.52) (0.82) (0.84) (0.85) (0.91) (0.93)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.61 $ 9.43 $ 10.14 $ 10.57 $ 10.55 $ 10.19 $ 9.90
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charge) 5.70%(a) (1.99)%(a) 3.75% 8.45% 12.34% 12.75% 11.77%
RATIOS -- SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $ 24,713 $29,358 $46,632 $55,075 $58,055 $44,097 $35,788
Ratio of expenses to average net assets 0.57%(b) 1.12%(b) 1.13% 1.12% 0.92% 0.50% 0.29%
Ratio of net investment income to
average net assets 3.51%(b) 7.21%(b) 7.65% 7.56% 8.18% 9.15% 9.34%
Ratio of expenses to average net assets* 0.74%(b) 1.26%(b)
Ratio of net investment income to
average net assets* 3.34%(b) 7.07%(b)
Portfolio turnover 27.00% 18.00% 47.00% 23.00% 24.00% 5.00% 5.00%
</TABLE>
- ---------------
*During the period, certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
85
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED TERM INCOME FUND
----------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.88 $ 10.53 $ 10.45 $ 10.33 $ 10.02 $ 10.04
- ---------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.27 0.54 0.57 0.64 0.73 0.76
Net realized and unrealized gains
(losses) on investments 0.11 (0.61) 0.08 0.13 0.31 (0.01)
- ---------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.38 (0.07) 0.65 0.77 1.04 0.75
- ---------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.28) (0.54) (0.57) (0.64) (0.73) (0.77)
Net realized gains (0.04) (0.01)
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions (0.28) (0.58) (0.57) (0.65) (0.73) (0.77)
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.98 $ 9.88 $ 10.53 $ 10.45 $ 10.33 $ 10.02
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 3.80%(a) (0.66)% 6.39% 7.77% 10.82% 7.75%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 168,112 $ 79,150 $ 81,771 $ 55,565 $ 43,763 $ 31,303
Ratio of expenses to average net
assets 0.77%(b) 0.79% 0.77% 0.78% 0.80% 0.82%
Ratio of net investment income to
average net assets 5.86%(b) 5.29% 5.49% 6.18% 7.20% 7.63%
Ratio of expenses to average net
assets* 0.79%(b) 0.97% 0.78%
Ratio of net investment income to
average net assets* 5.84%(b) 5.10% 5.48%
Portfolio turnover 24.49% 41.26% 50.27% 14.97% 9.79%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
<TABLE>
<CAPTION>
GOVERNMENT MORTGAGE FUND
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31, MAY 18, 1990
ENDED APRIL ---------------------------------------------- TO OCTOBER 31,
30, 1995 1994 1993 1992 1991 1990(A)
----------- -------- -------- -------- ------- --------------
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.33 $ 11.36 $ 11.07 $ 10.73 $ 10.18 $ 10.00
- --------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.36 0.68 0.66 0.74 0.80 0.35
Net realized and unrealized gains
(losses) on investments 0.32 (1.02) 0.32 0.34 0.55 0.18
- --------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.68 (0.34) 0.98 1.08 1.35 0.53
- --------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.37) (0.67) (0.66) (0.74) (0.80) (0.35)
Net realized gains (0.08) (0.02) (0.03)
- --------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.45) (0.69) (0.69) (0.74) (0.80) (0.35)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.56 $ 10.33 $ 11.36 $ 11.07 $ 10.73 $ 10.18
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 6.64%(b) (3.01)% 9.05% 10.34% 13.77% 5.37%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 143,435 $148,168 $132,738 $ 73,660 $42,616 $ 31,972
Ratio of expenses to average net
assets 0.77%(c) 0.76% 0.75% 0.77% 0.78% 0.82%(c)
Ratio of net investment income to
average net assets 6.99%(c) 6.38% 5.92% 6.82% 7.68% 7.98%(c)
Ratio of expenses to average net
assets* 0.79%(c) 0.96% 0.76%
Ratio of net investment income to
average net assets* 6.97%(c) 6.18% 5.92%
Portfolio turnover 24.12% 131.63% 50.18% 11.19% 20.70%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
86
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE INCOME FUND INVESTMENT QUALITY BOND FUND
---------------------------------- ----------------------------------
DECEMBER 10, DECEMBER 10,
1993 1993
TO OCTOBER 31, TO OCTOBER 31,
1994(A) 1994(A)
SIX MONTHS ENDED ---------------- SIX MONTHS ENDED ----------------
APRIL 30, APRIL 30,
1995 1995
---------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.25 $ 10.00 $ 9.10 $ 10.00
- -----------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.30 0.52 0.31 0.53
Net realized and unrealized gains
(losses) on investments 0.17 (0.76) 0.29 (0.92)
- -----------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.47 (0.24) 0.60 (0.39)
- -----------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.31) (0.51) (0.32) (0.51)
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.41 $ 9.25 $ 9.38 $ 9.10
- -----------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 5.07%(b) (2.48)%(b) 6.74%(b) (3.92)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $133,225 $112,923 $ 92,202 $ 94,685
Ratio of expenses to average net
assets 0.81%(c) 0.79%(c) 0.84%(c) 0.79%(c)
Ratio of net investment income to
average net assets 6.65%(c) 6.23%(c) 6.89%(c) 6.33%(c)
Ratio of expenses to average net
assets* 1.08%(c) 1.25%(c) 1.10%(c) 1.25%(c)
Ratio of net investment income to
average net assets* 6.38%(c) 5.77%(c) 6.63%(c) 5.87%(c)
Portfolio turnover 28.74% 55.06% 54.92% 89.92%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
OHIO MUNICIPAL BOND FUND
-----------------------------------------------------------------------------
YEARS ENDED OCTOBER 31, MAY 18, 1990
------------------------------------------ TO OCTOBER 31,
1994 1993 1992 1991 1990(A)
SIX MONTHS ------- ------- ------- ------ --------------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.33 $ 11.52 $ 10.52 $ 10.37 $10.06 $10.00
- ------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.26 0.49 0.52 0.60 0.65 0.28
Net realized and unrealized gains
(losses) on investments 0.52 (0.94) 1.00 0.15 0.31 0.04
- ------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.78 (0.45) 1.52 0.75 0.96 0.32
- ------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income 0.26 (0.49) (0.52) (0.60) (0.65) (0.26)
Net realized gains (0.25)
- ------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.26) (0.74) (0.52) (0.60) (0.65) (0.26)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.85 $ 10.33 $ 11.52 $ 10.52 $10.37 $10.06
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 7.67%(b) (4.08)% 14.75% 7.34% 9.87% 3.27%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $58,137 $57,704 $50,676 $17,676 $8,042 $6,315
Ratio of expenses to average net
assets 0.64%(c) 0.51% 0.42% 0.09% 0.01% 0.38%(c)
Ratio of net investment income to
average net assets 4.88%(c) 4.58% 4.77% 5.76% 6.39% 6.11%(c)
Ratio of expenses to average net
assets* 0.95%(c) 1.09% 0.86% 0.84% 0.82% 1.17%(c)
Ratio of net investment income to
average net assets* 4.58%(c) 4.01% 4.33% 5.01% 5.58% 5.32%(c)
Portfolio turnover 64.80% 52.59% 150.76% 47.28% 15.06% 17.62%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
87
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED FUND STOCK INDEX FUND VALUE FUND
--------------------------- -------------------------- ---------------------------
DECEMBER 10, DECEMBER 3, DECEMBER 3,
1993 TO 1993 TO 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 (A) ENDED 1994 (A)
------------ APRIL 30, ----------- APRIL 30, ------------
1995 1995
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.62 $ 10.00 $ 10.18 $ 10.00 $ 10.13 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.21 0.33 0.12 0.20 0.14 0.21
Net realized and unrealized gains
(losses) on investments 0.62 (0.39) 0.92 0.16 0.79 0.11
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.83 (0.06) 1.04 0.36 0.93 0.32
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.24) (0.32) (0.13) (0.18) (0.14) (0.19)
Net realized gains (0.17)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.24) (0.32) (0.13) (0.18) (0.31) (0.19)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.21 $ 9.62 $ 11.09 $ 10.18 $ 10.75 $ 10.13
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 8.77%(b) (0.57)%(b) 10.28%(b) 3.66%(b) 9.43%(b) 3.27%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $158,762 $127,285 $105,834 $ 89,686 $261,830 $188,184
Ratio of expenses to average net
assets 0.91%(c) 0.87%(c) 0.58%(c) 0.58%(c) 0.91%(c) 0.92%(c)
Ratio of net investment income to
average net assets 4.30%(c) 3.97%(c) 2.48%(c) 2.35%(c) 2.88%(c) 2.32%(c)
Ratio of expenses to average net assets* 1.32%(c) 1.49%(c) 0.92%(c) 1.10%(c) 1.29%(c) 1.48%(c)
Ratio of net investment income to
average net assets* 3.89%(c) 3.35%(c) 2.14%(c) 1.82%(c) 2.50%(c) 1.76%(c)
Portfolio turnover 45.32% 118.49% 11.06% 1.44% 8.95% 39.05%
</TABLE>
- ------------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
DIVERSIFIED STOCK FUND
---------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.68 $ 13.39 $ 12.16 $ 11.44 $ 9.25 $ 9.90
- -------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.14 0.25 0.18 0.19 0.23 0.26
Net realized and unrealized gains
(losses) on investments 1.05 0.64 1.50 1.11 2.20 (0.67)
- -------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.19 0.89 1.68 1.30 2.43 (0.41)
- -------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.15) (0.23) (0.21) (0.19) (0.24) (0.24)
Net realized gains (1.38) (1.37) (0.24) (0.39)
- -------------------------------------------------------------------------------------------------------------------
Total Distributions (1.53) (1.60) (0.45) (0.58) (0.24) (0.24)
- -------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.34 $ 12.68 $ 13.39 $ 12.16 $ 11.44 $ 9.25
- -------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 10.83%(a) 7.39% 14.04% 11.57% 27.50% (4.29)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $321,593 $263,227 $257,405 $227,839 $177,472 $121,754
Ratio of expenses to average net
assets 0.87%(b) 0.89% 0.89% 0.91% 0.91% 0.91%
Ratio of net investment income to
average net assets 2.35%(b) 2.06% 1.45% 1.63% 2.06% 2.75%
Ratio of expenses to average net
assets* 0.91%(b) 1.10% 0.90%
Ratio of net investment income to
average net assets* 2.31%(b) 1.86% 1.43%
Portfolio turnover 43.76% 103.62% 86.32% 74.83% 50.78% 63.10%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
88
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND SPECIAL VALUE FUND SPECIAL GROWTH FUND
--------------------------- --------------------------- ---------------------------
DECEMBER 3, DECEMBER 3, DECEMBER 3,
1993 TO 1993 TO 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 (A) ENDED 1994 (A)
------------ APRIL 30, ------------ APRIL 30, ------------
1995 1995
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.23 $ 10.00 $ 10.49 $ 10.00 $ 8.90 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.06 0.10 0.08 0.11 0.01 0.02
Net realized and unrealized gains
(losses) on investments 0.64 0.22 0.82 0.48 0.45 (1.10)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.70 0.32 0.90 0.59 0.46 (1.08)
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.06) (0.09) (0.08) (0.10) (0.01) (0.02)
Net realized gains (0.05) (0.05)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.11) (0.09) (0.13) (0.10) (0.01) (0.02)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.82 $ 10.23 $ 11.26 $ 10.49 $ 9.35 $ 8.90
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 6.91%(b) 3.22%(b) 8.65%(b) 5.92%(b) 5.20%(b) (10.81)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 43,861 $ 66,921 $153,591 $118,600 $ 19,386 $ 24,593
Ratio of expenses to average net
assets 1.03%(c) 0.94%(c) 1.01%(c) 1.00%(c) 1.16%(c) 0.98%(c)
Ratio of net investment income to
average net assets 1.11%(c) 1.10%(c) 1.57%(c) 1.23%(c) 0.25%(c) 0.24%(c)
Ratio of expenses to average net assets* 1.39%(c) 1.51%(c) 1.31%(c) 1.49%(c) 1.54%(c) 1.58%(c)
Ratio of net investment income
(loss) to average net assets* 0.75%(c) 0.52%(c) 1.27%(c) 0.74%(c) (0.14)%(c) (0.36)(c)
Portfolio turnover 2.56% 28.09% 18.88% 17.90% 39.58% 118.39%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
OHIO REGIONAL STOCK FUND
------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
--------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS ------- ------- ------- ------- --------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.56 $ 14.69 $ 12.12 $ 11.15 $ 6.75 $ 9.72
- -----------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.09 0.18 0.16 0.20 0.21 0.24
Net realized and unrealized gains
(losses) on investments 0.85 0.39 2.63 1.07 4.39 (2.98)
- -----------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.94 0.57 2.79 1.27 4.60 (2.74)
- -----------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.09) (0.17) (0.18) (0.21) (0.20) (0.23)
Net realized gains (0.74) (0.53) (0.04) (0.09)
- -----------------------------------------------------------------------------------------------------------------
Total Distributions (0.83) (0.70) (0.22) (0.30) (0.20) (0.23)
- -----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 14.67 $ 14.56 $ 14.69 $ 12.12 $ 11.15 $ 6.75
- -----------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 7.06%(a) 3.96% 23.16% 11.50% 68.68% (28.63)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $35,183 $33,965 $34,926 $36,115 $27,092 $ 13,039
Ratio of expenses to average net
assets 1.18%(b) 1.04% 1.04% 1.04% 1.08% 1.11%
Ratio of net investment income to
average net assets 1.27%(b) 1.27% 1.17% 1.73% 2.16% 2.66%
Ratio of expenses to average net
assets* 1.22%(b) 1.27% 1.06%
Ratio of net investment income to
average net assets* 1.22%(b) 1.04% 1.15%
Portfolio turnover 4.86% 14.38% 7.25% 7.56% 14.59% 11.17%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
89
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH FUND
-------------------------------------------------------------------------------
SIX MONTHS
ENDED YEARS ENDED OCTOBER 31, MAY 18, 1990
APRIL 30, -------------------------------------------- TO OCTOBER 31,
1995 1994 1993 1992 1991 1990(A)
----------- ------- -------- ------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.32 $ 11.93 $ 8.93 $ 9.20 $ 9.46 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (0.01) (0.03) (0.02) 0.51 0.09
Net realized and unrealized gains
(losses) on investments (0.79) 1.40 3.03 (0.17) (0.25) (0.55)
- ------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities (0.79) 1.39 3.00 (0.19) 0.26 (0.46)
- ------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.01) (0.52) (0.08)
Net realized gains (0.62) (0.07)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.91 $ 13.32 $ 11.93 $ 8.93 $ 9.20 $ 9.46
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) (5.82)%(b) 11.65% 33.59% (2.08)% 2.93% (4.54)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 86,530 $81,307 $ 30,629 $11,091 $ 5,682 $ 9,878
Ratio of expenses to average net
assets 1.51%(c) 1.48% 1.46% 1.56% 1.72% 1.70%(c)
Ratio of net investment income
(loss) to average net assets (0.29)%(c) (0.51)% (0.74)% (0.20)% 5.97% 2.51%%(c)
Ratio of expenses to average net
assets* 1.66%(c) 1.83% 1.63% 1.72%
Ratio of net investment loss to
average net assets* (0.45)%(c) (0.86)% (0.91)% (0.35)%
Portfolio turnover 26.04% 50.66% 45.43% 91.92% 102.53% 12.16%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations
(b) Aggregate.
(c) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
90
<PAGE>
[LOGO]
THE VICTORY FUNDS
1-800-539-FUND
RS/VP-001 5/95
<PAGE>
BULK RATE
U.S. POSTAGE
PAID
CLEVELAND, OH
Permit 469
[LOGO]
THE VICTORY FUNDS
1-800-539-FUND
RS/VP-001 5/95
<PAGE>
[This page left blank intentionally]
<PAGE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE VICTORY PORTFOLIOS
THE INTERNATIONAL GROWTH FUND
February 1, 1996
This Statement of Additional Information is not a Prospectus, but
should be read in conjunction with the Prospectus of The Victory Portfolios -
The International Growth Fund, dated the same date as the date hereof (the
"Prospectus"). This Statement of Additional Information is incorporated by
reference in its entirety into the Prospectus. Copies of the Prospectus may be
obtained by writing The Victory Portfolios at Primary Funds Service Corporation,
P.O. Box 9741, Providence, RI 02940-9741, or by telephoning toll free
800-539-FUND or 800-539-3863.
Investment Policies and Limitations 1 INVESTMENT ADVISER
Valuation of Portfolio Securities 7 KeyCorp Mutual Fund Advisers, Inc.
Additional Purchase and
Redemption Information 8
Management of the Victory Portfolios 10 INVESTMENT SUB-ADVISER
Advisory and Other Contracts 19 Society Asset Management, Inc.
Additional Information 26
Independent Auditor's Report 31 ADMINISTRATOR
Financial Statements 31 Concord Holding Corporation
Appendix 32
DISTRIBUTOR
Victory Broker-Dealer Services, Inc.
TRANSFER AGENT
Primary Funds Services Corporation
CUSTODIAN
Key Trust Company of Ohio, N.A.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
The Victory Portfolios (the "Victory Portfolios") is an open-end
management investment company. The Victory Portfolios consist of twenty-eight
series of units of beneficial interest ("shares"), representing interests in
twenty-eight separate investment portfolios . This Statement of Additional
Information relates to The International Growth Fund (the "Fund") only. Much of
the information contained in this Statement of Additional Information expands on
subjects discussed in the Prospectus. Capitalized terms not defined herein are
used as defined in the Prospectus. No investment in shares of the Fund should
be made without first reading the Fund's Prospectus.
INVESTMENT POLICIES AND LIMITATIONS
Additional Information on Fund Instruments
The following policies supplement the investment objectives and
policies of the Fund as set forth in the Prospectus.
Bankers' Acceptances and Certificates of Deposit. The Fund may invest
in bankers' acceptances, certificates of deposit, and demand and time deposits.
Bankers' acceptances are negotiable drafts or bills of exchange typically drawn
by an importer or exporter to pay for specific merchandise, which are "accepted"
by a bank, meaning, in effect, that the bank unconditionally agrees to pay the
face value of the instrument on maturity. Certificates of deposit are negotiable
certificates issued against funds deposited in a commercial bank or a savings
and loan association for a definite period of time and earning a specified
return.
Bankers' acceptances will be those guaranteed by domestic and foreign
banks, if at the time of purchase such banks have capital, surplus, and
undivided profits in excess of $100,000,000 (as of the date of their most
recently published financial statements). Certificates of deposit and demand and
time deposits invested in by the Fund will be those of domestic and foreign
banks and savings and loan associations, if (a) at the time of purchase such
financial institutions have capital, surplus, and undivided profits in excess of
$100,000,000 (as of the date of their most recently published financial
statements) or (b) the principal amount of the instrument is insured in full by
the Federal Deposit Insurance Corporation or the Savings Association Insurance
Fund.
The Fund may also invest in Eurodollar Certificates of Deposit ("ECDs")
which are U.S. dollar-denominated certificates of deposit issued by branches of
foreign and domestic banks located outside the United States, Yankee
Certificates of Deposit ("Yankee CDs") which are certificates of deposit issued
by a U.S. branch of a foreign bank denominated in U.S. dollars and held in the
United States, Eurodollar Time Deposits ("ETDs") which are U.S.
dollar-denominated deposits in a foreign branch of a U.S. bank or a foreign
bank, and Canadian Time Deposits ("CTDs") which are U.S. dollar-denominated
certificates of deposit issued by Canadian offices of major Canadian Banks.
Commercial Paper. Commercial paper consists of unsecured promissory
notes issued by corporations. Except as noted below with respect to variable
amount master demand notes, issues of commercial paper normally have maturities
of less than nine months and fixed rates of return.
The Fund will purchase only commercial paper rated in one of the two
highest categories at the time of purchase by an NRSRO or, if not rated, found
by the Victory Portfolios' Board of Trustees to present minimal credit risks and
to be of comparable quality to instruments that are rated high quality (i.e., in
one of the two top ratings categories) by a NRSRO that is neither controlling,
controlled by, or under common control with the issuer of, or any issuer,
guarantor, or provider of credit support for, the instruments.
<PAGE>
For a description of the rating symbols of each NRSRO see the Appendix to this
Statement of Additional Information.
The Fund may also invest in Canadian Commercial Paper, which is commercial paper
issued by a Canadian corporation or a Canadian counterpart of a U.S.
corporation, and in Europaper, which is U.S. dollar-denominated commercial paper
of an issuer located in Europe.
Variable Amount Master Demand Notes. Variable amount master demand
notes in which the Fund may invest are unsecured demand notes that permit the
indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate according to the terms of the instrument. Although there is no
secondary market for these notes, the Fund may demand payment of principal and
accrued interest at any time and may resell the notes at any time to a third
party. The absence of an active secondary market, however, could make it
difficult for the Fund to dispose of a variable amount master demand note if the
issuer defaulted on its payment obligations, and the Fund could, for this or
other reasons, suffer a loss to the extent of the default. While the notes are
not typically rated by credit rating agencies, issuers of variable amount master
demand notes must satisfy the same criteria as set forth above for unrated
commercial paper, and Key Advisers or the Sub-Adviser will continuously monitor
the issuer's financial status and ability to make payments due under the
instrument. Where necessary to ensure that a note is of "high quality," the Fund
will require that the issuer's obligation to pay the principal of the note be
backed by an unconditional bank letter or line of credit, guarantee or
commitment to lend. For purposes of the Fund's investment policies, a variable
amount master note will be deemed to have a maturity equal to the longer of the
period of time remaining until the next readjustment of its interest rate or the
period of time remaining until the principal amount can be recovered from the
issuer through demand. (See Variable and Floating Rate Notes.)
Foreign Investment. The Fund may invest in securities issued by foreign
branches of U.S. banks, foreign banks, or other foreign issuers, including
American Depository Receipts ("ADRs") and securities purchased on foreign
securities exchanges. Such investment may subject the Fund to investment risks
that differ in some respects from those related to investments in obligations of
U.S. domestic issuers or in U.S. securities markets. Such risks include future
adverse political and economic developments, possible seizure, nationalization,
or expropriation of foreign investments, less stringent disclosure requirements,
the possible establishment of exchange controls or taxation at the source, and
the adoption of other foreign governmental restrictions. Additional risks
include currency exchange risks, less publicly available information, the risk
that companies may not be subject to the accounting, auditing and financial
reporting standards and requirements of U.S. companies, the risk that foreign
securities markets may have less volume and therefore many securities traded in
these markets may be less liquid and their prices are more volatile than U.S.
securities, and the risk that custodian and brokerage costs may be higher.
Permissible investments include obligations or securities of foreign issuers,
foreign branches of U.S. banks and of foreign banks. The Fund will acquire such
securities only when Key Advisers or the Sub-Adviser believes the risks
associated with such investments are minimal.
<PAGE>
Variable and Floating Rate Notes. The Fund may acquire variable and floating
rate notes, subject to its investment objectives, policies and restrictions. A
variable rate note is one whose terms provide for the readjustment of its
interest rate on set dates and which, upon such readjustment, can reasonably be
expected to have a market value that approximates its par value. A floating rate
note is one whose terms provide for the readjustment of its interest rate
whenever a specified interest rate changes and which, at any time, can
reasonably be expected to have a market value that approximates its par value.
Such notes are frequently not rated by credit rating agencies; however, unrated
variable and floating rate notes purchased by the Fund will only be those
determined by Key Advisers or the Sub-Adviser, under guidelines established by
the Trustees, to pose minimal credit risks and to be of comparable quality, at
the time of purchase, to rated instruments eligible for purchase under the
Fund's investment policies. In making such determinations, Key Advisers or the
Sub-Adviser will consider the earning power, cash flow and other liquidity
ratios of the issuers of such notes (such issuers include financial,
merchandising, bank holding and other companies) and will continuously monitor
their financial condition. Although there may be no active secondary market with
respect to a particular variable or floating rate note purchased by the Fund,
the Fund may resell the note at any time to a third party. The absence of an
active secondary market, however, could make it difficult for the Fund to
dispose of a variable or floating rate note in the event the issuer of the note
defaulted on its payment obligations and the Fund could, for this or other
reasons, suffer a loss to the extent of the default. Variable or floating rate
notes may be secured by bank letters of credit.
Variable or floating rate notes may have maturities of more than one
year, as follows:
<PAGE>
1. A note that is issued or guaranteed by the United States government
or any agency thereof and which has a variable rate of interest readjusted no
less frequently than annually will be deemed by the Fund to have a maturity
equal to the period remaining until the next readjustment of the interest rate.
2. A variable rate note, the principal amount of which is scheduled on
the face of the instrument to be paid in one year or less, will be deemed by the
Fund to have a maturity equal to the period remaining until the next
readjustment of the interest rate.
3. A variable rate note that is subject to a demand feature scheduled
to be paid in one year or more will be deemed by the Fund to have a maturity
equal to the longer of the period remaining until the next readjustment of the
interest rate or the period remaining until the principal amount can be
recovered through demand.
4. A floating rate note that is subject to a demand feature will be
deemed by the Fund to have a maturity equal to the period remaining until the
principal amount can be recovered through demand.
As used above, a note is "subject to a demand feature" where the Fund
is entitled to receive the principal amount of the note either at any time on no
more than 30 days' notice or at specified intervals not exceeding one year and
upon no more than 30 days' notice.
<PAGE>
Options. The Fund may sell (write) call options which are traded on national
securities exchanges with respect to common stock in its portfolio. The Fund
must at all times have in its portfolio the securities which it may be obligated
to deliver if the option is exercised. The Fund may write call options on its
common stocks in an attempt to realize a greater current return than would be
realized on the securities alone. The Fund may also write call options as a
partial hedge against a possible stock market decline or to extend a holding
period on a stock which is under consideration for sale in order to create a
long-term capital gain. In view of its investment objective, the Fund generally
would write call options only in circumstances where Key Advisers or the
Sub-Adviser does not anticipate significant appreciation of the underlying
security in the near future or has otherwise determined to dispose of the
security. As the writer of a call option, the Fund receives a premium for
undertaking the obligation to sell the underlying security at a fixed price
during the option period, if the option is exercised. So long as the Fund
remains obligated as a writer of a call option, it forgoes the opportunity to
profit from increases in the market price of the underlying security above the
exercise price of the option, except insofar as the premium represents such a
profit (and retains the risk of loss should the value of the underlying security
decline). The Fund may also enter into "closing purchase transactions" in order
to terminate its obligation as a writer of a call option prior to the expiration
of the option. Although the writing of call options only on national securities
exchanges increases the likelihood of the Fund's ability to make closing
purchase transactions, there is no assurance that the Fund will be able to
effect such transactions at any particular time or at any acceptable price. The
writing of call options could result in increases in the Fund's portfolio
turnover rate, especially during periods when market prices of the underlying
securities appreciate.
Futures Contracts. The Fund may enter into futures contracts, options
on futures contracts and stock index futures contracts and options thereon for
the purposes of remaining fully invested and reducing transaction costs. Futures
contracts provide for the future sale by one party and purchase by another party
of a specified amount of a specific security, class of securities, or an index
at a specified future time and at a specified price. A stock index futures
contract is a bilateral agreement pursuant to which two parties agree to take or
make delivery of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of trading of the
contracts and the price at which the futures contract is originally struck.
Futures contracts which are standardized as to maturity date and underlying
financial instrument are traded on national futures exchanges. Futures exchanges
and trading are regulated under the Commodity Exchange Act by the Commodity
Futures Trading Commission ("CFTC"), a U.S. Government agency.
Although futures contracts by their terms call for actual delivery and
acceptance of the underlying securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery.
Closing out an open futures position is done by taking an opposite position
("buying a contract which has previously been "sold," or "selling" a contract
previously purchased) in an identical contract to terminate the position.
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. The acquisition of put and call options on futures contracts will,
respectively, give the Fund 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. Brokerage
commissions are incurred when a futures contract is bought or sold.
Futures traders are required to make a good faith margin deposit in
cash or government securities with a broker or custodian to initiate and
maintain open positions in futures contracts. A margin deposit is intended to
assure completion of the contract (delivery or acceptance of the underlying
security) if it is not terminated prior to the specified delivery date. Minimal
initial margin requirements are established by the futures exchange and may be
changed. Brokers may establish deposit requirements which are higher than the
exchange minimums. Initial margin deposits on futures contracts are customarily
set at levels much lower than the prices at which the underlying securities are
purchased and sold, typically ranging upward from less than 5% of the value of
the contract being traded.
After a futures contract position is opened, the value of the contract
is marked-to-market daily. If the futures contract price changes to the extent
that the margin on deposit does not satisfy margin requirements, payment of
additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to and
from the futures broker for as long as the contract remains open. The Fund
expects to earn interest income on its margin deposits.
When interest rates are expected to rise or market values of portfolio
securities are expected to fall, the Fund can seek through the sale of futures
contracts to offset a decline in the value of its portfolio securities. When
interest rates are expected to fall or market values are expected to rise, the
Fund, through the purchase of such contracts, can attempt to secure better rates
or prices than might later be available in the market when it effects
anticipated purchases.
The Fund will only sell futures contracts to protect securities it owns
against price declines or purchase contracts to protect against an increase in
the price of securities it intends to purchase.
The Fund's ability to effectively utilize futures trading depends on
several factors. First, it is possible that there will not be a perfect price
correlation between the futures contracts and their underlying stock index.
Second, it is possible that a lack of liquidity for futures contracts could
exist in the secondary market, resulting in an inability to close a futures
position prior to its maturity date. Third, the purchase of a futures contract
involves the risk that the Fund could lose more than the original margin deposit
required to initiate a futures transaction.
Restrictions on the Use of Futures Contracts. The Fund will not enter
into futures contract transactions for purposes other than bona fide hedging
purposes to the extent that, immediately thereafter, the sum of its initial
margin deposits on open contracts exceeds 5% of the market value of the Fund's
total assets. In addition, the Fund will not enter into futures contracts to the
extent that the value of the futures contracts held would exceed 1/3 of the
Fund's total assets. Futures transactions will be limited to the extent
necessary to maintain the Fund's qualification as a regulated investment
company.
The Fund has undertaken to restrict its futures contract trading as
follows: first, the Fund will not engage in transactions in futures contracts
for speculative purposes; second, the Fund will not market itself to the public
In addition to the margin restrictions discussed above, transactions in
futures contracts may involve the segregation of funds pursuant to requirements
imposed by the Commission. Under those requirements, where the Fund has a long
position in a futures contract, it may be required to establish a segregated
account (not with a futures commission merchant or broker) containing cash or
certain liquid assets equal to the purchase price of the contract (less any
margin on deposit). For a short position in futures or forward contracts held by
the Fund, those requirements may mandate the establishment of a segregated
account (not with a futures commission merchant or broker) with cash or certain
liquid assets that, when added to the amounts deposited as margin, equal the
market value of the instruments underlying the futures contracts (but are not
less than the price at which the short positions were established). However,
segregation of assets is not required if the Fund "covers" a long position. For
example, instead of segregating assets, the Fund, when holding a long position
in a futures contract, could purchase a put option on the same futures contract
with a strike price as high or higher than the price of the contract held by the
Fund. In addition, where the Fund takes short positions, or engages in sales of
call options, it need not segregate assets if it "covers" these positions. For
example, where the Fund holds a short position in a futures contract, it may
cover by owning the instruments underlying the contract. The Fund may also cover
such a position by holding a call option permitting it to purchase the same
futures contract at a price no higher than the price at which the short position
was established. Where the Fund sells a call option on a futures contract, it
may cover either by entering into a long position in the same contract at a
price no higher than the strike price of the call option or by owning the
instruments underlying the futures contract. The Fund could also cover this
position by holding a separate call option permitting it to purchase the same
futures contract at a price no higher than the strike price of the call option
sold by the Fund.
In addition, the extent to which the Fund may enter into transactions
involving futures contracts may be limited by the Internal Revenue Code's
requirements for qualification as a registered investment company and the Fund's
intention to qualify as such.
Risk Factors in Futures Transactions. Positions in futures contracts
may be closed out only on an exchange which provides a secondary market for such
futures. However, there can be no assurance that a liquid secondary market will
exist for any particular futures contract at any specific time. Thus, it may not
be possible to close a futures position. In the event of adverse price
movements, the Fund would continue to be required to make daily cash payments to
maintain the required margin. In such situations, if the Fund has insufficient
cash, it may have to sell portfolio securities to meet daily margin requirements
at a time when it may be disadvantageous to do so. In addition, the Fund may be
required to make delivery of the instruments underlying futures contracts it
holds. The inability to close options and futures positions also could have an
adverse impact on the ability to effectively hedge them. The Fund will minimize
the risk that it will be unable to close out a futures contract by only entering
into futures contracts which are traded on national futures exchanges and for
which there appears to be a liquid secondary market.
The risk of loss in trading futures contracts in some strategies can be
substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in futures pricing. Because the deposit
requirements in the futures markets are less onerous than margin requirements in
the securities market, there may be increased participation by speculators in
the futures market which may also cause temporary price distortions. A
relatively small price movement in a futures contract may result in immediate
and substantial loss (as well as gain) to the investor. For example, if at the
time of purchase, 10% of the value of the futures contract is deposited as
margin, a subsequent 10% decrease in the value of the futures contract would
result in a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out. A 15% decrease would
result in a loss equal to 150% of the original margin deposit if the contract
were closed out. Thus, a purchase or sale of a futures contract may result in
losses in excess of the amount invested in the contract. However, because the
futures strategies engaged in by the Fund are only for hedging purposes, the
Key Advisers and the SubAdviser do not believe that the Fund is subject to the
risks of loss frequently associated with futures transactions. The Fund
would presumably have sustained comparable losses if, instead of the
futures contract, it had invested in the underlying financial instrument and
sold it after the decline.
Utilization of futures transactions by the Fund does involve the risk
of imperfect or no correlation where the securities underlying futures contract
have different maturities than the portfolio securities being hedged. It is also
possible that the Fund could both lose money on futures contracts and also
experience a decline in value of its portfolio securities. There is also the
risk of loss by the Fund of margin deposits in the event of bankruptcy of a
broker with whom the Fund has an open position in a futures contract or related
option.
The Fund may also acquire and sell put options on the securities held
in its portfolio.
A put is a right to sell a specified security (or securities) within a
specified period of time at a specified exercise price. The Fund may sell,
transfer, or assign a put only in conjunction with the sale, transfer, or
assignment of the underlying security or securities. The amount payable to the
Fund upon its exercise of a "put" is normally (i) the Fund's acquisition cost of
the securities (excluding any accrued interest which the Fund paid on the
acquisition), less any amortized market premium or plus any amortized market or
original issue discount during the period the Fund owned the securities, plus
(ii) all interest accrued on the securities since the last interest payment date
during that period.
Puts may be acquired by the Fund to facilitate the liquidity of its
portfolio assets. Puts may also be used to facilitate the reinvestment of the
Fund's assets at a rate of return more favorable than that of the underlying
security. Puts may, under certain circumstances, also be used to shorten the
maturity of underlying variable rate or floating rate securities for purposes of
calculating the remaining maturity of those securities and the dollar-weighted
average portfolio maturity of the Fund's assets. See "Variable and Floating Rate
Notes" and "VALUATION" in this Statement of Additional Information.
Miscellaneous Securities. The Fund can invest in various securities issued by
domestic and foreign corporations, including preferred stocks and investment
grade corporate bonds, notes, and warrants. Bonds are long-term corporate debt
instruments secured by some or all of the issuer's assets, debentures are
general corporate debt obligations backed only by the integrity of the borrower,
and warrants are instruments that entitle the holder to purchase a certain
amount of common stock at a specified price, which price is usually higher than
the current market price at the time of issuance. Preferred stocks are
instruments that combine qualities both of equity and debt securities.
Individual issues of preferred stock will have those rights and liabilities that
are spelled out in the governing document. Preferred stocks usually pay a fixed
dividend per quarter (or annum) and are senior to common stock in terms of
liquidation and dividends rights, and preferred stocks typically do not have
voting rights. The Fund will only purchase preferred stocks where the issuer is
publicly traded and has capital in excess of $200 million.
The Fund also may invest, consistent with its investment objective and policies,
in zero coupon bonds, which are debt instruments that do not pay current
interest and are typically sold at prices greatly discounted from par value. The
return on a zero-coupon obligation, when held to maturity, equals the difference
between the par value and the original purchase price. Zero-coupon obligations
have greater price volatility than coupon obligations.
"When-Issued" Securities. As discussed in the Prospectus, the Fund may
purchase securities on a "when issued" basis (i.e., for delivery beyond the
normal settlement date at a stated price and yield). When the Fund agrees to
purchase securities on a "when issued" basis, the Victory Portfolios' custodian
will set aside cash or liquid portfolio securities equal to the amount of the
commitment in a separate account. Normally, the custodian will set aside
portfolio securities to satisfy the purchase commitment, and in such a case, the
Fund may be required subsequently to place additional assets in the separate
account in order to assure that the value of the account remains equal to the
amount of the Fund's commitment. It may be expected that the Fund's net assets
will fluctuate to a greater degree when it sets aside portfolio securities to
cover such purchase commitments than when it sets aside cash.
When the Fund engages in "when-issued" transactions, it relies on the
seller to consummate the trade. Failure of the seller to do so may result in the
Fund incurring a loss or missing the opportunity to obtain a price considered to
be advantageous. The Fund does not intend to purchase "when issued" securities
for speculative purposes, but only in furtherance of its investment objective.
U.S. Government Obligations. The Fund may invest in obligations issued
or guaranteed by the U.S. Government, its agencies and instrumentalities.
Obligations of certain agencies and instrumentalities of the U.S. Government are
supported by the full faith and credit of the U.S. Treasury; others are
supported by the right of the issuer to borrow from the U.S. Treasury; others
are supported by the discretionary authority of the U.S. Government to purchase
the agency's obligations; and still others are supported only by the credit of
the agency or instrumentality. No assurance can be given that the U.S.
Government will provide financial support to U.S. Government-sponsored agencies
or instrumentalities if it is not obligated to do so by law. The Fund will
invest in the obligations of such agencies and instrumentalities only when Key
Advisers or the Sub-Adviser believes that the credit risk with respect thereto
is minimal.
Securities Lending. The Fund may lend its portfolio securities to
broker-dealers, banks or institutional borrowers of securities. The Fund must
receive a minimum of 100% collateral, plus any interest due in the form of cash
or U.S. Government securities. This collateral must be valued daily and should
the market value of the loaned securities increase, the borrower must furnish
additional collateral to the Fund. During the time portfolio securities are on
loan, the borrower will pay the Fund any dividends or interest paid on such
securities plus any interest negotiated between the parties to the lending
agreement. Loans will be subject to termination by the Fund or the borrower at
any time. While the Fund will not have the right to vote securities on loan, it
intends to terminate the loan and regain the right to vote if that is considered
important with respect to the investment. The Fund will only enter into
loan arrangements with broker-dealers, banks or other institutions which
Key Advisers or the Sub-Adviser has determined are creditworthy under
guidelines established by the Victory Portfolios' Trustees. The Fund intends to
limit its securities lending to 33 1/3% of total assets.
Other Investment Companies. The Fund may invest up to 5% of its total
assets in the securities of any one investment company, but may not own more
than 3% of the securities of any one investment company or invest more than 10%
of its total assets in the securities of other investment companies. Pursuant to
an exemptive order received by the Victory Portfolios from the Commission, the
Fund may invest in money market funds of the Victory Portfolios. Key Advisers
and/or the SubAdviser will waive its investment advisory fee as to all assets
invested in other investment companies. Because such other investment companies
employ an investment adviser, such investment by the Fund will cause
shareholders to bear duplicative fees, such as management fees.
Repurchase Agreements. Securities held by the Fund may be subject to
repurchase agreements. Under the terms of a repurchase agreement, the Fund would
acquire securities from financial institutions or registered broker-dealers
deemed creditworthy by Key Advisers or the Sub-Adviser pursuant to guidelines
adopted by the Victory Portfolios' Trustees, subject to the seller's agreement
to repurchase such securities at a mutually agreed upon date and price. The
seller is required to maintain the value of collateral held pursuant to the
agreement at not less than the repurchase price (including accrued interest). If
the seller were to default on its repurchase obligation or become insolvent, the
Fund would suffer a loss to the extent that the proceeds from a sale of the
underlying portfolio securities were less than the repurchase price, or to the
extent that the disposition of such securities by the Fund is delayed pending
court action. Repurchase agreements are considered by the staff of the
Commission to be loans by the Fund.
Reverse Repurchase Agreements. The Fund may borrow funds for temporary
purposes by entering into reverse repurchase agreements in accordance with the
investment restrictions described below. Pursuant to such agreements, the Fund
would sell portfolio securities to financial institutions such as banks and
broker-dealers, and agree to repurchase them at a mutually agreed-upon date and
price. At the time the Fund enters into a reverse repurchase agreement, it will
place in a segregated custodial account assets (such as cash or other liquid
high-grade securities) consistent with the Fund's investment restrictions having
a value equal to the repurchase price (including the accrued interest); the
collateral will be marked-to-market on a daily basis, and will be continuously
monitored to ensure that such equivalent value is maintained. Reverse repurchase
agreements involve the risk that the market value of the securities sold by the
Fund may decline below the price at which the Fund is obligated to repurchase
the securities. Reverse repurchase agreements are considered to be borrowings
under the Investment Company Act of 1940, as amended (the "1940 Act").
Investment Restrictions
The following investment restrictions are fundamental with respect to
the Fund and may be changed only by a vote of a majority of the outstanding
shares of the Fund as defined in "ADDITIONAL INFORMATION -Miscellaneous" of this
Statement of Additional Information).
THE FUND MAY NOT:
1. Participate on a joint or joint and several basis in any
securities trading account.
2. Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Fund from purchasing or selling options and futures contracts or from investing
in securities or other instruments backed by physical commodities).
3. Purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Fund from
investing in securities or other instruments backed by real estate or securities
of companies engaged in the real estate business). Investments by the Fund in
securities backed by mortgages on real estate or in marketable securities of
companies engaged in such activities are not hereby precluded.
4. Issue any senior security (as defined in the 1940 Act), except that
(a) the Fund may engage in transactions that may result in the issuance of
senior securities to the extent permitted under applicable regulations and
interpretations of the 1940 Act or an exemptive order; (b) the Fund may acquire
other securities, the acquisition of which may result in the issuance of a
senior security, to the extent permitted under applicable regulations or
interpretations of the 1940 Act; (c) subject to the restrictions set forth
below, the Fund may borrow money as authorized by the 1940 Act.
5. Borrow money, except that (a) the Fund may enter into commitments to
purchase securities in accordance with its investment program, including
delayeddelivery and when-issued securities and reverse repurchase agreements,
provided that the total amount of any such borrowing does not exceed 33 1/3% of
the Fund's total assets; and (b) the Fund may borrow money for temporary or
emergency purposes in an amount not exceeding 5% of the value of its total
assets at the time when the loan is made. Any borrowings representing more than
5% of the Fund's total assets must be repaid before the Fund may make additional
investments. For purposes of this restriction, collateral arrangements with
respect to margin for currency futures contracts are not deemed to be a pledge
of assets.
6. Lend any security or make any other loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties, but this limitation
does not apply to purchases of publicly issued debt securities or to repurchase
agreements.
7. Underwrite securities issued by others, except to the extent that the
Fund may be considered an underwriter within the meaning of the Securities Act
of 1933 in the disposition of restricted securities.
8. With respect to 75% of the Fund's total assets, the Fund may not
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or instrumentalities)
if, as a result, (a) more than 5% of the Fund's total assets would be invested
in the securities of that issuer, or (b) the Fund would hold more than 10% of
the outstanding voting securities of that issuer.
9. Purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. Government or any of its agencies or
instrumentalities, or repurchase agreements secured thereby) if, as a result,
more than 25% of the Fund's total assets would be invested in the securities of
companies whose principal business activities are in the same industry. In the
utilities category, the industry shall be determined according to the service
provided. For example, gas, electric, water and telephone will be considered as
separate industries.
The following restrictions are not fundamental and may be changed
without shareholder approval:
1. The Fund will not purchase or retain securities of any issuer if the
officers or Trustees of the Victory Portfolios or the officers or directors of
its investment adviser owning beneficially more than one half of 1% of the
securities of such issuer together own beneficially more than 5% of such
securities.
2. The Fund will not invest more than 10% of its total assets in the
securities of issuers which together with any predecessors have a record of less
than three years of continuous operation.
3. The Fund will not write or sell puts, straddles, spreads or
combinations thereof or write or purchase put options or purchase call options.
4. The Fund will not invest more than 15% of its net assets in illiquid
securities. Illiquid securities are securities that are not readily marketable
or cannot be disposed of promptly within seven days and in the usual course of
business at approximately the price at which the Fund has valued them. Such
securities include, but are not limited to, time deposits and repurchase
agreements with maturities longer than seven days. Securities that may be resold
under Rule 144A ("Restricted Securities"), or securities offered pursuant to
Section 4(2) of, the 1933 Act, shall not be deemed illiquid solely by reason of
being unregistered. Key Advisers or the Sub-Adviser determine whether a
particular security is deemed to be liquid based on the trading markets for the
specific security and other factors. However, because state securities laws may
limit the Fund's investment in Restricted Securities (regardless of the
liquidity of the investment), investments in Restricted Securities resalable
under Rule 144A will continue to be subject to applicable state law requirements
until such time, if ever, that such limitations are changed.
5. The Fund will not make short sales of securities, other than short
sales "against the box," or purchase securities on margin except for short-term
credits necessary for clearance of portfolio transactions, provided that this
restriction will not be applied to limit the use of options, futures contracts
and related options, in the manner otherwise permitted by the investment
restrictions, policies and investment program of the Fund, and shall not limit
the Fund's ability to make margin payments in connection with transactions in
currency futures options.
6. The Fund may invest up to 5% of its total assets in the securities of
any one investment company, but may not own more than 3% of the securities of
any one investment company or invest more than 10% of its total assets in the
securities of other investment companies. Pursuant to an exemptive order
received by the Victory Portfolios from the Commission, the Fund may invest in
the money market funds of the Victory Portfolios.
State Regulations
In addition, each of the Victory Portfolios, so long as its shares are
registered under the securities laws of the State of Texas and such restrictions
are required as a consequence of such registration, is subject to the following
non-fundamental policies, which may be modified in the future by the Trustees
without a vote of the Victory Portfolios' shareholders: (i) the Victory
Portfolios has represented to the Texas State Securities Board, on behalf of the
investment portfolios registered in that state, that those investment portfolios
will not invest in oil, gas or mineral leases or purchase or sell real property
(including limited partnership interests, but excluding readily marketable
securities of companies which invest in real estate); and (ii) the Victory
Portfolios has represented to the Texas State Securities Board on behalf of the
investment portfolios registered in that state, that those investment portfolios
will not invest more than 5% of their net assets in warrants valued at the lower
of cost or market; provided that, included within that amount, but not to exceed
2% of net assets, may be warrants which are not listed on the New York or
American Stock Exchanges. For purposes of this restriction,warrants acquired in
units or attached to securities are deemed to be without value.
Furthermore, the Fund will invest only in debt securities which are
rated, at the time of purchase,within the three highest rating groups assigned
by a NRSRO, or if unrated, those securities which Key Advisers or the
Sub-Adviser deems to be of comparable quality.
The policies and limitations listed above supplement those set forth in
the Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of the Fund's assets that may be invested
in any security or other asset, or sets forth a policy regarding quality
standards, such standard or percentage limitation will be determined immediately
after and as a result of the Fund's acquisition of such security or other asset
except in the case of borrowing (or other activities that may be deemed to
result in the issuance of a "senior security" under the 1940 Act). Accordingly,
any subsequent change in values, net assets, or other circumstances will not be
considered when determining whether the investment complies with the Fund's
investment policies and limitations. If the value of the Fund's holdings of
illiquid securities at any time exceeds the percentage limitation applicable at
the time of acquisition due to subsequent fluctuations in value or other
reasons, the Board of Trustees will consider what actions, if any, are
appropriate to maintain adequate liquidity.
<PAGE>
FUTURE DEVELOPMENTS
The Fund may take advantage of other investment practices which are not
at present contemplated for use by the Fund or which currently are not available
but which may be developed, to the extent such investment practices are both
consistent with the Fund's investment objective and are legally permissible for
the Fund. Such investment practices, if they arise, may involve risks which
exceed those involved in the activities described in the Prospectus and
Statement of Additional Information. Prior to commencing any new investment
practice, the Fund will notify shareholders by means of prospectus supplement.
Portfolio Turnover
The turnover rate for the Fund's investment portfolio is calculated by
dividing the lesser of the Fund's purchases or sales of portfolio securities for
the year by the monthly average value of the portfolio securities. The
calculation excludes all securities whose maturities, at the time of
acquisition, were one year or less.
In the fiscal years ended October 31, 1994 and 1993, the Fund's
portfolio turnover rates were 103.62% and 86%, respectively.
VALUATION OF PORTFOLIO SECURITIES
Investment securities held by the Fund are valued on the basis of
valuations provided by an independent pricing service, approved by the Board of
Trustees, which uses information with respect to transactions of a security,
quotations from dealers, market transactions in comparable securities, and
various relationships between securities, in determining value. Specific
investment securities which are not priced by the approved pricing service will
be valued according to quotations obtained from dealers who are market makers in
those securities. Investment securities with less than 60 days to maturity when
purchased are valued at amortized cost which approximates market value.
Investment securities not having readily available market quotations will be
priced at fair value using a methodology approved in good faith by the Board of
Trustees.
PERFORMANCE
As described in the Prospectus, from time to time the "standardized
yield," "dividend yield," "average annual total return," "total return," and
"total return at net asset value" of an investment in each class of Fund shares
may be advertised. An explanation of how yields and total returns are calculated
for each class and the components of those calculations are set forth below.
Yield and total return information may be useful to investors in
reviewing the Victory Portfolios' performance. The Fund's advertisement of its
performance must, under applicable Commission rules, include the average annual
total returns for each class of shares of the Fund for the 1, 5 and 10-year
period (or the life of the class, if less) as of the most recently ended
calendar quarter. This enables an investor to compare the Fund's
performance to the performance of other funds for the same periods. However, a
number of factors should be considered before using such information as a basis
for comparison with other investments. An investment in the Fund is not insured;
its yield and total return are not guaranteed and normally will fluctuate on a
daily basis. When redeemed, an investor's shares may be worth more or less than
their original cost. Yield and total return for any given past period are not a
prediction or representation by the Victory Portfolios of future yields or rates
of return on its shares. The yield and total returns of the Class A and Class B
shares of the Fund are affected by portfolio quality, portfolio maturity, the
type of investments the Fund holds and its operating expenses.
STANDARDIZED YIELDS. The Fund's "yield" (referred to as "standardized
yield") for a given 30-day period for a class of shares is calculated using the
following formula set forth in rules adopted by the Commission that apply to all
funds that quote yields:
Standardized Yield = 2 [[(a-b + 1)to the sixth] - 1]
----------
cd
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense
reimbursements).
c = the average daily number of shares of that class outstanding
during the 30-day period that were entitled to receive
dividends.
d = the maximum offering price per share of the class on the last
day of the period, adjusted for undistributed net investment
income.
The standardized yield of a class of shares for a 30-day period may
differ from its yield for any other period. The Commission formula assumes that
the standardized yield for a 30-day period occurs at a constant rate for a
six-month period and is annualized at the end of the six-month period. This
standardized yield is not based on actual distributions paid by the Fund to
shareholders in the 30-day period, but is a hypothetical yield based upon the
net investment income from the Fund's portfolio investments calculated for that
period. The standardized yield may differ from the "dividend yield" of that
class, described below. Additionally, because each class of shares is subject to
different expenses, it is likely that the standardized yields of the Fund
classes of shares will differ. The yield on Class A shares for the 30-day period
ended April 30, 1995 was ____% .
DIVIDEND YIELD AND DISTRIBUTION RETURN. From time to time the Fund may
quote a "dividend yield" or a "distribution return" for each class. Dividend
yield is based on the Class A or Class B share dividends derived from net
investment income during a stated period. Distribution return includes dividends
derived from net investment income and from realized capital gains declared
during a stated period. Under those calculations, the dividends and/or
distributions for that class declared during a stated period of one year or less
(for example, 30 days) are added together, and the sum is divided by the maximum
offering price per share of that class A) on the last day of the period. When
the result is annualized for a period of less than one year, the "dividend
yield" is calculated as follows:
Dividend Yield of the Class =
Dividends of the Class + Number of days (accrual period) x 365
-----------------------------------------------------------
Max. Offering Price of the Class (last day of period)
The maximum offering price for Class A shares includes the maximum
front-end sales charge. For Class B shares, the maximum offering price is the
net asset value per share, without considering the effect of contingent deferred
sales charges.
From time to time similar yield or distribution return calculations may
also be made using the Class A net asset value (instead of its respective
maximum offering price) at the end of the period. The dividend yields on Class
<PAGE>
A shares at maximum offering price and net asset value for the 30-day period
ended ________, 1995 were ____% and ____%, respectively.
TOTAL RETURNS. The "average annual total return" of each class is an
average annual compounded rate of return for each year in a specified number of
years. It is the rate of return based on the change in value of a hypothetical
initial investment of $1,000 ("P" in the formula below) held for a number of
years ("n") to achieve an Ending Redeemable Value ("ERV"), according to the
following formula:
( ERV )1 to the Nth - 1 = Average Annual Total Return
-----
( P )
The cumulative "total return" calculation measures the change in value
of a hypothetical investment of $1,000 over an entire period of years. Its
calculation uses some of the same factors as average annual total return, but it
does not average the rate of return on an annual basis. Total return is
determined as follows:
ERV - P = Total Return
P
In calculating total returns for Class A shares, the current maximum
sales charge of 4.75% (as a percentage of the offering price) is deducted from
the initial investment ("P") (unless the return is shown at net asset value, as
discussed below). For Class B shares, the payment of the applicable contingent
deferred sales charge (5.0% for the first year, 4.0% for the second year, 3.0%
for the third and fourth years, 2.0% in the fifth year, 1.0% in the sixth year
and none thereafter) is applied to the investment result for the time period
shown (unless the total return is shown any net asset value, as described
below). Total returns also assume that all dividends and capital gains
distributions during the period are reinvested to buy additional shares at net
asset value per share, and that the investment is redeemed at the end of the
period. The average annual total return and cumulative total return on Class A
shares for the period May 18, 1990 (commencement of operations) to ____, 1995
(life of fund) at maximum offering price were ___% and ____%, respectively. For
the one and five year periods ended _______________, 1995 annual total returns
for Class A were ______% and _____%, respectively.
From time to time the Fund may also quote an "average annual total
return at net asset value" or a cumulative "total return at net asset value" for
Class A or Class B shares. It is based on the difference in net asset value per
share at the beginning and the end of the period for a hypothetical investment
in that class of shares (without considering front-end or contingent sales
charges) and takes into consideration the reinvestment of dividends and capital
gains distributions. The average annual total return and cumulative total return
on Class A shares for the period May 18, 1990 (commencement of operations) to
________, 1995 (life of fund), at net asset value, was ____% and ___%,
respectively. For the one and five year periods ended _______, 1995, average
annual total return for Class A shares was ___% and ___%, respectively.
OTHER PERFORMANCE COMPARISONS. From time to time the Fund may publish
the ranking of the performance of its Class A or Class B shares by Lipper
Analytical Services, Inc. ("Lipper"), a widely-recognized independent mutual
fund monitoring service. Lipper monitors the performance of regulated investment
companies, including the Fund, and ranks the performance of the Fund's classes
against (i) all other funds, excluding money market funds, and (ii) all other
government bond funds. The Lipper performance rankings are based on total return
that includes the reinvestment of capital gains distributions and income
dividends but does not take sales charges or taxes into consideration.
From time to time the Fund may publish the ranking of the performance
of its Class A or Class B shares by Morningstar, Inc., an independent mutual
fund monitoring service that ranks mutual funds, including the Fund, in broad
investment categories (equity, taxable bond, tax-exempt and other) monthly,
based upon each fund's three, five and ten-year average annual total returns
(when available) and a risk adjustment factor that reflects Fund performance
relative to three-month U.S. Treasury bill monthly returns. Such returns are
adjusted for fees and sales loads. There are five ranking categories with a
corresponding number of stars: highest (5), above average (4), neutral (3),
below average (2) and lowest (1). Ten percent of the funds, series or classes in
an investment category receive 5 stars, 22.5% receive 4 stars, 35% receive 3
stars, 22.5% receive 2 stars, and the bottom 10% receive one star.
Morningstar ranks the Class A and Class B shares of the Fund in relation to
other taxable bond funds.
The total return on an investment made in Class A or Class B shares of
the Fund may be compared with the performance for the same period of one or more
of the following indices: the Consumer Price Index, the Salomon Brothers World
Government Bond Index, the Standard & Poor's 500 Index, the Shearson Lehman
Government/Corporate Bond Index, the Lehman Aggregate Bond Index, and the J.P.
Morgan Government Bond Index. Other indices may be used from time to time. The
Consumer Price Index is generally considered to be a measure of inflation. The
Salomon Brothers World Government Bond Index generally represents the
performance of government debt securities of various markets throughout the
world, including the United States. The Lehman Government/Corporate Bond Index
generally represents the performance of intermediate and long-term government
and investment grade corporate debt securities. The Lehman Aggregate Bond Index
measures the performance of U.S. corporate bond issues, U.S. government
securities and mortgaged-backed securities. The J.P. Morgan Government Bond
Index generally represents the performance of government bonds issued by various
countries including the United States. The S&P 500 Index is a composite index of
500 common stocks generally regarded as an index of U.S. stock market
performance. The foregoing bond indices are unmanaged indices of securities that
do not reflect reinvestment of capital gains or take investment costs into
consideration, as these items are not application to indices.
From time to time, the yields and the total returns of Class A or Class
B shares of the Fund may be quoted in and compared to other mutual funds with
similar investment objective in advertisements, shareholder reports or other
communications to shareholders. The Fund may also include calculations in such
communications that describe hypothetical investment results. (Such performance
examples will be based on an express set of assumptions and are not indicative
of the performance of any Fund.) Such calculations may from time to time include
discussions or illustrations of the effects of compounding in advertisements.
"Compounding" refers to the fact that, if dividends or other distributions on a
Fund investment are reinvested by being paid in additional Fund shares, any
future income or capital appreciation of a Fund would increase the value, not
only of the original Fund investment, but also of the additional Fund shares
received through reinvestment. As a result, the value of the Fund investment
would increase more quickly than if dividends or other distributions had been
paid in cash. The Fund may also include discussions or illustrations of the
potential investment goals of a prospective investor (including but not limited
to tax and/or retirement planning), investment management techniques, policies
or investment suitability of Fund, economic conditions, legislative developments
(including pending legislation), the effects of inflation and historical
performance of various asset classes, including but not limited to stocks, bonds
and Treasury bills. From time to time advertisements or communications to
shareholders may summarize the substance of information contained in shareholder
reports (including the investment composition of a Fund, as well as the views of
the investment adviser as to current market, economic, trade and interest rate
trends, legislative, regulatory and monetary developments, investment strategies
and related matters believed to be of relevance to Fund. The Fund may also
include in advertisements, charts, graphs or drawings which illustrate the
potential risks and rewards of investment in various investment vehicles,
including but not limited to stock, bonds, Treasury bills and shares of Fund as
well as charts or graphs which illustrate strategies such as dollar cost
averaging, and comparisons of hypothetical yields of investment in tax-exempt
versus taxable investments. In addition, advertisements or shareholder
communications may include a discussion of certain attributes or benefits to be
derived by an investment in Fund. Such advertisements or communications may
include symbols, headlines or other material which highlight or summarize the
information discussed in more detail therein. With proper authorization, Fund
may reprint articles (or excerpts) written regarding the Fund and provide them
to prospective shareholders. Performance information with respect to the Fund is
generally available by calling 1-800-539- 3863.
Investors may also judge, and the Fund may at times advertise,
performance of Class A or Class B shares by comparing it to the performance of
other mutual funds or mutual fund portfolios with comparable investment
objectives and policies, which performance may be contained in various unmanaged
mutual fund or market indices or rankings such as those prepared by Dow Jones &
Co., Inc., Standard & Poor's Corporation, Lehman Brothers, Merrill Lynch, and
Salomon Brothers, and in publications issued by Lipper Analytical Services, Inc.
and in the following publications: IBC/Donoghue's Money Fund Reports, Ibottson
Associates, Inc., Morningstar, CDA/Wiesenberger, Money Magazine, Forbes,
Barron's, The Wall Street Journal, The New York Times, Business Week, American
Banker, Fortune, Institutional Investor, U.S.A. Today. In addition to yield
information, general information about the Fund that appears in a publication
such as those mentioned above may also be quoted or reproduced in advertisements
or in reports to shareholders.
Advertisements and sales literature may include discussions of
specifics of the portfolio manager's investment strategy and process, including,
but not limited to, descriptions of security selection and analysis.
Advertisements may also include descriptive information about the
investment adviser, including, but not limited to, its status within the
industry, other services and products it makes available, total assets under
management, its investment philosophy.
When comparing yield, total return and investment risk of an investment
in Class A or Class B shares of the Fund with other investments, investors
should understand that certain other investments have different risk
characteristics than an investment in shares of the Fund. For example,
certificates of deposit may have fixed rates of return and may be insured as to
principal and interest by the FDIC, while the Fund's returns will fluctuate and
its share values and returns are not guaranteed. Money market accounts offered
by banks also may be insured by the FDIC and may offer stability of principal.
U.S. Treasury securities are guaranteed as to principal and interest by the full
faith and credit of the U.S. government. Money market mutual funds may seek to
offer a fixed price per share.
ADDITIONAL PURCHASE EXCHANGE AND REDEMPTION INFORMATION
The Victory Portfolios (see "Description of Victory Portfolios" below) is open
for business and the NAV of each class of shares of the Fund is calculated on
each Business Day. A Business Day is every day on which the NYSE is open for
business, the Federal Reserve Bank of Cleveland is open and any other day (other
than a day on which no shares of the Fund are tendered for redemption and no
order to purchase any shares is received) during which there is sufficient
trading in portfolio instruments that the Fund's net asset value per share might
be materially affected. The NAV of each class is determined and its shares are
priced as of the close of regular trading of the NYSE (generally 4:00 p.m.
Eastern time (the "Valuation Time")) on each Business Day of the Fund. The NYSE
or the Federal Reserve Bank of Cleveland will not be open in observance of the
following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veterans Day, Thanksgiving Day, and Christmas Day. The holiday closing schedule
is subject to change.
When the NYSE is closed, or when trading is restricted for any reason
other than its customary weekend or holiday closings, or under emergency
circumstances as determined by the Commission to warrant such action, the Fund's
Transfer Agent will determine the Fund's NAVs at Valuation Time. A Fund's NAV
may be affected to the extent that its securities are traded on days that are
not Business Days.
[If, in the opinion of the Trustees, conditions exist which make cash
payment undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued
in computing the NAV of each class of the Fund. Shareholders receiving
securities or other property on redemption may realize a gain or loss for tax
purposes and will incur any costs of sale as well as the associated
inconveniences.]
Pursuant to Rule 11a-3 under the 1940 Act, the Fund is required to give
shareholders at least 60 days' notice prior to terminating or modifying the
Fund's exchange privilege. Under the Rule, the 60-day notification requirement
may be waived if (i) the only effect of a modification would be to reduce or
eliminate an administrative fee, redemption fee or deferred sales charge
ordinarily payable at the time of exchange or (ii) the Fund temporarily suspends
the offering of shares as permitted under the 1940 Act or by the SEC or because
it is unable to invest amounts effectively in accordance with its investment
objective and policies.
In the Prospectus, the Victory Portfolios, Key Advisers and the
Sub-Adviser have notified shareholders that they reserve the right at any time
without prior notice to shareholders to refuse exchange purchases by any person
or group if, in Key Advisers or the Sub-Adviser's judgment, the Fund would be
unable to invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
ADDITIONAL PURCHASE INFORMATION
ALTERNATIVE SALES ARRANGEMENTS - CLASS A AND CLASS B SHARES. The
Alternative Sales Arrangements permit an investor to choose the method of
purchasing shares that is more beneficial to the investor depending on the
amount of the purchase, the length of time the investor expects to hold shares
and other relevant circumstances. Investors should understand that the purpose
and function of the deferred sales charge and asset-based sales charge with
respect to Class B shares are the same as those of the initial sales charge with
respect to Class A shares. Any salesperson or other person entitled to receive
compensation for selling Fund shares may receive different compensation with
respect to one class of shares on behalf of a single investor (not including
dealer "street name" or omnibus accounts) because generally it will be more
advantageous for that investor to purchase Class A shares of the Fund instead.
The two classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different shareholder
privileges and features. The net income attributable to Class B shares and the
dividends payable on Class B shares will be reduced by incremental expenses
borne solely by that class, including the asset-based sales charge to which
Class B shares are subject.
CLASS B CONVERSION FEATURE. Ninety-six months after an investor's
purchase order for Class B shares is accepted, such "Matured Class B Shares"
automatically will convert to Class A shares, on the basis of the relative net
asset value of the two classes, without the imposition of any sales load or
other charge. Each time any Matured Class B shares convert to Class A shares,
any Class B shares acquired by the reinvestment of dividends or distributions on
such Matured Class B shares that are still held will also convert to Class A
shares, on the same basis. The conversion feature is intended to relieve holders
of Matured Class B shares of the asset-based sales charge under the Class B
Distribution Plan after such shares have been outstanding long enough that the
Distributor may have been compensated for distribution expenses related to such
shares.
The conversion of Matured Class B shares to Class A shares is subject
to the continuing availability of a private letter ruling from the Internal
Revenue Service, or an opinion of counsel or tax adviser, to the effect that the
conversion of Matured Class B shares does not constitute a taxable event for the
holder under Federal income tax law. If such a revenue ruling or opinion is no
longer available, the automatic conversion feature may be suspended, in which
event no further conversion of Matured Class B shares would occur while such
suspension remained in effect. Although Matured Class B shares could then be
exchanged for Class A shares on the basis of relative net asset value of the two
classes, without the imposition of a sales charge or fee, such exchange could
constitute a taxable event for the holder, and absent such exchange, Class B
shares might continue to be subject to the asset-based sales charge for longer
than six years.
<PAGE>
The methodology for calculating the net asset value, dividends and
distributions of the Fund Class A and Class B shares recognizes two types of
expenses. General expenses that do not pertain specifically to either class are
allocated pro rata to the shares of each class, based on the percentage of the
net assets of such class to the Fund's total net assets, and then equally to
each outstanding share within a given class. Such general expenses include (i)
management fees, (ii) legal, bookkeeping and audit fees, (iii) printing and
mailing costs of shareholder reports, prospectuses, statements of additional
information and other materials for current shareholders, (iv) fees to
unaffiliated Trustees, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and brokerage
commissions, and (ix) non-recurring expenses, such as litigation costs. Other
expenses that are directly attributable to a class are allocated equally to each
outstanding share within that class. Such expenses included (i) Distribution
Plan fees, (ii) incremental transfer and shareholder servicing agent fees and
expenses, (iii) registration fees and (iv) shareholder meeting expenses, to the
extent that such expenses pertain to a specific class rather than to the Fund as
a whole.
REDUCED SALES CHARGE. Reduced sales charges are applicable to purchases
of $50,000 or more of Class A shares of the Fund alone or in combination with
purchases of shares of other Victory Portfolios made at any one time. To obtain
the reduction of the sales charge, you or your investment professional must
notify the Transfer Agent at the time of purchase whenever a quantity discount
is applicable to your purchase. Upon such notification, you will receive the
lowest applicable sales charge.
The contingent deferred sales charge is waived on Class B shares in the
following cases: (i) shares sold to Key Advisers, the Sub-Adviser or their
affiliates; (ii) shares issued in plans of reorganization to which the Fund is a
party; and (iii) shares redeemed in involuntary redemptions.
In addition to investing at one time in any combination of Class A
shares of the Victory Portfolios in an amount entitling you to a reduced sales
charge, you may qualify for a reduction in the sales charge under the following
programs:
COMBINED PURCHASES. When you invest in Class A shares of the Victory
Portfolios for several accounts at the same time, you may combine these
investments into a single transaction if purchased through one investment
professional, and if the total is $50,000 or more. The following may qualify for
this privilege: an individual, or "company" as defined in Section 2(a)(8) of the
1940 Act; an individual, spouse, and their children under age 21 purchasing for
his, her, or their own account; a trustee, administrator or other fiduciary
purchasing for a single trust estate or single fiduciary account or for a single
or a parent-subsidiary group of "employee benefit plans" (as defined in Section
3(3) of ERISA); and tax-exempt organizations under Section 501(c)(3) of the
Internal Revenue Code.
RIGHTS OF ACCUMULATION. Your "Rights of Accumulation" permit reduced
sales charges on future purchases of Class A shares after you have reached a new
breakpoint. You can add the value of existing Victory Portfolios shares held by
you, your spouse, and your children under age 21, determined at the previous
day's NAV at the close of business, to the amount of your new purchase valued at
the current offering price to determine your reduced sales charge.
LETTER OF INTENT. If you anticipate purchasing $50,000 or more of
shares of the Fund alone or in combination with Class A shares of certain other
Victory Portfolios within a 13-month period, you may obtain shares of the
portfolios at the same reduced sales charge as though the total quantity were
invested in one lump sum, by filing a non-binding Letter of Intent (the
"Letter") within 90 days of the start of the purchases. Each investment you make
after signing the Letter will be entitled to the sales charge applicable to the
total investment indicated in the Letter. For example, a $2,500 purchase toward
a $60,000 Letter would receive the same reduced sales charge as if the $60,000
had been invested at one time. To ensure that the reduced price will be received
on future purchases, you or your investment professional must inform the
transfer agent that the Letter is in effect each time shares are purchased.
Neither income dividends nor capital gain distributions taken in additional
shares will apply toward the completion of the Letter.
<PAGE>
Your initial investment must be at least 5% of the total amount you
plan to invest. Out of the initial purchase, 5% of the dollar amount specified
in the Letter will be registered in your name and held in escrow. The shares
held in escrow cannot be redeemed or exchanged until the Letter is satisfied or
the additional sales charges have been paid. You will earn income dividends and
capital gain distributions on escrowed shares. The escrow will be released when
your purchase of the total amount has been completed. You are not obligated to
complete the Letter.
If you purchase more than the amount specified in the Letter and
qualify for a further sales charge reduction, the sales charge will be adjusted
to reflect your total purchase at the end of 13 months. Surplus funds will be
applied to the purchase of additional shares at the then current offering price
applicable to the total purchase.
If you do not complete your purchase under the Letter within the
13-month period, your sales charge will be adjusted upward, corresponding to the
amount actually purchased, and if after written notice, you do not pay the
increased sales charge, sufficient escrowed shares will be redeemed to pay such
charge.
ADDITIONAL EXCHANGE INFORMATION
Class A shares of the Victory Portfolios (see "Description of Victory
Portfolios" below) may be exchanged for shares of any Victory money market fund
or any Victory Portfolios with a reduced sales charge. Shares of any Victory
money market portfolio or any Victory Portfolios with a reduced sales charge may
be exchanged for shares of the Fund upon payment of the difference in the sales
charge (or, if applicable, shares of any Victory money market portfolio may be
used to purchase Class B shares of the Fund.)
Class B shares of the Fund may be exchanged for shares of other Victory
Portfolios that offer Class B shares. The CDSC applicable to Class B shares is
imposed on Class B shares redeemed within six years of the initial purchase of
the exchanged Class B shares. When Class B shares are redeemed to effect an
exchange, the priorities described in "How to Invest" in the Prospectus for the
imposition of the Class B CDSC will be followed in determining the order in
which the shares are exchanged. Shareholders should take into account the effect
of any exchange on the applicability and rate of any CDSC that might be imposed
in the subsequent redemption of remaining shares. Shareholders owning shares of
both classes must specify whether they intend to exchange Class A or Class B
shares.
ADDITIONAL REDEMPTION INFORMATION
REINSTATEMENT PRIVILEGE. Within 90 days of a redemption, a shareholder
may reinvest all or part of the redemption proceeds of (i) Class A shares, or
(ii) Class B shares that were subject to the Class B contingent deferred sales
charge when redeemed, in Class A shares of the Fund or any of the other Victory
Portfolios into which shares of the Fund are exchangeable as described below, at
the net asset value next computed after receipt by the Transfer Agent of the
reinvestment order. No charge is currently made for reinvestment in shares of
the Fund but a reinvestment in shares of certain other Victory Portfolios is
subject to a $5.00 service fee. The shareholder must ask the Distributor for
such privilege at the time of reinvestment. Any capital gain that was realized
when the shares were redeemed is taxable, and reinvestment will not alter any
capital gains tax payable on that gain. If there has been a capital loss on the
redemption, some or all of the loss may not be tax deductible, depending on the
timing and amount of the reinvestment. Under the Internal Revenue Code, if the
redemption proceeds of Fund shares on which a sales charge was paid are
reinvested in shares of the Fund or another of the Victory Portfolios within 90
days of payment of the sales charge, the shareholder's basis in the shares of
the Fund that were redeemed may not include the amount of the sales charge paid.
That would reduce the loss or increase the gain recognized from redemption. The
Fund may amend, suspend or cease offering this reinvestment privilege at any
time as to shares redeemed after the date of such amendment, suspension or
cessation. You must reinstate your shares into an account with the same
registration. This privilege may be exercised only once by a shareholder with
respect to the Fund. For information on which funds are available for the
Reinstatement Privilege, please consult your program materials.
DIVIDENDS AND DISTRIBUTIONS
The Fund ordinarily declares and pays dividends separately for Class A
and Class B shares from its net investment income quarterly. The Fund
distributes substantially all of its net investment income and net capital
gains, if any, to shareholders within each calendar year as well as on a fiscal
year basis to the extent required for the Fund to qualify for favorable federal
tax treatment.
The amount of a class's distributions may vary from time to time
depending on market conditions, the composition of the Fund's portfolio, and
expenses borne by the Fund or borne separately by a class, as described in
"Alternative Sales Arrangements - Class A and Class B," above. Dividends are
calculated in the same manner, at the same time and on the same day for shares
of each class. However, dividends on Class B shares are expected to be lower as
a result of the asset-based sales charge on Class B shares, and Class B
dividends will also differ in amount as a consequence of any difference in net
asset value between Class A and Class B shares.
For this purpose, the net income of the Fund, from the time of the
immediately preceding determination thereof, shall consist of all interest
income accrued on the portfolio assets of the Fund, dividend income, if any,
income from securities loans, if any, and realized capital gains and losses on
the Fund assets, less all expenses and liabilities of the Fund chargeable
against income. Interest income shall include discount earned, including both
original issue and market discount, on discount paper accrued ratably to the
date of maturity. Expenses, including the compensation payable to Key Advisers
or the Sub-Adviser, are accrued each day. The expenses and liabilities of the
Fund shall include those appropriately allocable to the Fund as well as a share
of the general expenses and liabilities of the Victory Portfolios in proportion
to the Fund's share of the total net assets of the Victory Portfolios.
Additional Tax Information
It is the policy of each fund of the Victory Portfolios to qualify for
the favorable tax treatment accorded regulated investment companies ("RICs")
under Subchapter M of the Code, for so long as such qualification is in the best
interest of its shareholders. By following such policy and distributing its
income and gains currently with respect to each taxable year, the Victory
Portfolios expects to eliminate or reduce to a nominal amount the federal income
and excise taxes to which it may otherwise be subject.
In order to qualify as a RIC, each fund must, among other things, (1)
derive at least 90% of its gross income from dividends, interest, payments with
respect to securities loans, and gains from the sale or other disposition of
stock or securities, foreign currencies or other income (including gains from
options, futures or forward contracts) derived with respect to its business of
investing in stock, securities or currencies, (2) derive less than 30% of its
gross income from the sale or other disposition of stock, securities, options,
futures, forward contracts, and certain foreign currencies (or options, futures,
or forward contracts on foreign currencies) held for less than three months, and
(3) diversify its holdings so that at the end of each quarter of its taxable
year (i) at least 50% of the market value of the fund's assets is represented by
cash or cash items, U.S. Government securities, securities of other RICs and
other securities limited, in respect of any one issuer, to an amount not greater
than 5% of the value of the fund's total assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of its
total assets is invested in the securities of any one issuer (other than U.S.
Government securities) or of two or more issuers that the Victory Portfolios
control and that are engaged in the same, similar, or related trades or
businesses. These requirements may restrict the degree to which the Victory
Portfolios may engage in short-term trading and concentrate investments. If a
fund qualifies as a RIC, it will not be subject to federal income tax on the
part of its net investment income and net realized capital gains, if any, that
it distributes to shareholders with respect to each taxable year within the time
limits specified in the Code.
A non-deductible excise tax is imposed on regulated investment
companies that do not distribute in each calendar year an amount equal to 98% of
their ordinary income for the year plus 98% of their capital gain net income for
the 1-year period ending on October 31 of such calendar year. The balance of
such income must be distributed during the following calendar year. If
distributions during a calendar year are less than the required amount, the
fund is subject to a non-deductible excise tax equal to 4% of the deficiency.
Certain investment and hedging activities of a fund, including
transactions in options, futures contracts, hedging transactions, forward
contracts, straddles, foreign currencies, and foreign securities, are subject to
special tax rules. In a given case, these rules may accelerate income to the
fund, defer losses to the fund, cause adjustments in the holding periods of the
fund's securities, convert short-term capital losses into long-term capital
losses, or otherwise affect the character of the fund's income. These rules
could therefore affect the amount, timing and character of distributions to
shareholders. The Victory Portfolios will endeavor to make any available
elections pertaining to such transactions in a manner believed to be in the best
interest of the Victory Portfolios and their securities.
Each fund will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of taxable dividends paid to any shareholder who has
failed to provide (or provided an incorrect) tax identification number, or is
subject to withholding pursuant to a notice from the Internal Revenue Service
for failure to properly include on his or her income tax return payments of
interest or dividends. This "backup withholding" is not an additional tax, and
any amounts withheld may be credited against the shareholder's ultimate U.S. tax
liability.
Information set forth in the Prospectus and this Statement of
Additional Information that relates to federal taxation is only a summary of
certain key federal tax considerations generally affecting purchasers of shares
of the Victory Portfolios. No attempt has been made to present a complete
explanation of the federal tax treatment of a fund or its shareholders, and this
discussion is not intended as a substitute for careful tax planning.
Accordingly, potential purchasers of shares of a fund of these Portfolios are
urged to consult their tax advisers with specific reference to their own tax
circumstances. In addition, the tax discussion in the Prospectus and this
Statement of Additional Information is based on tax law in effect on the date of
the Prospectus and this Statement of Additional Information; such laws and
regulations may be changed by legislative, judicial or administrative action,
sometimes with retroactive effect.
Gain or loss on the sale or other disposition of foreign currency on a
spot (or cash) basis will result in ordinary gain or loss for federal income tax
purposes.
<PAGE>
Investment by the Fund in certain "passive foreign investment
companies" might subject the Fund to a U.S. federal income tax or other charge
on distributions received from or the sale of its investment in such a company
at a gain, which tax would not be eliminated by making distributions to Fund
shareholders. The Fund could avoid such a tax or charge by electing to treat the
passive foreign investment company as a "qualified electing fund;" however, the
Fund may not be in the position to make such an election.
<PAGE>
MANAGEMENT OF THE VICTORY PORTFOLIOS
Board of Trustees
Overall responsibility for management of the Victory Portfolios rests
with the Trustees, who are elected by the shareholders of the Victory
Portfolios. The Victory Portfolios are managed by the Trustees in accordance
with the laws of the Commonwealth of Massachusetts governing business trusts.
There are currently seven Trustees, six of whom are not "interested persons" of
the Victory Portfolios within the meaning of that term under the 1940 Act. The
Trustees, in turn, elect the officers of the Victory Portfolios to supervise
actively its day-to-day operations.
The Trustees of the Victory Portfolios, their addresses, ages and their
principal occupations during the past five years are as follows:
<TABLE>
Position(s) Held
With the Victory Principal Occupation
Name, Address and Age Portfolios During Past 5 Years
- --------------------- -------------------- -------------------
<S> <C> <C>
Robert G. Brown, 72
5460 N. Ocean Drive
Singer Island, FL 33404 Trustee Retired; from October 1983 to November 1990, President,
Cleveland Advanced Manufacturing Program (non-profit
corporation engaged in regional economic development);
Trustee, The Victory Funds.
Edward P. Campbell, 45
Nordson Corporation
28601 Clemens Road
Westlake, OH 44145 Trustee From March, 1994 to present, Executive Vice President and
Chief Operating Officer of Nordson Corporation
(manufacturer of application equipment); from May, 1988
March 1994, Vice President of Nordson Corporation; from
1987 to August 1994, member of the Supervisory
Committee of Society's Collective Investment Retirement
Fund; from May 1991 to August 1994, Trustee, Financial
Reserves Fund and from May 1993 to August 1994,
Trustee, Ohio Municipal Money Market Fund; Trustee, The
Victory Funds and Spears, Benzak, Salomon and Farrell
("SBSF") Funds.
Dr. Harry Gazelle, 67
17822 Lake Road
Lakewood, Ohio 44107 Trustee Retired radiologist, Drs. Hill and Thomas Corp. Trustee,
The Victory Funds.
<PAGE>
Dr. Thomas F. Morrissey, 62
Weatherhead School of
Management
Case Western Reserve
University
10900 Euclid Avenue
Cleveland, OH 44106-7235 Trustee 1995 Visiting Scholar, Bond University, Queensland,
Australia; Professor, Weatherhead School of Management,
Case Western Reserve University; from 1989 to 1995,
Associate Dean of Weatherhead School of Management;
from 1987 to August 1994, Member of the Supervisory
Committee of Society's Collective Investment Retirement
Fund; from May 1991 to August 1994, Trustee, Financial
Reserves Fund and from May 1993 to August 1994,
Trustee, Ohio Municipal Money Market Fund; Trustee, The
Victory Funds.
Stanley I. Landgraf, 70
41 Traditional Lane
Albany, NY 12211 Trustee Retired; currently, Trustee, Rensselaer Polytechnic Institute;
Director, Elenel Corporation, Albany International
Corporation and Mechanical Technology, Inc.; Member,
Board of Overseers, School of Management, Rensselaer
Polytechnic Institute; Member, The Fifty Group (a Capital
Region business organization); Trustee, The Victory Funds.
Leigh A. Wilson*, 51
River Tower
420 East 54th Street
Apt. 10H
New York, NY 10022 Trustee and President From 1989 to present, Chairman and Chief Executive
Officer, Glenleigh
International Limited;
from 1984-1989, Chief
Executive Officer,
Paribas North America and
Paribas Corporation;
Trustee, The Victory
Funds and SBSF Funds.
Dr. H. Patrick Swygert, 52
Howard University
2400 6th Street, N.W.
Suite 320
Washington, D.C. ___ Trustee Currently President, Howard University; Trustee, The
Victory Funds; formerly President, State University of New
York at Albany; formerly, Executive Vice President,
Temple University.
</TABLE>
- ------------
* Mr. Wilson is deemed to be an "interested person" of The Victory Portfolios
under the 1940 Act solely by reason of his position as President.
The Board presently has an Investment Policy Committee and a Business,
Legal, and Audit Committee. The members of the Investment Policy Committee are
Messrs. Morrissey, Brown and Landgraf (Chairman), who will serve until May 1996.
The function of the Investment Policy Committee is to review the existing
investment policies of the Victory Portfolios, including the levels of risk and
types of funds available to shareholders, and make recommendations to the Board
of Trustees regarding the revision of such policies or, if necessary, the
submission
<PAGE>
of such revisions to the Victory Portfolios' shareholders for their
consideration. The members of the Business, Legal and Audit Committee are
Messrs. Swygert (Chairman), Campbell and Gazelle who will serve until May 1996.
The function of the Business, Legal and Audit Committee is to recommend
independent auditors and monitor accounting and financial matters; to nominate
persons to serve as disinterested Trustees and Trustees to serve on committees
of the Board; and to review compliance and contract matters.
The Investment Policy Committee met four times during the current
fiscal year commencing November 1, 1994. The Business, Legal and Audit Committee
was constituted on May 24, 1995 (and has met once since then) and replaced the
Audit Committee, the Legal Committee and the Nominating Committee, which met
three times, one time and one time, respectively, during the current fiscal year
prior to May 31, 1995.
REMUNERATION OF TRUSTEES AND CERTAIN EXECUTIVE OFFICERS
Effective June 1, 1995, each Trustee (other than Leigh A. Wilson)
receives an annual fee of $27,000 for serving as Trustee of all the Funds of the
Victory Portfolios, and an additional per meeting fee ($2,400 in person and
$1,200 per telephonic meeting).
Effective June 1, 1995, Leigh A. Wilson receives an annual fee of
$33,000 for serving as President and Trustee for all of the Funds of the Victory
Portfolios, and an additional per meeting fee ($3,000 in person and $1,500 per
telephonic meeting).
The following tables indicate the compensation received by each Trustee
during the fiscal year of the Funds which ended on October 31, 1995:
<TABLE>
The Victory The Victory The Victory The Victory
The Victory Diversified Government The Victory Intermediate International
Balanced Fund1/ Stock Fund Mortgage Fund1/ Growth Fund2/ Income Fund Growth Fund2/
--------------- ---------- --------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee ........ $1,178.91 $2,331.48 $1,126.45 $1,168.23 $980.48 $880.52
Edward P. Campbell,
Trustee .......... 1,539.75 2,009.87 1,174.17 740.45 841.67 670.63
Harry Gazelle,
Trustee .......... 974.79 1,929.86 919.93 987.41 809.59 735.72
John W. Kemper,
Trustee* ......... 541.57 1,060.05 589.95 843.06 458.81 506.60
Thomas F. Morrissey,
Trustee .......... 1,539.75 2,009.87 1,174.17 1,151.74 841.67 802.87
Stanley I. Landgraf,
Trustee .......... 1,014.75 2,009.87 949.17 842.51 841.67 708.01
Leigh A. Wilson,
Trustee .......... 1,112.55 2,206.35 1,021.27 1,213.17 920.59 865.44
H. Patrick Swygert,
Trustee .......... 1,014.75 2,009.87 949.17 1,151.74 841.67 802.87
John Buckingham,*
Trustee .......... 541.57 1,060.05 589.95 226.15 458.81 409.93
John R. Young,*
Trustee .......... 577.04 1,132.82 621.95 750.08 488.98 494.95
</TABLE>
*Resigned
- ------------------------------------------------
1/ For certain Trustees, these amounts include payments made by the Society
Collective Investment Retirement Funds, which were reorganized into these
Funds as of December 19, 1994.
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
<TABLE>
The Victory The Victory The Victory The Victory The Victory The Victory
Investment Quality Limited Term Ohio Municipal Ohio Regional Prime Obligations Special
Bond Fund2/ Income Fund2/ Bond Fund Stock Fund Fund Value Fund
------------- ------------- ----------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee .......... $1,052.54 $1,155.92 $443.98 $271.80 $4,747.58 $1,091.75
Edward P. Campbell,
Trustee .......... 776.01 922.20 376.72 231.79 3,921.95 942.58
Harry Gazelle,
Trustee .......... 876.72 969.26 364.09 223.52 3,832.26 904.37
John W. Kemper,*
Trustee .......... 644.08 581.73 223.59 133.11 2,818.92 489.58
Thomas F. Morrissey,
Trustee .......... 966.09 1,045.87 376.72 231.79 3,921.95 942.58
Stanley I. Landgraf,
Trustee ......... 827.74 960.31 376.72 231.79 3,921.95 942.58
Leigh A. Wilson,
Trustee .......... 1,033.38 1,143.77 407.85 252.05 4,143.70 1,036.09
H. Patrick Swygert,
Trustee .......... 966.09 1,045.87 376.72 231.79 3,921.95 942.58
John D. Buckingham,*
Trustee .......... 504.76 495.35 223.59 133.11 2,818.92 489.58
John R. Young,*
Trustee .......... 619.72 590.17 236.57 140.98 2,915.30 523.93
</TABLE>
* Resigned
- ------------------------------------------------
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
<TABLE>
The Victory The Victory Victory
Tax-Free The Victory U.S. The Victory Institutional Stock
Money Government The Victory The Victory Government Money Index
Market Fund Obligations Fund2/ Value Fund2/ Fund for Income3/ Bond Fund3/ Market Fund3/ Fund
----------- ------------------ ------------ ----------------- ----------- ------------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee .......... $ 1,781.03 $ 5,774.42 $ 1,842.48 $ 217.14 $ 773.66 $ 3,820.17 $ 797.69
Edward P. Campbell,
Trustee .......... 1,523.27 4,324.24 1,581.23 114.18 389.76 2,204.64 689.90
Harry Gazelle,
Trustee .......... 1,467.67 4,922.46 1,522.01 189.79 675.74 3,425.47 661.40
John W. Kemper,*
Trustee .......... 853.51 3,098.06 841.91 161.55 624.83 2,554.32 356.16
Thomas F. Morrissey,
Trustee .......... 1,523.57 5,336.76 1,583.17 228.46 819.94 4,004.82 689.90
Stanley I. Landgraf,
Trustee .......... 1,523.57 4,828.66 1,580.86 157.16 535.10 2,927.66 689.90
Leigh A. Wilson,
Trustee .......... 1,661.60 5,902.24 1,732.57 248.70 874.92 4,397.12 759.38
H. Patrick Swygert,
Trustee .......... 1,523.57 5,336.76 1,583.17 228.46 819.94 4,004.82 689.90
John D. Buckingham,*
Trustee .......... 853.51 2,478.65 840.54 82.92 318.60 1,333.87 356.16
John R. Young,*
Trustee .......... 900.37 3,074.28 899.81 140.67 535.81 2,223.97 379.85
</TABLE>
* Resigned
- ------------------------------------------------
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
3/ For certain Trustees, these amounts include amounts paid by this Fund's
successor, a Portfolio of The Victory Funds, which was reorganized as the
Fund as of June 5, 1995.
<TABLE>
The Victory
The Victory The Victory The Victory Ohio The Victory Financial
National Municipal New York Municipal Money Special Growth Reserves
Bond Fund3/ Tax-Free Fund3/ Market Fund3/ ____Fund2/ Funds 3/
<S> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee .......... $39.89 $141.29 $2,962.00 $401.99 $4,834.58
Edward P. Campbell,
Trustee .......... 26.78 76.45 4,899.18 272.35 3,549.91
Harry Gazelle,
Trustee........... 37.48 123.38 3,548.52 341.34 5,474.20
John W. Kemper,*
Trustee .......... 18.20 100.45 1,893.61 260.65 2,913.01
Thomas F. Morrissey,
Trustee .......... 40.09 148.08 5,602.37 388.49 4,996.26
Stanley I. Landgraf,
Trustee .......... 38.83 104.47 3,183.11 307.57 5,112.02
Leigh A. Wilson,
Trustee .......... 49.44 162.90 3,424.84 417.32 5,729.73
H. Patrick Swygert,
Trustee .......... 40.09 148.08 3,102.37 388.49 4,996.26
John D. Buckingham,*
Trustee .......... 13.33 51.65 1,784.96 177.06 2,598.87
John R. Young,*
Trustee .......... 18.91 88.31 1,661.29 238.89 2,709.16
</TABLE>
- ------------------------------------------------
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
3/ For certain Trustees, these amounts include amounts paid by this Fund's
predecessor, a Portfolio of The Victory Funds, which was reorganized as the
Fund as of June 5, 1995.
<PAGE>
<TABLE>
Total Compensation
Pension or Retirement Benefits Estimated Annual from Victory
Accrued as Portfolio Expenses Benefits "Fund Complex"
Upon Retirement 4/
<S> <C> <C> <C>
Robert G. Brown, Trustee -0- -0- $39,815.98
Edward P. Campbell, Trustee -0- -0- 33,799.68
Harry Gazelle, Trustee -0- -0- 35,916.98
John W. Kemper, Trustee* -0- -0- 22,567.31
Thomas F. Morrissey, Trustee -0- -0- 40,366.98
Stanley I. Landgraf, Trustee -0- -0- 34,615.98
Leigh A. Wilson, Trustee -0- -0- 46,716.97
H. Patrick Swygert, Trustee -0- -0- 37,116.98
John D. Buckingham, Trustee -0- -0- 18,841.89
John R. Young, Trustee* -0- -0- 21,963.81
</TABLE>
* Resigned
- ------------------------------------
4/ For certain Trustees, these amounts include compensation received from
The Victory Funds (which were reorganized into the Current Company as
of June 5, 1995), the SBSF Funds (the investment adviser of which was
acquired by KeyCorp effective April, 1995) and Society's Collective
Investment Retirement Funds, which were reorganized into the Balanced
Fund and Government Mortgage Fund as of December 19, 1994. There are
presently 24 mutual funds from which the above-named Trustees are
compensated in the Victory "Fund Complex," but not all of the
above-named Trustees serve on the boards of each fund in the "Fund
Complex."
<TABLE>
Total Compensation
Pension or Retirement Benefits Estimated Annual from Victory
Accrued as Portfolio Expenses Benefits "Fund Complex"
Upon Retirement 4/
<S> <C> <C> <C>
Robert G. Brown, Trustee -0- -0- $39,815.98
Edward P. Campbell, Trustee -0- -0- 33,799.68
Harry Gazelle, Trustee -0- -0- 35,916.98
John W. Kemper, Trustee* -0- -0- 22,567.31
Thomas F. Morrissey, Trustee -0- -0- 40,366.98
Stanley I. Landgraf, Trustee -0- -0- 34,615.98
Leigh A. Wilson, Trustee -0- -0- 46,716.97
H. Patrick Swygert, Trustee -0- -0- 37,116.98
John D. Buckingham, Trustee -0- -0- 18,841.89
John R. Young, Trustee* -0- -0- 21,963.81
* Resigned
- ------------------------------------
4/ For certain Trustees, these amounts include compensation received from
The Victory Funds (which were reorganized into the Current Company as
of June 5, 1995), the SBSF Funds (the investment adviser of which was
acquired by KeyCorp effective April, 1995) and Society's Collective
Investment Retirement Funds, which were reorganized into the Balanced
Fund and Government Mortgage Fund as of December 19, 1994. There are
presently 24 mutual funds from which the above-named Trustees are
compensated in the Victory "Fund Complex," but not all of the
above-named Trustees serve on the boards of each fund in the "Fund
Complex."
</TABLE>
Officers
The officers of the Victory Portfolios, their addresses, ages
and principal occupations during the past five years are as follows:
<TABLE>
Position with the Principal occupation
Name Victory Portfolios during past 5 years
<S> <C> <C>
Leigh A. Wilson, 51 President and Trustee From 1989 to present, Chairman and
Chief Executive Officer, Glenleigh
International Limited; from 1984-1989,
Chief Executive Officer, Paribas North
America and Paribas Corporation; Trustee
to The Victory Funds and SBSF Funds.
William B. Blundin, 57 Vice President Senior Vice President of BISYS Fund
Services; officer of other investment
companies administered by BISYS Fund
Services; President and Chief Executive
Officer of Vista Broker-Dealer Services,
Inc., Emerald Asset Management, Inc. and
BNY Hamilton Distributors, Inc.,
registered broker/dealers.
<PAGE>
J. David Huber, 49 Vice President Executive Vice President, BISYS Fund
Services.
Scott A. Englehart, 33 Secretary From October 1990 to present, employee
of BISYS Fund Services, Inc.; from 1985
to October 1990, Manager of Banking
Center, Fifth Third Bank.
George O. Martinez, 36 Assistant Secretary From March 1995 to present, Senior Vice
President and Director of Legal and
Compliance Services, BISYS Fund
Services; from June 1989-March 1995,
Vice President and Associate General
Counsel, Alliance Capital Management.
Martin R. Dean, 31 Treasurer From May 1994 to present, employee of
BISYS Fund Services; from January 1987
- April 1994, Senior Manager, KPMG
Peat Marwick.
Adrian J. Waters, 32 Assistant Treasurer From May 1993 to present, employee of
BISYS Fund Services; from 1989-May
1993, Manager, Price Waterhouse.
</TABLE>
The mailing address of each of the officers of the Victory Portfolios
is 3435 Stelzer Road, Columbus, Ohio 43219-3035.
<PAGE>
The officers of the Victory Portfolios receive no compensation directly
from the Victory Portfolios for performing the duties of their offices. BISYS
Fund Services, Inc. receives fees from the Victory Portfolios for acting as
Administrator.
As of January 6, 1996, the Trustees and officers as a group owned
beneficially less than 1% of the Fund.
Investment Adviser and Sub-Adviser
KeyCorp Mutual Fund Advisers, Inc. was organized as an Ohio corporation
on July 27, 1995 and is registered as an investment adviser under the 1940 Act.
It is a wholly-owned subsidiary of KeyCorp Asset Management Holdings, Inc.,
which is a wholly-owned subsidiary of Society National Bank, a wholly-owned
subsidiary of KeyCorp . Affiliates of Key Advisers manage approximately $37
billion for numerous clients including large corporate and public retirement
plans, Taft-Hartley plans, foundations and endowments, high net worth
individuals and mutual funds.
KeyCorp, a financial services holding company, is headquartered at 127
Public Square, Cleveland, Ohio 44114. As of June 30, 1995, KeyCorp had an asset
base of $67.5 billion, with banking offices in 25 states from Maine to Alaska,
and trust and investment offices in 16 states. KeyCorp is the resulting entity
of a merger between Society Corporation, the bank holding company of which
Society National Bank was a wholly-owned subsidiary, and KeyCorp, the former
bank holding company, which merger was consummated during the first quarter of
1994. KeyCorp's major business activities include providing traditional banking
and associated financial services to consumer, business and commercial markets.
Its non-bank subsidiaries include investment advisory, securities brokerage,
insurance, bank credit card processing, and mortgage leasing companies. Society
National Bank is the lead affiliate bank of KeyCorp.
<PAGE>
The following schedule lists the advisory fees for each mutual fund that is
advised by Key Advisers.
.25 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Institutional Money Market Fund
.35 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Prime Obligations Fund
Victory U.S. Government Obligations Fund
Victory Tax-Free Money Market Fund
.50 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Ohio Municipal Money Market Fund
Victory Limited Term Income Fund
Victory Government Mortgage Fund
Victory Financial Reserves Fund
Victory Fund for Income #
.55 OF 1% OF AVERAGE DAILY NET ASSETS
Victory National Municipal Bond Fund
Victory Government Bond Fund
Victory New York Tax-Free Fund
.60 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Ohio Municipal Bond Fund
Victory Stock Index Fund
.65 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Diversified Stock Fund
.75 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Intermediate Income Fund
Victory Investment Quality Bond Fund
Victory Ohio Regional Stock Fund
1% OF AVERAGE DAILY NET ASSETS
Victory Balanced Fund
Victory Value Fund
Victory Growth Fund
Victory Special Value Fund
Victory Special Growth Fund+/-
1.10% OF AVERAGE DAILY ASSETS
Victory International Growth Fund
# First Albany Asset Management Corporation serves as
sub-adviser to the Victory Fund for Income, for which it
receives .20% paid by Key Advisers.
+/- T. Rowe Price Associates, Inc. serves as sub-adviser to
Society Special Growth Fund, for which it receives .25% of
average daily net assets up to $100 million and .20% of
average daily net assets in excess of $100 million paid by
Key Advisers.
ADVISORY AND OTHER CONTRACTS
Unless sooner terminated, the Investment Advisory Agreement between Key
Advisers and the Funds provides that it will continue in effect as to a
particular Fund for an initial two-year term and for consecutive one-year terms
thereafter, provided that such continuance is approved at least annually by the
Victory Portfolios' Trustees or by vote of a majority of the outstanding shares
of such Fund (as defined under "GENERAL INFORMATION - Miscellaneous" in the
Prospectuses), and, in either case, by a majority of the Trustees who are not
parties to the Investment Advisory Agreement or interested persons (as defined
in the 1940 Act) of any party to the Investment Advisory Agreement, by votes
cast in person at a meeting called for such purpose.
The Investment Advisory Agreement is terminable as to a particular Fund
at any time on 60 days' written notice without penalty by the Trustees, by vote
of a majority of the outstanding shares of that Fund, or by Key Advisers. The
Investment Advisory Agreement also terminates automatically in the event of any
assignment, as defined in the 1940 Act.
The Investment Advisory Agreement provides that Key Advisers shall not
be liable for any error of judgment or mistake of law or for any loss suffered
by the Victory Portfolios in connection with the performance of services
pursuant to the Investment Advisory Agreement, except a loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith, or gross
negligence on the part of Key Advisers in the performance of its duties, or from
reckless disregard by it of either duties and obligations thereunder.
Under the Investment Advisory Agreement, Key Advisers has agreed to
provide investment advisory services as described in the Prospectus. For the
services provided and expenses assumed pursuant to the Investment Advisory
Agreement, the Fund pays Key Advisers a fee, computed daily and paid monthly, at
the annual rate of 1.10% of the average daily net assets of the Fund.
Prior to January, 1993, Society National Bank served as investment
adviser to the Fund. From January, 1993 until , 1995, Society Asset Management,
Inc. served as investment adviser to the Fund. For the fiscal years ended
October 31, 1992, 1993 and 1994 the Fund paid investment advisory fees of
$________, $________ and $532,331, respectively, after fee reductions of
$______, $______ and $90,406, respectively. For the six months ended April 30,
1995, the Fund paid investment advisory fees of $___________.
Under an investment advisory agreement between the Victory Portfolios,
on behalf of the Fund, and Key Advisers, Key Advisers may delegate a portion of
its responsibilities to a subadviser. In addition, the investment advisory
agreement provides that Key Advisers may render services through its own
employees or the employees of one or more affiliated companies that are
qualified to act as an investment adviser of the Fund and are under the common
control of KeyCorp as long as all such persons are functioning as part of an
organized group of persons, managed by authorized officers of Key Advisers.
Key Advisers has entered into an investment sub-advisory agreement with
its affiliate, Society Asset Management, Inc. on behalf of each of the Victory
Portfolios except Fund for Income and Special Growth Fund. The Sub-Adviser is a
wholly-owned subsidiary of KeyCorp Asset Management Holdings, Inc. With respect
to the day to day management of the Fund, under the sub-advisory agreement, the
Sub-Adviser makes decisions concerning, and places all orders for, purchases and
sales of securities and helps maintain the records relating to such purchases
and sales. The Sub-Adviser may, in its discretion, provide such services through
its own employees or the employees of one or more affiliated companies that are
qualified to act as an investment adviser to the Company under applicable laws
and are under the common control of KeyCorp; provided that (i) all persons, when
providing services under the sub-advisory agreement, are functioning as part of
an organized group of persons, and (ii) such organized group of persons is
managed at all times by authorized officers of the Sub-Adviser. This arrangement
will not result in the payment of additional fees by the Fund. For its services
under the investment sub-advisory agreement, Key Advisers pays the Sub-Adviser
subadvisory fees at rates (based on an annual percentage of average daily net
assets) which vary according to the schedule below:
For the Balanced Fund, Diversified For the International Growth Fund, Ohio
Stock Fund, Growth Fund, Stock Index Regional Stock Fund and Special Value
Fund and Value Fund: Fund:
Rate of Rate of
Sub-Advisory Sub-Advisory
Net Assets Fee* Net Assets Fee*
Up to $10,000,000 0.65% Up to $10,000,000 0.90%
Next $15,000,000 0.50% Next $15,000,000 0.70%
Next $25,000,000 0.40% Next $25,000,000 0.55%
Above $50,000,000 0.35% Above $50,000,000 0.45%
For the Intermediate Income Fund, For the Prime Obligations Fund, Tax-Free
Investment Quality Bond Fund, Limited Money Market Fund, U.S. Government
Term Income Fund, Ohio Municipal Bond Obligations Fund, Financial Reserves
Fund, Goverment Bond Fund, Government Fund, Institutional Money Market Fund and
Mortgage Fund, National Municipal Ohio Municipal Money Market Fund:
Bond Fund and New York Tax-Free Fund:
Rate of Rate of
Sub-Advisory Sub-Advisory
Net Assets Fee* Net Assets Fee*
Up to $10,000,000 0.40% Up to $10,000,000 0.25%
Next $15,000,000 0.30% Next $15,000,000 0.20%
Next $25,000,000 0.25% Next $25,000,000 0.15%
Above $50,000,000 0.20% Above $50,000,000 0.125%
- --------------------
* As a percentage of average daily net assets. Note, however, that the
Sub-Adviser shall have the right, but not the obligation, to
voluntarily waive any portion of the sub-advisory fee from time to
time. Any such voluntary waiver will be irrevocable and determined in
advance of rendering sub-investment advisory services by the
Sub-Adviser, and shall be in writing and signed by the parties hereto.
Glass-Steagall Act
In 1971 the United States Supreme Court held in Investment Company
Institute v. Camp that the federal statute commonly referred to as the
Glass-Steagall Act prohibits a national bank from operating a fund for the
collective investment of managing agency accounts. Subsequently, the Board of
Governors of the Federal Reserve System (the "Board") issued a regulation and
interpretation to the effect that the Glass-Steagall Act and such decision: (a)
forbid a bank holding company registered under the Federal Bank Holding Company
Act of 1956 (the "Holding Company Act") or any non-bank affiliate thereof from
sponsoring, organizing, or controlling a registered, open-end investment company
continuously engaged in the issuance of its shares, but (b) do not prohibit such
a holding company or affiliate from acting as investment adviser, transfer
agent, and custodian to such an investment company. In 1981 the United States
Supreme Court held in Board of Governors of the Federal Reserve System v.
Investment Company Institute that the Board did not exceed its authority under
the Holding Company Act when it adopted its regulation and interpretation
authorizing bank holding companies and their non-bank affiliates to act as
investment advisers to registered closed-end investment companies. In the Board
of Governors case, the Supreme Court also stated that if a national bank
complied with the restrictions imposed by the Board in its regulation and
interpretation authorizing bank holding companies and their non-bank affiliates
to act as investment advisers to investment companies, a national bank
performing investment advisory services for an investment company would not
violate the Glass-Steagall Act.
Key Advisers and the Sub-Adviser believe that they may perform the
services for the Victory Portfolios contemplated by the Prospectus, this
Statement of Additional Information, and the Investment Advisory (Sub-Advisory)
Agreement with the Victory Portfolios without violation of applicable statutes
and regulations and has so represented in its Investment Advisory (Sub-Advisory)
Agreement with the Victory Portfolios. Key Trust Company of Ohio, N.A. believes
that it may perform the services for the Victory Portfolios contemplated by the
Prospectus, this Statement of Additional Information, and the Shareholder
Servicing Agreement with the Victory Portfolios (as described below) without
violation of applicable statutes and regulations and has so represented in such
Shareholder Servicing Agreement. Future changes in either federal or state
statutes and regulations relating to the permissible activities of banks or bank
holding companies and the subsidiaries or affiliates of those entities, as well
as further judicial or administrative decisions or interpretations of present
and future statutes and regulations, could prevent or restrict Key Trust Company
of Ohio, N.A., Key Advisers or the Sub-Adviser from continuing to perform such
services for the Victory Portfolios. Depending upon the nature of any changes
in the services which could be provided by Key Trust Company of Ohio, N.A.,
Key Advisers or the Sub-Adviser, the Trustees of the Victory Portfolios would
review the Victory Portfolios' relationship with Key Trust Company of Ohio,
N.A., Key Advisers or the Sub-Adviser and consider taking all action necessary
in the circumstances.
Should future legislative, judicial, or administrative action prohibit
or restrict the proposed activities of Key Trust Company of Ohio, N.A., Key
Advisers or the Sub-Adviser and its affiliated and correspondent banks and other
non-bank affiliates in connection with customer purchases of shares of the
Victory Portfolios, the banks and such non-bank affiliates might be required to
alter materially or discontinue the services offered by them to customers. It is
not anticipated, however, that any change in the Victory Portfolios' method of
operations would affect its net asset value per share or result in financial
losses to any customer.
From time to time, advertisements, supplemental sales literature and
information furnished to present or prospective shareholders of the Fund may
include descriptions of Key Trust Company of Ohio, N.A., Key Advisers and the
Sub-Adviser including, but not limited to, (i) descriptions of the operations of
Key Trust Company of Ohio, N.A., Key Advisers and the SubAdviser; (ii)
descriptions of certain personnel and their functions; and (iii) statistics and
rankings related to the operations of Key Trust Company of Ohio, N.A., Key
Advisers and the Sub-Adviser.
Portfolio Transactions
Pursuant to the Investment Advisory (Sub-Advisory) Agreement, Key
Advisers or the Sub-Adviser determines, subject to the general supervision of
the Trustees of the Victory Portfolios, and in accordance with each fund's
investment objective and restrictions, which securities are to be purchased and
sold by a fund, and which brokers are to be eligible to execute its portfolio
transactions. Purchases from underwriters and/or broker/dealers of portfolio
securities include a commission or concession paid by the issuer to the
underwriter and/or broker/dealer and purchases from dealers serving as market
makers may include the spread between the bid and asked price. While Key
Advisers and the Sub-Adviser generally seek competitive spreads or commissions,
the Fund may not necessarily pay the lowest spread or commission available on
each transaction, for reasons discussed below.
Allocation of transactions, including their frequency, to various
dealers is determined by Key Advisers or the Sub-Adviser in its best judgment
and in a manner deemed fair and reasonable to shareholders. The primary
consideration is prompt execution of orders in an effective manner at the most
favorable price. Subject to this consideration, dealers who provide supplemental
investment research to Key Advisers or the Sub-Adviser may receive orders for
transactions by the Victory Portfolios. Information so received is in addition
to and not in lieu of services required to be performed by Key Advisers or the
Sub-Adviser and does not reduce the advisory (sub-advisory) fees payable to Key
Advisers or the Sub-Adviser by the Victory Portfolios. Such information may be
useful to Key Advisers or the Sub-Adviser in serving both the Victory Portfolios
and other clients and, conversely, supplemental information obtained by the
placement of business or other clients may be useful to Key Advisers or the
Sub-Adviser in carrying out its obligations to the Victory Portfolios. In the
future, the Trustees may also authorize the allocation of brokerage to
affiliated broker-dealers on an agency basis to effect portfolio transactions.
In such event, the Trustees will adopt procedures incorporating the standards of
Rule 17e-1 of the 1940 Act, which require that the commission paid to affiliated
broker-dealers must be "reasonable and fair compared to the commission,
fee or other remuneration received, or to be received, by other brokers in
connection with comparable transactions involving similar securities
during a comparable period of time." At times, the Fund may also purchase
portfolio securities directly from dealers acting as principals, underwriters or
market makers. As these transactions are usually conducted on a net basis, no
brokerage commissions are paid by the Fund.
The Victory Portfolios will not execute portfolio transactions through,
acquire portfolio securities issued by, make savings deposits in, or enter into
repurchase or reverse repurchase agreements with Key Advisers, the Sub-Adviser,
Key Trust Company of Ohio, N.A. or its affiliates, Concord Holding Corporation,
Victory Broker-Dealer Services, Inc. or their affiliates, and will not give
preference to Key Trust Company of Ohio, N.A. 's correspondent banks or
affiliates, or Concord Holding Corporation or Victory Broker-Dealer Services,
Inc. with respect to such transactions, securities, savings deposits, repurchase
agreements, and reverse repurchase agreements.
Investment decisions for each fund are made independently from those
for the other funds or any other investment company or account managed by Key
Advisers or the Sub-Adviser. Any such other investment company or account may
also invest in the same securities as a particular fund. When a purchase or sale
of the same security is made at substantially the same time on behalf of a fund
and another fund, investment company or account, the transaction will be
averaged as to price, and available investments allocated as to amount, in a
manner which Key Advisers or the SubAdviser believes to be equitable to a fund
or the Victory Portfolios and such other investment company or account. In some
instances, this investment procedure may adversely affect the price paid or
received by a fund or the size of the position obtained by a fund. To the extent
permitted by law, Key Advisers or the Sub-Adviser may aggregate the securities
to be sold or purchased for a fund with those to be sold or purchased for the
other funds or for other investment companies or accounts in order to obtain
best execution. As provided by the Investment Advisory (Sub-Advisory) Agreement,
in making investment recommendations for the Victory Portfolios, Key Advisers
and the Sub-Adviser will not inquire or take into consideration whether an
issuer of securities proposed for purchase or sale by a Fund is a customer of
Key Advisers or the Sub-Adviser, their parents or subsidiaries or affiliates
and, in dealing with their commercial customers, Key Advisers or the
Sub-Adviser, its parents, subsidiaries, and affiliates will not inquire or take
into consideration whether securities of such customers are held by the Victory
Portfolios.
In the fiscal years ended October 31, 1992, 1993 and 1994, the Fund
paid $59,044, $187,410 and $3,047, respectively, in brokerage commissions. For
the six months ended April 30, 1995, the Fund paid $_______ in brokerage
commissions.
Administrator
Currently, Concord Holding Corporation ("CHC") serves as general
manager and administrator (the "Administrator") to the Fund. Prior to CHC
becoming administrator to the Fund The Winsbury Company ("Winsbury") served as
administrator. The Administrator assists in supervising all operations of each
fund (other than those performed by Key Advisers or the Sub-Adviser under the
Investment Advisory (Sub-Advisory) Agreement). The Administrator is a
broker-dealer registered with the Commission, and is a member of the National
Association of Securities Dealers, Inc. The Administrator provides financial
services to institutional clients.
CHC receives a fee from each fund for its services as Administrator and
expenses assumed pursuant to the Administration Agreements, calculated daily and
paid monthly, at the annual rate of fifteen one hundredths of one percent (.15%)
of each fund's average daily net assets. CHC may periodically waive all or a
portion of its fee with respect to any fund in order to increase the net income
of one or more funds of the Victory Portfolios available for distribution as
dividends.
Unless sooner terminated, the Administration Agreement will continue in effect
as to the Fund for a period of two years, and for consecutive one-year terms
thereafter, provided that such continuance is ratified at least annually by the
Victory Portfolios' Trustees or by vote of a majority of the outstanding shares
of that Fund , and in either case by a majority of the Trustees who are not
parties to the Administration Agreement or interested persons (as defined in the
1940 Act) of any party to the Administration Agreement, by votes cast in person
at a meeting called for such purpose.
The Administration Agreement provides that CHC shall not be liable for
any error of judgment or mistake of law or any loss suffered by the Victory
Portfolios in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or from the reckless disregard by
it of its obligations and duties thereunder.
Under the Administration Agreement, CHC assists in the Fund's
administration and operation, including providing statistical and research data,
clerical services, internal compliance and various other administrative
services, including among other responsibilities, forwarding certain purchase
and redemption requests to the Transfer Agent, participation in the updating of
the prospectus, coordinating the preparation, filing, printing and dissemination
of reports to shareholders, coordinating the preparation of income tax returns,
arranging for the maintenance of books and records and providing the office
facilities necessary to carry out the duties thereunder. Under the
Administration Agreement, CHC may delegate all or any part of its
responsibilities thereunder.
CHC receives an annual fee of .15% of the Fund's average net assets,
paid monthly, for services performed under the Fund's Administration Agreement.
CHC may, from time to time, agree to reimburse the Fund for expenses above a
specified percentage of average net assets.
<PAGE>
Victory Broker-Dealer Services, Inc. sells shares of the Fund as agent
on behalf of the Victory Portfolios at no cost to the Fund. Key Advisers and
the Sub-Adviser neither participate in nor are they responsible for the
underwriting of Victory Portfolios shares.
In the fiscal years ended October 31, 1992, October 31, 1993 and
October 31, 1994, the Fund paid to Winsbury aggregate administration fees of
$11,971, $24,124 and $69,419, respectively, after fee reductions of $0, $1,711
and $15,500, respectively. In the six months ended April 30, 1995, the Fund paid
administration fees of $-------------.
Class B Shares Distribution Plan
The Victory Portfolios has adopted a Distribution Plan for Class B shares of the
Fund under Rule 12b-1 of the Investment Company Act of 1940.
The Distribution Plan adopted by the Trustees with respect to the Class B shares
of the Fund provides that the Fund will pay the Distributor a distribution fee
under the Plan at the annual rate of 0.75% of the average daily net assets of
the Fund attributable to the Class B shares. The distribution fees may be used
by the Distributor for: (a) costs of printing and distributing the Fund's
prospectus, statement of additional information and reports to prospective
investors in the Fund; (b) costs involved in preparing, printing and
distributing sales literature pertaining to the Fund; (c) an allocation of
overhead and other branch office distribution-related expenses of the
Distributor; (d) payments to persons who provide support services in connection
with the distribution of the Fund's shares, including but not limited to, office
space and equipment, telephone facilities, answering routine inquiries regarding
the Fund, processing shareholder transactions and providing any other
shareholder services not otherwise provided by the Victory Portfolios' transfer
agent; (e) accruals for interest on the amount of the foregoing expenses that
exceed the Distribution Fee and the contingent deferred sales charge received by
the Distributor; and (f) any other expense primarily intended to result in the
sale of the Fund's shares, including, without limitation, payments to salesmen
and selling dealers at the time of the sale of shares, if applicable, and
continuing fees to each such salesmen and selling dealers, which fee shall begin
to accrue immediately after the sale of such shares.
The amount of the Distribution Fees payable by any Fund under the Distribution
Plan is not related directly to expenses incurred by the Distributor and the
Distribution Plan does not obligate the Fund to reimburse the Distributor for
such expenses. The Distribution Fees set forth in the Distribution Plan will be
paid by a Fund to the Distributor unless and until the Plan is terminated or not
renewed with respect to the Fund; any distribution or service expenses incurred
by the Distributor on behalf of a Fund in excess of payments of the Distribution
Fees specified above which the Distributor has accrued through the termination
date are the sole responsibility and liability of the Distributor and not an
obligation of the Fund.
The Distribution Plan for the Class B shares specifically recognizes that either
Key Advisers, the Sub-Adviser or the Distributor, directly or through an
affiliate, may use its fee revenue, past profits, or other resources, without
limitation, to pay promotional and administrative expenses in connection with
the offer and sale of shares of the Fund. In addition, the Plan provides that
Key Advisers, the Sub-Adviser and the Distributor may use their respective
resources, including fee revenues, to make payments to third parties that
provide assistance in selling the Fund's shares, or to third parties, including
banks, that render shareholder support services.
The Plan has been approved by the Trustees including a majority of the
Independent Trustees at a meeting called for that purpose and by the holders of
a majority of shares of the class. As required by the Rule, the Trustees
carefully considered all pertinent factors relating to the implementation of the
Plan prior to its approval, and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its shareholders. To the
extent that the Plan gives Key Advisers, the Sub-Adviser or the Distributor
greater flexibility in connection with the distribution of shares of the Fund,
additional sales of the Fund's shares may result. Additionally, certain
shareholder support services may be provided more effectively under the Plan by
local entities with whom shareholders have other relationships.
Business Management Agreement
In connection with its obligations under the investment sub-advisory
agreement, the Sub-Adviser has entered into a Business Management Agreement with
Key Advisers, pursuant to which Key Advisers provides certain administrative and
support services to the Sub-Adviser. Such services include preparing reports to
the Company's Board of Trustees, recordkeeping services, and services rendered
in connection with the preparation of regulatory filings and other reports, and
regulatory and other administrative and compliance systems and support services.
For such services, the Sub-Adviser pays fees to Key Advisers which vary
according to a sliding scale containing "breakpoints" at which decreases in the
business management fees correspond to increases in the average daily net asset
values of a Fund as follows:
For the Balanced Fund, Diversified For the International Growth Fund, Ohio
Stock Fund, Growth Fund, Stock Index Regional Stock Fund and Special Value
Fund and Value Fund: Fund:
Rate of Rate of
Business Business
Net Assets Management Fee* Net Assets Management Fee*
Up to $10,000,000 0.30% Up to $10,000,000 0.55%
Next $15,000,000 0.15% Next $15,000,000 0.35%
Next $25,000,000 0.05% Next $25,000,000 0.20%
Above $50,000,000 0.00% Above $50,000,000 0.15%
For the Intermediate Income Fund, For the Prime Obligations Fund, Tax-Free
Investment Quality Bond Fund, Limited Money Market Fund, U.S. Government
Term Income Fund, Ohio Municipal Bond Obligations Fund, Financial Reserves
Fund, Goverment Bond Fund, Government Fund, Institutional Money Market Fund and
Mortgage Fund, National Municipal Ohio Municipal Money Market Fund:
Bond Fund and New York Tax-Free Fund:
Rate of Rate of
Business Business
Net Assets Management Fee* Net Assets Management Fee*
Up to $10,000,000 0.25% Up to $10,000,000 0.20%
Next $15,000,000 0.15% Next $15,000,000 0.15%
Next $25,000,000 0.10% Next $25,000,000 0.10%
Above $50,000,000 0.05% Above $50,000,000 0.075%
- --------------------
* As a percentage of average daily net assets.
Shareholder Servicing Plan
The Victory Portfolios, on behalf of the Class A and Class B shares of the Fund,
has adopted a Shareholder Servicing Plan to provide payments to shareholder
servicing agents (each a "Shareholder Servicing Agent") that provide
administrative support services to customers who may from time to time
beneficially own shares, which include: (i) aggregating and processing purchase
and redemption requests for shares from customers and transmitting promptly net
purchase and redemption orders to our distributor or transfer agent; (ii)
providing customers with a service that invests the assets of their accounts in
shares pursuant to specific or pre-authorized instructions; (iii) processing
dividend and distribution payments from the Victory Portfolios on behalf of
customers; (iv) providing information periodically to customers showing their
positions in shares; (v) arranging for bank wires; (vi) responding to customer
inquiries concerning their investment in shares; (vii) providing subaccounting
with respect to shares beneficially owned by customers or providing the
information to us necessary for subaccounting; (viii) if required by law,
forwarding shareholder communications from us (such as proxies, shareholder
reports, annual and semi-annual financial statements and dividend, distribution
and tax notices) to customers; (ix) forwarding to customers proxy statements and
proxies containing any proposals regarding this Plan; and (x) providing such
other similar services as we may reasonably request to the extent you are
permitted to do so under applicable statutes, rules or regulations. For
expenses incurred and services provided as Shareholder Servicing Agent pursuant
to its respective Shareholder Servicing Agreement, the Victory Portfolios pays
each Shareholder Servicing Agent a fee computed daily and paid monthly, in
amounts aggregating not more than twenty-five one-hundredths of one percent
(.25%) of the average daily net assets of the Fund per year. A Shareholder
Servicing Agent may periodically waive all or a portion of its respective
shareholder servicing fees with respect to the Fund to increase the net income
of the Fund available for distribution as dividends.
Expenses
Each fund bears the following expenses relating to its respective
operations: taxes, interest, brokerage fees and commissions, fees of the
Trustees of the Victory Portfolios, Commission fees, state securities
qualification fees, costs of preparing and printing prospectuses for regulatory
purposes and for distribution to current shareholders, outside auditing and
legal expenses, advisory and administration fees, fees and out-of-pocket
expenses of the custodian and transfer agent, certain insurance premiums, costs
of maintenance of the fund's existence, costs of shareholders' reports and
meetings, and any extraordinary expenses incurred in the fund's operation.
If total expenses borne by any of the Victory Portfolios in any fiscal
year exceeds expense limitations imposed by applicable state securities
regulations, Key Advisers or the Sub-Adviser as applicable, and the
Administrator will waive their fees to the extent such excess expenses exceed
such expense limitation in proportion to their respective fees. As of the date
of this Statement of Additional Information, the most restrictive expense
limitation applicable to the Victory Portfolios limits each fund's aggregate
annual expenses, including management and advisory fees but excluding interest,
taxes, brokerage commissions, and certain other expenses, to 2.5% of the first
$30 million of a fund's average net assets, 2.0% of the next $70 million of a
fund's average net assets, and 1.5% of a Fund's remaining average net assets.
Any expenses to be borne by Key Advisers or the Sub-Adviser or the Administrator
will be estimated daily and reconciled and paid on a monthly basis. Fees imposed
upon customer accounts by Key Advisers, or the Sub-Adviser, Key Trust Company of
Ohio, N.A. or its correspondents, affiliated banks and other non-bank affiliates
for cash management services are not fund expenses for purposes of any such
expense limitation.
Distributor
Victory Broker-Dealer Services, Inc. (the "Distributor") serves as
distributor for the continuous offering of the shares of each fund of the
Victory Portfolios pursuant to a Distribution Agreement. Prior to Victory
BrokerDealer Services, Inc. becoming the Distributor, Winsbury served as
distributor of each Fund. Unless otherwise terminated, the Distribution
Agreement will remain in effect for two years, and thereafter for consecutive
one-year terms, provided that it is approved at least annually (i) by the
Victory Portfolios' Trustees or by the vote of a majority of the outstanding
shares of the Victory Portfolios, and (ii) by the vote of a majority of the
Trustees of the Victory Portfolios who are not parties to the Distribution
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval. The Distribution Agreement
may be terminated in the event of its assignment, as defined in the 1940 Act.
For the Victory Portfolios' fiscal years ended October 31, 1992, October 31,
1993, and October 31, 1994, Winsbury received $34,615, $77,258 and $212,021,
respectively, in underwriting commissions, and retained $0, $0 and $15,
respectively. For the six months ended April 30, 1995, the Distributor received
$_________ in underwriting commissions.
Fund Accountant
BISYS Fund Services Ohio, Inc. serves as fund accountant for each fund
pursuant to a fund accounting agreement with the Victory Portfolios dated June
5, 1995 (the "Fund Accounting Agreement"). As fund accountant for the Victory
Portfolios, BISYS Fund Services Ohio, Inc. calculates the Victory Portfolios'
net asset value, the dividend and capital gain distribution, if any, and the
yield. BISYS Fund Services Ohio, Inc. also provides a current security position
report, a summary report of transactions and pending maturities, a current cash
position report, and maintains the general ledger accounting records for each
Fund. Under its Fund Accounting Agreement with the Victory Portfolios, BISYS
Fund Services Ohio, Inc. is entitled to receive annual fees of .03% of the first
$100 million of a Fund's daily average net assets, .02% of the next $100 million
of a Fund's daily average net assets, and .01% of a Fund's remaining daily
average net assets. These annual fees are subject to a minimum monthly assets
charge of $2,500 per taxable Fund, $2,917 per tax-free Fund, and $3,333 per
international Fund and do not include out-of-pocket expenses or multiple class
charges of $833 per month assessed for each class of shares after the first
class.
In the fiscal years ended October 31, 1992, October 31, 1993, and October 31,
1994, the Victory Portfolios paid The Winsbury Service Corporation fund
accounting fees (after fee waivers) of $119,516, $144,288 and $152,663,
respectively, for the Fund. For the six months ended April 30, 1995, the Fund
paid $______ in fund accounting fees.
Custodian
Cash and securities owned by each fund of the Victory Portfolios
(except the International Growth Fund) are held by Key Trust Company of Ohio,
N.A. as custodian; cash and securities owned by the International Growth Fund
are held by The Bank of New York and certain foreign sub-custodians, and by Key
Trust Company of Ohio, N.A. as sub-custodian. Key Trust Company of Ohio, N.A.
serves as custodian to each fund of the Victory Portfolios (except the
International Growth Fund) pursuant to a Custodian Agreement dated May 24, 1995.
The Bank of New York serves as custodian to the International Growth Fund
pursuant to a Custodian Agreement dated _____________. Under these Agreements,
Key Trust Company of Ohio, N.A. and The Bank of New York each (i) maintain a
separate account or accounts in the name of each respective fund; (ii) make
receipts and disbursements of money on behalf of each fund; (iii) collect and
receive all income and other payments and distributions on account of portfolio
securities; (iv) respond to correspondence from security brokers and others
relating to its duties; and (v) make periodic reports to the Victory Portfolios'
Trustees concerning the Victory Portfolios' operations. Key Trust Company of
Ohio, N.A. and The Bank of New York each may, with the approval of a fund and at
the custodian's own expense, open and maintain a sub-custody account or accounts
on behalf of a fund, provided that Key Trust Company of Ohio, N.A. or The Bank
of New York shall remain liable for the performance of all of its duties under
its respective Custodian Agreement.
Transfer Agent
The Primary Funds Service Corporation serves as transfer agent and
dividend disbursing agent for each fund, pursuant to a Transfer Agency and
Shareholder Servicing Agreement. Under its agreement with the Victory
Portfolios, Primary Funds Service Corporation has agreed (i) to issue and redeem
shares of the Victory Portfolios; (ii) to address and mail all communications by
the Victory Portfolios to its shareholders, including reports to shareholders,
dividend and distribution notices, and proxy material for its meetings of
shareholders; (iii) to respond to correspondence or inquiries by shareholders
and others relating to its duties; (iv) to maintain shareholder accounts and
certain sub-accounts; and (v) to make periodic reports to the Victory
Portfolios' Trustees concerning the Victory Portfolios' operations. For the
services provided under the Transfer Agency and Shareholder Servicing Agreement,
Primary Funds Service Corporation receives, a maximum monthly fee of $1,250 per
fund to a maximum of $3.50 per account per fund.
Auditors
The financial highlights appearing in the Prospectus for the Fund,
other than unaudited information marked as such, has been derived from financial
statements of the Victory Portfolios which have been audited by Coopers &
Lybrand L.L.P., independent accountants, as set forth in their report
incorporated by reference herein, and are incorporated by reference in reliance
upon such report and on the authority of such firm as experts in auditing and
accounting. Coopers & Lybrand L.L.P.'s address is 100 East Broad Street,
Columbus, Ohio 43215.
Legal Counsel
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, 919 Third Avenue, New
York, New York 10022 are counsel to the Victory Portfolios.
<PAGE>
ADDITIONAL INFORMATION
Description of Shares
The Victory Portfolios (sometimes referred to as the "Trust") is a
Massachusetts business trust. The Victory Portfolios' Declaration of Trust,
pursuant to which the Victory Portfolios was originally called the North Third
Street Fund, was filed with the Secretary of State of the Commonwealth of
Massachusetts on February 6, 1986. On September 22, 1986, an Amended and
Restated Declaration of Trust was filed to change the name of the Trust to The
Emblem Fund and to make certain other changes. A second amendment was filed
October 23, 1986 providing for voting of shares in the aggregate except where
voting of shares by series is otherwise required by law. An amendment to the
Amended and Restated Declaration of Trust was filed on March 15, 1993 to change
the name of the Trust to The Society Funds. An Amended and Restated Declaration
of Trust was then filed on September 2, 1994 to change the name of the Trust to
The Victory Portfolios. The Declaration of Trust, as amended, authorizes the
Trustees to issue an unlimited number of shares, which are units of beneficial
interest, without par value. On or about February 29, 1996, contingent upon
shareholder approval, the Victory Portfolios will convert from a Massachusetts
business trust to a Delaware business trust. The Victory Portfolios presently
has twenty- eight series of shares, which represent interests in the U.S.
Government Obligations Fund, the Prime Obligations Fund, the Tax-Free Money
Market Fund, the Balanced Fund, the Stock Index Fund, the Value Fund, the Fund,
the Growth Fund, the Special Value Fund, the Special Growth Fund, the Ohio
Regional Stock Fund, the International Growth Fund, the Limited Term Income
Fund, the Government Mortgage Fund, the Ohio Municipal Bond Fund, the
Intermediate Income Fund, the Investment Quality Bond Fund, the Florida Tax-Free
Bond Fund, the Municipal Bond Fund, the Convertible Securities Fund, the
Short-Term U.S. Government Income Fund, the Government Bond Fund, the Fund for
Income, the National Municipal Bond Fund, the New York Tax-Free Fund, the
Institutional Money Market Fund, the Financial Reserves Fund and the Ohio
Municipal Money Market Fund, respectively. The Victory Portfolios' Declaration
of Trust authorizes the Trustees to divide or redivide any unissued shares of
the Victory Portfolios into one or more additional series by setting or changing
in any one or more respects their respective preferences, conversion or other
rights, voting power, restrictions, limitations as to dividends, qualifications,
and terms and conditions of redemption.
Shares have no subscription or preemptive rights and only such
conversion or exchange rights as the Trustees may grant in its discretion. When
issued for payment as described in the Prospectus and this Statement of
Additional Information, the Victory Portfolios' shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Victory
Portfolios, shares of a fund are entitled to receive the assets available for
distribution belonging to the fund, and a proportionate distribution, based upon
the relative asset values of the respective funds, of any general assets not
belonging to any particular fund which are available for distribution.
As described in the Prospectus under the caption "ADDITIONAL
INFORMATION -- Voting Rights," shares of the Victory Portfolios are entitled to
one vote per share (with proportional voting for fractional shares) on such
matters as shareholders are entitled to vote. Shareholders vote as a single
class on all matters except (i) when required by the 1940 Act, shares shall be
voted by individual series, and (ii) when the Trustees have determined that the
matter affects only the interests of one or more series, then only shareholders
of such series shall be entitled to vote thereon. There will normally be no
meetings of shareholders for the purposes of electing Trustees unless and until
such time as less than a majority of the Trustees have been elected by the
shareholders, at which time the Trustees then in office will call a
shareholders' meeting for the election of Trustees. In addition, Trustees may be
removed from office by a written consent signed by the holders of two-thirds of
the outstanding shares of the Victory Portfolios and filed with the Victory
Portfolios' custodian or by a vote of the holders of two-thirds of the
outstanding shares of the Victory Portfolios at a meeting duly called for the
purpose, which meeting shall be held upon the written request of the holders of
not less than 10% of the outstanding shares. Upon written request by ten or more
shareholders, who have been such for at least six months, and who hold shares
constituting 1% of the outstanding shares, stating that such shareholders
wish to communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a Trustee, the
Victory Portfolios will provide a list of shareholders or disseminate
appropriate materials (at the expense of the requesting shareholders). Except as
set forth above, the Trustees shall continue to hold office and may appoint
their successors.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Victory Portfolios shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each fund of the Victory Portfolios affected by the
matter. For purposes of determining whether the approval of a majority of the
outstanding shares of a fund will be required in connection with a matter, a
fund will be deemed to be affected by a matter unless it is clear that the
interests of each fund in the matter are identical, or that the matter does not
affect any interest of the fund. Under Rule 18f-2, the approval of an investment
advisory agreement or any change in investment policy would be effectively acted
upon with respect to a fund only if approved by a majority of the outstanding
shares of such fund. However, Rule 18f-2 also provides that the ratification of
independent public accountants, the approval of principal underwriting
contracts, and the election of Trustees may be effectively acted upon by
shareholders of the Victory Portfolios voting without regard to series.
Shareholder and Trustee Liability
Under Massachusetts law, holders of units of interest in a business
trust may, under certain circumstances, be held personally liable as partners
for the obligations of the trust. However, the Victory Portfolios' Declaration
of Trust provides that shareholders shall not be subject to any personal
liability for the obligations of the Victory Portfolios, and that every written
agreement, obligation, instrument, or undertaking made by the Victory Portfolios
shall contain a provision to the effect that the shareholders are not personally
liable thereunder. The Declaration of Trust provides for indemnification out of
the trust property of any shareholder held personally liable solely by reason of
his or her being or having been a shareholder. The Declaration of Trust also
provides that the Victory Portfolios shall, upon request, assume the defense of
any claim made against any shareholder for any act or obligation of the Victory
Portfolios, and shall satisfy any judgment thereon. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Funds would be unable to meet its
obligations.
The Declaration of Trust states further that no Trustee, officer, or
agent of the Victory Portfolios shall be personally liable in connection with
the administration or preservation of the assets of the Funds or the conduct of
the Victory Portfolios' business; nor shall any Trustee, officer, or agent be
personally liable to any person for any action or failure to act except for his
own bad faith, willful misfeasance, gross negligence, or reckless disregard of
his duties. The Declaration of Trust also provides that all persons having any
claim against the Trustees or the Victory Portfolios shall look solely to the
assets of the Victory Portfolios for payment.
<PAGE>
Delaware Law [to be inserted]
Miscellaneous
As used in the Prospectus and in this Statement of Additional
Information, "assets belonging to a fund" means the consideration received by
the Victory Portfolios upon the issuance or sale of shares in that fund,
together with all income, earnings, profits, and proceeds derived from the
investment thereof, including any proceeds from the sale, exchange, or
liquidation of such investments, and any funds or payments derived from any
reinvestment of such proceeds and any general assets of the Victory Portfolios,
which general liabilities and expenses are not readily identified as belonging
to a particular fund that are allocated to that fund by the Victory Portfolios'
Trustees. The Trustees may allocate such general assets in any manner they deem
fair and equitable. It is anticipated that the factor that will be used by the
Trustees in making allocations of general assets to a particular fund of the
Victory Portfolios will be the relative net asset value of the respective fund
at the time of allocation. Assets belonging to a particular fund are charged
with the direct liabilities and expenses in respect of that fund, and with a
share of the general liabilities and expenses of each of the funds not readily
identified as belonging to a particular fund but that are allocated to a fund in
proportion to the relative net asset values of the respective fund of the
Victory Portfolios at the time of allocation. The timing of allocations of
general assets and general liabilities and expenses of the Victory Portfolios to
a particular fund will be determined by the Trustees of the Victory Portfolios
and will be in accordance with generally accepted accounting principles.
Determinations by the Trustees of the Victory Portfolios as to the timing of the
allocation of general liabilities and expenses and as to the timing and
allocable portion of any general assets with respect to a particular fund are
conclusive.
As used in the Prospectus and in this Statement of Additional
Information, a "vote of a majority of the out standing shares" of the Victory
Portfolios or a particular fund means the affirmative vote of the lesser of (a)
67% or more of the shares of the Victory Portfolios or such fund present at a
meeting at which the holders of more than 50% of the outstanding shares of the
Victory Portfolios or such fund are represented in person or by proxy, or (b)
more than 50% of the outstanding votes of shareholders of the Victory Portfolios
or such fund.
Organizational expenses are allocated to each of the Victory Portfolios
and are amortized over a period of two years from the commencement of the public
offering of shares of the Victory Portfolios.
<PAGE>
Individual Trustees are elected by the shareholders and, subject to
removal by the vote of the holders of two-thirds of the outstanding shares of
the Victory Portfolios, serve for a term lasting until the next meeting of
shareholders at which trustees are elected. Such meetings are not required to be
held at any specific intervals. Individual Trustees may be removed by vote of
the shareholders voting not less than a majority of the shares then outstanding
cast in person or by proxy at any meeting called for that purpose, or by a
written declaration signed by shareholders voting not less than two-thirds of
the shares then outstanding.
The Victory Portfolios is registered with the Commission as a
management investment company. Such registration does not involve supervision by
the Commission of the management or policies of the Victory Portfolios.
The Prospectus and this Statement of Additional Information omit
certain of the information contained in the Registration Statement filed with
the Commission. Copies of such information may be obtained from the Commission
upon payment of the prescribed fee.
The Prospectus and this Statement of Additional Information are not an
offering of the securities herein described in any state in which such offering
may not lawfully be made. No salesman, dealer, or other person is authorized to
give any information or make any representation other than those contained in
the Prospectus and this Statement of Additional Information.
The 1994 Annual Report and 1995 Semi-Annual Report to shareholders of
The Victory Portfolios are incorporated herein in their entirety. These
reports include the financial statements for the fiscal year ended October 31,
1994 and for the semi-annual period ended April 30, 1995. The opinion in the
Annual Report of Coopers & Lybrand L.L.P., independent accountants, is
incorporated herein in its entirety to such Annual Report, and
such financial statements are incorporated in their entirety in reliance upon
such report of Coopers & Lybrand L.L.P. and on the authority of such firm as
experts in auditing and accounting.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
FINANCIAL STATEMENTS
<PAGE>
APPENDIX
The nationally recognized statistical rating organizations
(individually, an "NRSRO") that may be utilized by Key Advisers or the
Sub-Adviser with regard to portfolio investments for the Funds include Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P"),
Duff & Phelps, Inc. ("Duff"), Fitch Investors Service, Inc. ("Fitch"), IBCA
Limited and its affiliate, IBCA Inc.(collectively, "IBCA"), and Thomson
BankWatch, Inc. ("Thomson"). Set forth below is a description of the relevant
ratings of each such NRSRO. The NRSROs that may be utilized by Key Advisers or
the Sub-Adviser and the description of each NRSRO's ratings is as of the date
of this Statement of Additional Information, and may subsequently change.
Long-Term Debt Ratings (may be assigned, for example, to corporate and
municipal bonds).
Description of the five highest long-term debt ratings by Moody's
(Moody's applies numerical modifiers (e.g., 1, 2, and 3) in each rating category
to indicate the security's ranking within the category):
Aaa. Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa. Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than in Aaa securities.
A. Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.
Baa. Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba. Bonds which are rated Ba are judged to have speculative elements -
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times in the future. Uncertainty of
position characterizes bonds in this class.
Description of the five highest long-term debt ratings by S&P (S&P may
apply a plus (+) or minus (-) to a particular rating classification to show
relative standing within that classification):
AAA. Debt rated AAA has the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA. Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A. Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB. Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB. Debt rated BB is regarded, on balance, as predominately speculative
with respect to capacity to pay interest and repay principal in accordance with
the terms of the obligation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposure to adverse conditions.
Description of the three highest long-term debt ratings by Duff:
AAA. Highest credit quality. The risk factors are negligible being
only slightly more than for risk-free U.S. Treasury debt.
AA+. High credit quality Protection factors are strong.
AA. Risk is modest but may vary slightly from time to time
AA-. because of economic conditions.
A+. Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic
stress.
Description of the three highest long-term debt ratings by Fitch (plus
or minus signs are used with a rating symbol to indicate the relative position
of the credit within the rating category):
AAA. Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA. Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA." Because
bonds rated in the "AAA" and "AA" categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these
issues is generally rated "[-]+."
A. Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
IBCA's description of its three highest long-term debt ratings:
AAA. Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and
interest is substantial. Adverse changes in business, economic or
financial conditions are unlikely to increase investment risk
significantly.
AA. Obligations for which there is a very low expectation of investment
risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic, or financial
conditions may increase investment risk albeit not very significantly.
A. Obligations for which there is a low expectation of investment risk.
Capacity for timely repayment of principal and interest is strong,
although adverse changes in business, economic or financial conditions
may lead to increased investment risk.
Short-Term Debt Ratings (may be assigned, for example, to commercial
paper, master demand notes, bank instruments, and letters of credit)
Moody's description of its three highest short-term debt ratings:
Prime-1. Issuers rated Prime-1 (or supporting institutions) have a
superior capacity for repayment of senior short-term promissory obligations.
Prime-1 repayment capacity will normally be evidenced by many of the following
characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate reliance
on debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.
Prime-2. Issuers rated Prime-2 (or supporting institutions) have a
strong capacity for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Prime-3. Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
S&P's description of its three highest short-term debt ratings:
A-1. This designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to have extremely
strong safety characteristics are denoted with a plus sign (+).
A-2. Capacity for timely payment on issues with this designation is
satisfactory. However,the relative degree of safety is not as high as
for issues designated "A-1."
A-3. Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher
designations.
Duff's description of its five highest short-term debt ratings (Duff
incorporates gradations of "1+" (one plus) and "1-" (one minus) to assist
investors in recognizing quality differences within the highest rating
category):
Duff 1+. Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations.
Duff 1. Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk
factors are minor.
Duff 1-. High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk factors are
very small.
Duff 2. Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good.
Risk factors are small.
Duff 3. Satisfactory liquidity and other protection factors qualify
issue as to investment grade.
Risk factors are larger and subject to more variation. Nevertheless,
timely payment is expected.
Fitch's description of its four highest short-term debt ratings:
F-1+. Exceptionally Strong Credit Quality. Issues assigned this rating
are regarded as having the strongest degree of assurance for timely
payment.
F-1. Very Strong Credit Quality. Issues assigned this rating reflect
an assurance of timely payment only slightly less in degree than issues
rated F-1+.
F-2. Good Credit Quality. Issues assigned this rating have a
satisfactory degree of assurance for timely payment, but the margin of
safety is not as great as for issues assigned F-1+ or F-1 ratings.
F-3. Fair Credit Quality. Issues assigned this rating have
characteristics suggesting that the degree of assurance for timely
payment is adequate, however, near-term adverse changes could cause
these securities to be rated below investment grade.
IBCA's description of its three highest short-term debt ratings:
A+. Obligations supported by the highest capacity for timely
repayment.
A1. Obligations supported by a very strong capacity for timely
repayment.
A2. Obligations supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
Short-Term Loan/Municipal Note Ratings
Moody's description of its two highest short-term loan/municipal note
ratings:
MIG-1/VMIG-1. This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support
or demonstrated broad-based access to the market for refinancing.
MIG-2/VMIG-2. This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
S&P's description of its two highest municipal note ratings:
SP-1. Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus (+) designation.
SP-2. Satisfactory capacity to pay principal and interest.
Short-Term Debt Ratings
Thomson BankWatch, Inc. ("TBW") ratings are based upon a qualitative
and quantitative analysis of all segments of the organization including,
where applicable, holding company and operating subsidiaries.
BankWatch Ratings do not constitute a recommendation to buy or sell
securities of any of these companies. Further, BankWatch does not suggest
specific investment criteria for individual clients.
The TBW Short-Term Ratings apply to commercial paper, other senior
short-term obligations and deposit obligations of the entities to which the
rating has been assigned.
The TBW Short-Term Ratings apply only to unsecured instruments that
have a maturity of one year or less.
The TBW Short-Term Ratings specifically assess the likelihood of an
untimely payment of principal or interest.
TBW-1. The highest category; indicates a very high degree of likelihood
that principal and interest will be paid on a timely basis.
TBW-2. The second highest category; while the degree of safety
regarding timely repayment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated "TBW-1".
TBW-3. The lowest investment grade category; indicates that while more
susceptible to adverse developments (both internal and external) than
obligations with higher ratings, capacity to service principal and interest in a
timely fashion is considered adequate.
TBW-4. The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.
Definitions of Certain Money Market Instruments
Commercial Paper
Commercial paper consists of unsecured promissory notes issued by
corporations. Issues of commercial paper normally have maturities of less than
nine months and fixed rates of return.
Certificates of Deposit
Certificates of Deposit are negotiable certificates issued against
funds deposited in a commercial bank or a savings and loan association for a
definite period of time and earning a specified return.
Bankers' Acceptances
Bankers' acceptances are negotiable drafts or bills of exchange,
normally drawn by an importer or exporter to pay for specific merchandise, which
are "accepted" by a bank, meaning, in effect, that the bank unconditionally
agrees to pay the face value of the instrument on maturity.
U.S. Treasury Obligations
U.S. Treasury Obligations are obligations issued or guaranteed as to
payment of principal and interest by the full faith and credit of the U.S.
Government. These obligations may include Treasury bills, notes and bonds, and
issues of agencies and instrumentalities of the U.S. Government, provided such
obligations are guaranteed as to payment of principal and interest by the full
faith and credit of the U.S. Government.
U.S. Government Agency and Instrumentality Obligations
Obligations issued by agencies and instrumentalities of the U.S.
Government include such agencies and instrumentalities as the Government
National Mortgage Association, the Export-Import Bank of the United States, the
Tennessee Valley Authority, the Farmers Home Administration, the Federal Home
Loan Banks, the Federal Intermediate Credit Banks, the Federal Farm Credit
Banks, the Federal Land Banks, the Federal Housing Administration, the Federal
National Mortgage Association, the Federal Home Loan Mortgage Corporation, and
the Student Loan Marketing Association. Some of these obligations, such as those
of the Government National Mortgage Association are supported by the full faith
and credit of the U.S. Treasury; others, such as those of the Export-Import Bank
of the United States, are supported by the right of the issuer to borrow from
the Treasury; others, such as those of the Federal National Mortgage
Association, are supported by the discretionary authority of the U.S. Government
to purchase the agency's obligations; still others, such as those of the Student
Loan Marketing Association, are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored instrumentalities if it
is not obligated to do so by law. A Fund will invest in the obligations of such
instrumentalities only when the investment adviser believes that the credit risk
with respect to the instrumentality is minimal.
<PAGE>
[LOGO]
THE VICTORY FUNDS
SEMI-ANNUAL
REPORT
---------------------
THE VICTORY PORTFOLIOS
APRIL 30, 1995
<PAGE>
C O N T E N T S
<TABLE>
<S> <C>
Shareholder Letter 1
Investment Review and Outlook 2
FINANCIAL STATEMENTS
--------------------
Understanding Your Financial Statements 3
Statements of Assets and Liabilities 5
Statements of Operations 10
Statements of Changes in Net Assets 15
Schedules of Portfolio Investments 22
Notes to Financial Statements 73
Financial Highlights 83
</TABLE>
Society Asset Management, Inc. ("SAM"), a subsidiary of KeyCorp, is the
investment adviser to The Victory Portfolios. The Victory Portfolios is
sponsored and distributed by Victory Broker Dealer Services, Inc., which is not
affiliated with SAM, KeyCorp, any KeyCorp bank or their affiliates. SAM and
Society National Bank, also a subsidiary of KeyCorp, receive fees from The
Victory Portfolios for their services.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus for The Victory Portfolios.
Yields will fluctuate, and there can be no assurance that the money market funds
of The Victory Portfolios will be able to maintain a stable net asset value of
$1.00 per share. An investment in these portfolios is neither insured nor
guaranteed by the U.S. Government. The composition of the fund's holdings is
subject to change.
- --------------------------------------------------------------------------------
NOT
FDIC
INSURED
- --------------------------------------------------------------------------------
SHARES OF THE VICTORY PORTFOLIOS ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR
GUARANTEED BY, ANY KEYCORP BANK, SOCIETY ASSET MANAGEMENT, INC., OR THEIR
AFFILIATES, AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE
PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------
<PAGE>
THE VICTORY
PORTFOLIOS
DEAR SHAREHOLDER:
The Victory Portfolios is pleased to provide you with this semi-annual report
for the six-month period ended April 30, 1995. We are very proud to inform you
that the Diversified Stock Fund, the Ohio Regional Stock Fund and the Fund for
Income Portfolio all received 4 star ratings by Morningstar as of April 30,
1995.* For more information about your funds, rankings or for article reprints
call 1-800-KEY-FUND (539-3863).
Last year, when we changed our name to The Victory Portfolios, we also added a
number of convenient service and investment features. These initiatives marked
the beginning of a broader plan to restructure and expand our products and
services. Most recently, shareholders of The Victory Funds, an affiliated group
of funds with 14 investment portfolios, approved a reorganization that took
place on June 5, 1995. This date marked the final steps of a year-long process
focused on streamlining our product offerings and increasing the efficiency of
other services necessary to support the funds' operations. On June 5, The
Victory Funds merged with The Victory Portfolios. Seven portfolios of our
affiliate were merged with comparable investment portfolios, and seven new
portfolios were added. In all, there are now 24 Victory Portfolios available to
investors as part of the combined $5.1 billion complex.
I won't go into the enormous detail of this restructuring effort except to thank
management, our service providers and our investment professionals for their
support.
WOULDN'T IT BE NICE IF . . . (some summertime thoughts)
- - the information superhighway actually cut our commute time
- - major league baseball players had to get real jobs at real wages (at least for
a while)
- - the Paperwork Reduction Act actually resulted in less paperwork for America's
businesses
Thank you for choosing to invest in The Victory Portfolios. Our goal is to
become America's First Choice for Investors.
LEIGH A. WILSON
Leigh A. Wilson, President
THE VICTORY PORTFOLIOS
P.S. For more information about any of The Victory Portfolios, please request a
prospectus by calling 1-800-KEY-FUND (539-3863). The prospectus contains more
complete information, including charges and expenses. Read the prospectus
carefully before you invest or send money.
*Morningstar proprietary ratings reflect historical risk-adjusted performance as
of April 30, 1995. The ratings are subject to change every month. Star ratings
are calculated from the fund's three- and five-year average annual returns in
excess of 90-day Treasury bill returns with appropriate fee adjustments, and a
risk factor that reflects fund performance below 90-day Treasury bill returns.
For the three- and five-year periods ended April 30, 1995, 1,190 and 891 equity
funds, 561 and 372 fixed-income funds were rated. Diversified is rated 4 stars
for the three- and five-year periods; Ohio Regional is rated 3 stars for the
three-year period and 4 stars for the five-year period; and Fund for Income is
rated 3 stars for the three-year period and 4 stars for the five-year period.
Ten percent of the funds in an investment category receive 5 stars, 22.5%
receive 4 stars, 35% receive 3 stars, 22.5% receive 2 stars, and 10% receive 1
star. Past performance is no guarantee of future results. These ratings do not
include the effect of a sales charge. Fees have been waived for certain periods;
without the effect of these waivers performance and ratings may have varied.
1
<PAGE>
INVESTMENT
REVIEW
AND
OUTLOOK
(AS OF MAY 5, 1995)
IN OUR OPINION . . .
FROM 75 TO 45 (mph)
The widely predicted SOFT LANDING of the U.S. economy is not "on the way" . . .
it's already "arrived." More and more fresh economic data depict an economy
which, in recent months, has "slowed" from a "75 mile-per-hour" pace throughout
1994 (especially during the fourth quarter) to a more modest "speed" of roughly
"45 miles per hour." This slowing appears to be very satisfying to the economy's
primary "traffic cop" . . . the Federal Reserve.
The latest economic numbers describe an "economic vehicle" with the "brakes" now
firmly applied. The May 3 release of the Index of Leading Economic Indicators
for March recorded its largest decline in two years. February and March also
registered as the largest back-to-back monthly declines since the summer of
1992. Equally exciting (only to economists) was a surprising 0.1% decline in
factory orders during March, another sign of some "bad gas" in the "economic
engine." In addition, factory inventories rose more than expected in March and
were revised higher for February. This stronger inventory buildup suggests that
the most recent U.S. Commerce Department estimate of a 2.8% real GDP growth
"speed" during the first quarter of 1995 will be revised to a "faster speed."
This expected upward revision will come at the expense of a weak current
quarter . . . perhaps as "sluggish" as a 1.2-1.8% real annual rate.
The May 5 release of the April unemployment numbers, which jumped from 5.5% to
5.8%, shed further light on the "engine's diagnosis." These particularly weak
numbers could "fuel" additional near-term strength in both stocks and bonds.
IS THE FED FINISHED TIGHTENING?
The data of recent days provided more "high octane" fuel to the financial
markets' belief that the Fed will likely "stay on cruise control" for some time
to come. Many economists now suggest the Fed's next move will be to "step on the
gas" (ease policy). Although we would like to believe that, we expect a modest
resurgence of the economy during the second half of 1995, "fueled" by rising
exports, solid manufacturing output, strong capital spending, and improved
consumer interest in housing. This combination, added to some worrisome economic
"exhaust" (inflation pressure), could force the Fed's foot to the "brake pedal"
once again.
Society Asset Management, Inc.
2
<PAGE>
UNDERSTANDING YOUR FINANCIAL STATEMENTS
o The FINANCIAL STATEMENTS summarize and describe a fund's financial
transactions. They are broken down into four different statements,
which are illustrated below:
THE STATEMENTS OF ASSETS AND LIABILITIES lists all of the assets and
liabilities of the mutual fund. This is the individual fund's "balance sheet."
Also disclosed on this statement is the fund's net asset value per share and
its maximum offering price per share as of the date of the statement. The
statement also lists the accounts that comprise the mutual fund's net assets
(capital stock, undistributed income, etc.).
[FORM] SUMMARY OF THE MUTUAL FUND'S INVESTMENTS AND ALL
OTHER ASSETS OWNED BY THE FUND, INCLUDING AMOUNTS
OWED TO THE FUND BY OUTSIDE PARTIES
SUMMARY OF ALL AMOUNTS OWED TO OUTSIDE PARTIES BY
THE MUTUAL FUND
NET RESULT OF ASSETS LESS LIABILITIES
THE MARKET WORTH OF THE MUTUAL FUND'S TOTAL ASSETS
DIVIDED BY THE NUMBER OF SHARES OUTSTANDING
THE CURRENT NET ASSET VALUE PER SHARE PLUS SALES CHARGE
THE STATEMENT OF OPERATIONS shows the amount of dividend and interest income
earned from the mutual fund's investments, the expenses incurred by the fund
from its operations, and any gains or losses recognized by the fund from
holding and/or selling any investments.
[FORM] ANY INCOME EARNED FROM THE MUTUAL FUND'S INVESTMENTS
OPERATING EXPENSES INCURRED BY THE MUTUAL FUND DURING
THE PERIOD
GAINS OR LOSSES REALIZED UPON THE SALE OF THE MUTUAL
FUND'S INVESTMENTS ALONG WITH UNREALIZED GAINS OR LOSSES
ON FUND HOLDINGS AT THE REPORT DATE
NET CHANGE DUE TO MUTUAL FUND OPERATIONS
3
<PAGE>
THE STATEMENT OF CHANGES IN NET ASSETS shows the total assets of the mutual
fund for the two most recent reporting periods. The changes in net assets are
generally broken down into four distinct sections:
[FORM] OPERATIONS - SEE STATEMENT OF OPERATIONS
DIVIDENDS TO SHAREHOLDERS - TOTAL INCOME DIVIDENDS PAID
TO SHAREHOLDERS DURING THE PERIODS
NET REALIZED GAINS - TOTAL REALIZED GAINS DISTRIBUTED TO
SHAREHOLDERS DURING THE PERIODS
CAPITAL STOCK TRANSACTIONS - DOLLAR VALUE OF MUTUAL FUND
SHARES PURCHASED, REDEEMED OR REINVESTED DURING THE
PERIODS
THE PORTFOLIO OF INVESTMENTS lists each investment holding in the mutual fund
as of the date of the report. Investments may be grouped by category (by
industry or security type, for example). The percentage of the mutual fund's
net assets that these groupings represent is also disclosed.
[FORM] TYPE OF SECURITY
INDUSTRY SECTOR AND PERCENTAGE OF THE MUTUAL FUND's
NET ASSETS REPRESENTED BY INVESTMENTS IN THAT SECTOR
(IF APPLICABLE)
ACTUAL PORTFOLIO HOLDINGS WITH SHARES AND MARKET
VALUE AS OF REPORT DATE
o The NOTES TO FINANCIAL STATEMENTS are footnotes to the statements listed
above. 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.
o The FINANCIAL HIGHLIGHTS show, for a single share outstanding throughout the
period, the net investment income, the realized and unrealized gains and
losses, and the dividends and distributions of the fund. It also shows key
data and ratios, such as the total return for the period, the portfolio
turnover rate for funds other than money market mutual funds, and the
ratio of net investment income to average net assets.
4
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. TAX-FREE
GOVERNMENT PRIME MONEY
OBLIGATIONS OBLIGATIONS MARKET
FUND FUND FUND
(000) (000) (000)
-------- -------- --------
<S> <C> <C> <C>
ASSETS:
Investments, at value $228,336 $392,425 $208,031
Repurchase agreements 296,998 37,315
- ---------------------------------------------------------------------------------------------------------
525,334 429,740 208,031
Cash 322
Interest receivable 1,525 2,467 2,066
Prepaid expenses 5 34 7
- ---------------------------------------------------------------------------------------------------------
Total Assets 526,864 432,241 210,426
- ---------------------------------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 2,381 1,867 675
Accrued expenses and other payables:
Investment advisory fees 153 125 62
Administration fees 66 54 27
Accounting and transfer agent fees 44 52 22
Other 77 143 34
- ---------------------------------------------------------------------------------------------------------
Total Liabilities 2,721 2,241 820
- ---------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 524,337 432,505 209,606
Accumulated undistributed net realized losses from investment
transactions (194) (2,505)
- ---------------------------------------------------------------------------------------------------------
Net Assets $524,143 $430,000 $209,606
- ---------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) 524,337 430,000 209,606
- ---------------------------------------------------------------------------------------------------------
Net asset value--redemption and offering price per share $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------
Investments, at cost $525,334 $429,740 $208,031
- ---------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
5
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY FUNDS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK
TAX- FUND FOR
FREE INCOME
PORTFOLIO PORTFOLIO
(000) (000)
------------ ---------
<S> <C> <C>
ASSETS
Investments, at value $ 16,410 $23,678
Repurchase agreements 1,003
- -----------------------------------------------------------------------------------------------------
16,410 24,681
Interest receivable 338 183
Cash 4
Receivable for capital shares issued 429
Receivable from brokers for investments sold 93
Receivable from fund adviser 41 36
- -----------------------------------------------------------------------------------------------------
Total Assets 17,218 24,997
- -----------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 58
Payable to brokers for investments purchased 195 64
Payable for capital shares redeemed 111 85
Dividends payable 44 119
Accrued expenses and other payables:
Administrative fee 2 3
Other 13
- -----------------------------------------------------------------------------------------------------
Total Liabilities 410 284
- -----------------------------------------------------------------------------------------------------
NET ASSETS
Capital 15,880 26,101
Undistributed (distributions in excess of) net investment income 6 (90)
Net unrealized appreciation on investments 925 509
Accumulated undistributed net realized losses on investments (3) (1,807)
- -----------------------------------------------------------------------------------------------------
Net Assets $ 16,808 $24,713
- -----------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) -- class A 1,277 2,571
- -----------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) -- class B 67
- -----------------------------------------------------------------------------------------------------
Net asset value -- redemption price per share -- class A $ 12.51 $ 9.61
- -----------------------------------------------------------------------------------------------------
Offering price (100%/(100% --
Maximum Sales Charge) of net asset value adjusted to
nearest cent) per share -- class A $ 13.13 $ 9.81
- -----------------------------------------------------------------------------------------------------
Maximum Sales Charge -- class A 4.75% 2.00%
- -----------------------------------------------------------------------------------------------------
Net asset value -- offering and redemption price per share -- class B $ 12.50
- -----------------------------------------------------------------------------------------------------
Investments at cost $ 15,485 $24,172
- -----------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
6
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED INVESTMENT OHIO
TERM GOVERNMENT INTERMEDIATE QUALITY MUNICIPAL
INCOME MORTGAGE INCOME BOND BOND
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value $ 165,669 $142,962 $130,878 $ 91,366 $ 57,871
Interest receivable 2,571 983 2,429 1,453 1,157
Receivable for capital shares issued 21 24
Receivable from brokers for investments sold 2,753 2,048 2,035
Unamortized organization costs 8 9
Prepaid expenses 14 16 13 3
- ---------------------------------------------------------------------------------------------------------------
Total Assets 168,240 146,733 133,331 94,889 61,090
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable to brokers for investments purchased 3,136 2,542 2,845
Payable for capital shares redeemed 1 4
Accrued expenses and other payables:
Investment advisory fees 65 59 52 38 14
Administration fees 21 18 16 11 7
Accounting and transfer agent fees 15 13 13 11 9
Other 26 68 25 85 78
- ---------------------------------------------------------------------------------------------------------------
Total Liabilities 128 3,298 106 2,687 2,953
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 169,603 150,214 139,577 99,169 58,717
Undistributed net investment income 190 194 168 122 55
Net unrealized appreciation (depreciation) from
investments (519) (4,357) (2,607) (2,022) 275
Accumulated undistributed net realized losses
from investment transactions (1,162) (2,616) (3,913) (5,067) (910)
- ---------------------------------------------------------------------------------------------------------------
Net Assets $ 168,112 $143,435 $133,225 $ 92,202 $ 58,137
- ---------------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest
(shares) 16,853 13,587 14,164 9,827 5,356
- ---------------------------------------------------------------------------------------------------------------
Net asset value--redemption price per share $ 9.98 $ 10.56 $ 9.41 $ 9.38 $ 10.85
- ---------------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%--Maximum
Sales Charge) of net asset value adjusted to
nearest cent) per share $ 10.18 $ 11.09 $ 9.88 $ 9.85 $ 11.39
- ---------------------------------------------------------------------------------------------------------------
Maximum Sales Charge 2.00% 4.75% 4.75% 4.75% 4.75%
- ---------------------------------------------------------------------------------------------------------------
Investments, at cost $ 166,188 $147,319 $133,485 $ 93,388 $ 57,596
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
7
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK DIVERSIFIED
BALANCED INDEX VALUE STOCK GROWTH
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value $158,944 $105,660 $263,048 $323,032 $43,646
Cash 1
Foreign currency (Cost $509) 504
Interest and dividends receivable 1,163 201 484 404 51
Receivable for capital shares issued 13 239
Receivable from brokers for investments sold 2,497 658 10,016 203
Net variation margin on open futures contracts 25 5
Unamortized organization costs 6 4 10 4
Prepaid expenses 18 10 23 9 9
- --------------------------------------------------------------------------------------------------------------
Total Assets 163,145 105,901 264,228 333,700 43,913
- --------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for capital shares redeemed 3 14
Payable to brokers for investments purchased 4,141 2,178 11,833
Accrued expenses and other payables:
Investment advisory fees 78 38 134 156 23
Administration fees 19 33 39 5
Accounting and transfer agent fees 18 7 21 24 7
Other 124 22 32 41 17
- --------------------------------------------------------------------------------------------------------------
Total Liabilities 4,383 67 2,398 12,107 52
- --------------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 153,504 95,719 241,936 281,878 40,340
Undistributed (distributions in excess of) net
investment income (411) 179 406 151 8
Net unrealized appreciation from investments 7,080 9,685 17,472 30,351 3,288
Net unrealized depreciation from translation of
assets and liabilities in foreign currencies (12)
Accumulated undistributed net realized gains
(losses) from investment and foreign currency
transactions (1,399) 251 2,016 9,213 225
- --------------------------------------------------------------------------------------------------------------
Net Assets $158,762 $105,834 $261,830 $321,593 $43,661
- --------------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) 15,549 9,545 24,346 26,055 4,054
- --------------------------------------------------------------------------------------------------------------
Net asset value--redemption price per share $ 10.21 $ 11.09 $ 10.75 $ 12.34 $ 10.82
- --------------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%--Maximum Sales
Charge) of net asset value adjusted to nearest
cent) per share $ 10.72 $ 11.64 $ 11.29 $ 12.96 $ 11.36
- --------------------------------------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 4.75% 4.75% 4.75% 4.75%
- --------------------------------------------------------------------------------------------------------------
Investments, at cost $151,871 $ 95,975 $245,576 $292,681 $40,358
- --------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
8
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO
SPECIAL SPECIAL REGIONAL INTERNATIONAL
VALUE GROWTH STOCK GROWTH
FUND FUND FUND FUND
(000) (000) (000) (000)
-------- ------- ------- -------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value $153,966 $19,539 $35,164 $84,863
Foreign currency (Cost $2,485) 2,542
Interest and dividends receivable 275 16 41 181
Receivable for capital shares issued 9 27 26
Receivable from brokers for investments sold 980 259
Unamortized organization costs 5 2
Prepaid expenses 20 4 10
- ----------------------------------------------------------------------------------------------------------
Total Assets 155,255 19,561 35,232 87,881
- ----------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for capital shares redeemed 3 2
Payable to brokers for investments purchased 1,519 142 1,193
Accrued expenses and other payables:
Investment advisory fees 86 10 20 67
Administration fees 19 2 4 11
Accounting and transfer agent fees 14 6 8 52
Other 26 15 14 26
- ----------------------------------------------------------------------------------------------------------
Total Liabilities 1,664 175 49 1,351
- ----------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 139,501 22,102 23,813 84,285
Undistributed (distributions in excess of) net
investment income 155 (3) 5 (613)
Net unrealized appreciation from investments 11,380 1,362 10,524 (5,172)
Net unrealized appreciation from translation of assets
and liabilities in foreign currencies 9,285
Accumulated undistributed net realized gains (losses)
from investment and foreign currency transactions 2,555 (4,075) 841 (1,255)
- ----------------------------------------------------------------------------------------------------------
Net Assets $153,591 $19,386 $35,183 $86,530
- ----------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) 13,646 2,073 2,398 7,268
- ----------------------------------------------------------------------------------------------------------
Net asset value--redemption price per share $ 11.26 $ 9.35 $ 14.67 $ 11.91
- ----------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%--Maximum Sales
Charge) of net asset value adjusted to nearest cent)
per share $ 11.82 $ 9.82 $ 15.40 $ 12.50
- ----------------------------------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 4.75% 4.75% 4.75%
- ----------------------------------------------------------------------------------------------------------
Investments, at cost $142,586 $18,177 $24,640 $80,807
- ----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
9
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S.
GOVERNMENT PRIME TAX-FREE
OBLIGATIONS OBLIGATIONS MONEY MARKET
FUND FUND FUND
(000) (000) (000)
------- ------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $13,510 $18,407 $4,368
- ----------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 820 1,128 389
Administration fees 351 484 167
Shareholder service fees 222
Accounting fees 141 193 68
Legal and audit fees 41 86 22
Trustees' fees and expenses 16 29 8
Transfer agent fees 21 36 14
Registration and filing fees 24 21 10
Printing fees 27 28 14
Other 6 11 3
Expenses voluntarily reduced (16)
- ----------------------------------------------------------------------------------------------------------
Total Expenses 1,447 2,238 679
- ----------------------------------------------------------------------------------------------------------
Net Investment Income 12,063 16,169 3,689
- ----------------------------------------------------------------------------------------------------------
REALIZED GAINS FROM INVESTMENTS:
Net realized gains from investment transactions 54 1
- ----------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $12,117 $16,170 $3,689
- ----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
10
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY FUNDS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK FUND FOR
TAX-FREE INCOME
PORTFOLIO PORTFOLIO
(000) (000)
-------- ---------
<S> <C> <C>
INVESTMENT INCOME
Interest income $530 $ 1,054
- -----------------------------------------------------------------------------------------------------------
EXPENSES
Investment advisory fees 44 65
Administration fees 12 19
Registration fees 18 37
Shareholder servicing fees 19 32
Accounting fees 16 9
Transfer agent fees 11 14
Legal 5 6
Custodian fees and expenses 2
Trustees' fees and expenses 1
Other 9 8
Expenses voluntarily reduced (41) (43)
- -----------------------------------------------------------------------------------------------------------
Total Expenses 94 149
- -----------------------------------------------------------------------------------------------------------
Net Investment Income 436 905
- -----------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS
(LOSSES) FROM INVESTMENTS
Net realized losses from investment transactions (3) (369)
Net change in unrealized appreciation from investments 353 834
- -----------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments 350 465
- -----------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $786 $ 1,370
- -----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
11
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED INVESTMENT OHIO
TERM GOVERNMENT INTERMEDIATE QUALITY MUNICIPAL
INCOME MORTGAGE INCOME BOND BOND
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 3,810 $ 5,718 $ 4,461 $ 3,544 $ 1,533
- ------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 287 368 448 344 167
Administration fees 86 110 90 69 42
Accounting fees 38 48 39 33 20
Legal and audit fees 9 16 12 9 5
Organization fees 7 7
Trustees' fees and expenses 3 6 4 3 2
Transfer agent fees 10 11 10 10 9
Registration and filing fees 10 9 22 20 7
Printing fees 10 11 11 10 10
Other 2 3 3 1
Expenses voluntarily reduced (11) (12) (161) (122) (85)
- ------------------------------------------------------------------------------------------------------------
Total Expenses 444 570 485 384 177
- ------------------------------------------------------------------------------------------------------------
Net Investment Income 3,366 5,148 3,976 3,160 1,356
- ------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized losses from investment transactions (491) (1,978) (1,415) (1,048) (511)
Change in unrealized appreciation from investments 2,323 6,541 3,611 3,845 3,179
- ------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments 1,832 4,563 2,196 2,797 2,668
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 5,198 $ 9,711 $ 6,172 $ 5,957 $ 4,024
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
12
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK DIVERSIFIED
BALANCED INDEX VALUE STOCK GROWTH
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 2,504 $ 301 $ 952 $ 491 $ 30
Dividend income 1,262 1,141 3,381 4,004 522
- ----------------------------------------------------------------------------------------------------------------
Total Income 3,766 1,442 4,333 4,495 552
- ----------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 722 283 1,142 906 259
Administration fees 108 71 171 209 39
Accounting fees 48 28 70 85 17
Legal and audit fees 13 9 19 24 6
Organization fees 5 3 8 3
Trustees' fees and expenses 5 3 7 9 2
Transfer agent fees 15 10 12 15 9
Registration and filing fees 24 16 30 7 15
Printing fees 12 11 13 14 9
Other 2 1 4 3
Expenses voluntarily reduced (294) (161) (434) (59) (93)
- ----------------------------------------------------------------------------------------------------------------
Total Expenses 660 274 1,042 1,213 266
- ----------------------------------------------------------------------------------------------------------------
Net Investment Income 3,106 1,168 3,291 3,282 286
- ----------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND
FOREIGN CURRENCY:
Net realized gains from investment transactions 203 257 2,038 9,257 225
Net realized gains from foreign currency transactions 514
Net change in unrealized appreciation from investments 9,034 8,129 18,512 18,099 1,924
Change in unrealized depreciation from translation of assets
and liabilities in foreign currencies (5)
- ----------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments and foreign
currency 9,746 8,366 20,550 27,356 2,149
- ----------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $12,852 $9,554 $23,841 $30,638 $2,435
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
13
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO
SPECIAL SPECIAL REGIONAL INTERNATIONAL
VALUE GROWTH STOCK GROWTH
FUND FUND FUND FUND
(000) (000) (000) (000)
------- ------- ------ -------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 240 $ 41 $ 49 $ 62
Dividend income 1,431 104 352 421
Foreign tax withholding (48)
- ------------------------------------------------------------------------------------------------------------
Total Income 1,671 145 401 435
- ------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 647 103 123 436
Administration fees 97 16 25 60
Custodian and accounting fees 41 8 12 120
Legal and audit fees 12 3 4 7
Organization fees 4 1
Trustees' fees and expenses 4 1 1 3
Transfer agent fees 10 8 18 11
Registration and filing fees 19 10 7 13
Printing fees 11 9 10 10
Other 2 1
Expenses voluntarily reduced (193) (40) (7) (61)
- ------------------------------------------------------------------------------------------------------------
Total Expenses 654 120 193 599
- ------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 1,017 25 208 (164)
- ------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gains (losses) from investment transactions 2,555 (3,750) 840 (2,264)
Net realized loss from foreign currency transactions 1,440
Net change in unrealized appreciation (depreciation) from
investments 8,232 4,497 1,267 (3,388)
Change in unrealized appreciation from translation of assets and
liabilities in foreign currencies 42
- ------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains (losses) from investments and
foreign currency 10,787 747 2,107 (4,170)
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $11,804 $ 772 $2,315 $(4,334)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
14
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT TAX-FREE MONEY
OBLIGATIONS FUND PRIME OBLIGATIONS FUND MARKET FUND
------------------------ -------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
YEAR
ENDED
YEAR ENDED YEAR ENDED OCTOBER
OCTOBER 31, OCTOBER 31, 31,
1994 1994 1994
(000) (000) (000)
----------- ----------- ---------
SIX SIX MONTHS SIX
MONTHS ENDED MONTHS
ENDED APRIL 30, ENDED
APRIL 30, 1995 APRIL 30,
1995 (000) 1995
(000) ----------- (000)
--------- ---------
(UNAUDITED)
(UNAUDITED) (UNAUDITED)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 12,063 $ 14,747 $ 16,169 $ 26,637 $ 3,689 $ 4,538
Net realized gains (losses) from
investment transactions 54 (167) 1 (2,506) 7
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
operations 12,117 14,580 16,170 24,131 3,689 4,545
- -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (12,063) (14,747) (16,169) (26,637) (3,689) (4,538)
From net realized gains on
investments (81) (7)
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (12,063) (14,828) (16,169) (26,637) (3,689) (4,545)
- -------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 729,038 935,449 1,021,057 2,109,682 256,968 534,878
Dividends reinvested 1,416 1,179 7,281 8,381 350 355
Cost of shares redeemed (618,413) (1,040,066) (1,380,642) (2,055,784) (246,273) (526,023)
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions (112,041) (103,438) (352,304) 62,279 11,045 9,210
- -------------------------------------------------------------------------------------------------------------------------
Contribution by KeyCorp 2,506
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets (112,095) (103,686) 352,303 62,279 11,045 9,210
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 412,048 515,734 782,303 720,024 198,561 189,351
- -------------------------------------------------------------------------------------------------------------------------
End of period $ 524,143 $ 412,048 $ 430,000 $ 782,303 $ 209,606 $ 198,561
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 729,038 935,449 1,021,057 2,109,682 256,968 534,878
Dividends reinvested 1,416 1,179 7,281 8,381 350 355
Redeemed (618,413) (1,040,066) (1,380,642) (2,055,784) (246,273) (526,023)
- -------------------------------------------------------------------------------------------------------------------------
Change in shares 112,041 (103,438) (352,304) 62,279 11,045 9,210
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
15
<PAGE>
THE VICTORY FUNDS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK TAX-FREE FUND FOR INCOME
PORTFOLIO PORTFOLIO
------------------------ ------------------------
JANUARY 1, FEBRUARY
1994 TO 1, 1994 TO
OCTOBER OCTOBER
31, 1994 31, 1994
(000) (000)
SIX MONTHS ---------- SIX MONTHS ----------
ENDED ENDED
APRIL 30, APRIL 30,
1995 1995
(000) (000)
---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
OPERATIONS
Net investment income $ 436 $ 1,033 $ 905 $ 1,967
Net realized gains (losses) from investment
transactions (3) 229 (369) (654)
Net change in unrealized gain (loss) from
investments 353 (2,384) 834 (2,075)
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 786 (1,122) 1,370 (762)
- ------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders from net investment income
-- class A (421) (1,033) (946) (1,911)
Distributions in excess of net investment income
class A (49)
Dividends to shareholders from net investment income
-- class B (9)
Dividends to shareholders from net realized gains
class A (225)
Dividends to shareholders from net realized gains
class B (5)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from distributions to
shareholders (660) (1,033) (946) (1,960)
- ------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS(1)
Proceeds from shares issued 2,735 6,305 2,077 3,073
Dividends reinvested 234 455 185 525
Shares redeemed (4,127) (15,295) (7,331) (18,150)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from capital transactions (1,158) (8,535) (5,069) (14,552)
- ------------------------------------------------------------------------------------------------------------
Change in net assets (1,032) (10,690) (4,645) (17,274)
- ------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 17,840 28,530 29,358 46,632
- ------------------------------------------------------------------------------------------------------------
End of period $ 16,808 $ 17,840 $ 24,713 $ 29,358
- ------------------------------------------------------------------------------------------------------------
(1) SHARE TRANSACTIONS (IN DOLLARS):
Class A:
Issued 1,941 6,305 2,077 3,073
Distributions reinvested 221 455 185 525
Redeemed (4,127) (15,295) (7,331) (18,150)
- ------------------------------------------------------------------------------------------------------------
Net decrease (1,965) (8,535) (5,069) (14,552)
- ------------------------------------------------------------------------------------------------------------
Class B:
Issued 794
Distributions reinvested 13
Redeemed
- ------------------------------------------------------------------------------------------------------------
Net increase 807
- ------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS (IN SHARES):
Class A:
Issued 156 482 218 312
Distributions reinvested 18 35 20 54
Redeemed (337) (1,185) (779) (1,853)
- ------------------------------------------------------------------------------------------------------------
Net decrease in shares (163) (668) (541) (1,487)
- ------------------------------------------------------------------------------------------------------------
Class B:
Issued 67
Distributions reinvested
Redeemed
- ------------------------------------------------------------------------------------------------------------
Net increase in shares 67
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
16
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED TERM INCOME GOVERNMENT MORTGAGE INTERMEDIATE INCOME
FUND
FUND FUND ---------------------
-------------------- -------------------- DECEMBER
YEAR YEAR 10,
ENDED ENDED 1993 TO
OCTOBER OCTOBER OCTOBER
31, 31, 31,
1994 1994 1994 (A)
(000) (000) (000)
SIX -------- SIX -------- SIX --------
MONTHS MONTHS MONTHS
ENDED ENDED ENDED
APRIL APRIL APRIL
30, 30, 30,
1995 1995 1995
(000) (000) (000)
-------- -------- --------
(UNAUDITED (UNAUDITED (UNAUDITED
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 3,366 $ 4,521 $ 5,148 $ 10,593 $ 3,976 $ 5,951
Net realized gains (losses)
from investment
transactions (491) (671) (1,978) 615 (1,415) (2,498)
Net change in unrealized
appreciation (depreciation)
from investments 2,323 (4,406) 6,541 (16,536) 3,611 (6,218)
- ----------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 5,198 (556) 9,711 (5,328) 6,172 (2,765)
- ----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (3,314) (4,506) (5,273) (10,495) (4,036) (5,724)
From net realized gains from
investments (357) (1,233) (386)
- ----------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (3,314) (4,863) (6,506) (10,881) (4,036) (5,724)
- ----------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 102,064 34,263 25,202 119,347 34,623 159,988
Dividends reinvested 3,313 4,378 6,502 9,714 4,036 5,511
Cost of shares redeemed (18,299) (35,843) (39,642) (97,422) (20,493) (44,087)
- ----------------------------------------------------------------------------------------------------------
Change in net assets from
capital transactions 87,078 2,798 (7,938) 31,639 18,166 121,412
- ----------------------------------------------------------------------------------------------------------
Change in net assets 88,962 (2,621) (4,733) 15,430 20,302 112,923
- ----------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 79,150 81,771 148,168 132,738 112,923
- ----------------------------------------------------------------------------------------------------------
End of period $168,112 $ 79,150 $143,435 $148,168 $133,225 $112,923
- ----------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 10,367 3,336 2,439 10,724 3,739 16,205
Dividends reinvested 336 433 630 906 436 579
Redeemed (1,858) (3,529) (3,833) (8,967) (2,220) (4,575)
- ----------------------------------------------------------------------------------------------------------
Change in shares 8,845 240 (764) 2,663 1,955 12,209
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
17
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT QUALITY BOND
FUND BALANCED FUND
--------------------------- OHIO MUNICIPAL BOND FUND ---------------------------
DECEMBER 10, ----------------------------- DECEMBER 10,
1993 TO YEAR ENDED 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 ENDED 1994 (A)
(000) APRIL 30, (000) APRIL 30, (000)
------------ 1995 -------------- 1995 ------------
(000) (000)
---------- ----------
SIX MONTHS (UNAUDITED) (UNAUDITED)
ENDED
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 3,160 $ 5,712 $ 1,356 $ 2,580 $ 3,106 $ 3,706
Net realized gains (losses)
from investment transactions (1,048) (4,019) (511) (399) 203 (2,116)
Net realized gains from foreign
currency transactions 514
Net change in unrealized
appreciation (depreciation)
from investments 3,845 (5,867) 3,179 (4,662) 9,034 (1,961)
Change in unrealized
depreciation from translation
of assets and liabilities in
foreign currencies (5)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 5,957 (4,174) 4,024 (2,481) 12,852 (371)
- ----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (3,235) (5,516) (1,385) (2,557) (3,678) (3,545)
From net realized gains from
investments (1,169)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (3,235) (5,516) (1,385) (3,726) (3,678) (3,545)
- ----------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 18,694 139,893 8,944 28,815 66,281 176,193
Dividends reinvested 3,234 5,495 1,384 2,767 3,663 3,529
Cost of shares redeemed (27,133) (41,013) (12,534) (18,347) (47,641) (48,521)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions (5,205) 104,375 (2,206) 13,235 22,303 131,201
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets (2,483) 94,685 433 7,028 31,477 127,285
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 94,685 57,704 50,676 $127,285
- ----------------------------------------------------------------------------------------------------------------------------------
End of period $ 92,202 $ 94,685 $ 58,137 $ 57,704 $158,762 $127,285
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 2,032 14,142 845 2,625 6,905 17,854
Dividends reinvested 352 582 132 255 375 366
Redeemed (2,958) (4,323) (1,206) (1,693) (4,964) (4,987)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in shares (574) 10,401 (229) 1,187 2,316 13,233
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
18
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK INDEX FUND VALUE FUND DIVERSIFIED STOCK FUND
--------------------------- --------------------------- -------------------------
DECEMBER 3, DECEMBER 3, YEAR ENDED
1993 TO 1993 TO OCTOBER
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS 31,
1994 (A) ENDED 1994 (A) ENDED 1994
(000) APRIL 30, (000) APRIL 30, (000)
------------ 1995 ------------ 1995 ----------
(000) (000)
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 1,168 $ 1,515 $ 3,291 $ 3,602 $ 3,282 $ 5,177
Net realized gains (losses)
from investment transactions 257 (6) 2,038 3,124 9,257 30,135
Net change in unrealized
appreciation (depreciation)
from investments 8,129 1,556 18,512 (1,040) 18,099 (18,237)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 9,554 3,065 23,841 5,686 30,638 17,075
- ------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (1,173) (1,331) (3,198) (3,289) (3,481) (4,738)
From net realized gains from
investments (3,146) (29,668) (26,397)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (1,173) (1,331) (6,344) (3,289) (33,149) (31,135)
- ------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 30,344 114,187 120,235 229,389 64,652 94,732
Dividends reinvested 1,173 1,321 6,344 3,283 33,132 22,231
Cost of shares redeemed (23,750) (27,556) (70,430) (46,885) (36,907) (97,081)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions 7,767 87,952 56,149 185,787 60,877 19,882
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets 16,148 89,686 73,646 188,184 58,366 5,822
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 89,686 188,184 263,227 257,405
- ------------------------------------------------------------------------------------------------------------------------------
End of period $105,834 $ 89,686 $261,830 $188,184 $321,593 $263,227
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 2,981 11,441 11,942 22,949 5,494 7,718
Dividends reinvested 114 135 639 336 2,997 1,830
Redeemed (2,356) (2,770) (6,813) (4,707) (3,199) (8,003)
- ------------------------------------------------------------------------------------------------------------------------------
Change in shares 739 8,806 5,768 18,578 5,292 1,545
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
19
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND SPECIAL VALUE FUND SPECIAL GROWTH FUND
-------------------------- -------------------------- --------------------------
DECEMBER 3, DECEMBER 3, DECEMBER 3,
1993 TO 1993 TO 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 (A) ENDED 1994 (A)
(000) APRIL 30, (000) APRIL 30, (000)
----------- 1995 ----------- 1995 -----------
(000) (000)
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 286 $ 636 $ 1,017 $ 1,020 $ 25 $ 60
Net realized gains (losses) from
investment transactions 225 298 2,555 588 (3,750) (325)
Net change in unrealized appreciation
(depreciation) from investments 1,924 1,364 8,232 3,148 4,497 (3,135)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
operations 2,435 2,298 11,804 4,756 772 (3,400)
- -----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (328) (586) (955) (927) (29) (59)
From net realized gains from
investments (298) (588)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from distributions
to shareholders (626) (586) (1,543) (927) (29) (59)
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 7,230 92,029 46,521 137,158 3,811 44,544
Dividends reinvested 626 584 1,542 924 29 56
Cost of shares redeemed (32,725) (27,404) (23,333) (23,311) (9,790) (16,548)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions (24,869) 65,209 24,730 114,771 (5,950) 28,052
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets (23,060) 66,921 34,991 118,600 (5,207) 24,593
NET ASSETS:
Beginning of period 66,921 118,600 24,593
- -----------------------------------------------------------------------------------------------------------------------------------
End of period $ 43,861 $ 66,921 $153,591 $ 118,600 $ 19,386 $ 24,593
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 712 9,240 4,410 13,472 441 4,515
Dividends reinvested 63 60 148 91 3 6
Redeemed (3,262) (2,759) (2,217) (2,258) (1,134) (1,758)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in shares (2,487) 6,541 2,341 11,305 (690) 2,763
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
20
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO REGIONAL STOCK INTERNATIONAL GROWTH
FUND FUND
----------------------- -----------------------
YEAR ENDED YEAR ENDED
OCTOBER OCTOBER
31, 31,
1994 SIX MONTHS 1994
(000) ENDED (000)
---------- APRIL 30, ----------
1995
(000)
SIX MONTHS ----------
ENDED (UNAUDITED)
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 208 $ 438 $ (164) $ (136)
Net realized gains (losses) from investment
transactions 840 1,699 (2,264) 4,064
Net realized losses from foreign currency transactions 1,440 (152)
Net change in unrealized appreciation (depreciation)
from investments 1,267 (867) (3,388) 2,879
Change in unrealized appreciation from translation of
assets and liabilities in foreign currencies 42 15
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 2,315 1,270 (4,334) 6,670
- ------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (221) (409)
From net realized gains from investments (1,699) (1,293) (3,925)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from distributions to shareholders (1,920) (1,702) (3,925)
- ------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 4,152 16,543 23,300 53,804
Dividends reinvested 1,917 1,560 3,922
Cost of shares redeemed (5,246) (18,632) (13,740) (9,796)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from capital transactions 823 (529) 13,482 44,008
- ------------------------------------------------------------------------------------------------------------
Change in net assets 1,218 (961) 5,223 50,678
- ------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 33,965 34,926 81,307 30,629
- ------------------------------------------------------------------------------------------------------------
End of period $ 35,183 $ 33,965 $ 86,530 $ 81,307
- ------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 297 1,143 2,012 4,323
Dividends reinvested 144 109 337
Redeemed (376) (1,297) (1,187) (784)
- ------------------------------------------------------------------------------------------------------------
Change in shares 65 (45) 1,162 3,539
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
21
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
U.S. GOVERNMENT OBLIGATIONS FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- -------------------------------------------
U.S. TREASURY BILLS (4.7%)
25,000 5.73%, 6/29/95 $ 24,765
- -------------------------------------------------------
TOTAL U.S. TREASURY BILLS 24,765
- -------------------------------------------------------
- -------------------------------------------------------
U.S. TREASURY NOTES (38.8%)
30,000 4.25%, 7/31/95 29,862
150,000 3.875%, 8/31/95 148,923
25,000 3.875%, 9/30/95 24,786
- -------------------------------------------------------
TOTAL U.S. TREASURY NOTES 203,571
- -------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE 228,336
- -------------------------------------------------------
- -------------------------------------------------------
REPURCHASE AGREEMENTS (56.6%)
15,000 Barclays Bank
5.90%, 5/1/95
(Collateralized by 14,778
U.S. Treasury Notes,
7.38%-7.88%, 11/15/97-
4/15/98, market value-
$15,301) 15,000
20,000 Chase Securities
5.92%, 5/1/95
(Collateralized by 20,444
U.S. Treasury Bills,
5/4/95-5/18/95,
market value-$20,401) 20,000
20,000 Dean Witter
5.93%, 5/1/95
(Collateralized by 23,287
various U.S. Treasury
securities, 5/15/95-
2/29/00, 0.00%-7.13%,
market value-$20,401) 20,000
22,998 Donaldson, Lufkin &
Jennerette
5.93%, 5/1/95
(Collateralized by 25,691
various U.S. Treasury
securities, 5/15/95-
11/15/98, 0.00%-5.13%,
market value-$23,458) 22,998
15,000 Goldman Sachs
5.90%, 5/1/95
(Collateralized by 19,050
U.S. Treasury securities,
8/15/98, 0.00% market
value-$15,301) 15,000
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
20,000 Harris Securities
5.95%, 5/1/95
(Collateralized by 20,372
various U.S. Treasury
securities, 6/8/95-
10/15/98, 0.00%-8.75%,
market value-$20,400 $ 20,000
15,000 Lehman Brothers
5.90%, 5/1/95
(Collateralized by 14,455
U.S. Treasury Notes,
8.63%, 8/15/97, market
value-$15,054) 15,000
129,000 NationsBank
5.96%, 5/1/95
(Collateralized by 131,793
various U.S. Treasury
securities, 0.00%-
11.25%, 4/30/95-4/15/00,
market value-$131,585 129,000
20,000 Nomura Securities
5.92%, 5/1/95
(Collateralized by 20,217
U.S. Treasury Notes,
4.63%-7.75%, 2/29/96-
1/31/00, market value-
$20,400) 20,000
20,000 UBS Securities
5.93%, 5/1/95
(Collateralized by 19,630
U.S. Treasury Notes,
7.50%, 12/31/96, market
value-$20,405) 20,000
- -------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 296,998
- -------------------------------------------------------
TOTAL (COST $525,334)(B) $525,334
- -------------------------------------------------------
</TABLE>
(a) Percentages indicated are based on net assets of $524,143.
(b) Cost and value for federal income tax and financial reporting purposes are
the same.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
22
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments
PRIME OBLIGATIONS FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
CERTIFICATES OF DEPOSIT (3.5%)
BANKING (3.5%):
15,000 Canadian Imperial Bank
Commerce
6.45%, 8/7/95 $ 14,999
- ------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT 14,999
- ------------------------------------------------------------
- ----------------------------------------------
COMMERCIAL PAPER (42.1%)
BANKING (2.3%):
10,000 Cogentrix of Richmond
Virginia
6.02%, 5/18/95 9,972
----------
BEVERAGES (4.3%):
3,373 PepsiCo, Inc.
5.95%, 5/17/95 3,364
15,000 PepsiCo, Inc.
6.25%, 8/24/95 15,000
----------
18,364
----------
FINANCIAL SERVICES (20.7%):
5,000 American Express Co.
5.95%, 5/22/95 4,983
15,000 Bankers Trust
6.23%, 7/10/95 14,818
5,000 Broadway Capital Corp.
6.00%, 5/9/95 4,993
11,218 Fleet Funding Corp.
6.02%, 5/10/95 11,201
5,138 Fleet Funding Corp.
6.00%, 5/24/95 5,118
5,000 Ford Motor Credit Corp.
6.00%, 5/8/95 4,994
6,000 Ford Motor Credit Corp.
6.00%, 5/31/95 5,970
15,000 Hanson Finance
6.05%, 6/1/95 14,922
5,000 Transamerica Finance Corp.
5.98%, 5/15/95 4,988
11,050 Retailer Funding Corp.
6.00%, 5/24/95 11,008
6,044 Retailer Funding Corp.
6.00%, 5/31/95 6,014
----------
89,009
----------
INDUSTRIAL GOODS & SERVICES (2.3%):
10,000 Xerox Co.
6.00%, 5/15/95 9,977
----------
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MISCELLANEOUS (3.5%):
15,000 135 Bishopgate Funding
6.02%, 5/19/95 $ 14,955
----------
OFFICE EQUIPMENT & SERVICES (3.5%):
15,000 Canon USA, Inc.
5.98%, 5/12/95 14,973
----------
OIL & GAS EXPLORATION (1.2%):
5,000 British Oil New Zealand Ltd.
Discount
5.95%, 5/15/95 4,988
----------
PRINTING & PUBLISHING (1.2%):
5,000 Reed Publishing
6.05%, 6/27/95 4,952
----------
RECEIVABLE (3.2%):
5,000 Blue Hawk Funding
6.00%, 5/24/95 4,981
5,000 Blue Hawk Funding
5.98%, 5/31/95 4,975
3,840 Blue Hawk Funding
6.02%, 5/9/95 3,835
----------
13,791
- ------------------------------------------------------------
TOTAL COMMERCIAL PAPER 180,981
- ------------------------------------------------------------
- ----------------------------------------------
CORPORATE BONDS (3.3%)
BEVERAGES (0.2%):
1,000 PepsiCo, Inc.
5.63%, 7/1/95 1,000
----------
FINANCIAL SERVICES (1.9%):
8,050 Associates Corp. of N.A.
8.88%, 8/1/95 8,113
----------
MISCELLANEOUS (1.2%):
5,000 Hanson Overseas
5.50%, 1/15/96 4,960
- ------------------------------------------------------------
TOTAL CORPORATE BONDS 14,073
- ------------------------------------------------------------
- ----------------------------------------------
FLOATING RATE NOTES (14.3%)
MASTER DEMAND NOTES (5.1%):
22,000 Lehman Government
Securities
6.20%*, 5/1/95 22,000
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
23
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments -- Continued
PRIME OBLIGATIONS FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
SECURITY BROKER, DEALER (8.1%):
10,000 Goldman Sachs Group
6.03%*, 6/15/95** $ 10,000
10,000 Goldman Sachs Group
6.03%*, 6/16/95** 10,000
10,000 Lehman Brothers Holdings,
Inc.
6.16%*, 7/28/95** 10,000
5,000 Lehman Brothers Holdings,
Inc.
6.42%*, 3/11/96** 5,000
----------
35,000
----------
TAXABLE MUNICIPAL DEMAND NOTES (1.0%):
4,500 Springfield
6.08%*, 12/31/10** 4,500
- ------------------------------------------------------------
TOTAL FLOATING RATE NOTES 61,500
- ------------------------------------------------------------
- ----------------------------------------------
MEDIUM TERM NOTES (5.8%)
FINANCE (3.7%):
1,000 Ford Motor Credit Corp.
9.20%, 5/1/95 1,000
5,000 General Electric Capital
Corp.
6.25%, 5/1/95 5,000
10,000 General Electric Capital
Corp.
4.89%, 5/29/95 9,999
----------
15,999
----------
TOBACCO (2.1%):
9,000 Philip Morris Co.
6.25%, 5/22/95 9,003
- ------------------------------------------------------------
TOTAL MEDIUM TERM NOTES 25,002
- ------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (3.5%)
FEDERAL HOME LOAN BANK
10,000 5.19%, 6/13/95 9,999
5,000 6.60%, 4/25/95 5,000
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 14,999
- ------------------------------------------------------------
- ----------------------------------------------
VARIABLE RATE NOTES (18.8%)
5,034 Adesa Funding Corp.
6.08%*, 1/1/99** 5,034
2,500 Astro Alum
6.15%*, 4/1/05** 2,500
3,500 Baylis Group Partnership
6.30%*, 1/1/10** 3,500
15,000 C-River Maritime Exxon
Shipping
6.09%*, 10/1/01** 15,000
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
3,517 Capital One Funding Corp.
Service
6.08%*, 6/2/08** $ 3,517
2,725 Carelife, Inc.
6.15%*, 8/1/11** 2,725
1,600 Cleveland Steel Container
6.15%*, 12/1/08** 1,600
2,000 Cuyahoga County Ohio
Taxable Economic
Development Revenue
6.51%*, 6/1/22** 2,000
925 Dietz Road Ltd Partnership
6.15%*, 11/1/08** 925
3,000 Dome Corp -- Dome Corp
Project
6.15%*, 8/31/16** 3,000
8,388 Erie Funding
6.25%*, 11/1/16** 8,388
320 Fremont Plastics
6.15%*, 4/1/03** 320
1,500 GMH Enterprises
6.15%*, 7/1/03** 1,500
455 Highland Rd Partners
6.15%*, 10/1/04** 455
975 McKinley Air Transport
6.15%*, 8/1/09** 975
1,000 MCMC Pob LII
6.15%*, 8/1/14** 1,000
1,000 Olen Corp.
6.15%*, 12/1/04** 1,000
1,655 Olen Corp.
6.15%*, 8/1/08** 1,655
1,400 Pellerin Melnor Corp.
6.15%*, 9/1/02** 1,400
5,842 Primex Funding
6.08%*, 2/1/00** 5,842
700 Rivnut Engineered Products
6.15%*, 2/1/01** 700
980 S & SLP Project
6.15%*, 12/1/07** 980
420 Schipper-DJA Properties
6.17%*, 10/1/05** 420
3,060 Schipper Enterprises
6.17%*, 4/1/09** 3,060
1,295 Technisand, Inc.
6.15%*, 11/1/01** 1,295
1,800 Tell-Schipper Properties,
Inc.
6.17%*, 10/1/03** 1,800
8,300 Tyler Health Facilities
6.35%*, 11/1/25** 8,300
1,980 Zanetos Partnership Project
6.15%*, 7/1/13** 1,980
- ------------------------------------------------------------
TOTAL VARIABLE RATE NOTES 80,871
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
24
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments -- Continued
PRIME OBLIGATIONS FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
REPURCHASE AGREEMENTS (8.7%)
12,000 Chase Securities
5.92%, 5/2/95
(Collateralized by 12,287
U.S. Treasury Bills,
5/18/95-5/25/95,
market value-$12,244) $ 12,000
13,315 Donaldson-Lufkin Jenrette
5.93%, 5/1/95
(Collateralized by 15,318
various U.S. Treasury
securities, 0.00%-5.13%,
8/15/95-2/15/00,
market value-$13,582) 13,315
12,000 UBS Securities, Inc.
5.93%, 5/2/95
(Collateralized by 11,780
U.S. Treasury Notes,
7.90%, 12/31/96, market
value-$12,245) 12,000
- ------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 37,315
- ------------------------------------------------------------
TOTAL (COST $429,740)(B) $ 429,740
- ----------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $430,000.
(b) Cost and value for federal income tax and financial reporting purposes are
the same.
* Floating Rate Demand Notes are securities with yields that vary with a
designated market index or market rate. These securities are payable on the
date of demand. The rate reflected on the Schedule of Portfolio Investments is
the effective rate at April 30, 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 ON PAGES 73 TO 78.
25
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
TAX-FREE MONEY MARKET FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (98.6%)
ALABAMA (2.1%):
2,530 Ardmore Industrial
Development Revenue,
4.95%*, 6/1/04** $ 2,530
1,800 Montgomery, Alabama BMC,
4.75%*, 12/1/30** 1,800
--------
4,330
--------
ARKANSAS (2.4%):
5,000 University of Arkansas,
4.80%*, 12/1/19** 5,000
--------
CALIFORNIA (6.8%):
5,000 California Housing Finance
GIC, 4.60%, 8/1/27** 5,000
6,000 California School Cash
Reserve, 4.50%, 7/5/95 6,008
3,080 Los Angeles, California
Redevelopment, 8.85%,
7/1/95 3,115
--------
14,123
--------
COLORADO (1.3%):
2,645 Arapahoe County, Capital
Improvement, 4.45%,
8/31/96** 2,645
--------
FLORIDA (8.3%):
4,500 Broward County, Housing
Finance Authority, 4.95%*,
12/1/29** 4,500
9,700 Dade County, Housing Finance
Authority, Highway
Revenue, 4.95%*, 8/1/05** 9,700
490 Florida State Board of
Education, 5.50%, 1/1/96 492
2,500 Hillsborough County,
Ringhaven, 4.75%*,
12/1/11** 2,500
--------
17,192
--------
ILLINOIS (7.5%):
1,700 Illinois Development,
Kindlen, 4.80%*, 5/1/06** 1,700
5,000 Illinois Development, Power
& Light, 4.10%, 5/31/95** 5,000
5,000 Illinois Health Facility,
4.50%*, 11/15/24** 5,000
1,000 Illinois State, 8.13%,
6/1/95 1,023
2,700 Kankakee County, Industrial
Development Revenue,
4.95%*, 12/1/07** 2,700
--------
15,423
--------
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INDIANA (4.5%):
4,000 Indiana Bond Bank, 5.25%,
7/10/95 $ 4,005
1,150 Indianapolis, Indiana
Calderon, 4.95%*, 2/1/99** 1,150
1,995 Scottsburg, Indiana, 5.20%*,
10/1/09** 1,995
1,020 Syracuse, Economic
Development Revenue,
4.80%*, 12/1/05** 1,020
1,220 Wakarusa, Economic
Development Revenue,
4.80%*, 7/1/03** 1,220
--------
9,390
--------
IOWA (5.0%):
4,325 City of Urbandale, 4.25%*,
10/1/15** 4,325
6,000 Iowa Schools, 4.25%, 7/17/95 6,008
--------
10,333
--------
KANSAS (1.8%):
2,300 Fairway, Kansas, 4.25%*,
11/1/14** 2,300
1,500 Wamego Pollution Control
Revenue, 4.10%*, 11/1/14** 1,500
--------
3,800
--------
KENTUCKY (2.4%):
2,475 Boone County, 5.20%*,
12/1/09** 2,475
2,465 Covington, Kentucky, 4.70%*,
4/1/05** 2,465
--------
4,940
--------
MICHIGAN (1.3%):
1,725 Michigan State Strategic,
4.75%*, 4/1/06** 1,725
1,000 Oakland County Economic,
5.80%, 9/1/95 1,012
--------
2,737
--------
MINNESOTA (1.6%):
3,340 St. Cloud, Housing Webway,
4.95%*, 11/1/05** 3,340
--------
MISSOURI (5.3%):
3,600 Kansas City, J.C. Nichols
Project, 4.25%*, 5/1/15** 3,600
2,860 St. Charles County, Cedar
Ridge, 4.75%*, 10/1/07** 2,860
4,600 St. Louis Industrial
Development, Multi Family
Housing Revenue Bond,
Series 86, 5.05%*,
2/1/07** 4,600
--------
11,060
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
26
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
TAX-FREE MONEY MARKET FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
NEBRASKA (2.4%):
4,000 Nebraska Investment Finance
Authority, 4.75%,
7/15/95** $ 4,000
915 Nebraska Investment Finance
Authority, 5.00%, 7/1/15** 915
--------
4,915
--------
NEVADA (1.4%):
1,300 Director State Nevada H2W
Part, 4.95%*, 8/1/14** 1,300
1,600 Director State Nevada No.
Sail, 4.95%*, 8/1/01** 1,600
--------
2,900
--------
NEW YORK (0.8%):
1,700 New York, New York, 5.00%*,
2/1/20** 1,700
--------
NORTH CAROLINA (4.0%):
8,240 Person County, Pollution
Control Revenue, Carolina
Power & Light Project,
4.80%*, 11/1/19** 8,240
--------
OHIO (18.1%):
440 Akron Bath Copley, Ohio
Township Hospital, 4.80%*,
5/1/13** 440
2,000 Berea, Ohio, 4.50%, 10/25/95 2,002
1,500 Cuyahoga County, 4.80%*,
12/1/12** 1,500
2,850 Dublin School District,
5.57%, 12/20/95 2,854
885 Fairfield County, 4.88%,
10/26/95 887
2,550 Fayetteville Perry, Ohio,
4.68%, 4/12/96 2,554
2,500 Franklin County Hospital,
4.70%*, 6/1/16** 2,500
4,380 Franklin County, Wesley
Glen, 4.82%*, 4/1/13** 4,380
2,680 Gallia County, Industrial
Development Revenue,
Scenic Hills Nursing
Center, 4.40%*, 12/15/10** 2,680
3,400 Greene County, Ohio Apple
Valley, 4.30%*, 8/1/09** 3,400
3,000 Highland Heights, 5.65%,
12/28/95 3,008
3,800 Kings School District,
5.45%, 6/21/95 3,803
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
4,000 Lakewood, Ohio, 3.72%,
5/11/95 $ 4,000
2,495 Student Loan Funding Corp.,
Cincinnati, Ohio, Student
Loan Revenue, 4.60%*,
12/29/98** 2,495
790 Summit County, Ohio, Texler
Project, 4.40%, 5/1/09** 790
--------
37,293
--------
PENNSYLVANIA (2.7%):
3,100 Sayre, Health Care Facility,
4.75%*, 12/1/20** 3,100
2,450 Williamsport, Area School
District, 3.89%, 6/30/95 2,451
--------
5,551
--------
SOUTH CAROLINA (1.2%):
2,500 Job Economic Development
Revenue, 4.95%*, 12/1/99** 2,500
--------
TENNESSEE (3.0%):
6,200 Hawkins County, Kingston,
5.00%*, 8/1/09** 6,200
--------
TEXAS (3.6%):
4,140 Harris County, 4.95%*,
10/1/16** 4,140
2,240 Texas A&M University, 8.50%,
7/1/95 2,255
950 Texas A&M University, 9.00%,
7/1/95 957
--------
7,352
--------
UTAH (0.3%):
500 Intermountain Power Agency,
9.90%, 7/1/95 517
--------
VIRGINIA (1.5%):
3,000 State Housing Development,
3.90%, 5/10/95 3,000
--------
WASHINGTON (0.7%):
500 Everett Water & Sewer,
8.20%, 7/1/95 503
1,000 Pierce County, 4.55%,
11/1/04** 1,000
--------
1,503
--------
WISCONSIN (8.6%):
1,200 Appleton, Pensor, 4.95%*,
8/1/01** 1,200
1,525 Berlin Wenninger, 4.95%*,
4/1/07** 1,525
4,000 Evansville, Wisconsin,
4.95%*, 12/1/08** 4,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
27
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
TAX-FREE MONEY MARKET FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
4,000 Kenosha Metalmen, 4.95%*,
9/1/14** $ 4,000
1,000 Milwaukee, Wisconsin, 5.25%,
9/1/95 1,003
1,400 Oshkosh, Schloesser, 4.95%*,
3/1/02** 1,400
2,800 Plymouth, Industrial
Development Revenue,
4.95%*, 8/1/04** 2,800
1,800 Prairie Du Chien, Wisconsin,
4.80%*, 6/1/02** 1,800
--------
17,728
- ----------------------------------------------------------
TOTAL MUNICIPAL BONDS 203,712
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (2.1%)
4,318 Federated #15 Tax-Free Money
Market Fund 4,318
1 Fidelity Ohio Tax Free Fund 1
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 4,319
- ----------------------------------------------------------
TOTAL (COST $208,031)(B) $208,031
- ---------------------------------------------------------
</TABLE>
- ------------
(a) Percentages indicated are based on net assets of $206,606.
(b) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities collateralized by bank letters of credit or other
bank credit 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 Portfolio Investments is the rate in
effect at April 30, 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 ON PAGES 73 TO 78.
28
<PAGE>
Schedule of Portfolio Investments
THE VICTORY FUNDS April 30, 1995
NEW YORK TAX-FREE PORTFOLIO (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (94.5%)
250 Metropolitan Transportation
Authority, New York,
Revenue Bond, Series I,
AMBAC, 7.00%, 7/1/09 $ 282
1,200 Metropolitan Transportation
Authority, New York,
Service Contract, Refunding
Revenue Bond, Series K,
AMBAC, 7.50%, 7/1/17 1,318
250 Nassau County, New York,
Industrial Development
Agency, Civic Facilities
Revenue Bond, Hofstra
University Project, AMBAC,
6.75%, 8/01/11 263
700 New York City, New York, City
Housing Development,
Refunding Revenue Bond,
Multi-Unit Mortgage, Series
A, FHA, 7.30%, 6/1/10 741
335 New York City, New York, City
Housing Development,
Revenue Bond, Series 1,
MBIA, 7.38%, 4/1/17 352
675 New York City, New York, City
Housing Development,
Refunding Revenue Bond,
Multi-Unit Mortgage, Series
A, FHA, 7.35%, 6/1/19 717
200 New York City, New York,
Industrial Development
Agency, Civic Facilities
Revenue Bonds, USTA
National Tennis Center,
6.38%, 11/15/14 205
220 New York City, New York, City
Transportation Authority,
Revenue Bond, Livingston
Plaza Project, FSA, 7.50%,
1/1/20 247
680 New York City, New York,
Cultural Resources, Revenue
Bond, AMBAC, 6.63%, 1/1/11 711
300 New York City, New York,
General Obligation Bond,
Series B, FSA, 7.00%,
10/1/18 312
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
$ 350 New York City, New York,
General Obligation Bond,
Series C, FGIC, 7.00%,
2/1/12 $ 360
750 New York City, New York,
Municipal Water Finance
Authority, Water & Sewer
System Revenue Bonds,
Series A, FGIC, 6.75%,
6/15/16 780
700 New York State Dormitory
Authority Revenue Bonds,
City University, Series 2,
MBIA 6.75%, 7/01/24 738
750 New York State Dormitory
Authority, Revenue Bonds,
Ithaca College, MBIA,
6.50%, 7/1/10 782
400 New York State Dormitory
Authority, Revenue Bonds,
State University
Educational System, Series
B, AMBAC, 6.00%, 5/15/17 395
225 New York State Dormitory
Authority, Revenue Bond,
Judicial Facilities Leases,
Series B, MBIA, 7.00%,
4/15/16 239
370 New York State General
Obligation Bonds, AMBAC,
6.75%, 8/1/18 392
325 New York State General
Obligation Bonds, AMBAC,
6.75%, 8/1/19 343
500 New York State Medical Care
Facilities Finance Agency,
Unrefunded/Revenue Bond,
MBIA, 7.38%, 8/15/19 543
200 New York State Medical Care
Facilities Finance Agency,
Montefiore Medical Center,
AMBAC, 5.75%, 2/15/25 188
815 New York State Medical Care
Facilities Finance Agency,
Refunding Revenue Bond,
North Shore University
Hospital, MBIA, 7.20%,
11/1/20 879
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
29
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY FUNDS April 30, 1995
NEW YORK TAX-FREE PORTFOLIO (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
550 New York State Medical Care
Facilities Finance Agency,
Revenue Bond, Series A,
BIG, 7.10%, 2/15/27 $ 575
340 New York State Medical Care
Facilities Finance Agency,
Revenue Bond, St. Luke's,
Series B, MBIA, 7.45%,
2/15/29 382
550 New York State TWY Authority
General Revenue Bonds,
Series C, FGIC, 6.00%,
1/01/25 539
1,000 New York State Urban
Development Correctional
Facilities, Revenue Bond,
Series D, AMBAC, 7.50%,
1/1/12 1,088
400 New York State Urban
Development Correctional
Facilities, Series 1, FSA,
7.50%, 1/1/20 449
900 Triborough Bridge & Tunnel
Authority, Revenue Bond,
Series T, MBIA, 7.00%,
1/1/20 1,002
1,000 Triborough Bridge & Tunnel
Authority, Special
Obligation Refunding
Revenue Bond, Series B,
AMBAC, 6.88%, 1/1/15 1,061
- ---------------------------------------------------------
TOTAL MUNICIPAL BONDS $15,883
- ---------------------------------------------------------
- ---------------------------------------------------------
INVESTMENT COMPANIES (3.1%)
527 Municipal Fund for New York $ 527
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 527
- ---------------------------------------------------------
TOTAL (COST $15,485)(b) $16,410
- ---------------------------------------------------------
</TABLE>
- ------------
(a) Percentages indicated are based on net assets of $16,808.
(b) 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 $ 925
Unrealized depreciation
-------
Net unrealized appreciation $ 925
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
30
<PAGE>
Schedule of Portfolio Investments
THE VICTORY FUNDS April 30, 1995
FUND FOR INCOME (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
U.S. TREASURY OBLIGATION (1.2%)
U.S. TREASURY STRIP
2,000 zero%, 8/15/20 $ 296
- ---------------------------------------------------------
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (40.3%)
1,084 Bear Stearns Mortgage Capital
Corp., Series 1991-A/B1,
9.40%, 6/25/21 1,084
2,220 Bear Stearns Secured
Investors Trust, Series
1991-2/H, 7.50%, 9/20/20 2,151
104 Drexel, Burnham & Lambert
Trust, Series U/1, 6.30%,
8/1/17 107
1,000 General Electric Capital
Mortgage, Series 93-4f,
7.00%, 3/25/08 896
1,985 Housing Securities, Inc.,
Series 1993-B/B4M, 7.25%,
4/25/08 1,878
1,000 Kidder, Peabody Acceptance
Corp., Series 1993-C1/A3,
6.80%, 9/1/06 927
153 Merrill Lynch Trust, Series
27/D, 8.90%, 10/20/15 155
1,366 Prudential Home Mortgage,
Series 1992-42/M, 7.00%,
1/25/08 1,291
1,500 Resolution Trust Corp.,
Series 1992-2/B4, 8.20%,
11/25/21 1,476
- ---------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 9,965
- ---------------------------------------------------------
- ---------------------------------------------------------
U.S. GOVERNMENT AGENCIES (41.7%)
FEDERAL HOME LOAN MORTGAGE CORPORATION:
335 8.85%, 4/15/20 338
115 9.30%, 8/15/15 117
1,337 9.50%, 8/1/19-12/1/22 1,389
237 10.00%, 2/1/17-9/1/19 253
18 12.00%, 10/1/10-7/1/14 21
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION:
1,304 8.00%, 11/25/20 $ 1,221
1,683 8.50%, 8/1/24-1/13/25 1,712
25 9.50%, 1/1/19 28
154 10.00%, 5/1/13-2/1/18 172
10 10.50%, 1/1/18 11
55 12.00%, 8/1/13-4/1/15 61
36 13.00%, 12/1/12 41
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION:
2,272 9.50%, 8/15/17-10/15/19 2,390
2,115 10.00%, 3/15/16-6/15/21 2,289
97 10.25%, 3/15/19-6/15/19 103
82 10.50%, 2/15/16 90
66 11.00%, 9/20/14 74
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 10,310
- ---------------------------------------------------------
- ---------------------------------------------------------
REAL ESTATE MORTGAGE INVESTMENT
CONDUITS (12.6%)
1,000 Federal National Mortgage
Association, Series 1991-
13/C, 8.25%, 3/25/04 1,017
76 Federal National Mortgage
Association, Series G-18/6,
8.75%, 7/25/01 76
1,920 Federal National Mortgage
Association, Series
1988-4/Z, 9.25%, 3/25/18 2,014
- ---------------------------------------------------------
TOTAL REAL ESTATE MORTGAGE INVESTMENT
CONDUITS 3,107
- ---------------------------------------------------------
- ---------------------------------------------------------
REPURCHASE AGREEMENT (4.1%)
1,003 Donaldson, Lufkin & Jenrette
Securities Corp., 5.93%,
dated 4/28/95, due 5/1/95
(Collateralized by various
U.S. Treasury securities) 1,003
- ---------------------------------------------------------
TOTAL REPURCHASE AGREEMENT 1,003
- ---------------------------------------------------------
TOTAL (COST $24,172)(B) $ 24,681
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $24,713.
(b) 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 $ 842
Unrealized depreciation (333)
--------
Net unrealized appreciation $ 509
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
31
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
LIMITED TERM INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
ASSET BACKED SECURITIES (1.8%)
1,000 American Express Co., 6.05%,
7/15/97 $ 978
1,000 Capital Auto Receivables
Trust, 5.35%, 2/15/98 989
955 Capital Auto Receivables
Trust, 4.90%, 2/17/98 952
201 GMAC 1993 A Grantor Trust,
4.15%, 3/15/98 198
- ----------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 3,117
- ----------------------------------------------------------
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (8.6%)
FEDERAL HOME LOAN MORTGAGE CORP.:
1,540 7.00%, 7/15/98 1,535
2,000 5.50%, 10/15/02 1,933
2,000 5.50%, 11/15/03 1,924
482 8.40%, 1/15/05 487
937 6.00%, 2/15/13 933
258 8.00%, 1/15/18 258
1,300 8.50%, 9/15/19 1,316
FEDERAL NATIONAL MORTGAGE ASSOC.:
2,000 6.00%, 10/25/03 1,965
1,000 8.00%, 3/25/04 1,007
1,522 5.75%, 6/25/06 1,471
849 7.00%, 2/25/18 844
883 7.50%, 7/25/18 879
--------
14,552
--------
- ---------------------------------------------------------
CORPORATE BONDS (18.5%)
AUTOMOTIVE (0.3%):
500 Ford Motor, 7.88%, 10/15/96 506
--------
BANKING & FINANCIAL SERVICES (0.3%):
500 Bankers Trust, 7.25%, 11/1/96 502
--------
BROKERAGE SERVICES (2.0%):
2,000 Lehman Brothers, 5.75%,
11/15/98 1,858
1,500 Lehman Brothers Holding,
5.50%, 6/15/96 1,474
--------
3,332
--------
BUSINESS EQUIPMENT (1.3%):
2,175 International Business
Machines Corp., 6.38%,
11/1/97 2,145
--------
CHEMICALS (0.6%):
1,000 Dow Capital, 5.75%, 9/15/97 972
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
CONSUMER GOODS & SERVICES (0.6%):
1,000 PepsiCo, Inc., 5.63%, 7/1/95 $ 1,000
--------
FINANCIAL SERVICES (6.5%):
2,000 American General Corp.,
6.88%, 7/1/99 1,957
1,000 Associates Corp.,6.88%,
1/15/97 1,000
1,500 Associates Corp.,7.25%,
9/1/99 1,492
3,000 Ford Motor Credit Corp.,
7.13%, 12/1/97 3,004
1,000 ITT Finance, 7.38%, 10/15/95 1,005
2,000 Norwest Corp., 7.75%,
12/31/96 2,030
500 Norwest Financial, 7.10%,
11/15/96 502
--------
10,990
--------
FOOD PRODUCTS (0.4%):
775 H.J. Heinz Co., 5.50%,
9/15/97 756
--------
GOVERNMENTS (FOREIGN) (0.6%):
1,000 Province of Ontario Global
Bonds, 5.70%, 10/1/97 973
--------
INDUSTRIAL GOODS & SERVICES (1.2%):
2,000 Burlington Resources, 7.15%,
5/1/99 1,985
--------
INSURANCE (2.1%):
500 International Lease Finance
Corp., 6.38%, 11/1/96 496
2,000 International Lease Finance
Corp., 8.35%, 10/1/98 2,063
1,000 Transamerica Finance, 5.40%,
9/1/95 997
--------
3,556
--------
POLLUTION CONTROL SERVICES (1.5%):
500 Waste Management, 6.38%,
7/1/97 493
2,000 WMX Technologies, 7.13%,
3/22/97 2,005
--------
2,498
--------
UTILITIES -- ELECTRIC & GAS (1.1%):
1,000 Northern Illinois Gas, 5.50%,
2/1/97 976
1,000 Northern States Power, 5.50%,
2/1/99 944
--------
1,920
- ----------------------------------------------------------
TOTAL CORPORATE BONDS 31,135
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 73 TO 78.
32
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
LIMITED TERM INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
U.S. GOVERNMENT AGENCIES (1.7%)
FEDERAL NATIONAL MORTGAGE ASSOC.:
3,000 5.23%, 11/25/98 $ 2,826
- ----------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 2,826
- ----------------------------------------------------------
- ---------------------------------------------------------
U.S. TREASURY NOTES (64.8%)
4,000 5.50%, 4/30/96 3,968
1,000 7.63%, 5/31/96 1,013
8,000 6.50%, 9/30/96 8,002
9,000 7.50%, 12/31/96 9,136
18,000 7.50%, 1/31/97 18,273
1,000 6.75%, 2/28/97 1,003
16,000 6.88%, 2/28/97 16,078
10,000 6.63%, 3/31/97 10,005
7,000 6.50%, 8/15/97 6,978
3,000 7.38%, 11/15/97 3,046
1,500 6.00%, 12/31/97 1,475
4,500 5.13%, 4/30/98 4,306
6,500 8.25%, 7/15/98 6,774
7,000 5.25%, 7/31/98 6,689
12,000 7.13%, 2/29/00 12,110
- ----------------------------------------------------------
TOTAL U.S. TREASURY NOTES 108,856
- ----------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
INVESTMENT COMPANIES (3.1%)
5,183 Shearson U.S. Treasury Fund $ 5,183
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 5,183
- ----------------------------------------------------------
TOTAL (COST $166,188)(B) $165,669
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $168,112.
(b) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 1,161
Unrealized depreciation (1,681)
--------
Net unrealized depreciation $ (520)
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 73 TO 78.
33
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
GOVERNMENT MORTGAGE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATIONS (10.6%)
FEDERAL HOME LOAN MORTGAGE CORP.:
5,000 5.50%, 10/15/02 $ 4,832
500 5.00%, 8/15/11 492
FEDERAL NATIONAL MORTGAGE ASSOC.:
10,000 7.50%, 8/25/22 9,809
- ---------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS 15,133
- ---------------------------------------------------------
- ---------------------------------------------------------
U.S. GOVERNMENT
AGENCIES (86.8%)
FEDERAL HOME LOAN MORTGAGE CORP.:
5,927 8.00%, 1/1/00 5,922
209 9.50%, 8/1/21 218
3,128 5.99%, 12/1/23 3,136
19,787 7.50%, 4/1/24 19,351
FEDERAL NATIONAL MORTGAGE ASSOC.:
1,395 8.00%, 5/1/17 1,394
2,322 9.50%, 6/1/22 2,420
9,768 6.50%, 4/1/24 9,050
3,888 8.50%, 8/1/24 3,952
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
105 8.50%, 6/15/16 107
252 8.50%, 7/15/16 257
109 9.00%, 9/15/16 113
181 8.50%, 10/15/16 185
108 9.50%, 11/15/16 114
726 8.50%, 1/15/17 740
578 8.50%, 2/15/17 589
233 8.50%, 4/15/17 238
200 8.50%, 5/15/17 204
473 8.50%, 6/15/17 483
2,093 9.50%, 11/15/17 2,195
113 10.00%, 1/15/18 121
517 9.00%, 11/15/18 536
423 9.50%, 1/15/19 444
317 10.50%, 8/15/19 344
469 8.50%, 12/15/19 478
45 8.50%, 2/15/20 46
1,426 9.50%, 5/15/20 1,496
3,278 9.75%, 1/15/21 3,504
1,551 9.00%, 3/15/21 1,606
121 8.50%, 5/15/21 124
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
1,185 9.00%, 5/15/21 $ 1,227
311 8.00%, 6/15/21 311
1,332 9.00%, 6/15/21 1,379
2,307 9.50%, 6/15/21 2,422
13,249 8.00%, 5/15/22 13,257
4,043 8.00%, 10/15/22 4,046
3,088 9.00%, 2/15/23 3,202
2,870 8.50%, 3/15/23 2,928
803 7.50%, 6/15/23 786
4,591 7.50%, 7/15/23 4,490
1,527 8.00%, 8/15/23 1,528
4,887 7.00%, 9/15/23 4,636
2,833 7.00%, 10/15/23 2,687
4,619 7.00%, 12/15/23 4,384
8,295 7.50%, 1/15/24 8,106
3,933 7.50%, 2/15/24 3,842
4,048 8.50%, 10/15/24 4,134
1,714 8.75%, 8/15/25 1,739
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 124,471
- ---------------------------------------------------------
- ---------------------------------------------
U.S. TREASURY NOTES (1.5%)
1,000 5.50%, 4/30/96 992
1,100 8.75%, 8/15/00 1,189
- ---------------------------------------------------------
TOTAL U.S. TREASURY NOTES 2,181
- ---------------------------------------------------------
- ---------------------------------------------
INVESTMENT COMPANIES (0.8%)
1,177 Shearson U.S. Treasury Fund 1,177
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,177
- ---------------------------------------------------------
TOTAL (COST $147,319)(B) $142,962
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $143,435.
(b) 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 $41. Cost for federal income tax purposes differs from value
by net unrealized depreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 422
Unrealized depreciation (4,820)
--------
Net unrealized depreciation $ (4,398)
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
34
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
INTERMEDIATE INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
ASSET BACKED SECURITIES (0.7%)
CAPITAL AUTO RECEIVABLES TRUST
1,000 5.35%, 2/15/98 $ 989
- ---------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 989
- ---------------------------------------------------------
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (17.0%)
FEDERAL HOME LOAN MORTAGAGE CORP.
1,000 7.00%, 5/15/99 992
1,800 6.50%, 5/15/03 1,713
1,406 5.00%, 11/15/04 1,401
2,500 5.80%, 4/15/14 2,468
1,994 6.50%, 7/15/16 1,959
258 8.00%, 1/15/18 258
1,968 7.50%, 9/15/20 1,963
2,500 8.40%, 1/15/21 2,520
FEDERAL NATIONAL MORTGAGE ASSOC.
2,475 6.00%, 10/25/03 2,432
1,103 7.50%, 7/25/18 1,098
4,000 6.25%, 5/25/19 3,755
2,000 8.50%, 8/25/19 2,051
- ---------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 22,610
- ---------------------------------------------------------
- ---------------------------------------------------------
CORPORATE BONDS (39.1%)
APPLIANCES (0.8%):
1,000 Whirlpool Corp. Notes
9.50%, 6/15/00 1,089
--------
AUTOMOTIVE (2.8%):
1,000 Ford Motor Co.
9.00%, 9/15/01 1,076
500 Ford Motor Credit Co.
9.50%, 4/15/00 542
500 Ford Motor Holdings, Inc.
9.25%, 3/1/00 534
500 General Motors Corp.
9.75%, 5/15/99 514
1,000 General Motors Corp.
9.63%, 12/1/00 1,086
--------
3,752
--------
BANKING (0.4%):
500 Comerica, Inc.
10.13%, 6/1/98 537
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
BROKERAGE SERVICES (10.9%):
4,000 Bear Stearns Co.
9.38%, 6/1/01 $ 4,305
5,000 Lehman Brothers Holdings
5.75%, 11/15/98 4,643
2,500 Merrill Lynch & Co.
8.25%, 11/15/99 2,563
3,500 Salomon, Inc.
6.75%, 1/15/06 2,993
--------
14,504
--------
CHEMICALS (1.5%):
1,000 Dow Chemical
5.75%, 9/15/97 973
1,000 Monsanto Defined
8.13%, 12/15/06 1,032
--------
2,005
--------
FINANCIAL SERVICES (7.0%):
2,000 American Express
8.50%, 8/15/01 2,115
3,000 American General Corp.
7.70%, 10/15/99 3,034
1,000 Norwest Corp.
7.75%, 12/31/96 1,015
3,000 Transamerica Financial
8.75%, 10/1/99 3,138
--------
9,302
--------
FOOD PRODUCTS (0.7%):
1,000 Super Valu, Inc.
5.88%, 11/15/95 998
--------
GOVERNMENT AGENCY (0.4%):
500 Private Export Funding
9.00%, 1/31/96 508
--------
INDUSTRIAL GOODS & SERVICES (8.4%):
2,000 American Home Products
7.70%, 2/15/00 2,025
3,000 Amoco Canada
7.25%, 12/1/02 2,985
1,000 Grand Metropolitan Investment
Corp.
8.63%, 8/15/01 1,070
3,000 Service Corp. International
8.38%, 12/15/04 3,131
2,000 WMX Technologies Waste
Management
7.13%, 3/22/97 2,005
--------
11,216
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
35
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERMEDIATE INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INSURANCE (0.4%):
500 St. Paul Cos., Inc.
9.38%, 6/15/97 $ 526
--------
OIL & GAS EXPLORATION (1.2%):
500 British Petroleum America
10.15%, 3/15/96 514
1,000 Cheveron Corp. Amortization
Notes
8.11%, 12/1/04 1,044
--------
1,558
--------
PRINTING & PUBLISHING (1.6%):
1,000 Knight Ridder, Inc.
8.50%, 9/1/01 1,063
1,000 R.R. Donnelly & Sons Co.
9.13%, 12/1/00 1,095
--------
2,158
--------
RETAIL STORES (0.8%):
500 J.C. Penney, Inc.
9.05%, 3/1/01 538
500 Sears Roebuck & Co.
9.50%, 6/1/99 537
--------
1,075
--------
TELECOMMUNICATIONS (2.2%):
750 Communications Satellite
8.13%, 4/1/04 775
2,000 GTE Corp. Notes
9.10%, 6/1/03 2,143
--------
2,918
- ---------------------------------------------------------
TOTAL CORPORATE BONDS 52,146
- ---------------------------------------------------------
- ---------------------------------------------------------
U.S. GOVERNMENT AGENCIES (1.4%)
FEDERAL NATIONAL MORTAGE ASSOC.:
2,000 5.23%, 11/25/98 1,884
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 1,884
- ---------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
U.S. TREASURY NOTES (38.6%)
7,500 9.25%, 1/15/96 $ 7,651
3,000 9.38%, 4/15/96 3,087
2,000 5.50%, 4/30/96 1,984
5,000 7.38%, 5/15/96 5,049
6,500 6.88%, 4/30/97 6,534
2,000 5.63%, 1/31/98 1,945
5,000 7.25%, 2/15/98 5,068
7,000 7.00%, 4/15/99 7,050
2,000 7.50%, 10/31/99 2,048
1,000 6.38%, 1/15/00 980
8,000 7.13%, 2/29/00 8,073
2,000 6.88%, 3/31/00 1,997
- ---------------------------------------------------------
TOTAL U.S. TREASURY NOTES 51,466
- ---------------------------------------------------------
- ---------------------------------------------------------
INVESTMENT COMPANIES (1.3%)
1,783 Shearson U.S. Treasury Fund 1,783
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,783
- ---------------------------------------------------------
TOTAL (COST $133,485)(B) $130,878
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $133,225.
(b) 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 $ 885
Unrealized depreciation (3,492)
--------
Net unrealized depreciation $ (2,607)
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
36
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
INVESTMENT QUALITY BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
ASSET BACKED SECURITIES (1.6%)
CAPITAL AUTO RECEIVABLES ASSET TRUST
979 4.90%, 2/17/98 $ 976
RAILCAR TRUST, SERIES 92-1
459 7.75%, 6/1/04 465
- ------------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 1,441
- ------------------------------------------------------------
- ----------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (1.5%)
FEDERAL HOME LOAN MORTGAGE CORP.:
1,180 7.50%, 4/1/07 1,178
FEDERAL NATIONAL MORTGAGE ASSOC.:
67 7.00%, 3/25/18 67
155 7.25%, 6/25/18 154
- ------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATION 1,399
- ------------------------------------------------------------
- ----------------------------------------------
CORPORATE BONDS (28.4%)
AUTOMOTIVE (1.7%):
1,000 Ford Motor Co.
9.00%, 9/15/01 1,076
500 General Motors
9.13%, 7/15/95 535
----------
1,611
----------
BANKING (6.2%):
600 BankAmerica Corp.
9.63%, 2/13/01 657
1,500 Crestar Finance Corp.
8.75%, 11/15/04 1,591
500 First Bank System
8.00%, 7/2/04 514
1,020 First Union Corp.
9.45%, 6/15/99 1,095
800 SunTrust Banks, Inc.
7.38%, 7/1/02 799
1,000 Wells Fargo & Co.
8.75%, 5/1/02 1,061
----------
5,717
----------
BROKERAGE SERVICES (2.3%):
1,000 Morgan Stanley
8.88%, 10/15/01 1,056
1,280 Morgan Stanley
7.25%, 10/15/23 1,069
----------
2,125
----------
COMPUTER (0.6%):
510 International Business
Machines
9.00%, 5/1/98 510
----------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
CREDIT INSTITUTIONS -- PERSONAL (0.6%):
510 General Electric Credit
Corp.
8.75%, 11/26/96 $ 524
----------
FINANCIAL SERVICES (7.6%):
1,025 BHP Finance Ltd.
6.75%, 11/1/13 880
255 Ford Motor Credit Co.
9.40%, 11/16/95 259
1,000 General Motors Acceptance
Co.
6.28%*, 6/7/96 999
1,000 General Motors Acceptance
Co.
7.13%, 6/1/99 985
1,000 General Motors Acceptance
Co.
5.50%, 12/15/01 886
1,020 Merrill Lynch
8.25%, 11/15/99 1,046
2,000 Salomon Brothers
4.44%, 8/9/95 1,988
----------
7,043
----------
GOVERNMENTS (FOREIGN) (0.5%):
500 Republic of Iceland
6.13%, 2/1/04 449
----------
INDUSTRIAL GOODS & SERVICES (4.4%):
1,000 American Home Products
7.70%, 2/15/00 1,013
1,000 Georgia-Pacific
9.95%, 6/15/02 1,116
700 Philip Morris Co.
9.00%, 1/1/01 746
1,200 RJR Nabisco, Inc.
8.00%, 1/15/00 1,182
----------
4,057
----------
INSURANCE (1.0%):
1,100 Nationwide Mutual
Insurance Surplus
7.50%, 2/15/24 954
----------
OIL & GAS EXPLORATION (0.8%):
700 Atlantic Richfield Co.
9.00%, 4/1/21 765
----------
OIL & GAS TRANSMISSION (0.6%):
510 Shell Oil Co.
7.00%, 9/15/95 511
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
37
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INVESTMENT QUALITY BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TELECOMMUNICATIONS (2.1%):
510 GTE Hawaiian Telephone
Service
9.00%, 12/1/00 $ 525
510 MCI Communications
7.63%, 11/7/96 514
360 Northern Telecom Ltd.
8.25%, 6/13/96 366
510 Southwestern Bell Co.
8.30%, 6/1/96 518
----------
1,923
- ------------------------------------------------------------
TOTAL CORPORATE BONDS 26,189
- ------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (38.0%)
FEDERAL HOME LOAN MORTGAGE CORP.:
150 8.00%, 5/1/02 151
350 8.00%, 8/1/02 354
238 8.00%, 6/1/08 237
277 8.00%, 11/1/08 276
FEDERAL NATIONAL MORTGAGE ASSOC.:
994 8.00%, 1/1/23 993
1,562 7.50%, 3/1/24 1,529
1,500 9.00%, 5/1/25 1,549
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
2,815 6.50%, 2/15/09 2,705
1,597 9.00%, 2/15/17 1,654
1,513 8.50%, 9/15/17 1,544
891 9.00%, 6/15/18 923
1,667 9.00%, 10/15/19 1,727
2,738 9.00%, 12/15/19 2,836
1,742 9.00%, 1/15/20 1,809
1,128 9.00%, 2/15/20 1,168
740 8.50%, 11/15/21 756
2,657 7.50%, 8/15/22 2,600
1,646 8.50%, 8/15/22 1,681
1,228 8.50%, 2/15/23 1,253
1,464 7.00%, 10/15/23 1,389
1,378 7.50%, 10/15/23 1,345
4,794 7.50%, 1/15/24 4,683
1,962 7.50%, 5/15/24 1,916
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 35,078
- ------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BONDS (12.5%)
2,600 8.88%, 2/15/19 $ 3,001
3,000 8.00%, 11/15/21 3,188
2,900 7.13%, 2/15/23 2,798
1,500 7.50%, 11/15/24 1,520
1,000 7.63%, 2/15/25 1,035
- ------------------------------------------------------------
TOTAL U.S. TREASURY BONDS 11,542
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY NOTES (14.9%)
3,000 7.50%, 2/29/96 3,029
1,000 7.50%, 12/31/96 1,015
1,000 8.00%, 1/15/97 1,024
1,000 7.75%, 12/31/99 1,034
2,500 7.75%, 1/31/00 2,585
3,000 7.13%, 2/29/00 3,027
2,000 7.50%, 2/15/05 2,061
- ------------------------------------------------------------
TOTAL U.S. TREASURY NOTES 13,775
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (2.1%)
1,942 Shearson U.S. Treasury Fund 1,942
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,942
- ------------------------------------------------------------
TOTAL (COST $93,388) (B) $ 91,366
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $92,202.
(b) Represents costs 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 $ 646
Unrealized depreciation (2,668)
----------
Net unrealized depreciation $ (2,022)
==========
</TABLE>
* Corporate Bonds with floating rates are securities with yields that vary with
a designated market index or market rate. These securities are payable on the
date of demand. The rate reflected on the Schedule of Portfolio Investments
is the effective rate at April 30, 1995.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
38
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
OHIO MUNICIPAL BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (97.6%)
ALTERNATIVE MINIMUM TAX PAPER (11.1%):
2,500 Student Loan Funding Corp.,
Series A
5.50%, 12/1/01 $ 2,463
4,000 Student Loan Funding Corp.,
Series A
5.85%, 8/1/04 4,005
- ------------------------------------------------------------
TOTAL ALTERNATIVE MINIMUM TAX PAPER 6,468
- ------------------------------------------------------------
- ----------------------------------------------
GENERAL OBLIGATION BONDS (43.2%)
COUNTY, CITY, SPECIAL DISTRICT & SCHOOLS (39.7%):
1,500 Batavia, Ohio Local School
District
7.00%, 12/1/14 1,656
750 Batavia, Ohio Local School
District
6.30%, 12/1/22 769
500 Canton, Waterworks System
5.75%, 12/1/10 491
1,325 Clyde-Green Springs Village,
Ohio School District
6.10%, 12/1/19 1,302
500 Columbus, Ohio, Series B
6.10%, 1/1/03 531
1,500 Columbus, Ohio
6.20%, 1/1/04 1,604
1,385 Crawford County, Ohio,
AMBAC
6.75%, 12/1/19 1,477
1,000 Cuyahoga Falls, Ohio, MBIA
6.00%, 12/1/15 987
2,500 Franklin County, Ohio
Courthouse
6.38%, 12/1/01 2,724
1,000 Hilliard, Ohio School
District
6.15%, 12/1/06 1,035
2,500 Indian Valley, Ohio Local
School District
7.00%, 12/1/14 2,760
750 Kings, Ohio Local School
District
7.00%, 12/1/09 795
1,250 Lakeview, Ohio Local School
District
AMBAC
6.95%, 12/1/19 1,380
540 Lakewood, Ohio
5.40%, 12/1/05 540
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
600 Madison County, Ohio
7.00%, 12/1/19 $ 667
1,000 Munroe Falls, Ohio, Series A
AMBAC
6.95%, 12/1/14 1,103
500 Toledo, Ohio, AMBAC
6.10%, 12/1/14 501
1,820 Trumbull County, Ohio
5.75%, 12/1/03 1,892
880 Tuscarawas Valley, Ohio
Local
School District, AMBAC
6.00%, 12/1/19 863
----------
23,077
----------
STATE (3.5%):
2,000 Ohio State, Refunding &
Improvement
5.50%, 8/1/03 2,044
- ------------------------------------------------------------
TOTAL GENERAL OBLIGATION BONDS 25,121
- ------------------------------------------------------------
- ----------------------------------------------
REVENUE BONDS (43.3%)
HOSPITALS, NURSING HOMES & HEALTH CARE (17.7%):
2,250 Butler County, Ohio
Middletown Regional
Hospital, GFIC
6.75%, 11/15/10 2,411
1,000 Clermont County Hospital
Facility
6.00%, 9/1/19 977
1,720 Franklin County, Riverside
Hospital
7.25%, 5/15/20 1,864
1,000 Garfield Heights, Ohio
Marymount Hospital,
Refunding & Improvement
6.70%, 11/15/15 1,016
2,400 Lake County Hospital
Improvement Facilities
6.38%, 8/15/03 2,523
1,480 Lucas County, Ohio Hospital,
Series B
5.75%, 8/15/03 1,526
----------
10,317
----------
HOUSING (3.1%):
1,775 Ohio Cap Corp.
6.35%, 7/1/22 1,775
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
39
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
OHIO MUNICIPAL BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
PUBLIC FACILITIES (CONVENTION, SPORT) (5.3%):
2,000 Ohio State Building
Authority,
Adult Correctional
Facilities
6.00%, 10/1/07 $ 2,048
1,000 Ohio State Public
Facilities,
Higher Education
5.88%, 12/1/04 1,029
----------
3,077
----------
UTILITIES (SEWERS, TELEPHONE, ELECTRIC) (17.2%):
540 Cambridge, Ohio Water
System
5.50%, 12/1/08 526
1,935 Cleveland Public Power
Systems, MBIA
7.00%, 11/15/24 2,147
1,000 Cleveland Public Power
Systems, MBIA
6.00%, 11/15/02 1,051
1,750 Cleveland Regional Sewer
District
6.75%, 5/15/04 1,940
1,000 Cleveland, Ohio Waterworks
Series 1-92B
6.25%, 1/1/05 1,055
1,950 Columbus, Ohio Sewer
6.25%, 6/1/08 2,006
750 Columbus, Ohio Water
Systems
6.38%, 11/1/10 769
500 Southwest Regional Water,
MBIA
6.00%, 12/1/20 488
----------
9,982
----------
TOTAL REVENUE BONDS 25,151
- ------------------------------------------------------------
TOTAL MUNICIPAL BONDS 56,740
- ------------------------------------------------------------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (1.9%)
Dreyfus Ohio Money Market
1,131 Institutional Fund $ 1,131
- ------------------------------------------------------------
Total Investment Companies 1,131
- ------------------------------------------------------------
TOTAL (COST $57,596) (B) 57,871
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of 58,137.
(b) 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 $26. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation 1,006
Unrealized depreciation (757)
----------
Net unrealized appreciation $ 249
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
40
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATION (2.4%)
FEDERAL HOME LOAN MORTGAGE CORP.:
465,548 7.50%, 4/1/07 $ 465
FEDERAL NATIONAL MORTGAGE ASSOC.:
968,818 7.40%, 7/25/17 968
925,817 6.50%, 4/25/22 872
1,500,000 9.00%, 5/1/25 1,548
- ------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 3,853
- ------------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (53.7%)
AEROSPACE/DEFENSE (3.3%):
21,400 Boeing Co. 1,177
11,800 General Dynamics Corp. 547
20,300 Lockheed Martin Corp.(c) 1,173
33,650 Raytheon Co. 2,448
----------
5,345
----------
ALUMINUM (1.4%):
50,300 Aluminum Co. of America 2,257
----------
AUTOMOBILES (1.0%):
8,000 Chrysler Corp. 345
1,200 Fiat - ADR 24
45,000 Ford Motor Co. 1,215
----------
1,584
----------
BANKS (4.7%):
900 BBV - ADR 24
54,900 BankAmerica Corp. 2,718
28,200 Comerica, Inc. 811
13,800 CoreStates Financial Corp. 450
27,600 First Union Corp. 1,249
1,300 IMI - ADR 24
33,150 J.P. Morgan & Co., Inc. 2,176
----------
7,452
----------
BEVERAGES (1.3%):
33,900 Anheuser Busch Co., Inc. 1,971
1,300 Coca-Cola Femsa - ADR 26
----------
1,997
----------
CHEMICALS (1.2%):
10,100 Dow Chemical Co. 702
8,300 Eastman Chemical 471
1,200 Imperial Chemical - ADR 58
18,200 Lubrizol Corp. 635
3,200 Montedison - ADR(c) 24
1,000 Norsk Hydro - ADR 40
----------
1,930
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
COMPUTERS & PERIPHERALS (0.9%):
13,600 Cisco Systems(c) $ 542
13,400 Hewlett Packard Co. 886
----------
1,428
----------
CONGLOMERATES (0.0%):
3,000 Hanson PLC, ADR 57
----------
CONTAINERS (0.4%):
28,600 Newell Co. 676
----------
COSMETICS & RELATED (0.6%):
15,400 Avon Products 974
----------
ELECTRICAL EQUIPMENT (1.8%):
13,100 Emerson Electric Co. 881
34,400 General Electric Co. 1,926
900 Hitachi - ADR 92
----------
2,899
----------
ELECTRONIC COMPUTING EQUIPMENT (0.7%)
26,900 Compaq Computer Corp.(c) 1,022
----------
ENTERTAINMENT (0.1%)
450 Matsushita Electric - ADR 76
1,500 Sony - ADR 76
----------
152
----------
FINANCIAL SERVICES (2.2%):
26,400 American Express Co. 917
15,300 Federal National Mortgage
Assoc. 1,350
27,300 Household International,
Inc. 1,280
----------
3,547
----------
FOOD DISTRIBUTORS (0.3%):
16,500 Supervalu, Inc. 435
----------
FOOD PROCESSING & PACKAGING (0.2%):
10,000 Sara Lee Corp. 279
----------
FOREST PRODUCTS (2.8%):
20,300 Georgia Pacific Corp. 1,611
25,000 International Paper Co. 1,925
19,700 Union Camp Corp. 987
----------
4,523
----------
HEAVY MACHINERY (0.5%):
9,000 Deere & Co. 738
----------
HOSPITAL & NURSING EQUIPMENT (0.1%):
3,100 Johnson & Johnson, Inc. 202
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
41
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INSURANCE (1.3%):
25,100 Allstate $ 762
12,000 American General Corp. 396
9,200 Chubb Corp. 736
3,200 St. Paul Cos., Inc. 154
----------
2,048
----------
MANUFACTURING (0.9%):
24,700 Allied Signal, Inc. 979
12,300 Litton Industries, Inc.(c) 426
----------
1,405
----------
MEDICAL SUPPLIES (0.3%):
6,600 Medtronic, Inc. 491
----------
METALS (0.3%):
1,300 SKF Corp. - ADR(c) 27
17,100 USX U.S. Steel Group 522
----------
549
----------
OFFICE EQUIPMENT & SUPPLIES (0.3%):
1,000 Canon - ADR 83
9,700 Pitney Bowes, Inc. 360
----------
443
----------
OIL (7.0%):
12,000 Atlantic Richfield Co. 1,374
700 British Petroleum Co., PLC,
ADR 60
49,800 Chevron Corp. 2,359
15,000 Exxon Corp. 1,044
28,700 Mobil Corp. 2,723
1,400 Repsol - ADR 45
400 Royal Dutch Petroleum - ADR 50
49,500 Texaco, Inc. 3,385
1,000 YPF S.A. - ADR(c) 20
----------
11,060
----------
OIL & GAS EXPLORATION (2.5%):
52,600 Enron Corp. 1,788
60,200 Phillips Petroleum Co. 2,107
----------
3,895
----------
OILFIELD EQUIPMENT & SERVICES (0.7%):
46,500 Baker Hughes, Inc. 1,046
----------
PAINT, VARNISHES & ENAMELS (0.2%):
7,700 Sherwin Williams Co. 274
----------
PAPER (0.0%):
800 Fletcher Challange - ADR 22
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
PHARMACEUTICALS (3.4%):
49,000 Abbott Laboratories $ 1,929
11,400 American Home Products Corp. 879
13,600 Merck & Co., Inc. 583
11,900 Pfizer, Inc. 1,031
12,100 Schering-Plough 912
1,400 SmithKline Beecham 54
----------
5,388
----------
PUBLISHING (0.2%):
3,800 Dun & Bradstreet Corp. 198
2,500 News Corp. - ADR(c) 49
----------
247
----------
RETAIL (1.7%):
9,700 Dayton Hudson Corp. 651
21,900 Pep Boys-Manny, Moe & Jack 564
14,500 Sears & Roebuck Co. 787
7,500 Wal Mart Stores, Inc. 178
10,900 Walgreen Co. 512
----------
2,692
----------
SEMICONDUCTORS (0.8%):
11,850 Intel Corp. 1,213
600 Kyocera - ADR 94
----------
1,307
----------
SHOES, LEATHER GOODS & CLOTHING (0.1%):
4,400 Reebok International Ltd. 138
----------
SOAPS & CLEANING AGENTS (0.1%):
1,300 Procter & Gamble Co. 91
----------
SOFTWARE & COMPUTER SERVICES (1.1%):
13,650 Microsoft Corp.(c) 1,118
32,000 Novell, Inc.(c) 696
----------
1,814
----------
STEEL (0.1%):
2,100 British Steel - ADR 57
800 Broken Hill Proprietary -
ADR 46
2,300 Worthington Industries, Inc. 43
----------
146
TELECOMMUNICATIONS (0.3%):
26,800 Comsat Corp. 536
----------
TOBACCO & TOBACCO PRODUCTS (0.8%):
4,000 B.A.T. Industries - ADR 60
16,500 Philip Morris Cos., Inc. 1,118
3,900 UST, Inc. 110
----------
1,288
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
42
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TOOLS & HARDWARE MANUFACTURING (0.3%):
11,100 Stanley Works $ 440
----------
TRANSPORTATION (0.0%):
900 British Airways -ADR 58
3,000 TMM - ADR 20
----------
78
----------
UTILITIES - ELECTRIC & GAS (3.3%):
64,900 Consolidated Edison Co. NY,
Inc. 1,801
20,300 Duquesne Light Co. 685
83,300 Texas Utilities Co. 2,718
----------
5,204
----------
UTILITIES - TELECOMMUNICATIONS (4.5%):
68,600 A T & T Corp. 3,481
900 British Telecom - ADR 56
60,500 GTE Corp. 2,065
1,000 Hong Kong Telecom - ADR 20
9,000 MCI Telecommunications
Corp. 196
31,000 Nynex Corp. 1,267
1,000 Telefonica De Espana -
ADR(c) 37
1,000 Telephones De Mexico - ADR 30
700 Telephonos De Chile - ADR 48
----------
7,200
- ------------------------------------------------------------
TOTAL COMMON STOCKS 85,299
- ------------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS - FOREIGN (0.7%)
BRITAIN (0.0%):
PUBLISHING (0.0%):
2,200 Reed Elsevier International 28
----------
FOOD MANUFACTURING (0.0%):
5,000 United Biscuits 28
- ------------------------------------------------------------
TOTAL BRITAIN 56
- ------------------------------------------------------------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FRANCE (0.1%):
AUTOMOBILES (0.0%):
200 PSA Peugeot Citroen $ 29
----------
BANKS (0.0%):
500 Cie Financiere De Paribas-A 30
----------
BUILDING MATERIALS (0.0%):
250 Compagnie De Saint Gobain 32
----------
OIL & GAS PRODUCTION (0.0%):
400 Elf Aquitaine 32
----------
TELECOMMUNICATIONS (0.0%):
300 Alcatel-Alsthom 28
----------
UTILITIES - WATER (0.0%):
300 Cie Generale Des Eaux 32
- ------------------------------------------------------------
TOTAL FRANCE 183
- ------------------------------------------------------------
GERMANY (0.1%):
AUTOMOBILES (0.0%):
90 Volkswagen 25
----------
CHEMICALS (0.0%):
100 Bayer 25
----------
MACHINERY & ENGINEERING (0.0%):
100 Mannesmann 27
----------
MANUFACTURING (0.0%):
50 Siemens(c) 25
----------
UTILITIES - ELECTRIC (0.0%):
70 Veba 26
- ------------------------------------------------------------
TOTAL GERMANY 128
- ------------------------------------------------------------
HOLLAND (0.1%):
BANKING (0.0%):
700 ABN/Amro Holding 27
----------
CHEMICALS (0.0%):
200 Akzo Nobel NV 23
----------
TELECOMMUNICATIONS (0.0%):
700 Koninklijke PTT NED NV 25
- ------------------------------------------------------------
TOTAL HOLLAND 75
- ------------------------------------------------------------
HONG KONG (0.0%):
BROKERAGE (0.0%):
20,000 Peregrine Inv 21
----------
REAL ESTATE (0.0%):
5,000 Cheung Kong 21
- ------------------------------------------------------------
TOTAL HONG KONG 42
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
43
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
JAPAN (0.3%):
AUTOMOBILES (0.0%):
2,000 Nippon Denso Co., Ltd. $ 40
----------
BANKS (0.1%):
2,000 Mitsubishi Bank 49
2,000 Sumitomo Bank 43
----------
92
----------
CHEMICALS (0.0%):
6,000 Mitsubishi Chemical, Inc. 35
5,000 Toray Industries, Inc.(c) 35
----------
70
----------
CONSTRUCTION (0.0%):
4,000 Kajima Corp. 40
----------
HOUSEHOLD PRODUCTS (0.0%):
3,000 Kao Corp. 37
----------
PAPER (0.0%):
3,000 New Oji Paper Co., Ltd. 34
----------
PHARMACEUTICALS (0.0%):
1,000 Sankyo Co., Ltd. 24
----------
RETAIL (0.1%):
1,000 Ito Yokado Co. 54
2,000 Marui Co., Ltd. 31
----------
85
----------
RUBBER & RUBBER PRODUCTS (0.0%):
2,000 Bridgestone 32
----------
UTILITIES - ELECTRIC (0.0%):
1,100 Tokyo Electric Power 35
----------
UTILITIES - WATER (0.0%):
1,000 Kurita Water Ind. 24
- ------------------------------------------------------------
TOTAL JAPAN 513
- ------------------------------------------------------------
SWITZERLAND (0.1%):
ENGINEERING (0.0%):
25 Brown Boveri Series A 25
----------
FOOD MANUFACTURING (0.0%):
25 Nestle SA Registered 24
----------
PHARMACEUTICALS (0.0%):
5 Roche Genussshein 30
- ------------------------------------------------------------
TOTAL SWITZERLAND 79
- ------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS 1,076
- ------------------------------------------------------------
- ----------------------------------------------
CONVERTIBLE PREFERRED STOCKS (0.2%)
AUTOMOTIVE (0.2%):
4300 Ford Motor Co. 379
- ------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS 379
- ------------------------------------------------------------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
CORPORATE BONDS (11.1%)
BANKING (3.1%):
300,000 BankAmerica Corp., 9.63%,
2/13/01 $ 328
800,000 Crestar Finance Corp.,
8.75%,
11/15/04 849
1,000,000 First Bank System, 8.00%,
7/2/04 1,027
1,200,000 First Union Corp., 9.45%,
8/15/01 1,329
500,000 NationsBank Corp., 5.38%,
12/1/95 497
300,000 SunTrust Banks Inc., 7.38%,
7/1/02 300
500,000 Wells Fargo & Co., 8.75%,
5/1/02 531
----------
4,861
----------
BROKERAGE SERVICES (0.5%):
750,000 Morgan Stanley, 8.88%,
10/15/01 792
----------
COMPUTER (0.2%):
300,000 International Business
Machines, 9.00%, 5/1/98 300
----------
FINANCIAL SERVICES (2.9%):
1,000,000 Associates, 7.50%, 10/15/96 1,010
800,000 BHP Finance Ltd., 6.75%,
11/1/13 687
500,000 General Motors Acceptance
Corp., 5.50%, 12/15/01 443
1,000,000 Merrill Lynch Corp., 8.25%,
11/15/99 1,025
500,000 Merrill Lynch Corp., 4.75%,
6/24/96 488
1,000,000 Morgan Stanley, 7.25%,
10/15/23 835
200,000 U.S. West Capital Funding,
Inc., 8.00%, 10/15/96 203
----------
4,691
----------
GOVERNMENTS (FOREIGN) (0.2%):
300,000 Republic of Iceland, 6.13%,
2/1/04 269
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
44
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INDUSTRIAL GOODS & SERVICES (3.0%):
500,000 American Home Products,
7.70%, 2/15/00 $ 506
1,500,000 General Motors, 9.13%,
7/15/01 1,605
500,000 Georgia-Pacific, 9.95%,
6/15/02 558
900,000 Philip Morris, 9.00%, 1/1/01 960
700,000 RJR Nabisco, Inc., 8.00%,
1/15/00 690
500,000 Waste Management, 7.88%,
8/15/96 506
----------
4,825
----------
INSURANCE (0.7%):
1,200,000 Nationwide Mutual Insurance
Surplus, 7.50%, 2/15/24 1,041
----------
OIL & GAS EXPLORATION (0.3%):
500,000 Atlantic Richfield Co.,
9.00%,
4/1/21 546
----------
TELECOMMUNICATIONS (0.2%):
300,000 Southwestern Bell Co.,
8.30%,
6/1/96 305
- ------------------------------------------------------------
TOTAL CORPORATE BONDS 17,630
- ------------------------------------------------------------
- ----------------------------------------------
FLOATING RATE NOTES (0.3%)
500,000 General Motors Acceptance
Corp., 5.66%*, 6/7/96 499
- ------------------------------------------------------------
TOTAL FLOATING RATE NOTES 499
- ------------------------------------------------------------
- ----------------------------------------------
MEDIUM TERM NOTES (0.9%)
1,500,000 Salomon Brothers, 4.44%,
8/9/95 1,491
- ------------------------------------------------------------
TOTAL MEDIUM TERM NOTES 1,491
- ------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (15.7%)
FEDERAL HOME LOAN MORTGAGE CORP.:
133,439 8.00%, 5/1/02 135
FEDERAL NATIONAL MORTGAGE ASSOC.:
2,250,200 6.00%, 11/1/08 2,116
1,837,646 7.50%, 3/1/24 1,798
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
1,802,848 6.50%, 2/15/09 $ 1,730
251,367 9.50%, 7/15/09 264
1,514,925 9.00%, 10/15/16 1,573
226,173 9.00%, 11/15/16 234
850,334 9.00%, 6/15/18 881
25,890 10.00%, 10/15/18 28
779,707 9.00%, 9/15/19 807
1,188,568 9.00%, 10/15/19 1,231
1,483,116 9.00%, 12/15/19 1,536
870,959 9.00%, 1/15/20 904
557,334 9.00%, 2/15/20 577
1,667,441 8.50%, 5/15/20 1,701
610,779 8.50%, 4/15/21 623
828,801 7.50%, 12/15/22 811
462,219 8.50%, 3/15/23 472
951,881 7.50%, 11/15/23 930
2,013,452 7.50%, 1/15/24 1,967
1,471,279 7.50%, 5/15/24 1,437
3,046,512 8.50%, 9/15/24 3,111
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 24,866
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY BONDS (2.6%)
700,000 8.88%, 2/15/19 808
2,000,000 7.13%, 2/15/23 1,929
1,400,000 7.50%, 11/15/24 1,419
- ------------------------------------------------------------
TOTAL U.S. TREASURY BONDS 4,156
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY NOTES (7.7%)
1,300,000 5.88%, 5/15/95 1,300
1,000,000 7.50%, 12/31/96 1,015
500,000 7.13%, 9/30/99 505
1,000,000 7.75%, 12/31/99 1,034
4,700,000 7.75%, 1/31/00 4,860
1,000,000 7.13%, 2/29/00 1,009
1,500,000 7.25%, 5/15/04 1,518
1,000,000 7.50%, 2/15/05 1,031
- ------------------------------------------------------------
TOTAL U.S. TREASURY NOTES 12,272
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
45
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (4.7%)
126,487 Federated Treasury
Obligation
Fund $ 127
5,600 Global Privatization Fund 68
6,000 Italy Fund, Inc. - ADR 49
2,300 Latin American Equity
Fund(c) 34
2,000 Malaysian Fund 35
7,109,522 Shearson U.S. Treasury Fund 7,110
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 7,423
- ------------------------------------------------------------
TOTAL (COST - $151,871)(B) $ 158,944
- ---------------------------------------------------------
CURRENCY
200 French Franc 0
42,346,513 Japanese Yen 504
- ------------------------------------------------------------
TOTAL CURRENCY 504
- ------------------------------------------------------------
</TABLE>
- ---------------
* Floating Rate Demand Notes are securities with yields that vary with a
designated market index or market rate. These securities are payable on the
date of demand. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect at April 30, 1995.
(a) Percentages indicated are based on net assets of $158,762.
(b) 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 $1,136. 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 $ 6,153
Unrealized depreciation (216)
----------
Net unrealized appreciation $ 5,937
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
46
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMERCIAL PAPER (7.9%)
FINANCIAL SERVICES (7.9%):
1,500,000 American Express, 5.90%,
5/3/95 $ 1,500
2,000,000 Ford Motor Credit Co.,
5.91%, 5/1/95 2,000
2,000,000 General Motors Acceptance
Corp., 6.00%, 5/10/95 2,000
2,000,000 General Motors Acceptance
Corp., 6.16%, 5/10/95 2,000
900,000 Prudential Funding, 5.91%,
5/10/95 900
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 8,400
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (90.6%)
ADVERTISING (0.1%):
1,986 Interpublic Group Cos., Inc. 75
--------
AEROSPACE/DEFENSE (1.4%):
8,666 Boeing Co. 477
1,600 General Dynamics Corp. 74
4,761 Lockheed Martin Corp.(c) 275
3,046 McDonnell Douglas 189
1,298 Northrop Grumman Corp. 64
5,620 Rockwell International Corp. 245
2,280 Textron, Inc. 130
--------
1,454
--------
AIRCRAFT & AIRCRAFT PARTS (0.2%):
3,204 United Technologies Corp. 234
--------
AIR FREIGHT (0.1%):
1,906 AMR Corp. Delaware(c) 128
1,534 U.S. Air Group, Inc.(c) 11
--------
139
--------
AIRLINES (0.1%):
1,237 Delta Air Lines 81
--------
ALUMINUM (0.2%):
4,560 Aluminum Co. of America 205
--------
APPAREL (0.0%):
2,002 Liz Claiborne, Inc. 36
--------
AUTOMOBILES (1.9%):
9,021 Chrysler Corp. 389
26,094 Ford Motor Co. 704
19,240 General Motors 868
1,900 Navistar International
Corp.(c) 27
972 Paccar, Inc. 45
--------
2,033
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
AUTOMOTIVE PARTS (0.5%):
1,104 Cummins Engine, Inc. $ 49
2,558 Dana Corp. 66
1,928 Eaton Corp. 111
1,454 Echlin, Inc. 53
3,114 Genuine Parts Co. 121
294 SPX Corp. 4
145 Strattec Strategy Corp.(c) 2
1,631 TRW, Inc. 121
--------
527
--------
BANKS (3.3%):
2,733 Bank of Boston Corp. 91
9,491 BankAmerica Corp. 470
2,022 Bankers Trust New York 110
2,516 Barnett Banks, Inc. 118
3,236 Boatmens Bancshares, Inc. 107
4,577 Chase Manhattan Corp. 200
6,187 Chemical Banking Corp. 258
2,322 First Chicago Corp. 128
2,064 First Fidelity Bancorp. 99
1,906 First Interstate Bancorp. 146
4,464 First Union Corp. 202
4,813 J.P. Morgan & Co., Inc. 316
7,014 NationsBank Corp. 351
7,849 Norwest Corp. 208
6,014 PNC Bank Corp. 151
3,024 SunTrust Banks, Inc. 164
4,322 Wachovia Corp. 152
1,315 Wells Fargo & Co. 218
--------
3,489
--------
BANKS -- MONEY CENTERS (REGIONAL) (0.8%):
10,090 Citicorp 468
3,607 CoreStates Financial Corp. 118
1,531 Golden West Financial Corp.
Delaware 70
3,947 NBD Bancorp., Inc. 121
3,850 National City Corp. 105
--------
882
--------
BANKS -- OUTSIDE MONEY CENTER (0.3%):
10,348 Banc One Corp. 305
--------
BEVERAGES (3.3%):
6,558 Anheuser Busch Co., Inc. 381
1,721 Brown Forman Corp., Class B 57
32,812 Coca Cola Co. 1,907
943 Coors Adolph Co., Class B 15
20,182 PepsiCo, Inc. 840
9,471 Seagram Co. Limited 257
--------
3,457
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
47
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
BUILDING MATERIALS (0.6%):
943 Armstrong World Industries,
Inc. $ 43
766 Centex Corp. 18
746 Crane Co. 26
1,160 Fleetwood Enterprises, Inc. 27
804 Kaufman & Broad Home Corp. 10
4,031 Masco Corp. 103
2,946 Monsanto Co. 245
3,754 Morton International, Inc. 116
1,121 Owens Corning Fiberglas
Corp.(c) 41
707 Pulte Corp. 15
255 Skyline Corp. 4
--------
648
--------
CHEMICALS (0.1%):
1,748 Great Lakes Chemical 103
--------
CHEMICALS -- GENERAL (2.8%):
2,868 Air Products & Chemicals,
Inc. 144
7,106 Dow Chemical Co. 494
17,394 E.I. Du Pont De Nemours Co. 1,146
2,073 Eastman Chemical 118
1,732 Ecolab, Inc. 40
924 FMC Corp.(c) 57
491 First Mississippi Corp. 12
2,963 Hercules, Inc. 148
1,925 Mallinckrodt 69
1,709 Nalco Chemical Co. 60
5,404 PPG Industries, Inc. 213
3,459 Praxair, Inc. 82
1,689 Rohm & Haas Co. 98
1,300 Sigma-Aldrich 57
3,812 Union Carbide Corp. 122
2,358 W.R. Grace & Co. 126
--------
2,986
--------
CHEMICALS -- SPECIALTY (0.1%):
1,354 Avery Dennison Corp. 55
--------
COMPUTERS & PERIPHERALS (3.1%):
2,968 Amdahl Corp.(c) 35
2,988 Apple Computer, Inc. 114
6,550 Cisco Systems(c) 261
1,356 Computer Sciences Corp.(c) 67
688 Cray Research, Inc.(c) 13
904 Data General Corp.(c) 7
3,621 Digital Equipment Corp.(c) 167
13,010 Hewlett Packard Corp.(c) 860
14,942 International Business
Machines Corp. 1,416
1,098 Integraph Corp.(c) 12
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
3,650 Silicon Graphics(c) $ 137
2,452 Sun Microsystems, Inc.(c) 98
2,949 Tandem Computers, Inc.(c) 37
4,386 Unisys Corp.(c) 45
--------
3,269
--------
CONGLOMERATES (0.8%):
5,849 Corning Glass Works 195
10,724 Minnesota Mining &
Manufacturing Co. 639
--------
834
--------
CONSTRUCTION (0.0%):
924 Foster Wheeler Corp. 34
--------
CONSUMER CREDIT (0.2%):
4,384 Dean Witter Discover & Co. 186
--------
CONSUMER GOODS (0.1%):
1,867 American Greetings Corp. 51
1,160 Jostens, Inc. 23
--------
74
--------
CONTAINERS -- METAL, GLASS, PAPER, PLASTIC (0.4%):
727 Ball Corp. 25
1,257 Bemis, Inc. 35
2,280 Crown, Cork & Seal, Inc.(c) 97
1,121 Federal Paper Board, Inc. 33
3,990 Newell Co. 94
4,147 Rubbermaid, Inc. 122
2,343 Stone Container Corp.(c) 46
--------
452
--------
COSMETICS & RELATED (0.8%):
727 Alberto Culver Co. 23
1,748 Avon Products 110
2,358 Dial Corp. 57
5,620 Gillette Co. 461
2,789 International Flavor &
Fragrance, Inc. 143
--------
794
--------
DEPARTMENT STORES (0.4%):
2,849 Dillard Department Stores,
Inc., Class A 74
5,934 J. C. Penney 260
943 Mercantile Stores, Inc. 42
--------
376
--------
DIVERSIFIED -- CONGLOMERATES, HOLDINGS (0.3%):
2,746 International Telephone &
Telegraph 287
1,218 National Service Industries,
Inc. 34
--------
321
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
48
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
DRUG STORES (0.1%):
491 Longs Drug Stores Corp. $ 17
2,180 Rite Aid Corp. 51
--------
68
--------
ELECTRICAL EQUIPMENT (3.1%):
1,179 Bally Manufacturing Corp.(c) 12
2,890 DSC Communications Corp.(c) 107
5,698 Emerson Electric Co. 383
43,648 General Electric Co. 2,444
1,082 Johnson Controls, Inc. 59
472 Thomas & Betts Corp. 30
1,257 W.W. Grainger, Inc. 76
9,121 Westinghouse Electric Corp. 137
--------
3,248
--------
ELECTRICAL SERVICES (0.1%):
2,950 General Public Utilities
Corp. 84
--------
ELECTRONIC COMPUTING EQUIPMENT (0.2%):
6,609 Compaq Computer Corp.(c) 251
--------
ELECTRONIC & ELECTRICAL -- GENERAL (2.1%):
2,419 Advanced Micro Devices(c) 87
5,366 Amp, Inc. 229
967 Andrew Corp.(c) 48
2,968 Cooper Industries 116
1,415 E G & G, Inc. 24
1,179 General Signal Corp. 44
982 Harris Corp. 46
3,259 Honeywell, Inc. 126
14,954 Motorola, Inc. 850
3,111 National Semiconductor
Corp.(c) 71
3,179 Raytheon Co. 231
1,825 Tandy Corp. 90
746 Tektronix, Inc. 34
2,322 Texas Instruments, Inc. 246
--------
2,242
--------
ELECTRONICS -- DEFENSE RELATED (0.1%):
885 E Systems, Inc. 56
2,103 Loral Corp. 99
--------
155
--------
ENTERTAINMENT (1.1%):
2,397 Brunswick Corp. 51
2,280 Hasbro, Inc. 72
943 King World Productions(c) 38
4,034 Lowes Cos., Inc. 116
2,634 Promus Cos., Inc.(c) 101
13,668 Walt Disney Co. 757
--------
1,135
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ENVIRONMENTAL CONTROL (0.1%):
7,000 Laidlaw, Inc., Class B $ 63
--------
FINANCIAL SERVICES (3.3%):
12,900 American Express Co. 448
3,576 Automatic Data Processing,
Inc. 230
4,700 Bank of New York Co., Inc. 155
1,376 Beneficial Corp. 56
1,121 Ceridian Corp.(c) 39
4,619 Federal Home Loan Mortgage
Corp. 301
6,996 Federal National Mortgage
Corp. 617
3,498 Fleet Financial Group 115
2,103 Fluor Corp. 108
3,421 Great Western Financial
Corp. 72
3,007 H.F. Ahmanson & Co. 63
2,477 Household International,
Inc. 116
3,782 MBNA Corp. 114
3,746 Mellon Bank Corp. 147
4,904 Merrill Lynch & Co., Inc. 223
2,710 Salomon, Inc. 98
3,077 Shawmut National Corp. 82
1,745 Transamerica Corp. 99
8,168 Travelers, Inc. 338
2,545 U.S. Bancorp 70
--------
3,491
--------
FOOD DISTRIBUTORS (0.2%):
6,505 Albertsons, Inc. 206
--------
FOOD DISTRIBUTORS (SUPERMARKETS &
WHOLESALERS) (0.4%):
943 Fleming Cos., Inc. 23
963 Great Atlantic & Pacific
Tea,
Inc. 24
2,952 Kroger Co.(c) 75
1,848 Supervalu, Inc. 49
4,716 Sysco Corp. 132
1,925 Winn Dixie Stores, Inc. 107
--------
410
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
49
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FOOD PROCESSING & PACKAGING (2.6%):
13,201 Archer Daniels Midland Co. $ 241
3,731 CPC International, Inc. 219
6,286 Campbell Soup Co. 322
6,286 ConAgra, Inc. 209
4,047 General Mills 247
6,325 H.J. Heinz Co. 266
2,219 Hershey Foods Corp. 116
5,656 Kellogg Co. 359
2,209 Pioneer Hi-Bred
International,
Inc. 83
3,396 Quaker Oats Co. 122
2,513 Ralston-Ralston Purina Group 119
12,300 Sara Lee Corp. 343
3,007 Wm. Wrigley Jr., Co. 133
--------
2,779
--------
FOREST PRODUCTS -- LUMBER & PAPER (1.7%):
1,379 Alco Standard Corp. 98
1,163 Boise Casacade Corp. 38
2,358 Champion International Corp. 104
2,319 Georgia Pacific Corp. 184
3,204 International Paper Co. 247
2,083 James River Corp. Virginia 57
4,047 Kimberly Clark Corp. 229
2,810 Louisiana Pacific Corp. 72
1,554 Mead Corp. 80
2,555 Moore Corp. Ltd. 50
727 Potlatch Corp. 31
1,886 Scott Paper Co. 168
1,415 Temple Inland, Inc. 62
1,828 Union Camp Corp. 92
1,670 Westvaco Corp. 70
5,288 Weyerhauser Co. 222
--------
1,804
--------
FUNERAL SERVICES (0.1%):
2,422 Service Corp. International 68
--------
FURNITURE (0.1%):
2,771 Maytag Corp. 48
1,100 Zenith Electronics(c) 8
--------
56
--------
GOLD & SILVER MINING (0.0%):
3,300 Santa Fe Pacific Gold Corp. 42
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
HEALTH CARE (0.4%):
9,278 Columbia HCA Healthcare $ 390
--------
HEAVY MACHINERY (0.9%):
3,556 Baker Hughes, Inc. 80
5,148 Caterpillar Tractor, Inc. 301
452 Clark Equipment Co.(c) 39
2,222 Deere & Co. 182
1,169 Harnischfeger Industries,
Inc. 34
2,733 Ingersoll Rand Co. 98
1,357 McDermott International,
Inc. 37
1,879 Tyco Laboratories, Inc. 99
1,118 Varity Corp.(c) 47
--------
917
--------
HOSPITAL & NURSING EQUIPMENT (1.0%):
1,357 Bard C.R., Inc. 40
16,383 Johnson & Johnson, Inc. 1,065
--------
1,105
--------
HOTELS & MOTELS (0.1%):
1,198 Hilton Hotels Corp. 91
--------
HOUSEHOLD GOODS -- APPLIANCES & FURNITURE
(0.2%):
316 Bassett Furniture Ind. 8
1,732 Premark International, Inc. 84
1,928 Whirlpool Corp. 106
--------
198
--------
INDUSTRIAL SERVICES (0.7%):
7,820 American Home Products Corp. 603
1,434 Dover Corp. 93
--------
696
--------
INSURANCE -- LIFE (0.5%):
1,237 Jefferson Pilot Corp. 70
2,474 Providian Corp. 84
1,867 Torchmark Corp. 73
4,350 United Healthcare 158
4,050 U.S. Healthcare, Inc. 108
530 USLIFE Corp. 20
--------
513
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
50
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INSURANCE -- MULTI-LINE (2.0%):
2,910 Aetna Life & Casualty Co. $ 166
1,101 Alexander & Alexander
Services, Inc. 26
5,262 American General Corp. 174
8,091 American International
Group, Inc. 864
1,848 Cigna Corp. 134
1,415 Continental Corp. 28
2,142 General Re Corp. 273
2,377 Lincoln National Corp. 97
1,867 Marsh & McLennan Cos., Inc. 146
1,612 SafeCo Corp. 91
2,142 St. Paul Cos., Inc. 103
2,242 USF & G Corp. 33
--------
2,135
--------
INSURANCE -- PROPERTY, CASUALTY, HEALTH (0.2%):
2,180 Chubb Corp. 174
1,800 UNUM Corp. 77
--------
251
--------
LEISURE -- RECREATION, GAMING (0.0%):
885 Handleman Co. 9
--------
MACHINE TOOLS (0.0%):
885 Cincinnati Milacron, Inc. 24
904 Giddings & Lewis, Inc. 16
--------
40
--------
MANUFACTURING -- CAPITAL GOODS (0.2%):
2,949 Illinois Tool Works, Inc. 148
707 Trinova Corp. 25
--------
173
--------
MANUFACTURING -- CONSUMER GOODS (0.1%):
491 Outboard Marine Corp. 11
1,415 Teledyne, Inc.(c) 35
1,360 Western Atlas(c) 61
--------
107
--------
MANUFACTURING -- MISCELLANEOUS (1.0%):
7,212 Allied Signal, Inc. 286
726 Briggs & Stratton Corp. 26
607 Millipore Corp. 37
866 Morrison Knudsen Corp. 7
2,901 Pall Corp. 68
1,218 Parker-Hannifin Corp. 63
4,047 Unilever N.V. 541
2,671 Whitman Corp. 49
--------
1,077
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (0.2%):
2,203 Beverly Enterprises, Inc.(c) $ 32
1,121 Community Psychiatric
Centers, Inc. 15
1,544 Manor Care, Inc. 45
5,025 National Medical
Enterprises, Inc.(c) 85
--------
177
--------
MEDICAL SUPPLIES (0.7%):
1,473 Bausch & Lomb, Inc. 57
7,235 Baxter International, Inc. 251
1,706 Becton Dickinson & Co. 95
2,888 Biomet, Inc.(c) 51
200 Boston Scientific Corp.(c) 5
2,908 Medtronic, Inc. 216
1,179 St. Jude Medical, Inc. 51
1,415 United States Surgical Corp. 31
--------
757
--------
METALS -- FABRICATION (0.6%):
5,769 Alcan Aluminum Ltd. 164
1,101 Asarco, Inc. 30
2,400 Cyprus Amax Minerals 67
3,498 Homestake Mining Co. 59
1,124 Inland Steel Industries,
Inc. 29
2,227 Newmont Mining Corp. 93
1,828 Phelps Dodge Corp. 104
1,573 Reynolds Metals Co. 79
--------
625
--------
METAL & MINERAL PRODUCTION (0.6%):
2,713 Armco, Inc. 19
8,877 Barrick Gold Corp. 214
2,839 Bethlehem Steel Corp.(c) 40
2,830 Echo Bay Mines Ltd. 27
2,447 Englehard Corp. 94
3,010 Inco Ltd. 78
2,261 Nucor Corp. 109
1,913 USX U.S. Steel Group 58
--------
639
--------
NEWSPAPERS (0.5%):
3,534 Gannett Co., Inc. 186
1,395 Knight-Ridder, Inc. 76
2,552 New York Times Co., Class A 58
3,282 Times Mirror Co., Class A 59
1,670 Tribune Co. 99
--------
478
--------
OFFICE EQUIPMENT & SUPPLIES (0.5%):
4,009 Pitney Bowes, Inc. 149
2,713 Xerox Corp. 334
--------
483
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
51
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
OIL & GAS EXPLORATION AND PRODUCTION (1.7%):
2,358 Amerada Hess Corp. $ 119
1,573 Ashland, Inc. 58
2,623 Coastal Corp. 78
1,237 Columbia Gas System(c) 36
530 Eastern Enterprises 16
6,473 Enron Corp. 220
1,670 Enserch Corp. 29
669 Helmerich & Payne, Inc. 20
1,298 Kerr-McGee Corp. 67
885 Louisiana Land &
Exploration Co. 32
3,085 Noram Energy Corp. 19
7,962 Occidental Petroleum Corp. 183
688 Oneok, Inc. 13
2,516 Oryx Energy Co.(c) 35
1,160 Pennzoil Co. 57
6,622 Phillips Petroleum Co. 232
2,122 Rowan Cos.(c) 15
2,319 Sante Fe Energy Resources,
Inc.(c) 22
2,261 Sonat, Inc. 69
2,752 Sun Co., Inc. 83
7,290 USX - Marathon Group 137
6,231 Unocal Corp. 179
2,294 Williams Co., Inc. 75
--------
1,794
--------
OIL & GAS PRODUCTION (1.2%):
3,201 Burlington Resource, Inc. 125
10,139 Mobil Corp. 962
4,664 Tenneco, Inc. 214
--------
1,301
--------
OIL -- INTEGRATED COMPANIES (6.0%):
12,655 Amoco Corp. 830
4,128 Atlantic Richfield Co. 473
16,606 Chevron Corp. 787
31,639 Exxon Corp. 2,203
13,637 Royal Dutch Petroleum Co. 1,691
6,583 Texaco, Inc. 450
--------
6,434
--------
OILFIELD EQUIPMENT & SERVICES (0.6%):
4,718 Dresser Industries, Inc. 103
2,868 Halliburton Co. 110
6,231 Schlumberger Limited 392
--------
605
--------
PAINT, VARNISHES & ENAMELS (0.1%):
2,200 Sherwin Williams Co. 78
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
PHARMACEUTICALS (4.9%):
20,544 Abbott Laboratories $ 809
1,570 Allergan, Inc. 43
2,106 Alza Corp., Class A(c) 41
13,066 Bristol-Myers Squibb Co. 851
7,468 Eli Lilly & Co. 558
32,116 Merck & Co., Inc. 1,377
8,037 Pfizer, Inc. 696
4,852 Schering-Plough 366
4,441 Upjohn Co. 161
3,379 Warner-Lambert Co. 269
--------
5,171
--------
PHOTOGRAPHY (0.5%):
8,692 Eastman Kodak Co. 500
1,179 Polaroid Corp. 40
--------
540
--------
POLLUTION CONTROL SERVICES & EQUIPMENT (0.5%):
5,022 Browning-Ferris
Industries, Inc. 166
1,444 Safety Kleen 25
12,342 WMX Technologies, Inc. 336
275 Zurn Industries, Inc. 6
--------
533
--------
PRECISION INSTRUMENTS & RELATED (0.0%):
1,040 Perkin Elmer 32
--------
PUBLISHING, EXCEPT NEWSPAPER (0.9%):
2,103 Deluxe Corp. 65
2,455 Dow Jones & Co., Inc. 86
4,300 Dun & Bradstreet Corp. 224
766 John H. Harland Co. 17
1,218 McGraw Hill, Inc. 91
626 Meredith Corp. 16
3,870 R.R. Donnelley & Sons Co. 132
9,682 Time Warner, Inc. 355
--------
986
--------
RADIO & TELEVISION (1.2%):
1,555 CBS, Inc. 100
3,930 Capital Cities ABC, Inc. 332
5,775 Comcast Class A Special
Shares 91
300 Comcast Corp., Class A 5
204 Cox Communications, Inc.,
Class A(c) 3
15,585 Tele-Communications, Inc.,
Class A(c) 298
9,087 Viacom, Class B(c) 417
--------
1,246
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
52
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RAILROAD & RAILROAD HOLDING COMPANIES (0.8%):
2,300 Burlington Northern, Inc. $ 137
2,713 CSX Corp. 216
1,964 Conrail, Inc. 107
3,845 Santa Fe Southern Pacific
Corp. 90
5,188 Union Pacific Corp. 285
--------
835
--------
RAILROADS (0.2%):
3,437 Norfolk Southern Corp. 232
--------
RESTAURANTS (0.7%):
607 Luby's Cafeterias, Inc. 12
17,820 McDonald's Corp. 624
1,376 Ryan's Family Steak House(c) 10
1,082 Shoney's, Inc.(c) 12
2,555 Wendy's International 43
--------
701
--------
RETAIL (2.9%):
3,656 American Stores Co. 94
1,945 Brunos, Inc. 24
2,594 Charming Shoppes, Inc. 14
1,848 Dayton Hudson Corp. 124
2,025 Harcourt General, Inc. 83
11,656 K-Mart Corp. 162
3,194 Marriott International, Inc. 115
6,328 May Department Stores 229
2,103 Nordstrom, Inc. 81
5,012 Price/Costco, Inc.(c) 73
8,921 Sears & Roebuck Co. 484
58,600 Wal Mart Stores, Inc. 1,392
3,104 Walgreen Co. 146
3,421 Woolworth Corp. 55
--------
3,076
--------
RETAIL -- SPECIALTY STORES (1.2%):
2,497 Circuit City Stores, Inc. 65
3,715 The Gap 118
1,473 Giant Food, Inc. 40
11,531 Home Depot, Inc. 481
9,096 The Limited, Inc. 194
2,733 Melville Corp. 98
1,592 Pep Boys -- Manny, Moe &
Jack 41
1,867 TJX Cos., Inc. 21
7,268 Toys R Us, Inc.(c) 184
--------
1,242
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RUBBER & RUBBER PRODUCTS (0.2%):
669 B.F. Goodrich, Inc. $ 31
2,122 Cooper Tire & Rubber Co. 52
3,834 Goodyear Tire & Rubber Co. 146
--------
229
--------
SEMICONDUCTORS (1.3%):
2,100 Applied Materials, Inc.(c) 129
10,550 Intel Corp. 1,080
2,550 Micron Technology, Inc. 210
--------
1,419
--------
SERVICES (NON-FINANCIAL) (0.4%):
3,379 Amgen, Inc.(c) 246
3,050 First Data Corp. 172
1,240 Ogden Corp. 25
--------
443
--------
SHOES, LEATHER GOODS & CLOTHING (0.2%):
452 Brown Group, Inc. 13
1,906 Nike, Inc. 146
2,061 Reebok International Ltd. 64
1,237 Stride Rite Corp. 15
--------
238
--------
SOAPS & CLEANING AGENTS (1.5%):
1,395 Clorox Co. 82
3,670 Colgate Palmolive, Inc. 258
17,471 Procter & Gamble Co. 1,221
--------
1,561
--------
SOFTWARE & COMPUTER SERVICES (2.0%):
1,198 Autodesk, Inc. 41
4,125 Computer Associates
International, Inc. 266
1,271 Lotus Development Corp.(c) 40
14,900 Microsoft Corp.(c) 1,220
9,462 Novell, Inc.(c) 206
10,919 Oracle Systems Corp.(c) 333
630 Shared Medical Systems 24
--------
2,130
--------
STEEL (0.0%):
2,319 Worthington Industries, Inc. 44
--------
TAX RETURN PREPARATION (0.1%):
2,652 H. & R. Block 112
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
53
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TELECOMMUNICATIONS (2.3%):
12,612 Airtouch Communications(c) $ 339
4,800 Alltel Corp. 119
11,144 Bell Atlantic Corp. 612
649 M A Com, Inc.(c) 8
6,447 Northern Telecom Ltd. 235
10,772 Pacific Telesis Group 333
1,966 Scientific-Atlanta, Inc. 45
8,866 Sprint Corp. 293
11,591 U.S. West, Inc. 480
--------
2,464
--------
TEXTILE MANUFACTURING (0.1%):
866 Hartmarx Corp.(c) 5
313 Oshkosh B Gosh, Inc. 5
1,001 Russell Corp. 30
452 Springs Industries, Inc.,
Class A 18
1,631 V.F. Corp. 82
--------
140
--------
TOBACCO & TOBACCO PRODUCTS (1.7%):
5,149 American Brands, Inc. 209
21,904 Philip Morris Cos., Inc. 1,484
5,146 UST, Inc. 145
--------
1,838
--------
TOOLS & HARDWARE MANUFACTURING (0.2%):
2,122 Black & Decker Corp. 64
1,121 Snap On Tools, Inc. 42
1,160 Stanley Works 46
746 Timken Co. 30
--------
182
--------
TOYS & BICYCLES -- MANUFACTURING (0.1%):
5,725 Mattel, Inc. 136
--------
TRANSPORTATION -- AIR (0.1%):
3,650 Southwest Airlines Co. 84
--------
TRANSPORTATION LEASING & TRUCKING (0.2%):
924 Consolidated Freightways,
Inc.(c) 24
1,395 Federal Express Corp.(c) 95
1,101 Pittston Services Group 26
963 Roadway Services, Inc. 47
2,006 Ryder Systems, Inc. 47
707 Yellow Corp. 13
--------
252
--------
TRUCKS -- MANUFACTURING (0.1%):
236 Nacco Industries, Inc. 13
6,073 Placer Dome, Inc. 144
--------
157
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
UTILITIES -- ELECTRIC (3.0%):
4,697 American Electric Power $ 154
4,047 Carolina Power & Light 111
4,855 Central & South West Corp. 120
3,728 Cinergy Corp. 94
6,014 Consolidated Edison Co. NY,
Inc. 167
3,653 Detroit Edison Co. 103
4,415 Dominion Resources 161
5,188 Duke Power Co. 205
5,761 Entergy Corp. 125
4,735 FPL Group, Inc. 174
3,301 Houston Industries 130
3,676 Niagara Mohawk Power Corp. 51
1,670 Northern States Power Co.
Minnesota 74
3,931 Ohio Edison 79
7,196 Pacificorp 137
5,640 Peco Energy Co. 145
6,231 Public Service Enterprise 171
1,101 Raychem Corp. 39
11,438 SCEcorp. 192
16,712 Southern Co. 345
5,759 Texas Utilities Co. 188
5,423 Unicom Corp. 142
2,594 Union Electric Co. 92
--------
3,199
--------
UTILITIES -- ELECTRIC & GAS (0.4%):
3,724 Baltimore Gas & Electric 88
11,024 Pacific Gas & Electric Co. 296
904 Peoples Energy Corp. 23
--------
407
--------
UTILITIES -- NATURAL GAS (0.3%):
2,358 Consolidated Natural Gas 93
1,315 Nicor, Inc. 32
4,022 Pacific Enterprises 99
3,827 Panhandle Eastern Corp. 92
--------
316
--------
UTILITIES -- TELECOMMUNICATIONS (5.4%):
39,898 A T & T Corp. 2,025
14,016 Ameritech Corp. 631
12,636 Bellsouth Corp. 774
24,513 GTE Corp. 837
17,340 MCI Telecommunications Corp. 377
10,733 Nynex Corp. 439
15,249 SBC Communication, Inc. 673
--------
5,756
- ----------------------------------------------------------
TOTAL COMMON STOCKS 95,925
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
54
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BILLS (0.4%)
400,000 5.76%, 6/15/95 $ 397
- ----------------------------------------------------------
Total U.S. Treasury Bills 397
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (0.9%)
938,389 Shearson U.S. Treasury Fund 938
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 938
- ----------------------------------------------------------
TOTAL (COST $96,230)(B) $105,660
- ----------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $105,834.
(b) 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 $498. 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 $ 11,629
Unrealized depreciation (2,697)
--------
Net unrealized appreciation $ 8,932
=========
</TABLE>
(c) Represents non-income producing securities.
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------
FUTURES CONTRACTS
</TABLE>
<TABLE>
<CAPTION>
MARKET
NUMBER OF VALUE
CONTRACTS (000)
<S> <C> <C>
Short, Standard & Poor's 500
Index Futures Contracts, face
amount $8,788, expiring
6/16/95 35 $9,043
------
Total Futures Contracts $9,043
=======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
55
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMERCIAL PAPER (5.4%)
FINANCIAL SERVICES (5.4%):
7,000,000 Ford Motor Credit Corp.,
5.94%, 5/8/95 $ 7,000
7,000,000 General Electric Credit
Corp., 5.94%, 5/8/95 7,000
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 14,000
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (91.8%)
AEROSPACE/DEFENSE (5.0%):
73,000 Boeing Co. 4,015
48,000 General Dynamics Corp. 2,226
34,500 Lockheed Martin Corp.(c) 1,992
65,000 Raytheon Co. 4,729
--------
12,962
--------
AUTOMOTIVE (3.4%):
65,000 Chrysler Corp. 2,803
86,000 Ford Motor Co. 2,322
47,000 Pep Boys-Manny, Moe & Jack 1,210
35,900 TRW, Inc. 2,670
--------
9,005
--------
BANKS (7.4%):
93,000 BankAmerica Corp. 4,603
95,000 Comerica, Inc. 2,731
76,000 CoreStates Financial Corp. 2,479
77,000 First Union Corp. 3,484
81,000 J.P. Morgan & Co., Inc. 5,316
30,000 Norwest Corp. 795
--------
19,408
--------
BEVERAGES (1.2%):
53,000 Anheuser Busch Co., Inc. 3,081
--------
CHEMICALS (2.6%):
25,000 Dow Chemical Co. 1,738
31,000 Eastman Chemical 1,759
45,000 Lubrizol Corp. 1,569
15,000 Nalco Chemical Co. 525
60,000 RPM, Inc., Ohio 1,185
--------
6,776
--------
COMPUTER SOFTWARE (1.5%):
29,000 Microsoft Corp.(c) 2,374
67,000 Novell, Inc.(c) 1,457
--------
3,831
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
COMPUTERS & OFFICE EQUIPMENT (1.2%):
12,000 International Business
Machines Corp. $ 1,137
53,000 Pitney Bowes, Inc. 1,968
--------
3,105
--------
ELECTRICAL EQUIPMENT (2.6%):
22,500 Emerson Electric Co. 1,513
95,000 General Electric Co. 5,320
--------
6,833
--------
ELECTRONICS (2.5%):
50,000 Hewlett Packard Co. 3,306
31,000 Intel Corp. 3,174
--------
6,480
--------
FINANCIAL SERVICES (4.3%):
70,000 American Express Co. 2,433
105,000 American General Corp. 3,465
32,000 Federal National Mortgage
Assoc. 2,824
52,500 Household International,
Inc. 2,461
--------
11,183
--------
FOOD (0.4%):
31,000 Pioneer Hi-Bred
International, Inc. 1,163
--------
HEALTH CARE (1.1%):
75,000 Abbott Laboratories 2,953
--------
HOME PRODUCTS (1.9%):
57,000 Newell Co. 1,347
45,000 Sherwin Williams Co. 1,603
51,500 Stanley Works 2,041
--------
4,991
--------
INSURANCE (3.4%):
64,000 Aetna Life & Casualty Co. 3,648
77,000 Allstate 2,339
23,000 Chubb Corp. 1,840
25,000 St. Paul Cos., Inc.(c) 1,203
--------
9,030
--------
INDUSTRIAL - MISCELLANEOUS (2.6%):
42,000 Allied Signal, Inc. 1,664
35,000 Minnesota Mining &
Manufacturing Co. 2,087
25,000 Textron, Inc. 1,425
62,000 WMX Technologies, Inc. 1,690
--------
6,866
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
56
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MACHINERY & MANUFACTURING (1.5%):
45,000 Cooper Industries $ 1,755
27,000 Deere & Co. 2,214
--------
3,969
--------
MEDIA (1.9%):
30,001 Cox Communications, Inc.
Class A(c) 458
40,000 Dun & Bradstreet Corp. 2,085
43,000 Time Warner, Inc. 1,575
50,000 Times Mirror Co., Class A 906
--------
5,024
--------
METALS & MINING (2.8%):
63,000 Aluminum Co. of America 2,827
70,000 Cyprus Amax Minerals 1,951
80,000 USX U.S. Steel Group 2,440
--------
7,218
--------
OIL - INTEGRATED (DOMESTIC) (3.1%):
34,000 Atlantic Richfield Co. 3,893
117,500 Phillips Petroleum Co. 4,113
--------
8,006
--------
OIL - INTEGRATED (INTERNATIONAL) (8.4%):
111,500 Chevron Corp. 5,282
34,000 Exxon Corp. 2,367
73,000 Mobil Corp. 6,926
107,000 Texaco, Inc. 7,316
--------
21,891
--------
OILFIELD WELL EQUIPMENT & SERVICES (1.3%):
110,000 Baker Hughes, Inc. 2,475
13,000 Schlumberger Ltd. 817
--------
3,292
--------
PAPER & FOREST PRODUCTS (3.9%):
47,000 Georgia Pacific Corp. 3,731
61,500 International Paper Co. 4,736
37,500 Union Camp Corp. 1,880
--------
10,347
--------
PHARMACEUTICALS (3.6%):
13,800 American Home Products Corp. 1,064
55,000 Merck & Co., Inc. 2,358
40,000 Pfizer, Inc. 3,465
35,000 Schering-Plough 2,638
--------
9,525
--------
RESTAURANTS (0.9%):
65,000 McDonald's Corp. 2,275
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RETAIL - FOOD & DRUGS (1.2%):
75,000 Supervalu, Inc. $ 1,978
25,000 Walgreen Co. 1,175
--------
3,153
--------
RETAIL - TRADE (4.0%):
51,000 Dayton Hudson Corp. 3,423
83,000 Sears & Roebuck Co. 4,503
--------
7,926
--------
SOAPS & PERSONAL CARE (1.8%):
45,000 Avon Products 2,846
25,000 Procter & Gamble Co. 1,747
--------
4,593
--------
TELECOMMUNICATIONS (7.3%):
168,500 A T & T Corp. 8,551
15,000 Ameritech Corp. 675
43,000 Comsat Corp. 860
155,000 GTE Corp. 5,289
90,000 Nynex Corp. 3,679
--------
19,054
--------
TOBACCO (1.7%):
47,000 Philip Morris Cos., Inc. 3,184
42,000 UST, Inc. 1,181
--------
4,365
--------
TRANSPORTATION (1.2%):
8,000 Burlington Northern, Inc. 476
18,500 Norfolk Southern Corp. 1,246
28,000 Roadway Services, Inc. 1,358
--------
3,080
--------
UTILITIES - ELECTRIC (5.1%):
130,000 Consolidated Edison Co. NY,
Inc. 3,608
70,000 Duquesne Light Co. 2,363
95,000 Public Service Co. of
Colorado 2,862
141,000 Texas Utilities Co. 4,600
--------
13,433
--------
UTILITIES - NATURAL GAS (2.2%):
65,500 Consolidated Natural Gas 2,579
39,000 Enron Corp. 1,326
30,000 Enserch Corp. 518
48,000 Peoples Energy Corp. 1,212
--------
5,635
- ----------------------------------------------------------
TOTAL COMMON STOCKS 240,453
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
57
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BILLS (0.2%)
410,000 4.13%, 6/22/95 $ 407
- ----------------------------------------------------------
TOTAL U.S. TREASURY BILLS 407
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (3.1%)
8,188,301 Shearson U.S. Treasury Fund 8,188
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 8,188
- ----------------------------------------------------------
TOTAL (COST 245,679)(B) $263,048
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $261,830.
(b) 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 $168. 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 $ 23,151
Unrealized depreciation (5,950)
--------
Net unrealized appreciation $ 17,201
=========
</TABLE>
(c) Represents non-income producing securities.
- ---------------------------------------------------------
FUTURES CONTRACTS
<TABLE>
<CAPTION>
MARKET
NUMBER OF VALUE
CONTRACTS (000)
<S> <C> <C>
Short, Standard & Poor's 500
Index Futures Contracts,
face amount $2,480, expiring
6/16/95 10 $2,584
------
Total Futures Contracts $2,584
------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
58
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
DIVERSIFIED STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMERCIAL PAPER (1.5%)
FINANCIAL SERVICES (1.5%):
5,000,000 General Motors Acceptance
Corp. 5.94%, 5/3/95 $ 5,000
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 5,000
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (93.9%)
AEROSPACE/DEFENSE (4.7%):
128,500 Boeing Co. 7,067
78,000 General Dynamics Corp. 3,617
80,000 Lockheed Martin Corp.(c) 4,620
--------
15,304
--------
ALUMINUM (1.0%):
70,200 Aluminum Co. of America 3,150
--------
BANKS (6.9%):
125,800 BankAmerica Corp. 6,227
225,000 Comerica, Inc. 6,469
81,800 J.P. Morgan & Co., Inc. 5,368
24,800 National City Corp. 679
132,400 Norwest Corp. 3,509
--------
22,252
--------
BEVERAGES (2.7%):
66,400 Anheuser Busch Co., Inc. 3,859
120,000 PepsiCo, Inc. 4,995
--------
8,854
--------
CHEMICALS (1.8%):
40,200 Dow Chemical Co. 2,794
145,000 RPM, Inc., Ohio 2,864
--------
5,658
--------
COMPUTERS & PERIPHERALS (0.6%):
20,000 International Business
Machines Corp. 1,895
--------
CONGLOMERATES (0.6%):
30,000 Minnesota Mining &
Manufacturing Co. 1,789
--------
COSMETICS & RELATED (2.0%):
100,300 Avon Products 6,344
--------
ELECTRICAL EQUIPMENT (3.3%):
30,000 Emerson Electric Co. 2,017
150,800 General Electric Co. 8,445
--------
10,462
--------
ELECTRONIC COMPUTING EQUIPMENT (0.6%):
50,000 Compaq Computer Corp.(c) 1,900
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ELECTRONIC & ELECTRICAL - GENERAL (2.1%):
85,000 Motorola, Inc. $ 4,834
18,900 Texas Instruments, Inc. 2,003
--------
6,837
--------
ENGINEERING & CONSTRUCTION (1.8%):
113,700 Fluor Corp. 5,855
--------
ENTERTAINMENT (0.8%):
70,400 Promus Cos., Inc.(c) 2,710
--------
FINANCIAL SERVICES (1.1%):
39,000 Federal National Mortgage
Assoc. 3,442
--------
FOREST PRODUCTS (3.5%):
50,000 International Paper Co. 3,850
66,900 Mead Corp. 3,462
78,900 Union Camp Corp. 3,955
--------
11,267
--------
FUNERAL SERVICES (0.5%):
61,000 Service Corp. International 1,723
--------
INDUSTRIAL - MISCELLANEOUS (1.0%):
54,000 Textron, Inc. 3,078
--------
INSURANCE (4.2%):
40,000 Aetna Life & Casualty Co.(c) 2,280
52,900 American International
Group, Inc. 5,647
70,000 Chubb Corp. 5,600
--------
13,527
--------
MANUFACTURING MISCELLANEOUS (1.2%):
100,000 Allied Signal, Inc. 3,962
--------
METALS (1.3%):
134,300 USX U.S. Steel Group 4,096
--------
OFFICE EQUIPMENT & SUPPLIES (1.6%):
136,100 Pitney Bowes, Inc. 5,053
--------
OIL (10.9%):
40,400 Atlantic Richfield Co. 4,626
250,000 Chevron Corp. 11,844
105,500 Exxon Corp. 7,345
165,500 Texaco, Inc. 11,316
--------
35,131
--------
OIL & GAS EXPLORATION (3.6%):
170,000 Enron Corp. 5,780
170,000 Phillips Petroleum Co. 5,950
--------
11,730
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
59
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
DIVERSIFIED STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
OILFIELD EQUIPMENT & SERVICES (4.7%):
235,000 Baker Hughes, Inc. $ 5,287
227,600 Dresser Industries, Inc. 4,979
75,100 Schlumberger Ltd. 4,722
--------
14,988
--------
PHARMACEUTICALS (3.4%):
75,000 Merck & Co., Inc. 3,216
25,000 Pfizer, Inc. 2,166
20,000 Schering-Plough 1,507
50,000 Warner-Lambert Co. 3,988
--------
10,877
--------
POLLUTION CONTROL SERVICES (1.2%):
142,000 WMX Technologies, Inc. 3,870
--------
REAL ESTATE INVESTMENT TRUSTS (0.3%):
28,500 Weingarten Realty Investors 998
--------
RETAIL (1.0%):
46,500 Dayton Hudson Corp. 3,121
--------
RETAIL - SPECIALTY STORES (1.1%):
133,000 Pep Boys - Manny, Moe & Jack 3,425
--------
RUBBER & RUBBER PRODUCTS (2.3%):
120,000 Cooper Tire & Rubber Co.(c) 2,940
119,600 Goodyear Tire & Rubber Co. 4,545
--------
7,485
--------
SEMICONDUCTORS (1.8%):
30,000 Applied Materials, Inc.(c) 1,849
40,000 Intel Corp. 4,095
--------
5,944
--------
SHIPPING (1.1%):
152,650 TNT Freightways Corp. 3,587
--------
SOFTWARE & COMPUTER SERVICES (4.0%):
111,800 Microsoft(c) 9,154
175,000 Novell, Inc.(c) 3,806
--------
12,960
--------
TOBACCO & TOBACCO PRODUCTS (1.7%):
80,000 Philip Morris Cos., Inc. 5,420
--------
UTILITIES - ELECTRIC (5.4%):
200,000 Consolidated Edison Co. NY,
Inc. 5,550
20,000 Duquesne Light Co. 675
150,000 Southern Co. 3,094
248,500 Texas Utilities Co. 8,107
--------
17,426
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
UTILITIES - TELECOMMUNICATIONS (8.1%):
230,000 A T & T Corp. $ 11,673
300,000 GTE Corp. 10,238
98,100 Nynex Corp. 4,010
--------
25,921
- ----------------------------------------------------------
TOTAL COMMON STOCKS 302,041
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (5.0%)
2,433,734 Federated Treasury
Obligation Fund 2,434
13,557,653 Shearson U.S. Treasury Fund 13,557
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 15,991
- ----------------------------------------------------------
TOTAL (COST $292,681)(B) $323,032
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $321,593.
(b) 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 $366. 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 $ 33,693
Unrealized depreciation (3,708)
--------
Net unrealized appreciation $ 29,985
=========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
60
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (97.4%)
BANKS (4.6%):
20,500 BankAmerica Corp. $ 1,015
37,500 Norwest Corp. 994
----------
2,009
----------
BEVERAGES (2.8%):
21,300 Coca Cola Co. 1,238
----------
COMPUTERS & PERIPHERALS (1.1%):
9,000 3Com Corp.(c) 504
----------
CONGLOMERATES (2.7%):
36,000 Corning Glass Works 1,202
----------
COSMETICS & RELATED (3.2%):
17,000 Gillette Co. 1,394
----------
ELECTRICAL EQUIPMENT (5.7%):
26,300 General Electric Co. 1,473
18,700 Johnson Controls, Inc. 1,014
----------
2,487
----------
ELECTRONICS & ELECTRICAL (3.4%):
26,200 Motorola, Inc. 1,490
----------
ENTERTAINMENT (3.0%):
24,000 Walt Disney Co. 1,329
----------
FINANCIAL SERVICES (5.8%):
16,900 Federal National Mortgage
Assoc. 1,491
25,000 First USA, Inc. 1,063
----------
2,554
----------
FOREST PRODUCTS (4.1%):
13,000 Georgia Pacific Corp. 1,032
10,000 International Paper Co. 770
----------
1,802
----------
HOUSEHOLD PRODUCTS (3.2%):
34,300 Newell Co. 810
20,400 Rubbermaid, Inc. 602
----------
1,412
----------
INSURANCE (2.9%):
11,900 American International
Group, Inc. 1,270
----------
LEISURE-RECREATION, GAMING (1.3%):
43,700 International Game
Technology 563
----------
MEDICAL-BIOTECHNOLOGY (0.7%):
4,200 Amgen, Inc.(c) 305
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (1.5%):
23,900 Health Care & Retirement
Corp.(c) $ 675
----------
OIL & GAS EXPLORATION, PRODUCTION (1.6%):
18,000 Burlington Resource, Inc. 704
----------
OIL-INTEGRATED COMPANIES (11.3%):
11,800 Amoco Corp. 774
9,600 Atlantic Richfield Co. 1,099
25,000 Chevron Corp. 1,184
14,100 Mobil Corp. 1,338
8,100 Texaco, Inc. 554
----------
4,949
----------
PHARMACEUTICALS (3.4%):
20,000 Ivax Corp. 517
13,000 Schering-Plough 980
----------
1,497
----------
POLLUTION CONTROL SERVICES (1.8%):
29,000 WMX Technologies, Inc. 790
----------
RETAIL (5.3%):
30,000 The Gap 956
33,300 Home Depot, Inc. 1,390
----------
2,346
----------
SEMICONDUCTORS (3.7%):
16,000 Intel Corp. 1,638
----------
SOAPS & CLEANING AGENTS (3.0%):
18,800 Procter & Gamble Co. 1,814
----------
SOFTWARE & COMPUTER SERVICES (6.0%):
20,000 Microsoft Corp.(c) 1,638
45,000 Novell, Inc.(c) 979
----------
2,617
----------
TELECOMMUNICATIONS (6.8%):
22,400 Telefonos de Mexico 678
21,900 AT&T Corp. 1,111
20,300 SBC Communication, Inc. 1,191
----------
2,980
----------
TOBACCO & TOBACCO RELATED (1.0%):
6,600 Philip Morris Cos., Inc. 447
----------
TRANSPORTATION-AIR (2.3%):
43,700 Southwest Airlines Co. 1,011
----------
UTILITIES-NATURAL GAS (5.0%):
36,500 El Paso Natural Gas 1,068
33,300 Enron Corp. 1,132
----------
2,200
- ------------------------------------------------------------
TOTAL COMMON STOCKS 42,727
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
61
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (2.1%)
98,561 Shearson U.S. Treasury Fund $ 919
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 919
- ------------------------------------------------------------
TOTAL (COST $40,358)(B) $ 43,646
- ---
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $43,861.
(b) 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 $ 5,809
Unrealized depreciation (2,521)
----------
Net unrealized appreciation $ 3,288
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
62
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
SPECIAL VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (94.6%)
AEROSPACE/DEFENSE (3.4%):
113,400 GenCorp, Inc. $ 1,432
29,500 General Dynamics Corp. 1,368
86,700 Thiokol Corp. Delaware 2,416
----------
5,216
----------
AUTOMOTIVE PARTS (4.7%):
44,200 Genuine Parts Co. 1,713
46,600 Hayes Wheels 874
72,200 Kaydon Corp. 1,985
51,600 Mascotech, Inc. 574
13,000 Stewart & Stevenson
Services,
Inc. 487
95,775 T B C Corp.(c) 1,017
33,915 Walbro Corp. 634
----------
7,284
----------
BANKS (5.7%):
30,100 Central Fidelity Banks, Inc. 769
119,200 Comerica, Inc. 3,427
36,401 Michigan National Corp. 3,818
17,500 Star Bank 731
----------
8,745
----------
BEVERAGES (1.0%):
71,000 Coca Cola Enterprises, Inc. 1,588
----------
CHEMICALS (7.8%):
57,875 A. Schulman, Inc. 1,816
42,550 Avery Dennison Corp. 1,729
22,400 Geon Co. 605
32,000 Lubrizol Corp. 1,116
12,900 Lyondell Petrochemical 320
57,500 Olin Corp. 3,213
96,500 RPM, Inc. 1,905
30,000 WD 40 Co. 1,320
----------
12,024
----------
CONSTRUCTION (1.2%):
71,100 Foster Wheeler Corp. 2,631
----------
CONTAINERS (1.1%):
71,000 Sonoco Products Co. 1,766
----------
ELECTRICAL EQUIPMENT (8.4%):
39,200 Arrow Electronics, Inc.(c) 1,823
22,500 W.W. Grainger, Inc. 1,361
121,332 Mark IV Industries 2,184
33,300 Molex Corp. 1,257
45,400 Teleflex, Inc. 1,878
75,529 Vishay Intertechnology,
Inc.(c) 4,466
----------
12,969
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ENVIRONMENTAL CONTROL (1.1%):
179,650 Laidlaw, Inc. Class B $ 1,617
----------
FINANCIAL SERVICES (4.6%):
53,300 Equifax, Inc. 1,726
61,850 MBNA Corp. 1,870
42,800 PMI Group, Inc.(c) 1,594
69,100 UJB Financial Corp. 1,892
----------
7,082
----------
FOOD DISTRIBUTORS (0.3%):
15,500 SuperValu, Inc. 409
----------
FOOD PROCESSING & PACKAGING (2.4%):
72,100 Dean Foods Co. 2,055
45,250 IBP, Inc. 1,674
----------
3,729
----------
FOREST PRODUCTS (1.9%):
62,262 Pentair, Inc. 2,848
----------
FUNERAL SERVICES (1.8%)
95,500 Service Corp. International 2,698
----------
FURNITURE (0.7%):
28,300 Leggett & Platt, Inc. 1,090
----------
HEAVY MACHINERY (2.3%):
61,800 Baker Hughes, Inc. 1,391
40,650 Tyco Laboratories, Inc. 2,134
----------
3,525
----------
HOLDING COMPANIES (0.2%):
7,900 Northern Trust Corp.(c) 289
----------
HOTELS & MOTELS (1.4%):
72,300 Mirage Resorts, Inc.(c) 2,169
----------
INSURANCE (5.4%):
46,200 American Re Corp. 1,756
55,200 Kemper Corp. 2,498
47,500 Progressive Corp. 1,793
34,500 TransAtlantic Holdings 2,190
----------
8,237
----------
MACHINE TOOLS (2.9%):
90,900 Albany International Corp. 1,988
22,900 Greenfield Industries 676
67,200 Manitowoc Industries 1,756
----------
4,420
----------
MANUFACTURING (2.2%):
38,000 Briggs & Stratton Corp. 1,335
19,100 Hillenbrand 566
56,466 Pall Corp. 1,320
11,100 Paragon Trade Brands, 172
Inc.(c)
----------
3,393
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
63
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
SPECIAL VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (3.8%):
139,300 Community Psychiatric
Centers, Inc.(c) $ 1,845
43,200 Lincare Holdings(c) 1,334
60,100 Quorum Health Group(c) 1,240
7,100 Ventritex(c) 107
42,437 Vivra, Inc.(c) 1,363
----------
5,889
----------
MEDICAL SUPPLIES (0.2%):
10,000 Sunrise Medical, Inc.(c) 303
----------
METALS (3.3%):
86,100 CBI Industries, Inc. 2,132
28,000 Kennametal, Inc. 938
31,800 Minerals Technologies, Inc. 1,057
32,500 USX U.S. Steel Group 991
----------
5,118
----------
NEWSPAPERS (1.6%):
41,100 Tribune Co. 2,430
----------
OIL & GAS EXPLORATION (2.1%):
80,100 Anadarko Petroleum 3,294
----------
OIL & GAS PRODUCTION (1.2%):
46,100 Snyder Oil Corp. 663
42,500 Vastar Resources, Inc. 1,137
----------
1,800
----------
RETAIL (1.7%):
70,800 Hannaford Brothers 1,867
22,500 TJX Companies, Inc. 259
13,800 Tiffany & Co. 443
----------
2,569
----------
RUBBER (1.0%):
15,800 Bandag, Inc. 938
4,500 Bandag, Inc. Class A 249
19,125 Standard Products Co. 378
----------
1,565
----------
SEMICONDUCTORS (0.5%):
13,500 Applied Materials Inc.(c) 832
----------
SHOES, LEATHER GOODS (1.3%):
25,600 Nike, Inc. 1,962
----------
SOFTWARE & COMPUTER SERVICES (1.2%):
10,000 American Software, Inc. 41
14,750 Analysts International Corp. 372
28,300 Policy Management
Systems(c) 1,426
----------
1,839
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
STEEL (1.5%):
36,700 A.K. Steel Holding Corp.(c) $ 987
68,620 Worthington Industries, Inc. 1,295
----------
2,282
----------
TELECOMMUNICATIONS (0.8%):
4,600 Comsat Corp. 92
53,333 Federal Signal Corp. 1,207
----------
1,299
----------
TOBACCO (0.4%):
23,773 Universal Corp. 544
----------
TRANSPORTATION (3.8%):
45,350 Gatx Corp. 2,041
40,800 Pittston Services Group 969
80,750 Illinois Central Corp. 2,836
----------
5,846
----------
UTILITIES -- ELECTRIC & GAS (8.0%):
32,400 Brooklyn Union Gas Co. 786
27,020 DQE Co. 912
118,600 Florida Progress Corp. 3,617
148,300 Northeast Utilities 3,244
79,400 Public Service Co. of 2,392
Colorado
8,500 Raychem Corp. 303
27,700 Washington Gas Light Co. 1,080
----------
12,334
----------
UTILITIES -- TELECOMMUNICATIONS (1.1%):
69,400 LDDS Communications(c) 1,665
- ------------------------------------------------------------
TOTAL COMMON STOCKS 145,300
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (5.6%)
1,806,695 Federated Treasury 1,806
Obligation
6,859,515 Shearson U.S. Treasury Fund 6,860
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 8,666
- ------------------------------------------------------------
TOTAL (COST $142,586)(A) $ 153,966
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $153,591.
(b) 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 $ 16,787
Unrealized depreciation (5,407)
----------
Net unrealized appreciation $ 11,380
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
64
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments
SPECIAL GROWTH FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (94.8%)
AUTOMOTIVE PARTS (3.8%):
8,900 Breed Technologies, Inc. $ 179
20,000 Kaydon Corp. 550
----------
729
----------
BANKS (1.7%):
8,163 First Bank Systems, Inc. 331
----------
COMPUTERS & PERIPHERALS (4.9%):
12,000 Optical Data Systems(c) 486
10,000 Sungard Data Systems,
Inc.(c) 466
----------
952
----------
DRUG STORES (1.0%):
7,000 Eckerd Corp.(c) 204
----------
ELECTRONIC & ELECTRICAL (2.5%):
11,000 Avnet, Inc. 490
----------
FINANCIAL SERVICES (4.0%):
34,300 Aames Financial Corp. 429
8,500 Green Tree Financial Corp. 347
----------
776
----------
FURNITURE (4.1%):
24,000 Juno Lighting 498
11,000 LaZBoy Chair Co. 297
----------
795
----------
HOSPITAL & NURSING EQUIPMENT (3.1%):
15,000 Invacare Corp. 593
----------
INSURANCE -- LIFE (5.3%):
48,090 Gainsco, Inc. 511
14,500 Reliastar Financial Corp. 520
----------
1,031
----------
LEISURE -- RECREATION, GAMING (2.2%):
16,000 Aldila(c) 98
26,200 Callaway Golf Co. 324
----------
422
----------
MISCELLANEOUS MANUFACTURING (5.0%):
18,000 Keystone International, Inc. 378
25,000 Pall Corp. 584
----------
962
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (7.4%):
15,800 Lincare Holdings(c) $ 488
14,300 Mid Atlantic Medical
Services,
Inc.(c) 247
5,400 Pacificare Health System(c) 335
15,200 Sun Healthcare Group(c) 366
----------
1,436
----------
METALS (7.3%):
40,000 Addington Resources, Inc.(c) 450
13,000 Commercial Metals Co. 345
15,000 Mueller Industries, Inc.(c) 624
----------
1,419
----------
OFFICE EQUIPMENT & SUPPLIES (2.5%):
50,000 Checkmate Electronics(c) 481
----------
OIL & GAS EXPLORATION (5.6%):
10,000 Barrett Resources Corp.(c) 235
13,000 Devon Energy Corp. 270
10,000 H.S. Resource, Inc.(c) 165
18,000 Newfield Exploration(c) 414
----------
1,084
----------
PHARMACEUTICALS (3.2%):
18,000 Teva Pharmaceutical
Industries Ltd. 617
----------
PUBLISHING (2.9%):
5,000 Belo Corp. 300
15,000 Valassis Communications(c) 263
----------
563
----------
RETAIL (5.1%):
23,000 Lillian Vernon Corp. 469
16,000 Medicine Shoppe
International, Inc. 512
----------
981
----------
SEMICONDUCTORS (11.7%):
12,000 Advanced Micro Devices(c) 432
5,300 Alliance Semiconductor
Corp.(c) 215
14,100 Atmel Corp.(c) 620
30,000 Integrated Circuit 311
Systems(c)
5,000 Lam Research Corp.(c) 253
7,400 Linear Technology 442
----------
2,273
----------
SERVICES (NON-FINANCIAL) (1.8%):
20,000 Safecard Services 350
----------
TELECOMMUNICATIONS (2.4%):
21,000 Digi International, Inc.(c) 467
352 Intellicall, Inc.(c) 2
----------
469
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
65
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments -- Continued
SPECIAL GROWTH FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TRANSPORTATION -- RAIL (2.3%):
16,000 Railtex, Inc.(c) $ 444
----------
TRUCKING (5.0%):
21,000 American Freightways, 491
Inc.(c)
20,500 TNT Freightways Corp. 481
----------
972
- ------------------------------------------------------------
TOTAL COMMON STOCKS 18,374
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (6.0%)
295,621 Federated Treasury 296
Obligation
868,947 Shearson U.S. Treasury Fund 869
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,165
- ------------------------------------------------------------
TOTAL (COST $18,177)(B) $ 19,539
- ----------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $19,386.
(b) 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 $34. 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 $ 2,271
Unrealized depreciation (943)
----------
Net unrealized appreciation $ 1,328
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
66
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
OHIO REGIONAL STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (94.7%)
AEROSPACE/DEFENSE (0.2%):
5,361 GenCorp, Inc. $ 67
----------
AMUSEMENT & RECREATION SERVICES (0.6%):
7,000 Cedar Fair L.P. 219
----------
AUTOMOTIVE PARTS (5.2%):
24,000 Dana Corp. 617
15,000 Lamson & Sessions Co.(c) 96
15,000 TRW, Inc. 1,115
----------
1,828
----------
BANKS (7.2%):
26,000 Charter One Financial, Inc. 594
14,000 First Merit Corp. 324
9,375 Huntington Bancshares, Inc. 176
23,000 National City Corp. 630
15,000 Provident Bancorp 506
2,000 Second Bancorp 45
6,000 Star Bank 250
----------
2,525
----------
BUILDING MATERIALS (1.2%):
10,000 Medusa Corp. 226
5,000 Owens Corning Fiberglas
Corp.(c) 183
----------
409
----------
CHEMICALS (8.1%):
12,500 A. Schulman, Inc. 392
16,000 Chemed Corp. 492
23,500 Chempower, Inc.(c) 73
20,000 Ferro Corp. 568
6,000 Lesco, Inc. 95
20,000 Lubrizol Corp. 697
26,250 RPM, Inc. 518
----------
2,835
----------
CONSUMER GOODS (2.1%):
12,000 American Greetings Corp. 327
43,000 Gibson Greetings, Inc. 430
----------
757
----------
ELECTRICAL EQUIPMENT (4.7%):
60,000 Pioneer-Standard
Electronics,
Inc. 1,170
20,000 Robbins & Myers Inc. 485
----------
1,655
----------
ENGINEERING (0.3%):
5,000 Corrpro(c) 93
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FINANCIAL SERVICES (2.4%):
15,000 Haverfield Corp. $ 203
16,000 McDonald & Co. Investments 232
24,000 State Auto Financial 402
----------
837
----------
FOOD DISTRIBUTORS (0.9%):
10,000 Chiquita Brands 134
International
7,000 Kroger Co.(c) 178
----------
312
----------
FOREST PRODUCTS (2.9%):
12,000 Mead Corp. 621
15,000 Reynolds & Reynolds Co. 398
----------
1,019
----------
HEALTH CARE (0.4%):
9,000 Health Power, Inc.(c) 138
----------
HOSPITAL & NURSING EQUIPMENT (5.6%):
25,000 Invacare Corp. 988
20,000 Omnicare, Inc. 972
----------
1,960
----------
HOUSEHOLD GOODS (3.1%):
26,221 Lancaster Colony Corp. 911
20,000 Sun Television & Appliance 168
----------
1,079
----------
INDUSTRIAL SERVICES (3.9%):
45,000 ACME Cleveland Corp. 934
22,000 Amcast Industrial Corp. 440
----------
1,374
----------
INSURANCE (2.4%):
10,000 Ohio Casualty 293
15,000 Progressive Corp. 566
----------
859
----------
MACHINE TOOLS (8.3%):
15,750 Bearings, Inc. 488
17,000 Cincinnati Milacron, Inc. 455
37,050 Commercial Intertech Corp. 820
46,500 Gorman Rupp Co. 703
8,250 LDI Corp.(c) 27
5,000 Monarch Machine Tool Co. 49
25,000 Telxon Corp. 393
----------
2,935
----------
MANUFACTURING (2.2%):
10,000 Parker-Hannifin Corp. 520
7,000 TRINOVA Corp. 243
----------
763
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
67
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
OHIO REGIONAL STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
METALS (1.0%):
10,000 Brush Wellman, Inc. $ 197
5,000 Cold Metal Products, Inc.(c) 34
10,000 Park-Ohio Industries, 114
Inc.(c)
----------
345
----------
OFFICE EQUIPMENT & SUPPLIES (2.7%):
23,000 Diebold, Inc. 955
----------
OIL & GAS EXPLORATION (1.8%):
33,000 USX -- Marathon Group 619
----------
PAINT, VARNISHES & ENAMELS (1.4%):
14,000 Sherwin Williams Co. 499
----------
POLLUTION CONTROL SERVICES (0.7%):
51,100 Mid American Waste
Systems(c) 243
----------
PRECISION INSTRUMENTS (1.4%):
30,000 Keithley Instruments, Inc. 506
----------
PRINTING (0.3%):
20,000 Multi-Color Corp.(c) 98
----------
PUBLISHING (2.0%):
25,000 Scripps (E.W.) Co. 716
----------
REAL ESTATE INVESTMENT TRUSTS (1.0%):
16,000 Health Care REIT, Inc. 348
----------
RESTAURANTS (3.3%):
30,000 Bob Evans Farms, Inc. 615
20,000 Frisch's Restaurants 185
22,000 Wendy's International 374
----------
1,174
----------
RETAIL (2.8%):
15,000 Consolidated Stores Corp.(c) 257
17,000 Fabri-Centers of America, 315
Inc.(c)
15,000 The Limited, Inc. 320
10,000 Value City Department
Stores,
Inc.(c) 90
----------
982
----------
RUBBER & RUBBER PRODUCTS (1.6%):
5,000 Cooper Tire & Rubber Co. 123
12,000 Goodyear Tire & Rubber Co. 456
----------
579
----------
SERVICES (NON-FINANCIAL) (0.3%):
4,200 Roto Rooter, Inc. 103
----------
SHIPPING (0.3%):
3,000 Oglebay Norton Co. 98
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
STEEL (3.3%):
35,000 Shiloh(c) $ 333
9,000 Timken Co. 363
25,000 Worthington Industries, Inc. 472
----------
1,168
----------
TEXTILE MANUFACTURING (1.1%):
25,000 Essef Corp.(c) 394
----------
TRANSPORTATION (1.6%):
22,500 Comair Holding, Inc. 567
----------
TRUCKS (1.2%):
20,000 Thor Industries, Inc. 418
----------
UTILITIES -- ELECTRIC (3.2%):
14,000 American Electric Power 459
22,500 D.P.L., Inc. 470
10,000 Ohio Edison 200
----------
1,129
----------
UTILITIES -- TELECOMMUNICATIONS (2.0%):
30,000 Cincinnati Bell 720
- ------------------------------------------------------------
TOTAL COMMON STOCKS 33,325
- ------------------------------------------------------------
- ----------------------------------------------
RIGHTS & WARRANTS (0.2%)
10,000 Cincinnati Microwave, 59
Inc.(c)
- ------------------------------------------------------------
TOTAL RIGHTS & WARRANTS 59
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (5.1%)
303,843 Federated Treasury 304
Obligation
1,476,549 Shearson U.S. Treasury Fund 1,476
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,780
- ------------------------------------------------------------
TOTAL (COST $24,640)(B) $ 35,164
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $35,183.
(b) 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 $ 12,135
Unrealized depreciation (1,611)
----------
Net unrealized appreciation $ 10,524
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
68
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
CORPORATE BONDS (0.1%)
FRANCE (0.1%):
1,313 Axa SA Convertible(c),
4.50%, 1/1/99 $ 78
- ----------------------------------------------------------
TOTAL CORPORATE BONDS 78
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (97.2%)
AUSTRALIA (1.0%):
Energy Sources
60,000 The Broken Hill Proprietary
Co., Ltd.(c) 873
- ----------------------------------------------------------
TOTAL AUSTRALIA 873
- ----------------------------------------------------------
BRITAIN (9.1%):
BANKS (1.3%):
231,000 Standard Chartered Bank 1,119
--------
BROADCASTING & PUBLISHING (1.2%):
78,400 Reed International 1,009
--------
BUSINESS & PUBLIC SERVICES (4.3%):
122,200 British Airport Authority 932
122,600 Cable Wireless 792
65,800 Carlton Communications Plc. 1,000
127,800 Reuters 972
--------
3,696
--------
OIL & GAS PRODUCTION (1.2%):
144,400 British Petroleum 1,040
--------
TELECOMMUNICATIONS EQUIPMENT (1.1%):
311,000 Vodafone 973
- ----------------------------------------------------------
TOTAL BRITAIN 7,837
- ----------------------------------------------------------
FINLAND (1.2%):
ELECTRONIC & ELECTRICAL (1.2%):
25,000 Nokia AB 1,022
- ----------------------------------------------------------
TOTAL FINLAND 1,022
- ----------------------------------------------------------
FRANCE (9.9%):
ADVERTISING (0.7%):
5,750 Euro RSCG Worldwide 634
--------
AUTOMOTIVE PARTS (1.3%):
18,700 Valeo 1,067
--------
ELECTRONIC & ELECTRICAL (2.3%):
680 LeGrand 987
13,300 Schneider 1,024
--------
2,011
--------
INSURANCE (1.2%):
19,700 Axa 1,040
--------
MANUFACTURING - CONSUMER GOODS (1.3%):
4,550 Pinault-Printemps 1,031
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RECREATION/OTHER CONSUMER GOODS (1.9%):
6,700 BIC Corp. $ 1,119
3,600 Castorama(c) 597
--------
1,716
--------
RETAIL (1.2%):
2,120 Carrefour 1,065
- ----------------------------------------------------------
TOTAL FRANCE 8,564
- ----------------------------------------------------------
GERMANY (7.6%):
BANKS (2.1%):
1,980 Depfa Bank 1,007
1,620 Deutsche Bank(c) 796
--------
1,803
--------
COSMETICS & RELATED (1.2%):
1,360 Beiersdorf AG 1,061
--------
ENGINEERING/INDUSTRIAL
CONSTRUCTION (1.0%):
2,620 AGIV 844
--------
HEALTH & PERSONAL CARE (1.1%):
1,260 Schering 938
--------
MACHINE TOOLS (1.1%):
3,550 Mannesmann 970
--------
UTILITIES - ELECTRIC (1.1%):
2,660 Veba 994
- ----------------------------------------------------------
TOTAL GERMANY 6,610
- ----------------------------------------------------------
HOLLAND (8.4%):
BREWERIES (1.0%):
6,400 Heineken Holdings 839
--------
COMPUTERS & PERIPHERALS (0.5%):
10,900 Getronics 447
--------
FOREST PRODUCTS (1.0%):
29,300 Koninklijke KNP 885
--------
INSURANCE (1.1%):
18,600 Internationale Nederlanden 982
--------
LEISURE (1.2%):
18,400 Polygram 1,040
--------
POLLUTION CONTROL SERVICES (1.0%):
7,500 Ver Ned Uitgevers(c) 840
--------
SERVICES (NON-FINANCIAL) (1.2%):
16,600 Randstad Holdings 996
--------
SHIPPING & SHIPBUILDING (1.0%):
32,600 IHC Caland 892
--------
WHOLESALE & INTERNATIONAL TRADE (0.4%):
4,500 Hagemeyer 389
- ----------------------------------------------------------
TOTAL HOLLAND 7,310
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
69
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
HONG KONG (5.3%):
BANKS (1.0%):
217,000 Guoco Group $ 824
--------
DIVERSIFIED (1.9%):
197,000 Hutchinson Whampoa 855
122,000 Swire Pacific "A" 816
--------
1,671
--------
RADIO & TELEVISION (0.8%):
179,000 Television Broadcast 666
--------
REAL ESTATE (1.6%):
3,000,000 China Resources 752
124,000 Henderson Land 639
--------
1,391
- ----------------------------------------------------------
TOTAL HONG KONG 4,552
- ----------------------------------------------------------
ITALY (1.8%):
AUTOMOBILES (0.4%):
37,800 Pininfarina 363
--------
INSURANCE (0.5%):
20,000 Assicurazioni Generali 481
--------
UTILITIES - TELECOMMUNICATIONS (0.9%):
282,000 Telecom Italia 751
- ----------------------------------------------------------
TOTAL ITALY 1,595
- ----------------------------------------------------------
JAPAN (33.3%):
AEROSPACE/DEFENSE (0.8%):
100,000 Mitsubishi Heavy Industry 726
--------
BANKS (4.0%):
62,000 Asahi Bank 797
32,000 Mitsubishi Bank 785
47,000 Sanwa Bank 1,027
38,000 Sumitomo Bank 823
--------
3,432
--------
BUILDING MATERIALS (0.9%):
22,000 Tostem Corp. 799
--------
BUSINESS & PUBLIC SERVICE (0.6%):
17,600 Mos Food Services 517
--------
CHEMICALS (1.6%):
36,000 Shin Etsu Chemical 698
127,000 Tosoh Corp.(c) 676
--------
1,374
--------
ELECTRICAL EQUIPMENT (3.5%):
7,300 Keyence(c) 779
14,000 Kyocera 1,083
28,000 Murata Manufacturing 1,126
--------
2,988
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ELECTRONIC & ELECTRICAL (5.2%):
52,000 Canon, Inc. $ 860
88,000 Hitachi, Ltd. 896
9,000 Riso Kagaku 614
25,000 Rohm Co., Ltd. 1,157
32,000 Tokyo Electron 998
--------
4,525
--------
ENGINEERING/INDUSTRIAL CONSTRUCTION (0.3%):
11,000 Kinden 219
--------
FINANCE (1.6%):
50,000 Daiwa Securities 631
12,000 Nichiei Co. 767
--------
1,398
--------
HOUSEHOLD GOODS (0.9%):
20,400 Amway Japan 760
--------
MANUFACTURING - CAPITAL GOODS (1.2%):
16,000 Secom & Co. 1,044
--------
MERCHANDISING (0.9%):
11,000 Seven-eleven Japan 792
--------
PHARMACEUTICALS (1.3%):
51,000 Yamanouchi Pharmaceutical 1,147
--------
RADIO & TELEVISION (0.9%):
3,270 Nippon Television Network 728
--------
REAL ESTATE (0.9%):
60,000 Sekisui House 793
--------
RUBBER & RUBBER PRODUCTS (1.0%):
56,000 Bridgestone 906
--------
STEEL (1.8%):
195,000 Nippon Steel 775
268,000 NKK Corp.(c) 750
--------
1,525
--------
STORAGE & WAREHOUSING (1.0%):
51,000 Mitsubishi Warehouse 880
--------
TELECOMMUNICATIONS EQUIPMENT (1.0%):
98 DDI Corp. 863
--------
UTILITIES - ELECTRIC (0.9%):
66,000 Matsushita Electric Works 793
--------
UTILITIES - TELECOMMUNICATIONS (1.0%):
99 Nippon Telephone & Telegraph 875
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
70
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
WHOLESALE & INTERNATIONAL TRADE (2.0%):
33,000 Canon Sales $ 872
122,000 Itochu Corp. 828
--------
1,700
- ----------------------------------------------------------
TOTAL JAPAN 28,784
- ----------------------------------------------------------
MALAYSIA (1.9%):
DIVERSIFIED (0.9%):
496,000 Renong Berhad 759
--------
FINANCIAL SERVICES (0.5%):
125,000 Hong Leong Credit 456
--------
FOREST PRODUCTS (0.5%):
99,000 Adkam Perdana 445
- ----------------------------------------------------------
TOTAL MALAYSIA 1,660
- ----------------------------------------------------------
NEW ZEALAND (1.1%):
FOREST PRODUCTS (1.1%):
338,000 Fletcher Challenge 910
- ----------------------------------------------------------
TOTAL NEW ZEALAND 910
- ----------------------------------------------------------
SINGAPORE (2.0%):
AIRLINES (1.0%):
84,000 Singapore Airlines, Series F 808
--------
BANKS (1.0%):
81,000 Overseas Chinese Banking
Corp. 884
- ----------------------------------------------------------
TOTAL SINGAPORE 1,692
- ----------------------------------------------------------
SPAIN (1.3%):
DIVERSIFIED (0.3%):
92,000 Cofir 299
--------
FOOD DISTRIBUTORS (1.0%):
48,600 Pryca 861
- ----------------------------------------------------------
TOTAL SPAIN 1,160
- ----------------------------------------------------------
SWEDEN (5.1%):
AUTOMOBILES (0.9%):
41,400 Volvo AB 777
--------
COSMETICS & RELATED (1.3%):
37,300 Astra A Free(c) 1,088
--------
ELECTRONIC & ELECTRICAL (0.9%):
41,000 Allgon 804
--------
MANUFACTURING (1.2%):
16,000 Ericsson (L.M.) Series B 1,059
--------
MEDICAL SUPPLIES (0.8%):
45,000 Arjo 700
- ----------------------------------------------------------
TOTAL SWEDEN 4,428
- ----------------------------------------------------------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
SWITZERLAND (4.3%):
DIVERSIFIED (0.9%):
750 Baer Holdings Bearer $ 788
--------
FOOD PROCESSING (1.1%):
960 Nestle Registered 941
--------
PHARMACEUTICALS (1.1%):
165 Roche Holdings AG
Genusscheine NPV 995
--------
UTILITIES - ELECTRIC (1.2%):
1,020 Brown Boveri, Series A 1,010
- ----------------------------------------------------------
TOTAL SWITZERLAND 3,734
- ----------------------------------------------------------
UNITED STATES (3.9%):
BROKERAGE FIRMS & SECURITY DEALERS (0.3%):
8,700 Brazilian Investment Co. 273
--------
INDUSTRIAL SERVICES (0.9%):
750,000 China North Industries(c) 750
--------
INVESTMENT FUNDS - CLOSED END (2.2%):
17,000 Chile Fund 805
12,700 India Magnum Fund NV A(c) 722
122 Korea Eurofund(c) 435
--------
1,962
--------
UTILITIES - TELECOMMUNICATIONS (0.5%):
25,700 Videotron Holdings PLC.(c) 402
- ----------------------------------------------------------
TOTAL UNITED STATES 3,387
- ----------------------------------------------------------
TOTAL COMMON STOCKS 84,118
- ----------------------------------------------------------
- ---------------------------------------------------------
INVESTMENT COMPANIES (0.8%)
667,222 Shearson U.S. Treasury Fund 667
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 667
- ----------------------------------------------
TOTAL (COST $80,808)(B) $ 84,863
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $86,530.
(b) 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 $ 6,255
Unrealized depreciation (2,199)
-------
Net unrealized
appreciation $ 4,056
========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
71
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
- ---------------------------------------------------------
FORWARD CURRENCY CONTRACTS
<TABLE>
<CAPTION>
CONTRACT
VALUE
CONTRACT (U.S. APPRECIATION DELIVERY
CURRENCY PRICE DOLLARS) (DEPRECIATION) DATE
- ----------------------------------------- --------- ---------- -------- -------
<S> <C> <C> <C> <C>
CURRENCY SOLD:
Japanese Yen 84.125032 $ (258,668) $ (331) 5/2/95
---------- --------
Total currency sold $ (258,668) $ (331)
========= ========
CURRENCY PURCHASED:
Dutch Guilder 1.514748 $ 258,668 $ (5,760) 5/2/95
---------- --------
Total currency purchased $ 258,668 $ (5,760)
========= ========
Net payable for forward currency
contracts purchased and sold $ (6,091)
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
72
<PAGE>
Notes to Financial Statements
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
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, Tax-Free Money Market Fund, Limited
Term Income Fund, Government Mortgage Fund, Intermediate Income Fund, Investment
Quality Bond Fund, Ohio Municipal Bond Fund, Balanced Fund, Stock Index Fund,
Value Fund, Diversified Stock Fund, Growth Fund, Special Value Fund, Special
Growth Fund, Ohio Regional Stock Fund, and International Growth Fund.
2. SIGNIFICANT ACCOUNTING POLICIES:
SECURITIES VALUATION:
- --------------------
Investments of the U.S. Government Obligations Fund, the Prime Obligations Fund
and the Tax-Free 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, the
Government Mortgage Fund, the Intermediate Income Fund, the Investment Quality
Bond Fund, the Ohio Municipal Bond Fund, the Balanced Fund, the Stock Index
Fund, the Value Fund, the Diversified Stock Fund, the Growth Fund, the Special
Value Fund, the Special Growth Fund, the Ohio Regional Stock Fund, and the
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 in the Balanced Fund and the
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 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.
The Funds isolate that portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuation arising
from changes in market prices of securities held.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, purchases
and sales of foreign currencies, currency gains or losses realized between the
trade and settlement dates on securities transactions and the difference between
the amount of interest recorded on a Fund's books, 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 the
exchange rate.
73
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
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
an unrealized gain or loss. When the Forward is closed, the Fund records a
realized gain or loss equal to the difference between the value at the time it
was opened and the value at the time it was closed. 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:
- -----------------
Each 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. The 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 move 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; during the period
between purchase and settlement no payment is made and no interest accrues. A
segregated account is established and maintains cash and marketable securities
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.
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 and distributable net realized capital gains, if any, are declared and
distributed at least annually for the Stock Index Fund, the Value Stock Fund,
the Diversified Stock Fund, the Growth Fund, the Special Value Fund, the Special
Growth Fund, the Ohio Regional Stock Fund, and the International Growth Fund.
Dividends from net investment income are declared and paid monthly and
distributable net realized capital gains, if any, are declared and distributed
at least annually for the Limited Term Income Fund, the Government Mortgage
Fund, the Intermediate Income Fund, the Investment Quality Bond Fund, the Ohio
Municipal Bond Fund, and the Balanced Fund.
74
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
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, 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.
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.
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the six
months ended April 30, 1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Limited Term Income Fund............. $108,053,386 $ 27,036,296
Government Mortgage Fund............. $ 34,141,401 $ 41,957,068
Intermediate Income Fund............. $ 45,696,863 $ 32,245,604
Investment Quality Bond Fund......... $ 53,718,571 $ 49,102,816
Ohio Municipal Bond Fund............. $ 35,466,334 $ 36,043,062
Balanced Fund........................ $ 79,112,448 $ 62,383,648
Stock Index Fund..................... $ 20,540,742 $ 9,328,966
Value Fund........................... $ 63,655,162 $ 17,814,533
Diversified Stock Fund............... $142,784,968 $116,116,919
Growth Fund.......................... $ 1,331,614 $ 25,478,542
Special Value Fund................... $ 47,216,203 $ 23,119,184
Special Growth Fund.................. $ 7,686,792 $ 11,925,297
Ohio Regional Stock Fund............. $ 1,531,661 $ 2,110,048
International Growth Fund............ $ 30,178,013 $ 19,936,541
</TABLE>
4. 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 and sub-investment advisory agreements, SAM is entitled to receive
fees based on a percentage of the average net assets of the Funds. Society
serves the Funds as custodian for all funds except the International Growth
Fund. Society received no fees from the Funds for providing custodian services
except for reimbursement of actual out-of-pocket expenses incurred. During the
year ended October 31, 1994, KeyCorp made a capital contribution of $2,506,027
to the Prime Obligations Fund.
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,
75
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
and assisting shareholders in changing dividend options, account designations
and addresses. For providing such services, Society may receive a fee computed
daily as a percentage of the average net assets of the Funds.
Affiliates of The BISYS Group, Inc. ("BISYS") serve as the Fund's administrator
and distributor. Effective March 29, 1995, Concord Holding Corporation (the
"Administrator"), an indirect, wholly-owned subsidiary of BISYS, became the
administrator to the Funds and Victory Broker Dealer Services, Inc. (the
"Distributor") became the distributor to the Funds. Prior to March 29, 1995,
other affiliates of BISYS served as the Fund's administrator and distributor.
Certain officers of the Funds are affiliated with BISYS. Such officers receive
no direct payments from the Funds for serving as officers of the Funds. Such
officers are paid no fees directly by the Funds for serving as officers of the
Funds.
Under the terms of the administration agreement, the Administrator's fees
are computed daily as a percentage of the average net assets of the Funds. The
Distributor receives no fees from the Funds for providing distribution services
and is entitled to receive commissions on sales of shares of the variable net
asset value funds. For the six months ended April 30, 1995, the Distributor
received $171,000 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 $74,000 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 net assets.
Fees may be voluntarily reduced to assist the Funds in maintaining competitive
expense ratios.
Information regarding related party transactions is as follows for the six
months ended April 30, 1995:
<TABLE>
<CAPTION>
U.S. TAX-FREE
GOVERNMENT PRIME MONEY
OBLIGATIONS OBLIGATIONS MARKET
FUND FUND FUND
-------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .35% .35% .35%
Voluntary fee reductions $ 16,151
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15%
Voluntary fee reductions $ 260
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $140,500 $193,436 $ 67,915
</TABLE>
<TABLE>
<CAPTION>
LIMITED INVESTMENT
TERM GOVERNMENT INTERMEDIATE QUALITY
INCOME MORTGAGE INCOME BOND
FUND FUND FUND FUND
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .50% .50% .75% .75%
Voluntary fee reductions $ 11,015 $ 12,348 $160,661 $122,074
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15% .15%
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 38,451 $ 48,386 $ 39,466 $ 32,928
</TABLE>
76
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO
MUNICIPAL STOCK
BOND BALANCED INDEX
FUND FUND FUND
-------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .60% 1.00% .60%
Voluntary fee reductions $ 85,187 $293,792 $ 72,524
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15%
Voluntary fee reductions $ 70,657
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 20,140 $ 47,761 $ 10,560
Voluntary fee reductions: $ 17,703
</TABLE>
<TABLE>
<CAPTION>
DIVERSIFIED
VALUE STOCK GROWTH
FUND FUND FUND
-------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) 1.00% .65% 1.00%
Voluntary fee reductions $434,192 $ 58,363 $ 93,184
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15%
Voluntary fee reductions $ 303 $ 240
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 70,468 $ 84,805 $ 16,607
</TABLE>
<TABLE>
<CAPTION>
OHIO
SPECIAL SPECIAL REGIONAL INTERNATIONAL
VALUE GROWTH STOCK GROWTH
FUND FUND FUND FUND
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) 1.00% 1.00% .75% 1.10%
Voluntary fee reductions $192,792 $ 39,953 $ 7,022 $ 61,413
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15% .15%
Voluntary fee reductions $ 144
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 40,759 $ 7,725 $ 11,588 $ 59,708
</TABLE>
77
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
5. 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>
Aggressive Growth Portfolio1 to Special Growth Fund
Corporate Bond Portfolio1 to Investment Quality Bond Fund
Equity Income Portfolio1 to Value Fund
Equity Portfolio1 to Growth Fund
Foreign Markets Portfolio1 to International Growth Fund
Short-Term Government Income Portfolio1 to Limited Term Income Fund
U.S. Treasury Money Market Portfolio1 to U.S. Government Obligations Money Fund
</TABLE>
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 Portfolio1 to Financial Reserves Fund
Fund for Income Portfolio to Fund for Income
Government Bond Portfolio1 to Government Bond Fund
Institutional Money Market Portfolio1 to Institutional Money Market Fund
National Municipal Bond Portfolio1 to National Municipal Bond Fund
New York Tax-Free Portfolio to New York Tax-Free Fund
Ohio Municipal Money Market Portfolio1 to Ohio Municipal Money Market 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 acquisition was
accomplished by a tax-free exchange of 858,745 shares of the Growth Fund for the
882,905 shares of the Society Earnings Momentum Fund outstanding on March 17,
1994. These share transactions are included in the Growth Fund's statement of
changes in net assets. The Society Earnings Momentum Fund's net assets at March
17, 1994 of approximately $8,794,000, including $649,000 of unrealized
appreciation, were combined with those of the Growth Fund. The combined net
assets immediately after the acquisition were approximately $70,777,000.
- ---------------
1 Not included in this report.
78
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION:
The Victory Funds (the "Fund"), organized as a Massachusetts business trust on
January 6, 1982, is an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"). The Fund's
Declaration of Trust permits the Board of Trustees (the "Trustees") to create an
unlimited number of Portfolios. Victory New York Tax-Free Portfolio and the Fund
for Income Portfolio are two series (of a total of 14 series) of the Fund. Each
Portfolio's capitalization consists of an unlimited number of shares of
beneficial interest without par value.
On April 30, 1994, all of the assets and liabilities of the Investors Preference
New York Tax-Free Fund, Inc. ("IPNY") and the Investors Preference Fund for
Income, Inc. ("IPFFI") were acquired by the New York Tax-Free Portfolio and the
Fund for Income Portfolio, respectively, of the Fund pursuant to separate
Agreements and Plans of Reorganization approved by the shareholders of each IPNY
and IPFFI.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies for New York
Tax-Free Portfolio and Fund for Income Portfolio (the "Portfolios").
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles.
SECURITIES VALUATION:
- --------------------
The securities of the Fund for Income Portfolio that are traded on an exchange
or on the over-the-counter market are valued based upon the last sale price, or
if no sale has occurred, at the closing bid price. Securities for which market
quotations are not readily available are valued at the closing over-the counter
bid price, if available, or at their fair value as determined in good faith by
management following procedures approved by the Fund's Trustees. Short term debt
instruments with remaining maturities of 60 days or less at the time of purchase
are valued at amortized cost or original cost plus accrued interest, both of
which approximates market value.
The securities of New York Tax-Free Portfolio are valued by a pricing service
based upon a computerized matrix system or appraisals, in each case in reliance
upon information concerning market transactions and quotations from recognized
municipal securities dealers. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by
management following procedures approved by the Fund's Trustees.
REPURCHASE AGREEMENTS:
- -----------------------
When each Portfolio enters into a repurchase agreement, the repurchase price of
the securities will generally equal the amount paid by each Portfolio plus a
negotiated interest amount. The seller under the repurchase agreement will be
required to provide securities (collateral) to each Portfolio whose value will
be at least equal to the repurchase agreement amount. Each Portfolio monitors
the value of the collateral on a daily basis, and if the value of the collateral
falls below required levels, each Portfolio intends to seek additional
collateral from the seller to terminate the repurchase agreements. If the seller
defaults, each Portfolio would suffer a loss to the extent that the proceeds
from the sale of the underlying securities were less than the repurchase price.
Any such loss would be increased by any cost incurred on the disposing of such
securities. A repurchase agreement entered into by each Portfolio will be
limited to transactions with broker-dealers or domestic banks believed to
present minimal credit risks, and each Portfolio will take delivery of all
securities underlying the repurchase agreement until such agreement expires.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTION:
- ----------------------------------------------
The New York Tax-Free Portfolio may engage in when-issued or delayed delivery
transactions. To the extent the Portfolio engages in such transactions, it will
do so for the purpose of acquiring portfolio securities consistent with its
investment objectives and policies and not for the purpose of investment
leverage. The Portfolio will record a when-issued security and the related
liability on the trade date. Until the securities are received and paid for, the
Portfolio will maintain security positions such that sufficient liquid assets
will be available to make payments for the securities purchased. Securities
purchased on a when-issued or delayed delivery basis are marked to market daily
and begin earning interest on settlement date.
79
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements--Continued
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
INCOME TAXES:
- -------------
It is the policy of each Portfolio 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.
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. 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.
DIVIDENDS TO SHAREHOLDERS:
- -------------------------
Dividends from net investment income are declared and paid monthly and
distributable net realized capital gains, if any, are declared and distributed
at least annually for the New York Tax-Free Portfolio and the Fund for Income
Portfolio.
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, 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.
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the six
months ended April 30, 1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
New York Tax-Free $ 1,117,454 $ 1,736,206
Fund for Income $ 7,973,666 $ 15,709,007
</TABLE>
4. RELATED PARTY TRANSACTIONS:
ADVISORY AGREEMENT:
- -------------------
Key Trust Company ("Key Trust") is the investment adviser for each Portfolio and
receives a fee based on average daily net assets at an annual rate of 0.55% and
0.50% for New York Tax-Free Portfolio and Fund for Income Portfolio,
respectively. For the six months ended April 30, 1995, Key Trust accrued $44,599
and $64,663 in advisory fees, of which $41,068 and $42,981 was voluntarily
waived, for New York Tax-Free Portfolio and Fund for Income Portfolio,
respectively.
ADMINISTRATION AGREEMENT:
- -------------------------
Concord Financial Group (the "Administrator" or "Concord") is the Administrator
to each Portfolio under an Administration Agreement with respect to each
Portfolio. The Administrator receives an annual fee of 0.15% of each Portfolio's
average net assets for services performed under each Portfolio's Administration
Agreement. For the six months ended April 30, 1995, the administrator accrued
$12,094 and $19,284 from the New York Tax-Free Portfolio and Fund for Income
Portfolio, respectively, in administration fees, none of which were waived.
Effective March 29, 1995 Concord became BISYS Investment Services Inc., a wholly
owned subsidiary of The BISYS Group, Inc. ("BISYS"). BISYS serves as
administrator on substantially identical terms as described above.
80
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements--Continued
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
DISTRIBUTION AGREEMENT:
- -----------------------
Victory Broker Dealer Services, Inc. (the "Distributor"), an affiliate of the
Administrator, serves as Distributor to each
Portfolio. The Distributor sells shares of the Portfolios as agent on behalf of
the Fund at no cost to the Portfolios. The Fund has adopted a Distribution and
Service Plan (the "Plan") for the Class A shares of New York Tax-Free Portfolio
and The Fund for Income Portfolio under Rule 12b-1 under the Investment Company
Act of 1940. Under the Plan, the Adviser or Administrator may use their fee
revenues, or other resources to pay expenses associated with activities
primarily intended to result in the sale of the shares of the Portfolios. The
Fund has adopted a Distribution Plan for Class B shares of New York Tax-Free
Portfolio to compensate the Distributor for its services and costs in
distributing Class B shares and servicing accounts. Under the Distribution Plan,
the Fund pays the Distributor an annual "asset-based sales charge" of 0.75% per
year on Class B shares that are outstanding for six years or less. This fee is
computed on the average annual net assets of Class B shares, determined as of
the close of each regular business day.
* Directors fees and expenses for the six months ended April 30, 1995 of $777
for New York Tax-Free Portfolio and $126 for Fund for Income Portfolio were paid
to directors having no affiliation with the Fund other than in their capacity as
directors.
5. MERGERS:
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 Portfolio of the Victory Funds to a
corresponding investment fund of the Victory Portfolios in exchange for the
assumption of liabilities of each Victory Fund. The following Portfolios of The
Victory Funds merged into existing funds of The Victory Portfolios:
<TABLE>
<CAPTION>
THE VICTORY FUNDS THE VICTORY PORTFOLIOS
- ---------------------------------------- ------------------------------------------------------
<S> <C> <C>
Aggressive Growth Portfolio1 to Special Growth Fund
Corporate Bond Portfolio1 to Investment Quality Bond Fund
Equity Income Portfolio1 to Value Fund
Equity Portfolio1 to Growth Fund
Foreign Markets Portfolio1 to International Growth Fund
Short-Term Government Income Portfolio1 to Limited Term Income Fund
U.S. Treasury Money Market Portfolio1 to U.S. Government Obligations Money Fund
</TABLE>
Additionally, the following series of The Victory Funds merged into newly
created series of The Victory Portfolios:
<TABLE>
<CAPTION>
THE VICTORY FUNDS THE VICTORY PORTFOLIOS
- ---------------------------------------- ------------------------------------------------------
<S> <C> <C>
Financial Reserves Portfolio1 to Financial Reserves Fund
Fund for Income Portfolio to Fund for Income
Government Bond Portfolio1 to Government Bond Fund
Institutional Money Market Portfolio1 to Institutional Money Market Fund
National Municipal Bond Portfolio1 to National Municipal Bond Fund
New York Tax-Free Portfolio to New York Tax-Free Fund
Ohio Municipal Money Market Portfolio1 to Ohio Municipal Money Market Fund
</TABLE>
As of June 2, 1995 the fund accounting for the Portfolios is being performed by
BISYS Fund Services Ohio, Inc., a wholly owned subsidiary of the The BISYS
Group, Inc.
6. SPECIAL SHAREHOLDER MEETING:
On April 28, 1995, a special meeting of the shareholders of The Victory Funds
was held to consider various proposals, including, among other things, the
approval of an Agreement and Plan of Reorganization whereby the 14 series
portfolios of The Victory Funds were reorganized into corresponding series of
The Victory Portfolios, the election of certain nominees to serve on the Board
of Trustees of The Victory Funds and the ratification of the selection of
Coopers & Lybrand L.L.P. as independent auditors for each portfolio of The
Victory Funds2.
- ---------------
1 Not included in this report.
2 The April 28, 1995 meeting was adjourned until May 26, 1995 with respect to
the New York Tax Free and Fund For Income Portfolios due to a lack of a quorum
on such date. On May 26, 1995, a quorum was present and voted the shares of
such portfolios as indicated.
81
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements--Continued
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
Election of Trustees -- The shareholders of The Victory Funds, as a group, were
requested to direct the proxies to vote for or withhold authority to vote for
the election of certain individuals to serve as Trustees of The Victory Funds.
The shareholders of The Victory Funds approved each nominee. The results of such
solicitation are as follows:
<TABLE>
<CAPTION>
NOMINEE VOTES FOR VOTES WITHHELD
------------------------------------------ -------------- ---------------
<S> <C> <C>
Robert G. Brown 1,306,537,258 38,671,464
Edward P. Cambell 1,308,422,096 36,786,627
Harry Gazelle 1,307,262,991 37,945,462
Thomas F. Morrissey 1,310,379,551 34,828,901
Stanley I. Landgraf 1,308,450,924 36,757,800
Leigh A. Wilson 1,310,734,626 34,474,098
H. Patrick Swygert 1,311,252,568 34,456,155
</TABLE>
Agreement and Plan of Reorganization -- the shareholders of each Portfolio
approved an Agreement and Plan of Reorganization with respect to each Portfolio
as follows:
<TABLE>
<CAPTION>
PORTFOLIO IN FAVOR OPPOSED ABSTAIN
------------------------------------ ------------ ---------- -----------
<S> <C> <C> <C>
NY Tax Free-Class A 871,430 15,011 37,413
NY Tax Free-Class B 29,267 -- 1,666
Fund For Income 1,834,471 11,902 105,207
</TABLE>
Reclassification and Changes in Fundamental Policies -- The shareholders of the
below-listed Portfolios approved certain reclassifications and changes in
fundamental policies of the relevant Portfolio (and the successor Portfolio
post-reorganization) by the following votes:
<TABLE>
<CAPTION>
PORTFOLIO IN FAVOR OPPOSED ABSTAIN
------------------------------------ ------------ ---------- -----------
<S> <C> <C> <C>
NY Tax Free-Class A 871,550 15,011 37,293
NY Tax Free-Class B 29,267 -- 1,666
Fund for Income 1,803,283 40,439 107,858
</TABLE>
Ratification of Independent Auditors -- the shareholders of each Portfolio
ratified the appointment of Coopers & Lybrand L.L.P. as independent auditors for
each Portfolio for the next fiscal year as follows:
<TABLE>
<CAPTION>
PORTFOLIO IN FAVOR OPPOSED ABSTAIN
------------------------------------ ------------ ---------- -----------
<S> <C> <C> <C>
NY Tax Free-Class A 891,636 727 31,490
NY Tax Free-Class B 29,267 -- 1,666
Fund For Income 1,860,529 7,123 83,928
</TABLE>
- --------------------------------------------------------------------------------
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Fund. The report is not
authorized for distribution to prospective investors in the Fund, unless
preceded or accompanied by an effective prospectus. Neither the Fund nor Victory
Broker Dealer Services, Inc. is a bank and Fund shares are not backed or
guaranteed by any bank or insured by the FDIC, the Federal Reserve Board, or any
other agency. Victory Broker Dealer Services, Inc., which distributes The
Victory Funds, is not affiliated with Key Trust Company. Investing in mutual
funds involves risks, including the possible loss of principal amount invested.
An investment in a money market Portfolio is not insured or guaranteed by the
U.S. Government, and there can be no assurance that a money market Portfolio
will maintain a stable $1.00 share price.
- --------------------------------------------------------------------------------
82
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT OBLIGATIONS FUND
---------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.025 0.032 0.026 0.036 0.060 0.076
Distributions
Net investment income (0.025) (0.032) (0.026) (0.036) (0.060) (0.076)
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Total Return 2.57%(a) 3.30% 2.62% 3.66% 6.14% 7.83%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $524,143 $412,048 $515,734 $579,836 $430,248 $376,021
Ratio of expenses to
average net assets 0.62%(b) 0.63% 0.60% 0.60% 0.60% 0.62%
Ratio of net investment income
to average net assets 5.15%(b) 3.20% 2.57% 3.50% 5.92% 7.56%
Ratio of expenses to
average net assets* 0.80%
Ratio of net investment income
to average net assets* 3.03%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
<TABLE>
<CAPTION>
PRIME OBLIGATIONS FUND
---------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.025 0.035 0.030 0.037 0.061 0.078
Net realized losses on investments (0.003)
- ----------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 0.025 0.032 0.030 0.037 0.061 0.078
- ----------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.025) (0.035) (0.030) (0.037) (0.061) (0.078)
Capital transactions 0.003
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Total Return 2.53%(a) 3.57% 3.05% 3.77% 6.32% 8.06%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $430,000 $782,303 $720,024 $524,338 $442,263 $444,238
Ratio of expenses to average net assets 0.69%(b) 0.62% 0.60% 0.61% 0.62% 0.62%
Ratio of net investment income to
average net assets 5.02%(b) 3.52% 2.96% 3.68% 6.14% 7.76%
Ratio of expenses to average net
assets* 0.79%
Ratio of net investment income to
average net assets* 3.35%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
83
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND
----------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 100
- -----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.016 0.021 0.020 0.027 0.043 0.054
Distributions
Net investment income (0.016) (0.021) (0.020) (0.027) (0.043) (0.054)
- -----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Total Return 1.66%(a) 2.17% 2.06% 2.77% 4.44% 5.48%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 209,606 $198,561 $189,351 $151,012 $129,601 $134,652
Ratio of expenses to average net assets 0.61%(b) 0.60% 0.59% 0.61% 0.62% 0.63%
Ratio of net investment income to
average net assets 3.32%(b) 2.14% 2.04% 2.70% 4.29% 5.32%
Ratio of expenses to average net
assets* 0.63%(b) 0.79% 0.60%
Ratio of net investment income to
average net assets* 3.30%(b) 1.95% 2.02%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
84
<PAGE>
THE VICTORY FUNDS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK TAX-FREE PORTFOLIO
-----------------------------------------------------------------------------------
CLASS A
-------------------------------------------------
CLASS B PERIOD
----------------------------- FROM
PERIOD FROM JANUARY 1,
SEPTEMBER 26, 1994 TO YEARS ENDED
1994 TO OCTOBER DECEMBER 31,
OCTOBER 31, 31, -------------------
1994 SIX MONTHS 1994 1993 1992
------------- ENDED ---------- ------- -------
APRIL 30,
1995
----------
SIX MONTHS (UNAUDITED)
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 12.39 $12.62 $ 12.39 $ 13.54 $ 12.76 $ 12.50
- -------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.31 0.07 0.32 0.57 0.70 0.74
Net realized and unrealized
gains (losses) on
investments 0.27 (0.23) 0.30 (1.15) 0.84 0.26
- -------------------------------------------------------------------------------------------------------------------------
Total from investment
activities 0.58 (0.16) 0.62 (0.58) 1.54 1.00
- -------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.30) (0.07) (0.33) (0.57) (0.70) (0.74)
Net realized gains (0.17) -- (0.17) -- (0.06) --
- -------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.47) (0.07) (0.50) (0.57) (0.76) (0.74)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.50 $12.39 $ 12.51 $ 12.39 $ 13.54 $ 12.76
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charge) 4.80%(b) (1.25)%(b) 5.16%(b) (4.31)%(b) 12.34% 8.26%
RATIOS -- SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $ 834 -- $ 15,974 $ 17,840 $28,530 $26,034
Ratio of expenses to average net
assets 2.72%(c) 0.52%(c) 1.10%(c) 0.91%(c) 0.87% 0.66%
Ratio of net investment income to
average net assets 9.48%(c) 5.94%(c) 5.18%(c) 5.33%(c) 5.28% 5.89%
Ratio of expenses to average net
assets* 3.07%(c) 0.86%(c) 1.45%(c) 1.25%(c) 0.96% 0.96%
Ratio of net investment income to
average net assets* 9.13%(c) 5.60%(c) 4.83%(c) 4.99%(c) 5.19% 5.59%
Portfolio turnover rate 17.00% 18.00% 17.00% 18.00% 12.00% 14.00%
<CAPTION>
PERIOD FROM
FEBRUARY 11,
1991 TO
DECEMBER 31,
1991(A)
------------
<S> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 12.00
- ----------------------------------
Investment Activities
Net investment income 0.64
Net realized and unrealized
gains (losses) on
investments 0.50
- ----------------------------------
Total from investment
activities 1.14
- ----------------------------------
Distributions
Net investment income (0.64)
Net realized gains --
- ----------------------------------
Total Distributions (0.64)
- ----------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.50
- ----------------------------------
Total Return (excludes sales
charge) 11.06%(b)
RATIOS -- SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $ 20,995
Ratio of expenses to average net
assets 0.45%(c)
Ratio of net investment income to
average net assets 6.28%(c)
Ratio of expenses to average net
assets* 0.95%(c)
Ratio of net investment income to
average net assets* 5.78%(c)
Portfolio turnover rate 61.00%
</TABLE>
- ---------------
*During the period, certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
FUND FOR INCOME PORTFOLIO
--------------------------------------------------------------------------------------
PERIOD FROM
FEBRUARY 1,
1994 TO YEARS ENDED JANUARY 31,
OCTOBER 31, -------------------------------------------------------
1994 1994 1993 1992 1991 1990
SIX MONTHS ----------- ------- ------- ------- ------- -------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.43 $ 10.14 $ 10.57 $ 10.55 $ 10.19 $ 9.90 $ 9.73
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (0.05) 0.52 0.80 0.80 0.85 0.91 0.93
Net realized and unrealized gains
(losses) on investments 0.58 (0.71) (0.41) 0.06 0.36 0.29 0.17
- ----------------------------------------------------------------------------------------------------------------------------------
Total from investment activities 0.53 (0.19) 0.39 0.86 1.21 1.20 1.10
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.35) (0.52) (0.80) (0.80) (0.85) (0.91) (0.93)
Net realized gains -- -- (0.02) (0.04) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.35) (0.52) (0.82) (0.84) (0.85) (0.91) (0.93)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.61 $ 9.43 $ 10.14 $ 10.57 $ 10.55 $ 10.19 $ 9.90
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charge) 5.70%(a) (1.99)%(a) 3.75% 8.45% 12.34% 12.75% 11.77%
RATIOS -- SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $ 24,713 $29,358 $46,632 $55,075 $58,055 $44,097 $35,788
Ratio of expenses to average net assets 0.57%(b) 1.12%(b) 1.13% 1.12% 0.92% 0.50% 0.29%
Ratio of net investment income to
average net assets 3.51%(b) 7.21%(b) 7.65% 7.56% 8.18% 9.15% 9.34%
Ratio of expenses to average net assets* 0.74%(b) 1.26%(b)
Ratio of net investment income to
average net assets* 3.34%(b) 7.07%(b)
Portfolio turnover 27.00% 18.00% 47.00% 23.00% 24.00% 5.00% 5.00%
</TABLE>
- ---------------
*During the period, certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
85
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED TERM INCOME FUND
----------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.88 $ 10.53 $ 10.45 $ 10.33 $ 10.02 $ 10.04
- ---------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.27 0.54 0.57 0.64 0.73 0.76
Net realized and unrealized gains
(losses) on investments 0.11 (0.61) 0.08 0.13 0.31 (0.01)
- ---------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.38 (0.07) 0.65 0.77 1.04 0.75
- ---------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.28) (0.54) (0.57) (0.64) (0.73) (0.77)
Net realized gains (0.04) (0.01)
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions (0.28) (0.58) (0.57) (0.65) (0.73) (0.77)
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.98 $ 9.88 $ 10.53 $ 10.45 $ 10.33 $ 10.02
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 3.80%(a) (0.66)% 6.39% 7.77% 10.82% 7.75%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 168,112 $ 79,150 $ 81,771 $ 55,565 $ 43,763 $ 31,303
Ratio of expenses to average net
assets 0.77%(b) 0.79% 0.77% 0.78% 0.80% 0.82%
Ratio of net investment income to
average net assets 5.86%(b) 5.29% 5.49% 6.18% 7.20% 7.63%
Ratio of expenses to average net
assets* 0.79%(b) 0.97% 0.78%
Ratio of net investment income to
average net assets* 5.84%(b) 5.10% 5.48%
Portfolio turnover 24.49% 41.26% 50.27% 14.97% 9.79%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
<TABLE>
<CAPTION>
GOVERNMENT MORTGAGE FUND
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31, MAY 18, 1990
ENDED APRIL ---------------------------------------------- TO OCTOBER 31,
30, 1995 1994 1993 1992 1991 1990(A)
----------- -------- -------- -------- ------- --------------
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.33 $ 11.36 $ 11.07 $ 10.73 $ 10.18 $ 10.00
- --------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.36 0.68 0.66 0.74 0.80 0.35
Net realized and unrealized gains
(losses) on investments 0.32 (1.02) 0.32 0.34 0.55 0.18
- --------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.68 (0.34) 0.98 1.08 1.35 0.53
- --------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.37) (0.67) (0.66) (0.74) (0.80) (0.35)
Net realized gains (0.08) (0.02) (0.03)
- --------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.45) (0.69) (0.69) (0.74) (0.80) (0.35)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.56 $ 10.33 $ 11.36 $ 11.07 $ 10.73 $ 10.18
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 6.64%(b) (3.01)% 9.05% 10.34% 13.77% 5.37%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 143,435 $148,168 $132,738 $ 73,660 $42,616 $ 31,972
Ratio of expenses to average net
assets 0.77%(c) 0.76% 0.75% 0.77% 0.78% 0.82%(c)
Ratio of net investment income to
average net assets 6.99%(c) 6.38% 5.92% 6.82% 7.68% 7.98%(c)
Ratio of expenses to average net
assets* 0.79%(c) 0.96% 0.76%
Ratio of net investment income to
average net assets* 6.97%(c) 6.18% 5.92%
Portfolio turnover 24.12% 131.63% 50.18% 11.19% 20.70%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
86
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE INCOME FUND INVESTMENT QUALITY BOND FUND
---------------------------------- ----------------------------------
DECEMBER 10, DECEMBER 10,
1993 1993
TO OCTOBER 31, TO OCTOBER 31,
1994(A) 1994(A)
SIX MONTHS ENDED ---------------- SIX MONTHS ENDED ----------------
APRIL 30, APRIL 30,
1995 1995
---------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.25 $ 10.00 $ 9.10 $ 10.00
- -----------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.30 0.52 0.31 0.53
Net realized and unrealized gains
(losses) on investments 0.17 (0.76) 0.29 (0.92)
- -----------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.47 (0.24) 0.60 (0.39)
- -----------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.31) (0.51) (0.32) (0.51)
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.41 $ 9.25 $ 9.38 $ 9.10
- -----------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 5.07%(b) (2.48)%(b) 6.74%(b) (3.92)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $133,225 $112,923 $ 92,202 $ 94,685
Ratio of expenses to average net
assets 0.81%(c) 0.79%(c) 0.84%(c) 0.79%(c)
Ratio of net investment income to
average net assets 6.65%(c) 6.23%(c) 6.89%(c) 6.33%(c)
Ratio of expenses to average net
assets* 1.08%(c) 1.25%(c) 1.10%(c) 1.25%(c)
Ratio of net investment income to
average net assets* 6.38%(c) 5.77%(c) 6.63%(c) 5.87%(c)
Portfolio turnover 28.74% 55.06% 54.92% 89.92%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
OHIO MUNICIPAL BOND FUND
-----------------------------------------------------------------------------
YEARS ENDED OCTOBER 31, MAY 18, 1990
------------------------------------------ TO OCTOBER 31,
1994 1993 1992 1991 1990(A)
SIX MONTHS ------- ------- ------- ------ --------------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.33 $ 11.52 $ 10.52 $ 10.37 $10.06 $10.00
- ------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.26 0.49 0.52 0.60 0.65 0.28
Net realized and unrealized gains
(losses) on investments 0.52 (0.94) 1.00 0.15 0.31 0.04
- ------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.78 (0.45) 1.52 0.75 0.96 0.32
- ------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income 0.26 (0.49) (0.52) (0.60) (0.65) (0.26)
Net realized gains (0.25)
- ------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.26) (0.74) (0.52) (0.60) (0.65) (0.26)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.85 $ 10.33 $ 11.52 $ 10.52 $10.37 $10.06
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 7.67%(b) (4.08)% 14.75% 7.34% 9.87% 3.27%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $58,137 $57,704 $50,676 $17,676 $8,042 $6,315
Ratio of expenses to average net
assets 0.64%(c) 0.51% 0.42% 0.09% 0.01% 0.38%(c)
Ratio of net investment income to
average net assets 4.88%(c) 4.58% 4.77% 5.76% 6.39% 6.11%(c)
Ratio of expenses to average net
assets* 0.95%(c) 1.09% 0.86% 0.84% 0.82% 1.17%(c)
Ratio of net investment income to
average net assets* 4.58%(c) 4.01% 4.33% 5.01% 5.58% 5.32%(c)
Portfolio turnover 64.80% 52.59% 150.76% 47.28% 15.06% 17.62%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
87
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED FUND STOCK INDEX FUND VALUE FUND
--------------------------- -------------------------- ---------------------------
DECEMBER 10, DECEMBER 3, DECEMBER 3,
1993 TO 1993 TO 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 (A) ENDED 1994 (A)
------------ APRIL 30, ----------- APRIL 30, ------------
1995 1995
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.62 $ 10.00 $ 10.18 $ 10.00 $ 10.13 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.21 0.33 0.12 0.20 0.14 0.21
Net realized and unrealized gains
(losses) on investments 0.62 (0.39) 0.92 0.16 0.79 0.11
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.83 (0.06) 1.04 0.36 0.93 0.32
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.24) (0.32) (0.13) (0.18) (0.14) (0.19)
Net realized gains (0.17)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.24) (0.32) (0.13) (0.18) (0.31) (0.19)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.21 $ 9.62 $ 11.09 $ 10.18 $ 10.75 $ 10.13
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 8.77%(b) (0.57)%(b) 10.28%(b) 3.66%(b) 9.43%(b) 3.27%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $158,762 $127,285 $105,834 $ 89,686 $261,830 $188,184
Ratio of expenses to average net
assets 0.91%(c) 0.87%(c) 0.58%(c) 0.58%(c) 0.91%(c) 0.92%(c)
Ratio of net investment income to
average net assets 4.30%(c) 3.97%(c) 2.48%(c) 2.35%(c) 2.88%(c) 2.32%(c)
Ratio of expenses to average net assets* 1.32%(c) 1.49%(c) 0.92%(c) 1.10%(c) 1.29%(c) 1.48%(c)
Ratio of net investment income to
average net assets* 3.89%(c) 3.35%(c) 2.14%(c) 1.82%(c) 2.50%(c) 1.76%(c)
Portfolio turnover 45.32% 118.49% 11.06% 1.44% 8.95% 39.05%
</TABLE>
- ------------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
DIVERSIFIED STOCK FUND
---------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.68 $ 13.39 $ 12.16 $ 11.44 $ 9.25 $ 9.90
- -------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.14 0.25 0.18 0.19 0.23 0.26
Net realized and unrealized gains
(losses) on investments 1.05 0.64 1.50 1.11 2.20 (0.67)
- -------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.19 0.89 1.68 1.30 2.43 (0.41)
- -------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.15) (0.23) (0.21) (0.19) (0.24) (0.24)
Net realized gains (1.38) (1.37) (0.24) (0.39)
- -------------------------------------------------------------------------------------------------------------------
Total Distributions (1.53) (1.60) (0.45) (0.58) (0.24) (0.24)
- -------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.34 $ 12.68 $ 13.39 $ 12.16 $ 11.44 $ 9.25
- -------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 10.83%(a) 7.39% 14.04% 11.57% 27.50% (4.29)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $321,593 $263,227 $257,405 $227,839 $177,472 $121,754
Ratio of expenses to average net
assets 0.87%(b) 0.89% 0.89% 0.91% 0.91% 0.91%
Ratio of net investment income to
average net assets 2.35%(b) 2.06% 1.45% 1.63% 2.06% 2.75%
Ratio of expenses to average net
assets* 0.91%(b) 1.10% 0.90%
Ratio of net investment income to
average net assets* 2.31%(b) 1.86% 1.43%
Portfolio turnover 43.76% 103.62% 86.32% 74.83% 50.78% 63.10%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
88
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND SPECIAL VALUE FUND SPECIAL GROWTH FUND
--------------------------- --------------------------- ---------------------------
DECEMBER 3, DECEMBER 3, DECEMBER 3,
1993 TO 1993 TO 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 (A) ENDED 1994 (A)
------------ APRIL 30, ------------ APRIL 30, ------------
1995 1995
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.23 $ 10.00 $ 10.49 $ 10.00 $ 8.90 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.06 0.10 0.08 0.11 0.01 0.02
Net realized and unrealized gains
(losses) on investments 0.64 0.22 0.82 0.48 0.45 (1.10)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.70 0.32 0.90 0.59 0.46 (1.08)
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.06) (0.09) (0.08) (0.10) (0.01) (0.02)
Net realized gains (0.05) (0.05)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.11) (0.09) (0.13) (0.10) (0.01) (0.02)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.82 $ 10.23 $ 11.26 $ 10.49 $ 9.35 $ 8.90
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 6.91%(b) 3.22%(b) 8.65%(b) 5.92%(b) 5.20%(b) (10.81)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 43,861 $ 66,921 $153,591 $118,600 $ 19,386 $ 24,593
Ratio of expenses to average net
assets 1.03%(c) 0.94%(c) 1.01%(c) 1.00%(c) 1.16%(c) 0.98%(c)
Ratio of net investment income to
average net assets 1.11%(c) 1.10%(c) 1.57%(c) 1.23%(c) 0.25%(c) 0.24%(c)
Ratio of expenses to average net assets* 1.39%(c) 1.51%(c) 1.31%(c) 1.49%(c) 1.54%(c) 1.58%(c)
Ratio of net investment income
(loss) to average net assets* 0.75%(c) 0.52%(c) 1.27%(c) 0.74%(c) (0.14)%(c) (0.36)(c)
Portfolio turnover 2.56% 28.09% 18.88% 17.90% 39.58% 118.39%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
OHIO REGIONAL STOCK FUND
------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
--------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS ------- ------- ------- ------- --------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.56 $ 14.69 $ 12.12 $ 11.15 $ 6.75 $ 9.72
- -----------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.09 0.18 0.16 0.20 0.21 0.24
Net realized and unrealized gains
(losses) on investments 0.85 0.39 2.63 1.07 4.39 (2.98)
- -----------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.94 0.57 2.79 1.27 4.60 (2.74)
- -----------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.09) (0.17) (0.18) (0.21) (0.20) (0.23)
Net realized gains (0.74) (0.53) (0.04) (0.09)
- -----------------------------------------------------------------------------------------------------------------
Total Distributions (0.83) (0.70) (0.22) (0.30) (0.20) (0.23)
- -----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 14.67 $ 14.56 $ 14.69 $ 12.12 $ 11.15 $ 6.75
- -----------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 7.06%(a) 3.96% 23.16% 11.50% 68.68% (28.63)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $35,183 $33,965 $34,926 $36,115 $27,092 $ 13,039
Ratio of expenses to average net
assets 1.18%(b) 1.04% 1.04% 1.04% 1.08% 1.11%
Ratio of net investment income to
average net assets 1.27%(b) 1.27% 1.17% 1.73% 2.16% 2.66%
Ratio of expenses to average net
assets* 1.22%(b) 1.27% 1.06%
Ratio of net investment income to
average net assets* 1.22%(b) 1.04% 1.15%
Portfolio turnover 4.86% 14.38% 7.25% 7.56% 14.59% 11.17%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
89
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH FUND
-------------------------------------------------------------------------------
SIX MONTHS
ENDED YEARS ENDED OCTOBER 31, MAY 18, 1990
APRIL 30, -------------------------------------------- TO OCTOBER 31,
1995 1994 1993 1992 1991 1990(A)
----------- ------- -------- ------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.32 $ 11.93 $ 8.93 $ 9.20 $ 9.46 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (0.01) (0.03) (0.02) 0.51 0.09
Net realized and unrealized gains
(losses) on investments (0.79) 1.40 3.03 (0.17) (0.25) (0.55)
- ------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities (0.79) 1.39 3.00 (0.19) 0.26 (0.46)
- ------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.01) (0.52) (0.08)
Net realized gains (0.62) (0.07)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.91 $ 13.32 $ 11.93 $ 8.93 $ 9.20 $ 9.46
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) (5.82)%(b) 11.65% 33.59% (2.08)% 2.93% (4.54)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 86,530 $81,307 $ 30,629 $11,091 $ 5,682 $ 9,878
Ratio of expenses to average net
assets 1.51%(c) 1.48% 1.46% 1.56% 1.72% 1.70%(c)
Ratio of net investment income
(loss) to average net assets (0.29)%(c) (0.51)% (0.74)% (0.20)% 5.97% 2.51%%(c)
Ratio of expenses to average net
assets* 1.66%(c) 1.83% 1.63% 1.72%
Ratio of net investment loss to
average net assets* (0.45)%(c) (0.86)% (0.91)% (0.35)%
Portfolio turnover 26.04% 50.66% 45.43% 91.92% 102.53% 12.16%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations
(b) Aggregate.
(c) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
90
<PAGE>
[LOGO]
THE VICTORY FUNDS
1-800-539-FUND
RS/VP-001 5/95
<PAGE>
BULK RATE
U.S. POSTAGE
PAID
CLEVELAND, OH
Permit 469
[LOGO]
THE VICTORY FUNDS
1-800-539-FUND
RS/VP-001 5/95
<PAGE>
[This page left blank intentionally]
<PAGE>
<PAGE>
<PAGE>
PART B
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE VICTORY PORTFOLIOS
THE OHIO REGIONAL STOCK FUND
February 1, 1996
This Statement of Additional Information is not a Prospectus, but
should be read in conjunction with the Prospectus of The Victory Portfolios -
The Ohio Regional Stock Fund, dated the same date as the date hereof (the
"Prospectus"). This Statement of Additional Information is incorporated by
reference in its entirety into the Prospectus. Copies of the Prospectus may be
obtained by writing The Victory Portfolios at Primary Funds Service Corporation,
P.O. Box 9741, Providence, RI 02940-9741, or by telephoning toll free
800-539-FUND or 800-539-3863.
Investment Policies and Limitations 1 INVESTMENT ADVISER
Valuation of Portfolio Securities 7 KeyCorp Mutual Fund Advisers, Inc.
Additional Purchase and
Redemption Information 8
Management of the Victory Portfolios 10 INVESTMENT SUB-ADVISER
Advisory and Other Contracts 19 Society Asset Management, Inc.
Additional Information 26
Independent Auditor's Report 31 ADMINISTRATOR
Financial Statements 31 Concord Holding Corporation
Appendix 32
DISTRIBUTOR
Victory Broker-Dealer Services, Inc.
TRANSFER AGENT
Primary Funds Services Corporation
CUSTODIAN
Key Trust Company of Ohio, N.A.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
The Victory Portfolios (the "Victory Portfolios") is an open-end
management investment company. The Victory Portfolios consist of twenty-eight
series of units of beneficial interest ("shares"), representing interests in
twenty-eight separate investment portfolios. This Statement of Additional
Information relates to The Ohio Regional Stock Fund (the "Fund") only. Much of
the information contained in this Statement of Additional Information expands on
subjects discussed in the Prospectus. Capitalized terms not defined herein are
used as defined in the Prospectus. No investment in shares of the Fund should
be made without first reading the Fund's Prospectus.
INVESTMENT POLICIES AND LIMITATIONS
Additional Information on Fund Instruments
The following policies supplement the investment objectives and
policies of the Fund as set forth in the Prospectus.
Bankers' Acceptances and Certificates of Deposit. The Fund may invest
in bankers' acceptances, certificates of deposit, and demand and time deposits.
Bankers' acceptances are negotiable drafts or bills of exchange typically drawn
by an importer or exporter to pay for specific merchandise, which are "accepted"
by a bank, meaning, in effect, that the bank unconditionally agrees to pay the
face value of the instrument on maturity. Certificates of deposit are negotiable
certificates issued against funds deposited in a commercial bank or a savings
and loan association for a definite period of time and earning a specified
return.
Bankers' acceptances will be those guaranteed by domestic and foreign
banks, if at the time of purchase such banks have capital, surplus, and
undivided profits in excess of $100,000,000 (as of the date of their most
recently published financial statements). Certificates of deposit and demand and
time deposits invested in by the Fund will be those of domestic and foreign
banks and savings and loan associations, if (a) at the time of purchase such
financial institutions have capital, surplus, and undivided profits in excess of
$100,000,000 (as of the date of their most recently published financial
statements) or (b) the principal amount of the instrument is insured in full by
the Federal Deposit Insurance Corporation or the Savings Association Insurance
Fund.
The Fund may also invest in Eurodollar Certificates of Deposit ("ECDs")
which are U.S. dollar-denominated certificates of deposit issued by branches of
foreign and domestic banks located outside the United States, Yankee
Certificates of Deposit ("Yankee CDs") which are certificates of deposit issued
by a U.S. branch of a foreign bank denominated in U.S. dollars and held in the
United States, Eurodollar Time Deposits ("ETDs") which are U.S.
dollar-denominated deposits in a foreign branch of a U.S. bank or a foreign
bank, and Canadian Time Deposits ("CTDs") which are U.S. dollar-denominated
certificates of deposit issued by Canadian offices of major Canadian Banks.
Commercial Paper. Commercial paper consists of unsecured promissory
notes issued by corporations. Except as noted below with respect to variable
amount master demand notes, issues of commercial paper normally have maturities
of less than nine months and fixed rates of return.
The Fund will purchase only commercial paper rated in one of the two
highest categories at the time of purchase by an NRSRO or, if not rated, found
by the Victory Portfolios' Board of Trustees to present minimal credit risks and
to be of comparable quality to instruments that are rated high quality (i.e.,
in one of the two top ratings categories) by a NRSRO that is neither
controlling, controlled by, or under common control with the issuer of, or any
issuer, guarantor, or provider of credit support for, the instruments.
<PAGE>
For a description of the rating symbols of each NRSRO see the Appendix to this
Statement of Additional Information.
Variable Amount Master Demand Notes. Variable amount master demand
notes in which the Fund may invest are unsecured demand notes that permit the
indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate according to the terms of the instrument. Although there is no
secondary market for these notes, the Fund may demand payment of principal and
accrued interest at any time and may resell the notes at any time to a third
party. The absence of an active secondary market, however, could make it
difficult for the Fund to dispose of a variable amount master demand note if the
issuer defaulted on its payment obligations, and the Fund could, for this or
other reasons, suffer a loss to the extent of the default. While the notes are
not typically rated by credit rating agencies, issuers of variable amount master
demand notes must satisfy the same criteria as set forth above for unrated
commercial paper, and Key Advisers or the Sub-Adviser will continuously monitor
the issuer's financial status and ability to make payments due under the
instrument. Where necessary to ensure that a note is of "high quality," the Fund
will require that the issuer's obligation to pay the principal of the note be
backed by an unconditional bank letter or line of credit, guarantee or
commitment to lend. For purposes of the Fund's investment policies, a variable
amount master note will be deemed to have a maturity equal to the longer of the
period of time remaining until the next readjustment of its interest rate or the
period of time remaining until the principal amount can be recovered from the
issuer through demand. (See Variable and Floating Rate Notes.)
Foreign Investment. The Fund may invest in securities issued by foreign
branches of U.S. banks, foreign banks, or other foreign issuers, including
American Depository Receipts ("ADRs") and securities purchased on foreign
securities exchanges. Such investment may subject the Fund to investment risks
that differ in some respects from those related to investments in obligations of
U.S. domestic issuers or in U.S. securities markets. Such risks include future
adverse political and economic developments, possible seizure, nationalization,
or expropriation of foreign investments, less stringent disclosure requirements,
the possible establishment of exchange controls or taxation at the source, and
the adoption of other foreign governmental restrictions. Additional risks
include currency exchange risks, less publicly available information, the risk
that companies may not be subject to the accounting, auditing and financial
reporting standards and requirements of U.S. companies, the risk that foreign
securities markets may have less volume and therefore many securities traded in
these markets may be less liquid and their prices are more volatile than U.S.
securities, and the risk that custodian and brokerage costs may be higher.
Permissible investments include obligations or securities of foreign issuers,
foreign branches of U.S. banks and of foreign banks. The Fund will acquire
such securities only when Key Advisers or the Sub-Adviser believes the risks
associated with such investments are minimal.
Variable and Floating Rate Notes. The Fund may acquire variable and floating
rate notes, subject to its investment objectives, policies and restrictions. A
variable rate note is one whose terms provide for the readjustment of its
interest rate on set dates and which, upon such readjustment, can reasonably be
expected to have a market value that approximates its par value. A floating rate
note is one whose terms provide for the readjustment of its interest rate
whenever a specified interest rate changes and which, at any time, can
reasonably be expected to have a market value that approximates its par value.
Such notes are frequently not rated by credit rating agencies; however, unrated
variable and floating rate notes purchased by the Fund will only be those
determined by Key Advisers or the Sub-Adviser, under guidelines established by
the Trustees, to pose minimal credit risks and to be of comparable quality, at
the time of purchase, to rated instruments eligible for purchase under the
Fund's investment policies. In making such determinations, Key Advisers or the
Sub-Adviser will consider the earning power, cash flow and other liquidity
ratios of the issuers of such notes (such issuers include financial,
merchandising, bank holding and other companies) and will continuously monitor
their financial condition. Although there may be no active secondary market with
respect to a particular variable or floating rate note purchased by the
Fund, the Fund may resell the note at any time to a third party. The absence of
an active secondary market, however, could make it difficult for the Fund to
dispose of a variable or floating rate note in the event the issuer of the note
defaulted on its payment obligations and the Fund could, for this or other
reasons, suffer a loss to the extent of the default. Variable or floating rate
notes may be secured by bank letters of credit.
Variable or floating rate notes may have maturities of more than one
year, as follows:
1. A note that is issued or guaranteed by the United States government
or any agency thereof and which has a variable rate of interest readjusted no
less frequently than annually will be deemed by the Fund to have a maturity
equal to the period remaining until the next readjustment of the interest rate.
2. A variable rate note, the principal amount of which is scheduled on
the face of the instrument to be paid in one year or less, will be deemed by the
Fund to have a maturity equal to the period remaining until the next
readjustment of the interest rate.
3. A variable rate note that is subject to a demand feature scheduled
to be paid in one year or more will be deemed by the Fund to have a maturity
equal to the longer of the period remaining until the next readjustment of the
interest rate or the period remaining until the principal amount can be
recovered through demand.
4. A floating rate note that is subject to a demand feature will be
deemed by the Fund to have a maturity equal to the period remaining until the
principal amount can be recovered through demand.
As used above, a note is "subject to a demand feature" where the Fund
is entitled to receive the principal amount of the note either at any time on no
more than 30 days' notice or at specified intervals not exceeding one year and
upon no more than 30 days' notice.
Options. The Fund may sell (write) call options which are traded on
national securities exchanges with respect to common stock in its portfolio. The
Fund must at all times have in its portfolio the securities which it may be
obligated to deliver if the option is exercised. The Fund may write call options
on its common stocks in an attempt to realize a greater current return than
would be realized on the securities alone. The Fund may also write call options
as a partial hedge against a possible stock market decline or to extend a
holding period on a stock which is under consideration for sale in order to
create a long-term capital gain. In view of its investment objective, the Fund
generally would write call options only in circumstances where Key Advisers or
the SubAdviser does not anticipate significant appreciation of the underlying
security in the near future or has otherwise determined to dispose of the
security. As the writer of a call option, the Fund receives a premium for
undertaking the obligation to sell the underlying security at a fixed price
during the option period, if the option is exercised. So long as the Fund
remains obligated as a writer of a call option, it forgoes the opportunity to
profit from increases in the market price of the underlying security above the
exercise price of the option, except insofar as the premium represents such a
profit (and retains the risk of loss should the value of the underlying security
decline). The Fund may also enter into "closing purchase transactions" in order
to terminate its obligation as a writer of a call option prior to the expiration
of the option. Although the writing of call options only on national securities
exchanges increases the likelihood of the Fund's ability to make closing
purchase transactions, there is no assurance that the Fund will be able to
effect such transactions at any particular time or at any acceptable price. The
writing of call options could result in increases in the Fund's portfolio
turnover rate, especially during periods when market prices of the underlying
securities appreciate.
Miscellaneous Securities. The Fund can invest in various securities
issued by domestic and foreign corporations, including preferred stocks and
investment grade corporate bonds, notes, and warrants. Bonds are long-term
corporate debt instruments secured by some or all of the issuer's assets,
debentures are general corporate debt obligations backed only by the integrity
of the borrower, and warrants are instruments that entitle the holder to
purchase a certain amount of common stock at a specified price, which price
is usually higher than the current market price at the time of issuance.
Preferred stocks are instruments that combine qualities both of equity and debt
securities. Individual issues of preferred stock will have those rights and
liabilities that are spelled out in the governing document. Preferred stocks
usually pay a fixed dividend per quarter (or annum) and are senior to common
stock in terms of liquidation and dividends rights, and preferred stocks
typically do not have voting rights.
<PAGE>
The Fund will only purchase preferred stocks where the issuer is publicly traded
and has capital in excess of $200 million.
The Fund also may invest, consistent with its investment objective and
policies, in zero coupon bonds, which are debt instruments that do not pay
current interest and are typically sold at prices greatly discounted from par
value. The return on a zero-coupon obligation, when held to maturity, equals the
difference between the par value and the original purchase price. Zero-coupon
obligations have greater price volatility than coupon obligations.
"When-Issued" Securities. As discussed in the Prospectus, the Fund may
purchase securities on a "when issued" basis (i.e., for delivery beyond the
normal settlement date at a stated price and yield). When the Fund agrees to
purchase securities on a "when issued" basis, the Victory Portfolios' custodian
will set aside cash or liquid portfolio securities equal to the amount of the
commitment in a separate account. Normally, the custodian will set aside
portfolio securities to satisfy the purchase commitment, and in such a case, the
Fund may be required subsequently to place additional assets in the separate
account in order to assure that the value of the account remains equal to the
amount of the Fund's commitment. It may be expected that the Fund's net assets
will fluctuate to a greater degree when it sets aside portfolio securities to
cover such purchase commitments than when it sets aside cash.
When the Fund engages in "when-issued" transactions, it relies on the
seller to consummate the trade. Failure of the seller to do so may result in the
Fund incurring a loss or missing the opportunity to obtain a price considered to
be advantageous. The Fund does not intend to purchase "when issued" securities
for speculative purposes, but only in furtherance of its investment objective.
U.S. Government Obligations. The Fund may invest in obligations issued
or guaranteed by the U.S. Government, its agencies and instrumentalities.
Obligations of certain agencies and instrumentalities of the U.S. Government are
supported by the full faith and credit of the U.S. Treasury; others are
supported by the right of the issuer to borrow from the U.S. Treasury; others
are supported by the discretionary authority of the U.S. Government to purchase
the agency's obligations; and still others are supported only by the credit of
the agency or instrumentality. No assurance can be given that the U.S.
Government will provide financial support to U.S. Government-sponsored agencies
or instrumentalities if it is not obligated to do so by law. The Fund will
invest in the obligations of such agencies and instrumentalities only when Key
Advisers or the Sub-Adviser believes that the credit risk with respect thereto
is minimal.
Securities Lending. The Fund may lend its portfolio securities to
broker-dealers, banks or institutional borrowers of securities. The Fund must
receive a minimum of 100% collateral, plus any interest due in the form of cash
or U.S. Government securities. This collateral must be valued daily and should
the market value of the loaned securities increase, the borrower must furnish
additional collateral to the Fund. During the time portfolio securities are on
loan, the borrower will pay the Fund any dividends or interest paid on such
securities plus any interest negotiated between the parties to the lending
agreement. Loans will be subject to termination by the Fund or the borrower at
any time. While the Fund will not have the right to vote securities on loan, it
intends to terminate the loan and regain the right to vote if that is considered
important with respect to the investment. The Fund will only enter into loan
arrangements with broker-dealers, banks or other institutions which Key Advisers
or the Sub-Adviser has determined are creditworthy under guidelines established
by the Victory Portfolios' Trustees. The Fund intends to limit its securities
lending to 33-1/3% of total assets.
Other Investment Companies. The Fund may invest up to 5% of its total
assets in the securities of any one investment company, but may not own more
than 3% of the securities of any one investment company or invest more than 10%
of its total assets in the securities of other investment companies. Pursuant to
an exemptive order received by the Victory Portfolios from the Commission, the
Fund may invest in money market funds of the Victory Portfolios.
<PAGE>
Key Advisers and/or the Sub-Adviser will waive its investment advisory fee as to
all assets invested in other investment companies. Because such other investment
companies employ an investment adviser, such investment by the Fund will cause
shareholders to bear duplicative fees, such as management fees.
Repurchase Agreements. Securities held by the Fund may be subject to repurchase
agreements. Under the terms of a repurchase agreement, the Fund would acquire
securities from financial institutions or registered broker-dealers deemed
creditworthy by Key Advisers or the Sub-Adviser pursuant to guidelines adopted
by the Victory Portfolios' Trustees, subject to the seller's agreement to
repurchase such securities at a mutually agreed upon date and price. The seller
is required to maintain the value of collateral held pursuant to the agreement
at not less than the repurchase price (including accrued interest). If the
seller were to default on its repurchase obligation or become insolvent, the
Fund would suffer a loss to the extent that the proceeds from a sale of the
underlying portfolio securities were less than the repurchase price, or to the
extent that the disposition of such securities by the Fund is delayed pending
court action. Repurchase agreements are considered by the staff of the
Commission to be loans by the Fund.
Reverse Repurchase Agreements. The Fund may borrow funds for temporary
purposes by entering into reverse repurchase agreements in accordance with the
investment restrictions described below. Pursuant to such agreements, the Fund
would sell portfolio securities to financial institutions such as banks and
broker-dealers, and agree to repurchase them at a mutually agreed-upon date and
price. At the time the Fund enters into a reverse repurchase agreement, it will
place in a segregated custodial account assets (such as cash or other liquid
high-grade securities) consistent with the Fund's investment restrictions having
a value equal to the repurchase price (including the accrued interest); the
collateral will be marked-to-market on a daily basis, and will be continuously
monitored to ensure that such equivalent value is maintained. Reverse repurchase
agreements involve the risk that the market value of the securities sold by the
Fund may decline below the price at which the Fund is obligated to repurchase
the securities. Reverse repurchase agreements are considered to be borrowings
under the Investment Company Act of 1940, as amended (the "1940 Act").
Investment Restrictions
The following investment restrictions are fundamental with respect to
the Fund and may be changed only by a vote of a majority of the outstanding
shares of the Fund as defined in "ADDITIONAL INFORMATION -Miscellaneous" of this
Statement of Additional Information).
THE FUND MAY NOT:
1. Participate on a joint or joint and several basis in any securities
trading account.
2. Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Fund from purchasing or selling options and futures contracts or from investing
in securities or other instruments backed by physical commodities).
3. Purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Fund from
investing in securities or other instruments backed by real estate or securities
of companies engaged in the real estate business). Investments by the Fund in
securities backed by mortgages on real estate or in marketable securities of
companies engaged in such activities are not hereby precluded.
4. Issue any senior security (as defined in the 1940 Act), except that
(a) the Fund may engage in transactions that may result in the issuance of
senior securities to the extent permitted under applicable regulations and
interpretations of the 1940 Act or an exemptive order; (b) the Fund may acquire
other securities, the acquisition of which may result in the issuance of a
senior security, to the extent permitted under applicable regulations or
interpretations of the 1940 Act; (c) subject to the restrictions set forth
below, the Fund may borrow money as authorized by the 1940 Act.
5. Borrow money, except that (a) the Fund may enter into commitments to
purchase securities in accordance with its investment program, including
delayeddelivery and when-issued securities and reverse repurchase agreements,
provided that the total amount of any such borrowing does not exceed 33 1/3% of
the Fund's total assets; and (b) the Fund may borrow money for temporary or
emergency purposes in an amount not exceeding 5% of the value of its total
assets at the time when the loan is made. Any borrowings representing more than
5% of the Fund's total assets must be repaid before the Fund may make additional
investments.
6. Lend any security or make any other loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties, but this limitation
does not apply to purchases of publicly issued debt securities or to repurchase
agreements.
7. Underwrite securities issued by others, except to the extent that the
Fund may be considered an underwriter within the meaning of the Securities Act
of 1933 in the disposition of restricted securities.
8. With respect to 75% of the Fund's total assets, the Fund may not
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or instrumentalities)
if, as a result, (a) more than 5% of the Fund's total assets would be invested
in the securities of that issuer, or (b) the Fund would hold more than 10% of
the outstanding voting securities of that issuer.
9. Purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. Government or any of its agencies or
instrumentalities, or repurchase agreements secured thereby) if, as a result,
more than 25% of the Fund's total assets would be invested in the securities of
companies whose principal business activities are in the same industry. In the
utilities category, the industry shall be determined according to the service
provided. For example, gas, electric, water and telephone will be considered as
separate industries.
The following restrictions are not fundamental and may be changed
without shareholder approval:
1. The Fund will not purchase or retain securities of any issuer if the
officers or Trustees of the Victory Portfolios or the officers or directors of
its investment adviser owning beneficially more than one half of 1% of the
securities of such issuer together own beneficially more than 5% of such
securities.
2. The Fund will not invest more than 10% of its total assets in the
securities of issuers which together with any predecessors have a record of less
than three years of continuous operation.
3. The Fund will not write or sell puts, straddles, spreads or
combinations thereof or write or purchase put options or purchase call options.
4. The Fund will not invest more than 15% of its net assets in illiquid
securities. Illiquid securities are securities that are not readily marketable
or cannot be disposed of promptly within seven days and in the usual course of
business at approximately the price at which the Fund has valued them. Such
securities include, but are not limited to, time deposits and repurchase
agreements with maturities longer than seven days. Securities that may be resold
under Rule 144A ("Restricted Securities"), or securities offered pursuant to
Section 4(2) of, the 1933 Act, shall not be deemed illiquid solely by reason of
being unregistered. Key Advisers or the Sub-Adviser determine whether a
particular security is deemed to be liquid based on the trading markets for the
specific security and other factors. However, because state securities laws may
limit the Fund's investment in Restricted Securities (regardless of the
liquidity of the investment), investments in Restricted Securities resalable
under Rule 144A will continue to be subject to applicable state law requirements
until such time, if ever, that such limitations are changed.
5. The Fund will not make short sales of securities, other than short
sales "against the box," or purchase securities on margin except for short-term
credits necessary for clearance of portfolio transactions, provided that this
restriction will not be applied to limit the use of options, futures contracts
and related options, in the manner otherwise permitted by the investment
restrictions, policies and investment program of the Fund.
6. The Fund may invest up to 5% of its total assets in the securities of
any one investment company, but may not own more than 3% of the securities of
any one investment company or invest more than 10% of its total assets in the
securities of other investment companies. Pursuant to an exemptive order
received by the Victory Portfolios from the Commission, the Fund may invest in
the money market funds of the Victory Portfolios.
7. Buy state, municipal, or private activity bonds.
State Regulations
In addition, each of the Victory Portfolios, so long as its shares are
registered under the securities laws of the State of Texas and such restrictions
are required as a consequence of such registration, is subject to the following
non-fundamental policies, which may be modified in the future by the Trustees
without a vote of the Victory Portfolios' shareholders: (i) the Victory
Portfolios has represented to the Texas State Securities Board, on behalf of the
investment portfolios registered in that state, that those investment portfolios
will not invest in oil, gas or mineral leases or purchase or sell real property
(including limited partnership interests, but excluding readily marketable
securities of companies which invest in real estate); and (ii) the Victory
Portfolios
has represented to the Texas State Securities Board on behalf of the investment
portfolios registered in that state, that those investment portfolios will not
invest more than 5% of their net assets in warrants valued at the lower of cost
or market; provided that, included within that amount, but not to exceed 2% of
net assets, may be warrants which are not listed on the New York or American
Stock Exchanges. For purposes of this restriction, warrants acquired in units or
attached to securities are deemed to be without value.
The policies and limitations listed above supplement those set forth in
the Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of the Fund's assets that may be invested
in any security or other asset, or sets forth a policy regarding quality
standards, such standard or percentage limitation will be determined immediately
after and as a result of the Fund's acquisition of such security or other asset
except in the case of borrowing (or other activities that may be deemed to
result in the issuance of a "senior security" under the 1940 Act). Accordingly,
any subsequent change in values, net assets, or other circumstances will not be
considered when determining whether the investment complies with the Fund's
investment policies and limitations. If the value of the Fund's holdings of
illiquid securities at any time exceeds the percentage limitation applicable at
the time of acquisition due to subsequent fluctuations in value or other
reasons, the Board of Trustees will consider what actions, if any, are
appropriate to maintain adequate liquidity.
<PAGE>
FUTURE DEVELOPMENTS
The Fund may take advantage of other investment practices which are not
at present contemplated for use by the Fund or which currently are not available
but which may be developed, to the extent such investment practices are both
consistent with the Fund's investment objective and are legally permissible for
the Fund. Such investment practices, if they arise, may involve risks which
exceed those involved in the activities described in the Prospectus and
Statement of Additional Information. Prior to commencing any new investment
practice, the Fund will notify shareholders by means of prospectus supplement.
Portfolio Turnover
The turnover rate for the Fund's investment portfolio is calculated by
dividing the lesser of the Fund's purchases or sales of portfolio securities for
the year by the monthly average value of the portfolio securities. The
calculation excludes all securities whose maturities, at the time of
acquisition, were one year or less.
In the fiscal years ended October 31, 1994 and 1993, the Fund's portfolio
turnover rates were ____% and ____%, respectively.
VALUATION OF PORTFOLIO SECURITIES
Investment securities held by the Fund are valued on the basis of
valuations provided by an independent pricing service, approved by the Board of
Trustees, which uses information with respect to transactions of a security,
quotations from dealers, market transactions in comparable securities, and
various relationships between securities, in determining value. Specific
investment securities which are not priced by the approved pricing service will
be valued according to quotations obtained from dealers who are market makers in
those securities. Investment securities with less than 60 days to maturity when
purchased are valued at amortized cost which approximates market value.
Investment securities not having readily available market quotations will be
priced at fair value using a methodology approved in good faith by the Board of
Trustees.
<PAGE>
PERFORMANCE
As described in the Prospectus, from time to time the "standardized
yield," "dividend yield," "average annual total return," "total return," and
"total return at net asset value" of an investment in each class of Fund shares
may be advertised. An explanation of how yields and total returns are calculated
for each class and the components of those calculations are set forth below.
Yield and total return information may be useful to investors in
reviewing the Victory Portfolios' performance. The Fund's advertisement of its
performance must, under applicable Commission rules, include the average annual
total returns for each class of shares of the Fund for the 1, 5 and 10-year
period (or the life of the class, if less) as of the most recently ended
calendar quarter. This enables an investor to compare the Fund's performance to
the performance of other funds for the same periods. However, a number of
factors should be considered before using such information as a basis for
comparison with other investments. An investment in the Fund is not insured; its
yield and total return are not guaranteed and normally will fluctuate on a daily
basis. When redeemed, an investor's shares may be worth more or less than their
original cost. Yield and total return for any given past period are not a
prediction or representation by the Victory Portfolios of future yields or rates
of return on its shares. The yield and total returns of the Class A and Class B
shares of the Fund are affected by portfolio quality, portfolio maturity, the
type of investments the Fund holds and its operating expenses.
STANDARDIZED YIELDS. The Fund's "yield" (referred to as "standardized
yield") for a given 30-day period for a class of shares is calculated using the
following formula set forth in rules adopted by the Commission that apply to all
funds that quote yields:
Standardized Yield = 2 [[(a-b + 1)to the sixth] - 1]
--------
cd
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense
reimbursements).
c = the average daily number of shares of that class outstanding
during the 30-day period that were entitled to receive
dividends.
d = the maximum offering price per share of the class on the last
day of the period, adjusted for undistributed net investment
income.
The standardized yield of a class of shares for a 30-day period may
differ from its yield for any other period. The Commission formula assumes that
the standardized yield for a 30-day period occurs at a constant rate for a
six-month period and is annualized at the end of the six-month period. This
standardized yield is not based on actual distributions paid by the Fund to
shareholders in the 30-day period, but is a hypothetical yield based upon the
net investment income from the Fund's portfolio investments calculated for that
period. The standardized yield may differ from the "dividend yield" of that
class, described below. Additionally, because each class of shares is subject to
different expenses, it is likely that the standardized yields of the Fund
classes of shares will differ. The yield on Class A shares for the 30-day period
ended April 30, 1995 was ____% .
DIVIDEND YIELD AND DISTRIBUTION RETURN. From time to time the Fund may
quote a "dividend yield" or a "distribution return" for each class. Dividend
yield is based on the Class A or Class B share dividends derived from net
investment income during a stated period. Distribution return includes dividends
derived from net investment income and from realized capital gains declared
during a stated period. Under those calculations, the dividends and/or
distributions for that class declared during a stated period of one year or less
(for example, 30 days) are added together, and the sum is divided by the maximum
offering price per share of that class A) on the last day of the period. When
the result is annualized for a period of less than one year, the "dividend
yield" is calculated as follows:
<PAGE>
Dividend Yield of the Class =
Dividends of the Class + Number of days (accrual period) x 365
------------------------------------------------------------
Max. Offering Price of the Class (last day of period)
The maximum offering price for Class A shares includes the maximum
front-end sales charge. For Class B shares, the maximum offering price is the
net asset value per share, without considering the effect of contingent deferred
sales charges.
From time to time similar yield or distribution return calculations may
also be made using the Class A net asset value (instead of its respective
maximum offering price) at the end of the period. The dividend yields on Class A
shares at maximum offering price and net asset value for the 30-day period ended
________, 1995 were ____% and ____%, respectively.
TOTAL RETURNS. The "average annual total return" of each class is an
average annual compounded rate of return for each year in a specified number of
years. It is the rate of return based on the change in value of a hypothetical
initial investment of $1,000 ("P" in the formula below) held for a number of
years ("n") to achieve an Ending Redeemable Value ("ERV"), according to the
following formula:
( ERV )1 to the Nth - 1 = Average Annual Total Return
-----
( P )
The cumulative "total return" calculation measures the change in value
of a hypothetical investment of $1,000 over an entire period of years. Its
calculation uses some of the same factors as average annual total return, but it
does not average the rate of return on an annual basis. Total return is
determined as follows:
ERV - P = Total Return
P
In calculating total returns for Class A shares, the current maximum
sales charge of 4.75% (as a percentage of the offering price) is deducted from
the initial investment ("P") (unless the return is shown at net asset value, as
discussed below). For Class B shares, the payment of the applicable contingent
deferred sales charge (5.0% for the first year, 4.0% for the second year, 3.0%
for the third and fourth years, 2.0% in the fifth year, 1.0% in the sixth year
and none thereafter) is applied to the investment result for the time period
shown (unless the total return is shown any net asset value, as described
below). Total returns also assume that all dividends and capital gains
distributions during the period are reinvested to buy additional shares at net
asset value per share, and that the investment is redeemed at the end of the
period. The average annual total return and cumulative total return on Class A
shares for the period October 20, 1989 (commencement of operations) to ____,
1995 (life of fund) at maximum offering price were ___% and ____%, respectively.
For the one and five year periods ended _______________, 1995 annual total
returns for Class A were ______% and _____%, respectively.
From time to time the Fund may also quote an "average annual total
return at net asset value" or a cumulative "total return at net asset value" for
Class A or Class B shares. It is based on the difference in net asset value per
share at the beginning and the end of the period for a hypothetical investment
in that class of shares (without considering front-end or contingent sales
charges) and takes into consideration the reinvestment of dividends and capital
gains distributions. The average annual total return and cumulative total return
on Class A shares for the period October 20, 1989 (commencement of operations)
to ________, 1995 (life of fund), at net asset value, was ____% and ___%,
respectively. For the one and five year periods ended _______, 1995, average
annual total return for Class A shares was ___% and ___%, respectively.
OTHER PERFORMANCE COMPARISONS. From time to time the Fund may publish
the ranking of the performance of its Class A or Class B shares by Lipper
Analytical Services, Inc.("Lipper"), a widely-recognized independent mutual fund
monitoring service. Lipper monitors the performance of regulated investment
companies, including the Fund, and ranks the performance of the Fund's classes
against (i) all other funds, excluding money market funds, and (ii) all other
government bond funds. The Lipper performance rankings are based on total return
that includes the reinvestment of capital gains distributions and income
dividends but does not take sales charges or taxes into consideration.
From time to time the Fund may publish the ranking of the performance
of its Class A or Class B shares by Morningstar, Inc., an independent mutual
fund monitoring service that ranks mutual funds, including the Fund, in broad
investment categories (equity, taxable bond, tax-exempt and other) monthly,
based upon each fund's three, five and ten-year average annual total returns
(when available) and a risk adjustment factor that reflects Fund performance
relative to three-month U.S. Treasury bill monthly returns. Such returns are
adjusted for fees and sales loads. There are five ranking categories with a
corresponding number of stars: highest (5), above average (4), neutral (3),
below average (2) and lowest (1). Ten percent of the funds, series or classes in
an investment category receive 5 stars, 22.5% receive 4 stars, 35% receive 3
stars, 22.5% receive 2 stars, and the bottom 10% receive one star. Morningstar
ranks the Class A and Class B shares of the Fund in relation to other taxable
bond funds.
The total return on an investment made in Class A or Class B shares of
the Fund may be compared with the performance for the same period of one or more
of the following indices: the Consumer Price Index, the Salomon Brothers World
Government Bond Index, the Standard & Poor's 500 Index, the Shearson Lehman
Government/Corporate Bond Index, the Lehman Aggregate Bond Index, and the J.P.
Morgan Government Bond Index. Other indices may be used from time to time. The
Consumer Price Index is generally considered to be a measure of inflation. The
Salomon Brothers World Government Bond Index generally represents the
performance of government debt securities of various markets throughout the
world, including the United States. The Lehman Government/Corporate Bond Index
generally represents the performance of intermediate and long-term government
and investment grade corporate debt securities. The Lehman Aggregate Bond Index
measures the performance of U.S. corporate bond issues, U.S. government
securities and mortgaged-backed securities. The J.P. Morgan Government Bond
Index generally represents the performance of government bonds issued by various
countries including the United States. The S&P 500 Index is a composite index of
500 common stocks generally regarded as an index of U.S. stock market
performance. The foregoing bond indices are unmanaged indices of securities that
do not reflect reinvestment of capital gains or take investment costs into
consideration, as these items are not application to indices.
From time to time, the yields and the total returns of Class A or Class
B shares of the Fund may be quoted in and compared to other mutual funds with
similar investment objective in advertisements, shareholder reports or other
communications to shareholders. The Fund may also include calculations in such
communications that describe hypothetical investment results. (Such performance
examples will be based on an express set of assumptions and are not indicative
of the performance of any Fund.) Such calculations may from time to time include
discussions or illustrations of the effects of compounding in advertisements.
"Compounding" refers to the fact that, if dividends or other distributions on a
Fund investment are reinvested by being paid in additional Fund shares, any
future income or capital appreciation of a Fund would increase the value, not
only of the original Fund investment, but also of the additional Fund shares
received through reinvestment. As a result, the value of the Fund investment
would increase more quickly than if dividends or other distributions had been
paid in cash. The Fund may also include discussions or illustrations of the
potential investment goals of a prospective investor (including but not limited
to tax and/or retirement planning), investment management techniques, policies
or investment suitability of Fund, economic conditions, legislative developments
(including pending legislation), the effects of inflation and historical
performance of various asset classes, including but not limited to stocks, bonds
and Treasury bills. From time to time advertisements or communications to
shareholders may summarize the substance of information contained in shareholder
reports (including the investment composition of a Fund, as well as the views of
the investment adviser as to current market, economic, trade and interest rate
trends, legislative, regulatory and monetary developments, investment strategies
and related matters believed to be of relevance to Fund. The Fund may also
include in advertisements, charts, graphs or drawings which illustrate the
potential risks and rewards of investment in various investment vehicles,
including but not limited to stock, bonds, Treasury bills and shares of Fund as
well as charts or graphs which illustrate strategies such as dollar cost
averaging, and comparisons of hypothetical yields of investment in tax-exempt
versus taxable investments. In addition, advertisements or shareholder
communications may include a discussion of certain attributes or benefits to be
derived by an investment in Fund. Such advertisements or communications may
include symbols, headlines or other material which highlight or summarize the
information discussed in more detail therein.
With proper authorization, Fund may reprint articles (or excerpts) written
regarding the Fund and provide them to prospective shareholders. Performance
information with respect to the Fund is generally available by calling
1-800-539-3863.
Investors may also judge, and the Fund may at times advertise,
performance of Class A or Class B shares by comparing it to the performance of
other mutual funds or mutual fund portfolios with comparable investment
objectives and policies, which performance may be contained in various unmanaged
mutual fund or market indices or rankings such as those prepared by Dow Jones &
Co., Inc., Standard & Poor's Corporation, Lehman Brothers, Merrill Lynch, and
Salomon Brothers, and in publications issued by Lipper Analytical Services, Inc.
and in the following publications: IBC/Donoghue's Money Fund Reports, Ibottson
Associates, Inc., Morningstar, CDA/Wiesenberger, Money Magazine, Forbes,
Barron's, The Wall Street Journal, The New York Times, Business Week, American
Banker, Fortune, Institutional Investor, U.S.A. Today. In addition to yield
information, general information about the Fund that appears in a publication
such as those mentioned above may also be quoted or reproduced in advertisements
or in reports to shareholders.
Advertisements and sales literature may include discussions of
specifics of the portfolio manager's investment strategy and process, including,
but not limited to, descriptions of security selection and analysis.
Advertisements may also include descriptive information about the
investment adviser, including, but not limited to, its status within the
industry, other services and products it makes available, total assets under
management, its investment philosophy.
When comparing yield, total return and investment risk of an investment
in Class A or Class B shares of the Fund with other investments, investors
should understand that certain other investments have different risk
characteristics than an investment in shares of the Fund. For example,
certificates of deposit may have fixed rates of return and may be insured as to
principal and interest by the FDIC, while the Fund's returns will fluctuate and
its share values and returns are not guaranteed. Money market accounts offered
by banks also may be insured by the FDIC and may offer stability of principal.
U.S. Treasury securities are guaranteed as to principal and interest by the full
faith and credit of the U.S. government. Money market mutual funds may seek to
offer a fixed price per share.
ADDITIONAL PURCHASE EXCHANGE AND REDEMPTION INFORMATION
The Victory Portfolios (see "Description of Victory Portfolios" below) is open
for business and the NAV of each class of shares of the Fund is calculated on
each Business Day. A Business Day is every day on which the NYSE is open for
business, the Federal Reserve Bank of Cleveland is open and any other day (other
than a day on which no shares of the Fund are tendered for redemption and no
order to purchase any shares is received) during which there is sufficient
trading in portfolio instruments that the Fund's net asset value per share might
be materially affected. The NAV of each class is determined and its shares are
priced as of the close of regular trading of the NYSE (generally 4:00 p.m.
Eastern time (the "Valuation Time")) on each Business Day of the Fund. The NYSE
or the Federal Reserve Bank of Cleveland will not be open in observance of the
following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veterans Day, Thanksgiving Day, and Christmas Day. The holiday closing schedule
is subject to change.
<PAGE>
When the NYSE is closed, or when trading is restricted for any reason
other than its customary weekend or holiday closings, or under emergency
circumstances as determined by the Commission to warrant such action, the Fund's
Transfer Agent will determine the Fund's NAVs at Valuation Time. A Fund's NAV
may be affected to the extent that its securities are traded on days that are
not Business Days.
[If, in the opinion of the Trustees, conditions exist which make cash
payment undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing the NAV of each class of the Fund. Shareholders receiving securities
or other property on redemption may realize a gain or loss for tax purposes and
will incur any costs of sale as well as the associated inconveniences.]
Pursuant to Rule 11a-3 under the 1940 Act, the Fund is required to give
shareholders at least 60 days' notice prior to terminating or modifying the
Fund's exchange privilege. Under the Rule, the 60-day notification requirement
may be waived if (i) the only effect of a modification would be to reduce or
eliminate an administrative fee, redemption fee or deferred sales charge
ordinarily payable at the time of exchange or (ii) the Fund temporarily suspends
the offering of shares as permitted under the 1940 Act or by the SEC or because
it is unable to invest amounts effectively in accordance with its investment
objective and policies.
In the Prospectus, the Victory Portfolios, Key Advisers and the
Sub-Adviser have notified shareholders that they reserve the right at any time
without prior notice to shareholders to refuse exchange purchases by any person
or group if, in Key Advisers or the Sub-Adviser's judgment, the Fund would be
unable to invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
ADDITIONAL PURCHASE INFORMATION
ALTERNATIVE SALES ARRANGEMENTS - CLASS A AND CLASS B SHARES. The
Alternative Sales Arrangements permit an investor to choose the method of
purchasing shares that is more beneficial to the investor depending on the
amount of the purchase, the length of time the investor expects to hold shares
and other relevant circumstances. Investors should understand that the purpose
and function of the deferred sales charge and asset-based sales charge with
respect to Class B shares are the same as those of the initial sales charge with
respect to Class A shares. Any salesperson or other person entitled to receive
compensation for selling Fund shares may receive different compensation with
respect to one class of shares on behalf of a single investor (not including
dealer "street name" or omnibus accounts) because generally it will be more
advantageous for that investor to purchase Class A shares of the Fund instead.
The two classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different shareholder
privileges and features. The net income attributable to Class B shares and the
dividends payable on Class B shares will be reduced by incremental expenses
borne solely by that class, including the asset-based sales charge to which
Class B shares are subject.
CLASS B CONVERSION FEATURE. Ninety-six months after an investor's
purchase order for Class B shares is accepted, such "Matured Class B Shares"
automatically will convert to Class A shares, on the basis of the relative net
asset value of the two classes, without the imposition of any sales load or
other charge. Each time any Matured Class B shares convert to Class A shares,
any Class B shares acquired by the reinvestment of dividends or distributions on
such Matured Class B shares that are still held will also convert to Class A
shares, on the same basis. The conversion feature is intended to relieve holders
of Matured Class B shares of the asset-based sales charge under the Class B
Distribution Plan after such shares have been outstanding long enough that the
Distributor may have been compensated for distribution expenses related to such
shares.
The conversion of Matured Class B shares to Class A shares is subject
to the continuing availability of a private letter ruling from the Internal
Revenue Service, or an opinion of counsel or tax adviser, to the effect that the
conversion of Matured Class B shares does not constitute a taxable event for the
holder under Federal income tax law. If such a revenue ruling or opinion is no
longer available, the automatic conversion feature may be suspended, in which
event no further conversion of Matured Class B shares would occur while such
suspension remained in effect. Although Matured Class B shares could then be
exchanged for Class A shares on the basis of relative net asset value of the
two classes, without the imposition of a sales charge or fee, such exchange
could constitute a taxable event for the holder, and absent such exchange,
Class B shares might continue to be subject to the asset-based sales charge for
longer than six years.
The methodology for calculating the net asset value, dividends and
distributions of the Fund Class A and Class B shares recognizes two types of
expenses. General expenses that do not pertain specifically to either class are
allocated pro rata to the shares of each class, based on the percentage of the
net assets of such class to the Fund's total net assets, and then equally to
each outstanding share within a given class. Such general expenses include (i)
management fees, (ii) legal, bookkeeping and audit fees, (iii) printing and
mailing costs of shareholder reports, prospectuses, statements of additional
information and other materials for current shareholders, (iv) fees to
unaffiliated Trustees, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and brokerage
commissions, and (ix) non-recurring expenses, such as litigation costs. Other
expenses that are directly attributable to a class are allocated equally to each
outstanding share within that class. Such expenses included (i) Distribution
Plan fees, (ii) incremental transfer and shareholder servicing agent fees and
expenses, (iii) registration fees and (iv) shareholder meeting expenses, to the
extent that such expenses pertain to a specific class rather than to the Fund as
a whole.
REDUCED SALES CHARGE. Reduced sales charges are applicable to purchases
of $50,000 or more of Class A shares of the Fund alone or in combination with
purchases of shares of other Victory Portfolios made at any one time. To obtain
the reduction of the sales charge, you or your investment professional must
notify the Transfer Agent at the time of purchase whenever a quantity discount
is applicable to your purchase. Upon such notification, you will receive the
lowest applicable sales charge.
The contingent deferred sales charge is waived on Class B shares in the
following cases: (i) shares sold to Key Advisers, the Sub-Adviser or their
affiliates; (ii) shares issued in plans of reorganization to which the Fund is a
party; and (iii) shares redeemed in involuntary redemptions.
In addition to investing at one time in any combination of Class A
shares of the Victory Portfolios in an amount entitling you to a reduced sales
charge, you may qualify for a reduction in the sales charge under the following
programs:
COMBINED PURCHASES. When you invest in Class A shares of the Victory
Portfolios for several accounts at the same time, you may combine these
investments into a single transaction if purchased through one investment
professional, and if the total is $50,000 or more. The following may qualify for
this privilege: an individual, or "company" as defined in Section 2(a)(8) of the
1940 Act; an individual, spouse, and their children under age 21 purchasing for
his, her, or their own account; a trustee, administrator or other fiduciary
purchasing for a single trust estate or single fiduciary account or for a single
or a parent-subsidiary group of "employee benefit plans" (as defined in Section
3(3) of ERISA); and tax-exempt organizations under Section 501(c)(3) of the
Internal Revenue Code.
RIGHTS OF ACCUMULATION. Your "Rights of Accumulation" permit reduced
sales charges on future purchases of Class A shares after you have reached a new
breakpoint. You can add the value of existing Victory Portfolios shares held by
you, your spouse, and your children under age 21, determined at the previous
day's NAV at the close of business, to the amount of your new purchase valued at
the current offering price to determine your reduced sales charge.
LETTER OF INTENT. If you anticipate purchasing $50,000 or more of
shares of the Fund alone or in combination with Class A shares of certain other
Victory Portfolios within a 13-month period, you may obtain shares of the
portfolios at the same reduced sales charge as though the total quantity were
invested in one lump sum, by filing a non-binding Letter of Intent (the
"Letter") within 90 days of the start of the purchases. Each investment you make
after signing the Letter will be entitled to the sales charge applicable
to the total investment indicated in the Letter. For example, a $2,500
purchase toward a $60,000 Letter would receive the same reduced sales charge
as if the $60,000 had been invested at one time. To ensure that the reduced
price will be received on future purchases, you or your investment professional
must inform the transfer agent that the Letter is in effect each time shares are
purchased. Neither income dividends nor capital gain distributions taken in
additional shares will apply toward the completion of the Letter.
Your initial investment must be at least 5% of the total amount you
plan to invest. Out of the initial purchase, 5% of the dollar amount specified
in the Letter will be registered in your name and held in escrow. The shares
held in escrow cannot be redeemed or exchanged until the Letter is satisfied or
the additional sales charges have been paid. You will earn income dividends and
capital gain distributions on escrowed shares. The escrow will be released when
your purchase of the total amount has been completed. You are not obligated to
complete the Letter.
If you purchase more than the amount specified in the Letter and
qualify for a further sales charge reduction, the sales charge will be adjusted
to reflect your total purchase at the end of 13 months. Surplus funds will be
applied to the purchase of additional shares at the then current offering price
applicable to the total purchase.
If you do not complete your purchase under the Letter within the
13-month period, your sales charge will be adjusted upward, corresponding to the
amount actually purchased, and if after written notice, you do not pay the
increased sales charge, sufficient escrowed shares will be redeemed to pay such
charge.
ADDITIONAL EXCHANGE INFORMATION
Class A shares of the Victory Portfolios (see "Description of Victory
Portfolios" below) may be exchanged for shares of any Victory money market fund
or any Victory Portfolios with a reduced sales charge. Shares of any Victory
money market portfolio or any Victory Portfolios with a reduced sales charge may
be exchanged for shares of the Fund upon payment of the difference in the sales
charge (or, if applicable, shares of any Victory money market portfolio may be
used to purchase Class B shares of the Fund.)
Class B shares of the Fund may be exchanged for shares of other Victory
Portfolios that offer Class B shares. The CDSC applicable to Class B shares is
imposed on Class B shares redeemed within six years of the initial purchase of
the exchanged Class B shares. When Class B shares are redeemed to effect an
exchange, the priorities described in "How to Invest" in the Prospectus for the
imposition of the Class B CDSC will be followed in determining the order in
which the shares are exchanged. Shareholders should take into account the effect
of any exchange on the applicability and rate of any CDSC that might be imposed
in the subsequent redemption of remaining shares. Shareholders owning shares of
both classes must specify whether they intend to exchange Class A or Class B
shares.
ADDITIONAL REDEMPTION INFORMATION
REINSTATEMENT PRIVILEGE. Within 90 days of a redemption, a shareholder
may reinvest all or part of the redemption proceeds of (i) Class A shares, or
(ii) Class B shares that were subject to the Class B contingent deferred sales
charge when redeemed, in Class A shares of the Fund or any of the other Victory
Portfolios into which shares of the Fund are exchangeable as described below, at
the net asset value next computed after receipt by the Transfer Agent of the
reinvestment order. No charge is currently made for reinvestment in shares of
the Fund but a reinvestment in shares of certain other Victory Portfolios is
subject to a $5.00 service fee. The shareholder must ask the Distributor for
such privilege at the time of reinvestment. Any capital gain that was realized
when the shares were redeemed is taxable, and reinvestment will not alter any
capital gains tax payable on that gain. If there has been a capital loss on the
redemption, some or all of the loss may not be tax deductible, depending on the
timing and amount of the reinvestment. Under the Internal Revenue Code, if the
redemption proceeds of Fund shares on which a sales charge was paid are
reinvested in shares of the Fund or another of the Victory Portfolios within 90
days of payment of the sales charge, the shareholder's basis in the shares of
the Fund that were redeemed may not include the amount of the sales charge paid.
That would reduce the loss or increase the gain recognized from redemption.
The Fund may amend, suspend or cease offering this reinvestment privilege at
any time as to shares redeemed after the date of such amendment, suspension or
cessation. You must reinstate your shares into an account with the same
registration. This privilege may be exercised only once by a shareholder with
respect to the Fund. For information on which funds are available for the
Reinstatement Privilege, please consult your program materials.
DIVIDENDS AND DISTRIBUTIONS
The Fund ordinarily declares and pays dividends separately for Class A
and Class B shares from its net investment income quarterly. The Fund
distributes substantially all of its net investment income and net capital
gains, if any, to shareholders within each calendar year as well as on a fiscal
year basis to the extent required for the Fund to qualify for favorable federal
tax treatment.
The amount of a class's distributions may vary from time to time
depending on market conditions, the composition of the Fund's portfolio, and
expenses borne by the Fund or borne separately by a class, as described in
"Alternative Sales Arrangements - Class A and Class B," above. Dividends are
calculated in the same manner, at the same time and on the same day for shares
of each class. However, dividends on Class B shares are expected to be lower as
a result of the asset-based sales charge on Class B shares, and Class B
dividends will also differ in amount as a consequence of any difference in net
asset value between Class A and Class B shares.
For this purpose, the net income of the Fund, from the time of the
immediately preceding determination thereof, shall consist of all interest
income accrued on the portfolio assets of the Fund, dividend income, if any,
income from securities loans, if any, and realized capital gains and losses on
the Fund assets, less all expenses and liabilities of the Fund chargeable
against income. Interest income shall include discount earned, including both
original issue and market discount, on discount paper accrued ratably to the
date of maturity. Expenses, including the compensation payable to Key Advisers
or the Sub-Adviser, are accrued each day. The expenses and liabilities of the
Fund shall include those appropriately allocable to the Fund as well as a share
of the general expenses and liabilities of the Victory Portfolios in proportion
to the Fund's share of the total net assets of the Victory Portfolios.
Additional Tax Information
It is the policy of each fund of the Victory Portfolios to qualify for
the favorable tax treatment accorded regulated investment companies ("RICs")
under Subchapter M of the Code, for so long as such qualification is in the best
interest of its shareholders. By following such policy and distributing its
income and gains currently with respect to each taxable year, the Victory
Portfolios expects to eliminate or reduce to a nominal amount the federal income
and excise taxes to which it may otherwise be subject.
In order to qualify as a RIC, each fund must, among other things, (1)
derive at least 90% of its gross income from dividends, interest, payments with
respect to securities loans, and gains from the sale or other disposition of
stock or securities, foreign currencies or other income (including gains from
options, futures or forward contracts) derived with respect to its business of
investing in stock, securities or currencies, (2) derive less than 30% of its
gross income from the sale or other disposition of stock, securities, options,
futures, forward contracts, and certain foreign currencies (or options, futures,
or forward contracts on foreign currencies) held for less than three months, and
(3) diversify its holdings so that at the end of each quarter of its taxable
year (i) at least 50% of the market value of the fund's assets is represented by
cash or cash items, U.S. Government securities, securities of other RICs and
other securities limited, in respect of any one issuer, to an amount not greater
than 5% of the value of the fund's total assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of its
total assets is invested in the securities of any one issuer (other than U.S.
Government securities) or of two or more issuers that the Victory Portfolios
control and that are engaged in the same, similar, or related trades or
businesses. These requirements may restrict the degree to which the Victory
Portfolios may engage in short-term trading and concentrate investments.
If a fund qualifies as a RIC, it will not be subject to federal income tax on
the part of its net investment income and net realized capital gains, if any,
that it distributes to shareholders with respect to each taxable year within the
time limits specified in the Code.
A non-deductible excise tax is imposed on regulated investment
companies that do not distribute in each calendar year an amount equal to 98% of
their ordinary income for the year plus 98% of their capital gain net income for
the 1-year period ending on October 31 of such calendar year. The balance of
such income must be distributed during the following calendar year. If
distributions during a calendar year are less than the required amount, the fund
is subject to a non-deductible excise tax equal to 4% of the deficiency.
Certain investment and hedging activities of a fund, including
transactions in options, futures contracts, hedging transactions, forward
contracts, straddles, foreign currencies, and foreign securities, are subject to
special tax rules. In a given case, these rules may accelerate income to the
fund, defer losses to the fund, cause adjustments in the holding periods of the
fund's securities, convert short-term capital losses into long-term capital
losses, or otherwise affect the character of the fund's income. These rules
could therefore affect the amount, timing and character of distributions to
shareholders. The Victory Portfolios will endeavor to make any available
elections pertaining to such transactions in a manner believed to be in the best
interest of the Victory Portfolios and their securities.
Each fund will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of taxable dividends paid to any shareholder who has
failed to provide (or provided an incorrect) tax identification number , or is
subject to withholding pursuant to a notice from the Internal Revenue Service
for failure to properly include on his or her income tax return payments of
interest or dividends. This "backup withholding" is not an additional tax, and
any amounts withheld may be credited against the shareholder's ultimate U.S.
tax liability.
Information set forth in the Prospectus and this Statement of
Additional Information that relates to federal taxation is only a summary of
certain key federal tax considerations generally affecting purchasers of shares
of the Victory Portfolios. No attempt has been made to present a complete
explanation of the federal tax treatment of a fund or its shareholders, and this
discussion is not intended as a substitute for careful tax planning.
Accordingly, potential purchasers of shares of a fund of these Portfolios are
urged to consult their tax advisers with specific reference to their own tax
circumstances. In addition, the tax discussion in the Prospectus and this
Statement of Additional Information is based on tax law in effect on the date of
the Prospectus and this Statement of Additional Information; such laws and
regulations may be changed by legislative, judicial or administrative action,
sometimes with retroactive effect.
<PAGE>
MANAGEMENT OF THE VICTORY PORTFOLIOS
Board of Trustees
Overall responsibility for management of the Victory Portfolios rests
with the Trustees, who are elected by the shareholders of the Victory
Portfolios. The Victory Portfolios are managed by the Trustees in accordance
with the laws of the Commonwealth of Massachusetts governing business trusts.
There are currently seven Trustees, six of whom are not "interested persons" of
the Victory Portfolios within the meaning of that term under the 1940 Act. The
Trustees, in turn, elect the officers of the Victory Portfolios to supervise
actively its day-to-day operations.
The Trustees of the Victory Portfolios, their addresses, ages and their
principal occupations during the past five years are as follows:
<TABLE>
Position(s) Held
With the Victory Principal Occupation
Name, Address and Age Portfolios During Past 5 Years
- --------------------- -------------------- -------------------
<S> <C> <C>
Robert G. Brown, 72
5460 N. Ocean Drive
Singer Island, FL 33404 Trustee Retired; from October 1983 to November 1990, President,
Cleveland Advanced Manufacturing Program (non-profit
corporation engaged in regional economic development);
Trustee, The Victory Funds.
Edward P. Campbell, 45
Nordson Corporation
28601 Clemens Road
Westlake, OH 44145 Trustee From March, 1994 to present, Executive Vice President and
Chief Operating Officer of Nordson Corporation
(manufacturer of application equipment); from May, 1988
March 1994, Vice President of Nordson Corporation; from
1987 to August 1994, member of the Supervisory
Committee of Society's Collective Investment Retirement
Fund; from May 1991 to August 1994, Trustee, Financial
Reserves Fund and from May 1993 to August 1994,
Trustee, Ohio Municipal Money Market Fund; Trustee, The
Victory Funds and Spears, Benzak, Salomon and Farrell
("SBSF") Funds.
Dr. Harry Gazelle, 67
17822 Lake Road
Lakewood, Ohio 44107 Trustee Retired radiologist, Drs. Hill and Thomas Corp. Trustee,
The Victory Funds.
<PAGE>
Dr. Thomas F. Morrissey, 62
Weatherhead School of
Management
Case Western Reserve
University
10900 Euclid Avenue
Cleveland, OH 44106-7235 Trustee 1995 Visiting Scholar, Bond University, Queensland,
Australia; Professor, Weatherhead School of Management,
Case Western Reserve University; from 1989 to 1995,
Associate Dean of Weatherhead School of Management;
from 1987 to August 1994, Member of the Supervisory
Committee of Society's Collective Investment Retirement
Fund; from May 1991 to August 1994, Trustee, Financial
Reserves Fund and from May 1993 to August 1994,
Trustee, Ohio Municipal Money Market Fund; Trustee, The
Victory Funds.
Stanley I. Landgraf, 70
41 Traditional Lane
Albany, NY 12211 Trustee Retired; currently, Trustee, Rensselaer Polytechnic Institute;
Director, Elenel Corporation, Albany International
Corporation and Mechanical Technology, Inc.; Member,
Board of Overseers, School of Management, Rensselaer
Polytechnic Institute; Member, The Fifty Group (a Capital
Region business organization); Trustee, The Victory Funds.
Leigh A. Wilson*, 51
River Tower
420 East 54th Street
Apt. 10H
New York, NY 10022 Trustee and President From 1989 to present, Chairman and Chief Executive
Officer, Glenleigh
International Limited;
from 1984-1989, Chief
Executive Officer,
Paribas North America and
Paribas Corporation;
Trustee, The Victory
Funds and SBSF Funds.
Dr. H. Patrick Swygert, 52
Howard University
2400 6th Street, N.W.
Suite 320
Washington, D.C. ___ Trustee Currently President, Howard University; Trustee, The
Victory Funds; formerly President, State University of New
York at Albany; formerly, Executive Vice President,
Temple University.
</TABLE>
- ------------
* Mr. Wilson is deemed to be an "interested person" of The Victory Portfolios
under the 1940 Act solely by reason of his position as President.
The Board presently has an Investment Policy Committee and a Business,
Legal, and Audit Committee. The members of the Investment Policy Committee are
Messrs. Morrissey, Brown and Landgraf (Chairman), who will serve until May 1996.
The function of the Investment Policy Committee is to review the existing
investment policies of the Victory Portfolios, including the levels of risk and
types of funds available to shareholders, and make recommendations to the Board
of Trustees regarding the revision of such policies or, if necessary, the
submission
<PAGE>
of such revisions to the Victory Portfolios' shareholders for their
consideration. The members of the Business, Legal and Audit Committee are
Messrs. Swygert (Chairman), Campbell and Gazelle who will serve until May 1996.
The function of the Business, Legal and Audit Committee is to recommend
independent auditors and monitor accounting and financial matters; to nominate
persons to serve as disinterested Trustees and Trustees to serve on committees
of the Board; and to review compliance and contract matters.
The Investment Policy Committee met four times during the current
fiscal year commencing November 1, 1994. The Business, Legal and Audit Committee
was constituted on May 24, 1995 (and has met once since then) and replaced the
Audit Committee, the Legal Committee and the Nominating Committee, which met
three times, one time and one time, respectively, during the current fiscal year
prior to May 31, 1995.
REMUNERATION OF TRUSTEES AND CERTAIN EXECUTIVE OFFICERS
Effective June 1, 1995, each Trustee (other than Leigh A. Wilson)
receives an annual fee of $27,000 for serving as Trustee of all the Funds of the
Victory Portfolios, and an additional per meeting fee ($2,400 in person and
$1,200 per telephonic meeting).
Effective June 1, 1995, Leigh A. Wilson receives an annual fee of
$33,000 for serving as President and Trustee for all of the Funds of the Victory
Portfolios, and an additional per meeting fee ($3,000 in person and $1,500 per
telephonic meeting).
The following tables indicate the compensation received by each Trustee
during the fiscal year of the Funds which ended on October 31, 1995:
<TABLE>
The Victory The Victory The Victory The Victory
The Victory Diversified Government The Victory Intermediate International
Balanced Fund1/ Stock Fund Mortgage Fund1/ Growth Fund2/ Income Fund Growth Fund2/
--------------- ---------- --------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee ........ $1,178.91 $2,331.48 $1,126.45 $1,168.23 $980.48 $880.52
Edward P. Campbell,
Trustee .......... 1,539.75 2,009.87 1,174.17 740.45 841.67 670.63
Harry Gazelle,
Trustee .......... 974.79 1,929.86 919.93 987.41 809.59 735.72
John W. Kemper,
Trustee* ......... 541.57 1,060.05 589.95 843.06 458.81 506.60
Thomas F. Morrissey,
Trustee .......... 1,539.75 2,009.87 1,174.17 1,151.74 841.67 802.87
Stanley I. Landgraf,
Trustee .......... 1,014.75 2,009.87 949.17 842.51 841.67 708.01
Leigh A. Wilson,
Trustee .......... 1,112.55 2,206.35 1,021.27 1,213.17 920.59 865.44
H. Patrick Swygert,
Trustee .......... 1,014.75 2,009.87 949.17 1,151.74 841.67 802.87
John Buckingham,*
Trustee .......... 541.57 1,060.05 589.95 226.15 458.81 409.93
John R. Young,*
Trustee .......... 577.04 1,132.82 621.95 750.08 488.98 494.95
</TABLE>
*Resigned
- ------------------------------------------------
1/ For certain Trustees, these amounts include payments made by the Society
Collective Investment Retirement Funds, which were reorganized into these
Funds as of December 19, 1994.
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
<TABLE>
The Victory The Victory The Victory The Victory The Victory The Victory
Investment Quality Limited Term Ohio Municipal Ohio Regional Prime Obligations Special
Bond Fund2/ Income Fund2/ Bond Fund Stock Fund Fund Value Fund
------------- ------------- ----------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee .......... $1,052.54 $1,155.92 $443.98 $271.80 $4,747.58 $1,091.75
Edward P. Campbell,
Trustee .......... 776.01 922.20 376.72 231.79 3,921.95 942.58
Harry Gazelle,
Trustee .......... 876.72 969.26 364.09 223.52 3,832.26 904.37
John W. Kemper,*
Trustee .......... 644.08 581.73 223.59 133.11 2,818.92 489.58
Thomas F. Morrissey,
Trustee .......... 966.09 1,045.87 376.72 231.79 3,921.95 942.58
Stanley I. Landgraf,
Trustee ......... 827.74 960.31 376.72 231.79 3,921.95 942.58
Leigh A. Wilson,
Trustee .......... 1,033.38 1,143.77 407.85 252.05 4,143.70 1,036.09
H. Patrick Swygert,
Trustee .......... 966.09 1,045.87 376.72 231.79 3,921.95 942.58
John D. Buckingham,*
Trustee .......... 504.76 495.35 223.59 133.11 2,818.92 489.58
John R. Young,*
Trustee .......... 619.72 590.17 236.57 140.98 2,915.30 523.93
</TABLE>
* Resigned
- ------------------------------------------------
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
<TABLE>
The Victory The Victory Victory
Tax-Free The Victory U.S. The Victory Institutional Stock
Money Government The Victory The Victory Government Money Index
Market Fund Obligations Fund2/ Value Fund2/ Fund for Income3/ Bond Fund3/ Market Fund3/ Fund
----------- ------------------ ------------ ----------------- ----------- ------------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee .......... $ 1,781.03 $ 5,774.42 $ 1,842.48 $ 217.14 $ 773.66 $ 3,820.17 $ 797.69
Edward P. Campbell,
Trustee .......... 1,523.27 4,324.24 1,581.23 114.18 389.76 2,204.64 689.90
Harry Gazelle,
Trustee .......... 1,467.67 4,922.46 1,522.01 189.79 675.74 3,425.47 661.40
John W. Kemper,*
Trustee .......... 853.51 3,098.06 841.91 161.55 624.83 2,554.32 356.16
Thomas F. Morrissey,
Trustee .......... 1,523.57 5,336.76 1,583.17 228.46 819.94 4,004.82 689.90
Stanley I. Landgraf,
Trustee .......... 1,523.57 4,828.66 1,580.86 157.16 535.10 2,927.66 689.90
Leigh A. Wilson,
Trustee .......... 1,661.60 5,902.24 1,732.57 248.70 874.92 4,397.12 759.38
H. Patrick Swygert,
Trustee .......... 1,523.57 5,336.76 1,583.17 228.46 819.94 4,004.82 689.90
John D. Buckingham,*
Trustee .......... 853.51 2,478.65 840.54 82.92 318.60 1,333.87 356.16
John R. Young,*
Trustee .......... 900.37 3,074.28 899.81 140.67 535.81 2,223.97 379.85
</TABLE>
* Resigned
- ------------------------------------------------
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
3/ For certain Trustees, these amounts include amounts paid by this Fund's
successor, a Portfolio of The Victory Funds, which was reorganized as the
Fund as of June 5, 1995.
<TABLE>
The Victory
The Victory The Victory The Victory Ohio The Victory Financial
National Municipal New York Municipal Money Special Growth Reserves
Bond Fund3/ Tax-Free Fund3/ Market Fund3/ ____Fund2/ Funds 3/
<S> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee .......... $39.89 $141.29 $2,962.00 $401.99 $4,834.58
Edward P. Campbell,
Trustee .......... 26.78 76.45 4,899.18 272.35 3,549.91
Harry Gazelle,
Trustee........... 37.48 123.38 3,548.52 341.34 5,474.20
John W. Kemper,*
Trustee .......... 18.20 100.45 1,893.61 260.65 2,913.01
Thomas F. Morrissey,
Trustee .......... 40.09 148.08 5,602.37 388.49 4,996.26
Stanley I. Landgraf,
Trustee .......... 38.83 104.47 3,183.11 307.57 5,112.02
Leigh A. Wilson,
Trustee .......... 49.44 162.90 3,424.84 417.32 5,729.73
H. Patrick Swygert,
Trustee .......... 40.09 148.08 3,102.37 388.49 4,996.26
John D. Buckingham,*
Trustee .......... 13.33 51.65 1,784.96 177.06 2,598.87
John R. Young,*
Trustee .......... 18.91 88.31 1,661.29 238.89 2,709.16
</TABLE>
- ------------------------------------------------
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
3/ For certain Trustees, these amounts include amounts paid by this Fund's
predecessor, a Portfolio of The Victory Funds, which was reorganized as the
Fund as of June 5, 1995.
<PAGE>
<TABLE>
Total Compensation
Pension or Retirement Benefits Estimated Annual from Victory
Accrued as Portfolio Expenses Benefits "Fund Complex"
Upon Retirement 4/
<S> <C> <C> <C>
Robert G. Brown, Trustee -0- -0- $39,815.98
Edward P. Campbell, Trustee -0- -0- 33,799.68
Harry Gazelle, Trustee -0- -0- 35,916.98
John W. Kemper, Trustee* -0- -0- 22,567.31
Thomas F. Morrissey, Trustee -0- -0- 40,366.98
Stanley I. Landgraf, Trustee -0- -0- 34,615.98
Leigh A. Wilson, Trustee -0- -0- 46,716.97
H. Patrick Swygert, Trustee -0- -0- 37,116.98
John D. Buckingham, Trustee -0- -0- 18,841.89
John R. Young, Trustee* -0- -0- 21,963.81
</TABLE>
* Resigned
- ------------------------------------
4/ For certain Trustees, these amounts include compensation received from
The Victory Funds (which were reorganized into the Current Company as
of June 5, 1995), the SBSF Funds (the investment adviser of which was
acquired by KeyCorp effective April, 1995) and Society's Collective
Investment Retirement Funds, which were reorganized into the Balanced
Fund and Government Mortgage Fund as of December 19, 1994. There are
presently 24 mutual funds from which the above-named Trustees are
compensated in the Victory "Fund Complex," but not all of the
above-named Trustees serve on the boards of each fund in the "Fund
Complex."
<TABLE>
Total Compensation
Pension or Retirement Benefits Estimated Annual from Victory
Accrued as Portfolio Expenses Benefits "Fund Complex"
Upon Retirement 4/
<S> <C> <C> <C>
Robert G. Brown, Trustee -0- -0- $39,815.98
Edward P. Campbell, Trustee -0- -0- 33,799.68
Harry Gazelle, Trustee -0- -0- 35,916.98
John W. Kemper, Trustee* -0- -0- 22,567.31
Thomas F. Morrissey, Trustee -0- -0- 40,366.98
Stanley I. Landgraf, Trustee -0- -0- 34,615.98
Leigh A. Wilson, Trustee -0- -0- 46,716.97
H. Patrick Swygert, Trustee -0- -0- 37,116.98
John D. Buckingham, Trustee -0- -0- 18,841.89
John R. Young, Trustee* -0- -0- 21,963.81
* Resigned
- ------------------------------------
4/ For certain Trustees, these amounts include compensation received from
The Victory Funds (which were reorganized into the Current Company as
of June 5, 1995), the SBSF Funds (the investment adviser of which was
acquired by KeyCorp effective April, 1995) and Society's Collective
Investment Retirement Funds, which were reorganized into the Balanced
Fund and Government Mortgage Fund as of December 19, 1994. There are
presently 24 mutual funds from which the above-named Trustees are
compensated in the Victory "Fund Complex," but not all of the
above-named Trustees serve on the boards of each fund in the "Fund
Complex."
</TABLE>
Officers
The officers of the Victory Portfolios, their addresses, ages
and principal occupations during the past five years are as follows:
<TABLE>
Position with the Principal occupation
Name Victory Portfolios during past 5 years
<S> <C> <C>
Leigh A. Wilson, 51 President and Trustee From 1989 to present, Chairman and
Chief Executive Officer, Glenleigh
International Limited; from 1984-1989,
Chief Executive Officer, Paribas North
America and Paribas Corporation; Trustee
to The Victory Funds and SBSF Funds.
William B. Blundin, 57 Vice President Senior Vice President of BISYS Fund
Services; officer of other investment
companies administered by BISYS Fund
Services; President and Chief Executive
Officer of Vista Broker-Dealer Services,
Inc., Emerald Asset Management, Inc. and
BNY Hamilton Distributors, Inc.,
registered broker/dealers.
<PAGE>
J. David Huber, 49 Vice President Executive Vice President, BISYS Fund
Services.
Scott A. Englehart, 33 Secretary From October 1990 to present, employee
of BISYS Fund Services, Inc.; from 1985
to October 1990, Manager of Banking
Center, Fifth Third Bank.
George O. Martinez, 36 Assistant Secretary From March 1995 to present, Senior Vice
President and Director of Legal and
Compliance Services, BISYS Fund
Services; from June 1989-March 1995,
Vice President and Associate General
Counsel, Alliance Capital Management.
Martin R. Dean, 31 Treasurer From May 1994 to present, employee of
BISYS Fund Services; from January 1987
- April 1994, Senior Manager, KPMG
Peat Marwick.
Adrian J. Waters, 32 Assistant Treasurer From May 1993 to present, employee of
BISYS Fund Services; from 1989-May
1993, Manager, Price Waterhouse.
</TABLE>
The mailing address of each of the officers of the Victory Portfolios
is 3435 Stelzer Road, Columbus, Ohio 43219-3035.
The officers of the Victory Portfolios receive no compensation directly
from the Victory Portfolios for performing the duties of their offices. BISYS
Fund Services, Inc. receives fees from the Victory Portfolios for acting as
Administrator.
As of January 6, 1996, the Trustees and officers as a group owned
beneficially less than 1% of the Fund.
Investment Adviser and Sub-Adviser
KeyCorp Mutual Fund Advisers, Inc. was organized as an Ohio corporation
on July 27, 1995 and is registered as an investment adviser under the 1940 Act.
It is a wholly-owned subsidiary of KeyCorp Asset Management Holdings, Inc.,
which is a wholly-owned subsidiary of Society National Bank, a wholly-owned
subsidiary of KeyCorp. Affiliates of Key Advisers manage approximately $37
billion for numerous clients including large corporate and public retirement
plans, TaftHartley plans, foundations and endowments, high net worth individuals
and mutual funds.
KeyCorp, a financial services holding company, is headquartered at 127
Public Square, Cleveland, Ohio 44114. As of June 30, 1995, KeyCorp had an asset
base of $67.5 billion, with banking offices in 25 states from Maine to Alaska,
and trust and investment offices in 16 states. KeyCorp is the resulting entity
of a merger between Society Corporation, the bank holding company of which
Society National Bank was a wholly-owned subsidiary, and KeyCorp, the former
bank holding company, which merger was consummated during the first quarter of
1994. KeyCorp's major business activities include providing traditional
banking and associated financial services to consumer, business and commercial
markets. Its non-bank subsidiaries include investment advisory, securities
brokerage, insurance, bank credit card processing, and mortgage leasing
companies. Society National Bank is the lead affiliate bank of KeyCorp. The
following schedule lists the advisory fees for each mutual fund that is advised
by Key Advisers.
.25 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Institutional Money Market Fund
.35 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Prime Obligations Fund
Victory U.S. Government Obligations Fund
Victory Tax-Free Money Market Fund
.50 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Ohio Municipal Money Market Fund
Victory Limited Term Income Fund
Victory Government Mortgage Fund
Victory Financial Reserves Fund
Victory Fund for Income #
.55 OF 1% OF AVERAGE DAILY NET ASSETS
Victory National Municipal Bond Fund
Victory Government Bond Fund
Victory New York Tax-Free Fund
.60 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Ohio Municipal Bond Fund
Victory Stock Index Fund
.65 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Diversified Stock Fund
.75 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Intermediate Income Fund
Victory Investment Quality Bond Fund
Victory Ohio Regional Stock Fund
1% OF AVERAGE DAILY NET ASSETS
Victory Balanced Fund
Victory Value Fund
Victory Growth Fund
Victory Special Value Fund
Victory Special Growth Fund+/-
1.10% OF AVERAGE DAILY ASSETS
Victory International Growth Fund
# First Albany Asset Management Corporation serves as
sub-adviser to the Victory Fund for Income, for which it
receives .20% paid by Key Advisers.
+/- T. Rowe Price Associates, Inc. serves as sub-adviser to
Society Special Growth Fund, for which it receives .25% of
average daily net assets up to $100 million and .20% of
average daily net assets in excess of $100 million paid by Key
Advisers.
ADVISORY AND OTHER CONTRACTS
Unless sooner terminated, the Investment Advisory Agreement between Key
Advisers and the Funds provides that it will continue in effect as to a
particular Fund for an initial two-year term and for consecutive one-year terms
thereafter, provided that such continuance is approved at least annually by the
Victory Portfolios' Trustees or by vote of a majority of the outstanding shares
of such Fund (as defined under "GENERAL INFORMATION - Miscellaneous" in the
Prospectuses), and, in either case, by a majority of the Trustees who are not
parties to the Investment Advisory Agreement or interested persons (as defined
in the 1940 Act) of any party to the Investment Advisory Agreement, by votes
cast in person at a meeting called for such purpose.
The Investment Advisory Agreement is terminable as to a particular Fund
at any time on 60 days' written notice without penalty by the Trustees, by vote
of a majority of the outstanding shares of that Fund, or by Key Advisers. The
Investment Advisory Agreement also terminates automatically in the event of any
assignment, as defined in the 1940 Act.
The Investment Advisory Agreement provides that Key Advisers shall not
be liable for any error of judgment or mistake of law or for any loss suffered
by the Victory Portfolios in connection with the performance of services
pursuant to the Investment Advisory Agreement, except a loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith, or gross
negligence on the part of Key Advisers in the performance of its duties, or from
reckless disregard by it of either duties and obligations thereunder.
Under the Investment Advisory Agreement, Key Advisers has agreed to
provide investment advisory services as described in the Prospectus. For the
services provided and expenses assumed pursuant to the Investment Advisory
Agreement, the Fund pays Key Advisers a fee, computed daily and paid monthly, at
the annual rate of sixty-five one-hundredths of one percent (.65%) of the
average daily net assets of the Fund.
Prior to January, 1993, Society National Bank served as investment
adviser to the Fund. From January, 1993 until , 1995, Society Asset Management,
Inc. served as investment adviser to the Fund. For the fiscal years ended
October 31, 1992, 1993 and 1994 the Fund paid investment advisory fees of
$246,071, $252,982 and $247,755, respectively, after fee reductions of $0,
$5,574 and $10,682, respectively. For the six months ended April 30, 1995, the
Fund paid investment advisory fe es of $__________.
Under an investment advisory agreement between the Victory Portfolios,
on behalf of the Fund, and Key Advisers, Key Advisers may delegate a portion of
its responsibilities to a subadviser. In addition, the investment advisory
agreement provides that Key Advisers may render services through its own
employees or the employees of one or more affiliated companies that are
qualified to act as an investment adviser of the Fund and are under the common
control of KeyCorp as long as all such persons are functioning as part of an
organized group of persons, managed by authorized officers of Key Advisers.
Key Advisers has entered into an investment sub-advisory agreement with
its affiliate, Society Asset Management, Inc. on behalf of each of the Victory
Portfolios except Fund for Income and Special Growth Fund. The Sub-Adviser is a
wholly-owned subsidiary of KeyCorp Asset Management Holdings, Inc. With respect
to the day to day management of the Fund, under the sub-advisory agreement, the
Sub-Adviser makes decisions concerning, and places all orders for, purchases and
sales of securities and helps maintain the records relating to such purchases
and sales. The Sub-Adviser may, in its discretion, provide such services through
its own employees or the employees of one or more affiliated companies that are
qualified to act as an investment adviser to the Company under applicable laws
and are under the common control of KeyCorp; provided that (i) all persons, when
providing services under the sub-advisory agreement, are functioning as part of
an organized group of persons, and (ii) such organized group of persons is
managed at all times by authorized officers of the Sub-Adviser. This arrangement
will not result in the payment of additional fees by the Fund. For its services
under the investment sub-advisory agreement, Key Advisers pays the Sub-Adviser
subadvisory fees at rates (based on an annual percentage of average daily net
assets) which vary according to the schedule below:
For the Balanced Fund, Diversified For the International Growth Fund, Ohio
Stock Fund, Growth Fund, Stock Index Regional Stock Fund and Special Value
Fund and Value Fund: Fund:
Rate of Rate of
Sub-Advisory Sub-Advisory
Net Assets Fee* Net Assets Fee*
Up to $10,000,000 0.65% Up to $10,000,000 0.90%
Next $15,000,000 0.50% Next $15,000,000 0.70%
Next $25,000,000 0.40% Next $25,000,000 0.55%
Above $50,000,000 0.35% Above $50,000,000 0.45%
For the Intermediate Income Fund, For the Prime Obligations Fund, Tax-Free
Investment Quality Bond Fund, Limited Money Market Fund, U.S. Government
Term Income Fund, Ohio Municipal Bond Obligations Fund, Financial Reserves
Fund, Goverment Bond Fund, Government Fund, Institutional Money Market Fund and
Mortgage Fund, National Municipal Ohio Municipal Money Market Fund:
Bond Fund and New York Tax-Free Fund:
Rate of Rate of
Sub-Advisory Sub-Advisory
Net Assets Fee* Net Assets Fee*
Up to $10,000,000 0.40% Up to $10,000,000 0.25%
Next $15,000,000 0.30% Next $15,000,000 0.20%
Next $25,000,000 0.25% Next $25,000,000 0.15%
Above $50,000,000 0.20% Above $50,000,000 0.125%
- --------------------
* As a percentage of average daily net assets. Note, however, that the
Sub-Adviser shall have the right, but not the obligation, to
voluntarily waive any portion of the sub-advisory fee from time to
time. Any such voluntary waiver will be irrevocable and determined in
advance of rendering sub-investment advisory services by the
Sub-Adviser, and shall be in writing and signed by the parties hereto.
Glass-Steagall Act
In 1971 the United States Supreme Court held in Investment Company
Institute v. Camp that the federal statute commonly referred to as the
Glass-Steagall Act prohibits a national bank from operating a fund for the
collective investment of managing agency accounts. Subsequently, the Board of
Governors of the Federal Reserve System (the "Board") issued a regulation and
interpretation to the effect that the Glass-Steagall Act and such decision: (a)
forbid a bank holding company registered under the Federal Bank Holding Company
Act of 1956 (the "Holding Company Act") or any non-bank affiliate thereof from
sponsoring, organizing, or controlling a registered, open-end investment company
continuously engaged in the issuance of its shares, but (b) do not prohibit such
a holding company or affiliate from acting as investment adviser, transfer
agent, and custodian to such an investment company. In 1981 the United States
Supreme Court held in Board of Governors of the Federal Reserve System v.
Investment Company Institute that the Board did not exceed its authority under
the Holding Company Act when it adopted its regulation and interpretation
authorizing bank holding companies and their non-bank affiliates to act as
investment advisers to registered closed-end investment companies. In the Board
of Governors case, the Supreme Court also stated that if a national bank
complied with the restrictions imposed by the Board in its regulation and
interpretation authorizing bank holding companies and their non-bank affiliates
to act as investment advisers to investment companies, a national bank
performing investment advisory services for an investment company would not
violate the Glass-Steagall Act.
Key Advisers and the Sub-Adviser believe that they may perform the
services for the Victory Portfolios contemplated by the Prospectus, this
Statement of Additional Information, and the Investment Advisory (Sub-Advisory)
Agreement with the Victory Portfolios without violation of applicable statutes
and regulations and has so represented in its Investment Advisory (Sub-Advisory)
Agreement with the Victory Portfolios. Key Trust Company of Ohio, N. A. believes
that it may perform the services for the Victory Portfolios contemplated by the
Prospectus, this Statement of Additional Information, and the Shareholder
Servicing Agreement with the Victory Portfolios (as described below) without
violation of applicable statutes and regulations and has so represented in such
Shareholder Servicing Agreement. Future changes in either federal or state
statutes and regulations relating to the permissible activities of banks or bank
holding companies and the subsidiaries or affiliates of those entities, as well
as further judicial or administrative decisions or interpretations of present
and future statutes and regulations, could prevent or restrict Key Trust Company
of Ohio, N. A., Key Advisers or the Sub-Adviser from continuing to perform such
services for the Victory Portfolios. Depending upon the nature of any changes in
the services which could be provided by Key Trust Company of Ohio, N. A., Key
Advisers or the Sub-Adviser the Trustees of the Victory Portfolios would review
the Victory Portfolios' relationship with Key Trust Company of Ohio, N. A., Key
Advisers or the Sub-Adviser and consider taking all action necessary in the
circumstances.
Should future legislative, judicial, or administrative action prohibit
or restrict the proposed activities of Key Trust Company of Ohio, N. A., Key
Advisers or the Sub-Adviser and its affiliated and correspondent banks and other
non-bank affiliates in connection with customer purchases of shares of the
Victory Portfolios, the banks and such non-bank affiliates might be required to
alter materially or discontinue the services offered by them to customers. It is
not anticipated, however, that any change in the Victory Portfolios' method of
operations would affect its net asset value per share or result in financial
losses to any customer.
From time to time, advertisements, supplemental sales literature and
information furnished to present or prospective shareholders of the Fund may
include descriptions of Key Trust Company of Ohio, N. A., Key Advisers and the
Sub-Adviser including, but not limited to, (i) descriptions of the operations of
Key Trust Company of Ohio, N. A., Key Advisers and the Sub-Adviser;
(ii) descriptions of certain personnel and their functions; and (iii) statistics
and rankings related to the operations of Key Trust Company of Ohio, N. A.,
Key Advisers and the Sub-Adviser.
Portfolio Transactions
Pursuant to the Investment Advisory (Sub-Advisory) Agreement, Key
Advisers or the Sub-Adviser determines, subject to the general supervision of
the Trustees of the Victory Portfolios, and in accordance with each fund's
investment objective and restrictions, which securities are to be purchased and
sold by a fund, and which brokers are to be eligible to execute its portfolio
transactions. Purchases from underwriters and/or broker/dealers of portfolio
securities include a commission or concession paid by the issuer to the
underwriter and/or broker/dealer and purchases from dealers serving as market
makers may include the spread between the bid and asked price. While Key
Advisers and the Sub-Adviser generally seek competitive spreads or commissions,
the Fund may not necessarily pay the lowest spread or commission available on
each transaction, for reasons discussed below.
Allocation of transactions, including their frequency, to various
dealers is determined by Key Advisers or the Sub-Adviser in its best judgment
and in a manner deemed fair and reasonable to shareholders. The primary
consideration is prompt execution of orders in an effective manner at the most
favorable price. Subject to this consideration, dealers who provide supplemental
investment research to Key Advisers or the Sub-Adviser may receive orders for
transactions by the Victory Portfolios. Information so received is in addition
to and not in lieu of services required to be performed by Key Advisers or the
Sub-Adviser and does not reduce the advisory (sub-advisory) fees payable to Key
Advisers or the Sub-Adviser by the Victory Portfolios. Such information may be
useful to Key Advisers or the Sub-Adviser in serving both the Victory Portfolios
and other clients and, conversely, supplemental information obtained by the
placement of business or other clients may be useful to Key Advisers or the
Sub-Adviser in carrying out its obligations to the Victory Portfolios. In the
future, the Trustees may also authorize the allocation of brokerage to
affiliated broker-dealers on an agency basis to effect portfolio transactions.
In such event, the Trustees will adopt procedures incorporating the standards of
Rule 17e-1 of the 1940 Act, which require that the commission paid to affiliated
broker-dealers must be "reasonable and fair compared to the commission, fee or
other remuneration received, or to be received, by other brokers in connection
with comparable transactions involving similar securities during a comparable
period of time." At times, the Fund may also purchase portfolio securities
directly from dealers acting as principals, underwriters or market makers. As
these transactions are usually conducted on a net basis, no brokerage
commissions are paid by the Fund.
The Victory Portfolios will not execute portfolio transactions through,
acquire portfolio securities issued by, make savings deposits in, or enter into
repurchase or reverse repurchase agreements with Key Advisers, the Sub-Adviser,
Key Trust Company of Ohio, N.A. or its affiliates, Concord Holding Corporation,
Victory Broker-Dealer Services, Inc. or their affiliates, and will not give
preference to Key Trust Company of Ohio, N.A.'s correspondent banks or
affiliates, or Concord Holding Corporation or Victory Broker-Dealer Services,
Inc. with respect to such transactions, securities, savings deposits, repurchase
agreements, and reverse repurchase agreements.
Investment decisions for each fund are made independently from those
for the other funds or any other investment company or account managed by Key
Advisers or the Sub-Adviser. Any such other investment company or account may
also invest in the same securities as a particular fund. When a purchase or sale
of the same security is made at substantially the same time on behalf of a fund
and another fund, investment company or account, the transaction will be
averaged as to price, and available investments allocated as to amount, in a
manner which Key Advisers or the SubAdviser believes to be equitable to a fund
or the Victory Portfolios and such other investment company or account. In some
instances, this investment procedure may adversely affect the price paid or
received by a fund or the size of the position obtained by a fund. To the extent
permitted by law, Key Advisers or the Sub-Adviser may aggregate the securities
to be sold or purchased for a fund with those to be sold or purchased for the
other funds or for other investment companies or accounts in order to obtain
best execution. As provided by the Investment Advisory (Sub-Advisory) Agreement,
in making investment recommendations for the Victory Portfolios, Key Advisers
and the Sub-Adviser will not inquire or take into consideration whether an
issuer of securities proposed for purchase or sale by a Fund is a customer of
Key Advisers or the Sub-Adviser, their parents or subsidiaries or affiliates
and, in dealing with their commercial customers, Key Advisers or the
Sub-Adviser, their parents, subsidiaries, and affiliates will not inquire or
take into consideration whether securities of such customers are held by the
Victory Portfolios.
In the fiscal years ended October 31, 1992, 1993 and 1994, the Fund
paid $421,782, $14,502 and $18,410, respectively, in brokerage commissions. For
the six months ended April 30, 1995, the Fund paid $__________ in brokerage
commissions.
Administrator
Currently, Concord Holding Corporation ("CHC") serves as general
manager and administrator (the "Administrator") to the Fund. Prior to CHC
becoming administrator to the Funds, The Winsbury Company ("Winsbury") served as
administrator. The Administrator assists in supervising all operations of each
fund (other than those performed by Key Advisers or the Sub-Adviser under the
Investment Advisory (Sub-Advisory) Agreement). The Administrator is a
broker-dealer registered with the Commission, and is a member of the National
Association of Securities Dealers, Inc. The Administrator provides financial
services to institutional clients.
CHC receives a fee from each fund for its services as Administrator and expenses
assumed pursuant to the Administration Agreements, calculated daily and paid
monthly, at the annual rate of fifteen one hundredths of one percent (.15%) of
each fund's average daily net assets. CHC may periodically waive all or a
portion of its fee with respect to any fund in order to increase the net income
of one or more funds of the Victory Portfolios available for distribution as
dividends.
Unless sooner terminated, the Administration Agreement will continue in effect
as to the Fund for a period of two years, and for consecutive one- year terms
thereafter, provided that such continuance is ratified at least annually by the
Victory Portfolios' Trustees or by vote of a majority of the outstanding shares
of that Fund , and in either case by a majority of the Trustees who are not
parties to the Administration Agreement or interested persons (as defined in the
1940 Act) of any party to the Administration Agreement, by votes cast in person
at a meeting called for such purpose.
The Administration Agreement provides that CHC shall not be liable for
any error of judgment or mistake of law or any loss suffered by the Victory
Portfolios in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or from the reckless disregard by
it of its obligations and duties thereunder.
Under the Administration Agreement, CHC assists in the Fund's
administration and operation, including providing statistical and research data,
clerical services, internal compliance and various other administrative
services, including among other responsibilities, forwarding certain purchase
and redemption requests to the Transfer Agent, participation in the updating of
the prospectus, coordinating the preparation, filing, printing and dissemination
of reports to shareholders, coordinating the preparation of income tax returns,
arranging for the maintenance of books and records and providing the office
facilities necessary to carry out the duties thereunder. Under the
Administration Agreement, CHC may delegate all or any part of its
responsibilities thereunder.
CHC receives an annual fee of .15% of the Fund's average net assets,
paid monthly, for services performed under the Fund's Administration Agreement.
CHC may, from time to time, agree to reimburse the Fund for expenses above a
specified percentage of average net assets.
Victory Broker-Dealer Services, Inc. sells shares of the Fund as agent
on behalf of the Victory Portfolios at no cost to the Fund. Key Advisers and
the Sub-Adviser neither participate in nor are they responsible for the
underwriting of Victory Portfolios shares.
<PAGE>
In the fiscal years ended October 31, 1992, October 31, 1993 and
October 31, 1994, the Fund paid to Winsbury aggregate administration fees of
$49,094, $50,596 and $39,095, respectively, after fee reductions of $0, $52,097
and $39,988, respectively. In the six months ended April 30, 1995, the Fund p
aid administration fees of
$-----------.
Class B Shares Distribution Plan
The Victory Portfolios has adopted a Distribution Plan for Class B shares of the
Fund under Rule 12b-1 of the Investment Company Act of 1940.
The Distribution Plan adopted by the Trustees with respect to the Class B shares
of the Fund provides that the Fund will pay the Distributor a distribution fee
under the Plan at the annual rate of 0.75% of the average daily net assets of
the Fund attributable to the Class B shares. The distribution fees may be used
by the Distributor for: (a) costs of printing and distributing the Fund's
prospectus, statement of additional information and reports to prospective
investors in the Fund; (b) costs involved in preparing, printing and
distributing sales literature pertaining to the Fund; (c) an allocation of
overhead and other branch office distribution-related expenses of the
Distributor; (d) payments to persons who provide support services in connection
with the distribution of the Fund's shares, including but not limited to, office
space and equipment, telephone facilities, answering routine inquiries regarding
the Fund, processing shareholder transactions and providing any other
shareholder services not otherwise provided by the Victory Portfolios' transfer
agent; (e) accruals for interest on the amount of the foregoing expenses that
exceed the Distribution Fee and the contingent deferred sales charge received by
the Distributor; and (f) any other expense primarily intended to result in the
sale of the Fund's shares, including, without limitation, payments to salesmen
and selling dealers at the time of the sale of shares, if applicable, and
continuing fees to each such salesmen and selling dealers, which fee shall begin
to accrue immediately after the sale of such shares.
The amount of the Distribution Fees payable by any Fund under the Distribution
Plan is not related directly to expenses incurred by the Distributor and the
Distribution Plan does not obligate the Fund to reimburse the Distributor for
such expenses. The Distribution Fees set forth in the Distribution Plan will be
paid by a Fund to the Distributor unless and until the Plan is terminated or not
renewed with respect to the Fund; any distribution or service expenses incurred
by the Distributor on behalf of a Fund in excess of payments of the Distribution
Fees specified above which the Distributor has accrued through the termination
date are the sole responsibility and liability of the Distributor and not an
obligation of the Fund.
The Distribution Plan for the Class B shares specifically recognizes that either
Key Advisers, the Sub-Adviser or the Distributor, directly or through an
affiliate, may use its fee revenue, past profits, or other resources, without
limitation, to pay promotional and administrative expenses in connection with
the offer and sale of shares of the Fund. In addition, the Plan provides that
Key Advisers, the Sub-Adviser and the Distributor may use their respective
resources, including fee revenues, to make payments to third parties that
provide assistance in selling the Fund's shares, or to third parties, including
banks, that render shareholder support services.
The Plan has been approved by the Trustees including a majority of the
Independent Trustees at a meeting called for that purpose and by the holders of
a majority of shares of the class. As required by the Rule, the Trustees
carefully considered all pertinent factors relating to the implementation of the
Plan prior to its approval, and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its shareholders. To the
extent that the Plan gives Key Advisers, the Sub-Adviser or the Distributor
greater flexibility in connection with the distribution of shares of the Fund,
additional sales of the Fund's shares may result. Additionally, certain
shareholder support services may be provided more effectively under the Plan by
local entities with whom shareholders have other relationships.
Business Management Agreement
In connection with its obligations under the investment sub-advisory
agreement, the Sub-Adviser has entered into a Business Management Agreement with
Key Advisers, pursuant to which Key Advisers provides certain administrative and
support services to the Sub-Adviser. Such services include preparing reports to
the Company's Board of Trustees, recordkeeping services, and services rendered
in connection with the preparation of regulatory filings and other reports, and
regulatory and other administrative and compliance systems and support services.
<PAGE>
For such services, the Sub-Adviser pays fees to Key Advisers which vary
according to a sliding scale containing "breakpoints" at which decreases in the
business management fees correspond to increases in the average daily net asset
values of a Fund as follows:
For the Balanced Fund, Diversified For the International Growth Fund, Ohio
Stock Fund, Growth Fund, Stock Index Regional Stock Fund and Special Value
Fund and Value Fund: Fund:
Rate of Rate of
Business Business
Net Assets Management Fee* Net Assets Management Fee*
Up to $10,000,000 0.30% Up to $10,000,000 0.55%
Next $15,000,000 0.15% Next $15,000,000 0.35%
Next $25,000,000 0.05% Next $25,000,000 0.20%
Above $50,000,000 0.00% Above $50,000,000 0.15%
For the Intermediate Income Fund, For the Prime Obligations Fund, Tax-Free
Investment Quality Bond Fund, Limited Money Market Fund, U.S. Government
Term Income Fund, Ohio Municipal Bond Obligations Fund, Financial Reserves
Fund, Goverment Bond Fund, Government Fund, Institutional Money Market Fund and
Mortgage Fund, National Municipal Ohio Municipal Money Market Fund:
Bond Fund and New York Tax-Free Fund:
Rate of Rate of
Business Business
Net Assets Management Fee* Net Assets Management Fee*
Up to $10,000,000 0.25% Up to $10,000,000 0.20%
Next $15,000,000 0.15% Next $15,000,000 0.15%
Next $25,000,000 0.10% Next $25,000,000 0.10%
Above $50,000,000 0.05% Above $50,000,000 0.075%
- ----------------
* As a percentage of average daily net assets.
Shareholder Servicing Plan
The Victory Portfolios, on behalf of the Class A and Class B shares of the Fund,
has adopted a Shareholder Servicing Plan to provide payments to shareholder
servicing agents (each a "Shareholder Servicing Agent") that provide
administrative support services to customers who may from time to time
beneficially own shares, which include: (i) aggregating and processing purchase
and redemption requests for shares from customers and transmitting promptly net
purchase and redemption orders to our distributor or transfer agent; (ii)
providing customers with a service that invests the assets of their accounts in
shares pursuant to specific or pre-authorized instructions; (iii) processing
dividend and distribution payments from the Victory Portfolios on behalf of
customers; (iv) providing information periodically to customers showing their
positions in shares; (v) arranging for bank wires ; (vi) responding to customer
inquiries concerning their investment in shares; (vii) providing subaccounting
with respect to shares beneficially owned by customers or providing the
information to us necessary for subaccounting; (viii) if required by law,
forwarding shareholder communications from us (such as proxies, shareholder
reports, annual and semi-annual financial statements and dividend, distribution
and tax notices) to customers; (ix) forwarding to customers proxy statements and
proxies containing any proposals regarding this Plan; and (x) providing such
other similar services as we may reasonably request to the extent you are
permitted to do so under applicable statutes, rules or regulations. For expenses
incurred and services provided as Shareholder Servicing Agent pursuant to its
respective Shareholder Servicing Agreement, the Victory Portfolios pays each
Shareholder Servicing Agent a fee computed daily and paid monthly, in amounts
aggregating not more than twenty-five one-hundredths of one percent (.25%) of
the average daily net assets of the Fund per year. A Shareholder Servicing Agent
may periodically waive all or a portion of its respective shareholder servicing
fees with respect to the Fund to increase the net income of the Fund available
for distribution as dividends.
Expenses
Each fund bears the following expenses relating to its respective
operations: taxes, interest, brokerage fees and commissions, fees of the
Trustees of the Victory Portfolios, Commission fees, state securities
qualification fees, costs of preparing and printing prospectuses for regulatory
purposes and for distribution to current shareholders, outside auditing and
legal expenses, advisory and administration fees, fees and out-of-pocket
expenses of the custodian and transfer agent, certain insurance premiums, costs
of maintenance of the fund's existence, costs of shareholders' reports and
meetings, and any extraordinary expenses incurred in the fund's operation.
If total expenses borne by any of the Victory Portfolios in any fiscal
year exceeds expense limitations imposed by applicable state securities
regulations, Key Advisers or the Sub-Adviser as applicable, and the
Administrator will waive their fees to the extent such excess expenses exceed
such expense limitation in proportion to their respective fees. As of the date
of this Statement of Additional Information, the most restrictive expense
limitation applicable to the Victory Portfolios limits each fund's aggregate
annual expenses, including management and advisory fees but excluding interest,
taxes, brokerage commissions, and certain other expenses, to 2.5% of the first
$30 million of a fund's average net assets, 2.0% of the next $70 million of a
fund's average net assets, and 1.5% of a Fund's remaining average net assets.
Any expenses to be borne by Key Advisers or the Sub-Adviser or the Administrator
will be estimated daily and reconciled and paid on a monthly basis. Fees imposed
upon customer accounts by Key Advisers, or the Sub-Adviser, Key Trust Company of
Ohio, N.A. or its correspondents, affiliated banks and other non-bank affiliates
for cash management services are not fund expenses for purposes of any such
expense limitation.
Distributor
Victory Broker-Dealer Services, Inc. (the "Distributor") serves as
distributor for the continuous offering of the shares of each fund of the
Victory Portfolios pursuant to a Distribution Agreement . Prior to Victory
Broker-Dealer Services, Inc. becoming the Distributor, Winsbury served as
distributor of each Fund. Unless otherwise terminated, the Distribution
Agreement will remain in effect for two years, and thereafter for consecutive
one-year terms, provided that it is approved at least annually (i) by the
Victory Portfolios' Trustees or by the vote of a majority of the outstanding
shares of the Victory Portfolios, and (ii) by the vote of a majority of the
Trustees of the Victory Portfolios who are not parties to the Distribution
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval. The Distribution Agreement
may be terminated in the event of its assignment, as defined in the 1940 Act.
For the Victory Portfolios' fiscal years ended October 31, 1992, October 31,
1993, and October 31, 1994, Winsbury received $34,615, $77,258 and $212,021,
respectively, in underwriting commissions, and retained $0, $0 and $15,
respectively. For the six months ended April 30, 1995, the Distributor received
$__________ in underwriting commissions.
Fund Accountant
BISYS Fund Services Ohio, Inc. serves as fund accountant for each fund
pursuant to a fund accounting agreement with the Victory Portfolios dated June
5, 1995 (the "Fund Accounting Agreement"). As fund accountant for the Victory
Portfolios, BISYS Fund Services Ohio, Inc. calculates the Victory Portfolios'
net asset value, the dividend and capital gain distribution, if any, and the
yield. BISYS Fund Services Ohio, Inc. also provides a current security position
report, a summary report of transactions and pending maturities, a current cash
position report, and maintains the general ledger accounting records for each
Fund. Under its Fund Accounting Agreement with the Victory Portfolios, BISYS
Fund Services Ohio, Inc. is entitled to receive annual fees of .03% of the first
$100 million of a Fund's daily average net assets, .02% of the next $100 million
of a Fund's daily average net assets, and .01% of a Fund's remaining daily
average net assets. These annual fees are subject to a minimum monthly assets
charge of $2,500 per taxable Fund, $2,917 per tax-free Fund, and $3,333 per
international Fund and do not include out-of-pocket expenses or multiple class
charges of $833 per month assessed for each class of shares after the first
class.
In the fiscal years ended October 31, 1992, October 31, 1993, and October 31,
1994, the Victory Portfolios paid The Winsbury Service Corporation fund
accounting fees (after fee waivers) of $119,516, $144,288 and $152,663,
respectively, for the Fund. For the six months ended April 30, 1995, the Fund
paid $__________ in fund accounting fees.
Custodian
Cash and securities owned by each fund of the Victory Portfolios
(except the International Growth Fund) are held by Key Trust Company of Ohio,
N.A. as custodian; cash and securities owned by the International Growth Fund
are held by The Bank of New York and certain foreign sub-custodians, and by Key
Trust Company of Ohio, N.A. as sub-custodian. Key Trust Company of Ohio, N.A.
serves as custodian to each fund of the Victory Portfolios (except the
International Growth Fund) pursuant to a Custodian Agreement dated May 24, 1995.
The Bank of New York serves as custodian to the International Growth Fund
pursuant to a Custodian Agreement dated _____________. Under these Agreements,
Key Trust Company of Ohio, N.A. and The Bank of New York each (i) maintain a
separate account or accounts in the name of each respective fund; (ii) make
receipts and disbursements of money on behalf of each fund; (iii) collect and
receive all income and other payments and distributions on account of portfolio
securities; (iv) respond to correspondence from security brokers and others
relating to its duties; and (v) make periodic reports to the Victory Portfolios'
Trustees concerning the Victory Portfolios' operations. Key Trust Company of
Ohio, N.A. and The Bank of New York each may, with the approval of a fund and at
the custodian's own expense, open and maintain a sub-custody account or accounts
on behalf of a fund, provided that Key Trust Company of Ohio, N.A. or The Bank
of New York shall remain liable for the performance of all of its duties under
its respective Custodian Agreement.
Transfer Agent
The Primary Funds Service Corporation serves as transfer agent and
dividend disbursing agent for each fund, pursuant to a Transfer Agency and
Shareholder Servicing Agreement. Under its agreement with the Victory
Portfolios, Primary Funds Service Corporation has agreed (i) to issue and redeem
shares of the Victory Portfolios; (ii) to address and mail all communications by
the Victory Portfolios to its shareholders, including reports to shareholders,
dividend and distribution notices, and proxy material for its meetings of
shareholders; (iii) to respond to correspondence or inquiries by shareholders
and others relating to its duties; (iv) to maintain shareholder accounts and
certain sub-accounts; and (v) to make periodic reports to the Victory
Portfolios' Trustees concerning the Victory Portfolios' operations. For the
services provided under the Transfer Agency and Shareholder Servicing Agreement,
Primary Funds Service Corporation receives a maximum monthly fee of $1,250 per
fund to a maximum of $3.50 per account per fund.
Auditors
The financial highlights appearing in the Prospectus for the Fund,
other than unaudited information marked as such, has been derived from financial
statements of the Victory Portfolios which have been audited by Coopers &
Lybrand L.L.P., independent accountants, as set forth in their report
incorporated by reference herein, and are incorporated by reference in reliance
upon such report and on the authority of such firm as experts in auditing and
accounting. Coopers & Lybrand L.L.P.'s address is 100 East Broad Street,
Columbus, Ohio 43215.
Legal Counsel
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, 919 Third Avenue, New
York, New York 10022 are counsel to the Victory Portfolios.
<PAGE>
ADDITIONAL INFORMATION
Description of Shares
The Victory Portfolios (sometimes referred to as the "Trust") is a
Massachusetts business trust. The Victory Portfolios' Declaration of Trust,
pursuant to which the Victory Portfolios was originally called the North Third
Street Fund, was filed with the Secretary of State of the Commonwealth of
Massachusetts on February 6, 1986. On September 22, 1986, an Amended and
Restated Declaration of Trust was filed to change the name of the Trust to The
Emblem Fund and to make certain other changes. A second amendment was filed
October 23, 1986 providing for voting of shares in the aggregate except where
voting of shares by series is otherwise required by law. An amendment to the
Amended and Restated Declaration of Trust was filed on March 15, 1993 to change
the name of the Trust to The Society Funds. An Amended and Restated Declaration
of Trust was then filed on September 2, 1994 to change the name of the Trust to
The Victory Portfolios. The Declaration of Trust, as amended, authorizes the
Trustees to issue an unlimited number of shares, which are units of beneficial
interest, without par value. On or about February 29, 1996, contingent upon
shareholder approval, the Victory Portfolios will convert from a Massaschusetts
business tr ust to a Delaware business trust. The Victory Portfolios presently
has twenty-eight series of shares, which represent interests in the U.S.
Government Obligations Fund, the Prime Obligations Fund, the Tax-Free Money
Market Fund, the Balanced Fund, the Stock Index Fund, the Value Fund, the Fund,
the Growth Fund, the Special Value Fund, the Special Growth Fund, the Ohio
Regional Stock Fund, the International Growth Fund, the Limited Term Income
Fund, the Government Mortgage Fund, the Ohio Municipal Bond Fund, the
Intermediate Income Fund, the Investment Quality Bond Fund, the Florida Tax-Free
Bond Fund, the Municipal Bond Fund, the Convertible Securities Fund, the
Short-Term U.S. Government Income Fund, the Government Bond Fund, the Fund for
Income, the National Municipal Bond Fund, the New York Tax-Free Fund, the
Institutional Money Market Fund, the Financial Reserves Fund and the Ohio
Municipal Money Market Fund, respectively. The Victory Portfolios' Declaration
of Trust authorizes the Trustees to divide or redivide any unissued shares of
the Victory Portfolios into one or more additional series by setting or changing
in any one or more respects their respective preferences, conversion or other
rights, voting power, restrictions, limitations as to dividends, qualifications,
and terms and conditions of redemption.
Shares have no subscription or preemptive rights and only such
conversion or exchange rights as the Trustees may grant in its discretion. When
issued for payment as described in the Prospectus and this Statement of
Additional Information, the Victory Portfolios' shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Victory
Portfolios, shares of a fund are entitled to receive the assets available for
distribution belonging to the fund, and a proportionate distribution, based upon
the relative asset values of the respective funds, of any general assets not
belonging to any particular fund which are available for distribution.
As described in the Prospectus under the caption "ADDITIONAL
INFORMATION -- Voting Rights," shares of the Victory Portfolios are entitled to
one vote per share (with proportional voting for fractional shares) on such
matters as shareholders are entitled to vote. Shareholders vote as a single
class on all matters except (i) when required by the 1940 Act, shares shall be
voted by individual series, and (ii) when the Trustees have determined that the
matter affects only the interests of one or more series, then only shareholders
of such series shall be entitled to vote thereon. There will normally be no
meetings of shareholders for the purposes of electing Trustees unless and until
such time as less than a majority of the Trustees have been elected by the
shareholders, at which time the Trustees then in office will call a
shareholders' meeting for the election of Trustees. In addition, Trustees may be
removed from office by a written consent signed by the holders of two-thirds of
the outstanding shares of the Victory Portfolios and filed with the Victory
Portfolios' custodian or by a vote of the holders of two-thirds of the
outstanding shares of the Victory Portfolios at a meeting duly called for the
purpose, which meeting shall be held upon the written request of the holders of
not less than 10% of the outstanding shares. Upon written request by ten or more
shareholders, who have been such for at least six months, and who hold shares
constituting 1% of the outstanding shares, stating that such shareholders wish
to communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a Trustee, the
Victory Portfolios will provide a list of shareholders or disseminate
appropriate materials (at the expense of the requesting shareholders). Except as
set forth above, the Trustees shall continue to hold office and may appoint
their successors.
<PAGE>
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Victory Portfolios shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each fund of the Victory Portfolios affected by the
matter. For purposes of determining whether the approval of a majority of the
outstanding shares of a fund will be required in connection with a matter, a
fund will be deemed to be affected by a matter unless it is clear that the
interests of each fund in the matter are identical, or that the matter does not
affect any interest of the fund. Under Rule 18f-2, the approval of an investment
advisory agreement or any change in investment policy would be effectively acted
upon with respect to a fund only if approved by a majority of the outstanding
shares of such fund. However, Rule 18f-2 also provides that the ratification of
independent public accountants, the approval of principal underwriting
contracts, and the election of Trustees may be effectively acted upon by
shareholders of the Victory Portfolios voting without regard to series.
Shareholder and Trustee Liability
Under Massachusetts law, holders of units of interest in a business
trust may, under certain circumstances, be held personally liable as partners
for the obligations of the trust. However, the Victory Portfolios' Declaration
of Trust provides that shareholders shall not be subject to any personal
liability for the obligations of the Victory Portfolios, and that every written
agreement, obligation, instrument, or undertaking made by the Victory Portfolios
shall contain a provision to the effect that the shareholders are not personally
liable thereunder. The Declaration of Trust provides for indemnification out of
the trust property of any shareholder held personally liable solely by reason of
his or her being or having been a shareholder. The Declaration of Trust also
provides that the Victory Portfolios shall, upon request, assume the defense of
any claim made against any shareholder for any act or obligation of the Victory
Portfolios, and shall satisfy any judgment thereon. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Funds would be unable to meet its
obligations.
The Declaration of Trust states further that no Trustee, officer, or
agent of the Victory Portfolios shall be personally liable in connection with
the administration or preservation of the assets of the Funds or the conduct of
the Victory Portfolios' business; nor shall any Trustee, officer, or agent be
personally liable to any person for any action or failure to act except for his
own bad faith, willful misfeasance, gross negligence, or reckless disregard of
his duties. The Declaration of Trust also provides that all persons having any
claim against the Trustees or the Victory Portfolios shall look solely to the
assets of the Victory Portfolios for payment.
Delaware Law [to be inserted]
Miscellaneous
As used in the Prospectus and in this Statement of Additional
Information, "assets belonging to a fund" means the consideration received by
the Victory Portfolios upon the issuance or sale of shares in that fund,
together with all income, earnings, profits, and proceeds derived from the
investment thereof, including any proceeds from the sale, exchange, or
liquidation of such investments, and any funds or payments derived from any
reinvestment of such proceeds and any general assets of the Victory Portfolios,
which general liabilities and expenses are not readily identified as belonging
to a particular fund that are allocated to that fund by the Victory Portfolios'
Trustees. The Trustees may allocate such general assets in any manner they deem
fair and equitable. It is anticipated that the factor that will be used by the
Trustees in making allocations of general assets to a particular fund of the
Victory Portfolios will be the relative net asset value of the respective fund
at the time of allocation. Assets belonging to a particular fund are charged
with the direct liabilities and expenses in respect of that fund, and with a
share of the general liabilities and expenses of each of the funds not readily
identified as belonging to a particular fund but that are allocated to a fund in
proportion to the relative net asset values of the respective fund of the
Victory Portfolios at the time of allocation. The timing of allocations of
general assets and general liabilities and expenses of the Victory Portfolios to
a particular fund will be determined by the Trustees of the Victory Portfolios
and will be in accordance with generally accepted accounting principles.
Determinations by the Trustees of the Victory Portfolios as to the timing of the
allocation of general liabilities and expenses and as to the timing and
allocable portion of any general assets with respect to a particular fund are
conclusive.
As used in the Prospectus and in this Statement of Additional
Information, a "vote of a majority of the out standing shares" of the Victory
Portfolios or a particular fund means the affirmative vote of the lesser of (a)
67% or more of the shares of the Victory Portfolios or such fund present at a
meeting at which the holders of more than 50% of the outstanding shares of the
Victory Portfolios or such fund are represented in person or by proxy, or (b)
more than 50% of the outstanding votes of shareholders of the Victory Portfolios
or such fund.
Organizational expenses are allocated to each of the Victory Portfolios
and are amortized over a period of two years from the commencement of the public
offering of shares of the Victory Portfolios.
Individual Trustees are elected by the shareholders and, subject to
removal by the vote of the holders of two-thirds of the outstanding shares of
the Victory Portfolios, serve for a term lasting until the next meeting of
shareholders at which trustees are elected. Such meetings are not required to be
held at any specific intervals. Individual Trustees may be removed by vote of
the shareholders voting not less than a majority of the shares then outstanding
cast in person or by proxy at any meeting called for that purpose, or by a
written declaration signed by shareholders voting not less than two-thirds of
the shares then outstanding.
The Victory Portfolios is registered with the Commission as a
management investment company. Such registration does not involve supervision by
the Commission of the management or policies of the Victory Portfolios.
The Prospectus and this Statement of Additional Information omit
certain of the information contained in the Registration Statement filed with
the Commission. Copies of such information may be obtained from the Commission
upon payment of the prescribed fee.
The Prospectus and this Statement of Additional Information are not an
offering of the securities herein described in any state in which such offering
may not lawfully be made. No salesman, dealer, or other person is authorized to
give any information or make any representation other than those contained in
the Prospectus and this Statement of Additional Information.
The 1994 Annual Report and 1995 Semi-Annual Report to shareholders of
The Victory Portfolios are incorporated herein in their entirety. These
reports include the financial statements for the fiscal year ended October 31,
1994 and for the semi-annual period ended April 30, 1995. The opinion in the
Annual Report of Coopers & Lybrand L.L.P., independent accountants, is
incorporated herein in its entirety to such Annual Report, and such financial
statements are incorporated in their entirety in reliance upon such report of
Coopers & Lybrand L.L.P. and on the authority of such firm as experts in
auditing and accounting.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
FINANCIAL STATEMENTS
<PAGE>
APPENDIX
The nationally recognized statistical rating organizations
(individually, an "NRSRO") that may be utilized by Key Advisers or the
Sub-Adviser with regard to portfolio investments for the Funds include Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P"),
Duff & Phelps, Inc. ("Duff"), Fitch Investors Service, Inc. ("Fitch"), IBCA
Limited and its affiliate, IBCA Inc. (collectively, "IBCA"), and Thomson
BankWatch, Inc. ("Thomson"). Set forth below is a description of the relevant
ratings of each such NRSRO. The NRSROs that may be utilized by Key Advisers or
the Sub-Adviser and the description of each NRSRO's ratings is as of the date of
this Statement of Additional Information, and may subsequently change.
Long-Term Debt Ratings (may be assigned, for example, to corporate and
municipal bonds).
Description of the five highest long-term debt ratings by Moody's
(Moody's applies numerical modifiers (e.g., 1, 2, and 3) in each rating category
to indicate the security's ranking within the category):
Aaa. Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa. Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than in Aaa securities.
A. Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.
Baa. Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba. Bonds which are rated Ba are judged to have speculative elements -
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times in the future. Uncertainty of
position characterizes bonds in this class.
Description of the five highest long-term debt ratings by S&P (S&P may
apply a plus (+) or minus (-) to a particular rating classification to show
relative standing within that classification):
AAA. Debt rated AAA has the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA. Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A. Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB. Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB. Debt rated BB is regarded, on balance, as predominately speculative
with respect to capacity to pay interest and repay principal in accordance with
the terms of the obligation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposure to adverse conditions.
Description of the three highest long-term debt ratings by Duff:
AAA. Highest credit quality. The risk factors are negligible being
only slightly more than for risk-free U.S. Treasury debt.
AA+. High credit quality Protection factors are strong.
AA. Risk is modest but may vary slightly from time to time
AA-. because of economic conditions.
A+. Protection factors are average but adequate. However, risk factors
are more variable and greater in periods of economic stress.
Description of the three highest long-term debt ratings by Fitch (plus
or minus signs are used with a rating symbol to indicate the relative position
of the credit within the rating category):
AAA. Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA. Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA." Because
bonds rated in the "AAA" and "AA" categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these
issues is generally rated "[-]+."
A. Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
IBCA's description of its three highest long-term debt ratings:
AAA. Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and
interest is substantial . Adverse changes in business, economic or
financial conditions are unlikely to increase investment risk
significantly.
AA. Obligations for which there is a very low expectation of investment
risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic, or financial
conditions may increase investment risk albeit not very significantly.
A. Obligations for which there is a low expectation of investment risk.
Capacity for timely repayment of principal and interest is strong,
although adverse changes in business, economic or financial conditions
may lead to increased investment risk.
Short-Term Debt Ratings (may be assigned, for example, to commercial
paper, master demand notes, bank instruments, and letters of credit)
Moody's description of its three highest short-term debt ratings:
Prime-1. Issuers rated Prime-1 (or supporting institutions) have a
superior capacity for repayment of senior short-term promissory obligations.
Prime-1 repayment capacity will normally be evidenced by many of the following
characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate reliance
on debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.
Prime-2. Issuers rated Prime-2 (or supporting institutions) have a
strong capacity for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Prime-3. Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
S&P's description of its three highest short-term debt ratings:
A-1. This designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to have extremely
strong safety characteristics are denoted with a plus sign (+).
A-2. Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated "A-1."
A-3. Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher
designations.
Duff's description of its five highest short-term debt ratings (Duff
incorporates gradations of "1+" (one plus) and "1-" (one minus) to assist
investors in recognizing quality differences within the highest rating
category):
Duff 1+. Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations.
Duff 1. Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk
factors are minor.
Duff 1-. High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk factors are
very small.
Duff 2. Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good.
Risk factors are small.
Duff 3. Satisfactory liquidity and other protection factors qualify
issue as to investment grade.
Risk factors are larger and subject to more variation. Nevertheless,
timely payment is expected.
Fitch's description of its four highest short-term debt ratings:
F-1+. Exceptionally Strong Credit Quality. Issues assigned this
rating are regarded as having the strongest degree of assurance for
timely payment.
F-1. Very Strong Credit Quality. Issues assigned this rating reflect
an assurance of timely payment only slightly less in degree than issues
rated F-1+.
F-2. Good Credit Quality. Issues assigned this rating have a
satisfactory degree of assurance for timely payment, but the margin of
safety is not as great as for issues assigned F-1+ or F-1 ratings.
F-3. Fair Credit Quality. Issues assigned this rating have
characteristics suggesting that the degree of assurance for timely
payment is adequate, however, near-term adverse changes could cause
these securities to be rated below investment grade.
IBCA's description of its three highest short-term debt ratings:
A+. Obligations supported by the highest capacity for timely
repayment.
A1. Obligations supported by a very strong capacity for timely
repayment.
A2. Obligations supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
Short-Term Loan/Municipal Note Ratings
Moody's description of its two highest short-term loan/municipal note
ratings:
MIG-1/VMIG-1. This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support
or demonstrated broad-based access to the market for refinancing.
MIG-2/VMIG-2. This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
S&P's description of its two highest municipal note ratings:
SP-1. Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus (+) designation.
SP-2. Satisfactory capacity to pay principal and interest.
Short-Term Debt Ratings
Thomson BankWatch, Inc. ("TBW") ratings are based upon a qualitative
and quantitative analysis of all segments of the organization including, where
applicable, holding company and operating subsidiaries.
BankWatch Ratings do not constitute a recommendation to buy or sell
securities of any of these companies. Further, BankWatch does not suggest
specific investment criteria for individual clients.
The TBW Short-Term Ratings apply to commercial paper, other senior
short-term obligations and deposit obligations of the entities to which the
rating has been assigned.
The TBW Short-Term Ratings apply only to unsecured instruments that
have a maturity of one year or less.
The TBW Short-Term Ratings specifically assess the likelihood of an
untimely payment of principal or interest.
TBW-1. The highest category; indicates a very high degree of likelihood
that principal and interest will be paid on a timely basis.
TBW-2. The second highest category; while the degree of safety
regarding timely repayment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated "TBW-1".
TBW-3. The lowest investment grade category; indicates that while more
susceptible to adverse developments (both internal and external) than
obligations with higher ratings, capacity to service principal and interest in a
timely fashion is considered adequate.
TBW-4. The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.
Definitions of Certain Money Market Instruments
Commercial Paper
Commercial paper consists of unsecured promissory notes issued by
corporations. Issues of commercial paper normally have maturities of less than
nine months and fixed rates of return.
Certificates of Deposit
Certificates of Deposit are negotiable certificates issued against
funds deposited in a commercial bank or a savings and loan association for a
definite period of time and earning a specified return.
Bankers' Acceptances
Bankers' acceptances are negotiable drafts or bills of exchange,
normally drawn by an importer or exporter to pay for specific merchandise, which
are "accepted" by a bank, meaning, in effect, that the bank unconditionally
agrees to pay the face value of the instrument on maturity.
U.S. Treasury Obligations
U.S. Treasury Obligations are obligations issued or guaranteed as to
payment of principal and interest by the full faith and credit of the U.S.
Government. These obligations may include Treasury bills, notes and bonds, and
issues of agencies and instrumentalities of the U.S. Government, provided such
obligations are guaranteed as to payment of principal and interest by the full
faith and credit of the U.S. Government.
U.S. Government Agency and Instrumentality Obligations
Obligations issued by agencies and instrumentalities of the U.S.
Government include such agencies and instrumentalities as the Government
National Mortgage Association, the Export-Import Bank of the United States, the
Tennessee Valley Authority, the Farmers Home Administration, the Federal Home
Loan Banks, the Federal Intermediate Credit Banks, the Federal Farm Credit
Banks, the Federal Land Banks, the Federal Housing Administration, the Federal
National Mortgage Association, the Federal Home Loan Mortgage Corporation, and
the Student Loan Marketing Association. Some of these obligations, such as those
of the Government National Mortgage Association are supported by the full faith
and credit of the U.S. Treasury; others, such as those of the Export-Import Bank
of the United States, are supported by the right of the issuer to borrow from
the Treasury; others, such as those of the Federal National Mortgage
Association, are supported by the discretionary authority of the U.S. Government
to purchase the agency's obligations; still others, such as those of the Student
Loan Marketing Association, are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored instrumentalities if it
is not obligated to do so by law. A Fund will invest in the obligations of such
instrumentalities only when the investment adviser believes that the credit risk
with respect to the instrumentality is minimal.
<PAGE>
[LOGO]
THE VICTORY FUNDS
SEMI-ANNUAL
REPORT
---------------------
THE VICTORY PORTFOLIOS
APRIL 30, 1995
<PAGE>
C O N T E N T S
<TABLE>
<S> <C>
Shareholder Letter 1
Investment Review and Outlook 2
FINANCIAL STATEMENTS
--------------------
Understanding Your Financial Statements 3
Statements of Assets and Liabilities 5
Statements of Operations 10
Statements of Changes in Net Assets 15
Schedules of Portfolio Investments 22
Notes to Financial Statements 73
Financial Highlights 83
</TABLE>
Society Asset Management, Inc. ("SAM"), a subsidiary of KeyCorp, is the
investment adviser to The Victory Portfolios. The Victory Portfolios is
sponsored and distributed by Victory Broker Dealer Services, Inc., which is not
affiliated with SAM, KeyCorp, any KeyCorp bank or their affiliates. SAM and
Society National Bank, also a subsidiary of KeyCorp, receive fees from The
Victory Portfolios for their services.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus for The Victory Portfolios.
Yields will fluctuate, and there can be no assurance that the money market funds
of The Victory Portfolios will be able to maintain a stable net asset value of
$1.00 per share. An investment in these portfolios is neither insured nor
guaranteed by the U.S. Government. The composition of the fund's holdings is
subject to change.
- --------------------------------------------------------------------------------
NOT
FDIC
INSURED
- --------------------------------------------------------------------------------
SHARES OF THE VICTORY PORTFOLIOS ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR
GUARANTEED BY, ANY KEYCORP BANK, SOCIETY ASSET MANAGEMENT, INC., OR THEIR
AFFILIATES, AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE
PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------
<PAGE>
THE VICTORY
PORTFOLIOS
DEAR SHAREHOLDER:
The Victory Portfolios is pleased to provide you with this semi-annual report
for the six-month period ended April 30, 1995. We are very proud to inform you
that the Diversified Stock Fund, the Ohio Regional Stock Fund and the Fund for
Income Portfolio all received 4 star ratings by Morningstar as of April 30,
1995.* For more information about your funds, rankings or for article reprints
call 1-800-KEY-FUND (539-3863).
Last year, when we changed our name to The Victory Portfolios, we also added a
number of convenient service and investment features. These initiatives marked
the beginning of a broader plan to restructure and expand our products and
services. Most recently, shareholders of The Victory Funds, an affiliated group
of funds with 14 investment portfolios, approved a reorganization that took
place on June 5, 1995. This date marked the final steps of a year-long process
focused on streamlining our product offerings and increasing the efficiency of
other services necessary to support the funds' operations. On June 5, The
Victory Funds merged with The Victory Portfolios. Seven portfolios of our
affiliate were merged with comparable investment portfolios, and seven new
portfolios were added. In all, there are now 24 Victory Portfolios available to
investors as part of the combined $5.1 billion complex.
I won't go into the enormous detail of this restructuring effort except to thank
management, our service providers and our investment professionals for their
support.
WOULDN'T IT BE NICE IF . . . (some summertime thoughts)
- - the information superhighway actually cut our commute time
- - major league baseball players had to get real jobs at real wages (at least for
a while)
- - the Paperwork Reduction Act actually resulted in less paperwork for America's
businesses
Thank you for choosing to invest in The Victory Portfolios. Our goal is to
become America's First Choice for Investors.
LEIGH A. WILSON
Leigh A. Wilson, President
THE VICTORY PORTFOLIOS
P.S. For more information about any of The Victory Portfolios, please request a
prospectus by calling 1-800-KEY-FUND (539-3863). The prospectus contains more
complete information, including charges and expenses. Read the prospectus
carefully before you invest or send money.
*Morningstar proprietary ratings reflect historical risk-adjusted performance as
of April 30, 1995. The ratings are subject to change every month. Star ratings
are calculated from the fund's three- and five-year average annual returns in
excess of 90-day Treasury bill returns with appropriate fee adjustments, and a
risk factor that reflects fund performance below 90-day Treasury bill returns.
For the three- and five-year periods ended April 30, 1995, 1,190 and 891 equity
funds, 561 and 372 fixed-income funds were rated. Diversified is rated 4 stars
for the three- and five-year periods; Ohio Regional is rated 3 stars for the
three-year period and 4 stars for the five-year period; and Fund for Income is
rated 3 stars for the three-year period and 4 stars for the five-year period.
Ten percent of the funds in an investment category receive 5 stars, 22.5%
receive 4 stars, 35% receive 3 stars, 22.5% receive 2 stars, and 10% receive 1
star. Past performance is no guarantee of future results. These ratings do not
include the effect of a sales charge. Fees have been waived for certain periods;
without the effect of these waivers performance and ratings may have varied.
1
<PAGE>
INVESTMENT
REVIEW
AND
OUTLOOK
(AS OF MAY 5, 1995)
IN OUR OPINION . . .
FROM 75 TO 45 (mph)
The widely predicted SOFT LANDING of the U.S. economy is not "on the way" . . .
it's already "arrived." More and more fresh economic data depict an economy
which, in recent months, has "slowed" from a "75 mile-per-hour" pace throughout
1994 (especially during the fourth quarter) to a more modest "speed" of roughly
"45 miles per hour." This slowing appears to be very satisfying to the economy's
primary "traffic cop" . . . the Federal Reserve.
The latest economic numbers describe an "economic vehicle" with the "brakes" now
firmly applied. The May 3 release of the Index of Leading Economic Indicators
for March recorded its largest decline in two years. February and March also
registered as the largest back-to-back monthly declines since the summer of
1992. Equally exciting (only to economists) was a surprising 0.1% decline in
factory orders during March, another sign of some "bad gas" in the "economic
engine." In addition, factory inventories rose more than expected in March and
were revised higher for February. This stronger inventory buildup suggests that
the most recent U.S. Commerce Department estimate of a 2.8% real GDP growth
"speed" during the first quarter of 1995 will be revised to a "faster speed."
This expected upward revision will come at the expense of a weak current
quarter . . . perhaps as "sluggish" as a 1.2-1.8% real annual rate.
The May 5 release of the April unemployment numbers, which jumped from 5.5% to
5.8%, shed further light on the "engine's diagnosis." These particularly weak
numbers could "fuel" additional near-term strength in both stocks and bonds.
IS THE FED FINISHED TIGHTENING?
The data of recent days provided more "high octane" fuel to the financial
markets' belief that the Fed will likely "stay on cruise control" for some time
to come. Many economists now suggest the Fed's next move will be to "step on the
gas" (ease policy). Although we would like to believe that, we expect a modest
resurgence of the economy during the second half of 1995, "fueled" by rising
exports, solid manufacturing output, strong capital spending, and improved
consumer interest in housing. This combination, added to some worrisome economic
"exhaust" (inflation pressure), could force the Fed's foot to the "brake pedal"
once again.
Society Asset Management, Inc.
2
<PAGE>
UNDERSTANDING YOUR FINANCIAL STATEMENTS
o The FINANCIAL STATEMENTS summarize and describe a fund's financial
transactions. They are broken down into four different statements,
which are illustrated below:
THE STATEMENTS OF ASSETS AND LIABILITIES lists all of the assets and
liabilities of the mutual fund. This is the individual fund's "balance sheet."
Also disclosed on this statement is the fund's net asset value per share and
its maximum offering price per share as of the date of the statement. The
statement also lists the accounts that comprise the mutual fund's net assets
(capital stock, undistributed income, etc.).
[FORM] SUMMARY OF THE MUTUAL FUND'S INVESTMENTS AND ALL
OTHER ASSETS OWNED BY THE FUND, INCLUDING AMOUNTS
OWED TO THE FUND BY OUTSIDE PARTIES
SUMMARY OF ALL AMOUNTS OWED TO OUTSIDE PARTIES BY
THE MUTUAL FUND
NET RESULT OF ASSETS LESS LIABILITIES
THE MARKET WORTH OF THE MUTUAL FUND'S TOTAL ASSETS
DIVIDED BY THE NUMBER OF SHARES OUTSTANDING
THE CURRENT NET ASSET VALUE PER SHARE PLUS SALES CHARGE
THE STATEMENT OF OPERATIONS shows the amount of dividend and interest income
earned from the mutual fund's investments, the expenses incurred by the fund
from its operations, and any gains or losses recognized by the fund from
holding and/or selling any investments.
[FORM] ANY INCOME EARNED FROM THE MUTUAL FUND'S INVESTMENTS
OPERATING EXPENSES INCURRED BY THE MUTUAL FUND DURING
THE PERIOD
GAINS OR LOSSES REALIZED UPON THE SALE OF THE MUTUAL
FUND'S INVESTMENTS ALONG WITH UNREALIZED GAINS OR LOSSES
ON FUND HOLDINGS AT THE REPORT DATE
NET CHANGE DUE TO MUTUAL FUND OPERATIONS
3
<PAGE>
THE STATEMENT OF CHANGES IN NET ASSETS shows the total assets of the mutual
fund for the two most recent reporting periods. The changes in net assets are
generally broken down into four distinct sections:
[FORM] OPERATIONS - SEE STATEMENT OF OPERATIONS
DIVIDENDS TO SHAREHOLDERS - TOTAL INCOME DIVIDENDS PAID
TO SHAREHOLDERS DURING THE PERIODS
NET REALIZED GAINS - TOTAL REALIZED GAINS DISTRIBUTED TO
SHAREHOLDERS DURING THE PERIODS
CAPITAL STOCK TRANSACTIONS - DOLLAR VALUE OF MUTUAL FUND
SHARES PURCHASED, REDEEMED OR REINVESTED DURING THE
PERIODS
THE PORTFOLIO OF INVESTMENTS lists each investment holding in the mutual fund
as of the date of the report. Investments may be grouped by category (by
industry or security type, for example). The percentage of the mutual fund's
net assets that these groupings represent is also disclosed.
[FORM] TYPE OF SECURITY
INDUSTRY SECTOR AND PERCENTAGE OF THE MUTUAL FUND's
NET ASSETS REPRESENTED BY INVESTMENTS IN THAT SECTOR
(IF APPLICABLE)
ACTUAL PORTFOLIO HOLDINGS WITH SHARES AND MARKET
VALUE AS OF REPORT DATE
o The NOTES TO FINANCIAL STATEMENTS are footnotes to the statements listed
above. 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.
o The FINANCIAL HIGHLIGHTS show, for a single share outstanding throughout the
period, the net investment income, the realized and unrealized gains and
losses, and the dividends and distributions of the fund. It also shows key
data and ratios, such as the total return for the period, the portfolio
turnover rate for funds other than money market mutual funds, and the
ratio of net investment income to average net assets.
4
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. TAX-FREE
GOVERNMENT PRIME MONEY
OBLIGATIONS OBLIGATIONS MARKET
FUND FUND FUND
(000) (000) (000)
-------- -------- --------
<S> <C> <C> <C>
ASSETS:
Investments, at value $228,336 $392,425 $208,031
Repurchase agreements 296,998 37,315
- ---------------------------------------------------------------------------------------------------------
525,334 429,740 208,031
Cash 322
Interest receivable 1,525 2,467 2,066
Prepaid expenses 5 34 7
- ---------------------------------------------------------------------------------------------------------
Total Assets 526,864 432,241 210,426
- ---------------------------------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 2,381 1,867 675
Accrued expenses and other payables:
Investment advisory fees 153 125 62
Administration fees 66 54 27
Accounting and transfer agent fees 44 52 22
Other 77 143 34
- ---------------------------------------------------------------------------------------------------------
Total Liabilities 2,721 2,241 820
- ---------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 524,337 432,505 209,606
Accumulated undistributed net realized losses from investment
transactions (194) (2,505)
- ---------------------------------------------------------------------------------------------------------
Net Assets $524,143 $430,000 $209,606
- ---------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) 524,337 430,000 209,606
- ---------------------------------------------------------------------------------------------------------
Net asset value--redemption and offering price per share $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------
Investments, at cost $525,334 $429,740 $208,031
- ---------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
5
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY FUNDS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK
TAX- FUND FOR
FREE INCOME
PORTFOLIO PORTFOLIO
(000) (000)
------------ ---------
<S> <C> <C>
ASSETS
Investments, at value $ 16,410 $23,678
Repurchase agreements 1,003
- -----------------------------------------------------------------------------------------------------
16,410 24,681
Interest receivable 338 183
Cash 4
Receivable for capital shares issued 429
Receivable from brokers for investments sold 93
Receivable from fund adviser 41 36
- -----------------------------------------------------------------------------------------------------
Total Assets 17,218 24,997
- -----------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 58
Payable to brokers for investments purchased 195 64
Payable for capital shares redeemed 111 85
Dividends payable 44 119
Accrued expenses and other payables:
Administrative fee 2 3
Other 13
- -----------------------------------------------------------------------------------------------------
Total Liabilities 410 284
- -----------------------------------------------------------------------------------------------------
NET ASSETS
Capital 15,880 26,101
Undistributed (distributions in excess of) net investment income 6 (90)
Net unrealized appreciation on investments 925 509
Accumulated undistributed net realized losses on investments (3) (1,807)
- -----------------------------------------------------------------------------------------------------
Net Assets $ 16,808 $24,713
- -----------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) -- class A 1,277 2,571
- -----------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) -- class B 67
- -----------------------------------------------------------------------------------------------------
Net asset value -- redemption price per share -- class A $ 12.51 $ 9.61
- -----------------------------------------------------------------------------------------------------
Offering price (100%/(100% --
Maximum Sales Charge) of net asset value adjusted to
nearest cent) per share -- class A $ 13.13 $ 9.81
- -----------------------------------------------------------------------------------------------------
Maximum Sales Charge -- class A 4.75% 2.00%
- -----------------------------------------------------------------------------------------------------
Net asset value -- offering and redemption price per share -- class B $ 12.50
- -----------------------------------------------------------------------------------------------------
Investments at cost $ 15,485 $24,172
- -----------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
6
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED INVESTMENT OHIO
TERM GOVERNMENT INTERMEDIATE QUALITY MUNICIPAL
INCOME MORTGAGE INCOME BOND BOND
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value $ 165,669 $142,962 $130,878 $ 91,366 $ 57,871
Interest receivable 2,571 983 2,429 1,453 1,157
Receivable for capital shares issued 21 24
Receivable from brokers for investments sold 2,753 2,048 2,035
Unamortized organization costs 8 9
Prepaid expenses 14 16 13 3
- ---------------------------------------------------------------------------------------------------------------
Total Assets 168,240 146,733 133,331 94,889 61,090
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable to brokers for investments purchased 3,136 2,542 2,845
Payable for capital shares redeemed 1 4
Accrued expenses and other payables:
Investment advisory fees 65 59 52 38 14
Administration fees 21 18 16 11 7
Accounting and transfer agent fees 15 13 13 11 9
Other 26 68 25 85 78
- ---------------------------------------------------------------------------------------------------------------
Total Liabilities 128 3,298 106 2,687 2,953
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 169,603 150,214 139,577 99,169 58,717
Undistributed net investment income 190 194 168 122 55
Net unrealized appreciation (depreciation) from
investments (519) (4,357) (2,607) (2,022) 275
Accumulated undistributed net realized losses
from investment transactions (1,162) (2,616) (3,913) (5,067) (910)
- ---------------------------------------------------------------------------------------------------------------
Net Assets $ 168,112 $143,435 $133,225 $ 92,202 $ 58,137
- ---------------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest
(shares) 16,853 13,587 14,164 9,827 5,356
- ---------------------------------------------------------------------------------------------------------------
Net asset value--redemption price per share $ 9.98 $ 10.56 $ 9.41 $ 9.38 $ 10.85
- ---------------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%--Maximum
Sales Charge) of net asset value adjusted to
nearest cent) per share $ 10.18 $ 11.09 $ 9.88 $ 9.85 $ 11.39
- ---------------------------------------------------------------------------------------------------------------
Maximum Sales Charge 2.00% 4.75% 4.75% 4.75% 4.75%
- ---------------------------------------------------------------------------------------------------------------
Investments, at cost $ 166,188 $147,319 $133,485 $ 93,388 $ 57,596
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
7
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK DIVERSIFIED
BALANCED INDEX VALUE STOCK GROWTH
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value $158,944 $105,660 $263,048 $323,032 $43,646
Cash 1
Foreign currency (Cost $509) 504
Interest and dividends receivable 1,163 201 484 404 51
Receivable for capital shares issued 13 239
Receivable from brokers for investments sold 2,497 658 10,016 203
Net variation margin on open futures contracts 25 5
Unamortized organization costs 6 4 10 4
Prepaid expenses 18 10 23 9 9
- --------------------------------------------------------------------------------------------------------------
Total Assets 163,145 105,901 264,228 333,700 43,913
- --------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for capital shares redeemed 3 14
Payable to brokers for investments purchased 4,141 2,178 11,833
Accrued expenses and other payables:
Investment advisory fees 78 38 134 156 23
Administration fees 19 33 39 5
Accounting and transfer agent fees 18 7 21 24 7
Other 124 22 32 41 17
- --------------------------------------------------------------------------------------------------------------
Total Liabilities 4,383 67 2,398 12,107 52
- --------------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 153,504 95,719 241,936 281,878 40,340
Undistributed (distributions in excess of) net
investment income (411) 179 406 151 8
Net unrealized appreciation from investments 7,080 9,685 17,472 30,351 3,288
Net unrealized depreciation from translation of
assets and liabilities in foreign currencies (12)
Accumulated undistributed net realized gains
(losses) from investment and foreign currency
transactions (1,399) 251 2,016 9,213 225
- --------------------------------------------------------------------------------------------------------------
Net Assets $158,762 $105,834 $261,830 $321,593 $43,661
- --------------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) 15,549 9,545 24,346 26,055 4,054
- --------------------------------------------------------------------------------------------------------------
Net asset value--redemption price per share $ 10.21 $ 11.09 $ 10.75 $ 12.34 $ 10.82
- --------------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%--Maximum Sales
Charge) of net asset value adjusted to nearest
cent) per share $ 10.72 $ 11.64 $ 11.29 $ 12.96 $ 11.36
- --------------------------------------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 4.75% 4.75% 4.75% 4.75%
- --------------------------------------------------------------------------------------------------------------
Investments, at cost $151,871 $ 95,975 $245,576 $292,681 $40,358
- --------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
8
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO
SPECIAL SPECIAL REGIONAL INTERNATIONAL
VALUE GROWTH STOCK GROWTH
FUND FUND FUND FUND
(000) (000) (000) (000)
-------- ------- ------- -------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value $153,966 $19,539 $35,164 $84,863
Foreign currency (Cost $2,485) 2,542
Interest and dividends receivable 275 16 41 181
Receivable for capital shares issued 9 27 26
Receivable from brokers for investments sold 980 259
Unamortized organization costs 5 2
Prepaid expenses 20 4 10
- ----------------------------------------------------------------------------------------------------------
Total Assets 155,255 19,561 35,232 87,881
- ----------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for capital shares redeemed 3 2
Payable to brokers for investments purchased 1,519 142 1,193
Accrued expenses and other payables:
Investment advisory fees 86 10 20 67
Administration fees 19 2 4 11
Accounting and transfer agent fees 14 6 8 52
Other 26 15 14 26
- ----------------------------------------------------------------------------------------------------------
Total Liabilities 1,664 175 49 1,351
- ----------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 139,501 22,102 23,813 84,285
Undistributed (distributions in excess of) net
investment income 155 (3) 5 (613)
Net unrealized appreciation from investments 11,380 1,362 10,524 (5,172)
Net unrealized appreciation from translation of assets
and liabilities in foreign currencies 9,285
Accumulated undistributed net realized gains (losses)
from investment and foreign currency transactions 2,555 (4,075) 841 (1,255)
- ----------------------------------------------------------------------------------------------------------
Net Assets $153,591 $19,386 $35,183 $86,530
- ----------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) 13,646 2,073 2,398 7,268
- ----------------------------------------------------------------------------------------------------------
Net asset value--redemption price per share $ 11.26 $ 9.35 $ 14.67 $ 11.91
- ----------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%--Maximum Sales
Charge) of net asset value adjusted to nearest cent)
per share $ 11.82 $ 9.82 $ 15.40 $ 12.50
- ----------------------------------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 4.75% 4.75% 4.75%
- ----------------------------------------------------------------------------------------------------------
Investments, at cost $142,586 $18,177 $24,640 $80,807
- ----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
9
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S.
GOVERNMENT PRIME TAX-FREE
OBLIGATIONS OBLIGATIONS MONEY MARKET
FUND FUND FUND
(000) (000) (000)
------- ------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $13,510 $18,407 $4,368
- ----------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 820 1,128 389
Administration fees 351 484 167
Shareholder service fees 222
Accounting fees 141 193 68
Legal and audit fees 41 86 22
Trustees' fees and expenses 16 29 8
Transfer agent fees 21 36 14
Registration and filing fees 24 21 10
Printing fees 27 28 14
Other 6 11 3
Expenses voluntarily reduced (16)
- ----------------------------------------------------------------------------------------------------------
Total Expenses 1,447 2,238 679
- ----------------------------------------------------------------------------------------------------------
Net Investment Income 12,063 16,169 3,689
- ----------------------------------------------------------------------------------------------------------
REALIZED GAINS FROM INVESTMENTS:
Net realized gains from investment transactions 54 1
- ----------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $12,117 $16,170 $3,689
- ----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
10
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY FUNDS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK FUND FOR
TAX-FREE INCOME
PORTFOLIO PORTFOLIO
(000) (000)
-------- ---------
<S> <C> <C>
INVESTMENT INCOME
Interest income $530 $ 1,054
- -----------------------------------------------------------------------------------------------------------
EXPENSES
Investment advisory fees 44 65
Administration fees 12 19
Registration fees 18 37
Shareholder servicing fees 19 32
Accounting fees 16 9
Transfer agent fees 11 14
Legal 5 6
Custodian fees and expenses 2
Trustees' fees and expenses 1
Other 9 8
Expenses voluntarily reduced (41) (43)
- -----------------------------------------------------------------------------------------------------------
Total Expenses 94 149
- -----------------------------------------------------------------------------------------------------------
Net Investment Income 436 905
- -----------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS
(LOSSES) FROM INVESTMENTS
Net realized losses from investment transactions (3) (369)
Net change in unrealized appreciation from investments 353 834
- -----------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments 350 465
- -----------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $786 $ 1,370
- -----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
11
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED INVESTMENT OHIO
TERM GOVERNMENT INTERMEDIATE QUALITY MUNICIPAL
INCOME MORTGAGE INCOME BOND BOND
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 3,810 $ 5,718 $ 4,461 $ 3,544 $ 1,533
- ------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 287 368 448 344 167
Administration fees 86 110 90 69 42
Accounting fees 38 48 39 33 20
Legal and audit fees 9 16 12 9 5
Organization fees 7 7
Trustees' fees and expenses 3 6 4 3 2
Transfer agent fees 10 11 10 10 9
Registration and filing fees 10 9 22 20 7
Printing fees 10 11 11 10 10
Other 2 3 3 1
Expenses voluntarily reduced (11) (12) (161) (122) (85)
- ------------------------------------------------------------------------------------------------------------
Total Expenses 444 570 485 384 177
- ------------------------------------------------------------------------------------------------------------
Net Investment Income 3,366 5,148 3,976 3,160 1,356
- ------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized losses from investment transactions (491) (1,978) (1,415) (1,048) (511)
Change in unrealized appreciation from investments 2,323 6,541 3,611 3,845 3,179
- ------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments 1,832 4,563 2,196 2,797 2,668
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 5,198 $ 9,711 $ 6,172 $ 5,957 $ 4,024
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
12
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK DIVERSIFIED
BALANCED INDEX VALUE STOCK GROWTH
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 2,504 $ 301 $ 952 $ 491 $ 30
Dividend income 1,262 1,141 3,381 4,004 522
- ----------------------------------------------------------------------------------------------------------------
Total Income 3,766 1,442 4,333 4,495 552
- ----------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 722 283 1,142 906 259
Administration fees 108 71 171 209 39
Accounting fees 48 28 70 85 17
Legal and audit fees 13 9 19 24 6
Organization fees 5 3 8 3
Trustees' fees and expenses 5 3 7 9 2
Transfer agent fees 15 10 12 15 9
Registration and filing fees 24 16 30 7 15
Printing fees 12 11 13 14 9
Other 2 1 4 3
Expenses voluntarily reduced (294) (161) (434) (59) (93)
- ----------------------------------------------------------------------------------------------------------------
Total Expenses 660 274 1,042 1,213 266
- ----------------------------------------------------------------------------------------------------------------
Net Investment Income 3,106 1,168 3,291 3,282 286
- ----------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND
FOREIGN CURRENCY:
Net realized gains from investment transactions 203 257 2,038 9,257 225
Net realized gains from foreign currency transactions 514
Net change in unrealized appreciation from investments 9,034 8,129 18,512 18,099 1,924
Change in unrealized depreciation from translation of assets
and liabilities in foreign currencies (5)
- ----------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments and foreign
currency 9,746 8,366 20,550 27,356 2,149
- ----------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $12,852 $9,554 $23,841 $30,638 $2,435
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
13
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO
SPECIAL SPECIAL REGIONAL INTERNATIONAL
VALUE GROWTH STOCK GROWTH
FUND FUND FUND FUND
(000) (000) (000) (000)
------- ------- ------ -------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 240 $ 41 $ 49 $ 62
Dividend income 1,431 104 352 421
Foreign tax withholding (48)
- ------------------------------------------------------------------------------------------------------------
Total Income 1,671 145 401 435
- ------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 647 103 123 436
Administration fees 97 16 25 60
Custodian and accounting fees 41 8 12 120
Legal and audit fees 12 3 4 7
Organization fees 4 1
Trustees' fees and expenses 4 1 1 3
Transfer agent fees 10 8 18 11
Registration and filing fees 19 10 7 13
Printing fees 11 9 10 10
Other 2 1
Expenses voluntarily reduced (193) (40) (7) (61)
- ------------------------------------------------------------------------------------------------------------
Total Expenses 654 120 193 599
- ------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 1,017 25 208 (164)
- ------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gains (losses) from investment transactions 2,555 (3,750) 840 (2,264)
Net realized loss from foreign currency transactions 1,440
Net change in unrealized appreciation (depreciation) from
investments 8,232 4,497 1,267 (3,388)
Change in unrealized appreciation from translation of assets and
liabilities in foreign currencies 42
- ------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains (losses) from investments and
foreign currency 10,787 747 2,107 (4,170)
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $11,804 $ 772 $2,315 $(4,334)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
14
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT TAX-FREE MONEY
OBLIGATIONS FUND PRIME OBLIGATIONS FUND MARKET FUND
------------------------ -------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
YEAR
ENDED
YEAR ENDED YEAR ENDED OCTOBER
OCTOBER 31, OCTOBER 31, 31,
1994 1994 1994
(000) (000) (000)
----------- ----------- ---------
SIX SIX MONTHS SIX
MONTHS ENDED MONTHS
ENDED APRIL 30, ENDED
APRIL 30, 1995 APRIL 30,
1995 (000) 1995
(000) ----------- (000)
--------- ---------
(UNAUDITED)
(UNAUDITED) (UNAUDITED)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 12,063 $ 14,747 $ 16,169 $ 26,637 $ 3,689 $ 4,538
Net realized gains (losses) from
investment transactions 54 (167) 1 (2,506) 7
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
operations 12,117 14,580 16,170 24,131 3,689 4,545
- -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (12,063) (14,747) (16,169) (26,637) (3,689) (4,538)
From net realized gains on
investments (81) (7)
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (12,063) (14,828) (16,169) (26,637) (3,689) (4,545)
- -------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 729,038 935,449 1,021,057 2,109,682 256,968 534,878
Dividends reinvested 1,416 1,179 7,281 8,381 350 355
Cost of shares redeemed (618,413) (1,040,066) (1,380,642) (2,055,784) (246,273) (526,023)
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions (112,041) (103,438) (352,304) 62,279 11,045 9,210
- -------------------------------------------------------------------------------------------------------------------------
Contribution by KeyCorp 2,506
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets (112,095) (103,686) 352,303 62,279 11,045 9,210
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 412,048 515,734 782,303 720,024 198,561 189,351
- -------------------------------------------------------------------------------------------------------------------------
End of period $ 524,143 $ 412,048 $ 430,000 $ 782,303 $ 209,606 $ 198,561
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 729,038 935,449 1,021,057 2,109,682 256,968 534,878
Dividends reinvested 1,416 1,179 7,281 8,381 350 355
Redeemed (618,413) (1,040,066) (1,380,642) (2,055,784) (246,273) (526,023)
- -------------------------------------------------------------------------------------------------------------------------
Change in shares 112,041 (103,438) (352,304) 62,279 11,045 9,210
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
15
<PAGE>
THE VICTORY FUNDS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK TAX-FREE FUND FOR INCOME
PORTFOLIO PORTFOLIO
------------------------ ------------------------
JANUARY 1, FEBRUARY
1994 TO 1, 1994 TO
OCTOBER OCTOBER
31, 1994 31, 1994
(000) (000)
SIX MONTHS ---------- SIX MONTHS ----------
ENDED ENDED
APRIL 30, APRIL 30,
1995 1995
(000) (000)
---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
OPERATIONS
Net investment income $ 436 $ 1,033 $ 905 $ 1,967
Net realized gains (losses) from investment
transactions (3) 229 (369) (654)
Net change in unrealized gain (loss) from
investments 353 (2,384) 834 (2,075)
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 786 (1,122) 1,370 (762)
- ------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders from net investment income
-- class A (421) (1,033) (946) (1,911)
Distributions in excess of net investment income
class A (49)
Dividends to shareholders from net investment income
-- class B (9)
Dividends to shareholders from net realized gains
class A (225)
Dividends to shareholders from net realized gains
class B (5)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from distributions to
shareholders (660) (1,033) (946) (1,960)
- ------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS(1)
Proceeds from shares issued 2,735 6,305 2,077 3,073
Dividends reinvested 234 455 185 525
Shares redeemed (4,127) (15,295) (7,331) (18,150)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from capital transactions (1,158) (8,535) (5,069) (14,552)
- ------------------------------------------------------------------------------------------------------------
Change in net assets (1,032) (10,690) (4,645) (17,274)
- ------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 17,840 28,530 29,358 46,632
- ------------------------------------------------------------------------------------------------------------
End of period $ 16,808 $ 17,840 $ 24,713 $ 29,358
- ------------------------------------------------------------------------------------------------------------
(1) SHARE TRANSACTIONS (IN DOLLARS):
Class A:
Issued 1,941 6,305 2,077 3,073
Distributions reinvested 221 455 185 525
Redeemed (4,127) (15,295) (7,331) (18,150)
- ------------------------------------------------------------------------------------------------------------
Net decrease (1,965) (8,535) (5,069) (14,552)
- ------------------------------------------------------------------------------------------------------------
Class B:
Issued 794
Distributions reinvested 13
Redeemed
- ------------------------------------------------------------------------------------------------------------
Net increase 807
- ------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS (IN SHARES):
Class A:
Issued 156 482 218 312
Distributions reinvested 18 35 20 54
Redeemed (337) (1,185) (779) (1,853)
- ------------------------------------------------------------------------------------------------------------
Net decrease in shares (163) (668) (541) (1,487)
- ------------------------------------------------------------------------------------------------------------
Class B:
Issued 67
Distributions reinvested
Redeemed
- ------------------------------------------------------------------------------------------------------------
Net increase in shares 67
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
16
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED TERM INCOME GOVERNMENT MORTGAGE INTERMEDIATE INCOME
FUND
FUND FUND ---------------------
-------------------- -------------------- DECEMBER
YEAR YEAR 10,
ENDED ENDED 1993 TO
OCTOBER OCTOBER OCTOBER
31, 31, 31,
1994 1994 1994 (A)
(000) (000) (000)
SIX -------- SIX -------- SIX --------
MONTHS MONTHS MONTHS
ENDED ENDED ENDED
APRIL APRIL APRIL
30, 30, 30,
1995 1995 1995
(000) (000) (000)
-------- -------- --------
(UNAUDITED (UNAUDITED (UNAUDITED
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 3,366 $ 4,521 $ 5,148 $ 10,593 $ 3,976 $ 5,951
Net realized gains (losses)
from investment
transactions (491) (671) (1,978) 615 (1,415) (2,498)
Net change in unrealized
appreciation (depreciation)
from investments 2,323 (4,406) 6,541 (16,536) 3,611 (6,218)
- ----------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 5,198 (556) 9,711 (5,328) 6,172 (2,765)
- ----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (3,314) (4,506) (5,273) (10,495) (4,036) (5,724)
From net realized gains from
investments (357) (1,233) (386)
- ----------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (3,314) (4,863) (6,506) (10,881) (4,036) (5,724)
- ----------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 102,064 34,263 25,202 119,347 34,623 159,988
Dividends reinvested 3,313 4,378 6,502 9,714 4,036 5,511
Cost of shares redeemed (18,299) (35,843) (39,642) (97,422) (20,493) (44,087)
- ----------------------------------------------------------------------------------------------------------
Change in net assets from
capital transactions 87,078 2,798 (7,938) 31,639 18,166 121,412
- ----------------------------------------------------------------------------------------------------------
Change in net assets 88,962 (2,621) (4,733) 15,430 20,302 112,923
- ----------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 79,150 81,771 148,168 132,738 112,923
- ----------------------------------------------------------------------------------------------------------
End of period $168,112 $ 79,150 $143,435 $148,168 $133,225 $112,923
- ----------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 10,367 3,336 2,439 10,724 3,739 16,205
Dividends reinvested 336 433 630 906 436 579
Redeemed (1,858) (3,529) (3,833) (8,967) (2,220) (4,575)
- ----------------------------------------------------------------------------------------------------------
Change in shares 8,845 240 (764) 2,663 1,955 12,209
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
17
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT QUALITY BOND
FUND BALANCED FUND
--------------------------- OHIO MUNICIPAL BOND FUND ---------------------------
DECEMBER 10, ----------------------------- DECEMBER 10,
1993 TO YEAR ENDED 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 ENDED 1994 (A)
(000) APRIL 30, (000) APRIL 30, (000)
------------ 1995 -------------- 1995 ------------
(000) (000)
---------- ----------
SIX MONTHS (UNAUDITED) (UNAUDITED)
ENDED
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 3,160 $ 5,712 $ 1,356 $ 2,580 $ 3,106 $ 3,706
Net realized gains (losses)
from investment transactions (1,048) (4,019) (511) (399) 203 (2,116)
Net realized gains from foreign
currency transactions 514
Net change in unrealized
appreciation (depreciation)
from investments 3,845 (5,867) 3,179 (4,662) 9,034 (1,961)
Change in unrealized
depreciation from translation
of assets and liabilities in
foreign currencies (5)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 5,957 (4,174) 4,024 (2,481) 12,852 (371)
- ----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (3,235) (5,516) (1,385) (2,557) (3,678) (3,545)
From net realized gains from
investments (1,169)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (3,235) (5,516) (1,385) (3,726) (3,678) (3,545)
- ----------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 18,694 139,893 8,944 28,815 66,281 176,193
Dividends reinvested 3,234 5,495 1,384 2,767 3,663 3,529
Cost of shares redeemed (27,133) (41,013) (12,534) (18,347) (47,641) (48,521)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions (5,205) 104,375 (2,206) 13,235 22,303 131,201
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets (2,483) 94,685 433 7,028 31,477 127,285
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 94,685 57,704 50,676 $127,285
- ----------------------------------------------------------------------------------------------------------------------------------
End of period $ 92,202 $ 94,685 $ 58,137 $ 57,704 $158,762 $127,285
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 2,032 14,142 845 2,625 6,905 17,854
Dividends reinvested 352 582 132 255 375 366
Redeemed (2,958) (4,323) (1,206) (1,693) (4,964) (4,987)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in shares (574) 10,401 (229) 1,187 2,316 13,233
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
18
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK INDEX FUND VALUE FUND DIVERSIFIED STOCK FUND
--------------------------- --------------------------- -------------------------
DECEMBER 3, DECEMBER 3, YEAR ENDED
1993 TO 1993 TO OCTOBER
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS 31,
1994 (A) ENDED 1994 (A) ENDED 1994
(000) APRIL 30, (000) APRIL 30, (000)
------------ 1995 ------------ 1995 ----------
(000) (000)
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 1,168 $ 1,515 $ 3,291 $ 3,602 $ 3,282 $ 5,177
Net realized gains (losses)
from investment transactions 257 (6) 2,038 3,124 9,257 30,135
Net change in unrealized
appreciation (depreciation)
from investments 8,129 1,556 18,512 (1,040) 18,099 (18,237)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 9,554 3,065 23,841 5,686 30,638 17,075
- ------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (1,173) (1,331) (3,198) (3,289) (3,481) (4,738)
From net realized gains from
investments (3,146) (29,668) (26,397)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (1,173) (1,331) (6,344) (3,289) (33,149) (31,135)
- ------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 30,344 114,187 120,235 229,389 64,652 94,732
Dividends reinvested 1,173 1,321 6,344 3,283 33,132 22,231
Cost of shares redeemed (23,750) (27,556) (70,430) (46,885) (36,907) (97,081)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions 7,767 87,952 56,149 185,787 60,877 19,882
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets 16,148 89,686 73,646 188,184 58,366 5,822
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 89,686 188,184 263,227 257,405
- ------------------------------------------------------------------------------------------------------------------------------
End of period $105,834 $ 89,686 $261,830 $188,184 $321,593 $263,227
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 2,981 11,441 11,942 22,949 5,494 7,718
Dividends reinvested 114 135 639 336 2,997 1,830
Redeemed (2,356) (2,770) (6,813) (4,707) (3,199) (8,003)
- ------------------------------------------------------------------------------------------------------------------------------
Change in shares 739 8,806 5,768 18,578 5,292 1,545
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
19
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND SPECIAL VALUE FUND SPECIAL GROWTH FUND
-------------------------- -------------------------- --------------------------
DECEMBER 3, DECEMBER 3, DECEMBER 3,
1993 TO 1993 TO 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 (A) ENDED 1994 (A)
(000) APRIL 30, (000) APRIL 30, (000)
----------- 1995 ----------- 1995 -----------
(000) (000)
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 286 $ 636 $ 1,017 $ 1,020 $ 25 $ 60
Net realized gains (losses) from
investment transactions 225 298 2,555 588 (3,750) (325)
Net change in unrealized appreciation
(depreciation) from investments 1,924 1,364 8,232 3,148 4,497 (3,135)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
operations 2,435 2,298 11,804 4,756 772 (3,400)
- -----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (328) (586) (955) (927) (29) (59)
From net realized gains from
investments (298) (588)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from distributions
to shareholders (626) (586) (1,543) (927) (29) (59)
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 7,230 92,029 46,521 137,158 3,811 44,544
Dividends reinvested 626 584 1,542 924 29 56
Cost of shares redeemed (32,725) (27,404) (23,333) (23,311) (9,790) (16,548)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions (24,869) 65,209 24,730 114,771 (5,950) 28,052
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets (23,060) 66,921 34,991 118,600 (5,207) 24,593
NET ASSETS:
Beginning of period 66,921 118,600 24,593
- -----------------------------------------------------------------------------------------------------------------------------------
End of period $ 43,861 $ 66,921 $153,591 $ 118,600 $ 19,386 $ 24,593
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 712 9,240 4,410 13,472 441 4,515
Dividends reinvested 63 60 148 91 3 6
Redeemed (3,262) (2,759) (2,217) (2,258) (1,134) (1,758)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in shares (2,487) 6,541 2,341 11,305 (690) 2,763
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
20
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO REGIONAL STOCK INTERNATIONAL GROWTH
FUND FUND
----------------------- -----------------------
YEAR ENDED YEAR ENDED
OCTOBER OCTOBER
31, 31,
1994 SIX MONTHS 1994
(000) ENDED (000)
---------- APRIL 30, ----------
1995
(000)
SIX MONTHS ----------
ENDED (UNAUDITED)
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 208 $ 438 $ (164) $ (136)
Net realized gains (losses) from investment
transactions 840 1,699 (2,264) 4,064
Net realized losses from foreign currency transactions 1,440 (152)
Net change in unrealized appreciation (depreciation)
from investments 1,267 (867) (3,388) 2,879
Change in unrealized appreciation from translation of
assets and liabilities in foreign currencies 42 15
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 2,315 1,270 (4,334) 6,670
- ------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (221) (409)
From net realized gains from investments (1,699) (1,293) (3,925)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from distributions to shareholders (1,920) (1,702) (3,925)
- ------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 4,152 16,543 23,300 53,804
Dividends reinvested 1,917 1,560 3,922
Cost of shares redeemed (5,246) (18,632) (13,740) (9,796)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from capital transactions 823 (529) 13,482 44,008
- ------------------------------------------------------------------------------------------------------------
Change in net assets 1,218 (961) 5,223 50,678
- ------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 33,965 34,926 81,307 30,629
- ------------------------------------------------------------------------------------------------------------
End of period $ 35,183 $ 33,965 $ 86,530 $ 81,307
- ------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 297 1,143 2,012 4,323
Dividends reinvested 144 109 337
Redeemed (376) (1,297) (1,187) (784)
- ------------------------------------------------------------------------------------------------------------
Change in shares 65 (45) 1,162 3,539
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
21
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
U.S. GOVERNMENT OBLIGATIONS FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- -------------------------------------------
U.S. TREASURY BILLS (4.7%)
25,000 5.73%, 6/29/95 $ 24,765
- -------------------------------------------------------
TOTAL U.S. TREASURY BILLS 24,765
- -------------------------------------------------------
- -------------------------------------------------------
U.S. TREASURY NOTES (38.8%)
30,000 4.25%, 7/31/95 29,862
150,000 3.875%, 8/31/95 148,923
25,000 3.875%, 9/30/95 24,786
- -------------------------------------------------------
TOTAL U.S. TREASURY NOTES 203,571
- -------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE 228,336
- -------------------------------------------------------
- -------------------------------------------------------
REPURCHASE AGREEMENTS (56.6%)
15,000 Barclays Bank
5.90%, 5/1/95
(Collateralized by 14,778
U.S. Treasury Notes,
7.38%-7.88%, 11/15/97-
4/15/98, market value-
$15,301) 15,000
20,000 Chase Securities
5.92%, 5/1/95
(Collateralized by 20,444
U.S. Treasury Bills,
5/4/95-5/18/95,
market value-$20,401) 20,000
20,000 Dean Witter
5.93%, 5/1/95
(Collateralized by 23,287
various U.S. Treasury
securities, 5/15/95-
2/29/00, 0.00%-7.13%,
market value-$20,401) 20,000
22,998 Donaldson, Lufkin &
Jennerette
5.93%, 5/1/95
(Collateralized by 25,691
various U.S. Treasury
securities, 5/15/95-
11/15/98, 0.00%-5.13%,
market value-$23,458) 22,998
15,000 Goldman Sachs
5.90%, 5/1/95
(Collateralized by 19,050
U.S. Treasury securities,
8/15/98, 0.00% market
value-$15,301) 15,000
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
20,000 Harris Securities
5.95%, 5/1/95
(Collateralized by 20,372
various U.S. Treasury
securities, 6/8/95-
10/15/98, 0.00%-8.75%,
market value-$20,400 $ 20,000
15,000 Lehman Brothers
5.90%, 5/1/95
(Collateralized by 14,455
U.S. Treasury Notes,
8.63%, 8/15/97, market
value-$15,054) 15,000
129,000 NationsBank
5.96%, 5/1/95
(Collateralized by 131,793
various U.S. Treasury
securities, 0.00%-
11.25%, 4/30/95-4/15/00,
market value-$131,585 129,000
20,000 Nomura Securities
5.92%, 5/1/95
(Collateralized by 20,217
U.S. Treasury Notes,
4.63%-7.75%, 2/29/96-
1/31/00, market value-
$20,400) 20,000
20,000 UBS Securities
5.93%, 5/1/95
(Collateralized by 19,630
U.S. Treasury Notes,
7.50%, 12/31/96, market
value-$20,405) 20,000
- -------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 296,998
- -------------------------------------------------------
TOTAL (COST $525,334)(B) $525,334
- -------------------------------------------------------
</TABLE>
(a) Percentages indicated are based on net assets of $524,143.
(b) Cost and value for federal income tax and financial reporting purposes are
the same.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
22
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments
PRIME OBLIGATIONS FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
CERTIFICATES OF DEPOSIT (3.5%)
BANKING (3.5%):
15,000 Canadian Imperial Bank
Commerce
6.45%, 8/7/95 $ 14,999
- ------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT 14,999
- ------------------------------------------------------------
- ----------------------------------------------
COMMERCIAL PAPER (42.1%)
BANKING (2.3%):
10,000 Cogentrix of Richmond
Virginia
6.02%, 5/18/95 9,972
----------
BEVERAGES (4.3%):
3,373 PepsiCo, Inc.
5.95%, 5/17/95 3,364
15,000 PepsiCo, Inc.
6.25%, 8/24/95 15,000
----------
18,364
----------
FINANCIAL SERVICES (20.7%):
5,000 American Express Co.
5.95%, 5/22/95 4,983
15,000 Bankers Trust
6.23%, 7/10/95 14,818
5,000 Broadway Capital Corp.
6.00%, 5/9/95 4,993
11,218 Fleet Funding Corp.
6.02%, 5/10/95 11,201
5,138 Fleet Funding Corp.
6.00%, 5/24/95 5,118
5,000 Ford Motor Credit Corp.
6.00%, 5/8/95 4,994
6,000 Ford Motor Credit Corp.
6.00%, 5/31/95 5,970
15,000 Hanson Finance
6.05%, 6/1/95 14,922
5,000 Transamerica Finance Corp.
5.98%, 5/15/95 4,988
11,050 Retailer Funding Corp.
6.00%, 5/24/95 11,008
6,044 Retailer Funding Corp.
6.00%, 5/31/95 6,014
----------
89,009
----------
INDUSTRIAL GOODS & SERVICES (2.3%):
10,000 Xerox Co.
6.00%, 5/15/95 9,977
----------
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MISCELLANEOUS (3.5%):
15,000 135 Bishopgate Funding
6.02%, 5/19/95 $ 14,955
----------
OFFICE EQUIPMENT & SERVICES (3.5%):
15,000 Canon USA, Inc.
5.98%, 5/12/95 14,973
----------
OIL & GAS EXPLORATION (1.2%):
5,000 British Oil New Zealand Ltd.
Discount
5.95%, 5/15/95 4,988
----------
PRINTING & PUBLISHING (1.2%):
5,000 Reed Publishing
6.05%, 6/27/95 4,952
----------
RECEIVABLE (3.2%):
5,000 Blue Hawk Funding
6.00%, 5/24/95 4,981
5,000 Blue Hawk Funding
5.98%, 5/31/95 4,975
3,840 Blue Hawk Funding
6.02%, 5/9/95 3,835
----------
13,791
- ------------------------------------------------------------
TOTAL COMMERCIAL PAPER 180,981
- ------------------------------------------------------------
- ----------------------------------------------
CORPORATE BONDS (3.3%)
BEVERAGES (0.2%):
1,000 PepsiCo, Inc.
5.63%, 7/1/95 1,000
----------
FINANCIAL SERVICES (1.9%):
8,050 Associates Corp. of N.A.
8.88%, 8/1/95 8,113
----------
MISCELLANEOUS (1.2%):
5,000 Hanson Overseas
5.50%, 1/15/96 4,960
- ------------------------------------------------------------
TOTAL CORPORATE BONDS 14,073
- ------------------------------------------------------------
- ----------------------------------------------
FLOATING RATE NOTES (14.3%)
MASTER DEMAND NOTES (5.1%):
22,000 Lehman Government
Securities
6.20%*, 5/1/95 22,000
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
23
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments -- Continued
PRIME OBLIGATIONS FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
SECURITY BROKER, DEALER (8.1%):
10,000 Goldman Sachs Group
6.03%*, 6/15/95** $ 10,000
10,000 Goldman Sachs Group
6.03%*, 6/16/95** 10,000
10,000 Lehman Brothers Holdings,
Inc.
6.16%*, 7/28/95** 10,000
5,000 Lehman Brothers Holdings,
Inc.
6.42%*, 3/11/96** 5,000
----------
35,000
----------
TAXABLE MUNICIPAL DEMAND NOTES (1.0%):
4,500 Springfield
6.08%*, 12/31/10** 4,500
- ------------------------------------------------------------
TOTAL FLOATING RATE NOTES 61,500
- ------------------------------------------------------------
- ----------------------------------------------
MEDIUM TERM NOTES (5.8%)
FINANCE (3.7%):
1,000 Ford Motor Credit Corp.
9.20%, 5/1/95 1,000
5,000 General Electric Capital
Corp.
6.25%, 5/1/95 5,000
10,000 General Electric Capital
Corp.
4.89%, 5/29/95 9,999
----------
15,999
----------
TOBACCO (2.1%):
9,000 Philip Morris Co.
6.25%, 5/22/95 9,003
- ------------------------------------------------------------
TOTAL MEDIUM TERM NOTES 25,002
- ------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (3.5%)
FEDERAL HOME LOAN BANK
10,000 5.19%, 6/13/95 9,999
5,000 6.60%, 4/25/95 5,000
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 14,999
- ------------------------------------------------------------
- ----------------------------------------------
VARIABLE RATE NOTES (18.8%)
5,034 Adesa Funding Corp.
6.08%*, 1/1/99** 5,034
2,500 Astro Alum
6.15%*, 4/1/05** 2,500
3,500 Baylis Group Partnership
6.30%*, 1/1/10** 3,500
15,000 C-River Maritime Exxon
Shipping
6.09%*, 10/1/01** 15,000
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
3,517 Capital One Funding Corp.
Service
6.08%*, 6/2/08** $ 3,517
2,725 Carelife, Inc.
6.15%*, 8/1/11** 2,725
1,600 Cleveland Steel Container
6.15%*, 12/1/08** 1,600
2,000 Cuyahoga County Ohio
Taxable Economic
Development Revenue
6.51%*, 6/1/22** 2,000
925 Dietz Road Ltd Partnership
6.15%*, 11/1/08** 925
3,000 Dome Corp -- Dome Corp
Project
6.15%*, 8/31/16** 3,000
8,388 Erie Funding
6.25%*, 11/1/16** 8,388
320 Fremont Plastics
6.15%*, 4/1/03** 320
1,500 GMH Enterprises
6.15%*, 7/1/03** 1,500
455 Highland Rd Partners
6.15%*, 10/1/04** 455
975 McKinley Air Transport
6.15%*, 8/1/09** 975
1,000 MCMC Pob LII
6.15%*, 8/1/14** 1,000
1,000 Olen Corp.
6.15%*, 12/1/04** 1,000
1,655 Olen Corp.
6.15%*, 8/1/08** 1,655
1,400 Pellerin Melnor Corp.
6.15%*, 9/1/02** 1,400
5,842 Primex Funding
6.08%*, 2/1/00** 5,842
700 Rivnut Engineered Products
6.15%*, 2/1/01** 700
980 S & SLP Project
6.15%*, 12/1/07** 980
420 Schipper-DJA Properties
6.17%*, 10/1/05** 420
3,060 Schipper Enterprises
6.17%*, 4/1/09** 3,060
1,295 Technisand, Inc.
6.15%*, 11/1/01** 1,295
1,800 Tell-Schipper Properties,
Inc.
6.17%*, 10/1/03** 1,800
8,300 Tyler Health Facilities
6.35%*, 11/1/25** 8,300
1,980 Zanetos Partnership Project
6.15%*, 7/1/13** 1,980
- ------------------------------------------------------------
TOTAL VARIABLE RATE NOTES 80,871
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
24
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments -- Continued
PRIME OBLIGATIONS FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
REPURCHASE AGREEMENTS (8.7%)
12,000 Chase Securities
5.92%, 5/2/95
(Collateralized by 12,287
U.S. Treasury Bills,
5/18/95-5/25/95,
market value-$12,244) $ 12,000
13,315 Donaldson-Lufkin Jenrette
5.93%, 5/1/95
(Collateralized by 15,318
various U.S. Treasury
securities, 0.00%-5.13%,
8/15/95-2/15/00,
market value-$13,582) 13,315
12,000 UBS Securities, Inc.
5.93%, 5/2/95
(Collateralized by 11,780
U.S. Treasury Notes,
7.90%, 12/31/96, market
value-$12,245) 12,000
- ------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 37,315
- ------------------------------------------------------------
TOTAL (COST $429,740)(B) $ 429,740
- ----------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $430,000.
(b) Cost and value for federal income tax and financial reporting purposes are
the same.
* Floating Rate Demand Notes are securities with yields that vary with a
designated market index or market rate. These securities are payable on the
date of demand. The rate reflected on the Schedule of Portfolio Investments is
the effective rate at April 30, 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 ON PAGES 73 TO 78.
25
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
TAX-FREE MONEY MARKET FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (98.6%)
ALABAMA (2.1%):
2,530 Ardmore Industrial
Development Revenue,
4.95%*, 6/1/04** $ 2,530
1,800 Montgomery, Alabama BMC,
4.75%*, 12/1/30** 1,800
--------
4,330
--------
ARKANSAS (2.4%):
5,000 University of Arkansas,
4.80%*, 12/1/19** 5,000
--------
CALIFORNIA (6.8%):
5,000 California Housing Finance
GIC, 4.60%, 8/1/27** 5,000
6,000 California School Cash
Reserve, 4.50%, 7/5/95 6,008
3,080 Los Angeles, California
Redevelopment, 8.85%,
7/1/95 3,115
--------
14,123
--------
COLORADO (1.3%):
2,645 Arapahoe County, Capital
Improvement, 4.45%,
8/31/96** 2,645
--------
FLORIDA (8.3%):
4,500 Broward County, Housing
Finance Authority, 4.95%*,
12/1/29** 4,500
9,700 Dade County, Housing Finance
Authority, Highway
Revenue, 4.95%*, 8/1/05** 9,700
490 Florida State Board of
Education, 5.50%, 1/1/96 492
2,500 Hillsborough County,
Ringhaven, 4.75%*,
12/1/11** 2,500
--------
17,192
--------
ILLINOIS (7.5%):
1,700 Illinois Development,
Kindlen, 4.80%*, 5/1/06** 1,700
5,000 Illinois Development, Power
& Light, 4.10%, 5/31/95** 5,000
5,000 Illinois Health Facility,
4.50%*, 11/15/24** 5,000
1,000 Illinois State, 8.13%,
6/1/95 1,023
2,700 Kankakee County, Industrial
Development Revenue,
4.95%*, 12/1/07** 2,700
--------
15,423
--------
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INDIANA (4.5%):
4,000 Indiana Bond Bank, 5.25%,
7/10/95 $ 4,005
1,150 Indianapolis, Indiana
Calderon, 4.95%*, 2/1/99** 1,150
1,995 Scottsburg, Indiana, 5.20%*,
10/1/09** 1,995
1,020 Syracuse, Economic
Development Revenue,
4.80%*, 12/1/05** 1,020
1,220 Wakarusa, Economic
Development Revenue,
4.80%*, 7/1/03** 1,220
--------
9,390
--------
IOWA (5.0%):
4,325 City of Urbandale, 4.25%*,
10/1/15** 4,325
6,000 Iowa Schools, 4.25%, 7/17/95 6,008
--------
10,333
--------
KANSAS (1.8%):
2,300 Fairway, Kansas, 4.25%*,
11/1/14** 2,300
1,500 Wamego Pollution Control
Revenue, 4.10%*, 11/1/14** 1,500
--------
3,800
--------
KENTUCKY (2.4%):
2,475 Boone County, 5.20%*,
12/1/09** 2,475
2,465 Covington, Kentucky, 4.70%*,
4/1/05** 2,465
--------
4,940
--------
MICHIGAN (1.3%):
1,725 Michigan State Strategic,
4.75%*, 4/1/06** 1,725
1,000 Oakland County Economic,
5.80%, 9/1/95 1,012
--------
2,737
--------
MINNESOTA (1.6%):
3,340 St. Cloud, Housing Webway,
4.95%*, 11/1/05** 3,340
--------
MISSOURI (5.3%):
3,600 Kansas City, J.C. Nichols
Project, 4.25%*, 5/1/15** 3,600
2,860 St. Charles County, Cedar
Ridge, 4.75%*, 10/1/07** 2,860
4,600 St. Louis Industrial
Development, Multi Family
Housing Revenue Bond,
Series 86, 5.05%*,
2/1/07** 4,600
--------
11,060
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
26
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
TAX-FREE MONEY MARKET FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
NEBRASKA (2.4%):
4,000 Nebraska Investment Finance
Authority, 4.75%,
7/15/95** $ 4,000
915 Nebraska Investment Finance
Authority, 5.00%, 7/1/15** 915
--------
4,915
--------
NEVADA (1.4%):
1,300 Director State Nevada H2W
Part, 4.95%*, 8/1/14** 1,300
1,600 Director State Nevada No.
Sail, 4.95%*, 8/1/01** 1,600
--------
2,900
--------
NEW YORK (0.8%):
1,700 New York, New York, 5.00%*,
2/1/20** 1,700
--------
NORTH CAROLINA (4.0%):
8,240 Person County, Pollution
Control Revenue, Carolina
Power & Light Project,
4.80%*, 11/1/19** 8,240
--------
OHIO (18.1%):
440 Akron Bath Copley, Ohio
Township Hospital, 4.80%*,
5/1/13** 440
2,000 Berea, Ohio, 4.50%, 10/25/95 2,002
1,500 Cuyahoga County, 4.80%*,
12/1/12** 1,500
2,850 Dublin School District,
5.57%, 12/20/95 2,854
885 Fairfield County, 4.88%,
10/26/95 887
2,550 Fayetteville Perry, Ohio,
4.68%, 4/12/96 2,554
2,500 Franklin County Hospital,
4.70%*, 6/1/16** 2,500
4,380 Franklin County, Wesley
Glen, 4.82%*, 4/1/13** 4,380
2,680 Gallia County, Industrial
Development Revenue,
Scenic Hills Nursing
Center, 4.40%*, 12/15/10** 2,680
3,400 Greene County, Ohio Apple
Valley, 4.30%*, 8/1/09** 3,400
3,000 Highland Heights, 5.65%,
12/28/95 3,008
3,800 Kings School District,
5.45%, 6/21/95 3,803
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
4,000 Lakewood, Ohio, 3.72%,
5/11/95 $ 4,000
2,495 Student Loan Funding Corp.,
Cincinnati, Ohio, Student
Loan Revenue, 4.60%*,
12/29/98** 2,495
790 Summit County, Ohio, Texler
Project, 4.40%, 5/1/09** 790
--------
37,293
--------
PENNSYLVANIA (2.7%):
3,100 Sayre, Health Care Facility,
4.75%*, 12/1/20** 3,100
2,450 Williamsport, Area School
District, 3.89%, 6/30/95 2,451
--------
5,551
--------
SOUTH CAROLINA (1.2%):
2,500 Job Economic Development
Revenue, 4.95%*, 12/1/99** 2,500
--------
TENNESSEE (3.0%):
6,200 Hawkins County, Kingston,
5.00%*, 8/1/09** 6,200
--------
TEXAS (3.6%):
4,140 Harris County, 4.95%*,
10/1/16** 4,140
2,240 Texas A&M University, 8.50%,
7/1/95 2,255
950 Texas A&M University, 9.00%,
7/1/95 957
--------
7,352
--------
UTAH (0.3%):
500 Intermountain Power Agency,
9.90%, 7/1/95 517
--------
VIRGINIA (1.5%):
3,000 State Housing Development,
3.90%, 5/10/95 3,000
--------
WASHINGTON (0.7%):
500 Everett Water & Sewer,
8.20%, 7/1/95 503
1,000 Pierce County, 4.55%,
11/1/04** 1,000
--------
1,503
--------
WISCONSIN (8.6%):
1,200 Appleton, Pensor, 4.95%*,
8/1/01** 1,200
1,525 Berlin Wenninger, 4.95%*,
4/1/07** 1,525
4,000 Evansville, Wisconsin,
4.95%*, 12/1/08** 4,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
27
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
TAX-FREE MONEY MARKET FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
4,000 Kenosha Metalmen, 4.95%*,
9/1/14** $ 4,000
1,000 Milwaukee, Wisconsin, 5.25%,
9/1/95 1,003
1,400 Oshkosh, Schloesser, 4.95%*,
3/1/02** 1,400
2,800 Plymouth, Industrial
Development Revenue,
4.95%*, 8/1/04** 2,800
1,800 Prairie Du Chien, Wisconsin,
4.80%*, 6/1/02** 1,800
--------
17,728
- ----------------------------------------------------------
TOTAL MUNICIPAL BONDS 203,712
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (2.1%)
4,318 Federated #15 Tax-Free Money
Market Fund 4,318
1 Fidelity Ohio Tax Free Fund 1
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 4,319
- ----------------------------------------------------------
TOTAL (COST $208,031)(B) $208,031
- ---------------------------------------------------------
</TABLE>
- ------------
(a) Percentages indicated are based on net assets of $206,606.
(b) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities collateralized by bank letters of credit or other
bank credit 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 Portfolio Investments is the rate in
effect at April 30, 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 ON PAGES 73 TO 78.
28
<PAGE>
Schedule of Portfolio Investments
THE VICTORY FUNDS April 30, 1995
NEW YORK TAX-FREE PORTFOLIO (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (94.5%)
250 Metropolitan Transportation
Authority, New York,
Revenue Bond, Series I,
AMBAC, 7.00%, 7/1/09 $ 282
1,200 Metropolitan Transportation
Authority, New York,
Service Contract, Refunding
Revenue Bond, Series K,
AMBAC, 7.50%, 7/1/17 1,318
250 Nassau County, New York,
Industrial Development
Agency, Civic Facilities
Revenue Bond, Hofstra
University Project, AMBAC,
6.75%, 8/01/11 263
700 New York City, New York, City
Housing Development,
Refunding Revenue Bond,
Multi-Unit Mortgage, Series
A, FHA, 7.30%, 6/1/10 741
335 New York City, New York, City
Housing Development,
Revenue Bond, Series 1,
MBIA, 7.38%, 4/1/17 352
675 New York City, New York, City
Housing Development,
Refunding Revenue Bond,
Multi-Unit Mortgage, Series
A, FHA, 7.35%, 6/1/19 717
200 New York City, New York,
Industrial Development
Agency, Civic Facilities
Revenue Bonds, USTA
National Tennis Center,
6.38%, 11/15/14 205
220 New York City, New York, City
Transportation Authority,
Revenue Bond, Livingston
Plaza Project, FSA, 7.50%,
1/1/20 247
680 New York City, New York,
Cultural Resources, Revenue
Bond, AMBAC, 6.63%, 1/1/11 711
300 New York City, New York,
General Obligation Bond,
Series B, FSA, 7.00%,
10/1/18 312
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
$ 350 New York City, New York,
General Obligation Bond,
Series C, FGIC, 7.00%,
2/1/12 $ 360
750 New York City, New York,
Municipal Water Finance
Authority, Water & Sewer
System Revenue Bonds,
Series A, FGIC, 6.75%,
6/15/16 780
700 New York State Dormitory
Authority Revenue Bonds,
City University, Series 2,
MBIA 6.75%, 7/01/24 738
750 New York State Dormitory
Authority, Revenue Bonds,
Ithaca College, MBIA,
6.50%, 7/1/10 782
400 New York State Dormitory
Authority, Revenue Bonds,
State University
Educational System, Series
B, AMBAC, 6.00%, 5/15/17 395
225 New York State Dormitory
Authority, Revenue Bond,
Judicial Facilities Leases,
Series B, MBIA, 7.00%,
4/15/16 239
370 New York State General
Obligation Bonds, AMBAC,
6.75%, 8/1/18 392
325 New York State General
Obligation Bonds, AMBAC,
6.75%, 8/1/19 343
500 New York State Medical Care
Facilities Finance Agency,
Unrefunded/Revenue Bond,
MBIA, 7.38%, 8/15/19 543
200 New York State Medical Care
Facilities Finance Agency,
Montefiore Medical Center,
AMBAC, 5.75%, 2/15/25 188
815 New York State Medical Care
Facilities Finance Agency,
Refunding Revenue Bond,
North Shore University
Hospital, MBIA, 7.20%,
11/1/20 879
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
29
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY FUNDS April 30, 1995
NEW YORK TAX-FREE PORTFOLIO (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
550 New York State Medical Care
Facilities Finance Agency,
Revenue Bond, Series A,
BIG, 7.10%, 2/15/27 $ 575
340 New York State Medical Care
Facilities Finance Agency,
Revenue Bond, St. Luke's,
Series B, MBIA, 7.45%,
2/15/29 382
550 New York State TWY Authority
General Revenue Bonds,
Series C, FGIC, 6.00%,
1/01/25 539
1,000 New York State Urban
Development Correctional
Facilities, Revenue Bond,
Series D, AMBAC, 7.50%,
1/1/12 1,088
400 New York State Urban
Development Correctional
Facilities, Series 1, FSA,
7.50%, 1/1/20 449
900 Triborough Bridge & Tunnel
Authority, Revenue Bond,
Series T, MBIA, 7.00%,
1/1/20 1,002
1,000 Triborough Bridge & Tunnel
Authority, Special
Obligation Refunding
Revenue Bond, Series B,
AMBAC, 6.88%, 1/1/15 1,061
- ---------------------------------------------------------
TOTAL MUNICIPAL BONDS $15,883
- ---------------------------------------------------------
- ---------------------------------------------------------
INVESTMENT COMPANIES (3.1%)
527 Municipal Fund for New York $ 527
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 527
- ---------------------------------------------------------
TOTAL (COST $15,485)(b) $16,410
- ---------------------------------------------------------
</TABLE>
- ------------
(a) Percentages indicated are based on net assets of $16,808.
(b) 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 $ 925
Unrealized depreciation
-------
Net unrealized appreciation $ 925
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
30
<PAGE>
Schedule of Portfolio Investments
THE VICTORY FUNDS April 30, 1995
FUND FOR INCOME (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
U.S. TREASURY OBLIGATION (1.2%)
U.S. TREASURY STRIP
2,000 zero%, 8/15/20 $ 296
- ---------------------------------------------------------
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (40.3%)
1,084 Bear Stearns Mortgage Capital
Corp., Series 1991-A/B1,
9.40%, 6/25/21 1,084
2,220 Bear Stearns Secured
Investors Trust, Series
1991-2/H, 7.50%, 9/20/20 2,151
104 Drexel, Burnham & Lambert
Trust, Series U/1, 6.30%,
8/1/17 107
1,000 General Electric Capital
Mortgage, Series 93-4f,
7.00%, 3/25/08 896
1,985 Housing Securities, Inc.,
Series 1993-B/B4M, 7.25%,
4/25/08 1,878
1,000 Kidder, Peabody Acceptance
Corp., Series 1993-C1/A3,
6.80%, 9/1/06 927
153 Merrill Lynch Trust, Series
27/D, 8.90%, 10/20/15 155
1,366 Prudential Home Mortgage,
Series 1992-42/M, 7.00%,
1/25/08 1,291
1,500 Resolution Trust Corp.,
Series 1992-2/B4, 8.20%,
11/25/21 1,476
- ---------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 9,965
- ---------------------------------------------------------
- ---------------------------------------------------------
U.S. GOVERNMENT AGENCIES (41.7%)
FEDERAL HOME LOAN MORTGAGE CORPORATION:
335 8.85%, 4/15/20 338
115 9.30%, 8/15/15 117
1,337 9.50%, 8/1/19-12/1/22 1,389
237 10.00%, 2/1/17-9/1/19 253
18 12.00%, 10/1/10-7/1/14 21
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION:
1,304 8.00%, 11/25/20 $ 1,221
1,683 8.50%, 8/1/24-1/13/25 1,712
25 9.50%, 1/1/19 28
154 10.00%, 5/1/13-2/1/18 172
10 10.50%, 1/1/18 11
55 12.00%, 8/1/13-4/1/15 61
36 13.00%, 12/1/12 41
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION:
2,272 9.50%, 8/15/17-10/15/19 2,390
2,115 10.00%, 3/15/16-6/15/21 2,289
97 10.25%, 3/15/19-6/15/19 103
82 10.50%, 2/15/16 90
66 11.00%, 9/20/14 74
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 10,310
- ---------------------------------------------------------
- ---------------------------------------------------------
REAL ESTATE MORTGAGE INVESTMENT
CONDUITS (12.6%)
1,000 Federal National Mortgage
Association, Series 1991-
13/C, 8.25%, 3/25/04 1,017
76 Federal National Mortgage
Association, Series G-18/6,
8.75%, 7/25/01 76
1,920 Federal National Mortgage
Association, Series
1988-4/Z, 9.25%, 3/25/18 2,014
- ---------------------------------------------------------
TOTAL REAL ESTATE MORTGAGE INVESTMENT
CONDUITS 3,107
- ---------------------------------------------------------
- ---------------------------------------------------------
REPURCHASE AGREEMENT (4.1%)
1,003 Donaldson, Lufkin & Jenrette
Securities Corp., 5.93%,
dated 4/28/95, due 5/1/95
(Collateralized by various
U.S. Treasury securities) 1,003
- ---------------------------------------------------------
TOTAL REPURCHASE AGREEMENT 1,003
- ---------------------------------------------------------
TOTAL (COST $24,172)(B) $ 24,681
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $24,713.
(b) 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 $ 842
Unrealized depreciation (333)
--------
Net unrealized appreciation $ 509
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
31
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
LIMITED TERM INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
ASSET BACKED SECURITIES (1.8%)
1,000 American Express Co., 6.05%,
7/15/97 $ 978
1,000 Capital Auto Receivables
Trust, 5.35%, 2/15/98 989
955 Capital Auto Receivables
Trust, 4.90%, 2/17/98 952
201 GMAC 1993 A Grantor Trust,
4.15%, 3/15/98 198
- ----------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 3,117
- ----------------------------------------------------------
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (8.6%)
FEDERAL HOME LOAN MORTGAGE CORP.:
1,540 7.00%, 7/15/98 1,535
2,000 5.50%, 10/15/02 1,933
2,000 5.50%, 11/15/03 1,924
482 8.40%, 1/15/05 487
937 6.00%, 2/15/13 933
258 8.00%, 1/15/18 258
1,300 8.50%, 9/15/19 1,316
FEDERAL NATIONAL MORTGAGE ASSOC.:
2,000 6.00%, 10/25/03 1,965
1,000 8.00%, 3/25/04 1,007
1,522 5.75%, 6/25/06 1,471
849 7.00%, 2/25/18 844
883 7.50%, 7/25/18 879
--------
14,552
--------
- ---------------------------------------------------------
CORPORATE BONDS (18.5%)
AUTOMOTIVE (0.3%):
500 Ford Motor, 7.88%, 10/15/96 506
--------
BANKING & FINANCIAL SERVICES (0.3%):
500 Bankers Trust, 7.25%, 11/1/96 502
--------
BROKERAGE SERVICES (2.0%):
2,000 Lehman Brothers, 5.75%,
11/15/98 1,858
1,500 Lehman Brothers Holding,
5.50%, 6/15/96 1,474
--------
3,332
--------
BUSINESS EQUIPMENT (1.3%):
2,175 International Business
Machines Corp., 6.38%,
11/1/97 2,145
--------
CHEMICALS (0.6%):
1,000 Dow Capital, 5.75%, 9/15/97 972
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
CONSUMER GOODS & SERVICES (0.6%):
1,000 PepsiCo, Inc., 5.63%, 7/1/95 $ 1,000
--------
FINANCIAL SERVICES (6.5%):
2,000 American General Corp.,
6.88%, 7/1/99 1,957
1,000 Associates Corp.,6.88%,
1/15/97 1,000
1,500 Associates Corp.,7.25%,
9/1/99 1,492
3,000 Ford Motor Credit Corp.,
7.13%, 12/1/97 3,004
1,000 ITT Finance, 7.38%, 10/15/95 1,005
2,000 Norwest Corp., 7.75%,
12/31/96 2,030
500 Norwest Financial, 7.10%,
11/15/96 502
--------
10,990
--------
FOOD PRODUCTS (0.4%):
775 H.J. Heinz Co., 5.50%,
9/15/97 756
--------
GOVERNMENTS (FOREIGN) (0.6%):
1,000 Province of Ontario Global
Bonds, 5.70%, 10/1/97 973
--------
INDUSTRIAL GOODS & SERVICES (1.2%):
2,000 Burlington Resources, 7.15%,
5/1/99 1,985
--------
INSURANCE (2.1%):
500 International Lease Finance
Corp., 6.38%, 11/1/96 496
2,000 International Lease Finance
Corp., 8.35%, 10/1/98 2,063
1,000 Transamerica Finance, 5.40%,
9/1/95 997
--------
3,556
--------
POLLUTION CONTROL SERVICES (1.5%):
500 Waste Management, 6.38%,
7/1/97 493
2,000 WMX Technologies, 7.13%,
3/22/97 2,005
--------
2,498
--------
UTILITIES -- ELECTRIC & GAS (1.1%):
1,000 Northern Illinois Gas, 5.50%,
2/1/97 976
1,000 Northern States Power, 5.50%,
2/1/99 944
--------
1,920
- ----------------------------------------------------------
TOTAL CORPORATE BONDS 31,135
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 73 TO 78.
32
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
LIMITED TERM INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
U.S. GOVERNMENT AGENCIES (1.7%)
FEDERAL NATIONAL MORTGAGE ASSOC.:
3,000 5.23%, 11/25/98 $ 2,826
- ----------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 2,826
- ----------------------------------------------------------
- ---------------------------------------------------------
U.S. TREASURY NOTES (64.8%)
4,000 5.50%, 4/30/96 3,968
1,000 7.63%, 5/31/96 1,013
8,000 6.50%, 9/30/96 8,002
9,000 7.50%, 12/31/96 9,136
18,000 7.50%, 1/31/97 18,273
1,000 6.75%, 2/28/97 1,003
16,000 6.88%, 2/28/97 16,078
10,000 6.63%, 3/31/97 10,005
7,000 6.50%, 8/15/97 6,978
3,000 7.38%, 11/15/97 3,046
1,500 6.00%, 12/31/97 1,475
4,500 5.13%, 4/30/98 4,306
6,500 8.25%, 7/15/98 6,774
7,000 5.25%, 7/31/98 6,689
12,000 7.13%, 2/29/00 12,110
- ----------------------------------------------------------
TOTAL U.S. TREASURY NOTES 108,856
- ----------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
INVESTMENT COMPANIES (3.1%)
5,183 Shearson U.S. Treasury Fund $ 5,183
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 5,183
- ----------------------------------------------------------
TOTAL (COST $166,188)(B) $165,669
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $168,112.
(b) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 1,161
Unrealized depreciation (1,681)
--------
Net unrealized depreciation $ (520)
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 73 TO 78.
33
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
GOVERNMENT MORTGAGE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATIONS (10.6%)
FEDERAL HOME LOAN MORTGAGE CORP.:
5,000 5.50%, 10/15/02 $ 4,832
500 5.00%, 8/15/11 492
FEDERAL NATIONAL MORTGAGE ASSOC.:
10,000 7.50%, 8/25/22 9,809
- ---------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS 15,133
- ---------------------------------------------------------
- ---------------------------------------------------------
U.S. GOVERNMENT
AGENCIES (86.8%)
FEDERAL HOME LOAN MORTGAGE CORP.:
5,927 8.00%, 1/1/00 5,922
209 9.50%, 8/1/21 218
3,128 5.99%, 12/1/23 3,136
19,787 7.50%, 4/1/24 19,351
FEDERAL NATIONAL MORTGAGE ASSOC.:
1,395 8.00%, 5/1/17 1,394
2,322 9.50%, 6/1/22 2,420
9,768 6.50%, 4/1/24 9,050
3,888 8.50%, 8/1/24 3,952
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
105 8.50%, 6/15/16 107
252 8.50%, 7/15/16 257
109 9.00%, 9/15/16 113
181 8.50%, 10/15/16 185
108 9.50%, 11/15/16 114
726 8.50%, 1/15/17 740
578 8.50%, 2/15/17 589
233 8.50%, 4/15/17 238
200 8.50%, 5/15/17 204
473 8.50%, 6/15/17 483
2,093 9.50%, 11/15/17 2,195
113 10.00%, 1/15/18 121
517 9.00%, 11/15/18 536
423 9.50%, 1/15/19 444
317 10.50%, 8/15/19 344
469 8.50%, 12/15/19 478
45 8.50%, 2/15/20 46
1,426 9.50%, 5/15/20 1,496
3,278 9.75%, 1/15/21 3,504
1,551 9.00%, 3/15/21 1,606
121 8.50%, 5/15/21 124
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
1,185 9.00%, 5/15/21 $ 1,227
311 8.00%, 6/15/21 311
1,332 9.00%, 6/15/21 1,379
2,307 9.50%, 6/15/21 2,422
13,249 8.00%, 5/15/22 13,257
4,043 8.00%, 10/15/22 4,046
3,088 9.00%, 2/15/23 3,202
2,870 8.50%, 3/15/23 2,928
803 7.50%, 6/15/23 786
4,591 7.50%, 7/15/23 4,490
1,527 8.00%, 8/15/23 1,528
4,887 7.00%, 9/15/23 4,636
2,833 7.00%, 10/15/23 2,687
4,619 7.00%, 12/15/23 4,384
8,295 7.50%, 1/15/24 8,106
3,933 7.50%, 2/15/24 3,842
4,048 8.50%, 10/15/24 4,134
1,714 8.75%, 8/15/25 1,739
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 124,471
- ---------------------------------------------------------
- ---------------------------------------------
U.S. TREASURY NOTES (1.5%)
1,000 5.50%, 4/30/96 992
1,100 8.75%, 8/15/00 1,189
- ---------------------------------------------------------
TOTAL U.S. TREASURY NOTES 2,181
- ---------------------------------------------------------
- ---------------------------------------------
INVESTMENT COMPANIES (0.8%)
1,177 Shearson U.S. Treasury Fund 1,177
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,177
- ---------------------------------------------------------
TOTAL (COST $147,319)(B) $142,962
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $143,435.
(b) 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 $41. Cost for federal income tax purposes differs from value
by net unrealized depreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 422
Unrealized depreciation (4,820)
--------
Net unrealized depreciation $ (4,398)
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
34
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
INTERMEDIATE INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
ASSET BACKED SECURITIES (0.7%)
CAPITAL AUTO RECEIVABLES TRUST
1,000 5.35%, 2/15/98 $ 989
- ---------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 989
- ---------------------------------------------------------
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (17.0%)
FEDERAL HOME LOAN MORTAGAGE CORP.
1,000 7.00%, 5/15/99 992
1,800 6.50%, 5/15/03 1,713
1,406 5.00%, 11/15/04 1,401
2,500 5.80%, 4/15/14 2,468
1,994 6.50%, 7/15/16 1,959
258 8.00%, 1/15/18 258
1,968 7.50%, 9/15/20 1,963
2,500 8.40%, 1/15/21 2,520
FEDERAL NATIONAL MORTGAGE ASSOC.
2,475 6.00%, 10/25/03 2,432
1,103 7.50%, 7/25/18 1,098
4,000 6.25%, 5/25/19 3,755
2,000 8.50%, 8/25/19 2,051
- ---------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 22,610
- ---------------------------------------------------------
- ---------------------------------------------------------
CORPORATE BONDS (39.1%)
APPLIANCES (0.8%):
1,000 Whirlpool Corp. Notes
9.50%, 6/15/00 1,089
--------
AUTOMOTIVE (2.8%):
1,000 Ford Motor Co.
9.00%, 9/15/01 1,076
500 Ford Motor Credit Co.
9.50%, 4/15/00 542
500 Ford Motor Holdings, Inc.
9.25%, 3/1/00 534
500 General Motors Corp.
9.75%, 5/15/99 514
1,000 General Motors Corp.
9.63%, 12/1/00 1,086
--------
3,752
--------
BANKING (0.4%):
500 Comerica, Inc.
10.13%, 6/1/98 537
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
BROKERAGE SERVICES (10.9%):
4,000 Bear Stearns Co.
9.38%, 6/1/01 $ 4,305
5,000 Lehman Brothers Holdings
5.75%, 11/15/98 4,643
2,500 Merrill Lynch & Co.
8.25%, 11/15/99 2,563
3,500 Salomon, Inc.
6.75%, 1/15/06 2,993
--------
14,504
--------
CHEMICALS (1.5%):
1,000 Dow Chemical
5.75%, 9/15/97 973
1,000 Monsanto Defined
8.13%, 12/15/06 1,032
--------
2,005
--------
FINANCIAL SERVICES (7.0%):
2,000 American Express
8.50%, 8/15/01 2,115
3,000 American General Corp.
7.70%, 10/15/99 3,034
1,000 Norwest Corp.
7.75%, 12/31/96 1,015
3,000 Transamerica Financial
8.75%, 10/1/99 3,138
--------
9,302
--------
FOOD PRODUCTS (0.7%):
1,000 Super Valu, Inc.
5.88%, 11/15/95 998
--------
GOVERNMENT AGENCY (0.4%):
500 Private Export Funding
9.00%, 1/31/96 508
--------
INDUSTRIAL GOODS & SERVICES (8.4%):
2,000 American Home Products
7.70%, 2/15/00 2,025
3,000 Amoco Canada
7.25%, 12/1/02 2,985
1,000 Grand Metropolitan Investment
Corp.
8.63%, 8/15/01 1,070
3,000 Service Corp. International
8.38%, 12/15/04 3,131
2,000 WMX Technologies Waste
Management
7.13%, 3/22/97 2,005
--------
11,216
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
35
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERMEDIATE INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INSURANCE (0.4%):
500 St. Paul Cos., Inc.
9.38%, 6/15/97 $ 526
--------
OIL & GAS EXPLORATION (1.2%):
500 British Petroleum America
10.15%, 3/15/96 514
1,000 Cheveron Corp. Amortization
Notes
8.11%, 12/1/04 1,044
--------
1,558
--------
PRINTING & PUBLISHING (1.6%):
1,000 Knight Ridder, Inc.
8.50%, 9/1/01 1,063
1,000 R.R. Donnelly & Sons Co.
9.13%, 12/1/00 1,095
--------
2,158
--------
RETAIL STORES (0.8%):
500 J.C. Penney, Inc.
9.05%, 3/1/01 538
500 Sears Roebuck & Co.
9.50%, 6/1/99 537
--------
1,075
--------
TELECOMMUNICATIONS (2.2%):
750 Communications Satellite
8.13%, 4/1/04 775
2,000 GTE Corp. Notes
9.10%, 6/1/03 2,143
--------
2,918
- ---------------------------------------------------------
TOTAL CORPORATE BONDS 52,146
- ---------------------------------------------------------
- ---------------------------------------------------------
U.S. GOVERNMENT AGENCIES (1.4%)
FEDERAL NATIONAL MORTAGE ASSOC.:
2,000 5.23%, 11/25/98 1,884
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 1,884
- ---------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
U.S. TREASURY NOTES (38.6%)
7,500 9.25%, 1/15/96 $ 7,651
3,000 9.38%, 4/15/96 3,087
2,000 5.50%, 4/30/96 1,984
5,000 7.38%, 5/15/96 5,049
6,500 6.88%, 4/30/97 6,534
2,000 5.63%, 1/31/98 1,945
5,000 7.25%, 2/15/98 5,068
7,000 7.00%, 4/15/99 7,050
2,000 7.50%, 10/31/99 2,048
1,000 6.38%, 1/15/00 980
8,000 7.13%, 2/29/00 8,073
2,000 6.88%, 3/31/00 1,997
- ---------------------------------------------------------
TOTAL U.S. TREASURY NOTES 51,466
- ---------------------------------------------------------
- ---------------------------------------------------------
INVESTMENT COMPANIES (1.3%)
1,783 Shearson U.S. Treasury Fund 1,783
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,783
- ---------------------------------------------------------
TOTAL (COST $133,485)(B) $130,878
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $133,225.
(b) 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 $ 885
Unrealized depreciation (3,492)
--------
Net unrealized depreciation $ (2,607)
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
36
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
INVESTMENT QUALITY BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
ASSET BACKED SECURITIES (1.6%)
CAPITAL AUTO RECEIVABLES ASSET TRUST
979 4.90%, 2/17/98 $ 976
RAILCAR TRUST, SERIES 92-1
459 7.75%, 6/1/04 465
- ------------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 1,441
- ------------------------------------------------------------
- ----------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (1.5%)
FEDERAL HOME LOAN MORTGAGE CORP.:
1,180 7.50%, 4/1/07 1,178
FEDERAL NATIONAL MORTGAGE ASSOC.:
67 7.00%, 3/25/18 67
155 7.25%, 6/25/18 154
- ------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATION 1,399
- ------------------------------------------------------------
- ----------------------------------------------
CORPORATE BONDS (28.4%)
AUTOMOTIVE (1.7%):
1,000 Ford Motor Co.
9.00%, 9/15/01 1,076
500 General Motors
9.13%, 7/15/95 535
----------
1,611
----------
BANKING (6.2%):
600 BankAmerica Corp.
9.63%, 2/13/01 657
1,500 Crestar Finance Corp.
8.75%, 11/15/04 1,591
500 First Bank System
8.00%, 7/2/04 514
1,020 First Union Corp.
9.45%, 6/15/99 1,095
800 SunTrust Banks, Inc.
7.38%, 7/1/02 799
1,000 Wells Fargo & Co.
8.75%, 5/1/02 1,061
----------
5,717
----------
BROKERAGE SERVICES (2.3%):
1,000 Morgan Stanley
8.88%, 10/15/01 1,056
1,280 Morgan Stanley
7.25%, 10/15/23 1,069
----------
2,125
----------
COMPUTER (0.6%):
510 International Business
Machines
9.00%, 5/1/98 510
----------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
CREDIT INSTITUTIONS -- PERSONAL (0.6%):
510 General Electric Credit
Corp.
8.75%, 11/26/96 $ 524
----------
FINANCIAL SERVICES (7.6%):
1,025 BHP Finance Ltd.
6.75%, 11/1/13 880
255 Ford Motor Credit Co.
9.40%, 11/16/95 259
1,000 General Motors Acceptance
Co.
6.28%*, 6/7/96 999
1,000 General Motors Acceptance
Co.
7.13%, 6/1/99 985
1,000 General Motors Acceptance
Co.
5.50%, 12/15/01 886
1,020 Merrill Lynch
8.25%, 11/15/99 1,046
2,000 Salomon Brothers
4.44%, 8/9/95 1,988
----------
7,043
----------
GOVERNMENTS (FOREIGN) (0.5%):
500 Republic of Iceland
6.13%, 2/1/04 449
----------
INDUSTRIAL GOODS & SERVICES (4.4%):
1,000 American Home Products
7.70%, 2/15/00 1,013
1,000 Georgia-Pacific
9.95%, 6/15/02 1,116
700 Philip Morris Co.
9.00%, 1/1/01 746
1,200 RJR Nabisco, Inc.
8.00%, 1/15/00 1,182
----------
4,057
----------
INSURANCE (1.0%):
1,100 Nationwide Mutual
Insurance Surplus
7.50%, 2/15/24 954
----------
OIL & GAS EXPLORATION (0.8%):
700 Atlantic Richfield Co.
9.00%, 4/1/21 765
----------
OIL & GAS TRANSMISSION (0.6%):
510 Shell Oil Co.
7.00%, 9/15/95 511
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
37
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INVESTMENT QUALITY BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TELECOMMUNICATIONS (2.1%):
510 GTE Hawaiian Telephone
Service
9.00%, 12/1/00 $ 525
510 MCI Communications
7.63%, 11/7/96 514
360 Northern Telecom Ltd.
8.25%, 6/13/96 366
510 Southwestern Bell Co.
8.30%, 6/1/96 518
----------
1,923
- ------------------------------------------------------------
TOTAL CORPORATE BONDS 26,189
- ------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (38.0%)
FEDERAL HOME LOAN MORTGAGE CORP.:
150 8.00%, 5/1/02 151
350 8.00%, 8/1/02 354
238 8.00%, 6/1/08 237
277 8.00%, 11/1/08 276
FEDERAL NATIONAL MORTGAGE ASSOC.:
994 8.00%, 1/1/23 993
1,562 7.50%, 3/1/24 1,529
1,500 9.00%, 5/1/25 1,549
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
2,815 6.50%, 2/15/09 2,705
1,597 9.00%, 2/15/17 1,654
1,513 8.50%, 9/15/17 1,544
891 9.00%, 6/15/18 923
1,667 9.00%, 10/15/19 1,727
2,738 9.00%, 12/15/19 2,836
1,742 9.00%, 1/15/20 1,809
1,128 9.00%, 2/15/20 1,168
740 8.50%, 11/15/21 756
2,657 7.50%, 8/15/22 2,600
1,646 8.50%, 8/15/22 1,681
1,228 8.50%, 2/15/23 1,253
1,464 7.00%, 10/15/23 1,389
1,378 7.50%, 10/15/23 1,345
4,794 7.50%, 1/15/24 4,683
1,962 7.50%, 5/15/24 1,916
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 35,078
- ------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BONDS (12.5%)
2,600 8.88%, 2/15/19 $ 3,001
3,000 8.00%, 11/15/21 3,188
2,900 7.13%, 2/15/23 2,798
1,500 7.50%, 11/15/24 1,520
1,000 7.63%, 2/15/25 1,035
- ------------------------------------------------------------
TOTAL U.S. TREASURY BONDS 11,542
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY NOTES (14.9%)
3,000 7.50%, 2/29/96 3,029
1,000 7.50%, 12/31/96 1,015
1,000 8.00%, 1/15/97 1,024
1,000 7.75%, 12/31/99 1,034
2,500 7.75%, 1/31/00 2,585
3,000 7.13%, 2/29/00 3,027
2,000 7.50%, 2/15/05 2,061
- ------------------------------------------------------------
TOTAL U.S. TREASURY NOTES 13,775
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (2.1%)
1,942 Shearson U.S. Treasury Fund 1,942
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,942
- ------------------------------------------------------------
TOTAL (COST $93,388) (B) $ 91,366
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $92,202.
(b) Represents costs 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 $ 646
Unrealized depreciation (2,668)
----------
Net unrealized depreciation $ (2,022)
==========
</TABLE>
* Corporate Bonds with floating rates are securities with yields that vary with
a designated market index or market rate. These securities are payable on the
date of demand. The rate reflected on the Schedule of Portfolio Investments
is the effective rate at April 30, 1995.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
38
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
OHIO MUNICIPAL BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (97.6%)
ALTERNATIVE MINIMUM TAX PAPER (11.1%):
2,500 Student Loan Funding Corp.,
Series A
5.50%, 12/1/01 $ 2,463
4,000 Student Loan Funding Corp.,
Series A
5.85%, 8/1/04 4,005
- ------------------------------------------------------------
TOTAL ALTERNATIVE MINIMUM TAX PAPER 6,468
- ------------------------------------------------------------
- ----------------------------------------------
GENERAL OBLIGATION BONDS (43.2%)
COUNTY, CITY, SPECIAL DISTRICT & SCHOOLS (39.7%):
1,500 Batavia, Ohio Local School
District
7.00%, 12/1/14 1,656
750 Batavia, Ohio Local School
District
6.30%, 12/1/22 769
500 Canton, Waterworks System
5.75%, 12/1/10 491
1,325 Clyde-Green Springs Village,
Ohio School District
6.10%, 12/1/19 1,302
500 Columbus, Ohio, Series B
6.10%, 1/1/03 531
1,500 Columbus, Ohio
6.20%, 1/1/04 1,604
1,385 Crawford County, Ohio,
AMBAC
6.75%, 12/1/19 1,477
1,000 Cuyahoga Falls, Ohio, MBIA
6.00%, 12/1/15 987
2,500 Franklin County, Ohio
Courthouse
6.38%, 12/1/01 2,724
1,000 Hilliard, Ohio School
District
6.15%, 12/1/06 1,035
2,500 Indian Valley, Ohio Local
School District
7.00%, 12/1/14 2,760
750 Kings, Ohio Local School
District
7.00%, 12/1/09 795
1,250 Lakeview, Ohio Local School
District
AMBAC
6.95%, 12/1/19 1,380
540 Lakewood, Ohio
5.40%, 12/1/05 540
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
600 Madison County, Ohio
7.00%, 12/1/19 $ 667
1,000 Munroe Falls, Ohio, Series A
AMBAC
6.95%, 12/1/14 1,103
500 Toledo, Ohio, AMBAC
6.10%, 12/1/14 501
1,820 Trumbull County, Ohio
5.75%, 12/1/03 1,892
880 Tuscarawas Valley, Ohio
Local
School District, AMBAC
6.00%, 12/1/19 863
----------
23,077
----------
STATE (3.5%):
2,000 Ohio State, Refunding &
Improvement
5.50%, 8/1/03 2,044
- ------------------------------------------------------------
TOTAL GENERAL OBLIGATION BONDS 25,121
- ------------------------------------------------------------
- ----------------------------------------------
REVENUE BONDS (43.3%)
HOSPITALS, NURSING HOMES & HEALTH CARE (17.7%):
2,250 Butler County, Ohio
Middletown Regional
Hospital, GFIC
6.75%, 11/15/10 2,411
1,000 Clermont County Hospital
Facility
6.00%, 9/1/19 977
1,720 Franklin County, Riverside
Hospital
7.25%, 5/15/20 1,864
1,000 Garfield Heights, Ohio
Marymount Hospital,
Refunding & Improvement
6.70%, 11/15/15 1,016
2,400 Lake County Hospital
Improvement Facilities
6.38%, 8/15/03 2,523
1,480 Lucas County, Ohio Hospital,
Series B
5.75%, 8/15/03 1,526
----------
10,317
----------
HOUSING (3.1%):
1,775 Ohio Cap Corp.
6.35%, 7/1/22 1,775
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
39
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
OHIO MUNICIPAL BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
PUBLIC FACILITIES (CONVENTION, SPORT) (5.3%):
2,000 Ohio State Building
Authority,
Adult Correctional
Facilities
6.00%, 10/1/07 $ 2,048
1,000 Ohio State Public
Facilities,
Higher Education
5.88%, 12/1/04 1,029
----------
3,077
----------
UTILITIES (SEWERS, TELEPHONE, ELECTRIC) (17.2%):
540 Cambridge, Ohio Water
System
5.50%, 12/1/08 526
1,935 Cleveland Public Power
Systems, MBIA
7.00%, 11/15/24 2,147
1,000 Cleveland Public Power
Systems, MBIA
6.00%, 11/15/02 1,051
1,750 Cleveland Regional Sewer
District
6.75%, 5/15/04 1,940
1,000 Cleveland, Ohio Waterworks
Series 1-92B
6.25%, 1/1/05 1,055
1,950 Columbus, Ohio Sewer
6.25%, 6/1/08 2,006
750 Columbus, Ohio Water
Systems
6.38%, 11/1/10 769
500 Southwest Regional Water,
MBIA
6.00%, 12/1/20 488
----------
9,982
----------
TOTAL REVENUE BONDS 25,151
- ------------------------------------------------------------
TOTAL MUNICIPAL BONDS 56,740
- ------------------------------------------------------------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (1.9%)
Dreyfus Ohio Money Market
1,131 Institutional Fund $ 1,131
- ------------------------------------------------------------
Total Investment Companies 1,131
- ------------------------------------------------------------
TOTAL (COST $57,596) (B) 57,871
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of 58,137.
(b) 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 $26. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation 1,006
Unrealized depreciation (757)
----------
Net unrealized appreciation $ 249
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
40
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATION (2.4%)
FEDERAL HOME LOAN MORTGAGE CORP.:
465,548 7.50%, 4/1/07 $ 465
FEDERAL NATIONAL MORTGAGE ASSOC.:
968,818 7.40%, 7/25/17 968
925,817 6.50%, 4/25/22 872
1,500,000 9.00%, 5/1/25 1,548
- ------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 3,853
- ------------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (53.7%)
AEROSPACE/DEFENSE (3.3%):
21,400 Boeing Co. 1,177
11,800 General Dynamics Corp. 547
20,300 Lockheed Martin Corp.(c) 1,173
33,650 Raytheon Co. 2,448
----------
5,345
----------
ALUMINUM (1.4%):
50,300 Aluminum Co. of America 2,257
----------
AUTOMOBILES (1.0%):
8,000 Chrysler Corp. 345
1,200 Fiat - ADR 24
45,000 Ford Motor Co. 1,215
----------
1,584
----------
BANKS (4.7%):
900 BBV - ADR 24
54,900 BankAmerica Corp. 2,718
28,200 Comerica, Inc. 811
13,800 CoreStates Financial Corp. 450
27,600 First Union Corp. 1,249
1,300 IMI - ADR 24
33,150 J.P. Morgan & Co., Inc. 2,176
----------
7,452
----------
BEVERAGES (1.3%):
33,900 Anheuser Busch Co., Inc. 1,971
1,300 Coca-Cola Femsa - ADR 26
----------
1,997
----------
CHEMICALS (1.2%):
10,100 Dow Chemical Co. 702
8,300 Eastman Chemical 471
1,200 Imperial Chemical - ADR 58
18,200 Lubrizol Corp. 635
3,200 Montedison - ADR(c) 24
1,000 Norsk Hydro - ADR 40
----------
1,930
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
COMPUTERS & PERIPHERALS (0.9%):
13,600 Cisco Systems(c) $ 542
13,400 Hewlett Packard Co. 886
----------
1,428
----------
CONGLOMERATES (0.0%):
3,000 Hanson PLC, ADR 57
----------
CONTAINERS (0.4%):
28,600 Newell Co. 676
----------
COSMETICS & RELATED (0.6%):
15,400 Avon Products 974
----------
ELECTRICAL EQUIPMENT (1.8%):
13,100 Emerson Electric Co. 881
34,400 General Electric Co. 1,926
900 Hitachi - ADR 92
----------
2,899
----------
ELECTRONIC COMPUTING EQUIPMENT (0.7%)
26,900 Compaq Computer Corp.(c) 1,022
----------
ENTERTAINMENT (0.1%)
450 Matsushita Electric - ADR 76
1,500 Sony - ADR 76
----------
152
----------
FINANCIAL SERVICES (2.2%):
26,400 American Express Co. 917
15,300 Federal National Mortgage
Assoc. 1,350
27,300 Household International,
Inc. 1,280
----------
3,547
----------
FOOD DISTRIBUTORS (0.3%):
16,500 Supervalu, Inc. 435
----------
FOOD PROCESSING & PACKAGING (0.2%):
10,000 Sara Lee Corp. 279
----------
FOREST PRODUCTS (2.8%):
20,300 Georgia Pacific Corp. 1,611
25,000 International Paper Co. 1,925
19,700 Union Camp Corp. 987
----------
4,523
----------
HEAVY MACHINERY (0.5%):
9,000 Deere & Co. 738
----------
HOSPITAL & NURSING EQUIPMENT (0.1%):
3,100 Johnson & Johnson, Inc. 202
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
41
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INSURANCE (1.3%):
25,100 Allstate $ 762
12,000 American General Corp. 396
9,200 Chubb Corp. 736
3,200 St. Paul Cos., Inc. 154
----------
2,048
----------
MANUFACTURING (0.9%):
24,700 Allied Signal, Inc. 979
12,300 Litton Industries, Inc.(c) 426
----------
1,405
----------
MEDICAL SUPPLIES (0.3%):
6,600 Medtronic, Inc. 491
----------
METALS (0.3%):
1,300 SKF Corp. - ADR(c) 27
17,100 USX U.S. Steel Group 522
----------
549
----------
OFFICE EQUIPMENT & SUPPLIES (0.3%):
1,000 Canon - ADR 83
9,700 Pitney Bowes, Inc. 360
----------
443
----------
OIL (7.0%):
12,000 Atlantic Richfield Co. 1,374
700 British Petroleum Co., PLC,
ADR 60
49,800 Chevron Corp. 2,359
15,000 Exxon Corp. 1,044
28,700 Mobil Corp. 2,723
1,400 Repsol - ADR 45
400 Royal Dutch Petroleum - ADR 50
49,500 Texaco, Inc. 3,385
1,000 YPF S.A. - ADR(c) 20
----------
11,060
----------
OIL & GAS EXPLORATION (2.5%):
52,600 Enron Corp. 1,788
60,200 Phillips Petroleum Co. 2,107
----------
3,895
----------
OILFIELD EQUIPMENT & SERVICES (0.7%):
46,500 Baker Hughes, Inc. 1,046
----------
PAINT, VARNISHES & ENAMELS (0.2%):
7,700 Sherwin Williams Co. 274
----------
PAPER (0.0%):
800 Fletcher Challange - ADR 22
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
PHARMACEUTICALS (3.4%):
49,000 Abbott Laboratories $ 1,929
11,400 American Home Products Corp. 879
13,600 Merck & Co., Inc. 583
11,900 Pfizer, Inc. 1,031
12,100 Schering-Plough 912
1,400 SmithKline Beecham 54
----------
5,388
----------
PUBLISHING (0.2%):
3,800 Dun & Bradstreet Corp. 198
2,500 News Corp. - ADR(c) 49
----------
247
----------
RETAIL (1.7%):
9,700 Dayton Hudson Corp. 651
21,900 Pep Boys-Manny, Moe & Jack 564
14,500 Sears & Roebuck Co. 787
7,500 Wal Mart Stores, Inc. 178
10,900 Walgreen Co. 512
----------
2,692
----------
SEMICONDUCTORS (0.8%):
11,850 Intel Corp. 1,213
600 Kyocera - ADR 94
----------
1,307
----------
SHOES, LEATHER GOODS & CLOTHING (0.1%):
4,400 Reebok International Ltd. 138
----------
SOAPS & CLEANING AGENTS (0.1%):
1,300 Procter & Gamble Co. 91
----------
SOFTWARE & COMPUTER SERVICES (1.1%):
13,650 Microsoft Corp.(c) 1,118
32,000 Novell, Inc.(c) 696
----------
1,814
----------
STEEL (0.1%):
2,100 British Steel - ADR 57
800 Broken Hill Proprietary -
ADR 46
2,300 Worthington Industries, Inc. 43
----------
146
TELECOMMUNICATIONS (0.3%):
26,800 Comsat Corp. 536
----------
TOBACCO & TOBACCO PRODUCTS (0.8%):
4,000 B.A.T. Industries - ADR 60
16,500 Philip Morris Cos., Inc. 1,118
3,900 UST, Inc. 110
----------
1,288
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
42
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TOOLS & HARDWARE MANUFACTURING (0.3%):
11,100 Stanley Works $ 440
----------
TRANSPORTATION (0.0%):
900 British Airways -ADR 58
3,000 TMM - ADR 20
----------
78
----------
UTILITIES - ELECTRIC & GAS (3.3%):
64,900 Consolidated Edison Co. NY,
Inc. 1,801
20,300 Duquesne Light Co. 685
83,300 Texas Utilities Co. 2,718
----------
5,204
----------
UTILITIES - TELECOMMUNICATIONS (4.5%):
68,600 A T & T Corp. 3,481
900 British Telecom - ADR 56
60,500 GTE Corp. 2,065
1,000 Hong Kong Telecom - ADR 20
9,000 MCI Telecommunications
Corp. 196
31,000 Nynex Corp. 1,267
1,000 Telefonica De Espana -
ADR(c) 37
1,000 Telephones De Mexico - ADR 30
700 Telephonos De Chile - ADR 48
----------
7,200
- ------------------------------------------------------------
TOTAL COMMON STOCKS 85,299
- ------------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS - FOREIGN (0.7%)
BRITAIN (0.0%):
PUBLISHING (0.0%):
2,200 Reed Elsevier International 28
----------
FOOD MANUFACTURING (0.0%):
5,000 United Biscuits 28
- ------------------------------------------------------------
TOTAL BRITAIN 56
- ------------------------------------------------------------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FRANCE (0.1%):
AUTOMOBILES (0.0%):
200 PSA Peugeot Citroen $ 29
----------
BANKS (0.0%):
500 Cie Financiere De Paribas-A 30
----------
BUILDING MATERIALS (0.0%):
250 Compagnie De Saint Gobain 32
----------
OIL & GAS PRODUCTION (0.0%):
400 Elf Aquitaine 32
----------
TELECOMMUNICATIONS (0.0%):
300 Alcatel-Alsthom 28
----------
UTILITIES - WATER (0.0%):
300 Cie Generale Des Eaux 32
- ------------------------------------------------------------
TOTAL FRANCE 183
- ------------------------------------------------------------
GERMANY (0.1%):
AUTOMOBILES (0.0%):
90 Volkswagen 25
----------
CHEMICALS (0.0%):
100 Bayer 25
----------
MACHINERY & ENGINEERING (0.0%):
100 Mannesmann 27
----------
MANUFACTURING (0.0%):
50 Siemens(c) 25
----------
UTILITIES - ELECTRIC (0.0%):
70 Veba 26
- ------------------------------------------------------------
TOTAL GERMANY 128
- ------------------------------------------------------------
HOLLAND (0.1%):
BANKING (0.0%):
700 ABN/Amro Holding 27
----------
CHEMICALS (0.0%):
200 Akzo Nobel NV 23
----------
TELECOMMUNICATIONS (0.0%):
700 Koninklijke PTT NED NV 25
- ------------------------------------------------------------
TOTAL HOLLAND 75
- ------------------------------------------------------------
HONG KONG (0.0%):
BROKERAGE (0.0%):
20,000 Peregrine Inv 21
----------
REAL ESTATE (0.0%):
5,000 Cheung Kong 21
- ------------------------------------------------------------
TOTAL HONG KONG 42
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
43
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
JAPAN (0.3%):
AUTOMOBILES (0.0%):
2,000 Nippon Denso Co., Ltd. $ 40
----------
BANKS (0.1%):
2,000 Mitsubishi Bank 49
2,000 Sumitomo Bank 43
----------
92
----------
CHEMICALS (0.0%):
6,000 Mitsubishi Chemical, Inc. 35
5,000 Toray Industries, Inc.(c) 35
----------
70
----------
CONSTRUCTION (0.0%):
4,000 Kajima Corp. 40
----------
HOUSEHOLD PRODUCTS (0.0%):
3,000 Kao Corp. 37
----------
PAPER (0.0%):
3,000 New Oji Paper Co., Ltd. 34
----------
PHARMACEUTICALS (0.0%):
1,000 Sankyo Co., Ltd. 24
----------
RETAIL (0.1%):
1,000 Ito Yokado Co. 54
2,000 Marui Co., Ltd. 31
----------
85
----------
RUBBER & RUBBER PRODUCTS (0.0%):
2,000 Bridgestone 32
----------
UTILITIES - ELECTRIC (0.0%):
1,100 Tokyo Electric Power 35
----------
UTILITIES - WATER (0.0%):
1,000 Kurita Water Ind. 24
- ------------------------------------------------------------
TOTAL JAPAN 513
- ------------------------------------------------------------
SWITZERLAND (0.1%):
ENGINEERING (0.0%):
25 Brown Boveri Series A 25
----------
FOOD MANUFACTURING (0.0%):
25 Nestle SA Registered 24
----------
PHARMACEUTICALS (0.0%):
5 Roche Genussshein 30
- ------------------------------------------------------------
TOTAL SWITZERLAND 79
- ------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS 1,076
- ------------------------------------------------------------
- ----------------------------------------------
CONVERTIBLE PREFERRED STOCKS (0.2%)
AUTOMOTIVE (0.2%):
4300 Ford Motor Co. 379
- ------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS 379
- ------------------------------------------------------------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
CORPORATE BONDS (11.1%)
BANKING (3.1%):
300,000 BankAmerica Corp., 9.63%,
2/13/01 $ 328
800,000 Crestar Finance Corp.,
8.75%,
11/15/04 849
1,000,000 First Bank System, 8.00%,
7/2/04 1,027
1,200,000 First Union Corp., 9.45%,
8/15/01 1,329
500,000 NationsBank Corp., 5.38%,
12/1/95 497
300,000 SunTrust Banks Inc., 7.38%,
7/1/02 300
500,000 Wells Fargo & Co., 8.75%,
5/1/02 531
----------
4,861
----------
BROKERAGE SERVICES (0.5%):
750,000 Morgan Stanley, 8.88%,
10/15/01 792
----------
COMPUTER (0.2%):
300,000 International Business
Machines, 9.00%, 5/1/98 300
----------
FINANCIAL SERVICES (2.9%):
1,000,000 Associates, 7.50%, 10/15/96 1,010
800,000 BHP Finance Ltd., 6.75%,
11/1/13 687
500,000 General Motors Acceptance
Corp., 5.50%, 12/15/01 443
1,000,000 Merrill Lynch Corp., 8.25%,
11/15/99 1,025
500,000 Merrill Lynch Corp., 4.75%,
6/24/96 488
1,000,000 Morgan Stanley, 7.25%,
10/15/23 835
200,000 U.S. West Capital Funding,
Inc., 8.00%, 10/15/96 203
----------
4,691
----------
GOVERNMENTS (FOREIGN) (0.2%):
300,000 Republic of Iceland, 6.13%,
2/1/04 269
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
44
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INDUSTRIAL GOODS & SERVICES (3.0%):
500,000 American Home Products,
7.70%, 2/15/00 $ 506
1,500,000 General Motors, 9.13%,
7/15/01 1,605
500,000 Georgia-Pacific, 9.95%,
6/15/02 558
900,000 Philip Morris, 9.00%, 1/1/01 960
700,000 RJR Nabisco, Inc., 8.00%,
1/15/00 690
500,000 Waste Management, 7.88%,
8/15/96 506
----------
4,825
----------
INSURANCE (0.7%):
1,200,000 Nationwide Mutual Insurance
Surplus, 7.50%, 2/15/24 1,041
----------
OIL & GAS EXPLORATION (0.3%):
500,000 Atlantic Richfield Co.,
9.00%,
4/1/21 546
----------
TELECOMMUNICATIONS (0.2%):
300,000 Southwestern Bell Co.,
8.30%,
6/1/96 305
- ------------------------------------------------------------
TOTAL CORPORATE BONDS 17,630
- ------------------------------------------------------------
- ----------------------------------------------
FLOATING RATE NOTES (0.3%)
500,000 General Motors Acceptance
Corp., 5.66%*, 6/7/96 499
- ------------------------------------------------------------
TOTAL FLOATING RATE NOTES 499
- ------------------------------------------------------------
- ----------------------------------------------
MEDIUM TERM NOTES (0.9%)
1,500,000 Salomon Brothers, 4.44%,
8/9/95 1,491
- ------------------------------------------------------------
TOTAL MEDIUM TERM NOTES 1,491
- ------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (15.7%)
FEDERAL HOME LOAN MORTGAGE CORP.:
133,439 8.00%, 5/1/02 135
FEDERAL NATIONAL MORTGAGE ASSOC.:
2,250,200 6.00%, 11/1/08 2,116
1,837,646 7.50%, 3/1/24 1,798
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
1,802,848 6.50%, 2/15/09 $ 1,730
251,367 9.50%, 7/15/09 264
1,514,925 9.00%, 10/15/16 1,573
226,173 9.00%, 11/15/16 234
850,334 9.00%, 6/15/18 881
25,890 10.00%, 10/15/18 28
779,707 9.00%, 9/15/19 807
1,188,568 9.00%, 10/15/19 1,231
1,483,116 9.00%, 12/15/19 1,536
870,959 9.00%, 1/15/20 904
557,334 9.00%, 2/15/20 577
1,667,441 8.50%, 5/15/20 1,701
610,779 8.50%, 4/15/21 623
828,801 7.50%, 12/15/22 811
462,219 8.50%, 3/15/23 472
951,881 7.50%, 11/15/23 930
2,013,452 7.50%, 1/15/24 1,967
1,471,279 7.50%, 5/15/24 1,437
3,046,512 8.50%, 9/15/24 3,111
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 24,866
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY BONDS (2.6%)
700,000 8.88%, 2/15/19 808
2,000,000 7.13%, 2/15/23 1,929
1,400,000 7.50%, 11/15/24 1,419
- ------------------------------------------------------------
TOTAL U.S. TREASURY BONDS 4,156
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY NOTES (7.7%)
1,300,000 5.88%, 5/15/95 1,300
1,000,000 7.50%, 12/31/96 1,015
500,000 7.13%, 9/30/99 505
1,000,000 7.75%, 12/31/99 1,034
4,700,000 7.75%, 1/31/00 4,860
1,000,000 7.13%, 2/29/00 1,009
1,500,000 7.25%, 5/15/04 1,518
1,000,000 7.50%, 2/15/05 1,031
- ------------------------------------------------------------
TOTAL U.S. TREASURY NOTES 12,272
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
45
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (4.7%)
126,487 Federated Treasury
Obligation
Fund $ 127
5,600 Global Privatization Fund 68
6,000 Italy Fund, Inc. - ADR 49
2,300 Latin American Equity
Fund(c) 34
2,000 Malaysian Fund 35
7,109,522 Shearson U.S. Treasury Fund 7,110
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 7,423
- ------------------------------------------------------------
TOTAL (COST - $151,871)(B) $ 158,944
- ---------------------------------------------------------
CURRENCY
200 French Franc 0
42,346,513 Japanese Yen 504
- ------------------------------------------------------------
TOTAL CURRENCY 504
- ------------------------------------------------------------
</TABLE>
- ---------------
* Floating Rate Demand Notes are securities with yields that vary with a
designated market index or market rate. These securities are payable on the
date of demand. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect at April 30, 1995.
(a) Percentages indicated are based on net assets of $158,762.
(b) 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 $1,136. 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 $ 6,153
Unrealized depreciation (216)
----------
Net unrealized appreciation $ 5,937
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
46
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMERCIAL PAPER (7.9%)
FINANCIAL SERVICES (7.9%):
1,500,000 American Express, 5.90%,
5/3/95 $ 1,500
2,000,000 Ford Motor Credit Co.,
5.91%, 5/1/95 2,000
2,000,000 General Motors Acceptance
Corp., 6.00%, 5/10/95 2,000
2,000,000 General Motors Acceptance
Corp., 6.16%, 5/10/95 2,000
900,000 Prudential Funding, 5.91%,
5/10/95 900
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 8,400
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (90.6%)
ADVERTISING (0.1%):
1,986 Interpublic Group Cos., Inc. 75
--------
AEROSPACE/DEFENSE (1.4%):
8,666 Boeing Co. 477
1,600 General Dynamics Corp. 74
4,761 Lockheed Martin Corp.(c) 275
3,046 McDonnell Douglas 189
1,298 Northrop Grumman Corp. 64
5,620 Rockwell International Corp. 245
2,280 Textron, Inc. 130
--------
1,454
--------
AIRCRAFT & AIRCRAFT PARTS (0.2%):
3,204 United Technologies Corp. 234
--------
AIR FREIGHT (0.1%):
1,906 AMR Corp. Delaware(c) 128
1,534 U.S. Air Group, Inc.(c) 11
--------
139
--------
AIRLINES (0.1%):
1,237 Delta Air Lines 81
--------
ALUMINUM (0.2%):
4,560 Aluminum Co. of America 205
--------
APPAREL (0.0%):
2,002 Liz Claiborne, Inc. 36
--------
AUTOMOBILES (1.9%):
9,021 Chrysler Corp. 389
26,094 Ford Motor Co. 704
19,240 General Motors 868
1,900 Navistar International
Corp.(c) 27
972 Paccar, Inc. 45
--------
2,033
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
AUTOMOTIVE PARTS (0.5%):
1,104 Cummins Engine, Inc. $ 49
2,558 Dana Corp. 66
1,928 Eaton Corp. 111
1,454 Echlin, Inc. 53
3,114 Genuine Parts Co. 121
294 SPX Corp. 4
145 Strattec Strategy Corp.(c) 2
1,631 TRW, Inc. 121
--------
527
--------
BANKS (3.3%):
2,733 Bank of Boston Corp. 91
9,491 BankAmerica Corp. 470
2,022 Bankers Trust New York 110
2,516 Barnett Banks, Inc. 118
3,236 Boatmens Bancshares, Inc. 107
4,577 Chase Manhattan Corp. 200
6,187 Chemical Banking Corp. 258
2,322 First Chicago Corp. 128
2,064 First Fidelity Bancorp. 99
1,906 First Interstate Bancorp. 146
4,464 First Union Corp. 202
4,813 J.P. Morgan & Co., Inc. 316
7,014 NationsBank Corp. 351
7,849 Norwest Corp. 208
6,014 PNC Bank Corp. 151
3,024 SunTrust Banks, Inc. 164
4,322 Wachovia Corp. 152
1,315 Wells Fargo & Co. 218
--------
3,489
--------
BANKS -- MONEY CENTERS (REGIONAL) (0.8%):
10,090 Citicorp 468
3,607 CoreStates Financial Corp. 118
1,531 Golden West Financial Corp.
Delaware 70
3,947 NBD Bancorp., Inc. 121
3,850 National City Corp. 105
--------
882
--------
BANKS -- OUTSIDE MONEY CENTER (0.3%):
10,348 Banc One Corp. 305
--------
BEVERAGES (3.3%):
6,558 Anheuser Busch Co., Inc. 381
1,721 Brown Forman Corp., Class B 57
32,812 Coca Cola Co. 1,907
943 Coors Adolph Co., Class B 15
20,182 PepsiCo, Inc. 840
9,471 Seagram Co. Limited 257
--------
3,457
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
47
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
BUILDING MATERIALS (0.6%):
943 Armstrong World Industries,
Inc. $ 43
766 Centex Corp. 18
746 Crane Co. 26
1,160 Fleetwood Enterprises, Inc. 27
804 Kaufman & Broad Home Corp. 10
4,031 Masco Corp. 103
2,946 Monsanto Co. 245
3,754 Morton International, Inc. 116
1,121 Owens Corning Fiberglas
Corp.(c) 41
707 Pulte Corp. 15
255 Skyline Corp. 4
--------
648
--------
CHEMICALS (0.1%):
1,748 Great Lakes Chemical 103
--------
CHEMICALS -- GENERAL (2.8%):
2,868 Air Products & Chemicals,
Inc. 144
7,106 Dow Chemical Co. 494
17,394 E.I. Du Pont De Nemours Co. 1,146
2,073 Eastman Chemical 118
1,732 Ecolab, Inc. 40
924 FMC Corp.(c) 57
491 First Mississippi Corp. 12
2,963 Hercules, Inc. 148
1,925 Mallinckrodt 69
1,709 Nalco Chemical Co. 60
5,404 PPG Industries, Inc. 213
3,459 Praxair, Inc. 82
1,689 Rohm & Haas Co. 98
1,300 Sigma-Aldrich 57
3,812 Union Carbide Corp. 122
2,358 W.R. Grace & Co. 126
--------
2,986
--------
CHEMICALS -- SPECIALTY (0.1%):
1,354 Avery Dennison Corp. 55
--------
COMPUTERS & PERIPHERALS (3.1%):
2,968 Amdahl Corp.(c) 35
2,988 Apple Computer, Inc. 114
6,550 Cisco Systems(c) 261
1,356 Computer Sciences Corp.(c) 67
688 Cray Research, Inc.(c) 13
904 Data General Corp.(c) 7
3,621 Digital Equipment Corp.(c) 167
13,010 Hewlett Packard Corp.(c) 860
14,942 International Business
Machines Corp. 1,416
1,098 Integraph Corp.(c) 12
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
3,650 Silicon Graphics(c) $ 137
2,452 Sun Microsystems, Inc.(c) 98
2,949 Tandem Computers, Inc.(c) 37
4,386 Unisys Corp.(c) 45
--------
3,269
--------
CONGLOMERATES (0.8%):
5,849 Corning Glass Works 195
10,724 Minnesota Mining &
Manufacturing Co. 639
--------
834
--------
CONSTRUCTION (0.0%):
924 Foster Wheeler Corp. 34
--------
CONSUMER CREDIT (0.2%):
4,384 Dean Witter Discover & Co. 186
--------
CONSUMER GOODS (0.1%):
1,867 American Greetings Corp. 51
1,160 Jostens, Inc. 23
--------
74
--------
CONTAINERS -- METAL, GLASS, PAPER, PLASTIC (0.4%):
727 Ball Corp. 25
1,257 Bemis, Inc. 35
2,280 Crown, Cork & Seal, Inc.(c) 97
1,121 Federal Paper Board, Inc. 33
3,990 Newell Co. 94
4,147 Rubbermaid, Inc. 122
2,343 Stone Container Corp.(c) 46
--------
452
--------
COSMETICS & RELATED (0.8%):
727 Alberto Culver Co. 23
1,748 Avon Products 110
2,358 Dial Corp. 57
5,620 Gillette Co. 461
2,789 International Flavor &
Fragrance, Inc. 143
--------
794
--------
DEPARTMENT STORES (0.4%):
2,849 Dillard Department Stores,
Inc., Class A 74
5,934 J. C. Penney 260
943 Mercantile Stores, Inc. 42
--------
376
--------
DIVERSIFIED -- CONGLOMERATES, HOLDINGS (0.3%):
2,746 International Telephone &
Telegraph 287
1,218 National Service Industries,
Inc. 34
--------
321
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
48
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
DRUG STORES (0.1%):
491 Longs Drug Stores Corp. $ 17
2,180 Rite Aid Corp. 51
--------
68
--------
ELECTRICAL EQUIPMENT (3.1%):
1,179 Bally Manufacturing Corp.(c) 12
2,890 DSC Communications Corp.(c) 107
5,698 Emerson Electric Co. 383
43,648 General Electric Co. 2,444
1,082 Johnson Controls, Inc. 59
472 Thomas & Betts Corp. 30
1,257 W.W. Grainger, Inc. 76
9,121 Westinghouse Electric Corp. 137
--------
3,248
--------
ELECTRICAL SERVICES (0.1%):
2,950 General Public Utilities
Corp. 84
--------
ELECTRONIC COMPUTING EQUIPMENT (0.2%):
6,609 Compaq Computer Corp.(c) 251
--------
ELECTRONIC & ELECTRICAL -- GENERAL (2.1%):
2,419 Advanced Micro Devices(c) 87
5,366 Amp, Inc. 229
967 Andrew Corp.(c) 48
2,968 Cooper Industries 116
1,415 E G & G, Inc. 24
1,179 General Signal Corp. 44
982 Harris Corp. 46
3,259 Honeywell, Inc. 126
14,954 Motorola, Inc. 850
3,111 National Semiconductor
Corp.(c) 71
3,179 Raytheon Co. 231
1,825 Tandy Corp. 90
746 Tektronix, Inc. 34
2,322 Texas Instruments, Inc. 246
--------
2,242
--------
ELECTRONICS -- DEFENSE RELATED (0.1%):
885 E Systems, Inc. 56
2,103 Loral Corp. 99
--------
155
--------
ENTERTAINMENT (1.1%):
2,397 Brunswick Corp. 51
2,280 Hasbro, Inc. 72
943 King World Productions(c) 38
4,034 Lowes Cos., Inc. 116
2,634 Promus Cos., Inc.(c) 101
13,668 Walt Disney Co. 757
--------
1,135
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ENVIRONMENTAL CONTROL (0.1%):
7,000 Laidlaw, Inc., Class B $ 63
--------
FINANCIAL SERVICES (3.3%):
12,900 American Express Co. 448
3,576 Automatic Data Processing,
Inc. 230
4,700 Bank of New York Co., Inc. 155
1,376 Beneficial Corp. 56
1,121 Ceridian Corp.(c) 39
4,619 Federal Home Loan Mortgage
Corp. 301
6,996 Federal National Mortgage
Corp. 617
3,498 Fleet Financial Group 115
2,103 Fluor Corp. 108
3,421 Great Western Financial
Corp. 72
3,007 H.F. Ahmanson & Co. 63
2,477 Household International,
Inc. 116
3,782 MBNA Corp. 114
3,746 Mellon Bank Corp. 147
4,904 Merrill Lynch & Co., Inc. 223
2,710 Salomon, Inc. 98
3,077 Shawmut National Corp. 82
1,745 Transamerica Corp. 99
8,168 Travelers, Inc. 338
2,545 U.S. Bancorp 70
--------
3,491
--------
FOOD DISTRIBUTORS (0.2%):
6,505 Albertsons, Inc. 206
--------
FOOD DISTRIBUTORS (SUPERMARKETS &
WHOLESALERS) (0.4%):
943 Fleming Cos., Inc. 23
963 Great Atlantic & Pacific
Tea,
Inc. 24
2,952 Kroger Co.(c) 75
1,848 Supervalu, Inc. 49
4,716 Sysco Corp. 132
1,925 Winn Dixie Stores, Inc. 107
--------
410
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
49
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FOOD PROCESSING & PACKAGING (2.6%):
13,201 Archer Daniels Midland Co. $ 241
3,731 CPC International, Inc. 219
6,286 Campbell Soup Co. 322
6,286 ConAgra, Inc. 209
4,047 General Mills 247
6,325 H.J. Heinz Co. 266
2,219 Hershey Foods Corp. 116
5,656 Kellogg Co. 359
2,209 Pioneer Hi-Bred
International,
Inc. 83
3,396 Quaker Oats Co. 122
2,513 Ralston-Ralston Purina Group 119
12,300 Sara Lee Corp. 343
3,007 Wm. Wrigley Jr., Co. 133
--------
2,779
--------
FOREST PRODUCTS -- LUMBER & PAPER (1.7%):
1,379 Alco Standard Corp. 98
1,163 Boise Casacade Corp. 38
2,358 Champion International Corp. 104
2,319 Georgia Pacific Corp. 184
3,204 International Paper Co. 247
2,083 James River Corp. Virginia 57
4,047 Kimberly Clark Corp. 229
2,810 Louisiana Pacific Corp. 72
1,554 Mead Corp. 80
2,555 Moore Corp. Ltd. 50
727 Potlatch Corp. 31
1,886 Scott Paper Co. 168
1,415 Temple Inland, Inc. 62
1,828 Union Camp Corp. 92
1,670 Westvaco Corp. 70
5,288 Weyerhauser Co. 222
--------
1,804
--------
FUNERAL SERVICES (0.1%):
2,422 Service Corp. International 68
--------
FURNITURE (0.1%):
2,771 Maytag Corp. 48
1,100 Zenith Electronics(c) 8
--------
56
--------
GOLD & SILVER MINING (0.0%):
3,300 Santa Fe Pacific Gold Corp. 42
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
HEALTH CARE (0.4%):
9,278 Columbia HCA Healthcare $ 390
--------
HEAVY MACHINERY (0.9%):
3,556 Baker Hughes, Inc. 80
5,148 Caterpillar Tractor, Inc. 301
452 Clark Equipment Co.(c) 39
2,222 Deere & Co. 182
1,169 Harnischfeger Industries,
Inc. 34
2,733 Ingersoll Rand Co. 98
1,357 McDermott International,
Inc. 37
1,879 Tyco Laboratories, Inc. 99
1,118 Varity Corp.(c) 47
--------
917
--------
HOSPITAL & NURSING EQUIPMENT (1.0%):
1,357 Bard C.R., Inc. 40
16,383 Johnson & Johnson, Inc. 1,065
--------
1,105
--------
HOTELS & MOTELS (0.1%):
1,198 Hilton Hotels Corp. 91
--------
HOUSEHOLD GOODS -- APPLIANCES & FURNITURE
(0.2%):
316 Bassett Furniture Ind. 8
1,732 Premark International, Inc. 84
1,928 Whirlpool Corp. 106
--------
198
--------
INDUSTRIAL SERVICES (0.7%):
7,820 American Home Products Corp. 603
1,434 Dover Corp. 93
--------
696
--------
INSURANCE -- LIFE (0.5%):
1,237 Jefferson Pilot Corp. 70
2,474 Providian Corp. 84
1,867 Torchmark Corp. 73
4,350 United Healthcare 158
4,050 U.S. Healthcare, Inc. 108
530 USLIFE Corp. 20
--------
513
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
50
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INSURANCE -- MULTI-LINE (2.0%):
2,910 Aetna Life & Casualty Co. $ 166
1,101 Alexander & Alexander
Services, Inc. 26
5,262 American General Corp. 174
8,091 American International
Group, Inc. 864
1,848 Cigna Corp. 134
1,415 Continental Corp. 28
2,142 General Re Corp. 273
2,377 Lincoln National Corp. 97
1,867 Marsh & McLennan Cos., Inc. 146
1,612 SafeCo Corp. 91
2,142 St. Paul Cos., Inc. 103
2,242 USF & G Corp. 33
--------
2,135
--------
INSURANCE -- PROPERTY, CASUALTY, HEALTH (0.2%):
2,180 Chubb Corp. 174
1,800 UNUM Corp. 77
--------
251
--------
LEISURE -- RECREATION, GAMING (0.0%):
885 Handleman Co. 9
--------
MACHINE TOOLS (0.0%):
885 Cincinnati Milacron, Inc. 24
904 Giddings & Lewis, Inc. 16
--------
40
--------
MANUFACTURING -- CAPITAL GOODS (0.2%):
2,949 Illinois Tool Works, Inc. 148
707 Trinova Corp. 25
--------
173
--------
MANUFACTURING -- CONSUMER GOODS (0.1%):
491 Outboard Marine Corp. 11
1,415 Teledyne, Inc.(c) 35
1,360 Western Atlas(c) 61
--------
107
--------
MANUFACTURING -- MISCELLANEOUS (1.0%):
7,212 Allied Signal, Inc. 286
726 Briggs & Stratton Corp. 26
607 Millipore Corp. 37
866 Morrison Knudsen Corp. 7
2,901 Pall Corp. 68
1,218 Parker-Hannifin Corp. 63
4,047 Unilever N.V. 541
2,671 Whitman Corp. 49
--------
1,077
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (0.2%):
2,203 Beverly Enterprises, Inc.(c) $ 32
1,121 Community Psychiatric
Centers, Inc. 15
1,544 Manor Care, Inc. 45
5,025 National Medical
Enterprises, Inc.(c) 85
--------
177
--------
MEDICAL SUPPLIES (0.7%):
1,473 Bausch & Lomb, Inc. 57
7,235 Baxter International, Inc. 251
1,706 Becton Dickinson & Co. 95
2,888 Biomet, Inc.(c) 51
200 Boston Scientific Corp.(c) 5
2,908 Medtronic, Inc. 216
1,179 St. Jude Medical, Inc. 51
1,415 United States Surgical Corp. 31
--------
757
--------
METALS -- FABRICATION (0.6%):
5,769 Alcan Aluminum Ltd. 164
1,101 Asarco, Inc. 30
2,400 Cyprus Amax Minerals 67
3,498 Homestake Mining Co. 59
1,124 Inland Steel Industries,
Inc. 29
2,227 Newmont Mining Corp. 93
1,828 Phelps Dodge Corp. 104
1,573 Reynolds Metals Co. 79
--------
625
--------
METAL & MINERAL PRODUCTION (0.6%):
2,713 Armco, Inc. 19
8,877 Barrick Gold Corp. 214
2,839 Bethlehem Steel Corp.(c) 40
2,830 Echo Bay Mines Ltd. 27
2,447 Englehard Corp. 94
3,010 Inco Ltd. 78
2,261 Nucor Corp. 109
1,913 USX U.S. Steel Group 58
--------
639
--------
NEWSPAPERS (0.5%):
3,534 Gannett Co., Inc. 186
1,395 Knight-Ridder, Inc. 76
2,552 New York Times Co., Class A 58
3,282 Times Mirror Co., Class A 59
1,670 Tribune Co. 99
--------
478
--------
OFFICE EQUIPMENT & SUPPLIES (0.5%):
4,009 Pitney Bowes, Inc. 149
2,713 Xerox Corp. 334
--------
483
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
51
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
OIL & GAS EXPLORATION AND PRODUCTION (1.7%):
2,358 Amerada Hess Corp. $ 119
1,573 Ashland, Inc. 58
2,623 Coastal Corp. 78
1,237 Columbia Gas System(c) 36
530 Eastern Enterprises 16
6,473 Enron Corp. 220
1,670 Enserch Corp. 29
669 Helmerich & Payne, Inc. 20
1,298 Kerr-McGee Corp. 67
885 Louisiana Land &
Exploration Co. 32
3,085 Noram Energy Corp. 19
7,962 Occidental Petroleum Corp. 183
688 Oneok, Inc. 13
2,516 Oryx Energy Co.(c) 35
1,160 Pennzoil Co. 57
6,622 Phillips Petroleum Co. 232
2,122 Rowan Cos.(c) 15
2,319 Sante Fe Energy Resources,
Inc.(c) 22
2,261 Sonat, Inc. 69
2,752 Sun Co., Inc. 83
7,290 USX - Marathon Group 137
6,231 Unocal Corp. 179
2,294 Williams Co., Inc. 75
--------
1,794
--------
OIL & GAS PRODUCTION (1.2%):
3,201 Burlington Resource, Inc. 125
10,139 Mobil Corp. 962
4,664 Tenneco, Inc. 214
--------
1,301
--------
OIL -- INTEGRATED COMPANIES (6.0%):
12,655 Amoco Corp. 830
4,128 Atlantic Richfield Co. 473
16,606 Chevron Corp. 787
31,639 Exxon Corp. 2,203
13,637 Royal Dutch Petroleum Co. 1,691
6,583 Texaco, Inc. 450
--------
6,434
--------
OILFIELD EQUIPMENT & SERVICES (0.6%):
4,718 Dresser Industries, Inc. 103
2,868 Halliburton Co. 110
6,231 Schlumberger Limited 392
--------
605
--------
PAINT, VARNISHES & ENAMELS (0.1%):
2,200 Sherwin Williams Co. 78
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
PHARMACEUTICALS (4.9%):
20,544 Abbott Laboratories $ 809
1,570 Allergan, Inc. 43
2,106 Alza Corp., Class A(c) 41
13,066 Bristol-Myers Squibb Co. 851
7,468 Eli Lilly & Co. 558
32,116 Merck & Co., Inc. 1,377
8,037 Pfizer, Inc. 696
4,852 Schering-Plough 366
4,441 Upjohn Co. 161
3,379 Warner-Lambert Co. 269
--------
5,171
--------
PHOTOGRAPHY (0.5%):
8,692 Eastman Kodak Co. 500
1,179 Polaroid Corp. 40
--------
540
--------
POLLUTION CONTROL SERVICES & EQUIPMENT (0.5%):
5,022 Browning-Ferris
Industries, Inc. 166
1,444 Safety Kleen 25
12,342 WMX Technologies, Inc. 336
275 Zurn Industries, Inc. 6
--------
533
--------
PRECISION INSTRUMENTS & RELATED (0.0%):
1,040 Perkin Elmer 32
--------
PUBLISHING, EXCEPT NEWSPAPER (0.9%):
2,103 Deluxe Corp. 65
2,455 Dow Jones & Co., Inc. 86
4,300 Dun & Bradstreet Corp. 224
766 John H. Harland Co. 17
1,218 McGraw Hill, Inc. 91
626 Meredith Corp. 16
3,870 R.R. Donnelley & Sons Co. 132
9,682 Time Warner, Inc. 355
--------
986
--------
RADIO & TELEVISION (1.2%):
1,555 CBS, Inc. 100
3,930 Capital Cities ABC, Inc. 332
5,775 Comcast Class A Special
Shares 91
300 Comcast Corp., Class A 5
204 Cox Communications, Inc.,
Class A(c) 3
15,585 Tele-Communications, Inc.,
Class A(c) 298
9,087 Viacom, Class B(c) 417
--------
1,246
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
52
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RAILROAD & RAILROAD HOLDING COMPANIES (0.8%):
2,300 Burlington Northern, Inc. $ 137
2,713 CSX Corp. 216
1,964 Conrail, Inc. 107
3,845 Santa Fe Southern Pacific
Corp. 90
5,188 Union Pacific Corp. 285
--------
835
--------
RAILROADS (0.2%):
3,437 Norfolk Southern Corp. 232
--------
RESTAURANTS (0.7%):
607 Luby's Cafeterias, Inc. 12
17,820 McDonald's Corp. 624
1,376 Ryan's Family Steak House(c) 10
1,082 Shoney's, Inc.(c) 12
2,555 Wendy's International 43
--------
701
--------
RETAIL (2.9%):
3,656 American Stores Co. 94
1,945 Brunos, Inc. 24
2,594 Charming Shoppes, Inc. 14
1,848 Dayton Hudson Corp. 124
2,025 Harcourt General, Inc. 83
11,656 K-Mart Corp. 162
3,194 Marriott International, Inc. 115
6,328 May Department Stores 229
2,103 Nordstrom, Inc. 81
5,012 Price/Costco, Inc.(c) 73
8,921 Sears & Roebuck Co. 484
58,600 Wal Mart Stores, Inc. 1,392
3,104 Walgreen Co. 146
3,421 Woolworth Corp. 55
--------
3,076
--------
RETAIL -- SPECIALTY STORES (1.2%):
2,497 Circuit City Stores, Inc. 65
3,715 The Gap 118
1,473 Giant Food, Inc. 40
11,531 Home Depot, Inc. 481
9,096 The Limited, Inc. 194
2,733 Melville Corp. 98
1,592 Pep Boys -- Manny, Moe &
Jack 41
1,867 TJX Cos., Inc. 21
7,268 Toys R Us, Inc.(c) 184
--------
1,242
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RUBBER & RUBBER PRODUCTS (0.2%):
669 B.F. Goodrich, Inc. $ 31
2,122 Cooper Tire & Rubber Co. 52
3,834 Goodyear Tire & Rubber Co. 146
--------
229
--------
SEMICONDUCTORS (1.3%):
2,100 Applied Materials, Inc.(c) 129
10,550 Intel Corp. 1,080
2,550 Micron Technology, Inc. 210
--------
1,419
--------
SERVICES (NON-FINANCIAL) (0.4%):
3,379 Amgen, Inc.(c) 246
3,050 First Data Corp. 172
1,240 Ogden Corp. 25
--------
443
--------
SHOES, LEATHER GOODS & CLOTHING (0.2%):
452 Brown Group, Inc. 13
1,906 Nike, Inc. 146
2,061 Reebok International Ltd. 64
1,237 Stride Rite Corp. 15
--------
238
--------
SOAPS & CLEANING AGENTS (1.5%):
1,395 Clorox Co. 82
3,670 Colgate Palmolive, Inc. 258
17,471 Procter & Gamble Co. 1,221
--------
1,561
--------
SOFTWARE & COMPUTER SERVICES (2.0%):
1,198 Autodesk, Inc. 41
4,125 Computer Associates
International, Inc. 266
1,271 Lotus Development Corp.(c) 40
14,900 Microsoft Corp.(c) 1,220
9,462 Novell, Inc.(c) 206
10,919 Oracle Systems Corp.(c) 333
630 Shared Medical Systems 24
--------
2,130
--------
STEEL (0.0%):
2,319 Worthington Industries, Inc. 44
--------
TAX RETURN PREPARATION (0.1%):
2,652 H. & R. Block 112
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
53
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TELECOMMUNICATIONS (2.3%):
12,612 Airtouch Communications(c) $ 339
4,800 Alltel Corp. 119
11,144 Bell Atlantic Corp. 612
649 M A Com, Inc.(c) 8
6,447 Northern Telecom Ltd. 235
10,772 Pacific Telesis Group 333
1,966 Scientific-Atlanta, Inc. 45
8,866 Sprint Corp. 293
11,591 U.S. West, Inc. 480
--------
2,464
--------
TEXTILE MANUFACTURING (0.1%):
866 Hartmarx Corp.(c) 5
313 Oshkosh B Gosh, Inc. 5
1,001 Russell Corp. 30
452 Springs Industries, Inc.,
Class A 18
1,631 V.F. Corp. 82
--------
140
--------
TOBACCO & TOBACCO PRODUCTS (1.7%):
5,149 American Brands, Inc. 209
21,904 Philip Morris Cos., Inc. 1,484
5,146 UST, Inc. 145
--------
1,838
--------
TOOLS & HARDWARE MANUFACTURING (0.2%):
2,122 Black & Decker Corp. 64
1,121 Snap On Tools, Inc. 42
1,160 Stanley Works 46
746 Timken Co. 30
--------
182
--------
TOYS & BICYCLES -- MANUFACTURING (0.1%):
5,725 Mattel, Inc. 136
--------
TRANSPORTATION -- AIR (0.1%):
3,650 Southwest Airlines Co. 84
--------
TRANSPORTATION LEASING & TRUCKING (0.2%):
924 Consolidated Freightways,
Inc.(c) 24
1,395 Federal Express Corp.(c) 95
1,101 Pittston Services Group 26
963 Roadway Services, Inc. 47
2,006 Ryder Systems, Inc. 47
707 Yellow Corp. 13
--------
252
--------
TRUCKS -- MANUFACTURING (0.1%):
236 Nacco Industries, Inc. 13
6,073 Placer Dome, Inc. 144
--------
157
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
UTILITIES -- ELECTRIC (3.0%):
4,697 American Electric Power $ 154
4,047 Carolina Power & Light 111
4,855 Central & South West Corp. 120
3,728 Cinergy Corp. 94
6,014 Consolidated Edison Co. NY,
Inc. 167
3,653 Detroit Edison Co. 103
4,415 Dominion Resources 161
5,188 Duke Power Co. 205
5,761 Entergy Corp. 125
4,735 FPL Group, Inc. 174
3,301 Houston Industries 130
3,676 Niagara Mohawk Power Corp. 51
1,670 Northern States Power Co.
Minnesota 74
3,931 Ohio Edison 79
7,196 Pacificorp 137
5,640 Peco Energy Co. 145
6,231 Public Service Enterprise 171
1,101 Raychem Corp. 39
11,438 SCEcorp. 192
16,712 Southern Co. 345
5,759 Texas Utilities Co. 188
5,423 Unicom Corp. 142
2,594 Union Electric Co. 92
--------
3,199
--------
UTILITIES -- ELECTRIC & GAS (0.4%):
3,724 Baltimore Gas & Electric 88
11,024 Pacific Gas & Electric Co. 296
904 Peoples Energy Corp. 23
--------
407
--------
UTILITIES -- NATURAL GAS (0.3%):
2,358 Consolidated Natural Gas 93
1,315 Nicor, Inc. 32
4,022 Pacific Enterprises 99
3,827 Panhandle Eastern Corp. 92
--------
316
--------
UTILITIES -- TELECOMMUNICATIONS (5.4%):
39,898 A T & T Corp. 2,025
14,016 Ameritech Corp. 631
12,636 Bellsouth Corp. 774
24,513 GTE Corp. 837
17,340 MCI Telecommunications Corp. 377
10,733 Nynex Corp. 439
15,249 SBC Communication, Inc. 673
--------
5,756
- ----------------------------------------------------------
TOTAL COMMON STOCKS 95,925
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
54
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BILLS (0.4%)
400,000 5.76%, 6/15/95 $ 397
- ----------------------------------------------------------
Total U.S. Treasury Bills 397
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (0.9%)
938,389 Shearson U.S. Treasury Fund 938
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 938
- ----------------------------------------------------------
TOTAL (COST $96,230)(B) $105,660
- ----------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $105,834.
(b) 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 $498. 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 $ 11,629
Unrealized depreciation (2,697)
--------
Net unrealized appreciation $ 8,932
=========
</TABLE>
(c) Represents non-income producing securities.
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------
FUTURES CONTRACTS
</TABLE>
<TABLE>
<CAPTION>
MARKET
NUMBER OF VALUE
CONTRACTS (000)
<S> <C> <C>
Short, Standard & Poor's 500
Index Futures Contracts, face
amount $8,788, expiring
6/16/95 35 $9,043
------
Total Futures Contracts $9,043
=======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
55
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMERCIAL PAPER (5.4%)
FINANCIAL SERVICES (5.4%):
7,000,000 Ford Motor Credit Corp.,
5.94%, 5/8/95 $ 7,000
7,000,000 General Electric Credit
Corp., 5.94%, 5/8/95 7,000
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 14,000
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (91.8%)
AEROSPACE/DEFENSE (5.0%):
73,000 Boeing Co. 4,015
48,000 General Dynamics Corp. 2,226
34,500 Lockheed Martin Corp.(c) 1,992
65,000 Raytheon Co. 4,729
--------
12,962
--------
AUTOMOTIVE (3.4%):
65,000 Chrysler Corp. 2,803
86,000 Ford Motor Co. 2,322
47,000 Pep Boys-Manny, Moe & Jack 1,210
35,900 TRW, Inc. 2,670
--------
9,005
--------
BANKS (7.4%):
93,000 BankAmerica Corp. 4,603
95,000 Comerica, Inc. 2,731
76,000 CoreStates Financial Corp. 2,479
77,000 First Union Corp. 3,484
81,000 J.P. Morgan & Co., Inc. 5,316
30,000 Norwest Corp. 795
--------
19,408
--------
BEVERAGES (1.2%):
53,000 Anheuser Busch Co., Inc. 3,081
--------
CHEMICALS (2.6%):
25,000 Dow Chemical Co. 1,738
31,000 Eastman Chemical 1,759
45,000 Lubrizol Corp. 1,569
15,000 Nalco Chemical Co. 525
60,000 RPM, Inc., Ohio 1,185
--------
6,776
--------
COMPUTER SOFTWARE (1.5%):
29,000 Microsoft Corp.(c) 2,374
67,000 Novell, Inc.(c) 1,457
--------
3,831
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
COMPUTERS & OFFICE EQUIPMENT (1.2%):
12,000 International Business
Machines Corp. $ 1,137
53,000 Pitney Bowes, Inc. 1,968
--------
3,105
--------
ELECTRICAL EQUIPMENT (2.6%):
22,500 Emerson Electric Co. 1,513
95,000 General Electric Co. 5,320
--------
6,833
--------
ELECTRONICS (2.5%):
50,000 Hewlett Packard Co. 3,306
31,000 Intel Corp. 3,174
--------
6,480
--------
FINANCIAL SERVICES (4.3%):
70,000 American Express Co. 2,433
105,000 American General Corp. 3,465
32,000 Federal National Mortgage
Assoc. 2,824
52,500 Household International,
Inc. 2,461
--------
11,183
--------
FOOD (0.4%):
31,000 Pioneer Hi-Bred
International, Inc. 1,163
--------
HEALTH CARE (1.1%):
75,000 Abbott Laboratories 2,953
--------
HOME PRODUCTS (1.9%):
57,000 Newell Co. 1,347
45,000 Sherwin Williams Co. 1,603
51,500 Stanley Works 2,041
--------
4,991
--------
INSURANCE (3.4%):
64,000 Aetna Life & Casualty Co. 3,648
77,000 Allstate 2,339
23,000 Chubb Corp. 1,840
25,000 St. Paul Cos., Inc.(c) 1,203
--------
9,030
--------
INDUSTRIAL - MISCELLANEOUS (2.6%):
42,000 Allied Signal, Inc. 1,664
35,000 Minnesota Mining &
Manufacturing Co. 2,087
25,000 Textron, Inc. 1,425
62,000 WMX Technologies, Inc. 1,690
--------
6,866
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
56
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MACHINERY & MANUFACTURING (1.5%):
45,000 Cooper Industries $ 1,755
27,000 Deere & Co. 2,214
--------
3,969
--------
MEDIA (1.9%):
30,001 Cox Communications, Inc.
Class A(c) 458
40,000 Dun & Bradstreet Corp. 2,085
43,000 Time Warner, Inc. 1,575
50,000 Times Mirror Co., Class A 906
--------
5,024
--------
METALS & MINING (2.8%):
63,000 Aluminum Co. of America 2,827
70,000 Cyprus Amax Minerals 1,951
80,000 USX U.S. Steel Group 2,440
--------
7,218
--------
OIL - INTEGRATED (DOMESTIC) (3.1%):
34,000 Atlantic Richfield Co. 3,893
117,500 Phillips Petroleum Co. 4,113
--------
8,006
--------
OIL - INTEGRATED (INTERNATIONAL) (8.4%):
111,500 Chevron Corp. 5,282
34,000 Exxon Corp. 2,367
73,000 Mobil Corp. 6,926
107,000 Texaco, Inc. 7,316
--------
21,891
--------
OILFIELD WELL EQUIPMENT & SERVICES (1.3%):
110,000 Baker Hughes, Inc. 2,475
13,000 Schlumberger Ltd. 817
--------
3,292
--------
PAPER & FOREST PRODUCTS (3.9%):
47,000 Georgia Pacific Corp. 3,731
61,500 International Paper Co. 4,736
37,500 Union Camp Corp. 1,880
--------
10,347
--------
PHARMACEUTICALS (3.6%):
13,800 American Home Products Corp. 1,064
55,000 Merck & Co., Inc. 2,358
40,000 Pfizer, Inc. 3,465
35,000 Schering-Plough 2,638
--------
9,525
--------
RESTAURANTS (0.9%):
65,000 McDonald's Corp. 2,275
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RETAIL - FOOD & DRUGS (1.2%):
75,000 Supervalu, Inc. $ 1,978
25,000 Walgreen Co. 1,175
--------
3,153
--------
RETAIL - TRADE (4.0%):
51,000 Dayton Hudson Corp. 3,423
83,000 Sears & Roebuck Co. 4,503
--------
7,926
--------
SOAPS & PERSONAL CARE (1.8%):
45,000 Avon Products 2,846
25,000 Procter & Gamble Co. 1,747
--------
4,593
--------
TELECOMMUNICATIONS (7.3%):
168,500 A T & T Corp. 8,551
15,000 Ameritech Corp. 675
43,000 Comsat Corp. 860
155,000 GTE Corp. 5,289
90,000 Nynex Corp. 3,679
--------
19,054
--------
TOBACCO (1.7%):
47,000 Philip Morris Cos., Inc. 3,184
42,000 UST, Inc. 1,181
--------
4,365
--------
TRANSPORTATION (1.2%):
8,000 Burlington Northern, Inc. 476
18,500 Norfolk Southern Corp. 1,246
28,000 Roadway Services, Inc. 1,358
--------
3,080
--------
UTILITIES - ELECTRIC (5.1%):
130,000 Consolidated Edison Co. NY,
Inc. 3,608
70,000 Duquesne Light Co. 2,363
95,000 Public Service Co. of
Colorado 2,862
141,000 Texas Utilities Co. 4,600
--------
13,433
--------
UTILITIES - NATURAL GAS (2.2%):
65,500 Consolidated Natural Gas 2,579
39,000 Enron Corp. 1,326
30,000 Enserch Corp. 518
48,000 Peoples Energy Corp. 1,212
--------
5,635
- ----------------------------------------------------------
TOTAL COMMON STOCKS 240,453
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
57
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BILLS (0.2%)
410,000 4.13%, 6/22/95 $ 407
- ----------------------------------------------------------
TOTAL U.S. TREASURY BILLS 407
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (3.1%)
8,188,301 Shearson U.S. Treasury Fund 8,188
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 8,188
- ----------------------------------------------------------
TOTAL (COST 245,679)(B) $263,048
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $261,830.
(b) 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 $168. 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 $ 23,151
Unrealized depreciation (5,950)
--------
Net unrealized appreciation $ 17,201
=========
</TABLE>
(c) Represents non-income producing securities.
- ---------------------------------------------------------
FUTURES CONTRACTS
<TABLE>
<CAPTION>
MARKET
NUMBER OF VALUE
CONTRACTS (000)
<S> <C> <C>
Short, Standard & Poor's 500
Index Futures Contracts,
face amount $2,480, expiring
6/16/95 10 $2,584
------
Total Futures Contracts $2,584
------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
58
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
DIVERSIFIED STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMERCIAL PAPER (1.5%)
FINANCIAL SERVICES (1.5%):
5,000,000 General Motors Acceptance
Corp. 5.94%, 5/3/95 $ 5,000
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 5,000
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (93.9%)
AEROSPACE/DEFENSE (4.7%):
128,500 Boeing Co. 7,067
78,000 General Dynamics Corp. 3,617
80,000 Lockheed Martin Corp.(c) 4,620
--------
15,304
--------
ALUMINUM (1.0%):
70,200 Aluminum Co. of America 3,150
--------
BANKS (6.9%):
125,800 BankAmerica Corp. 6,227
225,000 Comerica, Inc. 6,469
81,800 J.P. Morgan & Co., Inc. 5,368
24,800 National City Corp. 679
132,400 Norwest Corp. 3,509
--------
22,252
--------
BEVERAGES (2.7%):
66,400 Anheuser Busch Co., Inc. 3,859
120,000 PepsiCo, Inc. 4,995
--------
8,854
--------
CHEMICALS (1.8%):
40,200 Dow Chemical Co. 2,794
145,000 RPM, Inc., Ohio 2,864
--------
5,658
--------
COMPUTERS & PERIPHERALS (0.6%):
20,000 International Business
Machines Corp. 1,895
--------
CONGLOMERATES (0.6%):
30,000 Minnesota Mining &
Manufacturing Co. 1,789
--------
COSMETICS & RELATED (2.0%):
100,300 Avon Products 6,344
--------
ELECTRICAL EQUIPMENT (3.3%):
30,000 Emerson Electric Co. 2,017
150,800 General Electric Co. 8,445
--------
10,462
--------
ELECTRONIC COMPUTING EQUIPMENT (0.6%):
50,000 Compaq Computer Corp.(c) 1,900
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ELECTRONIC & ELECTRICAL - GENERAL (2.1%):
85,000 Motorola, Inc. $ 4,834
18,900 Texas Instruments, Inc. 2,003
--------
6,837
--------
ENGINEERING & CONSTRUCTION (1.8%):
113,700 Fluor Corp. 5,855
--------
ENTERTAINMENT (0.8%):
70,400 Promus Cos., Inc.(c) 2,710
--------
FINANCIAL SERVICES (1.1%):
39,000 Federal National Mortgage
Assoc. 3,442
--------
FOREST PRODUCTS (3.5%):
50,000 International Paper Co. 3,850
66,900 Mead Corp. 3,462
78,900 Union Camp Corp. 3,955
--------
11,267
--------
FUNERAL SERVICES (0.5%):
61,000 Service Corp. International 1,723
--------
INDUSTRIAL - MISCELLANEOUS (1.0%):
54,000 Textron, Inc. 3,078
--------
INSURANCE (4.2%):
40,000 Aetna Life & Casualty Co.(c) 2,280
52,900 American International
Group, Inc. 5,647
70,000 Chubb Corp. 5,600
--------
13,527
--------
MANUFACTURING MISCELLANEOUS (1.2%):
100,000 Allied Signal, Inc. 3,962
--------
METALS (1.3%):
134,300 USX U.S. Steel Group 4,096
--------
OFFICE EQUIPMENT & SUPPLIES (1.6%):
136,100 Pitney Bowes, Inc. 5,053
--------
OIL (10.9%):
40,400 Atlantic Richfield Co. 4,626
250,000 Chevron Corp. 11,844
105,500 Exxon Corp. 7,345
165,500 Texaco, Inc. 11,316
--------
35,131
--------
OIL & GAS EXPLORATION (3.6%):
170,000 Enron Corp. 5,780
170,000 Phillips Petroleum Co. 5,950
--------
11,730
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
59
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
DIVERSIFIED STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
OILFIELD EQUIPMENT & SERVICES (4.7%):
235,000 Baker Hughes, Inc. $ 5,287
227,600 Dresser Industries, Inc. 4,979
75,100 Schlumberger Ltd. 4,722
--------
14,988
--------
PHARMACEUTICALS (3.4%):
75,000 Merck & Co., Inc. 3,216
25,000 Pfizer, Inc. 2,166
20,000 Schering-Plough 1,507
50,000 Warner-Lambert Co. 3,988
--------
10,877
--------
POLLUTION CONTROL SERVICES (1.2%):
142,000 WMX Technologies, Inc. 3,870
--------
REAL ESTATE INVESTMENT TRUSTS (0.3%):
28,500 Weingarten Realty Investors 998
--------
RETAIL (1.0%):
46,500 Dayton Hudson Corp. 3,121
--------
RETAIL - SPECIALTY STORES (1.1%):
133,000 Pep Boys - Manny, Moe & Jack 3,425
--------
RUBBER & RUBBER PRODUCTS (2.3%):
120,000 Cooper Tire & Rubber Co.(c) 2,940
119,600 Goodyear Tire & Rubber Co. 4,545
--------
7,485
--------
SEMICONDUCTORS (1.8%):
30,000 Applied Materials, Inc.(c) 1,849
40,000 Intel Corp. 4,095
--------
5,944
--------
SHIPPING (1.1%):
152,650 TNT Freightways Corp. 3,587
--------
SOFTWARE & COMPUTER SERVICES (4.0%):
111,800 Microsoft(c) 9,154
175,000 Novell, Inc.(c) 3,806
--------
12,960
--------
TOBACCO & TOBACCO PRODUCTS (1.7%):
80,000 Philip Morris Cos., Inc. 5,420
--------
UTILITIES - ELECTRIC (5.4%):
200,000 Consolidated Edison Co. NY,
Inc. 5,550
20,000 Duquesne Light Co. 675
150,000 Southern Co. 3,094
248,500 Texas Utilities Co. 8,107
--------
17,426
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
UTILITIES - TELECOMMUNICATIONS (8.1%):
230,000 A T & T Corp. $ 11,673
300,000 GTE Corp. 10,238
98,100 Nynex Corp. 4,010
--------
25,921
- ----------------------------------------------------------
TOTAL COMMON STOCKS 302,041
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (5.0%)
2,433,734 Federated Treasury
Obligation Fund 2,434
13,557,653 Shearson U.S. Treasury Fund 13,557
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 15,991
- ----------------------------------------------------------
TOTAL (COST $292,681)(B) $323,032
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $321,593.
(b) 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 $366. 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 $ 33,693
Unrealized depreciation (3,708)
--------
Net unrealized appreciation $ 29,985
=========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
60
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (97.4%)
BANKS (4.6%):
20,500 BankAmerica Corp. $ 1,015
37,500 Norwest Corp. 994
----------
2,009
----------
BEVERAGES (2.8%):
21,300 Coca Cola Co. 1,238
----------
COMPUTERS & PERIPHERALS (1.1%):
9,000 3Com Corp.(c) 504
----------
CONGLOMERATES (2.7%):
36,000 Corning Glass Works 1,202
----------
COSMETICS & RELATED (3.2%):
17,000 Gillette Co. 1,394
----------
ELECTRICAL EQUIPMENT (5.7%):
26,300 General Electric Co. 1,473
18,700 Johnson Controls, Inc. 1,014
----------
2,487
----------
ELECTRONICS & ELECTRICAL (3.4%):
26,200 Motorola, Inc. 1,490
----------
ENTERTAINMENT (3.0%):
24,000 Walt Disney Co. 1,329
----------
FINANCIAL SERVICES (5.8%):
16,900 Federal National Mortgage
Assoc. 1,491
25,000 First USA, Inc. 1,063
----------
2,554
----------
FOREST PRODUCTS (4.1%):
13,000 Georgia Pacific Corp. 1,032
10,000 International Paper Co. 770
----------
1,802
----------
HOUSEHOLD PRODUCTS (3.2%):
34,300 Newell Co. 810
20,400 Rubbermaid, Inc. 602
----------
1,412
----------
INSURANCE (2.9%):
11,900 American International
Group, Inc. 1,270
----------
LEISURE-RECREATION, GAMING (1.3%):
43,700 International Game
Technology 563
----------
MEDICAL-BIOTECHNOLOGY (0.7%):
4,200 Amgen, Inc.(c) 305
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (1.5%):
23,900 Health Care & Retirement
Corp.(c) $ 675
----------
OIL & GAS EXPLORATION, PRODUCTION (1.6%):
18,000 Burlington Resource, Inc. 704
----------
OIL-INTEGRATED COMPANIES (11.3%):
11,800 Amoco Corp. 774
9,600 Atlantic Richfield Co. 1,099
25,000 Chevron Corp. 1,184
14,100 Mobil Corp. 1,338
8,100 Texaco, Inc. 554
----------
4,949
----------
PHARMACEUTICALS (3.4%):
20,000 Ivax Corp. 517
13,000 Schering-Plough 980
----------
1,497
----------
POLLUTION CONTROL SERVICES (1.8%):
29,000 WMX Technologies, Inc. 790
----------
RETAIL (5.3%):
30,000 The Gap 956
33,300 Home Depot, Inc. 1,390
----------
2,346
----------
SEMICONDUCTORS (3.7%):
16,000 Intel Corp. 1,638
----------
SOAPS & CLEANING AGENTS (3.0%):
18,800 Procter & Gamble Co. 1,814
----------
SOFTWARE & COMPUTER SERVICES (6.0%):
20,000 Microsoft Corp.(c) 1,638
45,000 Novell, Inc.(c) 979
----------
2,617
----------
TELECOMMUNICATIONS (6.8%):
22,400 Telefonos de Mexico 678
21,900 AT&T Corp. 1,111
20,300 SBC Communication, Inc. 1,191
----------
2,980
----------
TOBACCO & TOBACCO RELATED (1.0%):
6,600 Philip Morris Cos., Inc. 447
----------
TRANSPORTATION-AIR (2.3%):
43,700 Southwest Airlines Co. 1,011
----------
UTILITIES-NATURAL GAS (5.0%):
36,500 El Paso Natural Gas 1,068
33,300 Enron Corp. 1,132
----------
2,200
- ------------------------------------------------------------
TOTAL COMMON STOCKS 42,727
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
61
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (2.1%)
98,561 Shearson U.S. Treasury Fund $ 919
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 919
- ------------------------------------------------------------
TOTAL (COST $40,358)(B) $ 43,646
- ---
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $43,861.
(b) 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 $ 5,809
Unrealized depreciation (2,521)
----------
Net unrealized appreciation $ 3,288
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
62
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
SPECIAL VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (94.6%)
AEROSPACE/DEFENSE (3.4%):
113,400 GenCorp, Inc. $ 1,432
29,500 General Dynamics Corp. 1,368
86,700 Thiokol Corp. Delaware 2,416
----------
5,216
----------
AUTOMOTIVE PARTS (4.7%):
44,200 Genuine Parts Co. 1,713
46,600 Hayes Wheels 874
72,200 Kaydon Corp. 1,985
51,600 Mascotech, Inc. 574
13,000 Stewart & Stevenson
Services,
Inc. 487
95,775 T B C Corp.(c) 1,017
33,915 Walbro Corp. 634
----------
7,284
----------
BANKS (5.7%):
30,100 Central Fidelity Banks, Inc. 769
119,200 Comerica, Inc. 3,427
36,401 Michigan National Corp. 3,818
17,500 Star Bank 731
----------
8,745
----------
BEVERAGES (1.0%):
71,000 Coca Cola Enterprises, Inc. 1,588
----------
CHEMICALS (7.8%):
57,875 A. Schulman, Inc. 1,816
42,550 Avery Dennison Corp. 1,729
22,400 Geon Co. 605
32,000 Lubrizol Corp. 1,116
12,900 Lyondell Petrochemical 320
57,500 Olin Corp. 3,213
96,500 RPM, Inc. 1,905
30,000 WD 40 Co. 1,320
----------
12,024
----------
CONSTRUCTION (1.2%):
71,100 Foster Wheeler Corp. 2,631
----------
CONTAINERS (1.1%):
71,000 Sonoco Products Co. 1,766
----------
ELECTRICAL EQUIPMENT (8.4%):
39,200 Arrow Electronics, Inc.(c) 1,823
22,500 W.W. Grainger, Inc. 1,361
121,332 Mark IV Industries 2,184
33,300 Molex Corp. 1,257
45,400 Teleflex, Inc. 1,878
75,529 Vishay Intertechnology,
Inc.(c) 4,466
----------
12,969
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ENVIRONMENTAL CONTROL (1.1%):
179,650 Laidlaw, Inc. Class B $ 1,617
----------
FINANCIAL SERVICES (4.6%):
53,300 Equifax, Inc. 1,726
61,850 MBNA Corp. 1,870
42,800 PMI Group, Inc.(c) 1,594
69,100 UJB Financial Corp. 1,892
----------
7,082
----------
FOOD DISTRIBUTORS (0.3%):
15,500 SuperValu, Inc. 409
----------
FOOD PROCESSING & PACKAGING (2.4%):
72,100 Dean Foods Co. 2,055
45,250 IBP, Inc. 1,674
----------
3,729
----------
FOREST PRODUCTS (1.9%):
62,262 Pentair, Inc. 2,848
----------
FUNERAL SERVICES (1.8%)
95,500 Service Corp. International 2,698
----------
FURNITURE (0.7%):
28,300 Leggett & Platt, Inc. 1,090
----------
HEAVY MACHINERY (2.3%):
61,800 Baker Hughes, Inc. 1,391
40,650 Tyco Laboratories, Inc. 2,134
----------
3,525
----------
HOLDING COMPANIES (0.2%):
7,900 Northern Trust Corp.(c) 289
----------
HOTELS & MOTELS (1.4%):
72,300 Mirage Resorts, Inc.(c) 2,169
----------
INSURANCE (5.4%):
46,200 American Re Corp. 1,756
55,200 Kemper Corp. 2,498
47,500 Progressive Corp. 1,793
34,500 TransAtlantic Holdings 2,190
----------
8,237
----------
MACHINE TOOLS (2.9%):
90,900 Albany International Corp. 1,988
22,900 Greenfield Industries 676
67,200 Manitowoc Industries 1,756
----------
4,420
----------
MANUFACTURING (2.2%):
38,000 Briggs & Stratton Corp. 1,335
19,100 Hillenbrand 566
56,466 Pall Corp. 1,320
11,100 Paragon Trade Brands, 172
Inc.(c)
----------
3,393
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
63
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
SPECIAL VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (3.8%):
139,300 Community Psychiatric
Centers, Inc.(c) $ 1,845
43,200 Lincare Holdings(c) 1,334
60,100 Quorum Health Group(c) 1,240
7,100 Ventritex(c) 107
42,437 Vivra, Inc.(c) 1,363
----------
5,889
----------
MEDICAL SUPPLIES (0.2%):
10,000 Sunrise Medical, Inc.(c) 303
----------
METALS (3.3%):
86,100 CBI Industries, Inc. 2,132
28,000 Kennametal, Inc. 938
31,800 Minerals Technologies, Inc. 1,057
32,500 USX U.S. Steel Group 991
----------
5,118
----------
NEWSPAPERS (1.6%):
41,100 Tribune Co. 2,430
----------
OIL & GAS EXPLORATION (2.1%):
80,100 Anadarko Petroleum 3,294
----------
OIL & GAS PRODUCTION (1.2%):
46,100 Snyder Oil Corp. 663
42,500 Vastar Resources, Inc. 1,137
----------
1,800
----------
RETAIL (1.7%):
70,800 Hannaford Brothers 1,867
22,500 TJX Companies, Inc. 259
13,800 Tiffany & Co. 443
----------
2,569
----------
RUBBER (1.0%):
15,800 Bandag, Inc. 938
4,500 Bandag, Inc. Class A 249
19,125 Standard Products Co. 378
----------
1,565
----------
SEMICONDUCTORS (0.5%):
13,500 Applied Materials Inc.(c) 832
----------
SHOES, LEATHER GOODS (1.3%):
25,600 Nike, Inc. 1,962
----------
SOFTWARE & COMPUTER SERVICES (1.2%):
10,000 American Software, Inc. 41
14,750 Analysts International Corp. 372
28,300 Policy Management
Systems(c) 1,426
----------
1,839
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
STEEL (1.5%):
36,700 A.K. Steel Holding Corp.(c) $ 987
68,620 Worthington Industries, Inc. 1,295
----------
2,282
----------
TELECOMMUNICATIONS (0.8%):
4,600 Comsat Corp. 92
53,333 Federal Signal Corp. 1,207
----------
1,299
----------
TOBACCO (0.4%):
23,773 Universal Corp. 544
----------
TRANSPORTATION (3.8%):
45,350 Gatx Corp. 2,041
40,800 Pittston Services Group 969
80,750 Illinois Central Corp. 2,836
----------
5,846
----------
UTILITIES -- ELECTRIC & GAS (8.0%):
32,400 Brooklyn Union Gas Co. 786
27,020 DQE Co. 912
118,600 Florida Progress Corp. 3,617
148,300 Northeast Utilities 3,244
79,400 Public Service Co. of 2,392
Colorado
8,500 Raychem Corp. 303
27,700 Washington Gas Light Co. 1,080
----------
12,334
----------
UTILITIES -- TELECOMMUNICATIONS (1.1%):
69,400 LDDS Communications(c) 1,665
- ------------------------------------------------------------
TOTAL COMMON STOCKS 145,300
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (5.6%)
1,806,695 Federated Treasury 1,806
Obligation
6,859,515 Shearson U.S. Treasury Fund 6,860
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 8,666
- ------------------------------------------------------------
TOTAL (COST $142,586)(A) $ 153,966
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $153,591.
(b) 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 $ 16,787
Unrealized depreciation (5,407)
----------
Net unrealized appreciation $ 11,380
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
64
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments
SPECIAL GROWTH FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (94.8%)
AUTOMOTIVE PARTS (3.8%):
8,900 Breed Technologies, Inc. $ 179
20,000 Kaydon Corp. 550
----------
729
----------
BANKS (1.7%):
8,163 First Bank Systems, Inc. 331
----------
COMPUTERS & PERIPHERALS (4.9%):
12,000 Optical Data Systems(c) 486
10,000 Sungard Data Systems,
Inc.(c) 466
----------
952
----------
DRUG STORES (1.0%):
7,000 Eckerd Corp.(c) 204
----------
ELECTRONIC & ELECTRICAL (2.5%):
11,000 Avnet, Inc. 490
----------
FINANCIAL SERVICES (4.0%):
34,300 Aames Financial Corp. 429
8,500 Green Tree Financial Corp. 347
----------
776
----------
FURNITURE (4.1%):
24,000 Juno Lighting 498
11,000 LaZBoy Chair Co. 297
----------
795
----------
HOSPITAL & NURSING EQUIPMENT (3.1%):
15,000 Invacare Corp. 593
----------
INSURANCE -- LIFE (5.3%):
48,090 Gainsco, Inc. 511
14,500 Reliastar Financial Corp. 520
----------
1,031
----------
LEISURE -- RECREATION, GAMING (2.2%):
16,000 Aldila(c) 98
26,200 Callaway Golf Co. 324
----------
422
----------
MISCELLANEOUS MANUFACTURING (5.0%):
18,000 Keystone International, Inc. 378
25,000 Pall Corp. 584
----------
962
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (7.4%):
15,800 Lincare Holdings(c) $ 488
14,300 Mid Atlantic Medical
Services,
Inc.(c) 247
5,400 Pacificare Health System(c) 335
15,200 Sun Healthcare Group(c) 366
----------
1,436
----------
METALS (7.3%):
40,000 Addington Resources, Inc.(c) 450
13,000 Commercial Metals Co. 345
15,000 Mueller Industries, Inc.(c) 624
----------
1,419
----------
OFFICE EQUIPMENT & SUPPLIES (2.5%):
50,000 Checkmate Electronics(c) 481
----------
OIL & GAS EXPLORATION (5.6%):
10,000 Barrett Resources Corp.(c) 235
13,000 Devon Energy Corp. 270
10,000 H.S. Resource, Inc.(c) 165
18,000 Newfield Exploration(c) 414
----------
1,084
----------
PHARMACEUTICALS (3.2%):
18,000 Teva Pharmaceutical
Industries Ltd. 617
----------
PUBLISHING (2.9%):
5,000 Belo Corp. 300
15,000 Valassis Communications(c) 263
----------
563
----------
RETAIL (5.1%):
23,000 Lillian Vernon Corp. 469
16,000 Medicine Shoppe
International, Inc. 512
----------
981
----------
SEMICONDUCTORS (11.7%):
12,000 Advanced Micro Devices(c) 432
5,300 Alliance Semiconductor
Corp.(c) 215
14,100 Atmel Corp.(c) 620
30,000 Integrated Circuit 311
Systems(c)
5,000 Lam Research Corp.(c) 253
7,400 Linear Technology 442
----------
2,273
----------
SERVICES (NON-FINANCIAL) (1.8%):
20,000 Safecard Services 350
----------
TELECOMMUNICATIONS (2.4%):
21,000 Digi International, Inc.(c) 467
352 Intellicall, Inc.(c) 2
----------
469
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
65
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments -- Continued
SPECIAL GROWTH FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TRANSPORTATION -- RAIL (2.3%):
16,000 Railtex, Inc.(c) $ 444
----------
TRUCKING (5.0%):
21,000 American Freightways, 491
Inc.(c)
20,500 TNT Freightways Corp. 481
----------
972
- ------------------------------------------------------------
TOTAL COMMON STOCKS 18,374
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (6.0%)
295,621 Federated Treasury 296
Obligation
868,947 Shearson U.S. Treasury Fund 869
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,165
- ------------------------------------------------------------
TOTAL (COST $18,177)(B) $ 19,539
- ----------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $19,386.
(b) 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 $34. 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 $ 2,271
Unrealized depreciation (943)
----------
Net unrealized appreciation $ 1,328
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
66
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
OHIO REGIONAL STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (94.7%)
AEROSPACE/DEFENSE (0.2%):
5,361 GenCorp, Inc. $ 67
----------
AMUSEMENT & RECREATION SERVICES (0.6%):
7,000 Cedar Fair L.P. 219
----------
AUTOMOTIVE PARTS (5.2%):
24,000 Dana Corp. 617
15,000 Lamson & Sessions Co.(c) 96
15,000 TRW, Inc. 1,115
----------
1,828
----------
BANKS (7.2%):
26,000 Charter One Financial, Inc. 594
14,000 First Merit Corp. 324
9,375 Huntington Bancshares, Inc. 176
23,000 National City Corp. 630
15,000 Provident Bancorp 506
2,000 Second Bancorp 45
6,000 Star Bank 250
----------
2,525
----------
BUILDING MATERIALS (1.2%):
10,000 Medusa Corp. 226
5,000 Owens Corning Fiberglas
Corp.(c) 183
----------
409
----------
CHEMICALS (8.1%):
12,500 A. Schulman, Inc. 392
16,000 Chemed Corp. 492
23,500 Chempower, Inc.(c) 73
20,000 Ferro Corp. 568
6,000 Lesco, Inc. 95
20,000 Lubrizol Corp. 697
26,250 RPM, Inc. 518
----------
2,835
----------
CONSUMER GOODS (2.1%):
12,000 American Greetings Corp. 327
43,000 Gibson Greetings, Inc. 430
----------
757
----------
ELECTRICAL EQUIPMENT (4.7%):
60,000 Pioneer-Standard
Electronics,
Inc. 1,170
20,000 Robbins & Myers Inc. 485
----------
1,655
----------
ENGINEERING (0.3%):
5,000 Corrpro(c) 93
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FINANCIAL SERVICES (2.4%):
15,000 Haverfield Corp. $ 203
16,000 McDonald & Co. Investments 232
24,000 State Auto Financial 402
----------
837
----------
FOOD DISTRIBUTORS (0.9%):
10,000 Chiquita Brands 134
International
7,000 Kroger Co.(c) 178
----------
312
----------
FOREST PRODUCTS (2.9%):
12,000 Mead Corp. 621
15,000 Reynolds & Reynolds Co. 398
----------
1,019
----------
HEALTH CARE (0.4%):
9,000 Health Power, Inc.(c) 138
----------
HOSPITAL & NURSING EQUIPMENT (5.6%):
25,000 Invacare Corp. 988
20,000 Omnicare, Inc. 972
----------
1,960
----------
HOUSEHOLD GOODS (3.1%):
26,221 Lancaster Colony Corp. 911
20,000 Sun Television & Appliance 168
----------
1,079
----------
INDUSTRIAL SERVICES (3.9%):
45,000 ACME Cleveland Corp. 934
22,000 Amcast Industrial Corp. 440
----------
1,374
----------
INSURANCE (2.4%):
10,000 Ohio Casualty 293
15,000 Progressive Corp. 566
----------
859
----------
MACHINE TOOLS (8.3%):
15,750 Bearings, Inc. 488
17,000 Cincinnati Milacron, Inc. 455
37,050 Commercial Intertech Corp. 820
46,500 Gorman Rupp Co. 703
8,250 LDI Corp.(c) 27
5,000 Monarch Machine Tool Co. 49
25,000 Telxon Corp. 393
----------
2,935
----------
MANUFACTURING (2.2%):
10,000 Parker-Hannifin Corp. 520
7,000 TRINOVA Corp. 243
----------
763
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
67
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
OHIO REGIONAL STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
METALS (1.0%):
10,000 Brush Wellman, Inc. $ 197
5,000 Cold Metal Products, Inc.(c) 34
10,000 Park-Ohio Industries, 114
Inc.(c)
----------
345
----------
OFFICE EQUIPMENT & SUPPLIES (2.7%):
23,000 Diebold, Inc. 955
----------
OIL & GAS EXPLORATION (1.8%):
33,000 USX -- Marathon Group 619
----------
PAINT, VARNISHES & ENAMELS (1.4%):
14,000 Sherwin Williams Co. 499
----------
POLLUTION CONTROL SERVICES (0.7%):
51,100 Mid American Waste
Systems(c) 243
----------
PRECISION INSTRUMENTS (1.4%):
30,000 Keithley Instruments, Inc. 506
----------
PRINTING (0.3%):
20,000 Multi-Color Corp.(c) 98
----------
PUBLISHING (2.0%):
25,000 Scripps (E.W.) Co. 716
----------
REAL ESTATE INVESTMENT TRUSTS (1.0%):
16,000 Health Care REIT, Inc. 348
----------
RESTAURANTS (3.3%):
30,000 Bob Evans Farms, Inc. 615
20,000 Frisch's Restaurants 185
22,000 Wendy's International 374
----------
1,174
----------
RETAIL (2.8%):
15,000 Consolidated Stores Corp.(c) 257
17,000 Fabri-Centers of America, 315
Inc.(c)
15,000 The Limited, Inc. 320
10,000 Value City Department
Stores,
Inc.(c) 90
----------
982
----------
RUBBER & RUBBER PRODUCTS (1.6%):
5,000 Cooper Tire & Rubber Co. 123
12,000 Goodyear Tire & Rubber Co. 456
----------
579
----------
SERVICES (NON-FINANCIAL) (0.3%):
4,200 Roto Rooter, Inc. 103
----------
SHIPPING (0.3%):
3,000 Oglebay Norton Co. 98
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
STEEL (3.3%):
35,000 Shiloh(c) $ 333
9,000 Timken Co. 363
25,000 Worthington Industries, Inc. 472
----------
1,168
----------
TEXTILE MANUFACTURING (1.1%):
25,000 Essef Corp.(c) 394
----------
TRANSPORTATION (1.6%):
22,500 Comair Holding, Inc. 567
----------
TRUCKS (1.2%):
20,000 Thor Industries, Inc. 418
----------
UTILITIES -- ELECTRIC (3.2%):
14,000 American Electric Power 459
22,500 D.P.L., Inc. 470
10,000 Ohio Edison 200
----------
1,129
----------
UTILITIES -- TELECOMMUNICATIONS (2.0%):
30,000 Cincinnati Bell 720
- ------------------------------------------------------------
TOTAL COMMON STOCKS 33,325
- ------------------------------------------------------------
- ----------------------------------------------
RIGHTS & WARRANTS (0.2%)
10,000 Cincinnati Microwave, 59
Inc.(c)
- ------------------------------------------------------------
TOTAL RIGHTS & WARRANTS 59
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (5.1%)
303,843 Federated Treasury 304
Obligation
1,476,549 Shearson U.S. Treasury Fund 1,476
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,780
- ------------------------------------------------------------
TOTAL (COST $24,640)(B) $ 35,164
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $35,183.
(b) 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 $ 12,135
Unrealized depreciation (1,611)
----------
Net unrealized appreciation $ 10,524
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
68
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
CORPORATE BONDS (0.1%)
FRANCE (0.1%):
1,313 Axa SA Convertible(c),
4.50%, 1/1/99 $ 78
- ----------------------------------------------------------
TOTAL CORPORATE BONDS 78
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (97.2%)
AUSTRALIA (1.0%):
Energy Sources
60,000 The Broken Hill Proprietary
Co., Ltd.(c) 873
- ----------------------------------------------------------
TOTAL AUSTRALIA 873
- ----------------------------------------------------------
BRITAIN (9.1%):
BANKS (1.3%):
231,000 Standard Chartered Bank 1,119
--------
BROADCASTING & PUBLISHING (1.2%):
78,400 Reed International 1,009
--------
BUSINESS & PUBLIC SERVICES (4.3%):
122,200 British Airport Authority 932
122,600 Cable Wireless 792
65,800 Carlton Communications Plc. 1,000
127,800 Reuters 972
--------
3,696
--------
OIL & GAS PRODUCTION (1.2%):
144,400 British Petroleum 1,040
--------
TELECOMMUNICATIONS EQUIPMENT (1.1%):
311,000 Vodafone 973
- ----------------------------------------------------------
TOTAL BRITAIN 7,837
- ----------------------------------------------------------
FINLAND (1.2%):
ELECTRONIC & ELECTRICAL (1.2%):
25,000 Nokia AB 1,022
- ----------------------------------------------------------
TOTAL FINLAND 1,022
- ----------------------------------------------------------
FRANCE (9.9%):
ADVERTISING (0.7%):
5,750 Euro RSCG Worldwide 634
--------
AUTOMOTIVE PARTS (1.3%):
18,700 Valeo 1,067
--------
ELECTRONIC & ELECTRICAL (2.3%):
680 LeGrand 987
13,300 Schneider 1,024
--------
2,011
--------
INSURANCE (1.2%):
19,700 Axa 1,040
--------
MANUFACTURING - CONSUMER GOODS (1.3%):
4,550 Pinault-Printemps 1,031
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RECREATION/OTHER CONSUMER GOODS (1.9%):
6,700 BIC Corp. $ 1,119
3,600 Castorama(c) 597
--------
1,716
--------
RETAIL (1.2%):
2,120 Carrefour 1,065
- ----------------------------------------------------------
TOTAL FRANCE 8,564
- ----------------------------------------------------------
GERMANY (7.6%):
BANKS (2.1%):
1,980 Depfa Bank 1,007
1,620 Deutsche Bank(c) 796
--------
1,803
--------
COSMETICS & RELATED (1.2%):
1,360 Beiersdorf AG 1,061
--------
ENGINEERING/INDUSTRIAL
CONSTRUCTION (1.0%):
2,620 AGIV 844
--------
HEALTH & PERSONAL CARE (1.1%):
1,260 Schering 938
--------
MACHINE TOOLS (1.1%):
3,550 Mannesmann 970
--------
UTILITIES - ELECTRIC (1.1%):
2,660 Veba 994
- ----------------------------------------------------------
TOTAL GERMANY 6,610
- ----------------------------------------------------------
HOLLAND (8.4%):
BREWERIES (1.0%):
6,400 Heineken Holdings 839
--------
COMPUTERS & PERIPHERALS (0.5%):
10,900 Getronics 447
--------
FOREST PRODUCTS (1.0%):
29,300 Koninklijke KNP 885
--------
INSURANCE (1.1%):
18,600 Internationale Nederlanden 982
--------
LEISURE (1.2%):
18,400 Polygram 1,040
--------
POLLUTION CONTROL SERVICES (1.0%):
7,500 Ver Ned Uitgevers(c) 840
--------
SERVICES (NON-FINANCIAL) (1.2%):
16,600 Randstad Holdings 996
--------
SHIPPING & SHIPBUILDING (1.0%):
32,600 IHC Caland 892
--------
WHOLESALE & INTERNATIONAL TRADE (0.4%):
4,500 Hagemeyer 389
- ----------------------------------------------------------
TOTAL HOLLAND 7,310
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
69
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
HONG KONG (5.3%):
BANKS (1.0%):
217,000 Guoco Group $ 824
--------
DIVERSIFIED (1.9%):
197,000 Hutchinson Whampoa 855
122,000 Swire Pacific "A" 816
--------
1,671
--------
RADIO & TELEVISION (0.8%):
179,000 Television Broadcast 666
--------
REAL ESTATE (1.6%):
3,000,000 China Resources 752
124,000 Henderson Land 639
--------
1,391
- ----------------------------------------------------------
TOTAL HONG KONG 4,552
- ----------------------------------------------------------
ITALY (1.8%):
AUTOMOBILES (0.4%):
37,800 Pininfarina 363
--------
INSURANCE (0.5%):
20,000 Assicurazioni Generali 481
--------
UTILITIES - TELECOMMUNICATIONS (0.9%):
282,000 Telecom Italia 751
- ----------------------------------------------------------
TOTAL ITALY 1,595
- ----------------------------------------------------------
JAPAN (33.3%):
AEROSPACE/DEFENSE (0.8%):
100,000 Mitsubishi Heavy Industry 726
--------
BANKS (4.0%):
62,000 Asahi Bank 797
32,000 Mitsubishi Bank 785
47,000 Sanwa Bank 1,027
38,000 Sumitomo Bank 823
--------
3,432
--------
BUILDING MATERIALS (0.9%):
22,000 Tostem Corp. 799
--------
BUSINESS & PUBLIC SERVICE (0.6%):
17,600 Mos Food Services 517
--------
CHEMICALS (1.6%):
36,000 Shin Etsu Chemical 698
127,000 Tosoh Corp.(c) 676
--------
1,374
--------
ELECTRICAL EQUIPMENT (3.5%):
7,300 Keyence(c) 779
14,000 Kyocera 1,083
28,000 Murata Manufacturing 1,126
--------
2,988
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ELECTRONIC & ELECTRICAL (5.2%):
52,000 Canon, Inc. $ 860
88,000 Hitachi, Ltd. 896
9,000 Riso Kagaku 614
25,000 Rohm Co., Ltd. 1,157
32,000 Tokyo Electron 998
--------
4,525
--------
ENGINEERING/INDUSTRIAL CONSTRUCTION (0.3%):
11,000 Kinden 219
--------
FINANCE (1.6%):
50,000 Daiwa Securities 631
12,000 Nichiei Co. 767
--------
1,398
--------
HOUSEHOLD GOODS (0.9%):
20,400 Amway Japan 760
--------
MANUFACTURING - CAPITAL GOODS (1.2%):
16,000 Secom & Co. 1,044
--------
MERCHANDISING (0.9%):
11,000 Seven-eleven Japan 792
--------
PHARMACEUTICALS (1.3%):
51,000 Yamanouchi Pharmaceutical 1,147
--------
RADIO & TELEVISION (0.9%):
3,270 Nippon Television Network 728
--------
REAL ESTATE (0.9%):
60,000 Sekisui House 793
--------
RUBBER & RUBBER PRODUCTS (1.0%):
56,000 Bridgestone 906
--------
STEEL (1.8%):
195,000 Nippon Steel 775
268,000 NKK Corp.(c) 750
--------
1,525
--------
STORAGE & WAREHOUSING (1.0%):
51,000 Mitsubishi Warehouse 880
--------
TELECOMMUNICATIONS EQUIPMENT (1.0%):
98 DDI Corp. 863
--------
UTILITIES - ELECTRIC (0.9%):
66,000 Matsushita Electric Works 793
--------
UTILITIES - TELECOMMUNICATIONS (1.0%):
99 Nippon Telephone & Telegraph 875
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
70
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
WHOLESALE & INTERNATIONAL TRADE (2.0%):
33,000 Canon Sales $ 872
122,000 Itochu Corp. 828
--------
1,700
- ----------------------------------------------------------
TOTAL JAPAN 28,784
- ----------------------------------------------------------
MALAYSIA (1.9%):
DIVERSIFIED (0.9%):
496,000 Renong Berhad 759
--------
FINANCIAL SERVICES (0.5%):
125,000 Hong Leong Credit 456
--------
FOREST PRODUCTS (0.5%):
99,000 Adkam Perdana 445
- ----------------------------------------------------------
TOTAL MALAYSIA 1,660
- ----------------------------------------------------------
NEW ZEALAND (1.1%):
FOREST PRODUCTS (1.1%):
338,000 Fletcher Challenge 910
- ----------------------------------------------------------
TOTAL NEW ZEALAND 910
- ----------------------------------------------------------
SINGAPORE (2.0%):
AIRLINES (1.0%):
84,000 Singapore Airlines, Series F 808
--------
BANKS (1.0%):
81,000 Overseas Chinese Banking
Corp. 884
- ----------------------------------------------------------
TOTAL SINGAPORE 1,692
- ----------------------------------------------------------
SPAIN (1.3%):
DIVERSIFIED (0.3%):
92,000 Cofir 299
--------
FOOD DISTRIBUTORS (1.0%):
48,600 Pryca 861
- ----------------------------------------------------------
TOTAL SPAIN 1,160
- ----------------------------------------------------------
SWEDEN (5.1%):
AUTOMOBILES (0.9%):
41,400 Volvo AB 777
--------
COSMETICS & RELATED (1.3%):
37,300 Astra A Free(c) 1,088
--------
ELECTRONIC & ELECTRICAL (0.9%):
41,000 Allgon 804
--------
MANUFACTURING (1.2%):
16,000 Ericsson (L.M.) Series B 1,059
--------
MEDICAL SUPPLIES (0.8%):
45,000 Arjo 700
- ----------------------------------------------------------
TOTAL SWEDEN 4,428
- ----------------------------------------------------------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
SWITZERLAND (4.3%):
DIVERSIFIED (0.9%):
750 Baer Holdings Bearer $ 788
--------
FOOD PROCESSING (1.1%):
960 Nestle Registered 941
--------
PHARMACEUTICALS (1.1%):
165 Roche Holdings AG
Genusscheine NPV 995
--------
UTILITIES - ELECTRIC (1.2%):
1,020 Brown Boveri, Series A 1,010
- ----------------------------------------------------------
TOTAL SWITZERLAND 3,734
- ----------------------------------------------------------
UNITED STATES (3.9%):
BROKERAGE FIRMS & SECURITY DEALERS (0.3%):
8,700 Brazilian Investment Co. 273
--------
INDUSTRIAL SERVICES (0.9%):
750,000 China North Industries(c) 750
--------
INVESTMENT FUNDS - CLOSED END (2.2%):
17,000 Chile Fund 805
12,700 India Magnum Fund NV A(c) 722
122 Korea Eurofund(c) 435
--------
1,962
--------
UTILITIES - TELECOMMUNICATIONS (0.5%):
25,700 Videotron Holdings PLC.(c) 402
- ----------------------------------------------------------
TOTAL UNITED STATES 3,387
- ----------------------------------------------------------
TOTAL COMMON STOCKS 84,118
- ----------------------------------------------------------
- ---------------------------------------------------------
INVESTMENT COMPANIES (0.8%)
667,222 Shearson U.S. Treasury Fund 667
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 667
- ----------------------------------------------
TOTAL (COST $80,808)(B) $ 84,863
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $86,530.
(b) 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 $ 6,255
Unrealized depreciation (2,199)
-------
Net unrealized
appreciation $ 4,056
========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
71
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
- ---------------------------------------------------------
FORWARD CURRENCY CONTRACTS
<TABLE>
<CAPTION>
CONTRACT
VALUE
CONTRACT (U.S. APPRECIATION DELIVERY
CURRENCY PRICE DOLLARS) (DEPRECIATION) DATE
- ----------------------------------------- --------- ---------- -------- -------
<S> <C> <C> <C> <C>
CURRENCY SOLD:
Japanese Yen 84.125032 $ (258,668) $ (331) 5/2/95
---------- --------
Total currency sold $ (258,668) $ (331)
========= ========
CURRENCY PURCHASED:
Dutch Guilder 1.514748 $ 258,668 $ (5,760) 5/2/95
---------- --------
Total currency purchased $ 258,668 $ (5,760)
========= ========
Net payable for forward currency
contracts purchased and sold $ (6,091)
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
72
<PAGE>
Notes to Financial Statements
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
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, Tax-Free Money Market Fund, Limited
Term Income Fund, Government Mortgage Fund, Intermediate Income Fund, Investment
Quality Bond Fund, Ohio Municipal Bond Fund, Balanced Fund, Stock Index Fund,
Value Fund, Diversified Stock Fund, Growth Fund, Special Value Fund, Special
Growth Fund, Ohio Regional Stock Fund, and International Growth Fund.
2. SIGNIFICANT ACCOUNTING POLICIES:
SECURITIES VALUATION:
- --------------------
Investments of the U.S. Government Obligations Fund, the Prime Obligations Fund
and the Tax-Free 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, the
Government Mortgage Fund, the Intermediate Income Fund, the Investment Quality
Bond Fund, the Ohio Municipal Bond Fund, the Balanced Fund, the Stock Index
Fund, the Value Fund, the Diversified Stock Fund, the Growth Fund, the Special
Value Fund, the Special Growth Fund, the Ohio Regional Stock Fund, and the
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 in the Balanced Fund and the
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 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.
The Funds isolate that portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuation arising
from changes in market prices of securities held.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, purchases
and sales of foreign currencies, currency gains or losses realized between the
trade and settlement dates on securities transactions and the difference between
the amount of interest recorded on a Fund's books, 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 the
exchange rate.
73
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
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
an unrealized gain or loss. When the Forward is closed, the Fund records a
realized gain or loss equal to the difference between the value at the time it
was opened and the value at the time it was closed. 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:
- -----------------
Each 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. The 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 move 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; during the period
between purchase and settlement no payment is made and no interest accrues. A
segregated account is established and maintains cash and marketable securities
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.
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 and distributable net realized capital gains, if any, are declared and
distributed at least annually for the Stock Index Fund, the Value Stock Fund,
the Diversified Stock Fund, the Growth Fund, the Special Value Fund, the Special
Growth Fund, the Ohio Regional Stock Fund, and the International Growth Fund.
Dividends from net investment income are declared and paid monthly and
distributable net realized capital gains, if any, are declared and distributed
at least annually for the Limited Term Income Fund, the Government Mortgage
Fund, the Intermediate Income Fund, the Investment Quality Bond Fund, the Ohio
Municipal Bond Fund, and the Balanced Fund.
74
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
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, 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.
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.
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the six
months ended April 30, 1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Limited Term Income Fund............. $108,053,386 $ 27,036,296
Government Mortgage Fund............. $ 34,141,401 $ 41,957,068
Intermediate Income Fund............. $ 45,696,863 $ 32,245,604
Investment Quality Bond Fund......... $ 53,718,571 $ 49,102,816
Ohio Municipal Bond Fund............. $ 35,466,334 $ 36,043,062
Balanced Fund........................ $ 79,112,448 $ 62,383,648
Stock Index Fund..................... $ 20,540,742 $ 9,328,966
Value Fund........................... $ 63,655,162 $ 17,814,533
Diversified Stock Fund............... $142,784,968 $116,116,919
Growth Fund.......................... $ 1,331,614 $ 25,478,542
Special Value Fund................... $ 47,216,203 $ 23,119,184
Special Growth Fund.................. $ 7,686,792 $ 11,925,297
Ohio Regional Stock Fund............. $ 1,531,661 $ 2,110,048
International Growth Fund............ $ 30,178,013 $ 19,936,541
</TABLE>
4. 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 and sub-investment advisory agreements, SAM is entitled to receive
fees based on a percentage of the average net assets of the Funds. Society
serves the Funds as custodian for all funds except the International Growth
Fund. Society received no fees from the Funds for providing custodian services
except for reimbursement of actual out-of-pocket expenses incurred. During the
year ended October 31, 1994, KeyCorp made a capital contribution of $2,506,027
to the Prime Obligations Fund.
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,
75
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
and assisting shareholders in changing dividend options, account designations
and addresses. For providing such services, Society may receive a fee computed
daily as a percentage of the average net assets of the Funds.
Affiliates of The BISYS Group, Inc. ("BISYS") serve as the Fund's administrator
and distributor. Effective March 29, 1995, Concord Holding Corporation (the
"Administrator"), an indirect, wholly-owned subsidiary of BISYS, became the
administrator to the Funds and Victory Broker Dealer Services, Inc. (the
"Distributor") became the distributor to the Funds. Prior to March 29, 1995,
other affiliates of BISYS served as the Fund's administrator and distributor.
Certain officers of the Funds are affiliated with BISYS. Such officers receive
no direct payments from the Funds for serving as officers of the Funds. Such
officers are paid no fees directly by the Funds for serving as officers of the
Funds.
Under the terms of the administration agreement, the Administrator's fees
are computed daily as a percentage of the average net assets of the Funds. The
Distributor receives no fees from the Funds for providing distribution services
and is entitled to receive commissions on sales of shares of the variable net
asset value funds. For the six months ended April 30, 1995, the Distributor
received $171,000 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 $74,000 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 net assets.
Fees may be voluntarily reduced to assist the Funds in maintaining competitive
expense ratios.
Information regarding related party transactions is as follows for the six
months ended April 30, 1995:
<TABLE>
<CAPTION>
U.S. TAX-FREE
GOVERNMENT PRIME MONEY
OBLIGATIONS OBLIGATIONS MARKET
FUND FUND FUND
-------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .35% .35% .35%
Voluntary fee reductions $ 16,151
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15%
Voluntary fee reductions $ 260
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $140,500 $193,436 $ 67,915
</TABLE>
<TABLE>
<CAPTION>
LIMITED INVESTMENT
TERM GOVERNMENT INTERMEDIATE QUALITY
INCOME MORTGAGE INCOME BOND
FUND FUND FUND FUND
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .50% .50% .75% .75%
Voluntary fee reductions $ 11,015 $ 12,348 $160,661 $122,074
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15% .15%
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 38,451 $ 48,386 $ 39,466 $ 32,928
</TABLE>
76
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO
MUNICIPAL STOCK
BOND BALANCED INDEX
FUND FUND FUND
-------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .60% 1.00% .60%
Voluntary fee reductions $ 85,187 $293,792 $ 72,524
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15%
Voluntary fee reductions $ 70,657
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 20,140 $ 47,761 $ 10,560
Voluntary fee reductions: $ 17,703
</TABLE>
<TABLE>
<CAPTION>
DIVERSIFIED
VALUE STOCK GROWTH
FUND FUND FUND
-------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) 1.00% .65% 1.00%
Voluntary fee reductions $434,192 $ 58,363 $ 93,184
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15%
Voluntary fee reductions $ 303 $ 240
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 70,468 $ 84,805 $ 16,607
</TABLE>
<TABLE>
<CAPTION>
OHIO
SPECIAL SPECIAL REGIONAL INTERNATIONAL
VALUE GROWTH STOCK GROWTH
FUND FUND FUND FUND
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) 1.00% 1.00% .75% 1.10%
Voluntary fee reductions $192,792 $ 39,953 $ 7,022 $ 61,413
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15% .15%
Voluntary fee reductions $ 144
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 40,759 $ 7,725 $ 11,588 $ 59,708
</TABLE>
77
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
5. 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>
Aggressive Growth Portfolio1 to Special Growth Fund
Corporate Bond Portfolio1 to Investment Quality Bond Fund
Equity Income Portfolio1 to Value Fund
Equity Portfolio1 to Growth Fund
Foreign Markets Portfolio1 to International Growth Fund
Short-Term Government Income Portfolio1 to Limited Term Income Fund
U.S. Treasury Money Market Portfolio1 to U.S. Government Obligations Money Fund
</TABLE>
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 Portfolio1 to Financial Reserves Fund
Fund for Income Portfolio to Fund for Income
Government Bond Portfolio1 to Government Bond Fund
Institutional Money Market Portfolio1 to Institutional Money Market Fund
National Municipal Bond Portfolio1 to National Municipal Bond Fund
New York Tax-Free Portfolio to New York Tax-Free Fund
Ohio Municipal Money Market Portfolio1 to Ohio Municipal Money Market 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 acquisition was
accomplished by a tax-free exchange of 858,745 shares of the Growth Fund for the
882,905 shares of the Society Earnings Momentum Fund outstanding on March 17,
1994. These share transactions are included in the Growth Fund's statement of
changes in net assets. The Society Earnings Momentum Fund's net assets at March
17, 1994 of approximately $8,794,000, including $649,000 of unrealized
appreciation, were combined with those of the Growth Fund. The combined net
assets immediately after the acquisition were approximately $70,777,000.
- ---------------
1 Not included in this report.
78
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION:
The Victory Funds (the "Fund"), organized as a Massachusetts business trust on
January 6, 1982, is an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"). The Fund's
Declaration of Trust permits the Board of Trustees (the "Trustees") to create an
unlimited number of Portfolios. Victory New York Tax-Free Portfolio and the Fund
for Income Portfolio are two series (of a total of 14 series) of the Fund. Each
Portfolio's capitalization consists of an unlimited number of shares of
beneficial interest without par value.
On April 30, 1994, all of the assets and liabilities of the Investors Preference
New York Tax-Free Fund, Inc. ("IPNY") and the Investors Preference Fund for
Income, Inc. ("IPFFI") were acquired by the New York Tax-Free Portfolio and the
Fund for Income Portfolio, respectively, of the Fund pursuant to separate
Agreements and Plans of Reorganization approved by the shareholders of each IPNY
and IPFFI.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies for New York
Tax-Free Portfolio and Fund for Income Portfolio (the "Portfolios").
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles.
SECURITIES VALUATION:
- --------------------
The securities of the Fund for Income Portfolio that are traded on an exchange
or on the over-the-counter market are valued based upon the last sale price, or
if no sale has occurred, at the closing bid price. Securities for which market
quotations are not readily available are valued at the closing over-the counter
bid price, if available, or at their fair value as determined in good faith by
management following procedures approved by the Fund's Trustees. Short term debt
instruments with remaining maturities of 60 days or less at the time of purchase
are valued at amortized cost or original cost plus accrued interest, both of
which approximates market value.
The securities of New York Tax-Free Portfolio are valued by a pricing service
based upon a computerized matrix system or appraisals, in each case in reliance
upon information concerning market transactions and quotations from recognized
municipal securities dealers. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by
management following procedures approved by the Fund's Trustees.
REPURCHASE AGREEMENTS:
- -----------------------
When each Portfolio enters into a repurchase agreement, the repurchase price of
the securities will generally equal the amount paid by each Portfolio plus a
negotiated interest amount. The seller under the repurchase agreement will be
required to provide securities (collateral) to each Portfolio whose value will
be at least equal to the repurchase agreement amount. Each Portfolio monitors
the value of the collateral on a daily basis, and if the value of the collateral
falls below required levels, each Portfolio intends to seek additional
collateral from the seller to terminate the repurchase agreements. If the seller
defaults, each Portfolio would suffer a loss to the extent that the proceeds
from the sale of the underlying securities were less than the repurchase price.
Any such loss would be increased by any cost incurred on the disposing of such
securities. A repurchase agreement entered into by each Portfolio will be
limited to transactions with broker-dealers or domestic banks believed to
present minimal credit risks, and each Portfolio will take delivery of all
securities underlying the repurchase agreement until such agreement expires.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTION:
- ----------------------------------------------
The New York Tax-Free Portfolio may engage in when-issued or delayed delivery
transactions. To the extent the Portfolio engages in such transactions, it will
do so for the purpose of acquiring portfolio securities consistent with its
investment objectives and policies and not for the purpose of investment
leverage. The Portfolio will record a when-issued security and the related
liability on the trade date. Until the securities are received and paid for, the
Portfolio will maintain security positions such that sufficient liquid assets
will be available to make payments for the securities purchased. Securities
purchased on a when-issued or delayed delivery basis are marked to market daily
and begin earning interest on settlement date.
79
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements--Continued
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
INCOME TAXES:
- -------------
It is the policy of each Portfolio 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.
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. 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.
DIVIDENDS TO SHAREHOLDERS:
- -------------------------
Dividends from net investment income are declared and paid monthly and
distributable net realized capital gains, if any, are declared and distributed
at least annually for the New York Tax-Free Portfolio and the Fund for Income
Portfolio.
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, 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.
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the six
months ended April 30, 1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
New York Tax-Free $ 1,117,454 $ 1,736,206
Fund for Income $ 7,973,666 $ 15,709,007
</TABLE>
4. RELATED PARTY TRANSACTIONS:
ADVISORY AGREEMENT:
- -------------------
Key Trust Company ("Key Trust") is the investment adviser for each Portfolio and
receives a fee based on average daily net assets at an annual rate of 0.55% and
0.50% for New York Tax-Free Portfolio and Fund for Income Portfolio,
respectively. For the six months ended April 30, 1995, Key Trust accrued $44,599
and $64,663 in advisory fees, of which $41,068 and $42,981 was voluntarily
waived, for New York Tax-Free Portfolio and Fund for Income Portfolio,
respectively.
ADMINISTRATION AGREEMENT:
- -------------------------
Concord Financial Group (the "Administrator" or "Concord") is the Administrator
to each Portfolio under an Administration Agreement with respect to each
Portfolio. The Administrator receives an annual fee of 0.15% of each Portfolio's
average net assets for services performed under each Portfolio's Administration
Agreement. For the six months ended April 30, 1995, the administrator accrued
$12,094 and $19,284 from the New York Tax-Free Portfolio and Fund for Income
Portfolio, respectively, in administration fees, none of which were waived.
Effective March 29, 1995 Concord became BISYS Investment Services Inc., a wholly
owned subsidiary of The BISYS Group, Inc. ("BISYS"). BISYS serves as
administrator on substantially identical terms as described above.
80
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements--Continued
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
DISTRIBUTION AGREEMENT:
- -----------------------
Victory Broker Dealer Services, Inc. (the "Distributor"), an affiliate of the
Administrator, serves as Distributor to each
Portfolio. The Distributor sells shares of the Portfolios as agent on behalf of
the Fund at no cost to the Portfolios. The Fund has adopted a Distribution and
Service Plan (the "Plan") for the Class A shares of New York Tax-Free Portfolio
and The Fund for Income Portfolio under Rule 12b-1 under the Investment Company
Act of 1940. Under the Plan, the Adviser or Administrator may use their fee
revenues, or other resources to pay expenses associated with activities
primarily intended to result in the sale of the shares of the Portfolios. The
Fund has adopted a Distribution Plan for Class B shares of New York Tax-Free
Portfolio to compensate the Distributor for its services and costs in
distributing Class B shares and servicing accounts. Under the Distribution Plan,
the Fund pays the Distributor an annual "asset-based sales charge" of 0.75% per
year on Class B shares that are outstanding for six years or less. This fee is
computed on the average annual net assets of Class B shares, determined as of
the close of each regular business day.
* Directors fees and expenses for the six months ended April 30, 1995 of $777
for New York Tax-Free Portfolio and $126 for Fund for Income Portfolio were paid
to directors having no affiliation with the Fund other than in their capacity as
directors.
5. MERGERS:
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 Portfolio of the Victory Funds to a
corresponding investment fund of the Victory Portfolios in exchange for the
assumption of liabilities of each Victory Fund. The following Portfolios of The
Victory Funds merged into existing funds of The Victory Portfolios:
<TABLE>
<CAPTION>
THE VICTORY FUNDS THE VICTORY PORTFOLIOS
- ---------------------------------------- ------------------------------------------------------
<S> <C> <C>
Aggressive Growth Portfolio1 to Special Growth Fund
Corporate Bond Portfolio1 to Investment Quality Bond Fund
Equity Income Portfolio1 to Value Fund
Equity Portfolio1 to Growth Fund
Foreign Markets Portfolio1 to International Growth Fund
Short-Term Government Income Portfolio1 to Limited Term Income Fund
U.S. Treasury Money Market Portfolio1 to U.S. Government Obligations Money Fund
</TABLE>
Additionally, the following series of The Victory Funds merged into newly
created series of The Victory Portfolios:
<TABLE>
<CAPTION>
THE VICTORY FUNDS THE VICTORY PORTFOLIOS
- ---------------------------------------- ------------------------------------------------------
<S> <C> <C>
Financial Reserves Portfolio1 to Financial Reserves Fund
Fund for Income Portfolio to Fund for Income
Government Bond Portfolio1 to Government Bond Fund
Institutional Money Market Portfolio1 to Institutional Money Market Fund
National Municipal Bond Portfolio1 to National Municipal Bond Fund
New York Tax-Free Portfolio to New York Tax-Free Fund
Ohio Municipal Money Market Portfolio1 to Ohio Municipal Money Market Fund
</TABLE>
As of June 2, 1995 the fund accounting for the Portfolios is being performed by
BISYS Fund Services Ohio, Inc., a wholly owned subsidiary of the The BISYS
Group, Inc.
6. SPECIAL SHAREHOLDER MEETING:
On April 28, 1995, a special meeting of the shareholders of The Victory Funds
was held to consider various proposals, including, among other things, the
approval of an Agreement and Plan of Reorganization whereby the 14 series
portfolios of The Victory Funds were reorganized into corresponding series of
The Victory Portfolios, the election of certain nominees to serve on the Board
of Trustees of The Victory Funds and the ratification of the selection of
Coopers & Lybrand L.L.P. as independent auditors for each portfolio of The
Victory Funds2.
- ---------------
1 Not included in this report.
2 The April 28, 1995 meeting was adjourned until May 26, 1995 with respect to
the New York Tax Free and Fund For Income Portfolios due to a lack of a quorum
on such date. On May 26, 1995, a quorum was present and voted the shares of
such portfolios as indicated.
81
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements--Continued
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
Election of Trustees -- The shareholders of The Victory Funds, as a group, were
requested to direct the proxies to vote for or withhold authority to vote for
the election of certain individuals to serve as Trustees of The Victory Funds.
The shareholders of The Victory Funds approved each nominee. The results of such
solicitation are as follows:
<TABLE>
<CAPTION>
NOMINEE VOTES FOR VOTES WITHHELD
------------------------------------------ -------------- ---------------
<S> <C> <C>
Robert G. Brown 1,306,537,258 38,671,464
Edward P. Cambell 1,308,422,096 36,786,627
Harry Gazelle 1,307,262,991 37,945,462
Thomas F. Morrissey 1,310,379,551 34,828,901
Stanley I. Landgraf 1,308,450,924 36,757,800
Leigh A. Wilson 1,310,734,626 34,474,098
H. Patrick Swygert 1,311,252,568 34,456,155
</TABLE>
Agreement and Plan of Reorganization -- the shareholders of each Portfolio
approved an Agreement and Plan of Reorganization with respect to each Portfolio
as follows:
<TABLE>
<CAPTION>
PORTFOLIO IN FAVOR OPPOSED ABSTAIN
------------------------------------ ------------ ---------- -----------
<S> <C> <C> <C>
NY Tax Free-Class A 871,430 15,011 37,413
NY Tax Free-Class B 29,267 -- 1,666
Fund For Income 1,834,471 11,902 105,207
</TABLE>
Reclassification and Changes in Fundamental Policies -- The shareholders of the
below-listed Portfolios approved certain reclassifications and changes in
fundamental policies of the relevant Portfolio (and the successor Portfolio
post-reorganization) by the following votes:
<TABLE>
<CAPTION>
PORTFOLIO IN FAVOR OPPOSED ABSTAIN
------------------------------------ ------------ ---------- -----------
<S> <C> <C> <C>
NY Tax Free-Class A 871,550 15,011 37,293
NY Tax Free-Class B 29,267 -- 1,666
Fund for Income 1,803,283 40,439 107,858
</TABLE>
Ratification of Independent Auditors -- the shareholders of each Portfolio
ratified the appointment of Coopers & Lybrand L.L.P. as independent auditors for
each Portfolio for the next fiscal year as follows:
<TABLE>
<CAPTION>
PORTFOLIO IN FAVOR OPPOSED ABSTAIN
------------------------------------ ------------ ---------- -----------
<S> <C> <C> <C>
NY Tax Free-Class A 891,636 727 31,490
NY Tax Free-Class B 29,267 -- 1,666
Fund For Income 1,860,529 7,123 83,928
</TABLE>
- --------------------------------------------------------------------------------
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Fund. The report is not
authorized for distribution to prospective investors in the Fund, unless
preceded or accompanied by an effective prospectus. Neither the Fund nor Victory
Broker Dealer Services, Inc. is a bank and Fund shares are not backed or
guaranteed by any bank or insured by the FDIC, the Federal Reserve Board, or any
other agency. Victory Broker Dealer Services, Inc., which distributes The
Victory Funds, is not affiliated with Key Trust Company. Investing in mutual
funds involves risks, including the possible loss of principal amount invested.
An investment in a money market Portfolio is not insured or guaranteed by the
U.S. Government, and there can be no assurance that a money market Portfolio
will maintain a stable $1.00 share price.
- --------------------------------------------------------------------------------
82
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT OBLIGATIONS FUND
---------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.025 0.032 0.026 0.036 0.060 0.076
Distributions
Net investment income (0.025) (0.032) (0.026) (0.036) (0.060) (0.076)
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Total Return 2.57%(a) 3.30% 2.62% 3.66% 6.14% 7.83%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $524,143 $412,048 $515,734 $579,836 $430,248 $376,021
Ratio of expenses to
average net assets 0.62%(b) 0.63% 0.60% 0.60% 0.60% 0.62%
Ratio of net investment income
to average net assets 5.15%(b) 3.20% 2.57% 3.50% 5.92% 7.56%
Ratio of expenses to
average net assets* 0.80%
Ratio of net investment income
to average net assets* 3.03%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
<TABLE>
<CAPTION>
PRIME OBLIGATIONS FUND
---------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.025 0.035 0.030 0.037 0.061 0.078
Net realized losses on investments (0.003)
- ----------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 0.025 0.032 0.030 0.037 0.061 0.078
- ----------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.025) (0.035) (0.030) (0.037) (0.061) (0.078)
Capital transactions 0.003
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Total Return 2.53%(a) 3.57% 3.05% 3.77% 6.32% 8.06%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $430,000 $782,303 $720,024 $524,338 $442,263 $444,238
Ratio of expenses to average net assets 0.69%(b) 0.62% 0.60% 0.61% 0.62% 0.62%
Ratio of net investment income to
average net assets 5.02%(b) 3.52% 2.96% 3.68% 6.14% 7.76%
Ratio of expenses to average net
assets* 0.79%
Ratio of net investment income to
average net assets* 3.35%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
83
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND
----------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 100
- -----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.016 0.021 0.020 0.027 0.043 0.054
Distributions
Net investment income (0.016) (0.021) (0.020) (0.027) (0.043) (0.054)
- -----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Total Return 1.66%(a) 2.17% 2.06% 2.77% 4.44% 5.48%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 209,606 $198,561 $189,351 $151,012 $129,601 $134,652
Ratio of expenses to average net assets 0.61%(b) 0.60% 0.59% 0.61% 0.62% 0.63%
Ratio of net investment income to
average net assets 3.32%(b) 2.14% 2.04% 2.70% 4.29% 5.32%
Ratio of expenses to average net
assets* 0.63%(b) 0.79% 0.60%
Ratio of net investment income to
average net assets* 3.30%(b) 1.95% 2.02%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
84
<PAGE>
THE VICTORY FUNDS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK TAX-FREE PORTFOLIO
-----------------------------------------------------------------------------------
CLASS A
-------------------------------------------------
CLASS B PERIOD
----------------------------- FROM
PERIOD FROM JANUARY 1,
SEPTEMBER 26, 1994 TO YEARS ENDED
1994 TO OCTOBER DECEMBER 31,
OCTOBER 31, 31, -------------------
1994 SIX MONTHS 1994 1993 1992
------------- ENDED ---------- ------- -------
APRIL 30,
1995
----------
SIX MONTHS (UNAUDITED)
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 12.39 $12.62 $ 12.39 $ 13.54 $ 12.76 $ 12.50
- -------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.31 0.07 0.32 0.57 0.70 0.74
Net realized and unrealized
gains (losses) on
investments 0.27 (0.23) 0.30 (1.15) 0.84 0.26
- -------------------------------------------------------------------------------------------------------------------------
Total from investment
activities 0.58 (0.16) 0.62 (0.58) 1.54 1.00
- -------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.30) (0.07) (0.33) (0.57) (0.70) (0.74)
Net realized gains (0.17) -- (0.17) -- (0.06) --
- -------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.47) (0.07) (0.50) (0.57) (0.76) (0.74)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.50 $12.39 $ 12.51 $ 12.39 $ 13.54 $ 12.76
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charge) 4.80%(b) (1.25)%(b) 5.16%(b) (4.31)%(b) 12.34% 8.26%
RATIOS -- SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $ 834 -- $ 15,974 $ 17,840 $28,530 $26,034
Ratio of expenses to average net
assets 2.72%(c) 0.52%(c) 1.10%(c) 0.91%(c) 0.87% 0.66%
Ratio of net investment income to
average net assets 9.48%(c) 5.94%(c) 5.18%(c) 5.33%(c) 5.28% 5.89%
Ratio of expenses to average net
assets* 3.07%(c) 0.86%(c) 1.45%(c) 1.25%(c) 0.96% 0.96%
Ratio of net investment income to
average net assets* 9.13%(c) 5.60%(c) 4.83%(c) 4.99%(c) 5.19% 5.59%
Portfolio turnover rate 17.00% 18.00% 17.00% 18.00% 12.00% 14.00%
<CAPTION>
PERIOD FROM
FEBRUARY 11,
1991 TO
DECEMBER 31,
1991(A)
------------
<S> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 12.00
- ----------------------------------
Investment Activities
Net investment income 0.64
Net realized and unrealized
gains (losses) on
investments 0.50
- ----------------------------------
Total from investment
activities 1.14
- ----------------------------------
Distributions
Net investment income (0.64)
Net realized gains --
- ----------------------------------
Total Distributions (0.64)
- ----------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.50
- ----------------------------------
Total Return (excludes sales
charge) 11.06%(b)
RATIOS -- SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $ 20,995
Ratio of expenses to average net
assets 0.45%(c)
Ratio of net investment income to
average net assets 6.28%(c)
Ratio of expenses to average net
assets* 0.95%(c)
Ratio of net investment income to
average net assets* 5.78%(c)
Portfolio turnover rate 61.00%
</TABLE>
- ---------------
*During the period, certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
FUND FOR INCOME PORTFOLIO
--------------------------------------------------------------------------------------
PERIOD FROM
FEBRUARY 1,
1994 TO YEARS ENDED JANUARY 31,
OCTOBER 31, -------------------------------------------------------
1994 1994 1993 1992 1991 1990
SIX MONTHS ----------- ------- ------- ------- ------- -------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.43 $ 10.14 $ 10.57 $ 10.55 $ 10.19 $ 9.90 $ 9.73
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (0.05) 0.52 0.80 0.80 0.85 0.91 0.93
Net realized and unrealized gains
(losses) on investments 0.58 (0.71) (0.41) 0.06 0.36 0.29 0.17
- ----------------------------------------------------------------------------------------------------------------------------------
Total from investment activities 0.53 (0.19) 0.39 0.86 1.21 1.20 1.10
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.35) (0.52) (0.80) (0.80) (0.85) (0.91) (0.93)
Net realized gains -- -- (0.02) (0.04) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.35) (0.52) (0.82) (0.84) (0.85) (0.91) (0.93)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.61 $ 9.43 $ 10.14 $ 10.57 $ 10.55 $ 10.19 $ 9.90
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charge) 5.70%(a) (1.99)%(a) 3.75% 8.45% 12.34% 12.75% 11.77%
RATIOS -- SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $ 24,713 $29,358 $46,632 $55,075 $58,055 $44,097 $35,788
Ratio of expenses to average net assets 0.57%(b) 1.12%(b) 1.13% 1.12% 0.92% 0.50% 0.29%
Ratio of net investment income to
average net assets 3.51%(b) 7.21%(b) 7.65% 7.56% 8.18% 9.15% 9.34%
Ratio of expenses to average net assets* 0.74%(b) 1.26%(b)
Ratio of net investment income to
average net assets* 3.34%(b) 7.07%(b)
Portfolio turnover 27.00% 18.00% 47.00% 23.00% 24.00% 5.00% 5.00%
</TABLE>
- ---------------
*During the period, certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
85
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED TERM INCOME FUND
----------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.88 $ 10.53 $ 10.45 $ 10.33 $ 10.02 $ 10.04
- ---------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.27 0.54 0.57 0.64 0.73 0.76
Net realized and unrealized gains
(losses) on investments 0.11 (0.61) 0.08 0.13 0.31 (0.01)
- ---------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.38 (0.07) 0.65 0.77 1.04 0.75
- ---------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.28) (0.54) (0.57) (0.64) (0.73) (0.77)
Net realized gains (0.04) (0.01)
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions (0.28) (0.58) (0.57) (0.65) (0.73) (0.77)
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.98 $ 9.88 $ 10.53 $ 10.45 $ 10.33 $ 10.02
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 3.80%(a) (0.66)% 6.39% 7.77% 10.82% 7.75%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 168,112 $ 79,150 $ 81,771 $ 55,565 $ 43,763 $ 31,303
Ratio of expenses to average net
assets 0.77%(b) 0.79% 0.77% 0.78% 0.80% 0.82%
Ratio of net investment income to
average net assets 5.86%(b) 5.29% 5.49% 6.18% 7.20% 7.63%
Ratio of expenses to average net
assets* 0.79%(b) 0.97% 0.78%
Ratio of net investment income to
average net assets* 5.84%(b) 5.10% 5.48%
Portfolio turnover 24.49% 41.26% 50.27% 14.97% 9.79%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
<TABLE>
<CAPTION>
GOVERNMENT MORTGAGE FUND
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31, MAY 18, 1990
ENDED APRIL ---------------------------------------------- TO OCTOBER 31,
30, 1995 1994 1993 1992 1991 1990(A)
----------- -------- -------- -------- ------- --------------
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.33 $ 11.36 $ 11.07 $ 10.73 $ 10.18 $ 10.00
- --------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.36 0.68 0.66 0.74 0.80 0.35
Net realized and unrealized gains
(losses) on investments 0.32 (1.02) 0.32 0.34 0.55 0.18
- --------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.68 (0.34) 0.98 1.08 1.35 0.53
- --------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.37) (0.67) (0.66) (0.74) (0.80) (0.35)
Net realized gains (0.08) (0.02) (0.03)
- --------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.45) (0.69) (0.69) (0.74) (0.80) (0.35)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.56 $ 10.33 $ 11.36 $ 11.07 $ 10.73 $ 10.18
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 6.64%(b) (3.01)% 9.05% 10.34% 13.77% 5.37%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 143,435 $148,168 $132,738 $ 73,660 $42,616 $ 31,972
Ratio of expenses to average net
assets 0.77%(c) 0.76% 0.75% 0.77% 0.78% 0.82%(c)
Ratio of net investment income to
average net assets 6.99%(c) 6.38% 5.92% 6.82% 7.68% 7.98%(c)
Ratio of expenses to average net
assets* 0.79%(c) 0.96% 0.76%
Ratio of net investment income to
average net assets* 6.97%(c) 6.18% 5.92%
Portfolio turnover 24.12% 131.63% 50.18% 11.19% 20.70%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
86
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE INCOME FUND INVESTMENT QUALITY BOND FUND
---------------------------------- ----------------------------------
DECEMBER 10, DECEMBER 10,
1993 1993
TO OCTOBER 31, TO OCTOBER 31,
1994(A) 1994(A)
SIX MONTHS ENDED ---------------- SIX MONTHS ENDED ----------------
APRIL 30, APRIL 30,
1995 1995
---------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.25 $ 10.00 $ 9.10 $ 10.00
- -----------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.30 0.52 0.31 0.53
Net realized and unrealized gains
(losses) on investments 0.17 (0.76) 0.29 (0.92)
- -----------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.47 (0.24) 0.60 (0.39)
- -----------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.31) (0.51) (0.32) (0.51)
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.41 $ 9.25 $ 9.38 $ 9.10
- -----------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 5.07%(b) (2.48)%(b) 6.74%(b) (3.92)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $133,225 $112,923 $ 92,202 $ 94,685
Ratio of expenses to average net
assets 0.81%(c) 0.79%(c) 0.84%(c) 0.79%(c)
Ratio of net investment income to
average net assets 6.65%(c) 6.23%(c) 6.89%(c) 6.33%(c)
Ratio of expenses to average net
assets* 1.08%(c) 1.25%(c) 1.10%(c) 1.25%(c)
Ratio of net investment income to
average net assets* 6.38%(c) 5.77%(c) 6.63%(c) 5.87%(c)
Portfolio turnover 28.74% 55.06% 54.92% 89.92%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
OHIO MUNICIPAL BOND FUND
-----------------------------------------------------------------------------
YEARS ENDED OCTOBER 31, MAY 18, 1990
------------------------------------------ TO OCTOBER 31,
1994 1993 1992 1991 1990(A)
SIX MONTHS ------- ------- ------- ------ --------------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.33 $ 11.52 $ 10.52 $ 10.37 $10.06 $10.00
- ------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.26 0.49 0.52 0.60 0.65 0.28
Net realized and unrealized gains
(losses) on investments 0.52 (0.94) 1.00 0.15 0.31 0.04
- ------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.78 (0.45) 1.52 0.75 0.96 0.32
- ------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income 0.26 (0.49) (0.52) (0.60) (0.65) (0.26)
Net realized gains (0.25)
- ------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.26) (0.74) (0.52) (0.60) (0.65) (0.26)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.85 $ 10.33 $ 11.52 $ 10.52 $10.37 $10.06
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 7.67%(b) (4.08)% 14.75% 7.34% 9.87% 3.27%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $58,137 $57,704 $50,676 $17,676 $8,042 $6,315
Ratio of expenses to average net
assets 0.64%(c) 0.51% 0.42% 0.09% 0.01% 0.38%(c)
Ratio of net investment income to
average net assets 4.88%(c) 4.58% 4.77% 5.76% 6.39% 6.11%(c)
Ratio of expenses to average net
assets* 0.95%(c) 1.09% 0.86% 0.84% 0.82% 1.17%(c)
Ratio of net investment income to
average net assets* 4.58%(c) 4.01% 4.33% 5.01% 5.58% 5.32%(c)
Portfolio turnover 64.80% 52.59% 150.76% 47.28% 15.06% 17.62%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
87
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED FUND STOCK INDEX FUND VALUE FUND
--------------------------- -------------------------- ---------------------------
DECEMBER 10, DECEMBER 3, DECEMBER 3,
1993 TO 1993 TO 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 (A) ENDED 1994 (A)
------------ APRIL 30, ----------- APRIL 30, ------------
1995 1995
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.62 $ 10.00 $ 10.18 $ 10.00 $ 10.13 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.21 0.33 0.12 0.20 0.14 0.21
Net realized and unrealized gains
(losses) on investments 0.62 (0.39) 0.92 0.16 0.79 0.11
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.83 (0.06) 1.04 0.36 0.93 0.32
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.24) (0.32) (0.13) (0.18) (0.14) (0.19)
Net realized gains (0.17)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.24) (0.32) (0.13) (0.18) (0.31) (0.19)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.21 $ 9.62 $ 11.09 $ 10.18 $ 10.75 $ 10.13
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 8.77%(b) (0.57)%(b) 10.28%(b) 3.66%(b) 9.43%(b) 3.27%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $158,762 $127,285 $105,834 $ 89,686 $261,830 $188,184
Ratio of expenses to average net
assets 0.91%(c) 0.87%(c) 0.58%(c) 0.58%(c) 0.91%(c) 0.92%(c)
Ratio of net investment income to
average net assets 4.30%(c) 3.97%(c) 2.48%(c) 2.35%(c) 2.88%(c) 2.32%(c)
Ratio of expenses to average net assets* 1.32%(c) 1.49%(c) 0.92%(c) 1.10%(c) 1.29%(c) 1.48%(c)
Ratio of net investment income to
average net assets* 3.89%(c) 3.35%(c) 2.14%(c) 1.82%(c) 2.50%(c) 1.76%(c)
Portfolio turnover 45.32% 118.49% 11.06% 1.44% 8.95% 39.05%
</TABLE>
- ------------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
DIVERSIFIED STOCK FUND
---------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.68 $ 13.39 $ 12.16 $ 11.44 $ 9.25 $ 9.90
- -------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.14 0.25 0.18 0.19 0.23 0.26
Net realized and unrealized gains
(losses) on investments 1.05 0.64 1.50 1.11 2.20 (0.67)
- -------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.19 0.89 1.68 1.30 2.43 (0.41)
- -------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.15) (0.23) (0.21) (0.19) (0.24) (0.24)
Net realized gains (1.38) (1.37) (0.24) (0.39)
- -------------------------------------------------------------------------------------------------------------------
Total Distributions (1.53) (1.60) (0.45) (0.58) (0.24) (0.24)
- -------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.34 $ 12.68 $ 13.39 $ 12.16 $ 11.44 $ 9.25
- -------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 10.83%(a) 7.39% 14.04% 11.57% 27.50% (4.29)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $321,593 $263,227 $257,405 $227,839 $177,472 $121,754
Ratio of expenses to average net
assets 0.87%(b) 0.89% 0.89% 0.91% 0.91% 0.91%
Ratio of net investment income to
average net assets 2.35%(b) 2.06% 1.45% 1.63% 2.06% 2.75%
Ratio of expenses to average net
assets* 0.91%(b) 1.10% 0.90%
Ratio of net investment income to
average net assets* 2.31%(b) 1.86% 1.43%
Portfolio turnover 43.76% 103.62% 86.32% 74.83% 50.78% 63.10%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
88
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND SPECIAL VALUE FUND SPECIAL GROWTH FUND
--------------------------- --------------------------- ---------------------------
DECEMBER 3, DECEMBER 3, DECEMBER 3,
1993 TO 1993 TO 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 (A) ENDED 1994 (A)
------------ APRIL 30, ------------ APRIL 30, ------------
1995 1995
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.23 $ 10.00 $ 10.49 $ 10.00 $ 8.90 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.06 0.10 0.08 0.11 0.01 0.02
Net realized and unrealized gains
(losses) on investments 0.64 0.22 0.82 0.48 0.45 (1.10)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.70 0.32 0.90 0.59 0.46 (1.08)
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.06) (0.09) (0.08) (0.10) (0.01) (0.02)
Net realized gains (0.05) (0.05)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.11) (0.09) (0.13) (0.10) (0.01) (0.02)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.82 $ 10.23 $ 11.26 $ 10.49 $ 9.35 $ 8.90
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 6.91%(b) 3.22%(b) 8.65%(b) 5.92%(b) 5.20%(b) (10.81)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 43,861 $ 66,921 $153,591 $118,600 $ 19,386 $ 24,593
Ratio of expenses to average net
assets 1.03%(c) 0.94%(c) 1.01%(c) 1.00%(c) 1.16%(c) 0.98%(c)
Ratio of net investment income to
average net assets 1.11%(c) 1.10%(c) 1.57%(c) 1.23%(c) 0.25%(c) 0.24%(c)
Ratio of expenses to average net assets* 1.39%(c) 1.51%(c) 1.31%(c) 1.49%(c) 1.54%(c) 1.58%(c)
Ratio of net investment income
(loss) to average net assets* 0.75%(c) 0.52%(c) 1.27%(c) 0.74%(c) (0.14)%(c) (0.36)(c)
Portfolio turnover 2.56% 28.09% 18.88% 17.90% 39.58% 118.39%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
OHIO REGIONAL STOCK FUND
------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
--------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS ------- ------- ------- ------- --------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.56 $ 14.69 $ 12.12 $ 11.15 $ 6.75 $ 9.72
- -----------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.09 0.18 0.16 0.20 0.21 0.24
Net realized and unrealized gains
(losses) on investments 0.85 0.39 2.63 1.07 4.39 (2.98)
- -----------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.94 0.57 2.79 1.27 4.60 (2.74)
- -----------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.09) (0.17) (0.18) (0.21) (0.20) (0.23)
Net realized gains (0.74) (0.53) (0.04) (0.09)
- -----------------------------------------------------------------------------------------------------------------
Total Distributions (0.83) (0.70) (0.22) (0.30) (0.20) (0.23)
- -----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 14.67 $ 14.56 $ 14.69 $ 12.12 $ 11.15 $ 6.75
- -----------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 7.06%(a) 3.96% 23.16% 11.50% 68.68% (28.63)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $35,183 $33,965 $34,926 $36,115 $27,092 $ 13,039
Ratio of expenses to average net
assets 1.18%(b) 1.04% 1.04% 1.04% 1.08% 1.11%
Ratio of net investment income to
average net assets 1.27%(b) 1.27% 1.17% 1.73% 2.16% 2.66%
Ratio of expenses to average net
assets* 1.22%(b) 1.27% 1.06%
Ratio of net investment income to
average net assets* 1.22%(b) 1.04% 1.15%
Portfolio turnover 4.86% 14.38% 7.25% 7.56% 14.59% 11.17%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
89
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH FUND
-------------------------------------------------------------------------------
SIX MONTHS
ENDED YEARS ENDED OCTOBER 31, MAY 18, 1990
APRIL 30, -------------------------------------------- TO OCTOBER 31,
1995 1994 1993 1992 1991 1990(A)
----------- ------- -------- ------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.32 $ 11.93 $ 8.93 $ 9.20 $ 9.46 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (0.01) (0.03) (0.02) 0.51 0.09
Net realized and unrealized gains
(losses) on investments (0.79) 1.40 3.03 (0.17) (0.25) (0.55)
- ------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities (0.79) 1.39 3.00 (0.19) 0.26 (0.46)
- ------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.01) (0.52) (0.08)
Net realized gains (0.62) (0.07)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.91 $ 13.32 $ 11.93 $ 8.93 $ 9.20 $ 9.46
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) (5.82)%(b) 11.65% 33.59% (2.08)% 2.93% (4.54)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 86,530 $81,307 $ 30,629 $11,091 $ 5,682 $ 9,878
Ratio of expenses to average net
assets 1.51%(c) 1.48% 1.46% 1.56% 1.72% 1.70%(c)
Ratio of net investment income
(loss) to average net assets (0.29)%(c) (0.51)% (0.74)% (0.20)% 5.97% 2.51%%(c)
Ratio of expenses to average net
assets* 1.66%(c) 1.83% 1.63% 1.72%
Ratio of net investment loss to
average net assets* (0.45)%(c) (0.86)% (0.91)% (0.35)%
Portfolio turnover 26.04% 50.66% 45.43% 91.92% 102.53% 12.16%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations
(b) Aggregate.
(c) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
90
<PAGE>
[LOGO]
THE VICTORY FUNDS
1-800-539-FUND
RS/VP-001 5/95
<PAGE>
BULK RATE
U.S. POSTAGE
PAID
CLEVELAND, OH
Permit 469
[LOGO]
THE VICTORY FUNDS
1-800-539-FUND
RS/VP-001 5/95
<PAGE>
[This page left blank intentionally]
<PAGE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE VICTORY PORTFOLIOS
THE SPECIAL VALUE FUND
February 1, 1996
This Statement of Additional Information is not a Prospectus, but
should be read in conjunction with the Prospectus of The Victory Portfolios -
The Special Value Fund, dated the same date as the date hereof (the
"Prospectus"). This Statement of Additional Information is incorporated by
reference in its entirety into the Prospectus. Copies of the Prospectus may be
obtained by writing The Victory Portfolios at Primary Funds Service Corporation,
P.O. Box 9741, Providence, RI 02940-9741, or by telephoning toll free
800-539-FUND or 800-539-3863.
Investment Policies and Limitations 1 INVESTMENT ADVISER
Valuation of Portfolio Securities 7 KeyCorp Mutual Fund Advisers, Inc.
Additional Purchase and
Redemption Information 8
Management of the Victory Portfolios 10 INVESTMENT SUB-ADVISER
Advisory and Other Contracts 19 Society Asset Management, Inc.
Additional Information 26
Independent Auditor's Report 31 ADMINISTRATOR
Financial Statements 31 Concord Holding Corporation
Appendix 32
DISTRIBUTOR
Victory Broker-Dealer Services, Inc.
TRANSFER AGENT
Primary Funds Services Corporation
CUSTODIAN
Key Trust Company of Ohio, N.A.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
The Victory Portfolios (the "Victory Portfolios") is an open-end
management investment company. The Victory Portfolios consist of twenty- eight
series of units of beneficial interest ("shares"), representing interests in
twenty-eight separate investment portfolios. This Statement of Additional
Information relates to The Special Value Fund (the "Fund") only. Much of the
information contained in this Statement of Additional Information expands on
subjects discussed in the Prospectus. Capitalized terms not defined herein are
used as defined in the Prospectus. No investment in shares of the Fund should be
made without first reading the Fund's Prospectus.
INVESTMENT POLICIES AND LIMITATIONS
Additional Information on Fund Instruments
The following policies supplement the investment objectives and
policies of the Fund as set forth in the Prospectus.
Bankers' Acceptances and Certificates of Deposit. The Fund may invest in
bankers' acceptances, certificates of deposit, and demand and time deposits.
Bankers' acceptances are negotiable drafts or bills of exchange typically drawn
by an importer or exporter to pay for specific merchandise, which are "accepted"
by a bank, meaning, in effect, that the bank unconditionally agrees to pay the
face value of the instrument on maturity. Certificates of deposit are negotiable
certificates issued against funds deposited in a commercial bank or a savings
and loan association for a definite period of time and earning a specified
return.
Bankers' acceptances will be those guaranteed by domestic and foreign
banks, if at the time of purchase such banks have capital, surplus, and
undivided profits in excess of $100,000,000 (as of the date of their most
recently published financial statements). Certificates of deposit and demand and
time deposits invested in by the Fund will be those of domestic and foreign
banks and savings and loan associations, if (a) at the time of purchase such
financial institutions have capital, surplus, and undivided profits in excess of
$100,000,000 (as of the date of their most recently published financial
statements) or (b) the principal amount of the instrument is insured in full by
the Federal Deposit Insurance Corporation or the Savings Association Insurance
Fund.
The Fund may also invest in Eurodollar Certificates of Deposit ("ECDs")
which are U.S. dollar-denominated certificates of deposit issued by branches of
foreign and domestic banks located outside the United States, Yankee
Certificates of Deposit ("Yankee CDs") which are certificates of deposit issued
by a U.S. branch of a foreign bank denominated in U.S. dollars and held in the
United States, Eurodollar Time Deposits ("ETDs") which are U.S.
dollar-denominated deposits in a foreign branch of a U.S. bank or a foreign
bank, and Canadian Time Deposits ("CTDs") which are U.S. dollar-denominated
certificates of deposit issued by Canadian offices of major Canadian Banks.
Commercial Paper. Commercial paper consists of unsecured promissory
notes issued by corporations. Except as noted below with respect to variable
amount master demand notes, issues of commercial paper normally have maturities
of less than nine months and fixed rates of return.
The Fund will purchase only commercial paper rated in one of the two
highest categories at the time of purchase by an NRSRO or, if not rated, found
by the Victory Portfolios' Board of Trustees to present minimal credit risks and
to be of comparable quality to instruments that are rated high quality (i.e., in
one of the two top ratings categories) by a NRSRO that is neither controlling,
controlled by, or under common control with the issuer of, or any issuer,
guarantor, or provider of credit support for, the instruments. For a description
of the rating symbols of each NRSRO see the Appendix to this Statement of
Additional Information.
Variable Amount Master Demand Notes. Variable amount master demand
notes in which the Fund may invest are unsecured demand notes that permit the
indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate according to the terms of the instrument. Although there is no
secondary market for these notes, the Fund may demand payment of principal and
accrued interest at any time and may resell the notes at any time to a third
party. The absence of an active secondary market, however, could make it
difficult for the Fund to dispose of a variable amount master demand note if the
issuer defaulted on its payment obligations, and the Fund could, for this or
other reasons, suffer a loss to the extent of the default. While the notes are
not typically rated by credit rating agencies, issuers of variable amount
master demand notes must satisfy the same criteria as set forth above for
unrated commercial paper, and Key Advisers or the Sub-Adviser will continuously
monitor the issuer's financial status and ability to make payments due under the
instrument. Where necessary to ensure that a note is of "high quality," the Fund
will require that the issuer's obligation to pay the principal of the note be
backed by an unconditional bank letter or line of credit, guarantee or
commitment to lend. For purposes of the Fund's investment policies, a variable
amount master note will be deemed to have a maturity equal to the longer of the
period of time remaining until the next readjustment of its interest rate or the
period of time remaining until the principal amount can be recovered from the
issuer through demand. (See Variable and Floating Rate Notes.)
Foreign Investment. The Fund may invest in securities issued by foreign
branches of U.S. banks, foreign banks, or other foreign issuers, including
American Depository Receipts ("ADRs") and securities purchased on foreign
securities exchanges. Such investment may subject the Fund to investment risks
that differ in some respects from those related to investments in obligations of
U.S. domestic issuers or in U.S. securities markets. Such risks include future
adverse political and economic developments, possible seizure, nationalization,
or expropriation of foreign investments, less stringent disclosure requirements,
the possible establishment of exchange controls or taxation at the source, and
the adoption of other foreign governmental restrictions. Additional risks
include currency exchange risks, less publicly available information, the risk
that companies may not be subject to the accounting, auditing and financial
reporting standards and requirements of U.S. companies, the risk that foreign
securities markets may have less volume and therefore many securities traded in
these markets may be less liquid and their prices are more volatile than U.S.
securities, and the risk that custodian and brokerage costs may be higher.
Permissible investments include obligations or securities of foreign issuers,
foreign branches of U.S. banks and of foreign banks. The Fund will acquire such
securities only when Key Advisers or the Sub-Adviser believes the risks
associated with such investments are minimal.
Variable and Floating Rate Notes. The Fund may acquire variable and
floating rate notes, subject to its investment objectives, policies and
restrictions. A variable rate note is one whose terms provide for the
readjustment of its interest rate on set dates and which, upon such
readjustment, can reasonably be expected to have a market value that
approximates its par value. A floating rate note is one whose terms provide
for the readjustment of its interest rate whenever a specified interest
rate changes and which, at any time, can reasonably be expected to have a market
value that approximates its par value. Such notes are frequently not rated by
credit rating agencies; however, unrated variable and floating rate notes
purchased by the Fund will only be those determined by Key Advisers or the
Sub-Adviser, under guidelines established by the Trustees, to pose minimal
credit risks and to be of comparable quality, at the time of purchase, to rated
instruments eligible for purchase under the Fund's investment policies.
In making such determinations, Key Advisers or the Sub-Adviser will consider the
earning power, cash flow and other liquidity ratios of the issuers of such
notes (such issuers include financial, merchandising, bank holding and other
companies) and will continuously monitor their financial condition. Although
there may be no active secondary market with respect to a particular variable or
floating rate note purchased by the Fund, the Fund may resell the note at any
time to a third party. The absence of an active secondary market, however,
could make it difficult for the Fund to dispose of a variable or floating rate
note in the event the issuer of the note defaulted on its payment obligations
and the Fund could, for this or other reasons, suffer a loss to the extent of
the default. Variable or floating rate notes may be secured by bank letters of
credit.
Variable or floating rate notes may have maturities of more than one
year, as follows:
1. A note that is issued or guaranteed by the United States government
or any agency thereof and which has a variable rate of interest readjusted no
less frequently than annually will be deemed by the Fund to have a maturity
equal to the period remaining until the next readjustment of the interest rate.
2. A variable rate note, the principal amount of which is scheduled on
the face of the instrument to be paid in one year or less, will be deemed by the
Fund to have a maturity equal to the period remaining until the next
readjustment of the interest rate.
3. A variable rate note that is subject to a demand feature scheduled
to be paid in one year or more will be deemed by the Fund to have a maturity
equal to the longer of the period remaining until the next readjustment of the
interest rate or the period remaining until the principal amount can be
recovered through demand.
4. A floating rate note that is subject to a demand feature will be
deemed by the Fund to have a maturity equal to the period remaining until the
principal amount can be recovered through demand.
As used above, a note is "subject to a demand feature" where the Fund
is entitled to receive the principal amount of the note either at any time on no
more than 30 days' notice or at specified intervals not exceeding one year and
upon no more than 30 days' notice.
Options. The Fund may sell (write) call options which are traded on national
securities exchanges with respect to common stock in its portfolio. The Fund
must at all times have in its portfolio the securities which it may be obligated
to deliver if the option is exercised. The Fund may write call options on its
common stocks in an attempt to realize a greater current return than would be
realized on the securities alone. The Fund may also write call options as a
partial hedge against a possible stock market decline or to extend a holding
period on a stock which is under consideration for sale in order to create a
long-term capital gain. In view of its investment objective, the Fund generally
would write call options only in circumstances where Key Advisers or the
Sub-Adviser does not anticipate significant appreciation of the underlying
security in the near future or has otherwise determined to dispose of the
security. As the writer of a call option, the Fund receives a premium for
undertaking the obligation to sell the underlying security at a fixed price
during the option period, if the option is exercised.
So long as the Fund remains obligated as a writer of a call option, it forgoes
the opportunity to profit from increases in the market price of the underlying
security above the exercise price of the option, except insofar as the premium
represents such a profit (and retains the risk of loss should the value of the
underlying security decline). The Fund may also enter into "closing purchase
transactions" in order to terminate its obligation as a writer of a call option
prior to the expiration of the option. Although the writing of call options only
on national securities exchanges increases the likelihood of the Fund's ability
to make closing purchase transactions, there is no assurance that the Fund will
be able to effect such transactions at any particular time or at any acceptable
price. The writing of call options could result in increases in the Fund's
portfolio turnover rate, especially during periods when market prices of the
underlying securities appreciate.
Futures Contracts. The Fund may enter into futures contracts,
options on futures contracts and stock index futures contracts and options
thereon for the purposes of remaining fully invested and reducing transaction
costs. Futures contracts provide for the future sale by one party and purchase
by another party of a specified amount of a specific security, class of
securities, or an index at a specified future time and at a specified price. A
stock index futures contract is a bilateral agreement pursuant to which two
parties agree to take or make delivery of an amount of cash equal to a specified
dollar amount times the difference between the stock index value at the close of
trading of the contracts and the price at which the futures contract is
originally struck. Futures contracts which are standardized as to maturity date
and underlying financial instrument are traded on national futures exchanges.
Futures exchanges and trading are regulated under the Commodity Exchange Act by
the CFTC, a U.S. Government agency.
Although futures contracts by their terms call for actual delivery and
acceptance of the underlying securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery. Closing
out an open futures position is done by taking an opposite position ("buying a
contract which has previously been "sold," or "selling" a contract previously
purchased) in an identical contract to terminate the position. 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. The
acquisition of put and call options on futures contracts will, respectively,
give the Fund 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. Brokerage commissions are incurred when a
futures contract is bought or sold.
Futures traders are required to make a good faith margin deposit in
cash or government securities with a broker or custodian to initiate and
maintain open positions in futures contracts. A margin deposit is intended to
assure completion of the contract (delivery or acceptance of the underlying
security) if it is not terminated prior to the specified delivery date. Minimal
initial margin requirements are established by the futures exchange and may be
changed. Brokers may establish deposit requirements which are higher than the
exchange minimums.
Initial margin deposits on futures contracts are customarily set at levels much
lower than the prices at which the underlying securities are purchased and sold,
typically ranging upward from less than 5% of the value of the contract being
traded.
After a futures contract position is opened, the value of the contract
is marked-to-market daily. If the futures contract price changes to the extent
that the margin on deposit does not satisfy margin requirements, payment of
additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to and
from the futures broker for as long as the contract remains open. The Fund
expects to earn interest income on its margin deposits.
When interest rates are expected to rise or market values of portfolio
securities are expected to fall, the Fund can seek through the sale of futures
contracts to offset a decline in the value of its portfolio securities. When
interest rates are expected to fall or market values are expected to rise, the
Fund, through the purchase of such contracts, can attempt to secure better rates
or prices than might later be available in the market when it effects
anticipated purchases.
The Fund will only sell futures contracts to protect securities it owns
against price declines or purchase contracts to protect against an increase in
the price of securities it intends to purchase.
The Fund's ability to effectively utilize futures trading depends on
several factors. First, it is possible that there will not be a perfect price
correlation between the futures contracts and their underlying stock index.
Second, it is possible that a lack of liquidity for futures contracts could
exist in the secondary market, resulting in an inability to close a futures
position prior to its maturity date. Third, the purchase of a futures contract
involves the risk that the Fund could lose more than the original margin deposit
required to initiate a futures transaction.
Restrictions on the Use of Futures Contracts. The Fund will not enter
into futures contract transactions for purposes other than bona fide hedging
purposes to the extent that, immediately thereafter, the sum of its initial
margin deposits on open contracts exceeds 5% of the market value of the Fund's
total assets. In addition, the Fund will not enter into futures contracts to the
extent that the value of the futures contracts held would exceed 1/3 of the
Fund's total assets. Futures transactions will be limited to the extent
necessary to maintain the Fund's qualification as a regulated investment
company.
The Fund has undertaken to restrict its futures contract trading as
follows: first, the Fund will not engage in transactions in futures contracts
for speculative purposes; second, the Fund will not market itself to the public
as commodity pool or otherwise as a vehicle for trading in the commodities
futures or commodity options markets; third, the Fund will disclose to all
prospective shareholders the purpose of and limitations on its commodity futures
trading; fourth, the Fund will submit to the Commodity Futures Trading
Commission ("CFTC") special calls for information. Accordingly, registration as
a commodities pool operator with the CFTC is not required.
In addition to the margin restrictions discussed above, transactions in
futures contracts may involve the segregation of funds pursuant to requirements
imposed by the Commission. Under those requirements, where the Fund has a long
position in a futures contract, it may be required to establish a segregated
account (not with a futures commission merchant or broker) containing cash or
certain liquid assets equal to the purchase price of the contract (less any
margin on deposit). For a short position in futures or forward contracts held by
the Fund, those requirements may mandate the establishment of a segregated
account (not with a futures commission merchant or broker) with cash or certain
liquid assets that, when added to the amounts deposited as margin, equal the
market value of the instruments underlying the futures contracts (but are not
less than the price at which the short positions were established). However,
segregation of assets is not required if the Fund "covers" a long position. For
example, instead of segregating assets, the Fund, when holding a long position
in a futures contract, could purchase a put option on the same futures contract
with a strike price as high or higher than the price of the contract held by the
Fund. In addition, where the Fund takes short positions, or engages in sales of
call options, it need not segregate assets if it "covers" these positions. For
example, where the Fund holds a short position in a futures contract, it may
cover by owning the instruments underlying the contract. The Fund may also cover
such a position by holding a call option permitting it to purchase the same
futures contract at a price no higher than the price at which the short position
was established. Where the Fund sells a call option on a futures contract, it
may cover either by entering into a long position in the same contract at a
price no higher than the strike price of the call option or by owning the
instruments underlying the futures contract. The Fund could also cover this
position by holding a separate call option permitting it to purchase the same
futures contract at a price no higher than the strike price of the call option
sold by the Fund.
In addition, the extent to which the Fund may enter into transactions
involving futures contracts may be limited by the Internal Revenue Code's
requirements for qualification as a registered investment company and the Fund's
intention to qualify as such.
Risk Factors in Futures Transactions. Positions in futures contracts
may be closed out only on an exchange which provides a secondary market for such
futures. However, there can be no assurance that a liquid secondary market will
exist for any particular futures contract at any specific time. Thus, it may not
be possible to close a futures position. In the event of adverse price
movements, the Fund would continue to be required to make daily cash payments to
maintain the required margin. In such situations, if the Fund has insufficient
cash, it may have to sell portfolio securities to meet daily margin requirements
at a time when it may be disadvantageous to do so. In addition, the Fund may be
required to make delivery of the instruments underlying futures contracts it
holds. The inability to close options and futures positions also could have an
adverse impact on the ability to effectively hedge them. The Fund will minimize
the risk that it will be unable to close out a futures contract by only entering
into futures contracts which are traded on national futures exchanges and for
which there appears to be a liquid secondary market.
The risk of loss in trading futures contracts in some strategies can be
substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in futures pricing. Because the deposit
requirements in the futures markets are less onerous than margin requirements in
the securities market, there may be increased participation by speculators in
the futures market which may also cause temporary price distortions. A
relatively small price movement in a futures contract may result in immediate
and substantial loss (as well as gain) to the investor. For example, if at the
time of purchase, 10% of the value of the futures contract is deposited as
margin, a subsequent 10% decrease in the value of the futures contract would
result in a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out. A 15% decrease would
result in a loss equal to 150% of the original margin deposit if the contract
were closed out. Thus, a purchase or sale of a futures contract may result in
losses in excess of the amount invested in the contract. However, because the
futures strategies engaged in by the Fund are only for hedging purposes, the Key
Advisers and The Sub-Adviser do not believe that the Fund is subject to the
risks of loss frequently associated with futures transactions. The Fund would
presumably have sustained comparable losses if, instead of the futures contract,
it had invested in the underlying financial instrument and sold it after the
decline.
Utilization of futures transactions by the Fund does involve the risk
of imperfect or no correlation where the securities underlying futures contract
have different maturities than the portfolio securities being hedged. It is also
possible that the Fund could both lose money on futures contracts and also
experience a decline in value of its portfolio securities. There is also the
risk of loss by the Fund of margin deposits in the event of bankruptcy of a
broker with whom the Fund has an open position in a futures contract or related
option.
The Fund may also acquire and sell put options on the securities held
in its portfolio.
A put is a right to sell a specified security (or securities) within a
specified period of time at a specified exercise price. The Fund may sell,
transfer, or assign a put only in conjunction with the sale, transfer, or
assignment of the underlying security or securities. The amount payable to the
Fund upon its exercise of a "put" is normally (i) the Fund's acquisition cost of
the securities (excluding any accrued interest which the Fund paid on the
acquisition), less any amortized market premium or plus any amortized market or
original issue discount during the period the Fund owned the securities, plus
(ii) all interest accrued on the securities since the last interest payment date
during that period.
Puts may be acquired by the Fund to facilitate the liquidity of its
portfolio assets. Puts may also be used to facilitate the reinvestment of the
Fund's assets at a rate of return more favorable than that of the underlying
security. Puts may, under certain circumstances, also be used to shorten the
maturity of underlying variable rate or floating rate securities for purposes of
calculating the remaining maturity of those securities and the dollar-weighted
average portfolio maturity of the Fund's assets. See "Variable and Floating Rate
Notes" and "VALUATION" in this Statement of Additional Information.
Miscellaneous Securities. The Fund can invest in various securities
issued by domestic and foreign corporations, including preferred stocks and
investment grade corporate bonds, notes, and warrants. Bonds are long-term
corporate debt instruments secured by some or all of the issuer's assets,
debentures are general corporate debt obligations backed only by the integrity
of the borrower, and warrants are instruments that entitle the holder to
purchase a certain amount of common stock at a specified price, which price is
usually higher than the current market price at the time of issuance. Preferred
stocks are instruments that combine qualities both of equity and debt
securities. Individual issues of preferred stock will have those rights and
liabilities that are spelled out in the governing document. Preferred stocks
usually pay a fixed dividend per quarter (or annum) and are senior to common
stock in terms of liquidation and dividends rights, and preferred stocks
typically do not have voting rights. The Fund will only purchase preferred
stocks where the issuer is publicly traded and has capital in excess of
$200 million.
The Fund also may invest, consistent with its investment objective and
policies, in zero coupon bonds, which are debt instruments that do not pay
current interest and are typically sold at prices greatly discounted from par
value. The return on a zero-coupon obligation, when held to maturity, equals the
difference between the par value and the original purchase price.
Zero-coupon obligations have greater price volatility than coupon obligations.
"When-Issued" Securities. As discussed in the Prospectus, the Fund may
purchase securities on a "when issued" basis (i.e., for delivery beyond the
normal settlement date at a stated price and yield). When the Fund agrees to
purchase securities on a "when issued" basis, the Victory Portfolios' custodian
will set aside cash or liquid portfolio securities equal to the amount of the
commitment in a separate account. Normally, the custodian will set aside
portfolio securities to satisfy the purchase commitment, and in such a case, the
Fund may be required subsequently to place additional assets in the separate
account in order to assure that the value of the account remains equal to the
amount of the Fund's commitment. It may be expected that the Fund's net assets
will fluctuate to a greater degree when it sets aside portfolio securities to
cover such purchase commitments than when it sets aside cash.
When the Fund engages in "when-issued" transactions, it relies on the
seller to consummate the trade. Failure of the seller to do so may result in the
Fund incurring a loss or missing the opportunity to obtain a price considered to
be advantageous. The Fund does not intend to purchase "when issued" securities
for speculative purposes, but only in furtherance of its investment objective.
U.S. Government Obligations. The Fund may invest in obligations issued
or guaranteed by the U.S. Government, its agencies and instrumentalities.
Obligations of certain agencies and instrumentalities of the U.S. Government are
supported by the full faith and credit of the U.S. Treasury; others are
supported by the right of the issuer to borrow from the U.S. Treasury; others
are supported by the discretionary authority of the U.S. Government to purchase
the agency's obligations; and still others are supported only by the credit of
the agency or instrumentality. No assurance can be given that the U.S.
Government will provide financial support to U.S. Government-sponsored agencies
or instrumentalities if it is not obligated to do so by law. The Fund will
invest in the obligations of such agencies and instrumentalities only when Key
Advisers or the Sub-Adviser believes that the credit risk with respect thereto
is minimal.
Securities Lending. The Fund may lend its portfolio securities to
broker-dealers, banks or institutional borrowers of securities. The Fund must
receive a minimum of 100% collateral, plus any interest due in the form of cash
or U.S. Government securities. This collateral must be valued daily and should
the market value of the loaned securities increase, the borrower must furnish
additional collateral to the Fund. During the time portfolio securities are on
loan, the borrower will pay the Fund any dividends or interest paid on such
securities plus any interest negotiated between the parties to the lending
agreement.
Loans will be subject to termination by the Fund or the borrower at any time.
While the Fund will not have the right to vote securities on loan, it intends to
terminate the loan and regain the right to vote if that is considered important
with respect to the investment. The Fund will only enter into loan arrangements
with broker-dealers, banks or other institutions which Key Advisers or the
Sub-Adviser has determined are creditworthy under guidelines established by the
Victory Portfolios' Trustees. The Fund intends to limit its securities lending
to 33 1/3% of total assets.
Other Investment Companies. The Fund may invest up to 5% of its total
assets in the securities of any one investment company, but may not own more
than 3% of the securities of any one investment company or invest more than 10%
of its total assets in the securities of other investment companies. Pursuant
to an exemptive order received by the Victory Portfolios from the Commission,
the Fund may invest in money market funds of the Victory Portfolios. Key
Advisers and/or the Sub-Adviser will waive its investment advisory fee as to all
assets invested in other investment companies. Because such other investment
companies employ an investment adviser, such investment by the Fund will cause
shareholders to bear duplicative fees, such as management fees.
Repurchase Agreements. Securities held by the Fund may be subject to
repurchase agreements. Under the terms of a repurchase agreement, the Fund would
acquire securities from financial institutions or registered broker-dealers
deemed creditworthy by Key Advisers or the Sub-Adviser pursuant to guidelines
adopted by the Victory Portfolios' Trustees, subject to the seller's agreement
to repurchase such securities at a mutually agreed upon date and price. The
seller is required to maintain the value of collateral held pursuant to the
agreement at not less than the repurchase price (including accrued interest). If
the seller were to default on its repurchase obligation or become insolvent, the
Fund would suffer a loss to the extent that the proceeds from a sale of the
underlying portfolio securities were less than the repurchase price, or to the
extent that the disposition of such securities by the Fund is delayed pending
court action. Repurchase agreements are considered by the staff of the
Commission to be loans by the Fund.
Reverse Repurchase Agreements. The Fund may borrow funds for temporary
purposes by entering into reverse repurchase agreements in accordance with the
investment restrictions described below. Pursuant to such agreements, the Fund
would sell portfolio securities to financial institutions such as banks and
broker-dealers, and agree to repurchase them at a mutually agreed-upon date and
price. At the time the Fund enters into a reverse repurchase agreement, it will
place in a segregated custodial account assets (such as cash or other liquid
high-grade securities) consistent with the Fund's investment restrictions having
a value equal to the repurchase price (including the accrued interest); the
collateral will be marked-to-market on a daily basis, and will be continuously
monitored to ensure that such equivalent value is maintained. Reverse repurchase
agreements involve the risk that the market value of the securities sold by the
Fund may decline below the price at which the Fund is obligated to repurchase
the securities. Reverse repurchase agreements are considered to be borrowings
under the Investment Company Act of 1940, as amended (the "1940 Act").
Investment Restrictions
The following investment restrictions are fundamental with respect to
the Fund and may be changed only by a vote of a majority of the outstanding
shares of the Fund as defined in "ADDITIONAL INFORMATION -- Miscellaneous" of
this Statement of Additional Information).
THE FUND MAY NOT:
1. Participate on a joint or joint and several basis in any
securities trading account.
2. Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Fund from purchasing or selling options and futures contracts or from investing
in securities or other instruments backed by physical commodities).
3. Purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Fund from
investing in securities or other instruments backed by real estate or securities
of companies engaged in the real estate business). Investments by the Fund in
securities backed by mortgages on real estate or in marketable securities of
companies engaged in such activities are not hereby precluded.
4. Issue any senior security (as defined in the 1940 Act), except that
(a) the Fund may engage in transactions that may result in the issuance of
senior securities to the extent permitted under applicable regulations and
interpretations of the 1940 Act or an exemptive order; (b) the Fund may acquire
other securities , the acquisition of which may result in the issuance of a
senior security, to the extent permitted under applicable regulations or
interpretations of the 1940 Act; (c) subject to the restrictions set forth
below, the Fund may borrow money as authorized by the 1940 Act.
5. Borrow money, except that (a) the Fund may enter into commitments to
purchase securities in accordance with its investment program, including
delayed-delivery and when-issued securities and reverse repurchase agreements,
provided that the total amount of any such borrowing does not exceed 33 1/3% of
the Fund's total assets; and (b) the Fund may borrow money for temporary or
emergency purposes in an amount not exceeding 5% of the value of its total
assets at the time when the loan is made. Any borrowings representing more than
5% of the Fund's total assets must be repaid before the Fund may make additional
investments.
6. Lend any security or make any other loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties, but this limitation
does not apply to purchases of publicly issued debt securities or to repurchase
agreements.
7. Underwrite securities issued by others, except to the extent that the
Fund may be considered an underwriter within the meaning of the Securities Act
of 1933 in the disposition of restricted securities.
8. With respect to 75% of the Fund's total assets, the Fund may not
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or instrumentalities)
if, as a result, (a) more than 5% of the Fund's total assets would be invested
in the securities of that issuer, or (b) the Fund would hold more than 10% of
the outstanding voting securities of that issuer.
9. Purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or instrumentalities,
or repurchase agreements secured thereby) if, as a result, more than 25% of the
Fund's total assets would be invested in the securities of companies whose
principal business activities are in the same industry. In the utilities
category, the industry shall be determined according to the service provided.
For example, gas, electric, water and telephone will be considered as separate
industries.
The following restrictions are not fundamental and may be changed
without shareholder approval:
1. The Fund will not purchase or retain securities of any issuer if
the officers or Trustees of the Victory Portfolios or the officers or directors
of its investment adviser owning beneficially more than one half of 1% of the
securities of such issuer together own beneficially more than 5% of such
securities.
2. The Fund will not invest more than 10% of its total assets in the
securities of issuers which together with any predecessors have a record of less
than three years of continuous operation.
3. The Fund will not invest more than 15% of its net assets in illiquid
securities. Illiquid securities are securities that are not readily marketable
or cannot be disposed of promptly within seven days and in the usual course of
business at approximately the price at which the Fund has valued them. Such
securities include, but are not limited to, time deposits and repurchase
agreements with maturities longer than seven days. Securities that may be resold
under Rule 144A ("Restricted Securities"), or securities offered pursuant to
Section 4(2) of, the 1933 Act, shall not be deemed illiquid solely by reason of
being unregistered. Key Advisers or the Sub-Adviser determine whether a
particular security is deemed to be liquid based on the trading markets for the
specific security and other factors. However, because state securities laws may
limit the Fund's investment in Restricted Securities (regardless of the
liquidity of the investment), investments in Restricted Securities resalable
under Rule 144A will continue to be subject to applicable state law requirements
until such time, if ever, that such limitations are changed.
4. The Fund will not make short sales of securities, other than short
sales "against the box," or purchase securities on margin except for short-term
credits necessary for clearance of portfolio transactions, provided that this
restriction will not be applied to limit the use of options, futures contracts
and related options, in the manner otherwise permitted by the investment
restrictions, policies and investment program of the Fund.
5. The Fund may invest up to 5% of its total assets in the securities of
any one investment company, but may not own more than 3% of the securities of
any one investment company or invest more than 10% of its total assets in the
securities of other investment companies. Pursuant to an exemptive order
received by the Victory Portfolios from the Commission, the Fund may invest in
the money market funds of the Victory Portfolios.
6. Buy state, municipal, or private activity bonds.
State Regulations
In addition, each of the Victory Portfolios, so long as its shares are
registered under the securities laws of the State of Texas and such restrictions
are required as a consequence of such
registration, is subject to the following non-fundamental policies, which may be
modified in the future by the Trustees without a vote of the Victory Portfolios'
shareholders: (i) the Victory Portfolios has represented to the Texas State
Securities Board, on behalf of the investment portfolios registered in that
state, that those investment portfolios will not invest in oil, gas or mineral
leases or purchase or sell real property (including limited partnership
interests, but excluding readily marketable securities of companies which invest
in real estate); and (ii) the Victory Portfolios has represented to the Texas
State Securities Board on behalf of the investment portfolios registered in that
state, that those investment portfolios will not invest more than 5% of their
net assets in warrants valued at the lower of cost or market; provided that,
included within that amount, but not to exceed 2% of net assets, may be
warrants which are not listed on the New York or American Stock Exchanges. For
purposes of this restriction, warrants acquired in units or attached to
securities are deemed to be without value.
The policies and limitations listed above supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or limitation
states a maximum percentage of the Fund's assets that may be invested in any
security or other asset, or sets forth a policy regarding quality standards,
such standard or percentage limitation will be determined immediately after and
as a result of the Fund's acquisition of such security or other asset except in
the case of borrowing (or other activities that may be deemed to result in the
issuance of a "senior security" under the 1940 Act). Accordingly, any subsequent
change in values, net assets, or other circumstances will not be considered when
determining whether the investment complies with the Fund's investment policies
and limitations. If the value of the Fund's holdings of illiquid securities at
any time exceeds the percentage limitation applicable at the time of acquisition
due to subsequent fluctuations in value or other reasons, the Board of Trustees
will consider what actions, if any, are appropriate to maintain adequate
liquidity.
FUTURE DEVELOPMENTS
The Fund may take advantage of other investment practices which are not
at present contemplated for use by the Fund or which currently are not available
but which may be developed, to the extent such investment practices are both
consistent with the Fund's investment objective and are legally permissible for
the Fund. Such investment practices, if they arise, may involve risks which
exceed those involved in the activities described in the Prospectus and
Statement of Additional Information. Prior to commencing any new investment
practice, the Fund will notify shareholders by means of prospectus supplement.
Portfolio Turnover
The turnover rate for the Fund's investment portfolio is calculated by
dividing the lesser of the Fund's purchases or sales of portfolio securities for
the year by the monthly average value of the portfolio securities. The
calculation excludes all securities whose maturities, at the time of
acquisition, were one year or less. In the fiscal years ended October 31, 1995
and 1994, the Fund's portfolio turnover rates were ___% and __%, respectively.
VALUATION OF PORTFOLIO SECURITIES
Investment securities held by the Fund are valued on the basis of
valuations provided by an independent pricing service, approved by the Board of
Trustees, which uses information with respect to transactions of a security,
quotations from dealers, market transactions in comparable securities, and
various relationships between securities, in determining value. Specific
investment securities which are not priced by the approved pricing service will
be valued according to quotations obtained from dealers who are market makers in
those securities. Investment securities with less than 60 days to maturity when
purchased are valued at amortized cost which approximates market value.
Investment securities not having readily available market quotations will be
priced at fair value using a methodology approved in good faith by the Board of
Trustees.
PERFORMANCE
As described in the Prospectus, from time to time the "standardized
yield," "dividend yield," "average annual total return," "total return," and
"total return at net asset value" of an investment in each class of Fund shares
may be advertised. An explanation of how yields and total returns are calculated
for each class and the components of those calculations are set forth below.
Yield and total return information may be useful to investors in
reviewing the Victory Portfolios' performance. The Fund's advertisement of its
performance must, under applicable Commission rules, include the average annual
total returns for each class of shares of the Fund for the 1, 5 and 10-year
period (or the life of the class, if less) as of the most recently ended
calendar quarter. This enables an investor to compare the Fund's performance to
the performance of other funds for the same periods. However, a number of
factors should be considered before using such information as a basis for
comparison with other investments. An investment in the Fund is not insured; its
yield and total return are not guaranteed and normally will fluctuate on a daily
basis. When redeemed, an investor's shares may be worth more or less than their
original cost. Yield and total return for any given past period are not a
prediction or representation by the Victory Portfolios of future yields or rates
of return on its shares. The yield and total returns of the Class A and Class B
shares of the Fund are affected by portfolio quality, portfolio maturity, the
type of investments the Fund holds and its operating expenses.
STANDARDIZED YIELDS. The Fund's "yield" (referred to as "standardized
yield") for a given 30-day period for a class of shares is calculated using the
following formula set forth in rules adopted by the Commission that apply to all
funds that quote yields:
Standardized Yield = 2 [[(a-b + 1)to the sixth] - 1]
---------
cd
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense
reimbursements).
c = the average daily number of shares of that class
outstanding during the 30-day period
that were entitled
to receive dividends.
d = the maximum offering price per share of the class on the
last day of the period, adjusted for undistributed net
investment income.
The standardized yield of a class of shares for a 30-day period may
differ from its yield for any other period. The Commission formula assumes that
the standardized yield for a 30-day period occurs at a constant rate for a
six-month period and is annualized at the end of the six-month period. This
standardized yield is not based on actual distributions paid by the Fund to
shareholders in the 30-day period, but is a hypothetical yield based upon the
net investment income from the Fund's portfolio investments calculated for that
period. The standardized yield may differ from the "dividend yield" of that
class, described below. Additionally, because each class of shares is subject to
different expenses, it is likely that the standardized yields of the Fund
classes of shares will differ. The yield on Class A shares for the 30-day period
ended April 30, 1995 was ____% .
DIVIDEND YIELD AND DISTRIBUTION RETURN. From time to time the Fund may
quote a "dividend yield" or a "distribution return" for each class. Dividend
yield is based on the Class A or Class B share dividends derived from net
investment income during a stated period. Distribution return includes dividends
derived from net investment income and from realized capital gains declared
during a stated period. Under those calculations, the dividends and/or
distributions for that class declared during a stated period of one year or less
(for example, 30 days) are added together, and the sum is divided by the maximum
offering price per share of that class A) on the last day of the period. When
the result is annualized for a period of less than one year, the "dividend
yield" is calculated as follows:
Dividend Yield of the Class =
Dividends of the Class + Number of days (accrual period) x 365
------------------------------------------------------------
Max. Offering Price of the Class (last day of period)
The maximum offering price for Class A shares includes the maximum
front-end sales charge. For Class B shares, the maximum offering price is the
net asset value per share, without considering the effect of contingent deferred
sales charges.
From time to time similar yield or distribution return calculations may
also be made using the Class A net asset value (instead of its respective
maximum offering price) at the end of the period. The dividend yields on Class
A shares at maximum offering price and net asset value for the 30-day period
ended ________, 1995 were ____% and ____%, respectively.
TOTAL RETURNS. The "average annual total return" of each class is an
average annual compounded rate of return for each year in a specified number of
years. It is the rate of return based on the change in value of a hypothetical
initial investment of $1,000 ("P" in the formula below) held for a number of
years ("n") to achieve an Ending Redeemable Value ("ERV"), according to the
following formula:
( ERV )1 to the Nth - 1 = Average Annual Total Return
---------------------------------------------
( P )
The cumulative "total return" calculation measures the change in value
of a hypothetical investment of $1,000 over an entire period of years. Its
calculation uses some of the same factors as average annual total return, but it
does not average the rate of return on an annual basis. Total return is
determined as follows:
ERV - P = Total Return
P
In calculating total returns for Class A shares, the current maximum
sales charge of 4.75% (as a percentage of the offering price) is deducted from
the initial investment ("P") (unless the return is shown at net asset value, as
discussed below). For Class B shares, the payment of the applicable contingent
deferred sales charge (5.0% for the first year, 4.0% for the second year, 3.0%
for the third and fourth years, 2.0% in the fifth year, 1.0% in the sixth year
and none thereafter) is applied to the investment result for the time period
shown (unless the total return is shown any net asset value, as described
below). Total returns also assume that all dividends and capital gains
distributions during the period are reinvested to buy additional shares at net
asset value per share, and that the investment is redeemed at the end of the
period. The average annual total return and cumulative total return on Class A
shares for the period December 3, 1993 (commencement of operations) to ____,
1995 (life of fund) at maximum offering price were ___% and ____%, respectively.
For the one year period ended _______________, 1995 annual total return for
Class A was
- ------%.
From time to time the Fund may also quote an "average annual total
return at net asset value" or a cumulative "total return at net asset value" for
Class A or Class B shares. It is based on the difference in net asset value per
share at the beginning and the end of the period for a hypothetical investment
in that class of shares (without considering front-end or contingent sales
charges) and takes into consideration the reinvestment of dividends and capital
gains distributions. The average annual total return and cumulative total return
on Class A shares for the period December 3, 1993 (commencement of operations)
to ________, 1995 (life of fund), at net asset value, was ____% and ___%,
respectively. For the one year period ended ______, 1995, average annual total
return for Class A shares was ___% .
OTHER PERFORMANCE COMPARISONS. From time to time the Fund may publish
the ranking of the performance of its Class A or Class B shares by Lipper
Analytical Services, Inc. ("Lipper"), a widely-recognized independent mutual
fund monitoring service. Lipper monitors the performance of regulated investment
companies, including the Fund, and ranks the performance of the Fund's classes
against (i) all other funds, excluding money market funds, and (ii) all other
government bond funds. The Lipper performance rankings are based on total return
that includes the reinvestment of capital gains distributions and income
dividends but does not take sales charges or taxes into consideration.
From time to time the Fund may publish the ranking of the performance
of its Class A or Class B shares by Morningstar, Inc., an independent mutual
fund monitoring service that ranks mutual funds, including the Fund, in broad
investment categories (equity, taxable bond, tax-exempt and other) monthly,
based upon each fund's three, five and ten-year average annual total returns
(when available) and a risk adjustment factor that reflects Fund performance
relative to three-month U.S. Treasury bill monthly returns. Such returns are
adjusted for fees and sales loads. There are five ranking categories with a
corresponding number of stars: highest (5), above average (4), neutral (3),
below average (2) and lowest (1). Ten percent of the funds, series or classes in
an investment category receive 5 stars, 22.5% receive 4 stars, 35% receive 3
stars, 22.5% receive 2 stars, and the bottom 10% receive one star. Morningstar
ranks the Class A and Class B shares of the Fund in relation to other taxable
bond funds.
The total return on an investment made in Class A or Class B shares of
the Fund may be compared with the performance for the same period of one or more
of the following indices: the Consumer Price Index, the Salomon Brothers World
Government Bond Index, the Standard & Poor's 500 Index, the Shearson Lehman
Government/Corporate Bond Index, the Lehman Aggregate Bond Index, and the J.P.
Morgan Government Bond Index. Other indices may be used from time to time. The
Consumer Price Index is generally considered to be a measure of inflation. The
Salomon Brothers World Government Bond Index generally represents the
performance of government debt securities of various markets throughout the
world, including the United States. The Lehman Government/Corporate Bond Index
generally represents the performance of intermediate and long-term government
and investment grade corporate debt securities. The Lehman Aggregate Bond Index
measures the performance of U.S. corporate bond issues, U.S. government
securities and mortgaged-backed securities. The J.P. Morgan Government Bond
Index generally represents the performance of government bonds issued by various
countries including the United States. The S&P 500 Index is a composite index
of 500 common stocks generally regarded as an index of U.S. stock market
performance. The foregoing bond indices are unmanaged indices of securities
that do not reflect reinvestment of capital gains or take investment costs into
consideration, as these items are not application to indices.
From time to time, the yields and the total returns of Class A or Class
B shares of the Fund may be quoted in and compared to other mutual funds with
similar investment objective in advertisements, shareholder reports or other
communications to shareholders. The Fund may also include calculations in such
communications that describe hypothetical investment results. (Such performance
examples will be based on an express set of assumptions and are not indicative
of the performance of any Fund.) Such calculations may from time to time include
discussions or illustrations of the effects of compounding in advertisements.
"Compounding" refers to the fact that, if dividends or other distributions on a
Fund investment are reinvested by being paid in additional Fund shares, any
future income or capital appreciation of a Fund would increase the value, not
only of the original Fund investment, but also of the additional Fund shares
received through reinvestment. As a result, the value of the Fund investment
would increase more quickly than if dividends or other distributions had been
paid in cash. The Fund may also include discussions or illustrations of the
potential investment goals of a prospective investor (including but not limited
to tax and/or retirement planning), investment management techniques, policies
or investment suitability of Fund, economic conditions, legislative developments
(including pending legislation), the effects of inflation and historical
performance of various asset classes, including but not limited to stocks, bonds
and Treasury bills. From time to time advertisements or communications to
shareholders may summarize the substance of information contained in shareholder
reports (including the investment composition of a Fund, as well as the views of
the investment adviser as to current market, economic, trade and interest rate
trends, legislative, regulatory and monetary developments, investment strategies
and related matters believed to be of relevance to Fund. The Fund may also
include in advertisements, charts, graphs or drawings which illustrate the
potential risks and rewards of investment in various investment vehicles,
including but not limited to stock, bonds, Treasury bills and shares of Fund as
well as charts or graphs which illustrate strategies such as dollar cost
averaging, and comparisons of hypothetical yields of investment in tax-exempt
versus taxable investments. In addition, advertisements or shareholder
communications may include a discussion of certain attributes or benefits to be
derived by an investment in Fund. Such advertisements or communications may
include symbols, headlines or other material which highlight or summarize the
information discussed in more detail therein. With proper authorization, Fund
may reprint articles (or excerpts) written regarding the Fund and provide them
to prospective shareholders. Performance information with respect to the Fund
is generally available by calling 1-800-539-3863.
Investors may also judge, and the Fund may at times advertise,
performance of Class A or Class B shares by comparing it to the performance of
other mutual funds or mutual fund portfolios with comparable investment
objectives and policies, which performance may be contained in various unmanaged
mutual fund or market indices or rankings such as those prepared by Dow Jones &
Co., Inc., Standard & Poor's Corporation, Lehman Brothers, Merrill Lynch, and
Salomon Brothers, and in publications issued by Lipper Analytical Services, Inc.
and in the following publications: IBC/Donoghue's Money Fund Reports, Ibottson
Associates, Inc., Morningstar, CDA/Wiesenberger, Money Magazine, Forbes,
Barron's, The Wall Street Journal, The New York Times, Business Week, American
Banker, Fortune, Institutional Investor, U.S.A. Today. In addition to yield
information, general information about the Fund that appears in a publication
such as those mentioned above may also be quoted or reproduced in advertisements
or in reports to shareholders.
Advertisements and sales literature may include discussions of
specifics of the portfolio manager's investment strategy and process, including,
but not limited to, descriptions of security selection and analysis.
Advertisements may also include descriptive information about the
investment adviser, including, but not limited to, its status within the
industry, other services and products it makes available, total assets under
management, its investment philosophy.
When comparing yield, total return and investment risk of an investment
in Class A or Class B shares of the Fund with other investments, investors
should understand that certain other investments have different risk
characteristics than an investment in shares of the Fund. For example,
certificates of deposit may have fixed rates of return and may be insured as to
principal and interest by the FDIC, while the Fund's returns will fluctuate and
its share values and returns are not guaranteed. Money market accounts offered
by banks also may be insured by the FDIC and may offer stability of principal.
U.S. Treasury securities are guaranteed as to principal and interest by the full
faith and credit of the U.S. government. Money market mutual funds may seek to
offer a fixed price per share.
ADDITIONAL PURCHASE EXCHANGE AND REDEMPTION INFORMATION
The Victory Portfolios (see "Description of Victory Portfolios" below) is open
for business and the NAV of each class of shares of the Fund is calculated on
each Business Day. A Business Day is every day on which the NYSE is open for
business, the Federal Reserve Bank of Cleveland is open and any other day (other
than a day on which no shares of the Fund are tendered for redemption and no
order to purchase any shares is received) during which there is sufficient
trading in portfolio instruments that the Fund's net asset value per share might
be materially affected. The NAV of each class is determined and its shares are
priced as of the close of regular trading of the NYSE (generally 4:00 p.m.
Eastern time (the "Valuation Time")) on each Business Day of the Fund. The NYSE
or the Federal Reserve Bank of Cleveland will not be open in observance of the
following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veterans Day, Thanksgiving Day, and Christmas Day. The holiday closing schedule
is subject to change.
When the NYSE is closed, or when trading is restricted for any reason
other than its customary weekend or holiday closings, or under emergency
circumstances as determined by the Commission to warrant such action, the Fund's
Transfer Agent will determine the Fund's NAVs at Valuation Time. A Fund's NAV
may be affected to the extent that its securities are traded on days that are
not Business Days.
[If, in the opinion of the Trustees, conditions exist which make cash
payment undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing the NAV of each class of the Fund. Shareholders receiving securities
or other property on redemption may realize a gain or loss for tax purposes and
will incur any costs of sale as well as the associated inconveniences.]
Pursuant to Rule 11a-3 under the 1940 Act, the Fund is required to give
shareholders at least 60 days' notice prior to terminating or modifying the
Fund's exchange privilege. Under the Rule, the 60-day notification requirement
may be waived if (i) the only effect of a modification would be to reduce or
eliminate an administrative fee, redemption fee or deferred sales charge
ordinarily payable at the time of exchange or (ii) the Fund temporarily suspends
the offering of shares as permitted under the 1940 Act or by the SEC or because
it is unable to invest amounts effectively in accordance with its investment
objective and policies.
In the Prospectus, the Victory Portfolios, Key Advisers and the
Sub-Adviser have notified shareholders that they reserve the right at any time
without prior notice to shareholders to refuse exchange purchases by any person
or group if, in Key Advisers or the Sub-Adviser's judgment, the Fund would be
unable to invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
ADDITIONAL PURCHASE INFORMATION
ALTERNATIVE SALES ARRANGEMENTS - CLASS A AND CLASS B SHARES.
The Alternative Sales Arrangements permit an investor to choose the method of
purchasing shares that is more beneficial to the investor depending on the
amount of the purchase, the length of time the investor expects to hold shares
and other relevant circumstances. Investors should understand that the purpose
and function of the deferred sales charge and asset-based sales charge with
respect to Class B shares are the same as those of the initial sales charge with
respect to Class A shares. Any salesperson or other person entitled to receive
compensation for selling Fund shares may receive different compensation with
respect to one class of shares on behalf of a single investor (not including
dealer "street name" or omnibus accounts) because generally it will be more
advantageous for that investor to purchase Class A shares of the Fund instead.
The two classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different shareholder
privileges and features. The net income attributable to Class B shares and the
dividends payable on Class B shares will be reduced by incremental expenses
borne solely by that class, including the asset-based sales charge to which
Class B shares are subject.
CLASS B CONVERSION FEATURE. Ninety-six months after an investor's
purchase order for Class B shares is accepted, such "Matured Class B Shares"
automatically will convert to Class A shares, on the basis of the relative net
asset value of the two classes, without the imposition of any sales load or
other charge. Each time any Matured Class B shares convert to Class A shares,
any Class B shares acquired by the reinvestment of dividends or distributions on
such Matured Class B shares that are still held will also convert to Class A
shares, on the same basis. The conversion feature is intended to relieve holders
of Matured Class B shares of the asset-based sales charge under the Class B
Distribution Plan after such shares have been outstanding long enough that the
Distributor may have been compensated for distribution expenses related to such
shares.
The conversion of Matured Class B shares to Class A shares is subject
to the continuing availability of a private letter ruling from the Internal
Revenue Service, or an opinion of counsel or tax adviser, to the effect that the
conversion of Matured Class B shares does not constitute a taxable event for the
holder under Federal income tax law. If such a revenue ruling or opinion is no
longer available, the automatic conversion feature may be suspended, in which
event no further conversion of Matured Class B shares would occur while such
suspension remained in effect. Although Matured Class B shares could then be
exchanged for Class A shares on the basis of relative net asset value of the two
classes, without the imposition of a sales charge or fee, such exchange could
constitute a taxable event for the holder, and absent such exchange, Class B
shares might continue to be subject to the asset-based sales charge for longer
than six years.
The methodology for calculating the net asset value, dividends and
distributions of the Fund Class A and Class B shares recognizes two types of
expenses. General expenses that do not pertain specifically to either class are
allocated pro rata to the shares of each class, based on the percentage of the
net assets of such class to the Fund's total net assets, and then equally to
each outstanding share within a given class. Such general expenses include (i)
management fees, (ii) legal, bookkeeping and audit fees, (iii) printing and
mailing costs of shareholder reports, prospectuses, statements of additional
information and other materials for current shareholders, (iv) fees to
unaffiliated Trustees, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and brokerage
commissions, and (ix) non-recurring expenses, such as litigation costs. Other
expenses that are directly attributable to a class are allocated equally to each
outstanding share within that class. Such expenses included (i) Distribution
Plan fees, (ii) incremental transfer and shareholder servicing agent fees and
expenses, (iii) registration fees and (iv) shareholder meeting expenses, to the
extent that such expenses pertain to a specific class rather than to the Fund as
a whole.
REDUCED SALES CHARGE. Reduced sales charges are applicable to purchases
of $50,000 or more of Class A shares of the Fund alone or in combination with
purchases of shares of other Victory Portfolios made at any one time. To obtain
the reduction of the sales charge, you or your investment professional must
notify the Transfer Agent at the time of purchase whenever a quantity discount
is applicable to your purchase. Upon such notification, you will receive the
lowest applicable sales charge.
The contingent deferred sales charge is waived on Class B shares in the
following cases: (i) shares sold to Key Advisers, the Sub-Adviser or their
affiliates; (ii) shares issued in plans of reorganization to which the Fund is a
party; and (iii) shares redeemed in involuntary redemptions.
In addition to investing at one time in any combination of Class A
shares of the Victory Portfolios in an amount entitling you to a reduced
sales charge, you may qualify for a reduction in the sales charge under the
following programs:
COMBINED PURCHASES. When you invest in Class A shares of the Victory
Portfolios for several accounts at the same time, you may combine these
investments into a single transaction if purchased through one investment
professional, and if the total is $50,000 or more. The following may qualify for
this privilege: an individual, or "company" as defined in Section 2(a)(8) of the
1940 Act; an individual, spouse, and their children under age 21 purchasing for
his, her, or their own account; a trustee, administrator or other fiduciary
purchasing for a single trust estate or single fiduciary account or for a single
or a parent-subsidiary group of "employee benefit plans" (as defined in Section
3(3) of ERISA); and tax-exempt organizations under Section 501(c)(3) of the
Internal Revenue Code.
RIGHTS OF ACCUMULATION. Your "Rights of Accumulation" permit reduced
sales charges on future purchases of Class A shares after you have reached a new
breakpoint. You can add the value of existing Victory Portfolios shares held by
you, your spouse, and your children under age 21, determined at the previous
day's NAV at the close of business, to the amount of your new purchase valued at
the current offering price to determine your reduced sales charge.
LETTER OF INTENT. If you anticipate purchasing $50,000 or more of
shares of the Fund alone or in combination with Class A shares of certain other
Victory Portfolios within a 13-month period, you may obtain shares of the
portfolios at the same reduced sales charge as though the total quantity were
invested in one lump sum, by filing a non-binding Letter of Intent (the
"Letter") within 90 days of the start of the purchases. Each investment you make
after signing the Letter will be entitled to the sales charge applicable to the
total investment indicated in the Letter. For example, a $2,500 purchase toward
a $60,000 Letter would receive the same reduced sales charge as if the $60,000
had been invested at one time. To ensure that the reduced price will be received
on future purchases, you or your investment professional must inform the
transfer agent that the Letter is in effect each time shares are purchased.
Neither income dividends nor capital gain distributions taken in additional
shares will apply toward the completion of the Letter.
Your initial investment must be at least 5% of the total amount you
plan to invest. Out of the initial purchase, 5% of the dollar amount specified
in the Letter will be registered in your name and held in escrow. The shares
held in escrow cannot be redeemed or exchanged until the Letter is satisfied or
the additional sales charges have been paid. You will earn income dividends and
capital gain distributions on escrowed shares. The escrow will be released when
your purchase of the total amount has been completed. You are not obligated to
complete the Letter.
If you purchase more than the amount specified in the Letter and
qualify for a further sales charge reduction, the sales charge will be adjusted
to reflect your total purchase at the end of 13 months. Surplus funds will be
applied to the purchase of additional shares at the then current offering price
applicable to the total purchase.
If you do not complete your purchase under the Letter within the
13-month period, your sales charge will be adjusted upward, corresponding to the
amount actually purchased, and if after written notice, you do not pay the
increased sales charge, sufficient escrowed shares will be redeemed to pay such
charge.
ADDITIONAL EXCHANGE INFORMATION
Class A shares of the Victory Portfolios (see "Description of Victory
Portfolios" below) may be exchanged for shares of any Victory money market fund
or any Victory Portfolios with a reduced sales charge. Shares of any Victory
money market portfolio or any Victory Portfolios with a reduced sales charge may
be exchanged for shares of the Fund upon payment of the difference in the sales
charge (or, if applicable, shares of any Victory money market portfolio may be
used to purchase Class B shares of the Fund.)
Class B shares of the Fund may be exchanged for shares of other Victory
Portfolios that offer Class B shares. The CDSC applicable to Class B shares is
imposed on Class B shares redeemed within six years of the initial purchase of
the exchanged Class B shares. When Class B shares are redeemed to effect an
exchange, the priorities described in "How to Invest" in the Prospectus for the
imposition of the Class B CDSC will be followed in determining the order in
which the shares are exchanged. Shareholders should take into account the effect
of any exchange on the applicability and rate of any CDSC that might be imposed
in the subsequent redemption of remaining shares. Shareholders owning shares of
both classes must specify whether they intend to exchange Class A or Class B
shares.
ADDITIONAL REDEMPTION INFORMATION
REINSTATEMENT PRIVILEGE. Within 90 days of a redemption, a shareholder
may reinvest all or part of the redemption proceeds of (i) Class A shares, or
(ii) Class B shares that were subject to the Class B contingent deferred sales
charge when redeemed, in Class A shares of the Fund or any of the other Victory
Portfolios into which shares of the Fund are exchangeable as described below, at
the net asset value next computed after receipt by the Transfer Agent of the
reinvestment order. No charge is currently made for reinvestment in shares of
the Fund but a reinvestment in shares of certain other Victory Portfolios is
subject to a $5.00 service fee. The shareholder must ask the Distributor for
such privilege at the time of reinvestment. Any capital gain that was
realized when the shares were redeemed is taxable, and reinvestment will not
alter any capital gains tax payable on that gain. If there has been a capital
loss on the redemption, some or all of the loss may not be tax deductible,
depending on the timing and amount of the reinvestment. Under the Internal
Revenue Code, if the redemption proceeds of Fund shares on which a sales
charge was paid are reinvested in shares of the Fund or another of the Victory
Portfolios within 90 days of payment of the sales charge, the shareholder's
basis in the shares of the Fund that were redeemed may not include the amount of
the sales charge paid. That would reduce the loss or increase the gain
recognized from redemption. The Fund may amend, suspend or cease offering this
reinvestment privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation. You must reinstate your shares into an
account with the same registration. This privilege may be exercised only once by
a shareholder with respect to the Fund. For information on which funds are
available for the Reinstatement Privilege, please consult your program
materials.
DIVIDENDS AND DISTRIBUTIONS
The Fund ordinarily declares and pays dividends separately for Class A
and Class B shares from its net investment income quarterly. The Fund
distributes substantially all of its net investment income and net capital
gains, if any, to shareholders within each calendar year as well as on a fiscal
year basis to the extent required for the Fund to qualify for favorable federal
tax treatment.
The amount of a class's distributions may vary from time to time
depending on market conditions, the composition of the Fund's portfolio, and
expenses borne by the Fund or borne separately by a class, as described in
"Alternative Sales Arrangements - Class A and Class B," above. Dividends are
calculated in the same manner, at the same time and on the same day for shares
of each class. However, dividends on Class B shares are expected to be lower as
a result of the asset-based sales charge on Class B shares, and Class B
dividends will also differ in amount as a consequence of any difference in net
asset value between Class A and Class B shares.
For this purpose, the net income of the Fund, from the time of the
immediately preceding determination thereof, shall consist of all interest
income accrued on the portfolio assets of the Fund, dividend income, if any,
income from securities loans, if any, and realized capital gains and losses on
the Fund assets, less all expenses and liabilities of the Fund chargeable
against income. Interest income shall include discount earned, including both
original issue and market discount, on discount paper accrued ratably to the
date of maturity. Expenses, including the compensation payable to Key Advisers
or the Sub-Adviser, are accrued each day. The expenses and liabilities of the
Fund shall include those appropriately allocable to the Fund as well as a
share of the general expenses and liabilities of the Victory Portfolios in
proportion to the Fund's share of the total net assets of the Victory
Portfolios.
Additional Tax Information
It is the policy of each fund of the Victory Portfolios to qualify for
the favorable tax treatment accorded regulated investment companies ("RICs")
under Subchapter M of the Code, for so long as such qualification is in the best
interest of its shareholders. By following such policy and distributing its
income and gains currently with respect to each taxable year, the Victory
Portfolios expects to eliminate or reduce to a nominal amount the federal income
and excise taxes to which it may otherwise be subject.
In order to qualify as a RIC, each fund must, among other things, (1)
derive at least 90% of its gross income from dividends, interest, payments with
respect to securities loans, and gains from the sale or other disposition of
stock or securities, foreign currencies or other income (including gains from
options, futures or forward contracts) derived with respect to its business of
investing in stock, securities or currencies, (2) derive less than 30% of its
gross income from the sale or other disposition of stock, securities, options,
futures, forward contracts, and certain foreign currencies (or options, futures,
or forward contracts on foreign currencies) held for less than three months, and
(3) diversify its holdings so that at the end of each quarter of its taxable
year (i) at least 50% of the market value of the fund's assets is represented by
cash or cash items, U.S. Government securities, securities of other RICs and
other securities limited, in respect of any one issuer, to an amount not greater
than 5% of the value of the fund's total assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of its
total assets is invested in the securities of any one issuer (other than U.S.
Government securities) or of two or more issuers that the Victory Portfolios
control and that are engaged in the same, similar, or related trades or
businesses. These requirements may restrict the degree to which the Victory
Portfolios may engage in short-term trading and concentrate investments. If a
fund qualifies as a RIC, it will not be subject to federal income tax on the
part of its net investment income and net realized capital gains, if any, that
it distributes to shareholders with respect to each taxable year within the time
limits specified in the Code.
A non-deductible excise tax is imposed on regulated investment
companies that do not distribute in each calendar year an amount equal to 98% of
their ordinary income for the year plus 98% of their capital gain net income for
the 1-year period ending on October 31 of such calendar year. The balance of
such income must be distributed during the following calendar year. If
distributions during a calendar year are less than the required amount, the fund
is subject to a non-deductible excise tax equal to 4% of the deficiency.
Certain investment and hedging activities of a fund, including
transactions in options, futures contracts, hedging transactions, forward
contracts, straddles, foreign currencies, and foreign securities, are subject to
special tax rules. In a given case, these rules may accelerate income to the
fund, defer losses to the fund, cause adjustments in the holding periods of the
fund's securities, convert short-term capital losses into long-term capital
losses, or otherwise affect the character of the fund's income. These rules
could therefore affect the amount, timing and character of distributions to
shareholders. The Victory Portfolios will endeavor to make any available
elections pertaining to such transactions in a manner believed to be in the best
interest of the Victory Portfolios and their securities.
Each fund will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of taxable dividends paid to any shareholder who has
failed to provide (or provided an incorrect) tax identification number, or is
subject to withholding pursuant to a notice from the Internal Revenue Service
for failure to properly include on his or her income tax return payments of
interest or dividends. This "backup withholding" is not an additional tax, and
any amounts withheld may be credited against the shareholder's ultimate U.S. tax
liability.
Information set forth in the Prospectus and this Statement of
Additional Information that relates to federal taxation is only a summary of
certain key federal tax considerations generally affecting purchasers of shares
of the Victory Portfolios. No attempt has been made to present a complete
explanation of the federal tax treatment of a fund or its shareholders, and this
discussion is not intended as a substitute for careful tax planning.
Accordingly, potential purchasers of shares of a fund of these Portfolios are
urged to consult their tax advisers with specific reference to their own tax
circumstances. In addition, the tax discussion in the Prospectus and this
Statement of Additional Information is based on tax law in effect on the date of
the Prospectus and this Statement of Additional Information; such laws and
regulations may be changed by legislative, judicial or administrative action,
sometimes with retroactive effect.
<PAGE>
MANAGEMENT OF THE VICTORY PORTFOLIOS
Board of Trustees
Overall responsibility for management of the Victory Portfolios rests
with the Trustees, who are elected by the shareholders of the Victory
Portfolios. The Victory Portfolios are managed by the Trustees in accordance
with the laws of the Commonwealth of Massachusetts governing business trusts.
There are currently seven Trustees, six of whom are not "interested persons" of
the Victory Portfolios within the meaning of that term under the 1940 Act. The
Trustees, in turn, elect the officers of the Victory Portfolios to supervise
actively its day-to-day operations.
The Trustees of the Victory Portfolios, their addresses, ages and their
principal occupations during the past five years are as follows:
<TABLE>
Position(s) Held
With the Victory Principal Occupation
Name, Address and Age Portfolios During Past 5 Years
- --------------------- -------------------- -------------------
<S> <C> <C>
Robert G. Brown, 72
5460 N. Ocean Drive
Singer Island, FL 33404 Trustee Retired; from October 1983 to November 1990, President,
Cleveland Advanced Manufacturing Program (non-profit
corporation engaged in regional economic development);
Trustee, The Victory Funds.
Edward P. Campbell, 45
Nordson Corporation
28601 Clemens Road
Westlake, OH 44145 Trustee From March, 1994 to present, Executive Vice President and
Chief Operating Officer of Nordson Corporation
(manufacturer of application equipment); from May, 1988
March 1994, Vice President of Nordson Corporation; from
1987 to August 1994, member of the Supervisory
Committee of Society's Collective Investment Retirement
Fund; from May 1991 to August 1994, Trustee, Financial
Reserves Fund and from May 1993 to August 1994,
Trustee, Ohio Municipal Money Market Fund; Trustee, The
Victory Funds and Spears, Benzak, Salomon and Farrell
("SBSF") Funds.
Dr. Harry Gazelle, 67
17822 Lake Road
Lakewood, Ohio 44107 Trustee Retired radiologist, Drs. Hill and Thomas Corp. Trustee,
The Victory Funds.
<PAGE>
Dr. Thomas F. Morrissey, 62
Weatherhead School of
Management
Case Western Reserve
University
10900 Euclid Avenue
Cleveland, OH 44106-7235 Trustee 1995 Visiting Scholar, Bond University, Queensland,
Australia; Professor, Weatherhead School of Management,
Case Western Reserve University; from 1989 to 1995,
Associate Dean of Weatherhead School of Management;
from 1987 to August 1994, Member of the Supervisory
Committee of Society's Collective Investment Retirement
Fund; from May 1991 to August 1994, Trustee, Financial
Reserves Fund and from May 1993 to August 1994,
Trustee, Ohio Municipal Money Market Fund; Trustee, The
Victory Funds.
Stanley I. Landgraf, 70
41 Traditional Lane
Albany, NY 12211 Trustee Retired; currently, Trustee, Rensselaer Polytechnic Institute;
Director, Elenel Corporation, Albany International
Corporation and Mechanical Technology, Inc.; Member,
Board of Overseers, School of Management, Rensselaer
Polytechnic Institute; Member, The Fifty Group (a Capital
Region business organization); Trustee, The Victory Funds.
Leigh A. Wilson*, 51
River Tower
420 East 54th Street
Apt. 10H
New York, NY 10022 Trustee and President From 1989 to present, Chairman and Chief Executive
Officer, Glenleigh
International Limited;
from 1984-1989, Chief
Executive Officer,
Paribas North America and
Paribas Corporation;
Trustee, The Victory
Funds and SBSF Funds.
Dr. H. Patrick Swygert, 52
Howard University
2400 6th Street, N.W.
Suite 320
Washington, D.C. ___ Trustee Currently President, Howard University; Trustee, The
Victory Funds; formerly President, State University of New
York at Albany; formerly, Executive Vice President,
Temple University.
</TABLE>
- ------------
* Mr. Wilson is deemed to be an "interested person" of The Victory Portfolios
under the 1940 Act solely by reason of his position as President.
The Board presently has an Investment Policy Committee and a Business,
Legal, and Audit Committee. The members of the Investment Policy Committee are
Messrs. Morrissey, Brown and Landgraf (Chairman), who will serve until May 1996.
The function of the Investment Policy Committee is to review the existing
investment policies of the Victory Portfolios, including the levels of risk and
types of funds available to shareholders, and make recommendations to the Board
of Trustees regarding the revision of such policies or, if necessary, the
submission
<PAGE>
of such revisions to the Victory Portfolios' shareholders for their
consideration. The members of the Business, Legal and Audit Committee are
Messrs. Swygert (Chairman), Campbell and Gazelle who will serve until May 1996.
The function of the Business, Legal and Audit Committee is to recommend
independent auditors and monitor accounting and financial matters; to nominate
persons to serve as disinterested Trustees and Trustees to serve on committees
of the Board; and to review compliance and contract matters.
The Investment Policy Committee met four times during the current
fiscal year commencing November 1, 1994. The Business, Legal and Audit Committee
was constituted on May 24, 1995 (and has met once since then) and replaced the
Audit Committee, the Legal Committee and the Nominating Committee, which met
three times, one time and one time, respectively, during the current fiscal year
prior to May 31, 1995.
REMUNERATION OF TRUSTEES AND CERTAIN EXECUTIVE OFFICERS
Effective June 1, 1995, each Trustee (other than Leigh A. Wilson)
receives an annual fee of $27,000 for serving as Trustee of all the Funds of the
Victory Portfolios, and an additional per meeting fee ($2,400 in person and
$1,200 per telephonic meeting).
Effective June 1, 1995, Leigh A. Wilson receives an annual fee of
$33,000 for serving as President and Trustee for all of the Funds of the Victory
Portfolios, and an additional per meeting fee ($3,000 in person and $1,500 per
telephonic meeting).
The following tables indicate the compensation received by each Trustee
during the fiscal year of the Funds which ended on October 31, 1995:
<TABLE>
The Victory The Victory The Victory The Victory
The Victory Diversified Government The Victory Intermediate International
Balanced Fund1/ Stock Fund Mortgage Fund1/ Growth Fund2/ Income Fund Growth Fund2/
--------------- ---------- --------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee ........ $1,178.91 $2,331.48 $1,126.45 $1,168.23 $980.48 $880.52
Edward P. Campbell,
Trustee .......... 1,539.75 2,009.87 1,174.17 740.45 841.67 670.63
Harry Gazelle,
Trustee .......... 974.79 1,929.86 919.93 987.41 809.59 735.72
John W. Kemper,
Trustee* ......... 541.57 1,060.05 589.95 843.06 458.81 506.60
Thomas F. Morrissey,
Trustee .......... 1,539.75 2,009.87 1,174.17 1,151.74 841.67 802.87
Stanley I. Landgraf,
Trustee .......... 1,014.75 2,009.87 949.17 842.51 841.67 708.01
Leigh A. Wilson,
Trustee .......... 1,112.55 2,206.35 1,021.27 1,213.17 920.59 865.44
H. Patrick Swygert,
Trustee .......... 1,014.75 2,009.87 949.17 1,151.74 841.67 802.87
John Buckingham,*
Trustee .......... 541.57 1,060.05 589.95 226.15 458.81 409.93
John R. Young,*
Trustee .......... 577.04 1,132.82 621.95 750.08 488.98 494.95
</TABLE>
*Resigned
- ------------------------------------------------
1/ For certain Trustees, these amounts include payments made by the Society
Collective Investment Retirement Funds, which were reorganized into these
Funds as of December 19, 1994.
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
<TABLE>
The Victory The Victory The Victory The Victory The Victory The Victory
Investment Quality Limited Term Ohio Municipal Ohio Regional Prime Obligations Special
Bond Fund2/ Income Fund2/ Bond Fund Stock Fund Fund Value Fund
------------- ------------- ----------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee .......... $1,052.54 $1,155.92 $443.98 $271.80 $4,747.58 $1,091.75
Edward P. Campbell,
Trustee .......... 776.01 922.20 376.72 231.79 3,921.95 942.58
Harry Gazelle,
Trustee .......... 876.72 969.26 364.09 223.52 3,832.26 904.37
John W. Kemper,*
Trustee .......... 644.08 581.73 223.59 133.11 2,818.92 489.58
Thomas F. Morrissey,
Trustee .......... 966.09 1,045.87 376.72 231.79 3,921.95 942.58
Stanley I. Landgraf,
Trustee ......... 827.74 960.31 376.72 231.79 3,921.95 942.58
Leigh A. Wilson,
Trustee .......... 1,033.38 1,143.77 407.85 252.05 4,143.70 1,036.09
H. Patrick Swygert,
Trustee .......... 966.09 1,045.87 376.72 231.79 3,921.95 942.58
John D. Buckingham,*
Trustee .......... 504.76 495.35 223.59 133.11 2,818.92 489.58
John R. Young,*
Trustee .......... 619.72 590.17 236.57 140.98 2,915.30 523.93
</TABLE>
* Resigned
- ------------------------------------------------
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
<TABLE>
The Victory The Victory Victory
Tax-Free The Victory U.S. The Victory Institutional Stock
Money Government The Victory The Victory Government Money Index
Market Fund Obligations Fund2/ Value Fund2/ Fund for Income3/ Bond Fund3/ Market Fund3/ Fund
----------- ------------------ ------------ ----------------- ----------- ------------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee .......... $ 1,781.03 $ 5,774.42 $ 1,842.48 $ 217.14 $ 773.66 $ 3,820.17 $ 797.69
Edward P. Campbell,
Trustee .......... 1,523.27 4,324.24 1,581.23 114.18 389.76 2,204.64 689.90
Harry Gazelle,
Trustee .......... 1,467.67 4,922.46 1,522.01 189.79 675.74 3,425.47 661.40
John W. Kemper,*
Trustee .......... 853.51 3,098.06 841.91 161.55 624.83 2,554.32 356.16
Thomas F. Morrissey,
Trustee .......... 1,523.57 5,336.76 1,583.17 228.46 819.94 4,004.82 689.90
Stanley I. Landgraf,
Trustee .......... 1,523.57 4,828.66 1,580.86 157.16 535.10 2,927.66 689.90
Leigh A. Wilson,
Trustee .......... 1,661.60 5,902.24 1,732.57 248.70 874.92 4,397.12 759.38
H. Patrick Swygert,
Trustee .......... 1,523.57 5,336.76 1,583.17 228.46 819.94 4,004.82 689.90
John D. Buckingham,*
Trustee .......... 853.51 2,478.65 840.54 82.92 318.60 1,333.87 356.16
John R. Young,*
Trustee .......... 900.37 3,074.28 899.81 140.67 535.81 2,223.97 379.85
</TABLE>
* Resigned
- ------------------------------------------------
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
3/ For certain Trustees, these amounts include amounts paid by this Fund's
successor, a Portfolio of The Victory Funds, which was reorganized as the
Fund as of June 5, 1995.
<TABLE>
The Victory
The Victory The Victory The Victory Ohio The Victory Financial
National Municipal New York Municipal Money Special Growth Reserves
Bond Fund3/ Tax-Free Fund3/ Market Fund3/ ____Fund2/ Funds 3/
<S> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee .......... $39.89 $141.29 $2,962.00 $401.99 $4,834.58
Edward P. Campbell,
Trustee .......... 26.78 76.45 4,899.18 272.35 3,549.91
Harry Gazelle,
Trustee........... 37.48 123.38 3,548.52 341.34 5,474.20
John W. Kemper,*
Trustee .......... 18.20 100.45 1,893.61 260.65 2,913.01
Thomas F. Morrissey,
Trustee .......... 40.09 148.08 5,602.37 388.49 4,996.26
Stanley I. Landgraf,
Trustee .......... 38.83 104.47 3,183.11 307.57 5,112.02
Leigh A. Wilson,
Trustee .......... 49.44 162.90 3,424.84 417.32 5,729.73
H. Patrick Swygert,
Trustee .......... 40.09 148.08 3,102.37 388.49 4,996.26
John D. Buckingham,*
Trustee .......... 13.33 51.65 1,784.96 177.06 2,598.87
John R. Young,*
Trustee .......... 18.91 88.31 1,661.29 238.89 2,709.16
</TABLE>
- ------------------------------------------------
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
3/ For certain Trustees, these amounts include amounts paid by this Fund's
predecessor, a Portfolio of The Victory Funds, which was reorganized as the
Fund as of June 5, 1995.
<PAGE>
<TABLE>
Total Compensation
Pension or Retirement Benefits Estimated Annual from Victory
Accrued as Portfolio Expenses Benefits "Fund Complex"
Upon Retirement 4/
<S> <C> <C> <C>
Robert G. Brown, Trustee -0- -0- $39,815.98
Edward P. Campbell, Trustee -0- -0- 33,799.68
Harry Gazelle, Trustee -0- -0- 35,916.98
John W. Kemper, Trustee* -0- -0- 22,567.31
Thomas F. Morrissey, Trustee -0- -0- 40,366.98
Stanley I. Landgraf, Trustee -0- -0- 34,615.98
Leigh A. Wilson, Trustee -0- -0- 46,716.97
H. Patrick Swygert, Trustee -0- -0- 37,116.98
John D. Buckingham, Trustee -0- -0- 18,841.89
John R. Young, Trustee* -0- -0- 21,963.81
</TABLE>
* Resigned
- ------------------------------------
4/ For certain Trustees, these amounts include compensation received from
The Victory Funds (which were reorganized into the Current Company as
of June 5, 1995), the SBSF Funds (the investment adviser of which was
acquired by KeyCorp effective April, 1995) and Society's Collective
Investment Retirement Funds, which were reorganized into the Balanced
Fund and Government Mortgage Fund as of December 19, 1994. There are
presently 24 mutual funds from which the above-named Trustees are
compensated in the Victory "Fund Complex," but not all of the
above-named Trustees serve on the boards of each fund in the "Fund
Complex."
<TABLE>
Total Compensation
Pension or Retirement Benefits Estimated Annual from Victory
Accrued as Portfolio Expenses Benefits "Fund Complex"
Upon Retirement 4/
<S> <C> <C> <C>
Robert G. Brown, Trustee -0- -0- $39,815.98
Edward P. Campbell, Trustee -0- -0- 33,799.68
Harry Gazelle, Trustee -0- -0- 35,916.98
John W. Kemper, Trustee* -0- -0- 22,567.31
Thomas F. Morrissey, Trustee -0- -0- 40,366.98
Stanley I. Landgraf, Trustee -0- -0- 34,615.98
Leigh A. Wilson, Trustee -0- -0- 46,716.97
H. Patrick Swygert, Trustee -0- -0- 37,116.98
John D. Buckingham, Trustee -0- -0- 18,841.89
John R. Young, Trustee* -0- -0- 21,963.81
* Resigned
- ------------------------------------
4/ For certain Trustees, these amounts include compensation received from
The Victory Funds (which were reorganized into the Current Company as
of June 5, 1995), the SBSF Funds (the investment adviser of which was
acquired by KeyCorp effective April, 1995) and Society's Collective
Investment Retirement Funds, which were reorganized into the Balanced
Fund and Government Mortgage Fund as of December 19, 1994. There are
presently 24 mutual funds from which the above-named Trustees are
compensated in the Victory "Fund Complex," but not all of the
above-named Trustees serve on the boards of each fund in the "Fund
Complex."
</TABLE>
Officers
The officers of the Victory Portfolios, their addresses, ages
and principal occupations during the past five years are as follows:
<TABLE>
Position with the Principal occupation
Name Victory Portfolios during past 5 years
<S> <C> <C>
Leigh A. Wilson, 51 President and Trustee From 1989 to present, Chairman and
Chief Executive Officer, Glenleigh
International Limited; from 1984-1989,
Chief Executive Officer, Paribas North
America and Paribas Corporation; Trustee
to The Victory Funds and SBSF Funds.
William B. Blundin, 57 Vice President Senior Vice President of BISYS Fund
Services; officer of other investment
companies administered by BISYS Fund
Services; President and Chief Executive
Officer of Vista Broker-Dealer Services,
Inc., Emerald Asset Management, Inc. and
BNY Hamilton Distributors, Inc.,
registered broker/dealers.
<PAGE>
J. David Huber, 49 Vice President Executive Vice President, BISYS Fund
Services.
Scott A. Englehart, 33 Secretary From October 1990 to present, employee
of BISYS Fund Services, Inc.; from 1985
to October 1990, Manager of Banking
Center, Fifth Third Bank.
George O. Martinez, 36 Assistant Secretary From March 1995 to present, Senior Vice
President and Director of Legal and
Compliance Services, BISYS Fund
Services; from June 1989-March 1995,
Vice President and Associate General
Counsel, Alliance Capital Management.
Martin R. Dean, 31 Treasurer From May 1994 to present, employee of
BISYS Fund Services; from January 1987
- April 1994, Senior Manager, KPMG
Peat Marwick.
Adrian J. Waters, 32 Assistant Treasurer From May 1993 to present, employee of
BISYS Fund Services; from 1989-May
1993, Manager, Price Waterhouse.
</TABLE>
The mailing address of each of the officers of the Victory Portfolios
is 3435 Stelzer Road, Columbus, Ohio 43219-3035.
<PAGE>
The officers of the Victory Portfolios receive no
compensation directly from the Victory Portfolios for performing
the duties of their offices. BISYS Fund Services, Inc. receives
fees from the Victory Portfolios for acting as Administrator.
As of January 6, 1996, the Trustees and officers as a group owned
beneficially less than 1% of the Fund.
Investment Adviser and Sub-Adviser
KeyCorp Mutual Fund Advisers, Inc. was organized as an Ohio corporation
on July 27, 1995 and is registered as an investment adviser under the 1940 Act.
It is a wholly-owned subsidiary of KeyCorp Asset Management Holdings, Inc.,
which is a wholly-owned subsidiary of Society National Bank, a wholly-owned
subsidiary of KeyCorp . Affiliates of Key Advisers manage approximately $37
billion for numerous clients including large corporate and public retirement
plans, Taft-Hartley plans, foundations and endowments, high net worth
individuals and mutual funds.
KeyCorp, a financial services holding company, is headquartered at 127
Public Square, Cleveland, Ohio 44114. As of June 30, 1995, KeyCorp had an asset
base of $67.5 billion, with banking offices in 25 states from Maine to Alaska,
and trust and investment offices in 16 states. KeyCorp is the resulting entity
of a merger between Society Corporation, the bank holding company of which
Society National Bank was a wholly-owned subsidiary, and KeyCorp, the former
bank holding company, which merger was consummated during the first quarter of
1994. KeyCorp's major business activities include providing traditional banking
and associated financial services to consumer, business and commercial markets.
Its non-bank subsidiaries include investment advisory, securities brokerage,
insurance, bank credit card processing, and mortgage leasing companies. Society
National Bank is the lead affiliate bank of KeyCorp.
The following schedule lists the advisory fees for each mutual fund that is
advised by Key Advisers.
.25 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Institutional Money Market Fund
.35 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Prime Obligations Fund
Victory U.S. Government Obligations Fund
Victory Tax-Free Money Market Fund
.50 OF 1% OF AVERAGE DAILY NET ASSETS Victory Ohio Municipal Money
Market Fund Victory Limited Term Income Fund Victory
Government Mortgage Fund Victory Financial Reserves Fund
Victory Fund for Income #
.55 OF 1% OF AVERAGE DAILY NET ASSETS
Victory National Municipal Bond Fund
Victory Government Bond Fund
Victory New York Tax-Free Fund
.60 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Ohio Municipal Bond Fund
Victory Stock Index Fund
.65 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Diversified Stock Fund
.75 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Intermediate Income Fund
Victory Investment Quality Bond Fund
Victory Ohio Regional Stock Fund
1% OF AVERAGE DAILY NET ASSETS
Victory Balanced Fund
Victory Value Fund
Victory Growth Fund
Victory Special Value Fund
Victory Special Growth Fund+/-
1.10% OF AVERAGE DAILY ASSETS
Victory International Growth Fund
# First Albany Asset Management Corporation serves as
sub-adviser to the Victory Fund for Income, for which it
receives .20% paid by Key Advisers.
+/- T. Rowe Price Associates, Inc. serves as sub-adviser to
Society Special Growth Fund, for which it receives .25% of
average daily net assets up to $100 million and .20% of
average daily net assets in excess of $100 million paid by Key
Advisers.
ADVISORY AND OTHER CONTRACTS
Unless sooner terminated, the Investment Advisory Agreement between Key
Advisers and the Funds provides that it will continue in effect as to a
particular Fund for an initial two-year term and for consecutive one-year terms
thereafter, provided that such continuance is approved at least annually by the
Victory Portfolios' Trustees or by vote of a majority of the outstanding shares
of such Fund (as defined under "GENERAL INFORMATION Miscellaneous" in the
Prospectuses), and, in either case, by a majority of the Trustees who are not
parties to the Investment Advisory Agreement or interested persons (as defined
in the 1940 Act) of any party to the Investment Advisory Agreement, by votes
cast in person at a meeting called for such purpose.
The Investment Advisory Agreement is terminable as to a particular Fund
at any time on 60 days' written notice without penalty by the Trustees, by vote
of a majority of the outstanding shares of that Fund, or by Key Advisers. The
Investment Advisory Agreement also terminates automatically in the event of any
assignment, as defined in the 1940 Act.
The Investment Advisory Agreement provides that Key Advisers shall not
be liable for any error of judgment or mistake of law or for any loss suffered
by the Victory Portfolios in connection with the performance of services
pursuant to the Investment Advisory Agreement, except a loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith, or gross
negligence on the part of Key Advisers in the performance of its duties, or from
reckless disregard by it of either duties and obligations thereunder.
Under the Investment Advisory Agreement, Key Advisers has agreed to
provide investment advisory services as described in the Prospectus. For the
services provided and expenses assumed pursuant to the Investment Advisory
Agreement, the Fund pays Key Advisers a fee, computed daily and paid monthly,
at the annual rate of one percent (1.00%) of the average daily net assets of
the Fund.
Prior to January, 1993, Society National Bank served as investment
adviser to the Fund. From January, 1993 until , 1995,
Society Asset Management, Inc. served as investment adviser to the Fund. For
the fiscal period ended October 31, 1994, the Fund paid investment advisory fee
of $588,378 after fee reduction of $242,661. For the six months ended April 30,
1995, the Fund paid investment advisory fees of $----------.
Under an investment advisory agreement between the Victory Portfolios,
on behalf of the Fund, and Key Advisers, Key Advisers may delegate a portion of
its responsibilities to a subadviser. In addition, the investment advisory
agreement provides that Key Advisers may render services through its own
employees or the employees of one or more affiliated companies that are
qualified to act as an investment adviser of the Fund and are under the common
control of KeyCorp as long as all such persons are functioning as part of an
organized group of persons, managed by authorized officers of Key Advisers.
Key Advisers has entered into an investment sub-advisory agreement with
its affiliate, Society Asset Management, Inc. on behalf of each of the Victory
Portfolios except Fund for Income and Special Growth Fund. The Sub-Adviser is a
wholly-owned subsidiary of KeyCorp Asset Management Holdings, Inc. With respect
to the day to day management of the Fund, under the sub-advisory agreement, the
Sub-Adviser makes decisions concerning, and places all orders for, purchases and
sales of securities and helps maintain the records relating to such purchases
and sales. The Sub-Adviser may, in its discretion, provide such services through
its own employees or the employees of one or more affiliated companies that are
qualified to act as an investment adviser to the Company under applicable laws
and are under the common control of KeyCorp; provided that (i) all persons, when
providing services under the sub-advisory agreement, are functioning as part of
an organized group of persons, and (ii) such organized group of persons is
managed at all times by authorized officers of the Sub-Adviser. This arrangement
will not result in the payment of additional fees by the Fund. For its services
under the investment sub-advisory agreement, Key Advisers pays the Sub-Adviser
sub-advisory fees at rates (based on an annual percentage of average daily net
assets) which vary according to the schedule below:
For the Balanced Fund, Diversified For the International Growth Fund, Ohio
Stock Fund, Growth Fund, Stock Index Regional Stock Fund and Special Value
Fund and Value Fund: Fund:
Rate of Rate of
Sub-Advisory Sub-Advisory
Net Assets Fee* Net Assets Fee*
Up to $10,000,000 0.65% Up to $10,000,000 0.90%
Next $15,000,000 0.50% Next $15,000,000 0.70%
Next $25,000,000 0.40% Next $25,000,000 0.55%
Above $50,000,000 0.35% Above $50,000,000 0.45%
For the Intermediate Income Fund, For the Prime Obligations Fund, Tax-Free
Investment Quality Bond Fund, Limited Money Market Fund, U.S. Government
Term Income Fund, Ohio Municipal Bond Obligations Fund, Financial Reserves
Fund, Goverment Bond Fund, Government Fund, Institutional Money Market Fund and
Mortgage Fund, National Municipal Ohio Municipal Money Market Fund:
Bond Fund and New York Tax-Free Fund:
Rate of Rate of
Sub-Advisory Sub-Advisory
Net Assets Fee* Net Assets Fee*
Up to $10,000,000 0.40% Up to $10,000,000 0.25%
Next $15,000,000 0.30% Next $15,000,000 0.20%
Next $25,000,000 0.25% Next $25,000,000 0.15%
Above $50,000,000 0.20% Above $50,000,000 0.125%
- --------------------
* As a percentage of average daily net assets. Note, however,
that the Sub-Adviser shall have the right, but not the
obligation, to voluntarily waive any portion of the
sub-advisory fee from time to time. Any such voluntary
waiver will be irrevocable and determined in advance of
rendering sub-investment advisory services by the
Sub-Adviser, and shall be in writing and signed by the
parties hereto.
<PAGE>
Glass-Steagall Act
In 1971 the United States Supreme Court held in Investment Company
Institute v. Camp that the federal statute commonly referred to as the
Glass-Steagall Act prohibits a national bank from operating a fund for the
collective investment of managing agency accounts. Subsequently, the Board of
Governors of the Federal Reserve System (the "Board") issued a regulation and
interpretation to the effect that the Glass-Steagall Act and such decision: (a)
forbid a bank holding company registered under the Federal Bank Holding Company
Act of 1956 (the "Holding Company Act") or any non-bank affiliate thereof from
sponsoring, organizing, or controlling a registered, open-end investment company
continuously engaged in the issuance of its shares, but (b) do not prohibit such
a holding company or affiliate from acting as investment adviser, transfer
agent, and custodian to such an investment company. In 1981 the United States
Supreme Court held in Board of Governors of the Federal Reserve System v.
Investment Company Institute that the Board did not exceed its authority under
the Holding Company Act when it adopted its regulation and interpretation
authorizing bank holding companies and their non-bank affiliates to act as
investment advisers to registered closed-end investment companies. In the Board
of Governors case, the Supreme Court also stated that if a national bank
complied with the restrictions imposed by the Board in its regulation and
interpretation authorizing bank holding companies and their non-bank affiliates
to act as investment advisers to investment companies, a national bank
performing investment advisory services for an investment company would not
violate the Glass-Steagall Act.
Key Advisers and the Sub-Adviser believe that they may perform the
services for the Victory Portfolios contemplated by the Prospectus, this
Statement of Additional Information, and the Investment Advisory (Sub-Advisory)
Agreement with the Victory Portfolios without violation of applicable statutes
and regulations and has so represented in its Investment Advisory (Sub-Advisory)
Agreement with the Victory Portfolios. Key Trust Company of Ohio, N.A. believes
that it may perform the services for the Victory Portfolios contemplated by the
Prospectus, this Statement of Additional Information, and the Shareholder
Servicing Agreement with the Victory Portfolios (as described below) without
violation of applicable statutes and regulations and has so represented in such
Shareholder Servicing Agreement. Future changes in either federal or state
statutes and regulations relating to the permissible activities of banks or bank
holding companies and the subsidiaries or affiliates of those entities, as well
as further judicial or administrative decisions or interpretations of present
and future statutes and regulations, could prevent or restrict Key Trust Company
of Ohio, N.A., Key Advisers or the Sub-Adviser from continuing to perform such
services for the Victory Portfolios. Depending upon the nature of any changes in
the services which could be provided by Key Trust Company of Ohio, N.A., Key
Advisers or the Sub-Adviser the Trustees of the Victory Portfolios would review
the Victory Portfolios' relationship with Key Trust Company of Ohio, N.A., Key
Advisers or the Sub-Adviser and consider taking all action necessary in the
circumstances.
Should future legislative, judicial, or administrative action prohibit
or restrict the proposed activities of Key Trust Company of Ohio, N.A., Key
Advisers or the Sub-Adviser and its affiliated and correspondent banks and other
non-bank affiliates in connection with customer purchases of shares of the
Victory Portfolios, the banks and such non-bank affiliates might be required to
alter materially or discontinue the services offered by them to customers. It is
not anticipated, however, that any change in the Victory Portfolios' method of
operations would affect its net asset value per share or result in financial
losses to any customer.
From time to time, advertisements, supplemental sales literature and
information furnished to present or prospective shareholders of the Fund may
include descriptions of Key Trust Company of Ohio, N.A., Key Advisers and the
Sub-Adviser including, but not limited to, (i) descriptions of the operations of
Key Trust Company of Ohio, N.A., Key Advisers and the Sub-Adviser; (ii)
descriptions of certain personnel and their functions; and (iii) statistics and
rankings related to the operations of Key Trust Company of Ohio, N.A., Key
Advisers and the Sub-Adviser.
Portfolio Transactions
Pursuant to the Investment Advisory (Sub-Advisory) Agreement, Key
Advisers or the Sub-Adviser determines, subject to the general supervision of
the Trustees of the Victory Portfolios, and in accordance with each fund's
investment objective and restrictions, which securities are to be purchased and
sold by a fund, and which brokers are to be eligible to execute its portfolio
transactions. Purchases from underwriters and/or broker/dealers of portfolio
securities include a commission or concession paid by the issuer to the
underwriter and/or broker/dealer and purchases from dealers serving as market
makers may include the spread between the bid and asked price. While Key
Advisers and the Sub-Adviser generally seek competitive spreads or commissions,
the Fund may not necessarily pay the lowest spread or commission available on
each transaction, for reasons discussed below.
Allocation of transactions, including their frequency, to various
dealers is determined by Key Advisers or the Sub-Adviser in its best judgment
and in a manner deemed fair and reasonable to shareholders. The primary
consideration is prompt execution of orders in an effective manner at the most
favorable price. Subject to this consideration, dealers who provide supplemental
investment research to Key Advisers or the Sub-Adviser may receive orders for
transactions by the Victory Portfolios. Information so received is in addition
to and not in lieu of services required to be performed by Key Advisers or the
Sub-Adviser and does not reduce the advisory (sub-advisory) fees payable to Key
Advisers or the Sub-Adviser by the Victory Portfolios. Such information may be
useful to Key Advisers or the Sub-Adviser in serving both the Victory Portfolios
and other clients and, conversely, supplemental information obtained by the
placement of business or other clients may be useful to Key Advisers or the
Sub-Adviser in carrying out its obligations to the Victory Portfolios. In the
future, the Trustees may also authorize the allocation of brokerage to
affiliated broker-dealers on an agency basis to effect portfolio transactions.
In such event, the Trustees will adopt procedures incorporating the standards of
Rule 17e-1 of the 1940 Act, which require that the commission paid to affiliated
broker-dealers must be "reasonable and fair compared to the commission, fee or
other remuneration received, or to be received, by other brokers in connection
with comparable transactions involving similar securities during a comparable
period of time." At times, the Fund may also purchase portfolio securities
directly from dealers acting as principals, underwriters or market makers. As
these transactions are usually conducted on a net basis, no brokerage
commissions are paid by the Fund.
The Victory Portfolios will not execute portfolio transactions through,
acquire portfolio securities issued by, make savings deposits in, or enter into
repurchase or reverse repurchase agreements with Key Advisers, the Sub-Adviser,
Key Trust Company of Ohio, N.A. or its affiliates, Concord Holding Corporation,
Victory Broker-Dealer Services, Inc. or their affiliates, and will not give
preference to Key Trust Company of Ohio, N.A.'s correspondent banks or
affiliates, or Concord Holding Corporation or Victory Broker-Dealer Services,
Inc. with respect to such transactions, securities, savings deposits, repurchase
agreements, and reverse repurchase agreements.
Investment decisions for each fund are made independently from those
for the other funds or any other investment company or account managed by Key
Advisers or the Sub-Adviser . Any such other investment company or account may
also invest in the same securities as a particular fund. When a purchase or sale
of the same security is made at substantially the same time on behalf of a fund
and another fund, investment company or account, the transaction will be
averaged as to price, and available investments allocated as to amount, in a
manner which Key Advisers or the Sub-Adviser believes to be equitable to a fund
or the Victory Portfolios and such other investment company or account. In some
instances, this investment procedure may adversely affect the price paid or
received by a fund or the size of the position obtained by a fund. To the extent
permitted by law, Key Advisers or the Sub-Adviser may aggregate the securities
to be sold or purchased for a fund with those to be sold or purchased for the
other funds or for other investment companies or accounts in order to obtain
best execution. As provided by the Investment Advisory (Sub-Advisory) Agreement,
in making investment recommendations for the Victory Portfolios, Key Advisers
and the Sub-Adviser will not inquire or take into consideration whether an
issuer of securities proposed for purchase or sale by a Fund is a customer of
Key Advisers or the Sub-Adviser, their parents or subsidiaries or affiliates
and, in dealing with their commercial customers, Key Advisers or the
Sub-Adviser, their parents, subsidiaries, and affiliates will not inquire or
take into consideration whether securities of such customers are held by the
Victory Portfolios.
In the fiscal year ended October 31, 1994, and the period ended April
30, 1995, the Fund paid $118,986 and $________, respectively, in brokerage
commissions.
Administrator
Currently, Concord Holding Corporation ("CHC") serves as general
manager and administrator (the "Administrator") to the Fund . Prior to CHC
becoming administrator to the Fund, The Winsbury Company ("Winsbury") served as
administrator. The Administrator assists in supervising all operations of each
fund (other than those performed by Key Advisers or the Sub-Adviser under the
Investment Advisory (Sub-Advisory) Agreement). The Administrator is a broker-
dealer registered with the Commission, and is a member of the National
Association of Securities Dealers, Inc. The Administrator provides financial
services to institutional clients.
CHC receives a fee from each fund for its services as Administrator and
expenses assumed pursuant to the Administration Agreements, calculated daily and
paid monthly, at the annual rate of fifteen one hundredths of one percent (.15%)
of each fund's average daily net assets. CHC may periodically waive all or a
portion of its fee with respect to any fund in order to increase the net income
of one or more funds of the Victory Portfolios available for distribution as
dividends.
Unless sooner terminated, the Administration Agreement will continue in
effect as to the Fund for a period of two years, and for consecutive one-year
terms thereafter, provided that such continuance is ratified at least annually
by the Victory Portfolios' Trustees or by vote of a majority of the outstanding
shares of that Fund, and in either case by a majority of the Trustees who are
not parties to the Administration Agreement or interested persons (as defined in
the 1940 Act) of any party to the Administration Agreement, by votes cast in
person at a meeting called for such purpose.
The Administration Agreement provides that CHC shall not be liable for
any error of judgment or mistake of law or any loss suffered by the Victory
Portfolios in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or from the reckless disregard by
it of its obligations and duties thereunder.
Under the Administration Agreement, CHC assists in the Fund's
administration and operation, including providing statistical and research data,
clerical services, internal compliance and various other administrative
services, including among other responsibilities, forwarding certain purchase
and redemption requests to the Transfer Agent, participation in the updating of
the prospectus, coordinating the preparation, filing, printing and dissemination
of reports to shareholders, coordinating the preparation of income tax returns,
arranging for the maintenance of books and records and providing the office
facilities necessary to carry out the duties thereunder. Under the
Administration Agreement, CHC may delegate all or any part of its
responsibilities thereunder.
CHC receives an annual fee of .15% of the Fund's average net assets,
paid monthly, for services performed under the Fund's Administration Agreement.
CHC may, from time to time, agree to reimburse the Fund for expenses above a
specified percentage of average net assets.
Victory Broker-Dealer Services, Inc. sells shares of the
Fund as agent on behalf of the Victory Portfolios at no cost to the Fund. Key
Advisers and the Sub-Adviser neither participate in nor are they responsible for
the underwriting of Victory
Portfolios shares.
In the fiscal year ended October 31, 1994, the Fund paid to Winsbury
aggregate administration fees of $115,967 after fee reductions of $8,689. In the
six months ended April 30, 1995, the Fund paid administration fees of
$__________.
Class B Shares Distribution Plan
The Victory Portfolios has adopted a Distribution Plan for Class B shares of the
Fund under Rule 12b-1 of the Investment Company
Act of 1940.
The Distribution Plan adopted by the Trustees with respect to the Class B shares
of the Fund provides that the Fund will pay the Distributor a distribution fee
under the Plan at the annual rate of 0.75% of the average daily net assets of
the Fund attributable to the Class B shares. The distribution fees may be used
by the Distributor for: (a) costs of printing and distributing the Fund's
prospectus, statement of additional information and reports to prospective
investors in the Fund; (b) costs involved in preparing, printing and
distributing sales literature pertaining to the Fund; (c) an allocation of
overhead and other branch office distribution-related expenses of the
Distributor; (d) payments to persons who provide support services in connection
with the distribution of the Fund's shares, including but not limited to, office
space and equipment, telephone facilities, answering routine inquiries regarding
the Fund, processing shareholder transactions and providing any other
shareholder services not otherwise provided by the Victory Portfolios' transfer
agent; (e) accruals for interest on the amount of the foregoing expenses that
exceed the Distribution Fee and the contingent deferred sales charge received by
the Distributor; and (f) any other expense primarily intended to result in the
sale of the Fund's shares, including, without limitation, payments to salesmen
and selling dealers at the time of the sale of shares, if applicable, and
continuing fees to each such salesmen and selling dealers, which fee shall begin
to accrue immediately after the sale of such shares.
The amount of the Distribution Fees payable by any Fund under the Distribution
Plan is not related directly to expenses incurred by the Distributor and the
Distribution Plan does not obligate the Fund to reimburse the Distributor for
such expenses. The Distribution Fees set forth in the Distribution Plan will be
paid by a Fund to the Distributor unless and until the Plan is terminated or not
renewed with respect to the Fund; any distribution or service expenses incurred
by the Distributor on behalf of a Fund in excess of payments of the Distribution
Fees specified above which the Distributor has accrued through the termination
date are the sole responsibility and liability of the Distributor and not an
obligation of the Fund.
The Distribution Plan for the Class B shares specifically recognizes that either
Key Advisers, the Sub-Adviser or the Distributor, directly or through an
affiliate, may use its fee revenue, past profits, or other resources, without
limitation, to pay promotional and administrative expenses in connection with
the offer and sale of shares of the Fund. In addition, the Plan provides that
Key Advisers, the Sub-Adviser and the Distributor may use their respective
resources, including fee revenues, to make payments to third parties that
provide assistance in selling the Fund's shares, or to third parties, including
banks, that render shareholder support services.
The Plan has been approved by the Trustees including a majority of the
Independent Trustees at a meeting called for that purpose and by the holders of
a majority of shares of the class. As required by the Rule, the Trustees
carefully considered all pertinent factors relating to the implementation of the
Plan prior to its approval, and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its shareholders. To the
extent that the Plan gives Key Advisers, the Sub-Adviser or the Distributor
greater flexibility in connection with the distribution of shares of the Fund,
additional sales of the Fund's shares may result. Additionally, certain
shareholder support services may be provided more effectively under the Plan by
local entities with whom shareholders have other relationships.
Business Management Agreement
In connection with its obligations under the investment sub-advisory
agreement, the Sub-Adviser has entered into a Business Management Agreement with
Key Advisers, pursuant to which Key Advisers provides certain administrative and
support services to the Sub-Adviser. Such services include preparing reports to
the Company's Board of Trustees, recordkeeping services, and services rendered
in connection with the preparation of regulatory filings and other reports, and
regulatory and other administrative and compliance systems and support services.
For such services, the Sub-Adviser pays fees to Key Advisers which vary
according to a sliding scale containing "breakpoints" at which decreases in the
business management fees correspond to increases in the average daily net asset
values of a Fund as follows:
For the Balanced Fund, Diversified For the International Growth Fund, Ohio
Stock Fund, Growth Fund, Stock Index Regional Stock Fund and Special Value
Fund and Value Fund: Fund:
Rate of Rate of
Business Business
Net Assets Management Fee* Net Assets Management Fee*
Up to $10,000,000 0.30% Up to $10,000,000 0.55%
Next $15,000,000 0.15% Next $15,000,000 0.35%
Next $25,000,000 0.05% Next $25,000,000 0.20%
Above $50,000,000 0.00% Above $50,000,000 0.15%
For the Intermediate Income Fund, For the Prime Obligations Fund, Tax-Free
Investment Quality Bond Fund, Limited Money Market Fund, U.S. Government
Term Income Fund, Ohio Municipal Bond Obligations Fund, Financial Reserves
Fund, Goverment Bond Fund, Government Fund, Institutional Money Market Fund and
Mortgage Fund, National Municipal Ohio Municipal Money Market Fund:
Bond Fund and New York Tax-Free Fund:
Rate of Rate of
Business Business
Net Assets Management Fee* Net Assets Management Fee*
Up to $10,000,000 0.25% Up to $10,000,000 0.20%
Next $15,000,000 0.15% Next $15,000,000 0.15%
Next $25,000,000 0.10% Next $25,000,000 0.10%
Above $50,000,000 0.05% Above $50,000,000 0.075%
- --------------------
* As a percentage of average daily net assets.
Shareholder Servicing Plan
The Victory Portfolios, on behalf of the Class A and Class B shares of the Fund,
has adopted a Shareholder Servicing Plan to provide payments to shareholder
servicing agents (each a "Shareholder Servicing Agent") that provide
administrative support services to customers who may from time to time
beneficially own shares, which include: (i) aggregating and processing purchase
and redemption requests for shares from customers and transmitting promptly net
purchase and redemption orders to our distributor or transfer agent; (ii)
providing customers with a service that invests the assets of their accounts in
shares pursuant to specific or pre-authorized instructions; (iii) processing
dividend and distribution payments from the Victory Portfolios on behalf of
customers; (iv) providing information periodically to customers showing their
positions in shares; (v) arranging for bank wires ; (vi) responding to customer
inquiries concerning their investment in shares; (vii) providing subaccounting
with respect to shares beneficially owned by customers or providing the
information to us necessary for subaccounting; (viii) if required by law,
forwarding shareholder communications from us (such as proxies, shareholder
reports, annual and semi-annual financial statements and dividend, distribution
and tax notices) to customers; (ix) forwarding to customers proxy statements and
proxies containing any proposals regarding this Plan; and (x) providing such
other similar services as we may reasonably request to the extent you are
permitted to do so under applicable statutes, rules or regulations. For expenses
incurred and services provided as Shareholder Servicing Agent pursuant to its
respective Shareholder Servicing Agreement, the Victory Portfolios pays each
Shareholder Servicing Agent a fee computed daily and paid monthly, in amounts
aggregating not more than twenty-five one-hundredths of one percent (.25%) of
the average daily net assets of the Fund per year. A Shareholder Servicing Agent
may periodically waive all or a portion of its respective shareholder servicing
fees with respect to the Fund to increase the net income of the Fund available
for distribution as dividends.
Expenses
Each fund bears the following expenses relating to its respective
operations: taxes, interest, brokerage fees and commissions, fees of the
Trustees of the Victory Portfolios, Commission fees, state securities
qualification fees, costs of preparing and printing prospectuses for regulatory
purposes and for distribution to current shareholders, outside auditing and
legal expenses, advisory and administration fees, fees and out-of-pocket
expenses of the custodian and transfer agent, certain insurance premiums, costs
of maintenance of the fund's existence, costs of shareholders' reports and
meetings, and any extraordinary expenses incurred in the fund's operation.
If total expenses borne by any of the Victory Portfolios in any fiscal
year exceeds expense limitations imposed by applicable state securities
regulations, Key Advisers or the Sub-Adviser as applicable, and the
Administrator will waive their fees to the extent such excess expenses exceed
such expense limitation in proportion to their respective fees. As of the date
of this Statement of Additional Information, the most restrictive expense
limitation applicable to the Victory Portfolios limits each fund's aggregate
annual expenses, including management and advisory fees but excluding interest,
taxes, brokerage commissions, and certain other expenses, to 2.5% of the first
$30 million of a fund's average net assets, 2.0% of the next $70 million of a
fund's average net assets, and 1.5% of a Fund's remaining average net assets.
Any expenses to be borne by Key Advisers or the Sub-Adviser or the Administrator
will be estimated daily and reconciled and paid on a monthly basis. Fees imposed
upon customer accounts by Key Advisers, the Sub-Adviser, Key Trust Company of
Ohio, N.A. or its correspondents, affiliated banks and other non-bank affiliates
for cash management services are not fund expenses for purposes of any such
expense limitation.
Distributor
Victory Broker-Dealer Services, Inc. (the "Distributor") serves as
distributor for the continuous offering of the shares of each fund of the
Victory Portfolios pursuant to a Distribution Agreement . Prior to Victory
Broker-Dealer Services, Inc. becoming the Distributor, Winsbury served as
distributor of each Fund. Unless otherwise terminated, the Distribution
Agreement will remain in effect for two years, and thereafter for consecutive
one-year terms, provided that it is approved at least annually (i) by the
Victory Portfolios' Trustees or by the vote of a majority of the outstanding
shares of the Victory Portfolios, and (ii) by the vote of a majority of the
Trustees of the Victory Portfolios who are not parties to the Distribution
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval. The Distribution Agreement
may be terminated in the event of its assignment, as defined in the 1940 Act.
For the Victory Portfolios' fiscal years ended October 31, 1992, October 31,
1993, and October 31, 1994, Winsbury received $34,615, $77,258 and $212,021,
respectively, in underwriting commissions, and retained $0, $0 and $15,
respectively. For the six months ended April 30, 1995, the Distributor received
$__________ in underwriting commission.
Fund Accountant
BISYS Fund Services Ohio, Inc. serves as fund accountant for each fund
pursuant to a fund accounting agreement with the Victory Portfolios dated June
5, 1995 (the "Fund Accounting Agreement"). As fund accountant for the Victory
Portfolios, BISYS Fund Services Ohio, Inc. calculates the Victory Portfolios'
net asset value, the dividend and capital gain distribution, if any, and the
yield. BISYS Fund Services Ohio, Inc. also provides a current security position
report, a summary report of transactions and pending maturities, a current cash
position report, and maintains the general ledger accounting records for each
Fund. Under its Fund Accounting Agreement with the Victory Portfolios, BISYS
Fund Services Ohio, Inc. is entitled to receive annual fees of .03% of the first
$100 million of a Fund's daily average net assets, .02% of the next $100 million
of a Fund's daily average net assets, and .01% of a Fund's remaining daily
average net assets. These annual fees are subject to a minimum monthly assets
charge of $2,500 per taxable Fund, $2,917 per tax-free Fund, and $3,333 per
international Fund and do not include out-of-pocket expenses or multiple class
charges of $833 per month assessed for each class of shares after the first
class. In the fiscal period ended October 31, 1994, the Victory Portfolios paid
The Winsbury Service Corporation fund accounting fees (after fee waivers) of
$153,616 for the Fund. For the six months ended April 30, 1995, the Fund paid
$__________ in fund accounting fees .
Custodian
Cash and securities owned by each fund of the Victory Portfolios
(except the International Growth Fund) are held by Key Trust Company of Ohio,
N.A. as custodian; cash and securities owned by the International Growth Fund
are held by The Bank of New York and certain foreign sub-custodians, and by Key
Trust Company of Ohio, N.A. as sub-custodian . Key Trust Company of Ohio, N.A.
serves as custodian to each fund of the Victory Portfolios (except the
International Growth Fund) pursuant to a Custodian Agreement dated May 24, 1995.
The Bank of New York serves as custodian to the International Growth Fund
pursuant to a Custodian Agreement dated _____________. Under these Agreements,
Key Trust Company of Ohio, N.A. and The Bank of New York each (i) maintain a
separate account or accounts in the name of each respective fund; (ii) make
receipts and disbursements of money on behalf of each fund; (iii) collect and
receive all income and other payments and distributions on account of portfolio
securities; (iv) respond to correspondence from security brokers and others
relating to its duties; and (v) make periodic reports to the Victory Portfolios'
Trustees concerning the Victory Portfolios' operations. Key Trust Company of
Ohio, N.A. and The Bank of New York each may, with the approval of a fund
and at the custodian's own expense, open and maintain a subcustody account or
accounts on behalf of a fund, provided that Key Trust Company of Ohio, N.A. or
The Bank of New York shall remain liable for the performance of all of its
duties under its respective Custodian Agreement.
Transfer Agent
The Primary Funds Service Corporation serves as transfer agent and
dividend disbursing agent for each fund, pursuant to a Transfer Agency and
Shareholder Servicing Agreement. Under its agreement with the Victory
Portfolios, Primary Funds Service Corporation has agreed (i) to issue and redeem
shares of the Victory Portfolios; (ii) to address and mail all communications by
the Victory Portfolios to its shareholders, including reports to shareholders,
dividend and distribution notices, and proxy material for its meetings of
shareholders; (iii) to respond to correspondence or inquiries by shareholders
and others relating to its duties; (iv) to maintain shareholder accounts and
certain sub-accounts; and (v) to make periodic reports to the Victory
Portfolios' Trustees concerning the Victory Portfolios' operations. For the
services provided under the Transfer Agency and Shareholder Servicing Agreement,
Primary Funds Service Corporation receives a maximum monthly fee of $1,250 per
fund to a maximum of $3.50 per account per fund.
Auditors
The financial highlights appearing in the Prospectus for the Fund,
other than unaudited information marked as such, has been derived from financial
statements of the Victory Portfolios which have been audited by Coopers &
Lybrand L.L.P., independent accountants, as set forth in their report
incorporated by reference herein, and are incorporated by reference in reliance
upon such report and on the authority of such firm as experts in auditing and
accounting. Coopers & Lybrand L.L.P.'s address is 100 East Broad Street,
Columbus, Ohio 43215.
Legal Counsel
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, 919 Third
Avenue, New York, New York 10022 are counsel to the Victory
Portfolios.
<PAGE>
ADDITIONAL INFORMATION
Description of Shares
The Victory Portfolios (sometimes referred to as the "Trust") is a
Massachusetts business trust. The Victory Portfolios' Declaration of Trust,
pursuant to which the Victory Portfolios was originally called the North Third
Street Fund, was filed with the Secretary of State of the Commonwealth of
Massachusetts on February 6, 1986. On September 22, 1986, an Amended and
Restated Declaration of Trust was filed to change the name of the Trust to The
Emblem Fund and to make certain other changes. A second amendment was filed
October 23, 1986 providing for voting of shares in the aggregate except
where voting of shares by series is otherwise required by law. An amendment to
the Amended and Restated Declaration of Trust was filed on March 15, 1993 to
change the name of the Trust to The Society Funds. An Amended and Restated
Declaration of Trust was then filed on September 2, 1994 to change the name of
the Trust to The Victory Portfolios. The Declaration of Trust, as amended,
authorizes the Trustees to issue an unlimited number of shares, which are units
of beneficial interest, without par value. On or about February 29, 1996,
contingent upon shareholder approval, the Victory Portfolios will convert
from a Massachusetts business trust to a Delaware business trust. The Victory
Portfolios presently has twenty-eight series of shares, which represent
interests in the U.S. Government Obligations Fund, the Prime Obligations Fund,
the Tax-Free Money Market Fund, the Balanced Fund, the Stock Index Fund, the
Value Fund, the Fund, the Growth Fund, the Special Value Fund, the Special
Growth Fund, the Ohio Regional Stock Fund, the International Growth Fund, the
Limited Term Income Fund, the Government Mortgage Fund, the Ohio Municipal Bond
Fund, the Intermediate Income Fund, the Investment Quality Bond Fund, the
Florida Tax-Free Bond Fund, the Municipal Bond Fund, the Convertible Securities
Fund, the Short-Term U.S. Government Income Fund, the Government Bond Fund, the
Fund for Income, the National Municipal Bond Fund, the New York Tax-Free Fund,
the Institutional Money Market Fund, the Financial Reserves Fund and the Ohio
Municipal Money Market Fund, respectively. The Victory Portfolios' Declaration
of Trust authorizes the Trustees to divide or redivide any unissued shares of
the Victory Portfolios into one or more additional series by setting or changing
in any one or more respects their respective preferences, conversion or other
rights, voting power, restrictions, limitations as to dividends, qualifications,
and terms and conditions of redemption.
Shares have no subscription or preemptive rights and only such
conversion or exchange rights as the Trustees may grant in its discretion. When
issued for payment as described in the Prospectus and this Statement of
Additional Information, the Victory Portfolios' shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Victory
Portfolios, shares of a fund are entitled to receive the assets available for
distribution belonging to the fund, and a proportionate distribution, based upon
the relative asset values of the respective funds, of any general assets not
belonging to any particular fund which are available for distribution.
As described in the Prospectus under the caption "ADDITIONAL
INFORMATION -- Voting Rights," shares of the Victory Portfolios are entitled to
one vote per share (with proportional voting for fractional shares) on such
matters as shareholders are entitled to vote. Shareholders vote as a single
class on all matters except (i) when required by the 1940 Act, shares shall be
voted by individual series, and (ii) when the Trustees have determined
that the matter affects only the interests of one or more series, then only
shareholders of such series shall be entitled to vote thereon. There will
normally be no meetings of shareholders for the purposes of electing Trustees
unless and until such time as less than a majority of the Trustees have been
elected by the shareholders, at which time the Trustees then in office will call
a shareholders' meeting for the election of Trustees. In addition, Trustees
may be removed from office by a written consent signed by the holders of
two-thirds of the outstanding shares of the Victory Portfolios and filed with
the Victory Portfolios' custodian or by a vote of the holders of two-thirds of
the outstanding shares of the Victory Portfolios at a meeting duly called for
the purpose, which meeting shall be held upon the written request of the holders
of not less than 10% of the outstanding shares. Upon written request by ten or
more shareholders, who have been such for at least six months, and who hold
shares constituting 1% of the outstanding shares, stating that such shareholders
wish to communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a Trustee,
the Victory Portfolios will provide a list of shareholders or disseminate
appropriate materials (at the expense of the requesting shareholders). Except as
set forth above, the Trustees shall continue to hold office and may appoint
their successors.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Victory Portfolios shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each fund of the Victory Portfolios affected by the
matter. For purposes of determining whether the approval of a majority of the
outstanding shares of a fund will be required in connection with a matter, a
fund will be deemed to be affected by a matter unless it is clear that the
interests of each fund in the matter are identical, or that the matter does not
affect any interest of the fund. Under Rule 18f-2, the approval of an investment
advisory agreement or any change in investment policy would be effectively acted
upon with respect to a fund only if approved by a majority of the outstanding
shares of such fund. However, Rule 18f-2 also provides that the ratification of
independent public accountants, the approval of principal underwriting
contracts, and the election of Trustees may be effectively acted upon by
shareholders of the Victory Portfolios voting without regard to series.
Shareholder and Trustee Liability
Under Massachusetts law, holders of units of interest in a business
trust may, under certain circumstances, be held personally liable as partners
for the obligations of the trust. However, the Victory Portfolios' Declaration
of Trust provides that shareholders shall not be subject to any personal
liability for the obligations of the Victory Portfolios, and that every written
agreement, obligation, instrument, or undertaking made by the Victory Portfolios
shall contain a provision to the effect that the shareholders are not personally
liable thereunder. The Declaration of Trust provides for indemnification out of
the trust property of any shareholder held personally liable solely by
reason of his or her being or having been a shareholder. The Declaration of
Trust also provides that the Victory Portfolios shall, upon request, assume the
defense of any claim made against any shareholder for any act or obligation of
the Victory Portfolios, and shall satisfy any judgment thereon. Thus, the risk
of a shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Funds would be unable to meet its
obligations.
The Declaration of Trust states further that no Trustee, officer, or
agent of the Victory Portfolios shall be personally liable in connection with
the administration or preservation of the assets of the Funds or the conduct of
the Victory Portfolios' business; nor shall any Trustee, officer, or agent be
personally liable to any person for any action or failure to act except for his
own bad faith, willful misfeasance, gross negligence, or reckless disregard of
his duties. The Declaration of Trust also provides that all persons having any
claim against the Trustees or the Victory Portfolios shall look solely to the
assets of the Victory Portfolios for payment.
Delaware Law [INSERT]
Miscellaneous
As used in the Prospectus and in this Statement of Additional
Information, "assets belonging to a fund" means the consideration received by
the Victory Portfolios upon the issuance or sale of shares in that fund,
together with all income, earnings, profits, and proceeds derived from the
investment thereof, including any proceeds from the sale, exchange, or
liquidation of such investments, and any funds or payments derived from any
reinvestment of such proceeds and any general assets of the Victory Portfolios,
which general liabilities and expenses are not readily identified as belonging
to a particular fund that are allocated to that fund by the Victory Portfolios'
Trustees. The Trustees may allocate such general assets in any manner they deem
fair and equitable. It is anticipated that the factor that will be used by the
Trustees in making allocations of general assets to a particular fund of the
Victory Portfolios will be the relative net asset value of the respective fund
at the time of allocation. Assets belonging to a particular fund are charged
with the direct liabilities and expenses in respect of that fund, and with a
share of the general liabilities and expenses of each of the funds not readily
identified as belonging to a particular fund but that are allocated to a fund in
proportion to the relative net asset values of the respective fund of the
Victory Portfolios at the time of allocation. The timing of allocations of
general assets and general liabilities and expenses of the Victory Portfolios to
a particular fund will be determined by the Trustees of the Victory Portfolios
and will be in accordance with generally accepted accounting principles.
Determinations by the Trustees of the Victory Portfolios as to the timing of the
allocation of general liabilities and expenses and as to the timing and
allocable portion of any general assets with respect to a particular fund are
conclusive.
As used in the Prospectus and in this Statement of Additional
Information, a "vote of a majority of the outstanding shares" of the Victory
Portfolios or a particular fund means the affirmative vote of the lesser of (a)
67% or more of the shares of the Victory Portfolios or such fund present at a
meeting at which the holders of more than 50% of the outstanding shares of the
Victory Portfolios or such fund are represented in person or by proxy, or (b)
more than 50% of the outstanding votes of shareholders of the Victory Portfolios
or such fund.
Organizational expenses are allocated to each of the Victory Portfolios
and are amortized over a period of two years from the commencement of the public
offering of shares of the Victory Portfolios.
Individual Trustees are elected by the shareholders and, subject to removal by
the vote of the holders of two-thirds of the outstanding shares of the Victory
Portfolios, serve for a term lasting until the next meeting of shareholders at
which trustees are elected. Such meetings are not required to be held at any
specific intervals. Individual Trustees may be removed by vote of the
shareholders voting not less than a majority of the shares then outstanding cast
in person or by proxy at any meeting called for that purpose, or by a written
declaration signed by shareholders voting not less than two-thirds of the shares
then outstanding.
The Victory Portfolios is registered with the Commission as a
management investment company. Such registration does not involve supervision by
the Commission of the management or policies of the Victory Portfolios.
The Prospectus and this Statement of Additional Information omit
certain of the information contained in the Registration Statement filed with
the Commission. Copies of such information may be obtained from the Commission
upon payment of the prescribed fee.
The Prospectus and this Statement of Additional Information are not an
offering of the securities herein described in any state in which such offering
may not lawfully be made. No salesman, dealer, or other person is authorized to
give any information or make any representation other than those contained in
the Prospectus and this Statement of Additional Information.
The 1994 Annual Report and 1995 Semi-Annual Report to shareholders of
The Victory Portfolios are incorporated herein in their entirety. These
reports include the financial statements for the fiscal year ended October 31,
1994 and for the semi-annual period ended April 30, 1995. The opinion in the
Annual Report of Coopers & Lybrand L.L.P., independent accountants, is
incorporated herein in its entirety to such Annual Report, and such financial
statements are incorporated in their entirety in reliance upon such report of
Coopers & Lybrand L.L.P. and on the authority of such firm as experts in
auditing and accounting.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
FINANCIAL STATEMENTS
<PAGE>
APPENDIX
The nationally recognized statistical rating organizations
(individually, an "NRSRO") that may be utilized by Key Advisers or the
Sub-Adviser with regard to portfolio investments for the Funds include Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P"),
Duff & Phelps, Inc. ("Duff"), Fitch Investors Service, Inc. ("Fitch"), IBCA
Limited and its affiliate, IBCA Inc. (collectively, "IBCA"), and Thomson
BankWatch, Inc. ("Thomson"). Set forth below is a description of the relevant
ratings of each such NRSRO. The NRSROs that may be utilized by Key Advisers or
the Sub-Adviser and the description of each NRSRO's ratings is as of the date of
this Statement of Additional Information, and may subsequently change.
Long-Term Debt Ratings (may be assigned, for example, to
corporate and municipal bonds).
Description of the five highest long-term debt ratings by Moody's
(Moody's applies numerical modifiers (e.g., 1, 2, and 3) in each rating category
to indicate the security's ranking within the category):
Aaa. Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa. Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than in Aaa securities.
A. Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.
Baa. Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba. Bonds which are rated Ba are judged to have speculative elements -
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times in the future. Uncertainty of
position characterizes bonds in this class.
Description of the five highest long-term debt ratings by S&P
(S&P may apply a plus (+) or minus (-) to a particular rating classification to
show relative standing within that classification):
AAA. Debt rated AAA has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.
AA. Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A. Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB. Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB. Debt rated BB is regarded, on balance, as predominately speculative
with respect to capacity to pay interest and repay principal in accordance with
the terms of the obligation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposure to adverse conditions.
Description of the three highest long-term debt ratings by Duff:
AAA. Highest credit quality. The risk factors are
negligible being only slightly more than for risk-free U.S.
Treasury debt.
AA+. High credit quality Protection factors are strong.
AA. Risk is modest but may vary slightly from time to time
AA-. because of economic conditions.
A+. Protection factors are average but adequate. However,
risk factors are more variable and greater in periods of
economic stress.
Description of the three highest long-term debt ratings by Fitch (plus
or minus signs are used with a rating symbol to indicate the relative position
of the credit within the rating category):
AAA. Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA. Bonds considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and
repay principal is very strong, although not quite as strong
as bonds rated "AAA." Because bonds rated in the "AAA" and "AA"
categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issues is generally rated
"[-]+."
A. Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
IBCA's description of its three highest long-term debt ratings:
AAA. Obligations for which there is the lowest expectation
of investment risk. Capacity for timely repayment of
principal and interest is substantial. Adverse changes in
business, economic or financial conditions are unlikely to
increase investment risk significantly.
AA. Obligations for which there is a very low expectation of investment
risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic, or financial
conditions may increase investment risk albeit not very significantly.
A. Obligations for which there is a low expectation of investment risk.
Capacity for timely repayment of principal and interest is strong,
although adverse changes in business, economic or financial conditions
may lead to increased investment risk.
Short-Term Debt Ratings (may be assigned, for example, to commercial
paper, master demand notes, bank instruments, and letters of credit)
Moody's description of its three highest short-term debt ratings:
Prime-1. Issuers rated Prime-1 (or supporting institutions) have a
superior capacity for repayment of senior short-term promissory obligations.
Prime-1 repayment capacity will normally be evidenced by many of the following
characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate
reliance on debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial
charges and high internal cash generation.
- Well-established access to a range of financial markets
and assured sources of alternate liquidity.
Prime-2. Issuers rated Prime-2 (or supporting institutions)
have a strong capacity for repayment of senior short-term debt
obligations. This will normally be evidenced by many of the characteristics
cited above but to a lesser degree. Earnings trends and coverage ratios, while
sound, may be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
Prime-3. Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
S&P's description of its three highest short-term debt ratings:
A-1. This designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to have extremely
strong safety characteristics are denoted with a plus sign (+).
A-2. Capacity for timely payment on issues with this
designation is satisfactory. However, the relative degree of
safety is not as high as for issues designated "A-1."
A-3. Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher
designations.
Duff's description of its five highest short-term debt ratings (Duff
incorporates gradations of "1+" (one plus) and "1-" (one minus) to assist
investors in recognizing quality differences within the highest rating
category):
Duff 1+. Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations.
Duff 1. Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk
factors are minor.
Duff 1-. High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk factors are
very small.
Duff 2. Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good. Risk
factors are small.
Duff 3. Satisfactory liquidity and other protection factors qualify
issue as to investment grade.
Risk factors are larger and subject to more variation. Nevertheless,
timely payment is expected.
Fitch's description of its four highest short-term debt ratings:
F-1+. Exceptionally Strong Credit Quality. Issues assigned
this rating are regarded as having the strongest degree of
assurance for timely payment.
F-1. Very Strong Credit Quality. Issues assigned this
rating reflect an assurance of timely payment only slightly
less in degree than issues rated F-1+.
F-2. Good Credit Quality. Issues assigned this rating have a
satisfactory degree of assurance for timely payment, but the margin of
safety is not as great as for issues assigned F-1+ or F-1 ratings.
F-3. Fair Credit Quality. Issues assigned this rating have
characteristics suggesting that the degree of assurance for timely
payment is adequate, however, near-term adverse changes could cause
these securities to be rated below investment grade.
IBCA's description of its three highest short-term debt ratings:
A+. Obligations supported by the highest capacity for timely
repayment.
A1. Obligations supported by a very strong capacity for timely
repayment.
A2. Obligations supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
Short-Term Loan/Municipal Note Ratings
Moody's description of its two highest short-term loan/municipal note
ratings:
MIG-1/VMIG-1. This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support
or demonstrated broad-based access to the market for refinancing.
MIG-2/VMIG-2. This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
S&P's description of its two highest municipal note ratings: SP-1. Very
strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given
a plus (+) designation.
SP-2. Satisfactory capacity to pay principal and interest.
Short-Term Debt Ratings
Thomson BankWatch, Inc. ("TBW") ratings are based upon a
qualitative and quantitative analysis of all segments of the organization
including, where applicable, holding company and operating subsidiaries.
BankWatch Ratings do not constitute a recommendation to buy or sell
securities of any of these companies. Further, BankWatch does not suggest
specific investment criteria for individual clients.
The TBW Short-Term Ratings apply to commercial paper, other senior
short-term obligations and deposit obligations of the entities to which the
rating has been assigned.
The TBW Short-Term Ratings apply only to unsecured instruments that
have a maturity of one year or less.
The TBW Short-Term Ratings specifically assess the likelihood of an
untimely payment of principal or interest.
TBW-1. The highest category; indicates a very high degree of likelihood
that principal and interest will be paid on a timely basis.
TBW-2. The second highest category; while the degree of safety
regarding timely repayment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated "TBW-1".
TBW-3. The lowest investment grade category; indicates that while more
susceptible to adverse developments (both internal and external) than
obligations with higher ratings, capacity to service principal and interest in a
timely fashion is considered adequate.
TBW-4. The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.
Definitions of Certain Money Market Instruments
Commercial Paper
Commercial paper consists of unsecured promissory notes issued by
corporations. Issues of commercial paper normally have maturities of less than
nine months and fixed rates of return.
Certificates of Deposit
Certificates of Deposit are negotiable certificates issued against
funds deposited in a commercial bank or a savings and loan association for a
definite period of time and earning a specified return.
Bankers' Acceptances
Bankers' acceptances are negotiable drafts or bills of exchange,
normally drawn by an importer or exporter to pay for specific merchandise, which
are "accepted" by a bank, meaning, in effect, that the bank unconditionally
agrees to pay the face value of the instrument on maturity.
U.S. Treasury Obligations
U.S. Treasury Obligations are obligations issued or
guaranteed as to payment of principal and interest by the full
faith and credit of the U.S. Government. These obligations may
include Treasury bills, notes and bonds, and issues of agencies
and instrumentalities of the U.S. Government, provided such
obligations are guaranteed as to payment of principal and interest
by the full faith and credit of the U.S. Government.
U.S. Government Agency and Instrumentality Obligations
Obligations issued by agencies and instrumentalities of the U.S.
Government include such agencies and instrumentalities as the Government
National Mortgage Association, the Export-Import Bank of the United States, the
Tennessee Valley Authority, the Farmers Home Administration, the Federal Home
Loan Banks, the Federal Intermediate Credit Banks, the Federal Farm Credit
Banks, the Federal Land Banks, the Federal Housing Administration, the Federal
National Mortgage Association, the Federal Home Loan Mortgage Corporation, and
the Student Loan Marketing Association. Some of these obligations, such as those
of the Government National Mortgage Association are supported by the full faith
and credit of the U.S. Treasury; others, such as those of the Export-Import Bank
of the United States, are supported by the right of the issuer to borrow from
the Treasury; others, such as those of the Federal National Mortgage
Association, are supported by the discretionary authority of the U.S. Government
to purchase the agency's obligations; still others, such as those of the Student
Loan Marketing Association, are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored instrumentalities if it
is not obligated to do so by law. A Fund will invest in the obligations of such
instrumentalities only when the investment adviser believes that the credit risk
with respect to the instrumentality is minimal.
<PAGE>
[LOGO]
THE VICTORY FUNDS
SEMI-ANNUAL
REPORT
---------------------
THE VICTORY PORTFOLIOS
APRIL 30, 1995
<PAGE>
C O N T E N T S
<TABLE>
<S> <C>
Shareholder Letter 1
Investment Review and Outlook 2
FINANCIAL STATEMENTS
--------------------
Understanding Your Financial Statements 3
Statements of Assets and Liabilities 5
Statements of Operations 10
Statements of Changes in Net Assets 15
Schedules of Portfolio Investments 22
Notes to Financial Statements 73
Financial Highlights 83
</TABLE>
Society Asset Management, Inc. ("SAM"), a subsidiary of KeyCorp, is the
investment adviser to The Victory Portfolios. The Victory Portfolios is
sponsored and distributed by Victory Broker Dealer Services, Inc., which is not
affiliated with SAM, KeyCorp, any KeyCorp bank or their affiliates. SAM and
Society National Bank, also a subsidiary of KeyCorp, receive fees from The
Victory Portfolios for their services.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus for The Victory Portfolios.
Yields will fluctuate, and there can be no assurance that the money market funds
of The Victory Portfolios will be able to maintain a stable net asset value of
$1.00 per share. An investment in these portfolios is neither insured nor
guaranteed by the U.S. Government. The composition of the fund's holdings is
subject to change.
- --------------------------------------------------------------------------------
NOT
FDIC
INSURED
- --------------------------------------------------------------------------------
SHARES OF THE VICTORY PORTFOLIOS ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR
GUARANTEED BY, ANY KEYCORP BANK, SOCIETY ASSET MANAGEMENT, INC., OR THEIR
AFFILIATES, AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE
PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------
<PAGE>
THE VICTORY
PORTFOLIOS
DEAR SHAREHOLDER:
The Victory Portfolios is pleased to provide you with this semi-annual report
for the six-month period ended April 30, 1995. We are very proud to inform you
that the Diversified Stock Fund, the Ohio Regional Stock Fund and the Fund for
Income Portfolio all received 4 star ratings by Morningstar as of April 30,
1995.* For more information about your funds, rankings or for article reprints
call 1-800-KEY-FUND (539-3863).
Last year, when we changed our name to The Victory Portfolios, we also added a
number of convenient service and investment features. These initiatives marked
the beginning of a broader plan to restructure and expand our products and
services. Most recently, shareholders of The Victory Funds, an affiliated group
of funds with 14 investment portfolios, approved a reorganization that took
place on June 5, 1995. This date marked the final steps of a year-long process
focused on streamlining our product offerings and increasing the efficiency of
other services necessary to support the funds' operations. On June 5, The
Victory Funds merged with The Victory Portfolios. Seven portfolios of our
affiliate were merged with comparable investment portfolios, and seven new
portfolios were added. In all, there are now 24 Victory Portfolios available to
investors as part of the combined $5.1 billion complex.
I won't go into the enormous detail of this restructuring effort except to thank
management, our service providers and our investment professionals for their
support.
WOULDN'T IT BE NICE IF . . . (some summertime thoughts)
- - the information superhighway actually cut our commute time
- - major league baseball players had to get real jobs at real wages (at least for
a while)
- - the Paperwork Reduction Act actually resulted in less paperwork for America's
businesses
Thank you for choosing to invest in The Victory Portfolios. Our goal is to
become America's First Choice for Investors.
LEIGH A. WILSON
Leigh A. Wilson, President
THE VICTORY PORTFOLIOS
P.S. For more information about any of The Victory Portfolios, please request a
prospectus by calling 1-800-KEY-FUND (539-3863). The prospectus contains more
complete information, including charges and expenses. Read the prospectus
carefully before you invest or send money.
*Morningstar proprietary ratings reflect historical risk-adjusted performance as
of April 30, 1995. The ratings are subject to change every month. Star ratings
are calculated from the fund's three- and five-year average annual returns in
excess of 90-day Treasury bill returns with appropriate fee adjustments, and a
risk factor that reflects fund performance below 90-day Treasury bill returns.
For the three- and five-year periods ended April 30, 1995, 1,190 and 891 equity
funds, 561 and 372 fixed-income funds were rated. Diversified is rated 4 stars
for the three- and five-year periods; Ohio Regional is rated 3 stars for the
three-year period and 4 stars for the five-year period; and Fund for Income is
rated 3 stars for the three-year period and 4 stars for the five-year period.
Ten percent of the funds in an investment category receive 5 stars, 22.5%
receive 4 stars, 35% receive 3 stars, 22.5% receive 2 stars, and 10% receive 1
star. Past performance is no guarantee of future results. These ratings do not
include the effect of a sales charge. Fees have been waived for certain periods;
without the effect of these waivers performance and ratings may have varied.
1
<PAGE>
INVESTMENT
REVIEW
AND
OUTLOOK
(AS OF MAY 5, 1995)
IN OUR OPINION . . .
FROM 75 TO 45 (mph)
The widely predicted SOFT LANDING of the U.S. economy is not "on the way" . . .
it's already "arrived." More and more fresh economic data depict an economy
which, in recent months, has "slowed" from a "75 mile-per-hour" pace throughout
1994 (especially during the fourth quarter) to a more modest "speed" of roughly
"45 miles per hour." This slowing appears to be very satisfying to the economy's
primary "traffic cop" . . . the Federal Reserve.
The latest economic numbers describe an "economic vehicle" with the "brakes" now
firmly applied. The May 3 release of the Index of Leading Economic Indicators
for March recorded its largest decline in two years. February and March also
registered as the largest back-to-back monthly declines since the summer of
1992. Equally exciting (only to economists) was a surprising 0.1% decline in
factory orders during March, another sign of some "bad gas" in the "economic
engine." In addition, factory inventories rose more than expected in March and
were revised higher for February. This stronger inventory buildup suggests that
the most recent U.S. Commerce Department estimate of a 2.8% real GDP growth
"speed" during the first quarter of 1995 will be revised to a "faster speed."
This expected upward revision will come at the expense of a weak current
quarter . . . perhaps as "sluggish" as a 1.2-1.8% real annual rate.
The May 5 release of the April unemployment numbers, which jumped from 5.5% to
5.8%, shed further light on the "engine's diagnosis." These particularly weak
numbers could "fuel" additional near-term strength in both stocks and bonds.
IS THE FED FINISHED TIGHTENING?
The data of recent days provided more "high octane" fuel to the financial
markets' belief that the Fed will likely "stay on cruise control" for some time
to come. Many economists now suggest the Fed's next move will be to "step on the
gas" (ease policy). Although we would like to believe that, we expect a modest
resurgence of the economy during the second half of 1995, "fueled" by rising
exports, solid manufacturing output, strong capital spending, and improved
consumer interest in housing. This combination, added to some worrisome economic
"exhaust" (inflation pressure), could force the Fed's foot to the "brake pedal"
once again.
Society Asset Management, Inc.
2
<PAGE>
UNDERSTANDING YOUR FINANCIAL STATEMENTS
o The FINANCIAL STATEMENTS summarize and describe a fund's financial
transactions. They are broken down into four different statements,
which are illustrated below:
THE STATEMENTS OF ASSETS AND LIABILITIES lists all of the assets and
liabilities of the mutual fund. This is the individual fund's "balance sheet."
Also disclosed on this statement is the fund's net asset value per share and
its maximum offering price per share as of the date of the statement. The
statement also lists the accounts that comprise the mutual fund's net assets
(capital stock, undistributed income, etc.).
[FORM] SUMMARY OF THE MUTUAL FUND'S INVESTMENTS AND ALL
OTHER ASSETS OWNED BY THE FUND, INCLUDING AMOUNTS
OWED TO THE FUND BY OUTSIDE PARTIES
SUMMARY OF ALL AMOUNTS OWED TO OUTSIDE PARTIES BY
THE MUTUAL FUND
NET RESULT OF ASSETS LESS LIABILITIES
THE MARKET WORTH OF THE MUTUAL FUND'S TOTAL ASSETS
DIVIDED BY THE NUMBER OF SHARES OUTSTANDING
THE CURRENT NET ASSET VALUE PER SHARE PLUS SALES CHARGE
THE STATEMENT OF OPERATIONS shows the amount of dividend and interest income
earned from the mutual fund's investments, the expenses incurred by the fund
from its operations, and any gains or losses recognized by the fund from
holding and/or selling any investments.
[FORM] ANY INCOME EARNED FROM THE MUTUAL FUND'S INVESTMENTS
OPERATING EXPENSES INCURRED BY THE MUTUAL FUND DURING
THE PERIOD
GAINS OR LOSSES REALIZED UPON THE SALE OF THE MUTUAL
FUND'S INVESTMENTS ALONG WITH UNREALIZED GAINS OR LOSSES
ON FUND HOLDINGS AT THE REPORT DATE
NET CHANGE DUE TO MUTUAL FUND OPERATIONS
3
<PAGE>
THE STATEMENT OF CHANGES IN NET ASSETS shows the total assets of the mutual
fund for the two most recent reporting periods. The changes in net assets are
generally broken down into four distinct sections:
[FORM] OPERATIONS - SEE STATEMENT OF OPERATIONS
DIVIDENDS TO SHAREHOLDERS - TOTAL INCOME DIVIDENDS PAID
TO SHAREHOLDERS DURING THE PERIODS
NET REALIZED GAINS - TOTAL REALIZED GAINS DISTRIBUTED TO
SHAREHOLDERS DURING THE PERIODS
CAPITAL STOCK TRANSACTIONS - DOLLAR VALUE OF MUTUAL FUND
SHARES PURCHASED, REDEEMED OR REINVESTED DURING THE
PERIODS
THE PORTFOLIO OF INVESTMENTS lists each investment holding in the mutual fund
as of the date of the report. Investments may be grouped by category (by
industry or security type, for example). The percentage of the mutual fund's
net assets that these groupings represent is also disclosed.
[FORM] TYPE OF SECURITY
INDUSTRY SECTOR AND PERCENTAGE OF THE MUTUAL FUND's
NET ASSETS REPRESENTED BY INVESTMENTS IN THAT SECTOR
(IF APPLICABLE)
ACTUAL PORTFOLIO HOLDINGS WITH SHARES AND MARKET
VALUE AS OF REPORT DATE
o The NOTES TO FINANCIAL STATEMENTS are footnotes to the statements listed
above. 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.
o The FINANCIAL HIGHLIGHTS show, for a single share outstanding throughout the
period, the net investment income, the realized and unrealized gains and
losses, and the dividends and distributions of the fund. It also shows key
data and ratios, such as the total return for the period, the portfolio
turnover rate for funds other than money market mutual funds, and the
ratio of net investment income to average net assets.
4
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. TAX-FREE
GOVERNMENT PRIME MONEY
OBLIGATIONS OBLIGATIONS MARKET
FUND FUND FUND
(000) (000) (000)
-------- -------- --------
<S> <C> <C> <C>
ASSETS:
Investments, at value $228,336 $392,425 $208,031
Repurchase agreements 296,998 37,315
- ---------------------------------------------------------------------------------------------------------
525,334 429,740 208,031
Cash 322
Interest receivable 1,525 2,467 2,066
Prepaid expenses 5 34 7
- ---------------------------------------------------------------------------------------------------------
Total Assets 526,864 432,241 210,426
- ---------------------------------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 2,381 1,867 675
Accrued expenses and other payables:
Investment advisory fees 153 125 62
Administration fees 66 54 27
Accounting and transfer agent fees 44 52 22
Other 77 143 34
- ---------------------------------------------------------------------------------------------------------
Total Liabilities 2,721 2,241 820
- ---------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 524,337 432,505 209,606
Accumulated undistributed net realized losses from investment
transactions (194) (2,505)
- ---------------------------------------------------------------------------------------------------------
Net Assets $524,143 $430,000 $209,606
- ---------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) 524,337 430,000 209,606
- ---------------------------------------------------------------------------------------------------------
Net asset value--redemption and offering price per share $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------
Investments, at cost $525,334 $429,740 $208,031
- ---------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
5
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY FUNDS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK
TAX- FUND FOR
FREE INCOME
PORTFOLIO PORTFOLIO
(000) (000)
------------ ---------
<S> <C> <C>
ASSETS
Investments, at value $ 16,410 $23,678
Repurchase agreements 1,003
- -----------------------------------------------------------------------------------------------------
16,410 24,681
Interest receivable 338 183
Cash 4
Receivable for capital shares issued 429
Receivable from brokers for investments sold 93
Receivable from fund adviser 41 36
- -----------------------------------------------------------------------------------------------------
Total Assets 17,218 24,997
- -----------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 58
Payable to brokers for investments purchased 195 64
Payable for capital shares redeemed 111 85
Dividends payable 44 119
Accrued expenses and other payables:
Administrative fee 2 3
Other 13
- -----------------------------------------------------------------------------------------------------
Total Liabilities 410 284
- -----------------------------------------------------------------------------------------------------
NET ASSETS
Capital 15,880 26,101
Undistributed (distributions in excess of) net investment income 6 (90)
Net unrealized appreciation on investments 925 509
Accumulated undistributed net realized losses on investments (3) (1,807)
- -----------------------------------------------------------------------------------------------------
Net Assets $ 16,808 $24,713
- -----------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) -- class A 1,277 2,571
- -----------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) -- class B 67
- -----------------------------------------------------------------------------------------------------
Net asset value -- redemption price per share -- class A $ 12.51 $ 9.61
- -----------------------------------------------------------------------------------------------------
Offering price (100%/(100% --
Maximum Sales Charge) of net asset value adjusted to
nearest cent) per share -- class A $ 13.13 $ 9.81
- -----------------------------------------------------------------------------------------------------
Maximum Sales Charge -- class A 4.75% 2.00%
- -----------------------------------------------------------------------------------------------------
Net asset value -- offering and redemption price per share -- class B $ 12.50
- -----------------------------------------------------------------------------------------------------
Investments at cost $ 15,485 $24,172
- -----------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
6
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED INVESTMENT OHIO
TERM GOVERNMENT INTERMEDIATE QUALITY MUNICIPAL
INCOME MORTGAGE INCOME BOND BOND
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value $ 165,669 $142,962 $130,878 $ 91,366 $ 57,871
Interest receivable 2,571 983 2,429 1,453 1,157
Receivable for capital shares issued 21 24
Receivable from brokers for investments sold 2,753 2,048 2,035
Unamortized organization costs 8 9
Prepaid expenses 14 16 13 3
- ---------------------------------------------------------------------------------------------------------------
Total Assets 168,240 146,733 133,331 94,889 61,090
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable to brokers for investments purchased 3,136 2,542 2,845
Payable for capital shares redeemed 1 4
Accrued expenses and other payables:
Investment advisory fees 65 59 52 38 14
Administration fees 21 18 16 11 7
Accounting and transfer agent fees 15 13 13 11 9
Other 26 68 25 85 78
- ---------------------------------------------------------------------------------------------------------------
Total Liabilities 128 3,298 106 2,687 2,953
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 169,603 150,214 139,577 99,169 58,717
Undistributed net investment income 190 194 168 122 55
Net unrealized appreciation (depreciation) from
investments (519) (4,357) (2,607) (2,022) 275
Accumulated undistributed net realized losses
from investment transactions (1,162) (2,616) (3,913) (5,067) (910)
- ---------------------------------------------------------------------------------------------------------------
Net Assets $ 168,112 $143,435 $133,225 $ 92,202 $ 58,137
- ---------------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest
(shares) 16,853 13,587 14,164 9,827 5,356
- ---------------------------------------------------------------------------------------------------------------
Net asset value--redemption price per share $ 9.98 $ 10.56 $ 9.41 $ 9.38 $ 10.85
- ---------------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%--Maximum
Sales Charge) of net asset value adjusted to
nearest cent) per share $ 10.18 $ 11.09 $ 9.88 $ 9.85 $ 11.39
- ---------------------------------------------------------------------------------------------------------------
Maximum Sales Charge 2.00% 4.75% 4.75% 4.75% 4.75%
- ---------------------------------------------------------------------------------------------------------------
Investments, at cost $ 166,188 $147,319 $133,485 $ 93,388 $ 57,596
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
7
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK DIVERSIFIED
BALANCED INDEX VALUE STOCK GROWTH
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value $158,944 $105,660 $263,048 $323,032 $43,646
Cash 1
Foreign currency (Cost $509) 504
Interest and dividends receivable 1,163 201 484 404 51
Receivable for capital shares issued 13 239
Receivable from brokers for investments sold 2,497 658 10,016 203
Net variation margin on open futures contracts 25 5
Unamortized organization costs 6 4 10 4
Prepaid expenses 18 10 23 9 9
- --------------------------------------------------------------------------------------------------------------
Total Assets 163,145 105,901 264,228 333,700 43,913
- --------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for capital shares redeemed 3 14
Payable to brokers for investments purchased 4,141 2,178 11,833
Accrued expenses and other payables:
Investment advisory fees 78 38 134 156 23
Administration fees 19 33 39 5
Accounting and transfer agent fees 18 7 21 24 7
Other 124 22 32 41 17
- --------------------------------------------------------------------------------------------------------------
Total Liabilities 4,383 67 2,398 12,107 52
- --------------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 153,504 95,719 241,936 281,878 40,340
Undistributed (distributions in excess of) net
investment income (411) 179 406 151 8
Net unrealized appreciation from investments 7,080 9,685 17,472 30,351 3,288
Net unrealized depreciation from translation of
assets and liabilities in foreign currencies (12)
Accumulated undistributed net realized gains
(losses) from investment and foreign currency
transactions (1,399) 251 2,016 9,213 225
- --------------------------------------------------------------------------------------------------------------
Net Assets $158,762 $105,834 $261,830 $321,593 $43,661
- --------------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) 15,549 9,545 24,346 26,055 4,054
- --------------------------------------------------------------------------------------------------------------
Net asset value--redemption price per share $ 10.21 $ 11.09 $ 10.75 $ 12.34 $ 10.82
- --------------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%--Maximum Sales
Charge) of net asset value adjusted to nearest
cent) per share $ 10.72 $ 11.64 $ 11.29 $ 12.96 $ 11.36
- --------------------------------------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 4.75% 4.75% 4.75% 4.75%
- --------------------------------------------------------------------------------------------------------------
Investments, at cost $151,871 $ 95,975 $245,576 $292,681 $40,358
- --------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
8
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO
SPECIAL SPECIAL REGIONAL INTERNATIONAL
VALUE GROWTH STOCK GROWTH
FUND FUND FUND FUND
(000) (000) (000) (000)
-------- ------- ------- -------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value $153,966 $19,539 $35,164 $84,863
Foreign currency (Cost $2,485) 2,542
Interest and dividends receivable 275 16 41 181
Receivable for capital shares issued 9 27 26
Receivable from brokers for investments sold 980 259
Unamortized organization costs 5 2
Prepaid expenses 20 4 10
- ----------------------------------------------------------------------------------------------------------
Total Assets 155,255 19,561 35,232 87,881
- ----------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for capital shares redeemed 3 2
Payable to brokers for investments purchased 1,519 142 1,193
Accrued expenses and other payables:
Investment advisory fees 86 10 20 67
Administration fees 19 2 4 11
Accounting and transfer agent fees 14 6 8 52
Other 26 15 14 26
- ----------------------------------------------------------------------------------------------------------
Total Liabilities 1,664 175 49 1,351
- ----------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 139,501 22,102 23,813 84,285
Undistributed (distributions in excess of) net
investment income 155 (3) 5 (613)
Net unrealized appreciation from investments 11,380 1,362 10,524 (5,172)
Net unrealized appreciation from translation of assets
and liabilities in foreign currencies 9,285
Accumulated undistributed net realized gains (losses)
from investment and foreign currency transactions 2,555 (4,075) 841 (1,255)
- ----------------------------------------------------------------------------------------------------------
Net Assets $153,591 $19,386 $35,183 $86,530
- ----------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) 13,646 2,073 2,398 7,268
- ----------------------------------------------------------------------------------------------------------
Net asset value--redemption price per share $ 11.26 $ 9.35 $ 14.67 $ 11.91
- ----------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%--Maximum Sales
Charge) of net asset value adjusted to nearest cent)
per share $ 11.82 $ 9.82 $ 15.40 $ 12.50
- ----------------------------------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 4.75% 4.75% 4.75%
- ----------------------------------------------------------------------------------------------------------
Investments, at cost $142,586 $18,177 $24,640 $80,807
- ----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
9
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S.
GOVERNMENT PRIME TAX-FREE
OBLIGATIONS OBLIGATIONS MONEY MARKET
FUND FUND FUND
(000) (000) (000)
------- ------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $13,510 $18,407 $4,368
- ----------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 820 1,128 389
Administration fees 351 484 167
Shareholder service fees 222
Accounting fees 141 193 68
Legal and audit fees 41 86 22
Trustees' fees and expenses 16 29 8
Transfer agent fees 21 36 14
Registration and filing fees 24 21 10
Printing fees 27 28 14
Other 6 11 3
Expenses voluntarily reduced (16)
- ----------------------------------------------------------------------------------------------------------
Total Expenses 1,447 2,238 679
- ----------------------------------------------------------------------------------------------------------
Net Investment Income 12,063 16,169 3,689
- ----------------------------------------------------------------------------------------------------------
REALIZED GAINS FROM INVESTMENTS:
Net realized gains from investment transactions 54 1
- ----------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $12,117 $16,170 $3,689
- ----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
10
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY FUNDS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK FUND FOR
TAX-FREE INCOME
PORTFOLIO PORTFOLIO
(000) (000)
-------- ---------
<S> <C> <C>
INVESTMENT INCOME
Interest income $530 $ 1,054
- -----------------------------------------------------------------------------------------------------------
EXPENSES
Investment advisory fees 44 65
Administration fees 12 19
Registration fees 18 37
Shareholder servicing fees 19 32
Accounting fees 16 9
Transfer agent fees 11 14
Legal 5 6
Custodian fees and expenses 2
Trustees' fees and expenses 1
Other 9 8
Expenses voluntarily reduced (41) (43)
- -----------------------------------------------------------------------------------------------------------
Total Expenses 94 149
- -----------------------------------------------------------------------------------------------------------
Net Investment Income 436 905
- -----------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS
(LOSSES) FROM INVESTMENTS
Net realized losses from investment transactions (3) (369)
Net change in unrealized appreciation from investments 353 834
- -----------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments 350 465
- -----------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $786 $ 1,370
- -----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
11
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED INVESTMENT OHIO
TERM GOVERNMENT INTERMEDIATE QUALITY MUNICIPAL
INCOME MORTGAGE INCOME BOND BOND
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 3,810 $ 5,718 $ 4,461 $ 3,544 $ 1,533
- ------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 287 368 448 344 167
Administration fees 86 110 90 69 42
Accounting fees 38 48 39 33 20
Legal and audit fees 9 16 12 9 5
Organization fees 7 7
Trustees' fees and expenses 3 6 4 3 2
Transfer agent fees 10 11 10 10 9
Registration and filing fees 10 9 22 20 7
Printing fees 10 11 11 10 10
Other 2 3 3 1
Expenses voluntarily reduced (11) (12) (161) (122) (85)
- ------------------------------------------------------------------------------------------------------------
Total Expenses 444 570 485 384 177
- ------------------------------------------------------------------------------------------------------------
Net Investment Income 3,366 5,148 3,976 3,160 1,356
- ------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized losses from investment transactions (491) (1,978) (1,415) (1,048) (511)
Change in unrealized appreciation from investments 2,323 6,541 3,611 3,845 3,179
- ------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments 1,832 4,563 2,196 2,797 2,668
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 5,198 $ 9,711 $ 6,172 $ 5,957 $ 4,024
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
12
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK DIVERSIFIED
BALANCED INDEX VALUE STOCK GROWTH
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 2,504 $ 301 $ 952 $ 491 $ 30
Dividend income 1,262 1,141 3,381 4,004 522
- ----------------------------------------------------------------------------------------------------------------
Total Income 3,766 1,442 4,333 4,495 552
- ----------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 722 283 1,142 906 259
Administration fees 108 71 171 209 39
Accounting fees 48 28 70 85 17
Legal and audit fees 13 9 19 24 6
Organization fees 5 3 8 3
Trustees' fees and expenses 5 3 7 9 2
Transfer agent fees 15 10 12 15 9
Registration and filing fees 24 16 30 7 15
Printing fees 12 11 13 14 9
Other 2 1 4 3
Expenses voluntarily reduced (294) (161) (434) (59) (93)
- ----------------------------------------------------------------------------------------------------------------
Total Expenses 660 274 1,042 1,213 266
- ----------------------------------------------------------------------------------------------------------------
Net Investment Income 3,106 1,168 3,291 3,282 286
- ----------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND
FOREIGN CURRENCY:
Net realized gains from investment transactions 203 257 2,038 9,257 225
Net realized gains from foreign currency transactions 514
Net change in unrealized appreciation from investments 9,034 8,129 18,512 18,099 1,924
Change in unrealized depreciation from translation of assets
and liabilities in foreign currencies (5)
- ----------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments and foreign
currency 9,746 8,366 20,550 27,356 2,149
- ----------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $12,852 $9,554 $23,841 $30,638 $2,435
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
13
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO
SPECIAL SPECIAL REGIONAL INTERNATIONAL
VALUE GROWTH STOCK GROWTH
FUND FUND FUND FUND
(000) (000) (000) (000)
------- ------- ------ -------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 240 $ 41 $ 49 $ 62
Dividend income 1,431 104 352 421
Foreign tax withholding (48)
- ------------------------------------------------------------------------------------------------------------
Total Income 1,671 145 401 435
- ------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 647 103 123 436
Administration fees 97 16 25 60
Custodian and accounting fees 41 8 12 120
Legal and audit fees 12 3 4 7
Organization fees 4 1
Trustees' fees and expenses 4 1 1 3
Transfer agent fees 10 8 18 11
Registration and filing fees 19 10 7 13
Printing fees 11 9 10 10
Other 2 1
Expenses voluntarily reduced (193) (40) (7) (61)
- ------------------------------------------------------------------------------------------------------------
Total Expenses 654 120 193 599
- ------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 1,017 25 208 (164)
- ------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gains (losses) from investment transactions 2,555 (3,750) 840 (2,264)
Net realized loss from foreign currency transactions 1,440
Net change in unrealized appreciation (depreciation) from
investments 8,232 4,497 1,267 (3,388)
Change in unrealized appreciation from translation of assets and
liabilities in foreign currencies 42
- ------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains (losses) from investments and
foreign currency 10,787 747 2,107 (4,170)
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $11,804 $ 772 $2,315 $(4,334)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
14
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT TAX-FREE MONEY
OBLIGATIONS FUND PRIME OBLIGATIONS FUND MARKET FUND
------------------------ -------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
YEAR
ENDED
YEAR ENDED YEAR ENDED OCTOBER
OCTOBER 31, OCTOBER 31, 31,
1994 1994 1994
(000) (000) (000)
----------- ----------- ---------
SIX SIX MONTHS SIX
MONTHS ENDED MONTHS
ENDED APRIL 30, ENDED
APRIL 30, 1995 APRIL 30,
1995 (000) 1995
(000) ----------- (000)
--------- ---------
(UNAUDITED)
(UNAUDITED) (UNAUDITED)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 12,063 $ 14,747 $ 16,169 $ 26,637 $ 3,689 $ 4,538
Net realized gains (losses) from
investment transactions 54 (167) 1 (2,506) 7
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
operations 12,117 14,580 16,170 24,131 3,689 4,545
- -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (12,063) (14,747) (16,169) (26,637) (3,689) (4,538)
From net realized gains on
investments (81) (7)
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (12,063) (14,828) (16,169) (26,637) (3,689) (4,545)
- -------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 729,038 935,449 1,021,057 2,109,682 256,968 534,878
Dividends reinvested 1,416 1,179 7,281 8,381 350 355
Cost of shares redeemed (618,413) (1,040,066) (1,380,642) (2,055,784) (246,273) (526,023)
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions (112,041) (103,438) (352,304) 62,279 11,045 9,210
- -------------------------------------------------------------------------------------------------------------------------
Contribution by KeyCorp 2,506
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets (112,095) (103,686) 352,303 62,279 11,045 9,210
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 412,048 515,734 782,303 720,024 198,561 189,351
- -------------------------------------------------------------------------------------------------------------------------
End of period $ 524,143 $ 412,048 $ 430,000 $ 782,303 $ 209,606 $ 198,561
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 729,038 935,449 1,021,057 2,109,682 256,968 534,878
Dividends reinvested 1,416 1,179 7,281 8,381 350 355
Redeemed (618,413) (1,040,066) (1,380,642) (2,055,784) (246,273) (526,023)
- -------------------------------------------------------------------------------------------------------------------------
Change in shares 112,041 (103,438) (352,304) 62,279 11,045 9,210
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
15
<PAGE>
THE VICTORY FUNDS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK TAX-FREE FUND FOR INCOME
PORTFOLIO PORTFOLIO
------------------------ ------------------------
JANUARY 1, FEBRUARY
1994 TO 1, 1994 TO
OCTOBER OCTOBER
31, 1994 31, 1994
(000) (000)
SIX MONTHS ---------- SIX MONTHS ----------
ENDED ENDED
APRIL 30, APRIL 30,
1995 1995
(000) (000)
---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
OPERATIONS
Net investment income $ 436 $ 1,033 $ 905 $ 1,967
Net realized gains (losses) from investment
transactions (3) 229 (369) (654)
Net change in unrealized gain (loss) from
investments 353 (2,384) 834 (2,075)
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 786 (1,122) 1,370 (762)
- ------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders from net investment income
-- class A (421) (1,033) (946) (1,911)
Distributions in excess of net investment income
class A (49)
Dividends to shareholders from net investment income
-- class B (9)
Dividends to shareholders from net realized gains
class A (225)
Dividends to shareholders from net realized gains
class B (5)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from distributions to
shareholders (660) (1,033) (946) (1,960)
- ------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS(1)
Proceeds from shares issued 2,735 6,305 2,077 3,073
Dividends reinvested 234 455 185 525
Shares redeemed (4,127) (15,295) (7,331) (18,150)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from capital transactions (1,158) (8,535) (5,069) (14,552)
- ------------------------------------------------------------------------------------------------------------
Change in net assets (1,032) (10,690) (4,645) (17,274)
- ------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 17,840 28,530 29,358 46,632
- ------------------------------------------------------------------------------------------------------------
End of period $ 16,808 $ 17,840 $ 24,713 $ 29,358
- ------------------------------------------------------------------------------------------------------------
(1) SHARE TRANSACTIONS (IN DOLLARS):
Class A:
Issued 1,941 6,305 2,077 3,073
Distributions reinvested 221 455 185 525
Redeemed (4,127) (15,295) (7,331) (18,150)
- ------------------------------------------------------------------------------------------------------------
Net decrease (1,965) (8,535) (5,069) (14,552)
- ------------------------------------------------------------------------------------------------------------
Class B:
Issued 794
Distributions reinvested 13
Redeemed
- ------------------------------------------------------------------------------------------------------------
Net increase 807
- ------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS (IN SHARES):
Class A:
Issued 156 482 218 312
Distributions reinvested 18 35 20 54
Redeemed (337) (1,185) (779) (1,853)
- ------------------------------------------------------------------------------------------------------------
Net decrease in shares (163) (668) (541) (1,487)
- ------------------------------------------------------------------------------------------------------------
Class B:
Issued 67
Distributions reinvested
Redeemed
- ------------------------------------------------------------------------------------------------------------
Net increase in shares 67
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
16
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED TERM INCOME GOVERNMENT MORTGAGE INTERMEDIATE INCOME
FUND
FUND FUND ---------------------
-------------------- -------------------- DECEMBER
YEAR YEAR 10,
ENDED ENDED 1993 TO
OCTOBER OCTOBER OCTOBER
31, 31, 31,
1994 1994 1994 (A)
(000) (000) (000)
SIX -------- SIX -------- SIX --------
MONTHS MONTHS MONTHS
ENDED ENDED ENDED
APRIL APRIL APRIL
30, 30, 30,
1995 1995 1995
(000) (000) (000)
-------- -------- --------
(UNAUDITED (UNAUDITED (UNAUDITED
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 3,366 $ 4,521 $ 5,148 $ 10,593 $ 3,976 $ 5,951
Net realized gains (losses)
from investment
transactions (491) (671) (1,978) 615 (1,415) (2,498)
Net change in unrealized
appreciation (depreciation)
from investments 2,323 (4,406) 6,541 (16,536) 3,611 (6,218)
- ----------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 5,198 (556) 9,711 (5,328) 6,172 (2,765)
- ----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (3,314) (4,506) (5,273) (10,495) (4,036) (5,724)
From net realized gains from
investments (357) (1,233) (386)
- ----------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (3,314) (4,863) (6,506) (10,881) (4,036) (5,724)
- ----------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 102,064 34,263 25,202 119,347 34,623 159,988
Dividends reinvested 3,313 4,378 6,502 9,714 4,036 5,511
Cost of shares redeemed (18,299) (35,843) (39,642) (97,422) (20,493) (44,087)
- ----------------------------------------------------------------------------------------------------------
Change in net assets from
capital transactions 87,078 2,798 (7,938) 31,639 18,166 121,412
- ----------------------------------------------------------------------------------------------------------
Change in net assets 88,962 (2,621) (4,733) 15,430 20,302 112,923
- ----------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 79,150 81,771 148,168 132,738 112,923
- ----------------------------------------------------------------------------------------------------------
End of period $168,112 $ 79,150 $143,435 $148,168 $133,225 $112,923
- ----------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 10,367 3,336 2,439 10,724 3,739 16,205
Dividends reinvested 336 433 630 906 436 579
Redeemed (1,858) (3,529) (3,833) (8,967) (2,220) (4,575)
- ----------------------------------------------------------------------------------------------------------
Change in shares 8,845 240 (764) 2,663 1,955 12,209
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
17
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT QUALITY BOND
FUND BALANCED FUND
--------------------------- OHIO MUNICIPAL BOND FUND ---------------------------
DECEMBER 10, ----------------------------- DECEMBER 10,
1993 TO YEAR ENDED 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 ENDED 1994 (A)
(000) APRIL 30, (000) APRIL 30, (000)
------------ 1995 -------------- 1995 ------------
(000) (000)
---------- ----------
SIX MONTHS (UNAUDITED) (UNAUDITED)
ENDED
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 3,160 $ 5,712 $ 1,356 $ 2,580 $ 3,106 $ 3,706
Net realized gains (losses)
from investment transactions (1,048) (4,019) (511) (399) 203 (2,116)
Net realized gains from foreign
currency transactions 514
Net change in unrealized
appreciation (depreciation)
from investments 3,845 (5,867) 3,179 (4,662) 9,034 (1,961)
Change in unrealized
depreciation from translation
of assets and liabilities in
foreign currencies (5)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 5,957 (4,174) 4,024 (2,481) 12,852 (371)
- ----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (3,235) (5,516) (1,385) (2,557) (3,678) (3,545)
From net realized gains from
investments (1,169)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (3,235) (5,516) (1,385) (3,726) (3,678) (3,545)
- ----------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 18,694 139,893 8,944 28,815 66,281 176,193
Dividends reinvested 3,234 5,495 1,384 2,767 3,663 3,529
Cost of shares redeemed (27,133) (41,013) (12,534) (18,347) (47,641) (48,521)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions (5,205) 104,375 (2,206) 13,235 22,303 131,201
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets (2,483) 94,685 433 7,028 31,477 127,285
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 94,685 57,704 50,676 $127,285
- ----------------------------------------------------------------------------------------------------------------------------------
End of period $ 92,202 $ 94,685 $ 58,137 $ 57,704 $158,762 $127,285
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 2,032 14,142 845 2,625 6,905 17,854
Dividends reinvested 352 582 132 255 375 366
Redeemed (2,958) (4,323) (1,206) (1,693) (4,964) (4,987)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in shares (574) 10,401 (229) 1,187 2,316 13,233
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
18
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK INDEX FUND VALUE FUND DIVERSIFIED STOCK FUND
--------------------------- --------------------------- -------------------------
DECEMBER 3, DECEMBER 3, YEAR ENDED
1993 TO 1993 TO OCTOBER
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS 31,
1994 (A) ENDED 1994 (A) ENDED 1994
(000) APRIL 30, (000) APRIL 30, (000)
------------ 1995 ------------ 1995 ----------
(000) (000)
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 1,168 $ 1,515 $ 3,291 $ 3,602 $ 3,282 $ 5,177
Net realized gains (losses)
from investment transactions 257 (6) 2,038 3,124 9,257 30,135
Net change in unrealized
appreciation (depreciation)
from investments 8,129 1,556 18,512 (1,040) 18,099 (18,237)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 9,554 3,065 23,841 5,686 30,638 17,075
- ------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (1,173) (1,331) (3,198) (3,289) (3,481) (4,738)
From net realized gains from
investments (3,146) (29,668) (26,397)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (1,173) (1,331) (6,344) (3,289) (33,149) (31,135)
- ------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 30,344 114,187 120,235 229,389 64,652 94,732
Dividends reinvested 1,173 1,321 6,344 3,283 33,132 22,231
Cost of shares redeemed (23,750) (27,556) (70,430) (46,885) (36,907) (97,081)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions 7,767 87,952 56,149 185,787 60,877 19,882
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets 16,148 89,686 73,646 188,184 58,366 5,822
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 89,686 188,184 263,227 257,405
- ------------------------------------------------------------------------------------------------------------------------------
End of period $105,834 $ 89,686 $261,830 $188,184 $321,593 $263,227
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 2,981 11,441 11,942 22,949 5,494 7,718
Dividends reinvested 114 135 639 336 2,997 1,830
Redeemed (2,356) (2,770) (6,813) (4,707) (3,199) (8,003)
- ------------------------------------------------------------------------------------------------------------------------------
Change in shares 739 8,806 5,768 18,578 5,292 1,545
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
19
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND SPECIAL VALUE FUND SPECIAL GROWTH FUND
-------------------------- -------------------------- --------------------------
DECEMBER 3, DECEMBER 3, DECEMBER 3,
1993 TO 1993 TO 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 (A) ENDED 1994 (A)
(000) APRIL 30, (000) APRIL 30, (000)
----------- 1995 ----------- 1995 -----------
(000) (000)
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 286 $ 636 $ 1,017 $ 1,020 $ 25 $ 60
Net realized gains (losses) from
investment transactions 225 298 2,555 588 (3,750) (325)
Net change in unrealized appreciation
(depreciation) from investments 1,924 1,364 8,232 3,148 4,497 (3,135)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
operations 2,435 2,298 11,804 4,756 772 (3,400)
- -----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (328) (586) (955) (927) (29) (59)
From net realized gains from
investments (298) (588)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from distributions
to shareholders (626) (586) (1,543) (927) (29) (59)
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 7,230 92,029 46,521 137,158 3,811 44,544
Dividends reinvested 626 584 1,542 924 29 56
Cost of shares redeemed (32,725) (27,404) (23,333) (23,311) (9,790) (16,548)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions (24,869) 65,209 24,730 114,771 (5,950) 28,052
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets (23,060) 66,921 34,991 118,600 (5,207) 24,593
NET ASSETS:
Beginning of period 66,921 118,600 24,593
- -----------------------------------------------------------------------------------------------------------------------------------
End of period $ 43,861 $ 66,921 $153,591 $ 118,600 $ 19,386 $ 24,593
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 712 9,240 4,410 13,472 441 4,515
Dividends reinvested 63 60 148 91 3 6
Redeemed (3,262) (2,759) (2,217) (2,258) (1,134) (1,758)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in shares (2,487) 6,541 2,341 11,305 (690) 2,763
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
20
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO REGIONAL STOCK INTERNATIONAL GROWTH
FUND FUND
----------------------- -----------------------
YEAR ENDED YEAR ENDED
OCTOBER OCTOBER
31, 31,
1994 SIX MONTHS 1994
(000) ENDED (000)
---------- APRIL 30, ----------
1995
(000)
SIX MONTHS ----------
ENDED (UNAUDITED)
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 208 $ 438 $ (164) $ (136)
Net realized gains (losses) from investment
transactions 840 1,699 (2,264) 4,064
Net realized losses from foreign currency transactions 1,440 (152)
Net change in unrealized appreciation (depreciation)
from investments 1,267 (867) (3,388) 2,879
Change in unrealized appreciation from translation of
assets and liabilities in foreign currencies 42 15
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 2,315 1,270 (4,334) 6,670
- ------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (221) (409)
From net realized gains from investments (1,699) (1,293) (3,925)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from distributions to shareholders (1,920) (1,702) (3,925)
- ------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 4,152 16,543 23,300 53,804
Dividends reinvested 1,917 1,560 3,922
Cost of shares redeemed (5,246) (18,632) (13,740) (9,796)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from capital transactions 823 (529) 13,482 44,008
- ------------------------------------------------------------------------------------------------------------
Change in net assets 1,218 (961) 5,223 50,678
- ------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 33,965 34,926 81,307 30,629
- ------------------------------------------------------------------------------------------------------------
End of period $ 35,183 $ 33,965 $ 86,530 $ 81,307
- ------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 297 1,143 2,012 4,323
Dividends reinvested 144 109 337
Redeemed (376) (1,297) (1,187) (784)
- ------------------------------------------------------------------------------------------------------------
Change in shares 65 (45) 1,162 3,539
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
21
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
U.S. GOVERNMENT OBLIGATIONS FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- -------------------------------------------
U.S. TREASURY BILLS (4.7%)
25,000 5.73%, 6/29/95 $ 24,765
- -------------------------------------------------------
TOTAL U.S. TREASURY BILLS 24,765
- -------------------------------------------------------
- -------------------------------------------------------
U.S. TREASURY NOTES (38.8%)
30,000 4.25%, 7/31/95 29,862
150,000 3.875%, 8/31/95 148,923
25,000 3.875%, 9/30/95 24,786
- -------------------------------------------------------
TOTAL U.S. TREASURY NOTES 203,571
- -------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE 228,336
- -------------------------------------------------------
- -------------------------------------------------------
REPURCHASE AGREEMENTS (56.6%)
15,000 Barclays Bank
5.90%, 5/1/95
(Collateralized by 14,778
U.S. Treasury Notes,
7.38%-7.88%, 11/15/97-
4/15/98, market value-
$15,301) 15,000
20,000 Chase Securities
5.92%, 5/1/95
(Collateralized by 20,444
U.S. Treasury Bills,
5/4/95-5/18/95,
market value-$20,401) 20,000
20,000 Dean Witter
5.93%, 5/1/95
(Collateralized by 23,287
various U.S. Treasury
securities, 5/15/95-
2/29/00, 0.00%-7.13%,
market value-$20,401) 20,000
22,998 Donaldson, Lufkin &
Jennerette
5.93%, 5/1/95
(Collateralized by 25,691
various U.S. Treasury
securities, 5/15/95-
11/15/98, 0.00%-5.13%,
market value-$23,458) 22,998
15,000 Goldman Sachs
5.90%, 5/1/95
(Collateralized by 19,050
U.S. Treasury securities,
8/15/98, 0.00% market
value-$15,301) 15,000
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
20,000 Harris Securities
5.95%, 5/1/95
(Collateralized by 20,372
various U.S. Treasury
securities, 6/8/95-
10/15/98, 0.00%-8.75%,
market value-$20,400 $ 20,000
15,000 Lehman Brothers
5.90%, 5/1/95
(Collateralized by 14,455
U.S. Treasury Notes,
8.63%, 8/15/97, market
value-$15,054) 15,000
129,000 NationsBank
5.96%, 5/1/95
(Collateralized by 131,793
various U.S. Treasury
securities, 0.00%-
11.25%, 4/30/95-4/15/00,
market value-$131,585 129,000
20,000 Nomura Securities
5.92%, 5/1/95
(Collateralized by 20,217
U.S. Treasury Notes,
4.63%-7.75%, 2/29/96-
1/31/00, market value-
$20,400) 20,000
20,000 UBS Securities
5.93%, 5/1/95
(Collateralized by 19,630
U.S. Treasury Notes,
7.50%, 12/31/96, market
value-$20,405) 20,000
- -------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 296,998
- -------------------------------------------------------
TOTAL (COST $525,334)(B) $525,334
- -------------------------------------------------------
</TABLE>
(a) Percentages indicated are based on net assets of $524,143.
(b) Cost and value for federal income tax and financial reporting purposes are
the same.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
22
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments
PRIME OBLIGATIONS FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
CERTIFICATES OF DEPOSIT (3.5%)
BANKING (3.5%):
15,000 Canadian Imperial Bank
Commerce
6.45%, 8/7/95 $ 14,999
- ------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT 14,999
- ------------------------------------------------------------
- ----------------------------------------------
COMMERCIAL PAPER (42.1%)
BANKING (2.3%):
10,000 Cogentrix of Richmond
Virginia
6.02%, 5/18/95 9,972
----------
BEVERAGES (4.3%):
3,373 PepsiCo, Inc.
5.95%, 5/17/95 3,364
15,000 PepsiCo, Inc.
6.25%, 8/24/95 15,000
----------
18,364
----------
FINANCIAL SERVICES (20.7%):
5,000 American Express Co.
5.95%, 5/22/95 4,983
15,000 Bankers Trust
6.23%, 7/10/95 14,818
5,000 Broadway Capital Corp.
6.00%, 5/9/95 4,993
11,218 Fleet Funding Corp.
6.02%, 5/10/95 11,201
5,138 Fleet Funding Corp.
6.00%, 5/24/95 5,118
5,000 Ford Motor Credit Corp.
6.00%, 5/8/95 4,994
6,000 Ford Motor Credit Corp.
6.00%, 5/31/95 5,970
15,000 Hanson Finance
6.05%, 6/1/95 14,922
5,000 Transamerica Finance Corp.
5.98%, 5/15/95 4,988
11,050 Retailer Funding Corp.
6.00%, 5/24/95 11,008
6,044 Retailer Funding Corp.
6.00%, 5/31/95 6,014
----------
89,009
----------
INDUSTRIAL GOODS & SERVICES (2.3%):
10,000 Xerox Co.
6.00%, 5/15/95 9,977
----------
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MISCELLANEOUS (3.5%):
15,000 135 Bishopgate Funding
6.02%, 5/19/95 $ 14,955
----------
OFFICE EQUIPMENT & SERVICES (3.5%):
15,000 Canon USA, Inc.
5.98%, 5/12/95 14,973
----------
OIL & GAS EXPLORATION (1.2%):
5,000 British Oil New Zealand Ltd.
Discount
5.95%, 5/15/95 4,988
----------
PRINTING & PUBLISHING (1.2%):
5,000 Reed Publishing
6.05%, 6/27/95 4,952
----------
RECEIVABLE (3.2%):
5,000 Blue Hawk Funding
6.00%, 5/24/95 4,981
5,000 Blue Hawk Funding
5.98%, 5/31/95 4,975
3,840 Blue Hawk Funding
6.02%, 5/9/95 3,835
----------
13,791
- ------------------------------------------------------------
TOTAL COMMERCIAL PAPER 180,981
- ------------------------------------------------------------
- ----------------------------------------------
CORPORATE BONDS (3.3%)
BEVERAGES (0.2%):
1,000 PepsiCo, Inc.
5.63%, 7/1/95 1,000
----------
FINANCIAL SERVICES (1.9%):
8,050 Associates Corp. of N.A.
8.88%, 8/1/95 8,113
----------
MISCELLANEOUS (1.2%):
5,000 Hanson Overseas
5.50%, 1/15/96 4,960
- ------------------------------------------------------------
TOTAL CORPORATE BONDS 14,073
- ------------------------------------------------------------
- ----------------------------------------------
FLOATING RATE NOTES (14.3%)
MASTER DEMAND NOTES (5.1%):
22,000 Lehman Government
Securities
6.20%*, 5/1/95 22,000
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
23
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments -- Continued
PRIME OBLIGATIONS FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
SECURITY BROKER, DEALER (8.1%):
10,000 Goldman Sachs Group
6.03%*, 6/15/95** $ 10,000
10,000 Goldman Sachs Group
6.03%*, 6/16/95** 10,000
10,000 Lehman Brothers Holdings,
Inc.
6.16%*, 7/28/95** 10,000
5,000 Lehman Brothers Holdings,
Inc.
6.42%*, 3/11/96** 5,000
----------
35,000
----------
TAXABLE MUNICIPAL DEMAND NOTES (1.0%):
4,500 Springfield
6.08%*, 12/31/10** 4,500
- ------------------------------------------------------------
TOTAL FLOATING RATE NOTES 61,500
- ------------------------------------------------------------
- ----------------------------------------------
MEDIUM TERM NOTES (5.8%)
FINANCE (3.7%):
1,000 Ford Motor Credit Corp.
9.20%, 5/1/95 1,000
5,000 General Electric Capital
Corp.
6.25%, 5/1/95 5,000
10,000 General Electric Capital
Corp.
4.89%, 5/29/95 9,999
----------
15,999
----------
TOBACCO (2.1%):
9,000 Philip Morris Co.
6.25%, 5/22/95 9,003
- ------------------------------------------------------------
TOTAL MEDIUM TERM NOTES 25,002
- ------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (3.5%)
FEDERAL HOME LOAN BANK
10,000 5.19%, 6/13/95 9,999
5,000 6.60%, 4/25/95 5,000
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 14,999
- ------------------------------------------------------------
- ----------------------------------------------
VARIABLE RATE NOTES (18.8%)
5,034 Adesa Funding Corp.
6.08%*, 1/1/99** 5,034
2,500 Astro Alum
6.15%*, 4/1/05** 2,500
3,500 Baylis Group Partnership
6.30%*, 1/1/10** 3,500
15,000 C-River Maritime Exxon
Shipping
6.09%*, 10/1/01** 15,000
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
3,517 Capital One Funding Corp.
Service
6.08%*, 6/2/08** $ 3,517
2,725 Carelife, Inc.
6.15%*, 8/1/11** 2,725
1,600 Cleveland Steel Container
6.15%*, 12/1/08** 1,600
2,000 Cuyahoga County Ohio
Taxable Economic
Development Revenue
6.51%*, 6/1/22** 2,000
925 Dietz Road Ltd Partnership
6.15%*, 11/1/08** 925
3,000 Dome Corp -- Dome Corp
Project
6.15%*, 8/31/16** 3,000
8,388 Erie Funding
6.25%*, 11/1/16** 8,388
320 Fremont Plastics
6.15%*, 4/1/03** 320
1,500 GMH Enterprises
6.15%*, 7/1/03** 1,500
455 Highland Rd Partners
6.15%*, 10/1/04** 455
975 McKinley Air Transport
6.15%*, 8/1/09** 975
1,000 MCMC Pob LII
6.15%*, 8/1/14** 1,000
1,000 Olen Corp.
6.15%*, 12/1/04** 1,000
1,655 Olen Corp.
6.15%*, 8/1/08** 1,655
1,400 Pellerin Melnor Corp.
6.15%*, 9/1/02** 1,400
5,842 Primex Funding
6.08%*, 2/1/00** 5,842
700 Rivnut Engineered Products
6.15%*, 2/1/01** 700
980 S & SLP Project
6.15%*, 12/1/07** 980
420 Schipper-DJA Properties
6.17%*, 10/1/05** 420
3,060 Schipper Enterprises
6.17%*, 4/1/09** 3,060
1,295 Technisand, Inc.
6.15%*, 11/1/01** 1,295
1,800 Tell-Schipper Properties,
Inc.
6.17%*, 10/1/03** 1,800
8,300 Tyler Health Facilities
6.35%*, 11/1/25** 8,300
1,980 Zanetos Partnership Project
6.15%*, 7/1/13** 1,980
- ------------------------------------------------------------
TOTAL VARIABLE RATE NOTES 80,871
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
24
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments -- Continued
PRIME OBLIGATIONS FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
REPURCHASE AGREEMENTS (8.7%)
12,000 Chase Securities
5.92%, 5/2/95
(Collateralized by 12,287
U.S. Treasury Bills,
5/18/95-5/25/95,
market value-$12,244) $ 12,000
13,315 Donaldson-Lufkin Jenrette
5.93%, 5/1/95
(Collateralized by 15,318
various U.S. Treasury
securities, 0.00%-5.13%,
8/15/95-2/15/00,
market value-$13,582) 13,315
12,000 UBS Securities, Inc.
5.93%, 5/2/95
(Collateralized by 11,780
U.S. Treasury Notes,
7.90%, 12/31/96, market
value-$12,245) 12,000
- ------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 37,315
- ------------------------------------------------------------
TOTAL (COST $429,740)(B) $ 429,740
- ----------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $430,000.
(b) Cost and value for federal income tax and financial reporting purposes are
the same.
* Floating Rate Demand Notes are securities with yields that vary with a
designated market index or market rate. These securities are payable on the
date of demand. The rate reflected on the Schedule of Portfolio Investments is
the effective rate at April 30, 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 ON PAGES 73 TO 78.
25
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
TAX-FREE MONEY MARKET FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (98.6%)
ALABAMA (2.1%):
2,530 Ardmore Industrial
Development Revenue,
4.95%*, 6/1/04** $ 2,530
1,800 Montgomery, Alabama BMC,
4.75%*, 12/1/30** 1,800
--------
4,330
--------
ARKANSAS (2.4%):
5,000 University of Arkansas,
4.80%*, 12/1/19** 5,000
--------
CALIFORNIA (6.8%):
5,000 California Housing Finance
GIC, 4.60%, 8/1/27** 5,000
6,000 California School Cash
Reserve, 4.50%, 7/5/95 6,008
3,080 Los Angeles, California
Redevelopment, 8.85%,
7/1/95 3,115
--------
14,123
--------
COLORADO (1.3%):
2,645 Arapahoe County, Capital
Improvement, 4.45%,
8/31/96** 2,645
--------
FLORIDA (8.3%):
4,500 Broward County, Housing
Finance Authority, 4.95%*,
12/1/29** 4,500
9,700 Dade County, Housing Finance
Authority, Highway
Revenue, 4.95%*, 8/1/05** 9,700
490 Florida State Board of
Education, 5.50%, 1/1/96 492
2,500 Hillsborough County,
Ringhaven, 4.75%*,
12/1/11** 2,500
--------
17,192
--------
ILLINOIS (7.5%):
1,700 Illinois Development,
Kindlen, 4.80%*, 5/1/06** 1,700
5,000 Illinois Development, Power
& Light, 4.10%, 5/31/95** 5,000
5,000 Illinois Health Facility,
4.50%*, 11/15/24** 5,000
1,000 Illinois State, 8.13%,
6/1/95 1,023
2,700 Kankakee County, Industrial
Development Revenue,
4.95%*, 12/1/07** 2,700
--------
15,423
--------
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INDIANA (4.5%):
4,000 Indiana Bond Bank, 5.25%,
7/10/95 $ 4,005
1,150 Indianapolis, Indiana
Calderon, 4.95%*, 2/1/99** 1,150
1,995 Scottsburg, Indiana, 5.20%*,
10/1/09** 1,995
1,020 Syracuse, Economic
Development Revenue,
4.80%*, 12/1/05** 1,020
1,220 Wakarusa, Economic
Development Revenue,
4.80%*, 7/1/03** 1,220
--------
9,390
--------
IOWA (5.0%):
4,325 City of Urbandale, 4.25%*,
10/1/15** 4,325
6,000 Iowa Schools, 4.25%, 7/17/95 6,008
--------
10,333
--------
KANSAS (1.8%):
2,300 Fairway, Kansas, 4.25%*,
11/1/14** 2,300
1,500 Wamego Pollution Control
Revenue, 4.10%*, 11/1/14** 1,500
--------
3,800
--------
KENTUCKY (2.4%):
2,475 Boone County, 5.20%*,
12/1/09** 2,475
2,465 Covington, Kentucky, 4.70%*,
4/1/05** 2,465
--------
4,940
--------
MICHIGAN (1.3%):
1,725 Michigan State Strategic,
4.75%*, 4/1/06** 1,725
1,000 Oakland County Economic,
5.80%, 9/1/95 1,012
--------
2,737
--------
MINNESOTA (1.6%):
3,340 St. Cloud, Housing Webway,
4.95%*, 11/1/05** 3,340
--------
MISSOURI (5.3%):
3,600 Kansas City, J.C. Nichols
Project, 4.25%*, 5/1/15** 3,600
2,860 St. Charles County, Cedar
Ridge, 4.75%*, 10/1/07** 2,860
4,600 St. Louis Industrial
Development, Multi Family
Housing Revenue Bond,
Series 86, 5.05%*,
2/1/07** 4,600
--------
11,060
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
26
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
TAX-FREE MONEY MARKET FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
NEBRASKA (2.4%):
4,000 Nebraska Investment Finance
Authority, 4.75%,
7/15/95** $ 4,000
915 Nebraska Investment Finance
Authority, 5.00%, 7/1/15** 915
--------
4,915
--------
NEVADA (1.4%):
1,300 Director State Nevada H2W
Part, 4.95%*, 8/1/14** 1,300
1,600 Director State Nevada No.
Sail, 4.95%*, 8/1/01** 1,600
--------
2,900
--------
NEW YORK (0.8%):
1,700 New York, New York, 5.00%*,
2/1/20** 1,700
--------
NORTH CAROLINA (4.0%):
8,240 Person County, Pollution
Control Revenue, Carolina
Power & Light Project,
4.80%*, 11/1/19** 8,240
--------
OHIO (18.1%):
440 Akron Bath Copley, Ohio
Township Hospital, 4.80%*,
5/1/13** 440
2,000 Berea, Ohio, 4.50%, 10/25/95 2,002
1,500 Cuyahoga County, 4.80%*,
12/1/12** 1,500
2,850 Dublin School District,
5.57%, 12/20/95 2,854
885 Fairfield County, 4.88%,
10/26/95 887
2,550 Fayetteville Perry, Ohio,
4.68%, 4/12/96 2,554
2,500 Franklin County Hospital,
4.70%*, 6/1/16** 2,500
4,380 Franklin County, Wesley
Glen, 4.82%*, 4/1/13** 4,380
2,680 Gallia County, Industrial
Development Revenue,
Scenic Hills Nursing
Center, 4.40%*, 12/15/10** 2,680
3,400 Greene County, Ohio Apple
Valley, 4.30%*, 8/1/09** 3,400
3,000 Highland Heights, 5.65%,
12/28/95 3,008
3,800 Kings School District,
5.45%, 6/21/95 3,803
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
4,000 Lakewood, Ohio, 3.72%,
5/11/95 $ 4,000
2,495 Student Loan Funding Corp.,
Cincinnati, Ohio, Student
Loan Revenue, 4.60%*,
12/29/98** 2,495
790 Summit County, Ohio, Texler
Project, 4.40%, 5/1/09** 790
--------
37,293
--------
PENNSYLVANIA (2.7%):
3,100 Sayre, Health Care Facility,
4.75%*, 12/1/20** 3,100
2,450 Williamsport, Area School
District, 3.89%, 6/30/95 2,451
--------
5,551
--------
SOUTH CAROLINA (1.2%):
2,500 Job Economic Development
Revenue, 4.95%*, 12/1/99** 2,500
--------
TENNESSEE (3.0%):
6,200 Hawkins County, Kingston,
5.00%*, 8/1/09** 6,200
--------
TEXAS (3.6%):
4,140 Harris County, 4.95%*,
10/1/16** 4,140
2,240 Texas A&M University, 8.50%,
7/1/95 2,255
950 Texas A&M University, 9.00%,
7/1/95 957
--------
7,352
--------
UTAH (0.3%):
500 Intermountain Power Agency,
9.90%, 7/1/95 517
--------
VIRGINIA (1.5%):
3,000 State Housing Development,
3.90%, 5/10/95 3,000
--------
WASHINGTON (0.7%):
500 Everett Water & Sewer,
8.20%, 7/1/95 503
1,000 Pierce County, 4.55%,
11/1/04** 1,000
--------
1,503
--------
WISCONSIN (8.6%):
1,200 Appleton, Pensor, 4.95%*,
8/1/01** 1,200
1,525 Berlin Wenninger, 4.95%*,
4/1/07** 1,525
4,000 Evansville, Wisconsin,
4.95%*, 12/1/08** 4,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
27
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
TAX-FREE MONEY MARKET FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
4,000 Kenosha Metalmen, 4.95%*,
9/1/14** $ 4,000
1,000 Milwaukee, Wisconsin, 5.25%,
9/1/95 1,003
1,400 Oshkosh, Schloesser, 4.95%*,
3/1/02** 1,400
2,800 Plymouth, Industrial
Development Revenue,
4.95%*, 8/1/04** 2,800
1,800 Prairie Du Chien, Wisconsin,
4.80%*, 6/1/02** 1,800
--------
17,728
- ----------------------------------------------------------
TOTAL MUNICIPAL BONDS 203,712
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (2.1%)
4,318 Federated #15 Tax-Free Money
Market Fund 4,318
1 Fidelity Ohio Tax Free Fund 1
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 4,319
- ----------------------------------------------------------
TOTAL (COST $208,031)(B) $208,031
- ---------------------------------------------------------
</TABLE>
- ------------
(a) Percentages indicated are based on net assets of $206,606.
(b) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities collateralized by bank letters of credit or other
bank credit 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 Portfolio Investments is the rate in
effect at April 30, 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 ON PAGES 73 TO 78.
28
<PAGE>
Schedule of Portfolio Investments
THE VICTORY FUNDS April 30, 1995
NEW YORK TAX-FREE PORTFOLIO (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (94.5%)
250 Metropolitan Transportation
Authority, New York,
Revenue Bond, Series I,
AMBAC, 7.00%, 7/1/09 $ 282
1,200 Metropolitan Transportation
Authority, New York,
Service Contract, Refunding
Revenue Bond, Series K,
AMBAC, 7.50%, 7/1/17 1,318
250 Nassau County, New York,
Industrial Development
Agency, Civic Facilities
Revenue Bond, Hofstra
University Project, AMBAC,
6.75%, 8/01/11 263
700 New York City, New York, City
Housing Development,
Refunding Revenue Bond,
Multi-Unit Mortgage, Series
A, FHA, 7.30%, 6/1/10 741
335 New York City, New York, City
Housing Development,
Revenue Bond, Series 1,
MBIA, 7.38%, 4/1/17 352
675 New York City, New York, City
Housing Development,
Refunding Revenue Bond,
Multi-Unit Mortgage, Series
A, FHA, 7.35%, 6/1/19 717
200 New York City, New York,
Industrial Development
Agency, Civic Facilities
Revenue Bonds, USTA
National Tennis Center,
6.38%, 11/15/14 205
220 New York City, New York, City
Transportation Authority,
Revenue Bond, Livingston
Plaza Project, FSA, 7.50%,
1/1/20 247
680 New York City, New York,
Cultural Resources, Revenue
Bond, AMBAC, 6.63%, 1/1/11 711
300 New York City, New York,
General Obligation Bond,
Series B, FSA, 7.00%,
10/1/18 312
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
$ 350 New York City, New York,
General Obligation Bond,
Series C, FGIC, 7.00%,
2/1/12 $ 360
750 New York City, New York,
Municipal Water Finance
Authority, Water & Sewer
System Revenue Bonds,
Series A, FGIC, 6.75%,
6/15/16 780
700 New York State Dormitory
Authority Revenue Bonds,
City University, Series 2,
MBIA 6.75%, 7/01/24 738
750 New York State Dormitory
Authority, Revenue Bonds,
Ithaca College, MBIA,
6.50%, 7/1/10 782
400 New York State Dormitory
Authority, Revenue Bonds,
State University
Educational System, Series
B, AMBAC, 6.00%, 5/15/17 395
225 New York State Dormitory
Authority, Revenue Bond,
Judicial Facilities Leases,
Series B, MBIA, 7.00%,
4/15/16 239
370 New York State General
Obligation Bonds, AMBAC,
6.75%, 8/1/18 392
325 New York State General
Obligation Bonds, AMBAC,
6.75%, 8/1/19 343
500 New York State Medical Care
Facilities Finance Agency,
Unrefunded/Revenue Bond,
MBIA, 7.38%, 8/15/19 543
200 New York State Medical Care
Facilities Finance Agency,
Montefiore Medical Center,
AMBAC, 5.75%, 2/15/25 188
815 New York State Medical Care
Facilities Finance Agency,
Refunding Revenue Bond,
North Shore University
Hospital, MBIA, 7.20%,
11/1/20 879
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
29
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY FUNDS April 30, 1995
NEW YORK TAX-FREE PORTFOLIO (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
550 New York State Medical Care
Facilities Finance Agency,
Revenue Bond, Series A,
BIG, 7.10%, 2/15/27 $ 575
340 New York State Medical Care
Facilities Finance Agency,
Revenue Bond, St. Luke's,
Series B, MBIA, 7.45%,
2/15/29 382
550 New York State TWY Authority
General Revenue Bonds,
Series C, FGIC, 6.00%,
1/01/25 539
1,000 New York State Urban
Development Correctional
Facilities, Revenue Bond,
Series D, AMBAC, 7.50%,
1/1/12 1,088
400 New York State Urban
Development Correctional
Facilities, Series 1, FSA,
7.50%, 1/1/20 449
900 Triborough Bridge & Tunnel
Authority, Revenue Bond,
Series T, MBIA, 7.00%,
1/1/20 1,002
1,000 Triborough Bridge & Tunnel
Authority, Special
Obligation Refunding
Revenue Bond, Series B,
AMBAC, 6.88%, 1/1/15 1,061
- ---------------------------------------------------------
TOTAL MUNICIPAL BONDS $15,883
- ---------------------------------------------------------
- ---------------------------------------------------------
INVESTMENT COMPANIES (3.1%)
527 Municipal Fund for New York $ 527
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 527
- ---------------------------------------------------------
TOTAL (COST $15,485)(b) $16,410
- ---------------------------------------------------------
</TABLE>
- ------------
(a) Percentages indicated are based on net assets of $16,808.
(b) 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 $ 925
Unrealized depreciation
-------
Net unrealized appreciation $ 925
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
30
<PAGE>
Schedule of Portfolio Investments
THE VICTORY FUNDS April 30, 1995
FUND FOR INCOME (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
U.S. TREASURY OBLIGATION (1.2%)
U.S. TREASURY STRIP
2,000 zero%, 8/15/20 $ 296
- ---------------------------------------------------------
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (40.3%)
1,084 Bear Stearns Mortgage Capital
Corp., Series 1991-A/B1,
9.40%, 6/25/21 1,084
2,220 Bear Stearns Secured
Investors Trust, Series
1991-2/H, 7.50%, 9/20/20 2,151
104 Drexel, Burnham & Lambert
Trust, Series U/1, 6.30%,
8/1/17 107
1,000 General Electric Capital
Mortgage, Series 93-4f,
7.00%, 3/25/08 896
1,985 Housing Securities, Inc.,
Series 1993-B/B4M, 7.25%,
4/25/08 1,878
1,000 Kidder, Peabody Acceptance
Corp., Series 1993-C1/A3,
6.80%, 9/1/06 927
153 Merrill Lynch Trust, Series
27/D, 8.90%, 10/20/15 155
1,366 Prudential Home Mortgage,
Series 1992-42/M, 7.00%,
1/25/08 1,291
1,500 Resolution Trust Corp.,
Series 1992-2/B4, 8.20%,
11/25/21 1,476
- ---------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 9,965
- ---------------------------------------------------------
- ---------------------------------------------------------
U.S. GOVERNMENT AGENCIES (41.7%)
FEDERAL HOME LOAN MORTGAGE CORPORATION:
335 8.85%, 4/15/20 338
115 9.30%, 8/15/15 117
1,337 9.50%, 8/1/19-12/1/22 1,389
237 10.00%, 2/1/17-9/1/19 253
18 12.00%, 10/1/10-7/1/14 21
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION:
1,304 8.00%, 11/25/20 $ 1,221
1,683 8.50%, 8/1/24-1/13/25 1,712
25 9.50%, 1/1/19 28
154 10.00%, 5/1/13-2/1/18 172
10 10.50%, 1/1/18 11
55 12.00%, 8/1/13-4/1/15 61
36 13.00%, 12/1/12 41
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION:
2,272 9.50%, 8/15/17-10/15/19 2,390
2,115 10.00%, 3/15/16-6/15/21 2,289
97 10.25%, 3/15/19-6/15/19 103
82 10.50%, 2/15/16 90
66 11.00%, 9/20/14 74
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 10,310
- ---------------------------------------------------------
- ---------------------------------------------------------
REAL ESTATE MORTGAGE INVESTMENT
CONDUITS (12.6%)
1,000 Federal National Mortgage
Association, Series 1991-
13/C, 8.25%, 3/25/04 1,017
76 Federal National Mortgage
Association, Series G-18/6,
8.75%, 7/25/01 76
1,920 Federal National Mortgage
Association, Series
1988-4/Z, 9.25%, 3/25/18 2,014
- ---------------------------------------------------------
TOTAL REAL ESTATE MORTGAGE INVESTMENT
CONDUITS 3,107
- ---------------------------------------------------------
- ---------------------------------------------------------
REPURCHASE AGREEMENT (4.1%)
1,003 Donaldson, Lufkin & Jenrette
Securities Corp., 5.93%,
dated 4/28/95, due 5/1/95
(Collateralized by various
U.S. Treasury securities) 1,003
- ---------------------------------------------------------
TOTAL REPURCHASE AGREEMENT 1,003
- ---------------------------------------------------------
TOTAL (COST $24,172)(B) $ 24,681
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $24,713.
(b) 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 $ 842
Unrealized depreciation (333)
--------
Net unrealized appreciation $ 509
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
31
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
LIMITED TERM INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
ASSET BACKED SECURITIES (1.8%)
1,000 American Express Co., 6.05%,
7/15/97 $ 978
1,000 Capital Auto Receivables
Trust, 5.35%, 2/15/98 989
955 Capital Auto Receivables
Trust, 4.90%, 2/17/98 952
201 GMAC 1993 A Grantor Trust,
4.15%, 3/15/98 198
- ----------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 3,117
- ----------------------------------------------------------
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (8.6%)
FEDERAL HOME LOAN MORTGAGE CORP.:
1,540 7.00%, 7/15/98 1,535
2,000 5.50%, 10/15/02 1,933
2,000 5.50%, 11/15/03 1,924
482 8.40%, 1/15/05 487
937 6.00%, 2/15/13 933
258 8.00%, 1/15/18 258
1,300 8.50%, 9/15/19 1,316
FEDERAL NATIONAL MORTGAGE ASSOC.:
2,000 6.00%, 10/25/03 1,965
1,000 8.00%, 3/25/04 1,007
1,522 5.75%, 6/25/06 1,471
849 7.00%, 2/25/18 844
883 7.50%, 7/25/18 879
--------
14,552
--------
- ---------------------------------------------------------
CORPORATE BONDS (18.5%)
AUTOMOTIVE (0.3%):
500 Ford Motor, 7.88%, 10/15/96 506
--------
BANKING & FINANCIAL SERVICES (0.3%):
500 Bankers Trust, 7.25%, 11/1/96 502
--------
BROKERAGE SERVICES (2.0%):
2,000 Lehman Brothers, 5.75%,
11/15/98 1,858
1,500 Lehman Brothers Holding,
5.50%, 6/15/96 1,474
--------
3,332
--------
BUSINESS EQUIPMENT (1.3%):
2,175 International Business
Machines Corp., 6.38%,
11/1/97 2,145
--------
CHEMICALS (0.6%):
1,000 Dow Capital, 5.75%, 9/15/97 972
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
CONSUMER GOODS & SERVICES (0.6%):
1,000 PepsiCo, Inc., 5.63%, 7/1/95 $ 1,000
--------
FINANCIAL SERVICES (6.5%):
2,000 American General Corp.,
6.88%, 7/1/99 1,957
1,000 Associates Corp.,6.88%,
1/15/97 1,000
1,500 Associates Corp.,7.25%,
9/1/99 1,492
3,000 Ford Motor Credit Corp.,
7.13%, 12/1/97 3,004
1,000 ITT Finance, 7.38%, 10/15/95 1,005
2,000 Norwest Corp., 7.75%,
12/31/96 2,030
500 Norwest Financial, 7.10%,
11/15/96 502
--------
10,990
--------
FOOD PRODUCTS (0.4%):
775 H.J. Heinz Co., 5.50%,
9/15/97 756
--------
GOVERNMENTS (FOREIGN) (0.6%):
1,000 Province of Ontario Global
Bonds, 5.70%, 10/1/97 973
--------
INDUSTRIAL GOODS & SERVICES (1.2%):
2,000 Burlington Resources, 7.15%,
5/1/99 1,985
--------
INSURANCE (2.1%):
500 International Lease Finance
Corp., 6.38%, 11/1/96 496
2,000 International Lease Finance
Corp., 8.35%, 10/1/98 2,063
1,000 Transamerica Finance, 5.40%,
9/1/95 997
--------
3,556
--------
POLLUTION CONTROL SERVICES (1.5%):
500 Waste Management, 6.38%,
7/1/97 493
2,000 WMX Technologies, 7.13%,
3/22/97 2,005
--------
2,498
--------
UTILITIES -- ELECTRIC & GAS (1.1%):
1,000 Northern Illinois Gas, 5.50%,
2/1/97 976
1,000 Northern States Power, 5.50%,
2/1/99 944
--------
1,920
- ----------------------------------------------------------
TOTAL CORPORATE BONDS 31,135
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 73 TO 78.
32
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
LIMITED TERM INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
U.S. GOVERNMENT AGENCIES (1.7%)
FEDERAL NATIONAL MORTGAGE ASSOC.:
3,000 5.23%, 11/25/98 $ 2,826
- ----------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 2,826
- ----------------------------------------------------------
- ---------------------------------------------------------
U.S. TREASURY NOTES (64.8%)
4,000 5.50%, 4/30/96 3,968
1,000 7.63%, 5/31/96 1,013
8,000 6.50%, 9/30/96 8,002
9,000 7.50%, 12/31/96 9,136
18,000 7.50%, 1/31/97 18,273
1,000 6.75%, 2/28/97 1,003
16,000 6.88%, 2/28/97 16,078
10,000 6.63%, 3/31/97 10,005
7,000 6.50%, 8/15/97 6,978
3,000 7.38%, 11/15/97 3,046
1,500 6.00%, 12/31/97 1,475
4,500 5.13%, 4/30/98 4,306
6,500 8.25%, 7/15/98 6,774
7,000 5.25%, 7/31/98 6,689
12,000 7.13%, 2/29/00 12,110
- ----------------------------------------------------------
TOTAL U.S. TREASURY NOTES 108,856
- ----------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
INVESTMENT COMPANIES (3.1%)
5,183 Shearson U.S. Treasury Fund $ 5,183
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 5,183
- ----------------------------------------------------------
TOTAL (COST $166,188)(B) $165,669
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $168,112.
(b) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 1,161
Unrealized depreciation (1,681)
--------
Net unrealized depreciation $ (520)
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 73 TO 78.
33
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
GOVERNMENT MORTGAGE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATIONS (10.6%)
FEDERAL HOME LOAN MORTGAGE CORP.:
5,000 5.50%, 10/15/02 $ 4,832
500 5.00%, 8/15/11 492
FEDERAL NATIONAL MORTGAGE ASSOC.:
10,000 7.50%, 8/25/22 9,809
- ---------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS 15,133
- ---------------------------------------------------------
- ---------------------------------------------------------
U.S. GOVERNMENT
AGENCIES (86.8%)
FEDERAL HOME LOAN MORTGAGE CORP.:
5,927 8.00%, 1/1/00 5,922
209 9.50%, 8/1/21 218
3,128 5.99%, 12/1/23 3,136
19,787 7.50%, 4/1/24 19,351
FEDERAL NATIONAL MORTGAGE ASSOC.:
1,395 8.00%, 5/1/17 1,394
2,322 9.50%, 6/1/22 2,420
9,768 6.50%, 4/1/24 9,050
3,888 8.50%, 8/1/24 3,952
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
105 8.50%, 6/15/16 107
252 8.50%, 7/15/16 257
109 9.00%, 9/15/16 113
181 8.50%, 10/15/16 185
108 9.50%, 11/15/16 114
726 8.50%, 1/15/17 740
578 8.50%, 2/15/17 589
233 8.50%, 4/15/17 238
200 8.50%, 5/15/17 204
473 8.50%, 6/15/17 483
2,093 9.50%, 11/15/17 2,195
113 10.00%, 1/15/18 121
517 9.00%, 11/15/18 536
423 9.50%, 1/15/19 444
317 10.50%, 8/15/19 344
469 8.50%, 12/15/19 478
45 8.50%, 2/15/20 46
1,426 9.50%, 5/15/20 1,496
3,278 9.75%, 1/15/21 3,504
1,551 9.00%, 3/15/21 1,606
121 8.50%, 5/15/21 124
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
1,185 9.00%, 5/15/21 $ 1,227
311 8.00%, 6/15/21 311
1,332 9.00%, 6/15/21 1,379
2,307 9.50%, 6/15/21 2,422
13,249 8.00%, 5/15/22 13,257
4,043 8.00%, 10/15/22 4,046
3,088 9.00%, 2/15/23 3,202
2,870 8.50%, 3/15/23 2,928
803 7.50%, 6/15/23 786
4,591 7.50%, 7/15/23 4,490
1,527 8.00%, 8/15/23 1,528
4,887 7.00%, 9/15/23 4,636
2,833 7.00%, 10/15/23 2,687
4,619 7.00%, 12/15/23 4,384
8,295 7.50%, 1/15/24 8,106
3,933 7.50%, 2/15/24 3,842
4,048 8.50%, 10/15/24 4,134
1,714 8.75%, 8/15/25 1,739
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 124,471
- ---------------------------------------------------------
- ---------------------------------------------
U.S. TREASURY NOTES (1.5%)
1,000 5.50%, 4/30/96 992
1,100 8.75%, 8/15/00 1,189
- ---------------------------------------------------------
TOTAL U.S. TREASURY NOTES 2,181
- ---------------------------------------------------------
- ---------------------------------------------
INVESTMENT COMPANIES (0.8%)
1,177 Shearson U.S. Treasury Fund 1,177
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,177
- ---------------------------------------------------------
TOTAL (COST $147,319)(B) $142,962
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $143,435.
(b) 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 $41. Cost for federal income tax purposes differs from value
by net unrealized depreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 422
Unrealized depreciation (4,820)
--------
Net unrealized depreciation $ (4,398)
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
34
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
INTERMEDIATE INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
ASSET BACKED SECURITIES (0.7%)
CAPITAL AUTO RECEIVABLES TRUST
1,000 5.35%, 2/15/98 $ 989
- ---------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 989
- ---------------------------------------------------------
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (17.0%)
FEDERAL HOME LOAN MORTAGAGE CORP.
1,000 7.00%, 5/15/99 992
1,800 6.50%, 5/15/03 1,713
1,406 5.00%, 11/15/04 1,401
2,500 5.80%, 4/15/14 2,468
1,994 6.50%, 7/15/16 1,959
258 8.00%, 1/15/18 258
1,968 7.50%, 9/15/20 1,963
2,500 8.40%, 1/15/21 2,520
FEDERAL NATIONAL MORTGAGE ASSOC.
2,475 6.00%, 10/25/03 2,432
1,103 7.50%, 7/25/18 1,098
4,000 6.25%, 5/25/19 3,755
2,000 8.50%, 8/25/19 2,051
- ---------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 22,610
- ---------------------------------------------------------
- ---------------------------------------------------------
CORPORATE BONDS (39.1%)
APPLIANCES (0.8%):
1,000 Whirlpool Corp. Notes
9.50%, 6/15/00 1,089
--------
AUTOMOTIVE (2.8%):
1,000 Ford Motor Co.
9.00%, 9/15/01 1,076
500 Ford Motor Credit Co.
9.50%, 4/15/00 542
500 Ford Motor Holdings, Inc.
9.25%, 3/1/00 534
500 General Motors Corp.
9.75%, 5/15/99 514
1,000 General Motors Corp.
9.63%, 12/1/00 1,086
--------
3,752
--------
BANKING (0.4%):
500 Comerica, Inc.
10.13%, 6/1/98 537
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
BROKERAGE SERVICES (10.9%):
4,000 Bear Stearns Co.
9.38%, 6/1/01 $ 4,305
5,000 Lehman Brothers Holdings
5.75%, 11/15/98 4,643
2,500 Merrill Lynch & Co.
8.25%, 11/15/99 2,563
3,500 Salomon, Inc.
6.75%, 1/15/06 2,993
--------
14,504
--------
CHEMICALS (1.5%):
1,000 Dow Chemical
5.75%, 9/15/97 973
1,000 Monsanto Defined
8.13%, 12/15/06 1,032
--------
2,005
--------
FINANCIAL SERVICES (7.0%):
2,000 American Express
8.50%, 8/15/01 2,115
3,000 American General Corp.
7.70%, 10/15/99 3,034
1,000 Norwest Corp.
7.75%, 12/31/96 1,015
3,000 Transamerica Financial
8.75%, 10/1/99 3,138
--------
9,302
--------
FOOD PRODUCTS (0.7%):
1,000 Super Valu, Inc.
5.88%, 11/15/95 998
--------
GOVERNMENT AGENCY (0.4%):
500 Private Export Funding
9.00%, 1/31/96 508
--------
INDUSTRIAL GOODS & SERVICES (8.4%):
2,000 American Home Products
7.70%, 2/15/00 2,025
3,000 Amoco Canada
7.25%, 12/1/02 2,985
1,000 Grand Metropolitan Investment
Corp.
8.63%, 8/15/01 1,070
3,000 Service Corp. International
8.38%, 12/15/04 3,131
2,000 WMX Technologies Waste
Management
7.13%, 3/22/97 2,005
--------
11,216
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
35
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERMEDIATE INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INSURANCE (0.4%):
500 St. Paul Cos., Inc.
9.38%, 6/15/97 $ 526
--------
OIL & GAS EXPLORATION (1.2%):
500 British Petroleum America
10.15%, 3/15/96 514
1,000 Cheveron Corp. Amortization
Notes
8.11%, 12/1/04 1,044
--------
1,558
--------
PRINTING & PUBLISHING (1.6%):
1,000 Knight Ridder, Inc.
8.50%, 9/1/01 1,063
1,000 R.R. Donnelly & Sons Co.
9.13%, 12/1/00 1,095
--------
2,158
--------
RETAIL STORES (0.8%):
500 J.C. Penney, Inc.
9.05%, 3/1/01 538
500 Sears Roebuck & Co.
9.50%, 6/1/99 537
--------
1,075
--------
TELECOMMUNICATIONS (2.2%):
750 Communications Satellite
8.13%, 4/1/04 775
2,000 GTE Corp. Notes
9.10%, 6/1/03 2,143
--------
2,918
- ---------------------------------------------------------
TOTAL CORPORATE BONDS 52,146
- ---------------------------------------------------------
- ---------------------------------------------------------
U.S. GOVERNMENT AGENCIES (1.4%)
FEDERAL NATIONAL MORTAGE ASSOC.:
2,000 5.23%, 11/25/98 1,884
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 1,884
- ---------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
U.S. TREASURY NOTES (38.6%)
7,500 9.25%, 1/15/96 $ 7,651
3,000 9.38%, 4/15/96 3,087
2,000 5.50%, 4/30/96 1,984
5,000 7.38%, 5/15/96 5,049
6,500 6.88%, 4/30/97 6,534
2,000 5.63%, 1/31/98 1,945
5,000 7.25%, 2/15/98 5,068
7,000 7.00%, 4/15/99 7,050
2,000 7.50%, 10/31/99 2,048
1,000 6.38%, 1/15/00 980
8,000 7.13%, 2/29/00 8,073
2,000 6.88%, 3/31/00 1,997
- ---------------------------------------------------------
TOTAL U.S. TREASURY NOTES 51,466
- ---------------------------------------------------------
- ---------------------------------------------------------
INVESTMENT COMPANIES (1.3%)
1,783 Shearson U.S. Treasury Fund 1,783
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,783
- ---------------------------------------------------------
TOTAL (COST $133,485)(B) $130,878
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $133,225.
(b) 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 $ 885
Unrealized depreciation (3,492)
--------
Net unrealized depreciation $ (2,607)
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
36
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
INVESTMENT QUALITY BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
ASSET BACKED SECURITIES (1.6%)
CAPITAL AUTO RECEIVABLES ASSET TRUST
979 4.90%, 2/17/98 $ 976
RAILCAR TRUST, SERIES 92-1
459 7.75%, 6/1/04 465
- ------------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 1,441
- ------------------------------------------------------------
- ----------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (1.5%)
FEDERAL HOME LOAN MORTGAGE CORP.:
1,180 7.50%, 4/1/07 1,178
FEDERAL NATIONAL MORTGAGE ASSOC.:
67 7.00%, 3/25/18 67
155 7.25%, 6/25/18 154
- ------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATION 1,399
- ------------------------------------------------------------
- ----------------------------------------------
CORPORATE BONDS (28.4%)
AUTOMOTIVE (1.7%):
1,000 Ford Motor Co.
9.00%, 9/15/01 1,076
500 General Motors
9.13%, 7/15/95 535
----------
1,611
----------
BANKING (6.2%):
600 BankAmerica Corp.
9.63%, 2/13/01 657
1,500 Crestar Finance Corp.
8.75%, 11/15/04 1,591
500 First Bank System
8.00%, 7/2/04 514
1,020 First Union Corp.
9.45%, 6/15/99 1,095
800 SunTrust Banks, Inc.
7.38%, 7/1/02 799
1,000 Wells Fargo & Co.
8.75%, 5/1/02 1,061
----------
5,717
----------
BROKERAGE SERVICES (2.3%):
1,000 Morgan Stanley
8.88%, 10/15/01 1,056
1,280 Morgan Stanley
7.25%, 10/15/23 1,069
----------
2,125
----------
COMPUTER (0.6%):
510 International Business
Machines
9.00%, 5/1/98 510
----------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
CREDIT INSTITUTIONS -- PERSONAL (0.6%):
510 General Electric Credit
Corp.
8.75%, 11/26/96 $ 524
----------
FINANCIAL SERVICES (7.6%):
1,025 BHP Finance Ltd.
6.75%, 11/1/13 880
255 Ford Motor Credit Co.
9.40%, 11/16/95 259
1,000 General Motors Acceptance
Co.
6.28%*, 6/7/96 999
1,000 General Motors Acceptance
Co.
7.13%, 6/1/99 985
1,000 General Motors Acceptance
Co.
5.50%, 12/15/01 886
1,020 Merrill Lynch
8.25%, 11/15/99 1,046
2,000 Salomon Brothers
4.44%, 8/9/95 1,988
----------
7,043
----------
GOVERNMENTS (FOREIGN) (0.5%):
500 Republic of Iceland
6.13%, 2/1/04 449
----------
INDUSTRIAL GOODS & SERVICES (4.4%):
1,000 American Home Products
7.70%, 2/15/00 1,013
1,000 Georgia-Pacific
9.95%, 6/15/02 1,116
700 Philip Morris Co.
9.00%, 1/1/01 746
1,200 RJR Nabisco, Inc.
8.00%, 1/15/00 1,182
----------
4,057
----------
INSURANCE (1.0%):
1,100 Nationwide Mutual
Insurance Surplus
7.50%, 2/15/24 954
----------
OIL & GAS EXPLORATION (0.8%):
700 Atlantic Richfield Co.
9.00%, 4/1/21 765
----------
OIL & GAS TRANSMISSION (0.6%):
510 Shell Oil Co.
7.00%, 9/15/95 511
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
37
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INVESTMENT QUALITY BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TELECOMMUNICATIONS (2.1%):
510 GTE Hawaiian Telephone
Service
9.00%, 12/1/00 $ 525
510 MCI Communications
7.63%, 11/7/96 514
360 Northern Telecom Ltd.
8.25%, 6/13/96 366
510 Southwestern Bell Co.
8.30%, 6/1/96 518
----------
1,923
- ------------------------------------------------------------
TOTAL CORPORATE BONDS 26,189
- ------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (38.0%)
FEDERAL HOME LOAN MORTGAGE CORP.:
150 8.00%, 5/1/02 151
350 8.00%, 8/1/02 354
238 8.00%, 6/1/08 237
277 8.00%, 11/1/08 276
FEDERAL NATIONAL MORTGAGE ASSOC.:
994 8.00%, 1/1/23 993
1,562 7.50%, 3/1/24 1,529
1,500 9.00%, 5/1/25 1,549
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
2,815 6.50%, 2/15/09 2,705
1,597 9.00%, 2/15/17 1,654
1,513 8.50%, 9/15/17 1,544
891 9.00%, 6/15/18 923
1,667 9.00%, 10/15/19 1,727
2,738 9.00%, 12/15/19 2,836
1,742 9.00%, 1/15/20 1,809
1,128 9.00%, 2/15/20 1,168
740 8.50%, 11/15/21 756
2,657 7.50%, 8/15/22 2,600
1,646 8.50%, 8/15/22 1,681
1,228 8.50%, 2/15/23 1,253
1,464 7.00%, 10/15/23 1,389
1,378 7.50%, 10/15/23 1,345
4,794 7.50%, 1/15/24 4,683
1,962 7.50%, 5/15/24 1,916
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 35,078
- ------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BONDS (12.5%)
2,600 8.88%, 2/15/19 $ 3,001
3,000 8.00%, 11/15/21 3,188
2,900 7.13%, 2/15/23 2,798
1,500 7.50%, 11/15/24 1,520
1,000 7.63%, 2/15/25 1,035
- ------------------------------------------------------------
TOTAL U.S. TREASURY BONDS 11,542
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY NOTES (14.9%)
3,000 7.50%, 2/29/96 3,029
1,000 7.50%, 12/31/96 1,015
1,000 8.00%, 1/15/97 1,024
1,000 7.75%, 12/31/99 1,034
2,500 7.75%, 1/31/00 2,585
3,000 7.13%, 2/29/00 3,027
2,000 7.50%, 2/15/05 2,061
- ------------------------------------------------------------
TOTAL U.S. TREASURY NOTES 13,775
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (2.1%)
1,942 Shearson U.S. Treasury Fund 1,942
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,942
- ------------------------------------------------------------
TOTAL (COST $93,388) (B) $ 91,366
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $92,202.
(b) Represents costs 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 $ 646
Unrealized depreciation (2,668)
----------
Net unrealized depreciation $ (2,022)
==========
</TABLE>
* Corporate Bonds with floating rates are securities with yields that vary with
a designated market index or market rate. These securities are payable on the
date of demand. The rate reflected on the Schedule of Portfolio Investments
is the effective rate at April 30, 1995.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
38
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
OHIO MUNICIPAL BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (97.6%)
ALTERNATIVE MINIMUM TAX PAPER (11.1%):
2,500 Student Loan Funding Corp.,
Series A
5.50%, 12/1/01 $ 2,463
4,000 Student Loan Funding Corp.,
Series A
5.85%, 8/1/04 4,005
- ------------------------------------------------------------
TOTAL ALTERNATIVE MINIMUM TAX PAPER 6,468
- ------------------------------------------------------------
- ----------------------------------------------
GENERAL OBLIGATION BONDS (43.2%)
COUNTY, CITY, SPECIAL DISTRICT & SCHOOLS (39.7%):
1,500 Batavia, Ohio Local School
District
7.00%, 12/1/14 1,656
750 Batavia, Ohio Local School
District
6.30%, 12/1/22 769
500 Canton, Waterworks System
5.75%, 12/1/10 491
1,325 Clyde-Green Springs Village,
Ohio School District
6.10%, 12/1/19 1,302
500 Columbus, Ohio, Series B
6.10%, 1/1/03 531
1,500 Columbus, Ohio
6.20%, 1/1/04 1,604
1,385 Crawford County, Ohio,
AMBAC
6.75%, 12/1/19 1,477
1,000 Cuyahoga Falls, Ohio, MBIA
6.00%, 12/1/15 987
2,500 Franklin County, Ohio
Courthouse
6.38%, 12/1/01 2,724
1,000 Hilliard, Ohio School
District
6.15%, 12/1/06 1,035
2,500 Indian Valley, Ohio Local
School District
7.00%, 12/1/14 2,760
750 Kings, Ohio Local School
District
7.00%, 12/1/09 795
1,250 Lakeview, Ohio Local School
District
AMBAC
6.95%, 12/1/19 1,380
540 Lakewood, Ohio
5.40%, 12/1/05 540
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
600 Madison County, Ohio
7.00%, 12/1/19 $ 667
1,000 Munroe Falls, Ohio, Series A
AMBAC
6.95%, 12/1/14 1,103
500 Toledo, Ohio, AMBAC
6.10%, 12/1/14 501
1,820 Trumbull County, Ohio
5.75%, 12/1/03 1,892
880 Tuscarawas Valley, Ohio
Local
School District, AMBAC
6.00%, 12/1/19 863
----------
23,077
----------
STATE (3.5%):
2,000 Ohio State, Refunding &
Improvement
5.50%, 8/1/03 2,044
- ------------------------------------------------------------
TOTAL GENERAL OBLIGATION BONDS 25,121
- ------------------------------------------------------------
- ----------------------------------------------
REVENUE BONDS (43.3%)
HOSPITALS, NURSING HOMES & HEALTH CARE (17.7%):
2,250 Butler County, Ohio
Middletown Regional
Hospital, GFIC
6.75%, 11/15/10 2,411
1,000 Clermont County Hospital
Facility
6.00%, 9/1/19 977
1,720 Franklin County, Riverside
Hospital
7.25%, 5/15/20 1,864
1,000 Garfield Heights, Ohio
Marymount Hospital,
Refunding & Improvement
6.70%, 11/15/15 1,016
2,400 Lake County Hospital
Improvement Facilities
6.38%, 8/15/03 2,523
1,480 Lucas County, Ohio Hospital,
Series B
5.75%, 8/15/03 1,526
----------
10,317
----------
HOUSING (3.1%):
1,775 Ohio Cap Corp.
6.35%, 7/1/22 1,775
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
39
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
OHIO MUNICIPAL BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
PUBLIC FACILITIES (CONVENTION, SPORT) (5.3%):
2,000 Ohio State Building
Authority,
Adult Correctional
Facilities
6.00%, 10/1/07 $ 2,048
1,000 Ohio State Public
Facilities,
Higher Education
5.88%, 12/1/04 1,029
----------
3,077
----------
UTILITIES (SEWERS, TELEPHONE, ELECTRIC) (17.2%):
540 Cambridge, Ohio Water
System
5.50%, 12/1/08 526
1,935 Cleveland Public Power
Systems, MBIA
7.00%, 11/15/24 2,147
1,000 Cleveland Public Power
Systems, MBIA
6.00%, 11/15/02 1,051
1,750 Cleveland Regional Sewer
District
6.75%, 5/15/04 1,940
1,000 Cleveland, Ohio Waterworks
Series 1-92B
6.25%, 1/1/05 1,055
1,950 Columbus, Ohio Sewer
6.25%, 6/1/08 2,006
750 Columbus, Ohio Water
Systems
6.38%, 11/1/10 769
500 Southwest Regional Water,
MBIA
6.00%, 12/1/20 488
----------
9,982
----------
TOTAL REVENUE BONDS 25,151
- ------------------------------------------------------------
TOTAL MUNICIPAL BONDS 56,740
- ------------------------------------------------------------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (1.9%)
Dreyfus Ohio Money Market
1,131 Institutional Fund $ 1,131
- ------------------------------------------------------------
Total Investment Companies 1,131
- ------------------------------------------------------------
TOTAL (COST $57,596) (B) 57,871
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of 58,137.
(b) 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 $26. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation 1,006
Unrealized depreciation (757)
----------
Net unrealized appreciation $ 249
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
40
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATION (2.4%)
FEDERAL HOME LOAN MORTGAGE CORP.:
465,548 7.50%, 4/1/07 $ 465
FEDERAL NATIONAL MORTGAGE ASSOC.:
968,818 7.40%, 7/25/17 968
925,817 6.50%, 4/25/22 872
1,500,000 9.00%, 5/1/25 1,548
- ------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 3,853
- ------------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (53.7%)
AEROSPACE/DEFENSE (3.3%):
21,400 Boeing Co. 1,177
11,800 General Dynamics Corp. 547
20,300 Lockheed Martin Corp.(c) 1,173
33,650 Raytheon Co. 2,448
----------
5,345
----------
ALUMINUM (1.4%):
50,300 Aluminum Co. of America 2,257
----------
AUTOMOBILES (1.0%):
8,000 Chrysler Corp. 345
1,200 Fiat - ADR 24
45,000 Ford Motor Co. 1,215
----------
1,584
----------
BANKS (4.7%):
900 BBV - ADR 24
54,900 BankAmerica Corp. 2,718
28,200 Comerica, Inc. 811
13,800 CoreStates Financial Corp. 450
27,600 First Union Corp. 1,249
1,300 IMI - ADR 24
33,150 J.P. Morgan & Co., Inc. 2,176
----------
7,452
----------
BEVERAGES (1.3%):
33,900 Anheuser Busch Co., Inc. 1,971
1,300 Coca-Cola Femsa - ADR 26
----------
1,997
----------
CHEMICALS (1.2%):
10,100 Dow Chemical Co. 702
8,300 Eastman Chemical 471
1,200 Imperial Chemical - ADR 58
18,200 Lubrizol Corp. 635
3,200 Montedison - ADR(c) 24
1,000 Norsk Hydro - ADR 40
----------
1,930
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
COMPUTERS & PERIPHERALS (0.9%):
13,600 Cisco Systems(c) $ 542
13,400 Hewlett Packard Co. 886
----------
1,428
----------
CONGLOMERATES (0.0%):
3,000 Hanson PLC, ADR 57
----------
CONTAINERS (0.4%):
28,600 Newell Co. 676
----------
COSMETICS & RELATED (0.6%):
15,400 Avon Products 974
----------
ELECTRICAL EQUIPMENT (1.8%):
13,100 Emerson Electric Co. 881
34,400 General Electric Co. 1,926
900 Hitachi - ADR 92
----------
2,899
----------
ELECTRONIC COMPUTING EQUIPMENT (0.7%)
26,900 Compaq Computer Corp.(c) 1,022
----------
ENTERTAINMENT (0.1%)
450 Matsushita Electric - ADR 76
1,500 Sony - ADR 76
----------
152
----------
FINANCIAL SERVICES (2.2%):
26,400 American Express Co. 917
15,300 Federal National Mortgage
Assoc. 1,350
27,300 Household International,
Inc. 1,280
----------
3,547
----------
FOOD DISTRIBUTORS (0.3%):
16,500 Supervalu, Inc. 435
----------
FOOD PROCESSING & PACKAGING (0.2%):
10,000 Sara Lee Corp. 279
----------
FOREST PRODUCTS (2.8%):
20,300 Georgia Pacific Corp. 1,611
25,000 International Paper Co. 1,925
19,700 Union Camp Corp. 987
----------
4,523
----------
HEAVY MACHINERY (0.5%):
9,000 Deere & Co. 738
----------
HOSPITAL & NURSING EQUIPMENT (0.1%):
3,100 Johnson & Johnson, Inc. 202
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
41
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INSURANCE (1.3%):
25,100 Allstate $ 762
12,000 American General Corp. 396
9,200 Chubb Corp. 736
3,200 St. Paul Cos., Inc. 154
----------
2,048
----------
MANUFACTURING (0.9%):
24,700 Allied Signal, Inc. 979
12,300 Litton Industries, Inc.(c) 426
----------
1,405
----------
MEDICAL SUPPLIES (0.3%):
6,600 Medtronic, Inc. 491
----------
METALS (0.3%):
1,300 SKF Corp. - ADR(c) 27
17,100 USX U.S. Steel Group 522
----------
549
----------
OFFICE EQUIPMENT & SUPPLIES (0.3%):
1,000 Canon - ADR 83
9,700 Pitney Bowes, Inc. 360
----------
443
----------
OIL (7.0%):
12,000 Atlantic Richfield Co. 1,374
700 British Petroleum Co., PLC,
ADR 60
49,800 Chevron Corp. 2,359
15,000 Exxon Corp. 1,044
28,700 Mobil Corp. 2,723
1,400 Repsol - ADR 45
400 Royal Dutch Petroleum - ADR 50
49,500 Texaco, Inc. 3,385
1,000 YPF S.A. - ADR(c) 20
----------
11,060
----------
OIL & GAS EXPLORATION (2.5%):
52,600 Enron Corp. 1,788
60,200 Phillips Petroleum Co. 2,107
----------
3,895
----------
OILFIELD EQUIPMENT & SERVICES (0.7%):
46,500 Baker Hughes, Inc. 1,046
----------
PAINT, VARNISHES & ENAMELS (0.2%):
7,700 Sherwin Williams Co. 274
----------
PAPER (0.0%):
800 Fletcher Challange - ADR 22
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
PHARMACEUTICALS (3.4%):
49,000 Abbott Laboratories $ 1,929
11,400 American Home Products Corp. 879
13,600 Merck & Co., Inc. 583
11,900 Pfizer, Inc. 1,031
12,100 Schering-Plough 912
1,400 SmithKline Beecham 54
----------
5,388
----------
PUBLISHING (0.2%):
3,800 Dun & Bradstreet Corp. 198
2,500 News Corp. - ADR(c) 49
----------
247
----------
RETAIL (1.7%):
9,700 Dayton Hudson Corp. 651
21,900 Pep Boys-Manny, Moe & Jack 564
14,500 Sears & Roebuck Co. 787
7,500 Wal Mart Stores, Inc. 178
10,900 Walgreen Co. 512
----------
2,692
----------
SEMICONDUCTORS (0.8%):
11,850 Intel Corp. 1,213
600 Kyocera - ADR 94
----------
1,307
----------
SHOES, LEATHER GOODS & CLOTHING (0.1%):
4,400 Reebok International Ltd. 138
----------
SOAPS & CLEANING AGENTS (0.1%):
1,300 Procter & Gamble Co. 91
----------
SOFTWARE & COMPUTER SERVICES (1.1%):
13,650 Microsoft Corp.(c) 1,118
32,000 Novell, Inc.(c) 696
----------
1,814
----------
STEEL (0.1%):
2,100 British Steel - ADR 57
800 Broken Hill Proprietary -
ADR 46
2,300 Worthington Industries, Inc. 43
----------
146
TELECOMMUNICATIONS (0.3%):
26,800 Comsat Corp. 536
----------
TOBACCO & TOBACCO PRODUCTS (0.8%):
4,000 B.A.T. Industries - ADR 60
16,500 Philip Morris Cos., Inc. 1,118
3,900 UST, Inc. 110
----------
1,288
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
42
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TOOLS & HARDWARE MANUFACTURING (0.3%):
11,100 Stanley Works $ 440
----------
TRANSPORTATION (0.0%):
900 British Airways -ADR 58
3,000 TMM - ADR 20
----------
78
----------
UTILITIES - ELECTRIC & GAS (3.3%):
64,900 Consolidated Edison Co. NY,
Inc. 1,801
20,300 Duquesne Light Co. 685
83,300 Texas Utilities Co. 2,718
----------
5,204
----------
UTILITIES - TELECOMMUNICATIONS (4.5%):
68,600 A T & T Corp. 3,481
900 British Telecom - ADR 56
60,500 GTE Corp. 2,065
1,000 Hong Kong Telecom - ADR 20
9,000 MCI Telecommunications
Corp. 196
31,000 Nynex Corp. 1,267
1,000 Telefonica De Espana -
ADR(c) 37
1,000 Telephones De Mexico - ADR 30
700 Telephonos De Chile - ADR 48
----------
7,200
- ------------------------------------------------------------
TOTAL COMMON STOCKS 85,299
- ------------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS - FOREIGN (0.7%)
BRITAIN (0.0%):
PUBLISHING (0.0%):
2,200 Reed Elsevier International 28
----------
FOOD MANUFACTURING (0.0%):
5,000 United Biscuits 28
- ------------------------------------------------------------
TOTAL BRITAIN 56
- ------------------------------------------------------------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FRANCE (0.1%):
AUTOMOBILES (0.0%):
200 PSA Peugeot Citroen $ 29
----------
BANKS (0.0%):
500 Cie Financiere De Paribas-A 30
----------
BUILDING MATERIALS (0.0%):
250 Compagnie De Saint Gobain 32
----------
OIL & GAS PRODUCTION (0.0%):
400 Elf Aquitaine 32
----------
TELECOMMUNICATIONS (0.0%):
300 Alcatel-Alsthom 28
----------
UTILITIES - WATER (0.0%):
300 Cie Generale Des Eaux 32
- ------------------------------------------------------------
TOTAL FRANCE 183
- ------------------------------------------------------------
GERMANY (0.1%):
AUTOMOBILES (0.0%):
90 Volkswagen 25
----------
CHEMICALS (0.0%):
100 Bayer 25
----------
MACHINERY & ENGINEERING (0.0%):
100 Mannesmann 27
----------
MANUFACTURING (0.0%):
50 Siemens(c) 25
----------
UTILITIES - ELECTRIC (0.0%):
70 Veba 26
- ------------------------------------------------------------
TOTAL GERMANY 128
- ------------------------------------------------------------
HOLLAND (0.1%):
BANKING (0.0%):
700 ABN/Amro Holding 27
----------
CHEMICALS (0.0%):
200 Akzo Nobel NV 23
----------
TELECOMMUNICATIONS (0.0%):
700 Koninklijke PTT NED NV 25
- ------------------------------------------------------------
TOTAL HOLLAND 75
- ------------------------------------------------------------
HONG KONG (0.0%):
BROKERAGE (0.0%):
20,000 Peregrine Inv 21
----------
REAL ESTATE (0.0%):
5,000 Cheung Kong 21
- ------------------------------------------------------------
TOTAL HONG KONG 42
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
43
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
JAPAN (0.3%):
AUTOMOBILES (0.0%):
2,000 Nippon Denso Co., Ltd. $ 40
----------
BANKS (0.1%):
2,000 Mitsubishi Bank 49
2,000 Sumitomo Bank 43
----------
92
----------
CHEMICALS (0.0%):
6,000 Mitsubishi Chemical, Inc. 35
5,000 Toray Industries, Inc.(c) 35
----------
70
----------
CONSTRUCTION (0.0%):
4,000 Kajima Corp. 40
----------
HOUSEHOLD PRODUCTS (0.0%):
3,000 Kao Corp. 37
----------
PAPER (0.0%):
3,000 New Oji Paper Co., Ltd. 34
----------
PHARMACEUTICALS (0.0%):
1,000 Sankyo Co., Ltd. 24
----------
RETAIL (0.1%):
1,000 Ito Yokado Co. 54
2,000 Marui Co., Ltd. 31
----------
85
----------
RUBBER & RUBBER PRODUCTS (0.0%):
2,000 Bridgestone 32
----------
UTILITIES - ELECTRIC (0.0%):
1,100 Tokyo Electric Power 35
----------
UTILITIES - WATER (0.0%):
1,000 Kurita Water Ind. 24
- ------------------------------------------------------------
TOTAL JAPAN 513
- ------------------------------------------------------------
SWITZERLAND (0.1%):
ENGINEERING (0.0%):
25 Brown Boveri Series A 25
----------
FOOD MANUFACTURING (0.0%):
25 Nestle SA Registered 24
----------
PHARMACEUTICALS (0.0%):
5 Roche Genussshein 30
- ------------------------------------------------------------
TOTAL SWITZERLAND 79
- ------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS 1,076
- ------------------------------------------------------------
- ----------------------------------------------
CONVERTIBLE PREFERRED STOCKS (0.2%)
AUTOMOTIVE (0.2%):
4300 Ford Motor Co. 379
- ------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS 379
- ------------------------------------------------------------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
CORPORATE BONDS (11.1%)
BANKING (3.1%):
300,000 BankAmerica Corp., 9.63%,
2/13/01 $ 328
800,000 Crestar Finance Corp.,
8.75%,
11/15/04 849
1,000,000 First Bank System, 8.00%,
7/2/04 1,027
1,200,000 First Union Corp., 9.45%,
8/15/01 1,329
500,000 NationsBank Corp., 5.38%,
12/1/95 497
300,000 SunTrust Banks Inc., 7.38%,
7/1/02 300
500,000 Wells Fargo & Co., 8.75%,
5/1/02 531
----------
4,861
----------
BROKERAGE SERVICES (0.5%):
750,000 Morgan Stanley, 8.88%,
10/15/01 792
----------
COMPUTER (0.2%):
300,000 International Business
Machines, 9.00%, 5/1/98 300
----------
FINANCIAL SERVICES (2.9%):
1,000,000 Associates, 7.50%, 10/15/96 1,010
800,000 BHP Finance Ltd., 6.75%,
11/1/13 687
500,000 General Motors Acceptance
Corp., 5.50%, 12/15/01 443
1,000,000 Merrill Lynch Corp., 8.25%,
11/15/99 1,025
500,000 Merrill Lynch Corp., 4.75%,
6/24/96 488
1,000,000 Morgan Stanley, 7.25%,
10/15/23 835
200,000 U.S. West Capital Funding,
Inc., 8.00%, 10/15/96 203
----------
4,691
----------
GOVERNMENTS (FOREIGN) (0.2%):
300,000 Republic of Iceland, 6.13%,
2/1/04 269
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
44
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INDUSTRIAL GOODS & SERVICES (3.0%):
500,000 American Home Products,
7.70%, 2/15/00 $ 506
1,500,000 General Motors, 9.13%,
7/15/01 1,605
500,000 Georgia-Pacific, 9.95%,
6/15/02 558
900,000 Philip Morris, 9.00%, 1/1/01 960
700,000 RJR Nabisco, Inc., 8.00%,
1/15/00 690
500,000 Waste Management, 7.88%,
8/15/96 506
----------
4,825
----------
INSURANCE (0.7%):
1,200,000 Nationwide Mutual Insurance
Surplus, 7.50%, 2/15/24 1,041
----------
OIL & GAS EXPLORATION (0.3%):
500,000 Atlantic Richfield Co.,
9.00%,
4/1/21 546
----------
TELECOMMUNICATIONS (0.2%):
300,000 Southwestern Bell Co.,
8.30%,
6/1/96 305
- ------------------------------------------------------------
TOTAL CORPORATE BONDS 17,630
- ------------------------------------------------------------
- ----------------------------------------------
FLOATING RATE NOTES (0.3%)
500,000 General Motors Acceptance
Corp., 5.66%*, 6/7/96 499
- ------------------------------------------------------------
TOTAL FLOATING RATE NOTES 499
- ------------------------------------------------------------
- ----------------------------------------------
MEDIUM TERM NOTES (0.9%)
1,500,000 Salomon Brothers, 4.44%,
8/9/95 1,491
- ------------------------------------------------------------
TOTAL MEDIUM TERM NOTES 1,491
- ------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (15.7%)
FEDERAL HOME LOAN MORTGAGE CORP.:
133,439 8.00%, 5/1/02 135
FEDERAL NATIONAL MORTGAGE ASSOC.:
2,250,200 6.00%, 11/1/08 2,116
1,837,646 7.50%, 3/1/24 1,798
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
1,802,848 6.50%, 2/15/09 $ 1,730
251,367 9.50%, 7/15/09 264
1,514,925 9.00%, 10/15/16 1,573
226,173 9.00%, 11/15/16 234
850,334 9.00%, 6/15/18 881
25,890 10.00%, 10/15/18 28
779,707 9.00%, 9/15/19 807
1,188,568 9.00%, 10/15/19 1,231
1,483,116 9.00%, 12/15/19 1,536
870,959 9.00%, 1/15/20 904
557,334 9.00%, 2/15/20 577
1,667,441 8.50%, 5/15/20 1,701
610,779 8.50%, 4/15/21 623
828,801 7.50%, 12/15/22 811
462,219 8.50%, 3/15/23 472
951,881 7.50%, 11/15/23 930
2,013,452 7.50%, 1/15/24 1,967
1,471,279 7.50%, 5/15/24 1,437
3,046,512 8.50%, 9/15/24 3,111
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 24,866
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY BONDS (2.6%)
700,000 8.88%, 2/15/19 808
2,000,000 7.13%, 2/15/23 1,929
1,400,000 7.50%, 11/15/24 1,419
- ------------------------------------------------------------
TOTAL U.S. TREASURY BONDS 4,156
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY NOTES (7.7%)
1,300,000 5.88%, 5/15/95 1,300
1,000,000 7.50%, 12/31/96 1,015
500,000 7.13%, 9/30/99 505
1,000,000 7.75%, 12/31/99 1,034
4,700,000 7.75%, 1/31/00 4,860
1,000,000 7.13%, 2/29/00 1,009
1,500,000 7.25%, 5/15/04 1,518
1,000,000 7.50%, 2/15/05 1,031
- ------------------------------------------------------------
TOTAL U.S. TREASURY NOTES 12,272
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
45
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (4.7%)
126,487 Federated Treasury
Obligation
Fund $ 127
5,600 Global Privatization Fund 68
6,000 Italy Fund, Inc. - ADR 49
2,300 Latin American Equity
Fund(c) 34
2,000 Malaysian Fund 35
7,109,522 Shearson U.S. Treasury Fund 7,110
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 7,423
- ------------------------------------------------------------
TOTAL (COST - $151,871)(B) $ 158,944
- ---------------------------------------------------------
CURRENCY
200 French Franc 0
42,346,513 Japanese Yen 504
- ------------------------------------------------------------
TOTAL CURRENCY 504
- ------------------------------------------------------------
</TABLE>
- ---------------
* Floating Rate Demand Notes are securities with yields that vary with a
designated market index or market rate. These securities are payable on the
date of demand. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect at April 30, 1995.
(a) Percentages indicated are based on net assets of $158,762.
(b) 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 $1,136. 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 $ 6,153
Unrealized depreciation (216)
----------
Net unrealized appreciation $ 5,937
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
46
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMERCIAL PAPER (7.9%)
FINANCIAL SERVICES (7.9%):
1,500,000 American Express, 5.90%,
5/3/95 $ 1,500
2,000,000 Ford Motor Credit Co.,
5.91%, 5/1/95 2,000
2,000,000 General Motors Acceptance
Corp., 6.00%, 5/10/95 2,000
2,000,000 General Motors Acceptance
Corp., 6.16%, 5/10/95 2,000
900,000 Prudential Funding, 5.91%,
5/10/95 900
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 8,400
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (90.6%)
ADVERTISING (0.1%):
1,986 Interpublic Group Cos., Inc. 75
--------
AEROSPACE/DEFENSE (1.4%):
8,666 Boeing Co. 477
1,600 General Dynamics Corp. 74
4,761 Lockheed Martin Corp.(c) 275
3,046 McDonnell Douglas 189
1,298 Northrop Grumman Corp. 64
5,620 Rockwell International Corp. 245
2,280 Textron, Inc. 130
--------
1,454
--------
AIRCRAFT & AIRCRAFT PARTS (0.2%):
3,204 United Technologies Corp. 234
--------
AIR FREIGHT (0.1%):
1,906 AMR Corp. Delaware(c) 128
1,534 U.S. Air Group, Inc.(c) 11
--------
139
--------
AIRLINES (0.1%):
1,237 Delta Air Lines 81
--------
ALUMINUM (0.2%):
4,560 Aluminum Co. of America 205
--------
APPAREL (0.0%):
2,002 Liz Claiborne, Inc. 36
--------
AUTOMOBILES (1.9%):
9,021 Chrysler Corp. 389
26,094 Ford Motor Co. 704
19,240 General Motors 868
1,900 Navistar International
Corp.(c) 27
972 Paccar, Inc. 45
--------
2,033
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
AUTOMOTIVE PARTS (0.5%):
1,104 Cummins Engine, Inc. $ 49
2,558 Dana Corp. 66
1,928 Eaton Corp. 111
1,454 Echlin, Inc. 53
3,114 Genuine Parts Co. 121
294 SPX Corp. 4
145 Strattec Strategy Corp.(c) 2
1,631 TRW, Inc. 121
--------
527
--------
BANKS (3.3%):
2,733 Bank of Boston Corp. 91
9,491 BankAmerica Corp. 470
2,022 Bankers Trust New York 110
2,516 Barnett Banks, Inc. 118
3,236 Boatmens Bancshares, Inc. 107
4,577 Chase Manhattan Corp. 200
6,187 Chemical Banking Corp. 258
2,322 First Chicago Corp. 128
2,064 First Fidelity Bancorp. 99
1,906 First Interstate Bancorp. 146
4,464 First Union Corp. 202
4,813 J.P. Morgan & Co., Inc. 316
7,014 NationsBank Corp. 351
7,849 Norwest Corp. 208
6,014 PNC Bank Corp. 151
3,024 SunTrust Banks, Inc. 164
4,322 Wachovia Corp. 152
1,315 Wells Fargo & Co. 218
--------
3,489
--------
BANKS -- MONEY CENTERS (REGIONAL) (0.8%):
10,090 Citicorp 468
3,607 CoreStates Financial Corp. 118
1,531 Golden West Financial Corp.
Delaware 70
3,947 NBD Bancorp., Inc. 121
3,850 National City Corp. 105
--------
882
--------
BANKS -- OUTSIDE MONEY CENTER (0.3%):
10,348 Banc One Corp. 305
--------
BEVERAGES (3.3%):
6,558 Anheuser Busch Co., Inc. 381
1,721 Brown Forman Corp., Class B 57
32,812 Coca Cola Co. 1,907
943 Coors Adolph Co., Class B 15
20,182 PepsiCo, Inc. 840
9,471 Seagram Co. Limited 257
--------
3,457
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
47
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
BUILDING MATERIALS (0.6%):
943 Armstrong World Industries,
Inc. $ 43
766 Centex Corp. 18
746 Crane Co. 26
1,160 Fleetwood Enterprises, Inc. 27
804 Kaufman & Broad Home Corp. 10
4,031 Masco Corp. 103
2,946 Monsanto Co. 245
3,754 Morton International, Inc. 116
1,121 Owens Corning Fiberglas
Corp.(c) 41
707 Pulte Corp. 15
255 Skyline Corp. 4
--------
648
--------
CHEMICALS (0.1%):
1,748 Great Lakes Chemical 103
--------
CHEMICALS -- GENERAL (2.8%):
2,868 Air Products & Chemicals,
Inc. 144
7,106 Dow Chemical Co. 494
17,394 E.I. Du Pont De Nemours Co. 1,146
2,073 Eastman Chemical 118
1,732 Ecolab, Inc. 40
924 FMC Corp.(c) 57
491 First Mississippi Corp. 12
2,963 Hercules, Inc. 148
1,925 Mallinckrodt 69
1,709 Nalco Chemical Co. 60
5,404 PPG Industries, Inc. 213
3,459 Praxair, Inc. 82
1,689 Rohm & Haas Co. 98
1,300 Sigma-Aldrich 57
3,812 Union Carbide Corp. 122
2,358 W.R. Grace & Co. 126
--------
2,986
--------
CHEMICALS -- SPECIALTY (0.1%):
1,354 Avery Dennison Corp. 55
--------
COMPUTERS & PERIPHERALS (3.1%):
2,968 Amdahl Corp.(c) 35
2,988 Apple Computer, Inc. 114
6,550 Cisco Systems(c) 261
1,356 Computer Sciences Corp.(c) 67
688 Cray Research, Inc.(c) 13
904 Data General Corp.(c) 7
3,621 Digital Equipment Corp.(c) 167
13,010 Hewlett Packard Corp.(c) 860
14,942 International Business
Machines Corp. 1,416
1,098 Integraph Corp.(c) 12
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
3,650 Silicon Graphics(c) $ 137
2,452 Sun Microsystems, Inc.(c) 98
2,949 Tandem Computers, Inc.(c) 37
4,386 Unisys Corp.(c) 45
--------
3,269
--------
CONGLOMERATES (0.8%):
5,849 Corning Glass Works 195
10,724 Minnesota Mining &
Manufacturing Co. 639
--------
834
--------
CONSTRUCTION (0.0%):
924 Foster Wheeler Corp. 34
--------
CONSUMER CREDIT (0.2%):
4,384 Dean Witter Discover & Co. 186
--------
CONSUMER GOODS (0.1%):
1,867 American Greetings Corp. 51
1,160 Jostens, Inc. 23
--------
74
--------
CONTAINERS -- METAL, GLASS, PAPER, PLASTIC (0.4%):
727 Ball Corp. 25
1,257 Bemis, Inc. 35
2,280 Crown, Cork & Seal, Inc.(c) 97
1,121 Federal Paper Board, Inc. 33
3,990 Newell Co. 94
4,147 Rubbermaid, Inc. 122
2,343 Stone Container Corp.(c) 46
--------
452
--------
COSMETICS & RELATED (0.8%):
727 Alberto Culver Co. 23
1,748 Avon Products 110
2,358 Dial Corp. 57
5,620 Gillette Co. 461
2,789 International Flavor &
Fragrance, Inc. 143
--------
794
--------
DEPARTMENT STORES (0.4%):
2,849 Dillard Department Stores,
Inc., Class A 74
5,934 J. C. Penney 260
943 Mercantile Stores, Inc. 42
--------
376
--------
DIVERSIFIED -- CONGLOMERATES, HOLDINGS (0.3%):
2,746 International Telephone &
Telegraph 287
1,218 National Service Industries,
Inc. 34
--------
321
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
48
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
DRUG STORES (0.1%):
491 Longs Drug Stores Corp. $ 17
2,180 Rite Aid Corp. 51
--------
68
--------
ELECTRICAL EQUIPMENT (3.1%):
1,179 Bally Manufacturing Corp.(c) 12
2,890 DSC Communications Corp.(c) 107
5,698 Emerson Electric Co. 383
43,648 General Electric Co. 2,444
1,082 Johnson Controls, Inc. 59
472 Thomas & Betts Corp. 30
1,257 W.W. Grainger, Inc. 76
9,121 Westinghouse Electric Corp. 137
--------
3,248
--------
ELECTRICAL SERVICES (0.1%):
2,950 General Public Utilities
Corp. 84
--------
ELECTRONIC COMPUTING EQUIPMENT (0.2%):
6,609 Compaq Computer Corp.(c) 251
--------
ELECTRONIC & ELECTRICAL -- GENERAL (2.1%):
2,419 Advanced Micro Devices(c) 87
5,366 Amp, Inc. 229
967 Andrew Corp.(c) 48
2,968 Cooper Industries 116
1,415 E G & G, Inc. 24
1,179 General Signal Corp. 44
982 Harris Corp. 46
3,259 Honeywell, Inc. 126
14,954 Motorola, Inc. 850
3,111 National Semiconductor
Corp.(c) 71
3,179 Raytheon Co. 231
1,825 Tandy Corp. 90
746 Tektronix, Inc. 34
2,322 Texas Instruments, Inc. 246
--------
2,242
--------
ELECTRONICS -- DEFENSE RELATED (0.1%):
885 E Systems, Inc. 56
2,103 Loral Corp. 99
--------
155
--------
ENTERTAINMENT (1.1%):
2,397 Brunswick Corp. 51
2,280 Hasbro, Inc. 72
943 King World Productions(c) 38
4,034 Lowes Cos., Inc. 116
2,634 Promus Cos., Inc.(c) 101
13,668 Walt Disney Co. 757
--------
1,135
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ENVIRONMENTAL CONTROL (0.1%):
7,000 Laidlaw, Inc., Class B $ 63
--------
FINANCIAL SERVICES (3.3%):
12,900 American Express Co. 448
3,576 Automatic Data Processing,
Inc. 230
4,700 Bank of New York Co., Inc. 155
1,376 Beneficial Corp. 56
1,121 Ceridian Corp.(c) 39
4,619 Federal Home Loan Mortgage
Corp. 301
6,996 Federal National Mortgage
Corp. 617
3,498 Fleet Financial Group 115
2,103 Fluor Corp. 108
3,421 Great Western Financial
Corp. 72
3,007 H.F. Ahmanson & Co. 63
2,477 Household International,
Inc. 116
3,782 MBNA Corp. 114
3,746 Mellon Bank Corp. 147
4,904 Merrill Lynch & Co., Inc. 223
2,710 Salomon, Inc. 98
3,077 Shawmut National Corp. 82
1,745 Transamerica Corp. 99
8,168 Travelers, Inc. 338
2,545 U.S. Bancorp 70
--------
3,491
--------
FOOD DISTRIBUTORS (0.2%):
6,505 Albertsons, Inc. 206
--------
FOOD DISTRIBUTORS (SUPERMARKETS &
WHOLESALERS) (0.4%):
943 Fleming Cos., Inc. 23
963 Great Atlantic & Pacific
Tea,
Inc. 24
2,952 Kroger Co.(c) 75
1,848 Supervalu, Inc. 49
4,716 Sysco Corp. 132
1,925 Winn Dixie Stores, Inc. 107
--------
410
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
49
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FOOD PROCESSING & PACKAGING (2.6%):
13,201 Archer Daniels Midland Co. $ 241
3,731 CPC International, Inc. 219
6,286 Campbell Soup Co. 322
6,286 ConAgra, Inc. 209
4,047 General Mills 247
6,325 H.J. Heinz Co. 266
2,219 Hershey Foods Corp. 116
5,656 Kellogg Co. 359
2,209 Pioneer Hi-Bred
International,
Inc. 83
3,396 Quaker Oats Co. 122
2,513 Ralston-Ralston Purina Group 119
12,300 Sara Lee Corp. 343
3,007 Wm. Wrigley Jr., Co. 133
--------
2,779
--------
FOREST PRODUCTS -- LUMBER & PAPER (1.7%):
1,379 Alco Standard Corp. 98
1,163 Boise Casacade Corp. 38
2,358 Champion International Corp. 104
2,319 Georgia Pacific Corp. 184
3,204 International Paper Co. 247
2,083 James River Corp. Virginia 57
4,047 Kimberly Clark Corp. 229
2,810 Louisiana Pacific Corp. 72
1,554 Mead Corp. 80
2,555 Moore Corp. Ltd. 50
727 Potlatch Corp. 31
1,886 Scott Paper Co. 168
1,415 Temple Inland, Inc. 62
1,828 Union Camp Corp. 92
1,670 Westvaco Corp. 70
5,288 Weyerhauser Co. 222
--------
1,804
--------
FUNERAL SERVICES (0.1%):
2,422 Service Corp. International 68
--------
FURNITURE (0.1%):
2,771 Maytag Corp. 48
1,100 Zenith Electronics(c) 8
--------
56
--------
GOLD & SILVER MINING (0.0%):
3,300 Santa Fe Pacific Gold Corp. 42
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
HEALTH CARE (0.4%):
9,278 Columbia HCA Healthcare $ 390
--------
HEAVY MACHINERY (0.9%):
3,556 Baker Hughes, Inc. 80
5,148 Caterpillar Tractor, Inc. 301
452 Clark Equipment Co.(c) 39
2,222 Deere & Co. 182
1,169 Harnischfeger Industries,
Inc. 34
2,733 Ingersoll Rand Co. 98
1,357 McDermott International,
Inc. 37
1,879 Tyco Laboratories, Inc. 99
1,118 Varity Corp.(c) 47
--------
917
--------
HOSPITAL & NURSING EQUIPMENT (1.0%):
1,357 Bard C.R., Inc. 40
16,383 Johnson & Johnson, Inc. 1,065
--------
1,105
--------
HOTELS & MOTELS (0.1%):
1,198 Hilton Hotels Corp. 91
--------
HOUSEHOLD GOODS -- APPLIANCES & FURNITURE
(0.2%):
316 Bassett Furniture Ind. 8
1,732 Premark International, Inc. 84
1,928 Whirlpool Corp. 106
--------
198
--------
INDUSTRIAL SERVICES (0.7%):
7,820 American Home Products Corp. 603
1,434 Dover Corp. 93
--------
696
--------
INSURANCE -- LIFE (0.5%):
1,237 Jefferson Pilot Corp. 70
2,474 Providian Corp. 84
1,867 Torchmark Corp. 73
4,350 United Healthcare 158
4,050 U.S. Healthcare, Inc. 108
530 USLIFE Corp. 20
--------
513
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
50
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INSURANCE -- MULTI-LINE (2.0%):
2,910 Aetna Life & Casualty Co. $ 166
1,101 Alexander & Alexander
Services, Inc. 26
5,262 American General Corp. 174
8,091 American International
Group, Inc. 864
1,848 Cigna Corp. 134
1,415 Continental Corp. 28
2,142 General Re Corp. 273
2,377 Lincoln National Corp. 97
1,867 Marsh & McLennan Cos., Inc. 146
1,612 SafeCo Corp. 91
2,142 St. Paul Cos., Inc. 103
2,242 USF & G Corp. 33
--------
2,135
--------
INSURANCE -- PROPERTY, CASUALTY, HEALTH (0.2%):
2,180 Chubb Corp. 174
1,800 UNUM Corp. 77
--------
251
--------
LEISURE -- RECREATION, GAMING (0.0%):
885 Handleman Co. 9
--------
MACHINE TOOLS (0.0%):
885 Cincinnati Milacron, Inc. 24
904 Giddings & Lewis, Inc. 16
--------
40
--------
MANUFACTURING -- CAPITAL GOODS (0.2%):
2,949 Illinois Tool Works, Inc. 148
707 Trinova Corp. 25
--------
173
--------
MANUFACTURING -- CONSUMER GOODS (0.1%):
491 Outboard Marine Corp. 11
1,415 Teledyne, Inc.(c) 35
1,360 Western Atlas(c) 61
--------
107
--------
MANUFACTURING -- MISCELLANEOUS (1.0%):
7,212 Allied Signal, Inc. 286
726 Briggs & Stratton Corp. 26
607 Millipore Corp. 37
866 Morrison Knudsen Corp. 7
2,901 Pall Corp. 68
1,218 Parker-Hannifin Corp. 63
4,047 Unilever N.V. 541
2,671 Whitman Corp. 49
--------
1,077
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (0.2%):
2,203 Beverly Enterprises, Inc.(c) $ 32
1,121 Community Psychiatric
Centers, Inc. 15
1,544 Manor Care, Inc. 45
5,025 National Medical
Enterprises, Inc.(c) 85
--------
177
--------
MEDICAL SUPPLIES (0.7%):
1,473 Bausch & Lomb, Inc. 57
7,235 Baxter International, Inc. 251
1,706 Becton Dickinson & Co. 95
2,888 Biomet, Inc.(c) 51
200 Boston Scientific Corp.(c) 5
2,908 Medtronic, Inc. 216
1,179 St. Jude Medical, Inc. 51
1,415 United States Surgical Corp. 31
--------
757
--------
METALS -- FABRICATION (0.6%):
5,769 Alcan Aluminum Ltd. 164
1,101 Asarco, Inc. 30
2,400 Cyprus Amax Minerals 67
3,498 Homestake Mining Co. 59
1,124 Inland Steel Industries,
Inc. 29
2,227 Newmont Mining Corp. 93
1,828 Phelps Dodge Corp. 104
1,573 Reynolds Metals Co. 79
--------
625
--------
METAL & MINERAL PRODUCTION (0.6%):
2,713 Armco, Inc. 19
8,877 Barrick Gold Corp. 214
2,839 Bethlehem Steel Corp.(c) 40
2,830 Echo Bay Mines Ltd. 27
2,447 Englehard Corp. 94
3,010 Inco Ltd. 78
2,261 Nucor Corp. 109
1,913 USX U.S. Steel Group 58
--------
639
--------
NEWSPAPERS (0.5%):
3,534 Gannett Co., Inc. 186
1,395 Knight-Ridder, Inc. 76
2,552 New York Times Co., Class A 58
3,282 Times Mirror Co., Class A 59
1,670 Tribune Co. 99
--------
478
--------
OFFICE EQUIPMENT & SUPPLIES (0.5%):
4,009 Pitney Bowes, Inc. 149
2,713 Xerox Corp. 334
--------
483
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
51
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
OIL & GAS EXPLORATION AND PRODUCTION (1.7%):
2,358 Amerada Hess Corp. $ 119
1,573 Ashland, Inc. 58
2,623 Coastal Corp. 78
1,237 Columbia Gas System(c) 36
530 Eastern Enterprises 16
6,473 Enron Corp. 220
1,670 Enserch Corp. 29
669 Helmerich & Payne, Inc. 20
1,298 Kerr-McGee Corp. 67
885 Louisiana Land &
Exploration Co. 32
3,085 Noram Energy Corp. 19
7,962 Occidental Petroleum Corp. 183
688 Oneok, Inc. 13
2,516 Oryx Energy Co.(c) 35
1,160 Pennzoil Co. 57
6,622 Phillips Petroleum Co. 232
2,122 Rowan Cos.(c) 15
2,319 Sante Fe Energy Resources,
Inc.(c) 22
2,261 Sonat, Inc. 69
2,752 Sun Co., Inc. 83
7,290 USX - Marathon Group 137
6,231 Unocal Corp. 179
2,294 Williams Co., Inc. 75
--------
1,794
--------
OIL & GAS PRODUCTION (1.2%):
3,201 Burlington Resource, Inc. 125
10,139 Mobil Corp. 962
4,664 Tenneco, Inc. 214
--------
1,301
--------
OIL -- INTEGRATED COMPANIES (6.0%):
12,655 Amoco Corp. 830
4,128 Atlantic Richfield Co. 473
16,606 Chevron Corp. 787
31,639 Exxon Corp. 2,203
13,637 Royal Dutch Petroleum Co. 1,691
6,583 Texaco, Inc. 450
--------
6,434
--------
OILFIELD EQUIPMENT & SERVICES (0.6%):
4,718 Dresser Industries, Inc. 103
2,868 Halliburton Co. 110
6,231 Schlumberger Limited 392
--------
605
--------
PAINT, VARNISHES & ENAMELS (0.1%):
2,200 Sherwin Williams Co. 78
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
PHARMACEUTICALS (4.9%):
20,544 Abbott Laboratories $ 809
1,570 Allergan, Inc. 43
2,106 Alza Corp., Class A(c) 41
13,066 Bristol-Myers Squibb Co. 851
7,468 Eli Lilly & Co. 558
32,116 Merck & Co., Inc. 1,377
8,037 Pfizer, Inc. 696
4,852 Schering-Plough 366
4,441 Upjohn Co. 161
3,379 Warner-Lambert Co. 269
--------
5,171
--------
PHOTOGRAPHY (0.5%):
8,692 Eastman Kodak Co. 500
1,179 Polaroid Corp. 40
--------
540
--------
POLLUTION CONTROL SERVICES & EQUIPMENT (0.5%):
5,022 Browning-Ferris
Industries, Inc. 166
1,444 Safety Kleen 25
12,342 WMX Technologies, Inc. 336
275 Zurn Industries, Inc. 6
--------
533
--------
PRECISION INSTRUMENTS & RELATED (0.0%):
1,040 Perkin Elmer 32
--------
PUBLISHING, EXCEPT NEWSPAPER (0.9%):
2,103 Deluxe Corp. 65
2,455 Dow Jones & Co., Inc. 86
4,300 Dun & Bradstreet Corp. 224
766 John H. Harland Co. 17
1,218 McGraw Hill, Inc. 91
626 Meredith Corp. 16
3,870 R.R. Donnelley & Sons Co. 132
9,682 Time Warner, Inc. 355
--------
986
--------
RADIO & TELEVISION (1.2%):
1,555 CBS, Inc. 100
3,930 Capital Cities ABC, Inc. 332
5,775 Comcast Class A Special
Shares 91
300 Comcast Corp., Class A 5
204 Cox Communications, Inc.,
Class A(c) 3
15,585 Tele-Communications, Inc.,
Class A(c) 298
9,087 Viacom, Class B(c) 417
--------
1,246
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
52
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RAILROAD & RAILROAD HOLDING COMPANIES (0.8%):
2,300 Burlington Northern, Inc. $ 137
2,713 CSX Corp. 216
1,964 Conrail, Inc. 107
3,845 Santa Fe Southern Pacific
Corp. 90
5,188 Union Pacific Corp. 285
--------
835
--------
RAILROADS (0.2%):
3,437 Norfolk Southern Corp. 232
--------
RESTAURANTS (0.7%):
607 Luby's Cafeterias, Inc. 12
17,820 McDonald's Corp. 624
1,376 Ryan's Family Steak House(c) 10
1,082 Shoney's, Inc.(c) 12
2,555 Wendy's International 43
--------
701
--------
RETAIL (2.9%):
3,656 American Stores Co. 94
1,945 Brunos, Inc. 24
2,594 Charming Shoppes, Inc. 14
1,848 Dayton Hudson Corp. 124
2,025 Harcourt General, Inc. 83
11,656 K-Mart Corp. 162
3,194 Marriott International, Inc. 115
6,328 May Department Stores 229
2,103 Nordstrom, Inc. 81
5,012 Price/Costco, Inc.(c) 73
8,921 Sears & Roebuck Co. 484
58,600 Wal Mart Stores, Inc. 1,392
3,104 Walgreen Co. 146
3,421 Woolworth Corp. 55
--------
3,076
--------
RETAIL -- SPECIALTY STORES (1.2%):
2,497 Circuit City Stores, Inc. 65
3,715 The Gap 118
1,473 Giant Food, Inc. 40
11,531 Home Depot, Inc. 481
9,096 The Limited, Inc. 194
2,733 Melville Corp. 98
1,592 Pep Boys -- Manny, Moe &
Jack 41
1,867 TJX Cos., Inc. 21
7,268 Toys R Us, Inc.(c) 184
--------
1,242
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RUBBER & RUBBER PRODUCTS (0.2%):
669 B.F. Goodrich, Inc. $ 31
2,122 Cooper Tire & Rubber Co. 52
3,834 Goodyear Tire & Rubber Co. 146
--------
229
--------
SEMICONDUCTORS (1.3%):
2,100 Applied Materials, Inc.(c) 129
10,550 Intel Corp. 1,080
2,550 Micron Technology, Inc. 210
--------
1,419
--------
SERVICES (NON-FINANCIAL) (0.4%):
3,379 Amgen, Inc.(c) 246
3,050 First Data Corp. 172
1,240 Ogden Corp. 25
--------
443
--------
SHOES, LEATHER GOODS & CLOTHING (0.2%):
452 Brown Group, Inc. 13
1,906 Nike, Inc. 146
2,061 Reebok International Ltd. 64
1,237 Stride Rite Corp. 15
--------
238
--------
SOAPS & CLEANING AGENTS (1.5%):
1,395 Clorox Co. 82
3,670 Colgate Palmolive, Inc. 258
17,471 Procter & Gamble Co. 1,221
--------
1,561
--------
SOFTWARE & COMPUTER SERVICES (2.0%):
1,198 Autodesk, Inc. 41
4,125 Computer Associates
International, Inc. 266
1,271 Lotus Development Corp.(c) 40
14,900 Microsoft Corp.(c) 1,220
9,462 Novell, Inc.(c) 206
10,919 Oracle Systems Corp.(c) 333
630 Shared Medical Systems 24
--------
2,130
--------
STEEL (0.0%):
2,319 Worthington Industries, Inc. 44
--------
TAX RETURN PREPARATION (0.1%):
2,652 H. & R. Block 112
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
53
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TELECOMMUNICATIONS (2.3%):
12,612 Airtouch Communications(c) $ 339
4,800 Alltel Corp. 119
11,144 Bell Atlantic Corp. 612
649 M A Com, Inc.(c) 8
6,447 Northern Telecom Ltd. 235
10,772 Pacific Telesis Group 333
1,966 Scientific-Atlanta, Inc. 45
8,866 Sprint Corp. 293
11,591 U.S. West, Inc. 480
--------
2,464
--------
TEXTILE MANUFACTURING (0.1%):
866 Hartmarx Corp.(c) 5
313 Oshkosh B Gosh, Inc. 5
1,001 Russell Corp. 30
452 Springs Industries, Inc.,
Class A 18
1,631 V.F. Corp. 82
--------
140
--------
TOBACCO & TOBACCO PRODUCTS (1.7%):
5,149 American Brands, Inc. 209
21,904 Philip Morris Cos., Inc. 1,484
5,146 UST, Inc. 145
--------
1,838
--------
TOOLS & HARDWARE MANUFACTURING (0.2%):
2,122 Black & Decker Corp. 64
1,121 Snap On Tools, Inc. 42
1,160 Stanley Works 46
746 Timken Co. 30
--------
182
--------
TOYS & BICYCLES -- MANUFACTURING (0.1%):
5,725 Mattel, Inc. 136
--------
TRANSPORTATION -- AIR (0.1%):
3,650 Southwest Airlines Co. 84
--------
TRANSPORTATION LEASING & TRUCKING (0.2%):
924 Consolidated Freightways,
Inc.(c) 24
1,395 Federal Express Corp.(c) 95
1,101 Pittston Services Group 26
963 Roadway Services, Inc. 47
2,006 Ryder Systems, Inc. 47
707 Yellow Corp. 13
--------
252
--------
TRUCKS -- MANUFACTURING (0.1%):
236 Nacco Industries, Inc. 13
6,073 Placer Dome, Inc. 144
--------
157
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
UTILITIES -- ELECTRIC (3.0%):
4,697 American Electric Power $ 154
4,047 Carolina Power & Light 111
4,855 Central & South West Corp. 120
3,728 Cinergy Corp. 94
6,014 Consolidated Edison Co. NY,
Inc. 167
3,653 Detroit Edison Co. 103
4,415 Dominion Resources 161
5,188 Duke Power Co. 205
5,761 Entergy Corp. 125
4,735 FPL Group, Inc. 174
3,301 Houston Industries 130
3,676 Niagara Mohawk Power Corp. 51
1,670 Northern States Power Co.
Minnesota 74
3,931 Ohio Edison 79
7,196 Pacificorp 137
5,640 Peco Energy Co. 145
6,231 Public Service Enterprise 171
1,101 Raychem Corp. 39
11,438 SCEcorp. 192
16,712 Southern Co. 345
5,759 Texas Utilities Co. 188
5,423 Unicom Corp. 142
2,594 Union Electric Co. 92
--------
3,199
--------
UTILITIES -- ELECTRIC & GAS (0.4%):
3,724 Baltimore Gas & Electric 88
11,024 Pacific Gas & Electric Co. 296
904 Peoples Energy Corp. 23
--------
407
--------
UTILITIES -- NATURAL GAS (0.3%):
2,358 Consolidated Natural Gas 93
1,315 Nicor, Inc. 32
4,022 Pacific Enterprises 99
3,827 Panhandle Eastern Corp. 92
--------
316
--------
UTILITIES -- TELECOMMUNICATIONS (5.4%):
39,898 A T & T Corp. 2,025
14,016 Ameritech Corp. 631
12,636 Bellsouth Corp. 774
24,513 GTE Corp. 837
17,340 MCI Telecommunications Corp. 377
10,733 Nynex Corp. 439
15,249 SBC Communication, Inc. 673
--------
5,756
- ----------------------------------------------------------
TOTAL COMMON STOCKS 95,925
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
54
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BILLS (0.4%)
400,000 5.76%, 6/15/95 $ 397
- ----------------------------------------------------------
Total U.S. Treasury Bills 397
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (0.9%)
938,389 Shearson U.S. Treasury Fund 938
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 938
- ----------------------------------------------------------
TOTAL (COST $96,230)(B) $105,660
- ----------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $105,834.
(b) 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 $498. 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 $ 11,629
Unrealized depreciation (2,697)
--------
Net unrealized appreciation $ 8,932
=========
</TABLE>
(c) Represents non-income producing securities.
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------
FUTURES CONTRACTS
</TABLE>
<TABLE>
<CAPTION>
MARKET
NUMBER OF VALUE
CONTRACTS (000)
<S> <C> <C>
Short, Standard & Poor's 500
Index Futures Contracts, face
amount $8,788, expiring
6/16/95 35 $9,043
------
Total Futures Contracts $9,043
=======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
55
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMERCIAL PAPER (5.4%)
FINANCIAL SERVICES (5.4%):
7,000,000 Ford Motor Credit Corp.,
5.94%, 5/8/95 $ 7,000
7,000,000 General Electric Credit
Corp., 5.94%, 5/8/95 7,000
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 14,000
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (91.8%)
AEROSPACE/DEFENSE (5.0%):
73,000 Boeing Co. 4,015
48,000 General Dynamics Corp. 2,226
34,500 Lockheed Martin Corp.(c) 1,992
65,000 Raytheon Co. 4,729
--------
12,962
--------
AUTOMOTIVE (3.4%):
65,000 Chrysler Corp. 2,803
86,000 Ford Motor Co. 2,322
47,000 Pep Boys-Manny, Moe & Jack 1,210
35,900 TRW, Inc. 2,670
--------
9,005
--------
BANKS (7.4%):
93,000 BankAmerica Corp. 4,603
95,000 Comerica, Inc. 2,731
76,000 CoreStates Financial Corp. 2,479
77,000 First Union Corp. 3,484
81,000 J.P. Morgan & Co., Inc. 5,316
30,000 Norwest Corp. 795
--------
19,408
--------
BEVERAGES (1.2%):
53,000 Anheuser Busch Co., Inc. 3,081
--------
CHEMICALS (2.6%):
25,000 Dow Chemical Co. 1,738
31,000 Eastman Chemical 1,759
45,000 Lubrizol Corp. 1,569
15,000 Nalco Chemical Co. 525
60,000 RPM, Inc., Ohio 1,185
--------
6,776
--------
COMPUTER SOFTWARE (1.5%):
29,000 Microsoft Corp.(c) 2,374
67,000 Novell, Inc.(c) 1,457
--------
3,831
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
COMPUTERS & OFFICE EQUIPMENT (1.2%):
12,000 International Business
Machines Corp. $ 1,137
53,000 Pitney Bowes, Inc. 1,968
--------
3,105
--------
ELECTRICAL EQUIPMENT (2.6%):
22,500 Emerson Electric Co. 1,513
95,000 General Electric Co. 5,320
--------
6,833
--------
ELECTRONICS (2.5%):
50,000 Hewlett Packard Co. 3,306
31,000 Intel Corp. 3,174
--------
6,480
--------
FINANCIAL SERVICES (4.3%):
70,000 American Express Co. 2,433
105,000 American General Corp. 3,465
32,000 Federal National Mortgage
Assoc. 2,824
52,500 Household International,
Inc. 2,461
--------
11,183
--------
FOOD (0.4%):
31,000 Pioneer Hi-Bred
International, Inc. 1,163
--------
HEALTH CARE (1.1%):
75,000 Abbott Laboratories 2,953
--------
HOME PRODUCTS (1.9%):
57,000 Newell Co. 1,347
45,000 Sherwin Williams Co. 1,603
51,500 Stanley Works 2,041
--------
4,991
--------
INSURANCE (3.4%):
64,000 Aetna Life & Casualty Co. 3,648
77,000 Allstate 2,339
23,000 Chubb Corp. 1,840
25,000 St. Paul Cos., Inc.(c) 1,203
--------
9,030
--------
INDUSTRIAL - MISCELLANEOUS (2.6%):
42,000 Allied Signal, Inc. 1,664
35,000 Minnesota Mining &
Manufacturing Co. 2,087
25,000 Textron, Inc. 1,425
62,000 WMX Technologies, Inc. 1,690
--------
6,866
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
56
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MACHINERY & MANUFACTURING (1.5%):
45,000 Cooper Industries $ 1,755
27,000 Deere & Co. 2,214
--------
3,969
--------
MEDIA (1.9%):
30,001 Cox Communications, Inc.
Class A(c) 458
40,000 Dun & Bradstreet Corp. 2,085
43,000 Time Warner, Inc. 1,575
50,000 Times Mirror Co., Class A 906
--------
5,024
--------
METALS & MINING (2.8%):
63,000 Aluminum Co. of America 2,827
70,000 Cyprus Amax Minerals 1,951
80,000 USX U.S. Steel Group 2,440
--------
7,218
--------
OIL - INTEGRATED (DOMESTIC) (3.1%):
34,000 Atlantic Richfield Co. 3,893
117,500 Phillips Petroleum Co. 4,113
--------
8,006
--------
OIL - INTEGRATED (INTERNATIONAL) (8.4%):
111,500 Chevron Corp. 5,282
34,000 Exxon Corp. 2,367
73,000 Mobil Corp. 6,926
107,000 Texaco, Inc. 7,316
--------
21,891
--------
OILFIELD WELL EQUIPMENT & SERVICES (1.3%):
110,000 Baker Hughes, Inc. 2,475
13,000 Schlumberger Ltd. 817
--------
3,292
--------
PAPER & FOREST PRODUCTS (3.9%):
47,000 Georgia Pacific Corp. 3,731
61,500 International Paper Co. 4,736
37,500 Union Camp Corp. 1,880
--------
10,347
--------
PHARMACEUTICALS (3.6%):
13,800 American Home Products Corp. 1,064
55,000 Merck & Co., Inc. 2,358
40,000 Pfizer, Inc. 3,465
35,000 Schering-Plough 2,638
--------
9,525
--------
RESTAURANTS (0.9%):
65,000 McDonald's Corp. 2,275
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RETAIL - FOOD & DRUGS (1.2%):
75,000 Supervalu, Inc. $ 1,978
25,000 Walgreen Co. 1,175
--------
3,153
--------
RETAIL - TRADE (4.0%):
51,000 Dayton Hudson Corp. 3,423
83,000 Sears & Roebuck Co. 4,503
--------
7,926
--------
SOAPS & PERSONAL CARE (1.8%):
45,000 Avon Products 2,846
25,000 Procter & Gamble Co. 1,747
--------
4,593
--------
TELECOMMUNICATIONS (7.3%):
168,500 A T & T Corp. 8,551
15,000 Ameritech Corp. 675
43,000 Comsat Corp. 860
155,000 GTE Corp. 5,289
90,000 Nynex Corp. 3,679
--------
19,054
--------
TOBACCO (1.7%):
47,000 Philip Morris Cos., Inc. 3,184
42,000 UST, Inc. 1,181
--------
4,365
--------
TRANSPORTATION (1.2%):
8,000 Burlington Northern, Inc. 476
18,500 Norfolk Southern Corp. 1,246
28,000 Roadway Services, Inc. 1,358
--------
3,080
--------
UTILITIES - ELECTRIC (5.1%):
130,000 Consolidated Edison Co. NY,
Inc. 3,608
70,000 Duquesne Light Co. 2,363
95,000 Public Service Co. of
Colorado 2,862
141,000 Texas Utilities Co. 4,600
--------
13,433
--------
UTILITIES - NATURAL GAS (2.2%):
65,500 Consolidated Natural Gas 2,579
39,000 Enron Corp. 1,326
30,000 Enserch Corp. 518
48,000 Peoples Energy Corp. 1,212
--------
5,635
- ----------------------------------------------------------
TOTAL COMMON STOCKS 240,453
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
57
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BILLS (0.2%)
410,000 4.13%, 6/22/95 $ 407
- ----------------------------------------------------------
TOTAL U.S. TREASURY BILLS 407
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (3.1%)
8,188,301 Shearson U.S. Treasury Fund 8,188
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 8,188
- ----------------------------------------------------------
TOTAL (COST 245,679)(B) $263,048
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $261,830.
(b) 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 $168. 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 $ 23,151
Unrealized depreciation (5,950)
--------
Net unrealized appreciation $ 17,201
=========
</TABLE>
(c) Represents non-income producing securities.
- ---------------------------------------------------------
FUTURES CONTRACTS
<TABLE>
<CAPTION>
MARKET
NUMBER OF VALUE
CONTRACTS (000)
<S> <C> <C>
Short, Standard & Poor's 500
Index Futures Contracts,
face amount $2,480, expiring
6/16/95 10 $2,584
------
Total Futures Contracts $2,584
------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
58
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
DIVERSIFIED STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMERCIAL PAPER (1.5%)
FINANCIAL SERVICES (1.5%):
5,000,000 General Motors Acceptance
Corp. 5.94%, 5/3/95 $ 5,000
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 5,000
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (93.9%)
AEROSPACE/DEFENSE (4.7%):
128,500 Boeing Co. 7,067
78,000 General Dynamics Corp. 3,617
80,000 Lockheed Martin Corp.(c) 4,620
--------
15,304
--------
ALUMINUM (1.0%):
70,200 Aluminum Co. of America 3,150
--------
BANKS (6.9%):
125,800 BankAmerica Corp. 6,227
225,000 Comerica, Inc. 6,469
81,800 J.P. Morgan & Co., Inc. 5,368
24,800 National City Corp. 679
132,400 Norwest Corp. 3,509
--------
22,252
--------
BEVERAGES (2.7%):
66,400 Anheuser Busch Co., Inc. 3,859
120,000 PepsiCo, Inc. 4,995
--------
8,854
--------
CHEMICALS (1.8%):
40,200 Dow Chemical Co. 2,794
145,000 RPM, Inc., Ohio 2,864
--------
5,658
--------
COMPUTERS & PERIPHERALS (0.6%):
20,000 International Business
Machines Corp. 1,895
--------
CONGLOMERATES (0.6%):
30,000 Minnesota Mining &
Manufacturing Co. 1,789
--------
COSMETICS & RELATED (2.0%):
100,300 Avon Products 6,344
--------
ELECTRICAL EQUIPMENT (3.3%):
30,000 Emerson Electric Co. 2,017
150,800 General Electric Co. 8,445
--------
10,462
--------
ELECTRONIC COMPUTING EQUIPMENT (0.6%):
50,000 Compaq Computer Corp.(c) 1,900
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ELECTRONIC & ELECTRICAL - GENERAL (2.1%):
85,000 Motorola, Inc. $ 4,834
18,900 Texas Instruments, Inc. 2,003
--------
6,837
--------
ENGINEERING & CONSTRUCTION (1.8%):
113,700 Fluor Corp. 5,855
--------
ENTERTAINMENT (0.8%):
70,400 Promus Cos., Inc.(c) 2,710
--------
FINANCIAL SERVICES (1.1%):
39,000 Federal National Mortgage
Assoc. 3,442
--------
FOREST PRODUCTS (3.5%):
50,000 International Paper Co. 3,850
66,900 Mead Corp. 3,462
78,900 Union Camp Corp. 3,955
--------
11,267
--------
FUNERAL SERVICES (0.5%):
61,000 Service Corp. International 1,723
--------
INDUSTRIAL - MISCELLANEOUS (1.0%):
54,000 Textron, Inc. 3,078
--------
INSURANCE (4.2%):
40,000 Aetna Life & Casualty Co.(c) 2,280
52,900 American International
Group, Inc. 5,647
70,000 Chubb Corp. 5,600
--------
13,527
--------
MANUFACTURING MISCELLANEOUS (1.2%):
100,000 Allied Signal, Inc. 3,962
--------
METALS (1.3%):
134,300 USX U.S. Steel Group 4,096
--------
OFFICE EQUIPMENT & SUPPLIES (1.6%):
136,100 Pitney Bowes, Inc. 5,053
--------
OIL (10.9%):
40,400 Atlantic Richfield Co. 4,626
250,000 Chevron Corp. 11,844
105,500 Exxon Corp. 7,345
165,500 Texaco, Inc. 11,316
--------
35,131
--------
OIL & GAS EXPLORATION (3.6%):
170,000 Enron Corp. 5,780
170,000 Phillips Petroleum Co. 5,950
--------
11,730
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
59
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
DIVERSIFIED STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
OILFIELD EQUIPMENT & SERVICES (4.7%):
235,000 Baker Hughes, Inc. $ 5,287
227,600 Dresser Industries, Inc. 4,979
75,100 Schlumberger Ltd. 4,722
--------
14,988
--------
PHARMACEUTICALS (3.4%):
75,000 Merck & Co., Inc. 3,216
25,000 Pfizer, Inc. 2,166
20,000 Schering-Plough 1,507
50,000 Warner-Lambert Co. 3,988
--------
10,877
--------
POLLUTION CONTROL SERVICES (1.2%):
142,000 WMX Technologies, Inc. 3,870
--------
REAL ESTATE INVESTMENT TRUSTS (0.3%):
28,500 Weingarten Realty Investors 998
--------
RETAIL (1.0%):
46,500 Dayton Hudson Corp. 3,121
--------
RETAIL - SPECIALTY STORES (1.1%):
133,000 Pep Boys - Manny, Moe & Jack 3,425
--------
RUBBER & RUBBER PRODUCTS (2.3%):
120,000 Cooper Tire & Rubber Co.(c) 2,940
119,600 Goodyear Tire & Rubber Co. 4,545
--------
7,485
--------
SEMICONDUCTORS (1.8%):
30,000 Applied Materials, Inc.(c) 1,849
40,000 Intel Corp. 4,095
--------
5,944
--------
SHIPPING (1.1%):
152,650 TNT Freightways Corp. 3,587
--------
SOFTWARE & COMPUTER SERVICES (4.0%):
111,800 Microsoft(c) 9,154
175,000 Novell, Inc.(c) 3,806
--------
12,960
--------
TOBACCO & TOBACCO PRODUCTS (1.7%):
80,000 Philip Morris Cos., Inc. 5,420
--------
UTILITIES - ELECTRIC (5.4%):
200,000 Consolidated Edison Co. NY,
Inc. 5,550
20,000 Duquesne Light Co. 675
150,000 Southern Co. 3,094
248,500 Texas Utilities Co. 8,107
--------
17,426
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
UTILITIES - TELECOMMUNICATIONS (8.1%):
230,000 A T & T Corp. $ 11,673
300,000 GTE Corp. 10,238
98,100 Nynex Corp. 4,010
--------
25,921
- ----------------------------------------------------------
TOTAL COMMON STOCKS 302,041
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (5.0%)
2,433,734 Federated Treasury
Obligation Fund 2,434
13,557,653 Shearson U.S. Treasury Fund 13,557
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 15,991
- ----------------------------------------------------------
TOTAL (COST $292,681)(B) $323,032
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $321,593.
(b) 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 $366. 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 $ 33,693
Unrealized depreciation (3,708)
--------
Net unrealized appreciation $ 29,985
=========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
60
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (97.4%)
BANKS (4.6%):
20,500 BankAmerica Corp. $ 1,015
37,500 Norwest Corp. 994
----------
2,009
----------
BEVERAGES (2.8%):
21,300 Coca Cola Co. 1,238
----------
COMPUTERS & PERIPHERALS (1.1%):
9,000 3Com Corp.(c) 504
----------
CONGLOMERATES (2.7%):
36,000 Corning Glass Works 1,202
----------
COSMETICS & RELATED (3.2%):
17,000 Gillette Co. 1,394
----------
ELECTRICAL EQUIPMENT (5.7%):
26,300 General Electric Co. 1,473
18,700 Johnson Controls, Inc. 1,014
----------
2,487
----------
ELECTRONICS & ELECTRICAL (3.4%):
26,200 Motorola, Inc. 1,490
----------
ENTERTAINMENT (3.0%):
24,000 Walt Disney Co. 1,329
----------
FINANCIAL SERVICES (5.8%):
16,900 Federal National Mortgage
Assoc. 1,491
25,000 First USA, Inc. 1,063
----------
2,554
----------
FOREST PRODUCTS (4.1%):
13,000 Georgia Pacific Corp. 1,032
10,000 International Paper Co. 770
----------
1,802
----------
HOUSEHOLD PRODUCTS (3.2%):
34,300 Newell Co. 810
20,400 Rubbermaid, Inc. 602
----------
1,412
----------
INSURANCE (2.9%):
11,900 American International
Group, Inc. 1,270
----------
LEISURE-RECREATION, GAMING (1.3%):
43,700 International Game
Technology 563
----------
MEDICAL-BIOTECHNOLOGY (0.7%):
4,200 Amgen, Inc.(c) 305
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (1.5%):
23,900 Health Care & Retirement
Corp.(c) $ 675
----------
OIL & GAS EXPLORATION, PRODUCTION (1.6%):
18,000 Burlington Resource, Inc. 704
----------
OIL-INTEGRATED COMPANIES (11.3%):
11,800 Amoco Corp. 774
9,600 Atlantic Richfield Co. 1,099
25,000 Chevron Corp. 1,184
14,100 Mobil Corp. 1,338
8,100 Texaco, Inc. 554
----------
4,949
----------
PHARMACEUTICALS (3.4%):
20,000 Ivax Corp. 517
13,000 Schering-Plough 980
----------
1,497
----------
POLLUTION CONTROL SERVICES (1.8%):
29,000 WMX Technologies, Inc. 790
----------
RETAIL (5.3%):
30,000 The Gap 956
33,300 Home Depot, Inc. 1,390
----------
2,346
----------
SEMICONDUCTORS (3.7%):
16,000 Intel Corp. 1,638
----------
SOAPS & CLEANING AGENTS (3.0%):
18,800 Procter & Gamble Co. 1,814
----------
SOFTWARE & COMPUTER SERVICES (6.0%):
20,000 Microsoft Corp.(c) 1,638
45,000 Novell, Inc.(c) 979
----------
2,617
----------
TELECOMMUNICATIONS (6.8%):
22,400 Telefonos de Mexico 678
21,900 AT&T Corp. 1,111
20,300 SBC Communication, Inc. 1,191
----------
2,980
----------
TOBACCO & TOBACCO RELATED (1.0%):
6,600 Philip Morris Cos., Inc. 447
----------
TRANSPORTATION-AIR (2.3%):
43,700 Southwest Airlines Co. 1,011
----------
UTILITIES-NATURAL GAS (5.0%):
36,500 El Paso Natural Gas 1,068
33,300 Enron Corp. 1,132
----------
2,200
- ------------------------------------------------------------
TOTAL COMMON STOCKS 42,727
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
61
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (2.1%)
98,561 Shearson U.S. Treasury Fund $ 919
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 919
- ------------------------------------------------------------
TOTAL (COST $40,358)(B) $ 43,646
- ---
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $43,861.
(b) 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 $ 5,809
Unrealized depreciation (2,521)
----------
Net unrealized appreciation $ 3,288
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
62
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
SPECIAL VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (94.6%)
AEROSPACE/DEFENSE (3.4%):
113,400 GenCorp, Inc. $ 1,432
29,500 General Dynamics Corp. 1,368
86,700 Thiokol Corp. Delaware 2,416
----------
5,216
----------
AUTOMOTIVE PARTS (4.7%):
44,200 Genuine Parts Co. 1,713
46,600 Hayes Wheels 874
72,200 Kaydon Corp. 1,985
51,600 Mascotech, Inc. 574
13,000 Stewart & Stevenson
Services,
Inc. 487
95,775 T B C Corp.(c) 1,017
33,915 Walbro Corp. 634
----------
7,284
----------
BANKS (5.7%):
30,100 Central Fidelity Banks, Inc. 769
119,200 Comerica, Inc. 3,427
36,401 Michigan National Corp. 3,818
17,500 Star Bank 731
----------
8,745
----------
BEVERAGES (1.0%):
71,000 Coca Cola Enterprises, Inc. 1,588
----------
CHEMICALS (7.8%):
57,875 A. Schulman, Inc. 1,816
42,550 Avery Dennison Corp. 1,729
22,400 Geon Co. 605
32,000 Lubrizol Corp. 1,116
12,900 Lyondell Petrochemical 320
57,500 Olin Corp. 3,213
96,500 RPM, Inc. 1,905
30,000 WD 40 Co. 1,320
----------
12,024
----------
CONSTRUCTION (1.2%):
71,100 Foster Wheeler Corp. 2,631
----------
CONTAINERS (1.1%):
71,000 Sonoco Products Co. 1,766
----------
ELECTRICAL EQUIPMENT (8.4%):
39,200 Arrow Electronics, Inc.(c) 1,823
22,500 W.W. Grainger, Inc. 1,361
121,332 Mark IV Industries 2,184
33,300 Molex Corp. 1,257
45,400 Teleflex, Inc. 1,878
75,529 Vishay Intertechnology,
Inc.(c) 4,466
----------
12,969
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ENVIRONMENTAL CONTROL (1.1%):
179,650 Laidlaw, Inc. Class B $ 1,617
----------
FINANCIAL SERVICES (4.6%):
53,300 Equifax, Inc. 1,726
61,850 MBNA Corp. 1,870
42,800 PMI Group, Inc.(c) 1,594
69,100 UJB Financial Corp. 1,892
----------
7,082
----------
FOOD DISTRIBUTORS (0.3%):
15,500 SuperValu, Inc. 409
----------
FOOD PROCESSING & PACKAGING (2.4%):
72,100 Dean Foods Co. 2,055
45,250 IBP, Inc. 1,674
----------
3,729
----------
FOREST PRODUCTS (1.9%):
62,262 Pentair, Inc. 2,848
----------
FUNERAL SERVICES (1.8%)
95,500 Service Corp. International 2,698
----------
FURNITURE (0.7%):
28,300 Leggett & Platt, Inc. 1,090
----------
HEAVY MACHINERY (2.3%):
61,800 Baker Hughes, Inc. 1,391
40,650 Tyco Laboratories, Inc. 2,134
----------
3,525
----------
HOLDING COMPANIES (0.2%):
7,900 Northern Trust Corp.(c) 289
----------
HOTELS & MOTELS (1.4%):
72,300 Mirage Resorts, Inc.(c) 2,169
----------
INSURANCE (5.4%):
46,200 American Re Corp. 1,756
55,200 Kemper Corp. 2,498
47,500 Progressive Corp. 1,793
34,500 TransAtlantic Holdings 2,190
----------
8,237
----------
MACHINE TOOLS (2.9%):
90,900 Albany International Corp. 1,988
22,900 Greenfield Industries 676
67,200 Manitowoc Industries 1,756
----------
4,420
----------
MANUFACTURING (2.2%):
38,000 Briggs & Stratton Corp. 1,335
19,100 Hillenbrand 566
56,466 Pall Corp. 1,320
11,100 Paragon Trade Brands, 172
Inc.(c)
----------
3,393
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
63
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
SPECIAL VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (3.8%):
139,300 Community Psychiatric
Centers, Inc.(c) $ 1,845
43,200 Lincare Holdings(c) 1,334
60,100 Quorum Health Group(c) 1,240
7,100 Ventritex(c) 107
42,437 Vivra, Inc.(c) 1,363
----------
5,889
----------
MEDICAL SUPPLIES (0.2%):
10,000 Sunrise Medical, Inc.(c) 303
----------
METALS (3.3%):
86,100 CBI Industries, Inc. 2,132
28,000 Kennametal, Inc. 938
31,800 Minerals Technologies, Inc. 1,057
32,500 USX U.S. Steel Group 991
----------
5,118
----------
NEWSPAPERS (1.6%):
41,100 Tribune Co. 2,430
----------
OIL & GAS EXPLORATION (2.1%):
80,100 Anadarko Petroleum 3,294
----------
OIL & GAS PRODUCTION (1.2%):
46,100 Snyder Oil Corp. 663
42,500 Vastar Resources, Inc. 1,137
----------
1,800
----------
RETAIL (1.7%):
70,800 Hannaford Brothers 1,867
22,500 TJX Companies, Inc. 259
13,800 Tiffany & Co. 443
----------
2,569
----------
RUBBER (1.0%):
15,800 Bandag, Inc. 938
4,500 Bandag, Inc. Class A 249
19,125 Standard Products Co. 378
----------
1,565
----------
SEMICONDUCTORS (0.5%):
13,500 Applied Materials Inc.(c) 832
----------
SHOES, LEATHER GOODS (1.3%):
25,600 Nike, Inc. 1,962
----------
SOFTWARE & COMPUTER SERVICES (1.2%):
10,000 American Software, Inc. 41
14,750 Analysts International Corp. 372
28,300 Policy Management
Systems(c) 1,426
----------
1,839
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
STEEL (1.5%):
36,700 A.K. Steel Holding Corp.(c) $ 987
68,620 Worthington Industries, Inc. 1,295
----------
2,282
----------
TELECOMMUNICATIONS (0.8%):
4,600 Comsat Corp. 92
53,333 Federal Signal Corp. 1,207
----------
1,299
----------
TOBACCO (0.4%):
23,773 Universal Corp. 544
----------
TRANSPORTATION (3.8%):
45,350 Gatx Corp. 2,041
40,800 Pittston Services Group 969
80,750 Illinois Central Corp. 2,836
----------
5,846
----------
UTILITIES -- ELECTRIC & GAS (8.0%):
32,400 Brooklyn Union Gas Co. 786
27,020 DQE Co. 912
118,600 Florida Progress Corp. 3,617
148,300 Northeast Utilities 3,244
79,400 Public Service Co. of 2,392
Colorado
8,500 Raychem Corp. 303
27,700 Washington Gas Light Co. 1,080
----------
12,334
----------
UTILITIES -- TELECOMMUNICATIONS (1.1%):
69,400 LDDS Communications(c) 1,665
- ------------------------------------------------------------
TOTAL COMMON STOCKS 145,300
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (5.6%)
1,806,695 Federated Treasury 1,806
Obligation
6,859,515 Shearson U.S. Treasury Fund 6,860
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 8,666
- ------------------------------------------------------------
TOTAL (COST $142,586)(A) $ 153,966
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $153,591.
(b) 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 $ 16,787
Unrealized depreciation (5,407)
----------
Net unrealized appreciation $ 11,380
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
64
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments
SPECIAL GROWTH FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (94.8%)
AUTOMOTIVE PARTS (3.8%):
8,900 Breed Technologies, Inc. $ 179
20,000 Kaydon Corp. 550
----------
729
----------
BANKS (1.7%):
8,163 First Bank Systems, Inc. 331
----------
COMPUTERS & PERIPHERALS (4.9%):
12,000 Optical Data Systems(c) 486
10,000 Sungard Data Systems,
Inc.(c) 466
----------
952
----------
DRUG STORES (1.0%):
7,000 Eckerd Corp.(c) 204
----------
ELECTRONIC & ELECTRICAL (2.5%):
11,000 Avnet, Inc. 490
----------
FINANCIAL SERVICES (4.0%):
34,300 Aames Financial Corp. 429
8,500 Green Tree Financial Corp. 347
----------
776
----------
FURNITURE (4.1%):
24,000 Juno Lighting 498
11,000 LaZBoy Chair Co. 297
----------
795
----------
HOSPITAL & NURSING EQUIPMENT (3.1%):
15,000 Invacare Corp. 593
----------
INSURANCE -- LIFE (5.3%):
48,090 Gainsco, Inc. 511
14,500 Reliastar Financial Corp. 520
----------
1,031
----------
LEISURE -- RECREATION, GAMING (2.2%):
16,000 Aldila(c) 98
26,200 Callaway Golf Co. 324
----------
422
----------
MISCELLANEOUS MANUFACTURING (5.0%):
18,000 Keystone International, Inc. 378
25,000 Pall Corp. 584
----------
962
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (7.4%):
15,800 Lincare Holdings(c) $ 488
14,300 Mid Atlantic Medical
Services,
Inc.(c) 247
5,400 Pacificare Health System(c) 335
15,200 Sun Healthcare Group(c) 366
----------
1,436
----------
METALS (7.3%):
40,000 Addington Resources, Inc.(c) 450
13,000 Commercial Metals Co. 345
15,000 Mueller Industries, Inc.(c) 624
----------
1,419
----------
OFFICE EQUIPMENT & SUPPLIES (2.5%):
50,000 Checkmate Electronics(c) 481
----------
OIL & GAS EXPLORATION (5.6%):
10,000 Barrett Resources Corp.(c) 235
13,000 Devon Energy Corp. 270
10,000 H.S. Resource, Inc.(c) 165
18,000 Newfield Exploration(c) 414
----------
1,084
----------
PHARMACEUTICALS (3.2%):
18,000 Teva Pharmaceutical
Industries Ltd. 617
----------
PUBLISHING (2.9%):
5,000 Belo Corp. 300
15,000 Valassis Communications(c) 263
----------
563
----------
RETAIL (5.1%):
23,000 Lillian Vernon Corp. 469
16,000 Medicine Shoppe
International, Inc. 512
----------
981
----------
SEMICONDUCTORS (11.7%):
12,000 Advanced Micro Devices(c) 432
5,300 Alliance Semiconductor
Corp.(c) 215
14,100 Atmel Corp.(c) 620
30,000 Integrated Circuit 311
Systems(c)
5,000 Lam Research Corp.(c) 253
7,400 Linear Technology 442
----------
2,273
----------
SERVICES (NON-FINANCIAL) (1.8%):
20,000 Safecard Services 350
----------
TELECOMMUNICATIONS (2.4%):
21,000 Digi International, Inc.(c) 467
352 Intellicall, Inc.(c) 2
----------
469
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
65
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments -- Continued
SPECIAL GROWTH FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TRANSPORTATION -- RAIL (2.3%):
16,000 Railtex, Inc.(c) $ 444
----------
TRUCKING (5.0%):
21,000 American Freightways, 491
Inc.(c)
20,500 TNT Freightways Corp. 481
----------
972
- ------------------------------------------------------------
TOTAL COMMON STOCKS 18,374
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (6.0%)
295,621 Federated Treasury 296
Obligation
868,947 Shearson U.S. Treasury Fund 869
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,165
- ------------------------------------------------------------
TOTAL (COST $18,177)(B) $ 19,539
- ----------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $19,386.
(b) 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 $34. 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 $ 2,271
Unrealized depreciation (943)
----------
Net unrealized appreciation $ 1,328
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
66
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
OHIO REGIONAL STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (94.7%)
AEROSPACE/DEFENSE (0.2%):
5,361 GenCorp, Inc. $ 67
----------
AMUSEMENT & RECREATION SERVICES (0.6%):
7,000 Cedar Fair L.P. 219
----------
AUTOMOTIVE PARTS (5.2%):
24,000 Dana Corp. 617
15,000 Lamson & Sessions Co.(c) 96
15,000 TRW, Inc. 1,115
----------
1,828
----------
BANKS (7.2%):
26,000 Charter One Financial, Inc. 594
14,000 First Merit Corp. 324
9,375 Huntington Bancshares, Inc. 176
23,000 National City Corp. 630
15,000 Provident Bancorp 506
2,000 Second Bancorp 45
6,000 Star Bank 250
----------
2,525
----------
BUILDING MATERIALS (1.2%):
10,000 Medusa Corp. 226
5,000 Owens Corning Fiberglas
Corp.(c) 183
----------
409
----------
CHEMICALS (8.1%):
12,500 A. Schulman, Inc. 392
16,000 Chemed Corp. 492
23,500 Chempower, Inc.(c) 73
20,000 Ferro Corp. 568
6,000 Lesco, Inc. 95
20,000 Lubrizol Corp. 697
26,250 RPM, Inc. 518
----------
2,835
----------
CONSUMER GOODS (2.1%):
12,000 American Greetings Corp. 327
43,000 Gibson Greetings, Inc. 430
----------
757
----------
ELECTRICAL EQUIPMENT (4.7%):
60,000 Pioneer-Standard
Electronics,
Inc. 1,170
20,000 Robbins & Myers Inc. 485
----------
1,655
----------
ENGINEERING (0.3%):
5,000 Corrpro(c) 93
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FINANCIAL SERVICES (2.4%):
15,000 Haverfield Corp. $ 203
16,000 McDonald & Co. Investments 232
24,000 State Auto Financial 402
----------
837
----------
FOOD DISTRIBUTORS (0.9%):
10,000 Chiquita Brands 134
International
7,000 Kroger Co.(c) 178
----------
312
----------
FOREST PRODUCTS (2.9%):
12,000 Mead Corp. 621
15,000 Reynolds & Reynolds Co. 398
----------
1,019
----------
HEALTH CARE (0.4%):
9,000 Health Power, Inc.(c) 138
----------
HOSPITAL & NURSING EQUIPMENT (5.6%):
25,000 Invacare Corp. 988
20,000 Omnicare, Inc. 972
----------
1,960
----------
HOUSEHOLD GOODS (3.1%):
26,221 Lancaster Colony Corp. 911
20,000 Sun Television & Appliance 168
----------
1,079
----------
INDUSTRIAL SERVICES (3.9%):
45,000 ACME Cleveland Corp. 934
22,000 Amcast Industrial Corp. 440
----------
1,374
----------
INSURANCE (2.4%):
10,000 Ohio Casualty 293
15,000 Progressive Corp. 566
----------
859
----------
MACHINE TOOLS (8.3%):
15,750 Bearings, Inc. 488
17,000 Cincinnati Milacron, Inc. 455
37,050 Commercial Intertech Corp. 820
46,500 Gorman Rupp Co. 703
8,250 LDI Corp.(c) 27
5,000 Monarch Machine Tool Co. 49
25,000 Telxon Corp. 393
----------
2,935
----------
MANUFACTURING (2.2%):
10,000 Parker-Hannifin Corp. 520
7,000 TRINOVA Corp. 243
----------
763
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
67
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
OHIO REGIONAL STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
METALS (1.0%):
10,000 Brush Wellman, Inc. $ 197
5,000 Cold Metal Products, Inc.(c) 34
10,000 Park-Ohio Industries, 114
Inc.(c)
----------
345
----------
OFFICE EQUIPMENT & SUPPLIES (2.7%):
23,000 Diebold, Inc. 955
----------
OIL & GAS EXPLORATION (1.8%):
33,000 USX -- Marathon Group 619
----------
PAINT, VARNISHES & ENAMELS (1.4%):
14,000 Sherwin Williams Co. 499
----------
POLLUTION CONTROL SERVICES (0.7%):
51,100 Mid American Waste
Systems(c) 243
----------
PRECISION INSTRUMENTS (1.4%):
30,000 Keithley Instruments, Inc. 506
----------
PRINTING (0.3%):
20,000 Multi-Color Corp.(c) 98
----------
PUBLISHING (2.0%):
25,000 Scripps (E.W.) Co. 716
----------
REAL ESTATE INVESTMENT TRUSTS (1.0%):
16,000 Health Care REIT, Inc. 348
----------
RESTAURANTS (3.3%):
30,000 Bob Evans Farms, Inc. 615
20,000 Frisch's Restaurants 185
22,000 Wendy's International 374
----------
1,174
----------
RETAIL (2.8%):
15,000 Consolidated Stores Corp.(c) 257
17,000 Fabri-Centers of America, 315
Inc.(c)
15,000 The Limited, Inc. 320
10,000 Value City Department
Stores,
Inc.(c) 90
----------
982
----------
RUBBER & RUBBER PRODUCTS (1.6%):
5,000 Cooper Tire & Rubber Co. 123
12,000 Goodyear Tire & Rubber Co. 456
----------
579
----------
SERVICES (NON-FINANCIAL) (0.3%):
4,200 Roto Rooter, Inc. 103
----------
SHIPPING (0.3%):
3,000 Oglebay Norton Co. 98
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
STEEL (3.3%):
35,000 Shiloh(c) $ 333
9,000 Timken Co. 363
25,000 Worthington Industries, Inc. 472
----------
1,168
----------
TEXTILE MANUFACTURING (1.1%):
25,000 Essef Corp.(c) 394
----------
TRANSPORTATION (1.6%):
22,500 Comair Holding, Inc. 567
----------
TRUCKS (1.2%):
20,000 Thor Industries, Inc. 418
----------
UTILITIES -- ELECTRIC (3.2%):
14,000 American Electric Power 459
22,500 D.P.L., Inc. 470
10,000 Ohio Edison 200
----------
1,129
----------
UTILITIES -- TELECOMMUNICATIONS (2.0%):
30,000 Cincinnati Bell 720
- ------------------------------------------------------------
TOTAL COMMON STOCKS 33,325
- ------------------------------------------------------------
- ----------------------------------------------
RIGHTS & WARRANTS (0.2%)
10,000 Cincinnati Microwave, 59
Inc.(c)
- ------------------------------------------------------------
TOTAL RIGHTS & WARRANTS 59
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (5.1%)
303,843 Federated Treasury 304
Obligation
1,476,549 Shearson U.S. Treasury Fund 1,476
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,780
- ------------------------------------------------------------
TOTAL (COST $24,640)(B) $ 35,164
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $35,183.
(b) 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 $ 12,135
Unrealized depreciation (1,611)
----------
Net unrealized appreciation $ 10,524
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
68
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
CORPORATE BONDS (0.1%)
FRANCE (0.1%):
1,313 Axa SA Convertible(c),
4.50%, 1/1/99 $ 78
- ----------------------------------------------------------
TOTAL CORPORATE BONDS 78
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (97.2%)
AUSTRALIA (1.0%):
Energy Sources
60,000 The Broken Hill Proprietary
Co., Ltd.(c) 873
- ----------------------------------------------------------
TOTAL AUSTRALIA 873
- ----------------------------------------------------------
BRITAIN (9.1%):
BANKS (1.3%):
231,000 Standard Chartered Bank 1,119
--------
BROADCASTING & PUBLISHING (1.2%):
78,400 Reed International 1,009
--------
BUSINESS & PUBLIC SERVICES (4.3%):
122,200 British Airport Authority 932
122,600 Cable Wireless 792
65,800 Carlton Communications Plc. 1,000
127,800 Reuters 972
--------
3,696
--------
OIL & GAS PRODUCTION (1.2%):
144,400 British Petroleum 1,040
--------
TELECOMMUNICATIONS EQUIPMENT (1.1%):
311,000 Vodafone 973
- ----------------------------------------------------------
TOTAL BRITAIN 7,837
- ----------------------------------------------------------
FINLAND (1.2%):
ELECTRONIC & ELECTRICAL (1.2%):
25,000 Nokia AB 1,022
- ----------------------------------------------------------
TOTAL FINLAND 1,022
- ----------------------------------------------------------
FRANCE (9.9%):
ADVERTISING (0.7%):
5,750 Euro RSCG Worldwide 634
--------
AUTOMOTIVE PARTS (1.3%):
18,700 Valeo 1,067
--------
ELECTRONIC & ELECTRICAL (2.3%):
680 LeGrand 987
13,300 Schneider 1,024
--------
2,011
--------
INSURANCE (1.2%):
19,700 Axa 1,040
--------
MANUFACTURING - CONSUMER GOODS (1.3%):
4,550 Pinault-Printemps 1,031
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RECREATION/OTHER CONSUMER GOODS (1.9%):
6,700 BIC Corp. $ 1,119
3,600 Castorama(c) 597
--------
1,716
--------
RETAIL (1.2%):
2,120 Carrefour 1,065
- ----------------------------------------------------------
TOTAL FRANCE 8,564
- ----------------------------------------------------------
GERMANY (7.6%):
BANKS (2.1%):
1,980 Depfa Bank 1,007
1,620 Deutsche Bank(c) 796
--------
1,803
--------
COSMETICS & RELATED (1.2%):
1,360 Beiersdorf AG 1,061
--------
ENGINEERING/INDUSTRIAL
CONSTRUCTION (1.0%):
2,620 AGIV 844
--------
HEALTH & PERSONAL CARE (1.1%):
1,260 Schering 938
--------
MACHINE TOOLS (1.1%):
3,550 Mannesmann 970
--------
UTILITIES - ELECTRIC (1.1%):
2,660 Veba 994
- ----------------------------------------------------------
TOTAL GERMANY 6,610
- ----------------------------------------------------------
HOLLAND (8.4%):
BREWERIES (1.0%):
6,400 Heineken Holdings 839
--------
COMPUTERS & PERIPHERALS (0.5%):
10,900 Getronics 447
--------
FOREST PRODUCTS (1.0%):
29,300 Koninklijke KNP 885
--------
INSURANCE (1.1%):
18,600 Internationale Nederlanden 982
--------
LEISURE (1.2%):
18,400 Polygram 1,040
--------
POLLUTION CONTROL SERVICES (1.0%):
7,500 Ver Ned Uitgevers(c) 840
--------
SERVICES (NON-FINANCIAL) (1.2%):
16,600 Randstad Holdings 996
--------
SHIPPING & SHIPBUILDING (1.0%):
32,600 IHC Caland 892
--------
WHOLESALE & INTERNATIONAL TRADE (0.4%):
4,500 Hagemeyer 389
- ----------------------------------------------------------
TOTAL HOLLAND 7,310
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
69
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
HONG KONG (5.3%):
BANKS (1.0%):
217,000 Guoco Group $ 824
--------
DIVERSIFIED (1.9%):
197,000 Hutchinson Whampoa 855
122,000 Swire Pacific "A" 816
--------
1,671
--------
RADIO & TELEVISION (0.8%):
179,000 Television Broadcast 666
--------
REAL ESTATE (1.6%):
3,000,000 China Resources 752
124,000 Henderson Land 639
--------
1,391
- ----------------------------------------------------------
TOTAL HONG KONG 4,552
- ----------------------------------------------------------
ITALY (1.8%):
AUTOMOBILES (0.4%):
37,800 Pininfarina 363
--------
INSURANCE (0.5%):
20,000 Assicurazioni Generali 481
--------
UTILITIES - TELECOMMUNICATIONS (0.9%):
282,000 Telecom Italia 751
- ----------------------------------------------------------
TOTAL ITALY 1,595
- ----------------------------------------------------------
JAPAN (33.3%):
AEROSPACE/DEFENSE (0.8%):
100,000 Mitsubishi Heavy Industry 726
--------
BANKS (4.0%):
62,000 Asahi Bank 797
32,000 Mitsubishi Bank 785
47,000 Sanwa Bank 1,027
38,000 Sumitomo Bank 823
--------
3,432
--------
BUILDING MATERIALS (0.9%):
22,000 Tostem Corp. 799
--------
BUSINESS & PUBLIC SERVICE (0.6%):
17,600 Mos Food Services 517
--------
CHEMICALS (1.6%):
36,000 Shin Etsu Chemical 698
127,000 Tosoh Corp.(c) 676
--------
1,374
--------
ELECTRICAL EQUIPMENT (3.5%):
7,300 Keyence(c) 779
14,000 Kyocera 1,083
28,000 Murata Manufacturing 1,126
--------
2,988
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ELECTRONIC & ELECTRICAL (5.2%):
52,000 Canon, Inc. $ 860
88,000 Hitachi, Ltd. 896
9,000 Riso Kagaku 614
25,000 Rohm Co., Ltd. 1,157
32,000 Tokyo Electron 998
--------
4,525
--------
ENGINEERING/INDUSTRIAL CONSTRUCTION (0.3%):
11,000 Kinden 219
--------
FINANCE (1.6%):
50,000 Daiwa Securities 631
12,000 Nichiei Co. 767
--------
1,398
--------
HOUSEHOLD GOODS (0.9%):
20,400 Amway Japan 760
--------
MANUFACTURING - CAPITAL GOODS (1.2%):
16,000 Secom & Co. 1,044
--------
MERCHANDISING (0.9%):
11,000 Seven-eleven Japan 792
--------
PHARMACEUTICALS (1.3%):
51,000 Yamanouchi Pharmaceutical 1,147
--------
RADIO & TELEVISION (0.9%):
3,270 Nippon Television Network 728
--------
REAL ESTATE (0.9%):
60,000 Sekisui House 793
--------
RUBBER & RUBBER PRODUCTS (1.0%):
56,000 Bridgestone 906
--------
STEEL (1.8%):
195,000 Nippon Steel 775
268,000 NKK Corp.(c) 750
--------
1,525
--------
STORAGE & WAREHOUSING (1.0%):
51,000 Mitsubishi Warehouse 880
--------
TELECOMMUNICATIONS EQUIPMENT (1.0%):
98 DDI Corp. 863
--------
UTILITIES - ELECTRIC (0.9%):
66,000 Matsushita Electric Works 793
--------
UTILITIES - TELECOMMUNICATIONS (1.0%):
99 Nippon Telephone & Telegraph 875
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
70
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
WHOLESALE & INTERNATIONAL TRADE (2.0%):
33,000 Canon Sales $ 872
122,000 Itochu Corp. 828
--------
1,700
- ----------------------------------------------------------
TOTAL JAPAN 28,784
- ----------------------------------------------------------
MALAYSIA (1.9%):
DIVERSIFIED (0.9%):
496,000 Renong Berhad 759
--------
FINANCIAL SERVICES (0.5%):
125,000 Hong Leong Credit 456
--------
FOREST PRODUCTS (0.5%):
99,000 Adkam Perdana 445
- ----------------------------------------------------------
TOTAL MALAYSIA 1,660
- ----------------------------------------------------------
NEW ZEALAND (1.1%):
FOREST PRODUCTS (1.1%):
338,000 Fletcher Challenge 910
- ----------------------------------------------------------
TOTAL NEW ZEALAND 910
- ----------------------------------------------------------
SINGAPORE (2.0%):
AIRLINES (1.0%):
84,000 Singapore Airlines, Series F 808
--------
BANKS (1.0%):
81,000 Overseas Chinese Banking
Corp. 884
- ----------------------------------------------------------
TOTAL SINGAPORE 1,692
- ----------------------------------------------------------
SPAIN (1.3%):
DIVERSIFIED (0.3%):
92,000 Cofir 299
--------
FOOD DISTRIBUTORS (1.0%):
48,600 Pryca 861
- ----------------------------------------------------------
TOTAL SPAIN 1,160
- ----------------------------------------------------------
SWEDEN (5.1%):
AUTOMOBILES (0.9%):
41,400 Volvo AB 777
--------
COSMETICS & RELATED (1.3%):
37,300 Astra A Free(c) 1,088
--------
ELECTRONIC & ELECTRICAL (0.9%):
41,000 Allgon 804
--------
MANUFACTURING (1.2%):
16,000 Ericsson (L.M.) Series B 1,059
--------
MEDICAL SUPPLIES (0.8%):
45,000 Arjo 700
- ----------------------------------------------------------
TOTAL SWEDEN 4,428
- ----------------------------------------------------------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
SWITZERLAND (4.3%):
DIVERSIFIED (0.9%):
750 Baer Holdings Bearer $ 788
--------
FOOD PROCESSING (1.1%):
960 Nestle Registered 941
--------
PHARMACEUTICALS (1.1%):
165 Roche Holdings AG
Genusscheine NPV 995
--------
UTILITIES - ELECTRIC (1.2%):
1,020 Brown Boveri, Series A 1,010
- ----------------------------------------------------------
TOTAL SWITZERLAND 3,734
- ----------------------------------------------------------
UNITED STATES (3.9%):
BROKERAGE FIRMS & SECURITY DEALERS (0.3%):
8,700 Brazilian Investment Co. 273
--------
INDUSTRIAL SERVICES (0.9%):
750,000 China North Industries(c) 750
--------
INVESTMENT FUNDS - CLOSED END (2.2%):
17,000 Chile Fund 805
12,700 India Magnum Fund NV A(c) 722
122 Korea Eurofund(c) 435
--------
1,962
--------
UTILITIES - TELECOMMUNICATIONS (0.5%):
25,700 Videotron Holdings PLC.(c) 402
- ----------------------------------------------------------
TOTAL UNITED STATES 3,387
- ----------------------------------------------------------
TOTAL COMMON STOCKS 84,118
- ----------------------------------------------------------
- ---------------------------------------------------------
INVESTMENT COMPANIES (0.8%)
667,222 Shearson U.S. Treasury Fund 667
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 667
- ----------------------------------------------
TOTAL (COST $80,808)(B) $ 84,863
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $86,530.
(b) 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 $ 6,255
Unrealized depreciation (2,199)
-------
Net unrealized
appreciation $ 4,056
========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
71
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
- ---------------------------------------------------------
FORWARD CURRENCY CONTRACTS
<TABLE>
<CAPTION>
CONTRACT
VALUE
CONTRACT (U.S. APPRECIATION DELIVERY
CURRENCY PRICE DOLLARS) (DEPRECIATION) DATE
- ----------------------------------------- --------- ---------- -------- -------
<S> <C> <C> <C> <C>
CURRENCY SOLD:
Japanese Yen 84.125032 $ (258,668) $ (331) 5/2/95
---------- --------
Total currency sold $ (258,668) $ (331)
========= ========
CURRENCY PURCHASED:
Dutch Guilder 1.514748 $ 258,668 $ (5,760) 5/2/95
---------- --------
Total currency purchased $ 258,668 $ (5,760)
========= ========
Net payable for forward currency
contracts purchased and sold $ (6,091)
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
72
<PAGE>
Notes to Financial Statements
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
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, Tax-Free Money Market Fund, Limited
Term Income Fund, Government Mortgage Fund, Intermediate Income Fund, Investment
Quality Bond Fund, Ohio Municipal Bond Fund, Balanced Fund, Stock Index Fund,
Value Fund, Diversified Stock Fund, Growth Fund, Special Value Fund, Special
Growth Fund, Ohio Regional Stock Fund, and International Growth Fund.
2. SIGNIFICANT ACCOUNTING POLICIES:
SECURITIES VALUATION:
- --------------------
Investments of the U.S. Government Obligations Fund, the Prime Obligations Fund
and the Tax-Free 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, the
Government Mortgage Fund, the Intermediate Income Fund, the Investment Quality
Bond Fund, the Ohio Municipal Bond Fund, the Balanced Fund, the Stock Index
Fund, the Value Fund, the Diversified Stock Fund, the Growth Fund, the Special
Value Fund, the Special Growth Fund, the Ohio Regional Stock Fund, and the
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 in the Balanced Fund and the
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 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.
The Funds isolate that portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuation arising
from changes in market prices of securities held.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, purchases
and sales of foreign currencies, currency gains or losses realized between the
trade and settlement dates on securities transactions and the difference between
the amount of interest recorded on a Fund's books, 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 the
exchange rate.
73
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
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
an unrealized gain or loss. When the Forward is closed, the Fund records a
realized gain or loss equal to the difference between the value at the time it
was opened and the value at the time it was closed. 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:
- -----------------
Each 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. The 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 move 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; during the period
between purchase and settlement no payment is made and no interest accrues. A
segregated account is established and maintains cash and marketable securities
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.
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 and distributable net realized capital gains, if any, are declared and
distributed at least annually for the Stock Index Fund, the Value Stock Fund,
the Diversified Stock Fund, the Growth Fund, the Special Value Fund, the Special
Growth Fund, the Ohio Regional Stock Fund, and the International Growth Fund.
Dividends from net investment income are declared and paid monthly and
distributable net realized capital gains, if any, are declared and distributed
at least annually for the Limited Term Income Fund, the Government Mortgage
Fund, the Intermediate Income Fund, the Investment Quality Bond Fund, the Ohio
Municipal Bond Fund, and the Balanced Fund.
74
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
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, 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.
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.
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the six
months ended April 30, 1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Limited Term Income Fund............. $108,053,386 $ 27,036,296
Government Mortgage Fund............. $ 34,141,401 $ 41,957,068
Intermediate Income Fund............. $ 45,696,863 $ 32,245,604
Investment Quality Bond Fund......... $ 53,718,571 $ 49,102,816
Ohio Municipal Bond Fund............. $ 35,466,334 $ 36,043,062
Balanced Fund........................ $ 79,112,448 $ 62,383,648
Stock Index Fund..................... $ 20,540,742 $ 9,328,966
Value Fund........................... $ 63,655,162 $ 17,814,533
Diversified Stock Fund............... $142,784,968 $116,116,919
Growth Fund.......................... $ 1,331,614 $ 25,478,542
Special Value Fund................... $ 47,216,203 $ 23,119,184
Special Growth Fund.................. $ 7,686,792 $ 11,925,297
Ohio Regional Stock Fund............. $ 1,531,661 $ 2,110,048
International Growth Fund............ $ 30,178,013 $ 19,936,541
</TABLE>
4. 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 and sub-investment advisory agreements, SAM is entitled to receive
fees based on a percentage of the average net assets of the Funds. Society
serves the Funds as custodian for all funds except the International Growth
Fund. Society received no fees from the Funds for providing custodian services
except for reimbursement of actual out-of-pocket expenses incurred. During the
year ended October 31, 1994, KeyCorp made a capital contribution of $2,506,027
to the Prime Obligations Fund.
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,
75
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
and assisting shareholders in changing dividend options, account designations
and addresses. For providing such services, Society may receive a fee computed
daily as a percentage of the average net assets of the Funds.
Affiliates of The BISYS Group, Inc. ("BISYS") serve as the Fund's administrator
and distributor. Effective March 29, 1995, Concord Holding Corporation (the
"Administrator"), an indirect, wholly-owned subsidiary of BISYS, became the
administrator to the Funds and Victory Broker Dealer Services, Inc. (the
"Distributor") became the distributor to the Funds. Prior to March 29, 1995,
other affiliates of BISYS served as the Fund's administrator and distributor.
Certain officers of the Funds are affiliated with BISYS. Such officers receive
no direct payments from the Funds for serving as officers of the Funds. Such
officers are paid no fees directly by the Funds for serving as officers of the
Funds.
Under the terms of the administration agreement, the Administrator's fees
are computed daily as a percentage of the average net assets of the Funds. The
Distributor receives no fees from the Funds for providing distribution services
and is entitled to receive commissions on sales of shares of the variable net
asset value funds. For the six months ended April 30, 1995, the Distributor
received $171,000 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 $74,000 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 net assets.
Fees may be voluntarily reduced to assist the Funds in maintaining competitive
expense ratios.
Information regarding related party transactions is as follows for the six
months ended April 30, 1995:
<TABLE>
<CAPTION>
U.S. TAX-FREE
GOVERNMENT PRIME MONEY
OBLIGATIONS OBLIGATIONS MARKET
FUND FUND FUND
-------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .35% .35% .35%
Voluntary fee reductions $ 16,151
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15%
Voluntary fee reductions $ 260
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $140,500 $193,436 $ 67,915
</TABLE>
<TABLE>
<CAPTION>
LIMITED INVESTMENT
TERM GOVERNMENT INTERMEDIATE QUALITY
INCOME MORTGAGE INCOME BOND
FUND FUND FUND FUND
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .50% .50% .75% .75%
Voluntary fee reductions $ 11,015 $ 12,348 $160,661 $122,074
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15% .15%
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 38,451 $ 48,386 $ 39,466 $ 32,928
</TABLE>
76
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO
MUNICIPAL STOCK
BOND BALANCED INDEX
FUND FUND FUND
-------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .60% 1.00% .60%
Voluntary fee reductions $ 85,187 $293,792 $ 72,524
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15%
Voluntary fee reductions $ 70,657
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 20,140 $ 47,761 $ 10,560
Voluntary fee reductions: $ 17,703
</TABLE>
<TABLE>
<CAPTION>
DIVERSIFIED
VALUE STOCK GROWTH
FUND FUND FUND
-------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) 1.00% .65% 1.00%
Voluntary fee reductions $434,192 $ 58,363 $ 93,184
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15%
Voluntary fee reductions $ 303 $ 240
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 70,468 $ 84,805 $ 16,607
</TABLE>
<TABLE>
<CAPTION>
OHIO
SPECIAL SPECIAL REGIONAL INTERNATIONAL
VALUE GROWTH STOCK GROWTH
FUND FUND FUND FUND
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) 1.00% 1.00% .75% 1.10%
Voluntary fee reductions $192,792 $ 39,953 $ 7,022 $ 61,413
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15% .15%
Voluntary fee reductions $ 144
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 40,759 $ 7,725 $ 11,588 $ 59,708
</TABLE>
77
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
5. 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>
Aggressive Growth Portfolio1 to Special Growth Fund
Corporate Bond Portfolio1 to Investment Quality Bond Fund
Equity Income Portfolio1 to Value Fund
Equity Portfolio1 to Growth Fund
Foreign Markets Portfolio1 to International Growth Fund
Short-Term Government Income Portfolio1 to Limited Term Income Fund
U.S. Treasury Money Market Portfolio1 to U.S. Government Obligations Money Fund
</TABLE>
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 Portfolio1 to Financial Reserves Fund
Fund for Income Portfolio to Fund for Income
Government Bond Portfolio1 to Government Bond Fund
Institutional Money Market Portfolio1 to Institutional Money Market Fund
National Municipal Bond Portfolio1 to National Municipal Bond Fund
New York Tax-Free Portfolio to New York Tax-Free Fund
Ohio Municipal Money Market Portfolio1 to Ohio Municipal Money Market 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 acquisition was
accomplished by a tax-free exchange of 858,745 shares of the Growth Fund for the
882,905 shares of the Society Earnings Momentum Fund outstanding on March 17,
1994. These share transactions are included in the Growth Fund's statement of
changes in net assets. The Society Earnings Momentum Fund's net assets at March
17, 1994 of approximately $8,794,000, including $649,000 of unrealized
appreciation, were combined with those of the Growth Fund. The combined net
assets immediately after the acquisition were approximately $70,777,000.
- ---------------
1 Not included in this report.
78
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION:
The Victory Funds (the "Fund"), organized as a Massachusetts business trust on
January 6, 1982, is an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"). The Fund's
Declaration of Trust permits the Board of Trustees (the "Trustees") to create an
unlimited number of Portfolios. Victory New York Tax-Free Portfolio and the Fund
for Income Portfolio are two series (of a total of 14 series) of the Fund. Each
Portfolio's capitalization consists of an unlimited number of shares of
beneficial interest without par value.
On April 30, 1994, all of the assets and liabilities of the Investors Preference
New York Tax-Free Fund, Inc. ("IPNY") and the Investors Preference Fund for
Income, Inc. ("IPFFI") were acquired by the New York Tax-Free Portfolio and the
Fund for Income Portfolio, respectively, of the Fund pursuant to separate
Agreements and Plans of Reorganization approved by the shareholders of each IPNY
and IPFFI.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies for New York
Tax-Free Portfolio and Fund for Income Portfolio (the "Portfolios").
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles.
SECURITIES VALUATION:
- --------------------
The securities of the Fund for Income Portfolio that are traded on an exchange
or on the over-the-counter market are valued based upon the last sale price, or
if no sale has occurred, at the closing bid price. Securities for which market
quotations are not readily available are valued at the closing over-the counter
bid price, if available, or at their fair value as determined in good faith by
management following procedures approved by the Fund's Trustees. Short term debt
instruments with remaining maturities of 60 days or less at the time of purchase
are valued at amortized cost or original cost plus accrued interest, both of
which approximates market value.
The securities of New York Tax-Free Portfolio are valued by a pricing service
based upon a computerized matrix system or appraisals, in each case in reliance
upon information concerning market transactions and quotations from recognized
municipal securities dealers. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by
management following procedures approved by the Fund's Trustees.
REPURCHASE AGREEMENTS:
- -----------------------
When each Portfolio enters into a repurchase agreement, the repurchase price of
the securities will generally equal the amount paid by each Portfolio plus a
negotiated interest amount. The seller under the repurchase agreement will be
required to provide securities (collateral) to each Portfolio whose value will
be at least equal to the repurchase agreement amount. Each Portfolio monitors
the value of the collateral on a daily basis, and if the value of the collateral
falls below required levels, each Portfolio intends to seek additional
collateral from the seller to terminate the repurchase agreements. If the seller
defaults, each Portfolio would suffer a loss to the extent that the proceeds
from the sale of the underlying securities were less than the repurchase price.
Any such loss would be increased by any cost incurred on the disposing of such
securities. A repurchase agreement entered into by each Portfolio will be
limited to transactions with broker-dealers or domestic banks believed to
present minimal credit risks, and each Portfolio will take delivery of all
securities underlying the repurchase agreement until such agreement expires.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTION:
- ----------------------------------------------
The New York Tax-Free Portfolio may engage in when-issued or delayed delivery
transactions. To the extent the Portfolio engages in such transactions, it will
do so for the purpose of acquiring portfolio securities consistent with its
investment objectives and policies and not for the purpose of investment
leverage. The Portfolio will record a when-issued security and the related
liability on the trade date. Until the securities are received and paid for, the
Portfolio will maintain security positions such that sufficient liquid assets
will be available to make payments for the securities purchased. Securities
purchased on a when-issued or delayed delivery basis are marked to market daily
and begin earning interest on settlement date.
79
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements--Continued
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
INCOME TAXES:
- -------------
It is the policy of each Portfolio 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.
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. 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.
DIVIDENDS TO SHAREHOLDERS:
- -------------------------
Dividends from net investment income are declared and paid monthly and
distributable net realized capital gains, if any, are declared and distributed
at least annually for the New York Tax-Free Portfolio and the Fund for Income
Portfolio.
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, 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.
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the six
months ended April 30, 1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
New York Tax-Free $ 1,117,454 $ 1,736,206
Fund for Income $ 7,973,666 $ 15,709,007
</TABLE>
4. RELATED PARTY TRANSACTIONS:
ADVISORY AGREEMENT:
- -------------------
Key Trust Company ("Key Trust") is the investment adviser for each Portfolio and
receives a fee based on average daily net assets at an annual rate of 0.55% and
0.50% for New York Tax-Free Portfolio and Fund for Income Portfolio,
respectively. For the six months ended April 30, 1995, Key Trust accrued $44,599
and $64,663 in advisory fees, of which $41,068 and $42,981 was voluntarily
waived, for New York Tax-Free Portfolio and Fund for Income Portfolio,
respectively.
ADMINISTRATION AGREEMENT:
- -------------------------
Concord Financial Group (the "Administrator" or "Concord") is the Administrator
to each Portfolio under an Administration Agreement with respect to each
Portfolio. The Administrator receives an annual fee of 0.15% of each Portfolio's
average net assets for services performed under each Portfolio's Administration
Agreement. For the six months ended April 30, 1995, the administrator accrued
$12,094 and $19,284 from the New York Tax-Free Portfolio and Fund for Income
Portfolio, respectively, in administration fees, none of which were waived.
Effective March 29, 1995 Concord became BISYS Investment Services Inc., a wholly
owned subsidiary of The BISYS Group, Inc. ("BISYS"). BISYS serves as
administrator on substantially identical terms as described above.
80
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements--Continued
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
DISTRIBUTION AGREEMENT:
- -----------------------
Victory Broker Dealer Services, Inc. (the "Distributor"), an affiliate of the
Administrator, serves as Distributor to each
Portfolio. The Distributor sells shares of the Portfolios as agent on behalf of
the Fund at no cost to the Portfolios. The Fund has adopted a Distribution and
Service Plan (the "Plan") for the Class A shares of New York Tax-Free Portfolio
and The Fund for Income Portfolio under Rule 12b-1 under the Investment Company
Act of 1940. Under the Plan, the Adviser or Administrator may use their fee
revenues, or other resources to pay expenses associated with activities
primarily intended to result in the sale of the shares of the Portfolios. The
Fund has adopted a Distribution Plan for Class B shares of New York Tax-Free
Portfolio to compensate the Distributor for its services and costs in
distributing Class B shares and servicing accounts. Under the Distribution Plan,
the Fund pays the Distributor an annual "asset-based sales charge" of 0.75% per
year on Class B shares that are outstanding for six years or less. This fee is
computed on the average annual net assets of Class B shares, determined as of
the close of each regular business day.
* Directors fees and expenses for the six months ended April 30, 1995 of $777
for New York Tax-Free Portfolio and $126 for Fund for Income Portfolio were paid
to directors having no affiliation with the Fund other than in their capacity as
directors.
5. MERGERS:
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 Portfolio of the Victory Funds to a
corresponding investment fund of the Victory Portfolios in exchange for the
assumption of liabilities of each Victory Fund. The following Portfolios of The
Victory Funds merged into existing funds of The Victory Portfolios:
<TABLE>
<CAPTION>
THE VICTORY FUNDS THE VICTORY PORTFOLIOS
- ---------------------------------------- ------------------------------------------------------
<S> <C> <C>
Aggressive Growth Portfolio1 to Special Growth Fund
Corporate Bond Portfolio1 to Investment Quality Bond Fund
Equity Income Portfolio1 to Value Fund
Equity Portfolio1 to Growth Fund
Foreign Markets Portfolio1 to International Growth Fund
Short-Term Government Income Portfolio1 to Limited Term Income Fund
U.S. Treasury Money Market Portfolio1 to U.S. Government Obligations Money Fund
</TABLE>
Additionally, the following series of The Victory Funds merged into newly
created series of The Victory Portfolios:
<TABLE>
<CAPTION>
THE VICTORY FUNDS THE VICTORY PORTFOLIOS
- ---------------------------------------- ------------------------------------------------------
<S> <C> <C>
Financial Reserves Portfolio1 to Financial Reserves Fund
Fund for Income Portfolio to Fund for Income
Government Bond Portfolio1 to Government Bond Fund
Institutional Money Market Portfolio1 to Institutional Money Market Fund
National Municipal Bond Portfolio1 to National Municipal Bond Fund
New York Tax-Free Portfolio to New York Tax-Free Fund
Ohio Municipal Money Market Portfolio1 to Ohio Municipal Money Market Fund
</TABLE>
As of June 2, 1995 the fund accounting for the Portfolios is being performed by
BISYS Fund Services Ohio, Inc., a wholly owned subsidiary of the The BISYS
Group, Inc.
6. SPECIAL SHAREHOLDER MEETING:
On April 28, 1995, a special meeting of the shareholders of The Victory Funds
was held to consider various proposals, including, among other things, the
approval of an Agreement and Plan of Reorganization whereby the 14 series
portfolios of The Victory Funds were reorganized into corresponding series of
The Victory Portfolios, the election of certain nominees to serve on the Board
of Trustees of The Victory Funds and the ratification of the selection of
Coopers & Lybrand L.L.P. as independent auditors for each portfolio of The
Victory Funds2.
- ---------------
1 Not included in this report.
2 The April 28, 1995 meeting was adjourned until May 26, 1995 with respect to
the New York Tax Free and Fund For Income Portfolios due to a lack of a quorum
on such date. On May 26, 1995, a quorum was present and voted the shares of
such portfolios as indicated.
81
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements--Continued
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
Election of Trustees -- The shareholders of The Victory Funds, as a group, were
requested to direct the proxies to vote for or withhold authority to vote for
the election of certain individuals to serve as Trustees of The Victory Funds.
The shareholders of The Victory Funds approved each nominee. The results of such
solicitation are as follows:
<TABLE>
<CAPTION>
NOMINEE VOTES FOR VOTES WITHHELD
------------------------------------------ -------------- ---------------
<S> <C> <C>
Robert G. Brown 1,306,537,258 38,671,464
Edward P. Cambell 1,308,422,096 36,786,627
Harry Gazelle 1,307,262,991 37,945,462
Thomas F. Morrissey 1,310,379,551 34,828,901
Stanley I. Landgraf 1,308,450,924 36,757,800
Leigh A. Wilson 1,310,734,626 34,474,098
H. Patrick Swygert 1,311,252,568 34,456,155
</TABLE>
Agreement and Plan of Reorganization -- the shareholders of each Portfolio
approved an Agreement and Plan of Reorganization with respect to each Portfolio
as follows:
<TABLE>
<CAPTION>
PORTFOLIO IN FAVOR OPPOSED ABSTAIN
------------------------------------ ------------ ---------- -----------
<S> <C> <C> <C>
NY Tax Free-Class A 871,430 15,011 37,413
NY Tax Free-Class B 29,267 -- 1,666
Fund For Income 1,834,471 11,902 105,207
</TABLE>
Reclassification and Changes in Fundamental Policies -- The shareholders of the
below-listed Portfolios approved certain reclassifications and changes in
fundamental policies of the relevant Portfolio (and the successor Portfolio
post-reorganization) by the following votes:
<TABLE>
<CAPTION>
PORTFOLIO IN FAVOR OPPOSED ABSTAIN
------------------------------------ ------------ ---------- -----------
<S> <C> <C> <C>
NY Tax Free-Class A 871,550 15,011 37,293
NY Tax Free-Class B 29,267 -- 1,666
Fund for Income 1,803,283 40,439 107,858
</TABLE>
Ratification of Independent Auditors -- the shareholders of each Portfolio
ratified the appointment of Coopers & Lybrand L.L.P. as independent auditors for
each Portfolio for the next fiscal year as follows:
<TABLE>
<CAPTION>
PORTFOLIO IN FAVOR OPPOSED ABSTAIN
------------------------------------ ------------ ---------- -----------
<S> <C> <C> <C>
NY Tax Free-Class A 891,636 727 31,490
NY Tax Free-Class B 29,267 -- 1,666
Fund For Income 1,860,529 7,123 83,928
</TABLE>
- --------------------------------------------------------------------------------
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Fund. The report is not
authorized for distribution to prospective investors in the Fund, unless
preceded or accompanied by an effective prospectus. Neither the Fund nor Victory
Broker Dealer Services, Inc. is a bank and Fund shares are not backed or
guaranteed by any bank or insured by the FDIC, the Federal Reserve Board, or any
other agency. Victory Broker Dealer Services, Inc., which distributes The
Victory Funds, is not affiliated with Key Trust Company. Investing in mutual
funds involves risks, including the possible loss of principal amount invested.
An investment in a money market Portfolio is not insured or guaranteed by the
U.S. Government, and there can be no assurance that a money market Portfolio
will maintain a stable $1.00 share price.
- --------------------------------------------------------------------------------
82
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT OBLIGATIONS FUND
---------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.025 0.032 0.026 0.036 0.060 0.076
Distributions
Net investment income (0.025) (0.032) (0.026) (0.036) (0.060) (0.076)
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Total Return 2.57%(a) 3.30% 2.62% 3.66% 6.14% 7.83%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $524,143 $412,048 $515,734 $579,836 $430,248 $376,021
Ratio of expenses to
average net assets 0.62%(b) 0.63% 0.60% 0.60% 0.60% 0.62%
Ratio of net investment income
to average net assets 5.15%(b) 3.20% 2.57% 3.50% 5.92% 7.56%
Ratio of expenses to
average net assets* 0.80%
Ratio of net investment income
to average net assets* 3.03%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
<TABLE>
<CAPTION>
PRIME OBLIGATIONS FUND
---------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.025 0.035 0.030 0.037 0.061 0.078
Net realized losses on investments (0.003)
- ----------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 0.025 0.032 0.030 0.037 0.061 0.078
- ----------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.025) (0.035) (0.030) (0.037) (0.061) (0.078)
Capital transactions 0.003
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Total Return 2.53%(a) 3.57% 3.05% 3.77% 6.32% 8.06%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $430,000 $782,303 $720,024 $524,338 $442,263 $444,238
Ratio of expenses to average net assets 0.69%(b) 0.62% 0.60% 0.61% 0.62% 0.62%
Ratio of net investment income to
average net assets 5.02%(b) 3.52% 2.96% 3.68% 6.14% 7.76%
Ratio of expenses to average net
assets* 0.79%
Ratio of net investment income to
average net assets* 3.35%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
83
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND
----------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 100
- -----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.016 0.021 0.020 0.027 0.043 0.054
Distributions
Net investment income (0.016) (0.021) (0.020) (0.027) (0.043) (0.054)
- -----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Total Return 1.66%(a) 2.17% 2.06% 2.77% 4.44% 5.48%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 209,606 $198,561 $189,351 $151,012 $129,601 $134,652
Ratio of expenses to average net assets 0.61%(b) 0.60% 0.59% 0.61% 0.62% 0.63%
Ratio of net investment income to
average net assets 3.32%(b) 2.14% 2.04% 2.70% 4.29% 5.32%
Ratio of expenses to average net
assets* 0.63%(b) 0.79% 0.60%
Ratio of net investment income to
average net assets* 3.30%(b) 1.95% 2.02%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
84
<PAGE>
THE VICTORY FUNDS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK TAX-FREE PORTFOLIO
-----------------------------------------------------------------------------------
CLASS A
-------------------------------------------------
CLASS B PERIOD
----------------------------- FROM
PERIOD FROM JANUARY 1,
SEPTEMBER 26, 1994 TO YEARS ENDED
1994 TO OCTOBER DECEMBER 31,
OCTOBER 31, 31, -------------------
1994 SIX MONTHS 1994 1993 1992
------------- ENDED ---------- ------- -------
APRIL 30,
1995
----------
SIX MONTHS (UNAUDITED)
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 12.39 $12.62 $ 12.39 $ 13.54 $ 12.76 $ 12.50
- -------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.31 0.07 0.32 0.57 0.70 0.74
Net realized and unrealized
gains (losses) on
investments 0.27 (0.23) 0.30 (1.15) 0.84 0.26
- -------------------------------------------------------------------------------------------------------------------------
Total from investment
activities 0.58 (0.16) 0.62 (0.58) 1.54 1.00
- -------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.30) (0.07) (0.33) (0.57) (0.70) (0.74)
Net realized gains (0.17) -- (0.17) -- (0.06) --
- -------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.47) (0.07) (0.50) (0.57) (0.76) (0.74)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.50 $12.39 $ 12.51 $ 12.39 $ 13.54 $ 12.76
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charge) 4.80%(b) (1.25)%(b) 5.16%(b) (4.31)%(b) 12.34% 8.26%
RATIOS -- SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $ 834 -- $ 15,974 $ 17,840 $28,530 $26,034
Ratio of expenses to average net
assets 2.72%(c) 0.52%(c) 1.10%(c) 0.91%(c) 0.87% 0.66%
Ratio of net investment income to
average net assets 9.48%(c) 5.94%(c) 5.18%(c) 5.33%(c) 5.28% 5.89%
Ratio of expenses to average net
assets* 3.07%(c) 0.86%(c) 1.45%(c) 1.25%(c) 0.96% 0.96%
Ratio of net investment income to
average net assets* 9.13%(c) 5.60%(c) 4.83%(c) 4.99%(c) 5.19% 5.59%
Portfolio turnover rate 17.00% 18.00% 17.00% 18.00% 12.00% 14.00%
<CAPTION>
PERIOD FROM
FEBRUARY 11,
1991 TO
DECEMBER 31,
1991(A)
------------
<S> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 12.00
- ----------------------------------
Investment Activities
Net investment income 0.64
Net realized and unrealized
gains (losses) on
investments 0.50
- ----------------------------------
Total from investment
activities 1.14
- ----------------------------------
Distributions
Net investment income (0.64)
Net realized gains --
- ----------------------------------
Total Distributions (0.64)
- ----------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.50
- ----------------------------------
Total Return (excludes sales
charge) 11.06%(b)
RATIOS -- SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $ 20,995
Ratio of expenses to average net
assets 0.45%(c)
Ratio of net investment income to
average net assets 6.28%(c)
Ratio of expenses to average net
assets* 0.95%(c)
Ratio of net investment income to
average net assets* 5.78%(c)
Portfolio turnover rate 61.00%
</TABLE>
- ---------------
*During the period, certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
FUND FOR INCOME PORTFOLIO
--------------------------------------------------------------------------------------
PERIOD FROM
FEBRUARY 1,
1994 TO YEARS ENDED JANUARY 31,
OCTOBER 31, -------------------------------------------------------
1994 1994 1993 1992 1991 1990
SIX MONTHS ----------- ------- ------- ------- ------- -------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.43 $ 10.14 $ 10.57 $ 10.55 $ 10.19 $ 9.90 $ 9.73
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (0.05) 0.52 0.80 0.80 0.85 0.91 0.93
Net realized and unrealized gains
(losses) on investments 0.58 (0.71) (0.41) 0.06 0.36 0.29 0.17
- ----------------------------------------------------------------------------------------------------------------------------------
Total from investment activities 0.53 (0.19) 0.39 0.86 1.21 1.20 1.10
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.35) (0.52) (0.80) (0.80) (0.85) (0.91) (0.93)
Net realized gains -- -- (0.02) (0.04) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.35) (0.52) (0.82) (0.84) (0.85) (0.91) (0.93)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.61 $ 9.43 $ 10.14 $ 10.57 $ 10.55 $ 10.19 $ 9.90
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charge) 5.70%(a) (1.99)%(a) 3.75% 8.45% 12.34% 12.75% 11.77%
RATIOS -- SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $ 24,713 $29,358 $46,632 $55,075 $58,055 $44,097 $35,788
Ratio of expenses to average net assets 0.57%(b) 1.12%(b) 1.13% 1.12% 0.92% 0.50% 0.29%
Ratio of net investment income to
average net assets 3.51%(b) 7.21%(b) 7.65% 7.56% 8.18% 9.15% 9.34%
Ratio of expenses to average net assets* 0.74%(b) 1.26%(b)
Ratio of net investment income to
average net assets* 3.34%(b) 7.07%(b)
Portfolio turnover 27.00% 18.00% 47.00% 23.00% 24.00% 5.00% 5.00%
</TABLE>
- ---------------
*During the period, certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
85
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED TERM INCOME FUND
----------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.88 $ 10.53 $ 10.45 $ 10.33 $ 10.02 $ 10.04
- ---------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.27 0.54 0.57 0.64 0.73 0.76
Net realized and unrealized gains
(losses) on investments 0.11 (0.61) 0.08 0.13 0.31 (0.01)
- ---------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.38 (0.07) 0.65 0.77 1.04 0.75
- ---------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.28) (0.54) (0.57) (0.64) (0.73) (0.77)
Net realized gains (0.04) (0.01)
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions (0.28) (0.58) (0.57) (0.65) (0.73) (0.77)
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.98 $ 9.88 $ 10.53 $ 10.45 $ 10.33 $ 10.02
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 3.80%(a) (0.66)% 6.39% 7.77% 10.82% 7.75%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 168,112 $ 79,150 $ 81,771 $ 55,565 $ 43,763 $ 31,303
Ratio of expenses to average net
assets 0.77%(b) 0.79% 0.77% 0.78% 0.80% 0.82%
Ratio of net investment income to
average net assets 5.86%(b) 5.29% 5.49% 6.18% 7.20% 7.63%
Ratio of expenses to average net
assets* 0.79%(b) 0.97% 0.78%
Ratio of net investment income to
average net assets* 5.84%(b) 5.10% 5.48%
Portfolio turnover 24.49% 41.26% 50.27% 14.97% 9.79%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
<TABLE>
<CAPTION>
GOVERNMENT MORTGAGE FUND
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31, MAY 18, 1990
ENDED APRIL ---------------------------------------------- TO OCTOBER 31,
30, 1995 1994 1993 1992 1991 1990(A)
----------- -------- -------- -------- ------- --------------
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.33 $ 11.36 $ 11.07 $ 10.73 $ 10.18 $ 10.00
- --------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.36 0.68 0.66 0.74 0.80 0.35
Net realized and unrealized gains
(losses) on investments 0.32 (1.02) 0.32 0.34 0.55 0.18
- --------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.68 (0.34) 0.98 1.08 1.35 0.53
- --------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.37) (0.67) (0.66) (0.74) (0.80) (0.35)
Net realized gains (0.08) (0.02) (0.03)
- --------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.45) (0.69) (0.69) (0.74) (0.80) (0.35)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.56 $ 10.33 $ 11.36 $ 11.07 $ 10.73 $ 10.18
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 6.64%(b) (3.01)% 9.05% 10.34% 13.77% 5.37%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 143,435 $148,168 $132,738 $ 73,660 $42,616 $ 31,972
Ratio of expenses to average net
assets 0.77%(c) 0.76% 0.75% 0.77% 0.78% 0.82%(c)
Ratio of net investment income to
average net assets 6.99%(c) 6.38% 5.92% 6.82% 7.68% 7.98%(c)
Ratio of expenses to average net
assets* 0.79%(c) 0.96% 0.76%
Ratio of net investment income to
average net assets* 6.97%(c) 6.18% 5.92%
Portfolio turnover 24.12% 131.63% 50.18% 11.19% 20.70%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
86
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE INCOME FUND INVESTMENT QUALITY BOND FUND
---------------------------------- ----------------------------------
DECEMBER 10, DECEMBER 10,
1993 1993
TO OCTOBER 31, TO OCTOBER 31,
1994(A) 1994(A)
SIX MONTHS ENDED ---------------- SIX MONTHS ENDED ----------------
APRIL 30, APRIL 30,
1995 1995
---------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.25 $ 10.00 $ 9.10 $ 10.00
- -----------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.30 0.52 0.31 0.53
Net realized and unrealized gains
(losses) on investments 0.17 (0.76) 0.29 (0.92)
- -----------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.47 (0.24) 0.60 (0.39)
- -----------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.31) (0.51) (0.32) (0.51)
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.41 $ 9.25 $ 9.38 $ 9.10
- -----------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 5.07%(b) (2.48)%(b) 6.74%(b) (3.92)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $133,225 $112,923 $ 92,202 $ 94,685
Ratio of expenses to average net
assets 0.81%(c) 0.79%(c) 0.84%(c) 0.79%(c)
Ratio of net investment income to
average net assets 6.65%(c) 6.23%(c) 6.89%(c) 6.33%(c)
Ratio of expenses to average net
assets* 1.08%(c) 1.25%(c) 1.10%(c) 1.25%(c)
Ratio of net investment income to
average net assets* 6.38%(c) 5.77%(c) 6.63%(c) 5.87%(c)
Portfolio turnover 28.74% 55.06% 54.92% 89.92%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
OHIO MUNICIPAL BOND FUND
-----------------------------------------------------------------------------
YEARS ENDED OCTOBER 31, MAY 18, 1990
------------------------------------------ TO OCTOBER 31,
1994 1993 1992 1991 1990(A)
SIX MONTHS ------- ------- ------- ------ --------------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.33 $ 11.52 $ 10.52 $ 10.37 $10.06 $10.00
- ------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.26 0.49 0.52 0.60 0.65 0.28
Net realized and unrealized gains
(losses) on investments 0.52 (0.94) 1.00 0.15 0.31 0.04
- ------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.78 (0.45) 1.52 0.75 0.96 0.32
- ------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income 0.26 (0.49) (0.52) (0.60) (0.65) (0.26)
Net realized gains (0.25)
- ------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.26) (0.74) (0.52) (0.60) (0.65) (0.26)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.85 $ 10.33 $ 11.52 $ 10.52 $10.37 $10.06
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 7.67%(b) (4.08)% 14.75% 7.34% 9.87% 3.27%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $58,137 $57,704 $50,676 $17,676 $8,042 $6,315
Ratio of expenses to average net
assets 0.64%(c) 0.51% 0.42% 0.09% 0.01% 0.38%(c)
Ratio of net investment income to
average net assets 4.88%(c) 4.58% 4.77% 5.76% 6.39% 6.11%(c)
Ratio of expenses to average net
assets* 0.95%(c) 1.09% 0.86% 0.84% 0.82% 1.17%(c)
Ratio of net investment income to
average net assets* 4.58%(c) 4.01% 4.33% 5.01% 5.58% 5.32%(c)
Portfolio turnover 64.80% 52.59% 150.76% 47.28% 15.06% 17.62%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
87
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED FUND STOCK INDEX FUND VALUE FUND
--------------------------- -------------------------- ---------------------------
DECEMBER 10, DECEMBER 3, DECEMBER 3,
1993 TO 1993 TO 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 (A) ENDED 1994 (A)
------------ APRIL 30, ----------- APRIL 30, ------------
1995 1995
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.62 $ 10.00 $ 10.18 $ 10.00 $ 10.13 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.21 0.33 0.12 0.20 0.14 0.21
Net realized and unrealized gains
(losses) on investments 0.62 (0.39) 0.92 0.16 0.79 0.11
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.83 (0.06) 1.04 0.36 0.93 0.32
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.24) (0.32) (0.13) (0.18) (0.14) (0.19)
Net realized gains (0.17)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.24) (0.32) (0.13) (0.18) (0.31) (0.19)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.21 $ 9.62 $ 11.09 $ 10.18 $ 10.75 $ 10.13
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 8.77%(b) (0.57)%(b) 10.28%(b) 3.66%(b) 9.43%(b) 3.27%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $158,762 $127,285 $105,834 $ 89,686 $261,830 $188,184
Ratio of expenses to average net
assets 0.91%(c) 0.87%(c) 0.58%(c) 0.58%(c) 0.91%(c) 0.92%(c)
Ratio of net investment income to
average net assets 4.30%(c) 3.97%(c) 2.48%(c) 2.35%(c) 2.88%(c) 2.32%(c)
Ratio of expenses to average net assets* 1.32%(c) 1.49%(c) 0.92%(c) 1.10%(c) 1.29%(c) 1.48%(c)
Ratio of net investment income to
average net assets* 3.89%(c) 3.35%(c) 2.14%(c) 1.82%(c) 2.50%(c) 1.76%(c)
Portfolio turnover 45.32% 118.49% 11.06% 1.44% 8.95% 39.05%
</TABLE>
- ------------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
DIVERSIFIED STOCK FUND
---------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.68 $ 13.39 $ 12.16 $ 11.44 $ 9.25 $ 9.90
- -------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.14 0.25 0.18 0.19 0.23 0.26
Net realized and unrealized gains
(losses) on investments 1.05 0.64 1.50 1.11 2.20 (0.67)
- -------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.19 0.89 1.68 1.30 2.43 (0.41)
- -------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.15) (0.23) (0.21) (0.19) (0.24) (0.24)
Net realized gains (1.38) (1.37) (0.24) (0.39)
- -------------------------------------------------------------------------------------------------------------------
Total Distributions (1.53) (1.60) (0.45) (0.58) (0.24) (0.24)
- -------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.34 $ 12.68 $ 13.39 $ 12.16 $ 11.44 $ 9.25
- -------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 10.83%(a) 7.39% 14.04% 11.57% 27.50% (4.29)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $321,593 $263,227 $257,405 $227,839 $177,472 $121,754
Ratio of expenses to average net
assets 0.87%(b) 0.89% 0.89% 0.91% 0.91% 0.91%
Ratio of net investment income to
average net assets 2.35%(b) 2.06% 1.45% 1.63% 2.06% 2.75%
Ratio of expenses to average net
assets* 0.91%(b) 1.10% 0.90%
Ratio of net investment income to
average net assets* 2.31%(b) 1.86% 1.43%
Portfolio turnover 43.76% 103.62% 86.32% 74.83% 50.78% 63.10%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
88
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND SPECIAL VALUE FUND SPECIAL GROWTH FUND
--------------------------- --------------------------- ---------------------------
DECEMBER 3, DECEMBER 3, DECEMBER 3,
1993 TO 1993 TO 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 (A) ENDED 1994 (A)
------------ APRIL 30, ------------ APRIL 30, ------------
1995 1995
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.23 $ 10.00 $ 10.49 $ 10.00 $ 8.90 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.06 0.10 0.08 0.11 0.01 0.02
Net realized and unrealized gains
(losses) on investments 0.64 0.22 0.82 0.48 0.45 (1.10)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.70 0.32 0.90 0.59 0.46 (1.08)
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.06) (0.09) (0.08) (0.10) (0.01) (0.02)
Net realized gains (0.05) (0.05)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.11) (0.09) (0.13) (0.10) (0.01) (0.02)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.82 $ 10.23 $ 11.26 $ 10.49 $ 9.35 $ 8.90
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 6.91%(b) 3.22%(b) 8.65%(b) 5.92%(b) 5.20%(b) (10.81)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 43,861 $ 66,921 $153,591 $118,600 $ 19,386 $ 24,593
Ratio of expenses to average net
assets 1.03%(c) 0.94%(c) 1.01%(c) 1.00%(c) 1.16%(c) 0.98%(c)
Ratio of net investment income to
average net assets 1.11%(c) 1.10%(c) 1.57%(c) 1.23%(c) 0.25%(c) 0.24%(c)
Ratio of expenses to average net assets* 1.39%(c) 1.51%(c) 1.31%(c) 1.49%(c) 1.54%(c) 1.58%(c)
Ratio of net investment income
(loss) to average net assets* 0.75%(c) 0.52%(c) 1.27%(c) 0.74%(c) (0.14)%(c) (0.36)(c)
Portfolio turnover 2.56% 28.09% 18.88% 17.90% 39.58% 118.39%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
OHIO REGIONAL STOCK FUND
------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
--------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS ------- ------- ------- ------- --------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.56 $ 14.69 $ 12.12 $ 11.15 $ 6.75 $ 9.72
- -----------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.09 0.18 0.16 0.20 0.21 0.24
Net realized and unrealized gains
(losses) on investments 0.85 0.39 2.63 1.07 4.39 (2.98)
- -----------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.94 0.57 2.79 1.27 4.60 (2.74)
- -----------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.09) (0.17) (0.18) (0.21) (0.20) (0.23)
Net realized gains (0.74) (0.53) (0.04) (0.09)
- -----------------------------------------------------------------------------------------------------------------
Total Distributions (0.83) (0.70) (0.22) (0.30) (0.20) (0.23)
- -----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 14.67 $ 14.56 $ 14.69 $ 12.12 $ 11.15 $ 6.75
- -----------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 7.06%(a) 3.96% 23.16% 11.50% 68.68% (28.63)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $35,183 $33,965 $34,926 $36,115 $27,092 $ 13,039
Ratio of expenses to average net
assets 1.18%(b) 1.04% 1.04% 1.04% 1.08% 1.11%
Ratio of net investment income to
average net assets 1.27%(b) 1.27% 1.17% 1.73% 2.16% 2.66%
Ratio of expenses to average net
assets* 1.22%(b) 1.27% 1.06%
Ratio of net investment income to
average net assets* 1.22%(b) 1.04% 1.15%
Portfolio turnover 4.86% 14.38% 7.25% 7.56% 14.59% 11.17%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
89
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH FUND
-------------------------------------------------------------------------------
SIX MONTHS
ENDED YEARS ENDED OCTOBER 31, MAY 18, 1990
APRIL 30, -------------------------------------------- TO OCTOBER 31,
1995 1994 1993 1992 1991 1990(A)
----------- ------- -------- ------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.32 $ 11.93 $ 8.93 $ 9.20 $ 9.46 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (0.01) (0.03) (0.02) 0.51 0.09
Net realized and unrealized gains
(losses) on investments (0.79) 1.40 3.03 (0.17) (0.25) (0.55)
- ------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities (0.79) 1.39 3.00 (0.19) 0.26 (0.46)
- ------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.01) (0.52) (0.08)
Net realized gains (0.62) (0.07)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.91 $ 13.32 $ 11.93 $ 8.93 $ 9.20 $ 9.46
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) (5.82)%(b) 11.65% 33.59% (2.08)% 2.93% (4.54)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 86,530 $81,307 $ 30,629 $11,091 $ 5,682 $ 9,878
Ratio of expenses to average net
assets 1.51%(c) 1.48% 1.46% 1.56% 1.72% 1.70%(c)
Ratio of net investment income
(loss) to average net assets (0.29)%(c) (0.51)% (0.74)% (0.20)% 5.97% 2.51%%(c)
Ratio of expenses to average net
assets* 1.66%(c) 1.83% 1.63% 1.72%
Ratio of net investment loss to
average net assets* (0.45)%(c) (0.86)% (0.91)% (0.35)%
Portfolio turnover 26.04% 50.66% 45.43% 91.92% 102.53% 12.16%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations
(b) Aggregate.
(c) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
90
<PAGE>
[LOGO]
THE VICTORY FUNDS
1-800-539-FUND
RS/VP-001 5/95
<PAGE>
BULK RATE
U.S. POSTAGE
PAID
CLEVELAND, OH
Permit 469
[LOGO]
THE VICTORY FUNDS
1-800-539-FUND
RS/VP-001 5/95
<PAGE>
[This page left blank intentionally]
<PAGE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE VICTORY PORTFOLIOS
U.S. GOVERNMENT OBLIGATIONS FUND
February 1, 1996
This Statement of Additional Information is not a Prospectus, but
should be read in conjunction with the Prospectus of The Victory Portfolios -
The U. S. Government Obligations Fund, dated the same date as the date hereof
(the "Prospectus"). This Statement of Additional Information is incorporated by
reference in its entirety into the Prospectus. Copies of the Prospectus may be
obtained by writing The Victory Portfolios at Primary Funds Service Corporation,
P.O. Box 9741, Providence, RI 02940-9741, or by telephoning toll free
800-539-FUND or 800-539-3863.
Investment Policies and Limitations 1 INVESTMENT ADVISER
Valuation of Portfolio Securities 6 KeyCorp Mutual Fund Advisers, Inc.
Additional Purchase and
Redemption Information 7
Management of the Victory Portfolios 10 INVESTMENT SUB-ADVISER
Advisory and Other Contracts 19 Society Asset Management, Inc.
Additional Information 26
Independent Auditor's Report 31 ADMINISTRATOR
Financial Statements 31 Concord Holding Corporation
Appendix 32
DISTRIBUTOR
Victory Broker-Dealer Services, Inc.
TRANSFER AGENT
Primary Funds Services Corporation
CUSTODIAN
Key Trust Company of Ohio, N.A.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
The Victory Portfolios (the "Victory Portfolios") is an open-end
management investment company. The Victory Portfolios consist of twenty- eight
series of units of beneficial interest ("shares"), representing interests in
twenty- eight separate investment portfolios. This Statement of Additional
Information relates to The U.S. Government Obligations Fund (the "Fund") only.
Much of the information contained in this Statement of Additional Information
expands on subjects discussed in the Prospectus. Capitalized terms not defined
herein are used as defined in the Prospectus . No investment in shares of the
Fund should be made without first reading the Fund's Prospectus.
INVESTMENT POLICIES AND LIMITATIONS
Additional Information on Fund Instruments
The following policies supplement the investment objectives and
policies of the Fund as set forth in the Prospectus.
High Quality Investments . As noted in the Prospectus the Fund may
invest only in obligations determined by KeyCorp Mutual Fund Advisers, Inc.
("Key Advisers") or Society Asset Management, Inc. ( the "Sub-Adviser"), the
Victory Portfolios' Investment Adviser and Sub-Adviser, respectively, to present
minimal credit risks under guidelines adopted by the Victory Portfolios' Board
of Trustees (the "Board of Trustees" or the "Trustees").
Pursuant to Rule 2a-7 under the Investment Company Act of 1940, as
amended (the "1940 Act"), the Fund will maintain a dollar-weighted average
portfolio maturity which does not exceed 90 days.
Under the guidelines adopted by the Victory Portfolios' Trustees and in
accordance with Rule 2a-7 under the 1940 Act, Key Advisers or the Sub-Adviser
may be required to dispose of promptly an obligation held by the Fund in the
event of certain developments that indicate a diminution of the instrument's
credit quality, such as where an NRSRO downgrades an obligation below the
second highest rating category, or in the event of a default relating to the
financial condition of the issuer. In this regard, the Trustees have established
procedures designed to stabilize, to the extent reasonably possible, the price
per share of the Fund as computed for the purpose of distribution, redemption
and repurchase at $1.00. Such procedures will include review of the Fund's
portfolio holdings by the Trustees, at such intervals as they may deem
appropriate, to determine whether the net asset value of the Fund, calculated by
using readily available market quotations, deviates from $1.00 per share, and,
if so, whether such deviation may result in material dilution or is otherwise
unfair to existing shareholders (a "Material Deviation"). In the event the
Trustees determine that a Material Deviation exists, they will take such
corrective action as they regard as necessary and appropriate, including selling
portfolio instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity, withholding dividends, paying shareholder
redemption requests in portfolio securities at their then-current market value,
or establishing a net asset value per share by using readily available market
quotations.
The Appendix of this Statement of Additional Information identifies
each NRSRO which may be utilized by Key Advisers or the Sub-Adviser with regard
to portfolio investments for the Fund and provides a description of relevant
ratings assigned by each such NRSRO. A rating by an NRSRO may be utilized only
where the NRSRO is neither controlling, controlled by, or under common control
with the issuer of, or any issuer, guarantor, or provider of credit support for,
the instrument.
U.S. Government Obligations. The Fund may invest in obligations issued or
guaranteed by the U.S. Government, its agencies and instrumentalities.
Obligations of certain agencies and instrumentalities of the U.S. Government are
supported by the full faith and credit of the U.S. Treasury; others are
supported by the right of the issuer to borrow from the U.S. Treasury; others
are supported by the discretionary authority of the U.S. Government to purchase
the agency's obligations; and still others are supported only by the credit of
the agency or instrumentality. No assurance can be given that the U.S.
Government will provide financial support to U.S. Government-sponsored agencies
or instrumentalities if it is not obligated to do so by law. The Fund will
invest in the obligations of such agencies and instrumentalities only when Key
Advisers or the Sub-Adviser believes that the credit risk with respect thereto
is minimal.
Securities Lending. The Fund may lend its portfolio securities to
broker-dealers, banks or institutional borrowers of securities. The Fund must
receive a minimum of 100% collateral, plus any interest due in the form of cash
or U.S. Government securities. This collateral must be valued daily and should
the market value of the loaned securities increase, the borrower must furnish
additional collateral to the Fund . During the time portfolio securities are on
loan, the borrower will pay the Fund any dividends or interest paid on such
securities plus any interest negotiated between the parties to the lending
agreement. Loans will be subject to termination by the Fund or the borrower at
any time. While the Fund will not have the right to vote securities on loan, it
intends to terminate the loan and regain the right to vote if that is considered
important with respect to the investment. The Fund will only enter into loan
arrangements with broker-dealers, banks or other institutions which Key Advisers
or the Sub-Adviser has determined are creditworthy under guidelines established
by the Victory Portfolios' Trustees. The Fund intends to limit its securities
lending to 33 1/3% of total assets.
Other Investment Companies. The Fund may invest up to 5% of its total assets in
the securities of any one investment company, but may not own more than 3% of
the securities of any one investment company or invest more than 10% of its
total assets in the securities of other investment companies. Pursuant to an
exemptive order received by the Victory Portfolios from the Commission, the Fund
may invest in money market funds of the Victory Portfolios. Key Advisers and/or
the Sub-Adviser will waive its investment advisory fee as to all assets invested
in other investment companies. Because such other investment companies employ an
investment adviser, such investment by the Fund will cause shareholders to bear
duplicative fees, such as management fees.
Repurchase Agreements. Securities held by the Fund may be subject to repurchase
agreements. Under the terms of a repurchase agreement, the Fund would acquire
securities from financial institutions or registered broker-dealers deemed
creditworthy by Key Advisers or the Sub-Adviser pursuant to guidelines adopted
by the Victory Portfolios' Trustees, subject to the seller's agreement to
repurchase such securities at a mutually agreed upon date and price. The seller
is required to maintain the value of collateral held pursuant to the agreement
at not less than the repurchase price (including accrued interest). If the
seller were to default on its repurchase obligation or become insolvent, the
Fund would suffer a loss to the extent that the proceeds from a sale of the
underlying portfolio securities were less than the repurchase price, or to the
extent that the disposition of such securities by the Fund is delayed pending
court action. Repurchase Agreements are considered by the staff of the
Commission to be loans by the Fund.
Reverse Repurchase Agreements. The Fund may borrow funds for temporary
purposes by entering into reverse repurchase agreements in accordance with the
investment restrictions described below. Pursuant to such agreements, the Fund
would sell portfolio securities to financial institutions such as banks and
broker-dealers, and agree to repurchase them at a mutually agreed-upon date and
price. At the time the Fund enters into a reverse repurchase agreement, it will
place in a segregated custodial account assets (such as cash or other liquid
high-grade securities) consistent with such Fund's investment restrictions
having a value equal to the repurchase price (including the accrued interest);
the collateral will be marked-to-market on a daily basis, and will be
continuously monitored to ensure that such equivalent value is maintained.
Reverse repurchase agreements involve the risk that the market value of the
securities sold by the Fund may decline below the price at which the Fund is
obligated to repurchase the securities. Reverse repurchase agreements are
considered to be borrowings under the 1940 Act.
Government "Mortgage-backed" Securities. The Fund may invest in
obligations of certain agencies and instrumentalities of the U.S. Government.
Some such obligations, such as those issued by GNMA or the Export-Import Bank of
the United States, are supported by the full faith and credit of the U.S.
Treasury; others, such as those of FNMA, are supported by the right of the
issuer to borrow from the Treasury; others are supported by the discretionary
authority of the U.S. Government to purchase the agency's obligations; still
others, such as those of the Federal Farm Credit Banks or FHLMC, are supported
only by the credit of the instrumentality. No assurance can be given that the
U.S. Government would provide financial support to U.S. Government-sponsored
agencies and instrumentalities if it is not obligated to do so by law.
The principal governmental (i.e., backed by the full faith and credit
of the U.S. Government) guarantor of mortgage-related securities is GNMA. GNMA
is a wholly owned U.S. Government corporation within the Department of Housing
and Urban Development. GNMA is authorized to guarantee, with the full faith and
credit of the U.S. Government, the timely payment of principal and interest on
securities issued by institutions approved by GNMA (such as savings and loan
institutions, commercial banks and mortgage bankers) and pools of FHA-insured or
VA-guaranteed mortgages. Government-related (i.e., not backed by the full faith
and credit of the U.S. Government) guarantors include FNMA and FHLMC. FNMA and
FHLMC are government-sponsored corporations owned entirely by private
stockholders. Pass-through securities issued by FNMA and FHLMC are guaranteed as
to timely payment of principal and interest by FNMA and FHLMC, respectively, but
are not backed by the full faith and credit of the U.S. Government.
MORTGAGE-RELATED SECURITIES -- IN GENERAL
Mortgage-related securities are backed by mortgage obligations
including, among others, conventional 30-year fixed rate mortgage obligations,
graduated payment mortgage obligations, 15-year mortgage obligations, and
adjustable rate mortgage obligations. All of these mortgage obligations can be
used to create pass-through securities. A pass-through security is created when
mortgage obligations are pooled together and undivided interests in the pool or
pools are sold. The cash flow from the mortgage obligations is passed through to
the holders of the securities in the form of periodic payments of interest,
principal and prepayments (net of a service fee). Prepayments occur when the
holder of an individual mortgage obligation prepays the remaining principal
before the mortgage obligation's scheduled maturity date. As a result of the
pass-through of prepayments of principal on the underlying securities,
mortgage-backed securities are often subject to more rapid prepayment of
principal than their stated maturity would indicate. Because the prepayment
characteristics of the underlying mortgage obligations vary, it is not possible
to predict accurately the realized yield or average life of a particular issue
of pass-through certificates. Prepayment rates are important because of their
effect on the yield and price of the securities.
Accelerated prepayments have an adverse impact on yields for pass-throughs
purchased at a premium (i.e., a price in excess of principal amount) and may
involve additional risk of loss of principal because the premium may not have
been fully amortized at the time the obligation is repaid. The opposite is true
for pass-throughs purchased at a discount. The Victory Portfolios may purchase
mortgage-related securities at a premium or at a discount. Among the U.S.
Government securities in which the Victory Portfolios may invest are government
"mortgage-backed" (or government guaranteed mortgage related securities). Such
guarantees do not extend to the value of yield of the mortgage-backed securities
themselves or of the Fund's shares.
GNMA Certificates. Certificates of the Government National Mortgage
Association ("GNMA") are mortgage-backed securities which evidence an undivided
interest in a pool or pools of mortgages. GNMA Certificates that the Fund may
purchase are the "modified pass-through" type, which entitle the holder to
receive timely payment of all interest and principal payments due on the
mortgage pool, net of fees paid to the "issuer" and GNMA, regardless of whether
or not the mortgagor actually makes the payment.
The National Housing Act authorizes GNMA to guarantee the timely
payment of principal and interest on securities backed by a pool of mortgages
insured by the Federal Housing Administration ("FHA") or guaranteed by the
Veterans Administration ("VA"). The GNMA guarantee is backed by the full faith
and credit of the U.S. Government. GNMA is also empowered to borrow without
limitation from the U.S. Treasury if necessary to make any payments required
under its guarantee.
The estimated average life of a GNMA Certificate is likely to be
substantially shorter than the original maturity of the mortgages underlying the
securities. Prepayments of principal by mortgagors and mortgage foreclosures
will usually result in the return of the greater part of principal investment
long before the maturity of the mortgages in the pool. Foreclosures impose no
risk to principal investment because of the GNMA guarantee, except to the extent
that the Fund has purchased the certificates above par in the secondary market.
FHLMC Securities. The Federal Home Loan Mortgage Corporation ("FHLMC")
was created in 1970 to promote development of a nationwide secondary market in
conventional residential mortgages. The FHLMC issues two types of mortgage
pass-through securities ("FHLMC Certificates"), mortgage participation
certificates ("PCs") and collateralized mortgage obligations ("CMOs"). PCs
resemble GNMA Certificates in that each PC represents a pro rata share of all
interest and principal payments made and owed on the underlying pool. The FHLMC
guarantees timely monthly payment of interest on PCs and the ultimate payment of
principal. Recently introduced FHLMC Gold PCs guarantee the timely payment of
both principal and interest.
CMOs are securities backed by a pool of mortgages in which the
principal and interest cash flows of the pool are channeled on a prioritized
basis into two or more classes, or tranches, of bonds. FHLMC CMOs are backed by
pools of agency mortgage-backed securities and the timely payment of principal
and interest of each tranche is guaranteed by the FHLMC. The FHLMC guarantee is
not backed by the full faith and credit of the U.S. Government.
FNMA Securities. The Federal National Mortgage Association ("FNMA") was
established in 1938 to create a secondary market in mortgages insured by the
FHA, but has expanded its activity to the secondary market for conventional
residential mortgages. FNMA primarily issues two types of mortgage-backed
securities, guaranteed mortgage pass-through certificates ("FNMA Certificates")
and CMOs. FNMA Certificates resemble GNMA Certificates in that each FNMA
Certificate represents a pro rata share of all interest and principal payments
made and owed on the underlying pool. FNMA guarantees timely payment of interest
and principal on FNMA Certificates and CMOs. The FNMA guarantee is not backed by
the full faith and credit of the U.S. Government.
Investment Restrictions
The following investment restrictions are fundamental with respect to
the Fund and may be changed only by a vote of a majority of the outstanding
shares of the Fund as defined in "ADDITIONAL INFORMATION -Miscellaneous" of this
Statement of Additional Information).
THE FUND MAY NOT:
1. Issue any senior security (as defined in the 1940 Act), except
that (a) the Fund may engage in transactions that may result in the
issuance of senior securities to the extent permitted under applicable
regulations and interpretations of the 1940 Act or an exemptive order;
(b) the Fund may acquire other securities, the acquisition of which may
result in the issuance of a senior security, to the extent permitted
under applicable regulations or interpretations of the 1940 Act; (c)
subject to the restrictions set forth below, the Fund may borrow money
as authorized by the 1940 Act.
2. Borrow money, except that (a) the Fund may enter into
commitments to purchase securities in accordance with its investment
program, including delayed-delivery and when-issued securities and
reverse repurchase agreements, provided that the total amount of any
such borrowing does not exceed 33 1/3% of the Fund's total assets; and
(b) the Fund may borrow money for temporary or emergency purposes in an
amount not exceeding 5% of the value of its total assets at the time
when the loan is made. Any borrowings representing more than 5% of the
Fund's total assets must be repaid before the Fund may make additional
investments.
3. Lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of publicly issued debt
securities or to repurchase agreements.
4. Underwrite securities issued by others, except to the extent
that the Fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities.
5. Purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments or selling
options and futures contracts or from investing in securities or other
instruments.
6. Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments.
7. Purchase securities other than U.S. Treasury bills, notes, and
other obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities whose obligations are backed by the full
faith and credit of the U.S. Treasury, some of which may be subject to
repurchase agreements.
The following restrictions are not fundamental and may be changed
without shareholder approval:
1. The Fund will not make short sales of securities, other than
short sales "against the box," or purchase securities on margin except
for short-term credits necessary for clearance of portfolio
transactions, provided that this restriction will not be applied to
limit the use of options, futures contracts and related options, in
the manner otherwise permitted by the investment restrictions,
policies and investment program of the Fund.
2. The Fund may invest up to 5% of its total assets in the
securities of any one investment company, but may not own more than 3%
of the securities of any one investment company or invest more than 10%
of its total assets in the securities of other investment companies.
Pursuant to an exemptive order received by the Victory Portfolios from
the Commission, the Funds may invest in the money market funds of the
Victory Portfolios.
3. The Fund will notinvest more than 10% of its net assets in
illiquid securities.
4. The Fund will not purchase or retain securities of any issuer
if the officers or Trustees of the Victory Portfolios or the officers or
directors of its investment adviser owning beneficially more than one
half of 1% of the securities of such issuer together own beneficially
more than 5% of such securities.
5. The Fund will not invest more than 10% of its total assets in
the securities of issuers which together with any predecessors have a
record of less than three years of continuous operation.
6. Buy state, municipal, or private activity bonds or write
or purchase put options or purchase call options.
State Regulations
The Victory Portfolios have agreed with a state securities administrator
on behalf of each fund of the Victory Portfolios that each such fund will limit
investment in warrants to no more than 5% of its net assets and, of this 5%, no
more than 2% will be invested in warrants which are not listed on the New York
Stock Exchange or the American Stock Exchange; provided, however, that for the
purposes of this limitation, warrants acquired in units or attached to other
securities will be deemed to be without value.
In addition, each of the Victory Portfolios, so long as its shares are
registered under the securities laws of the State of Texas and such restrictions
are required as a consequence of such registration, is subject to the following
non-fundamental policy, which may be modified in the future by the Trustees
without a vote of the Victory Portfolios' shareholders: the Victory Portfolios
has represented to the Texas State Securities Board, on behalf of the investment
portfolios registered in that state, that those investment portfolios will not
invest in oil, gas or mineral leases or purchase or sell real property
(including limited partnership interests, but excluding readily marketable
securities of companies which invest in real estate).
The policies and limitations above supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or limitation
states a maximum percentage of the Fund's assets that may be invested in any
security or other asset, or sets forth a policy regarding quality standards,
such standard or percentage limitation will be determined immediately after and
as a result of the Fund's acquisition of such security or other asset except in
the case of borrowing (or other activities that may be deemed to result in the
issuance of a "senior security" under the 1940 Act). Accordingly, any subsequent
change in values, net assets, or other circumstances will not be considered when
determining whether the investment complies with the Fund's investment policies
and limitations. If the value of the Fund's holdings of illiquid securities at
any time exceeds the percentage limitation applicable at the time of
acquisition due to subsequent fluctuations in value or other reasons, the Board
will consider what actions, if any, are appropriate to maintain adequate
liquidity.
FUTURE DEVELOPMENTS
The Fund may take advantage of other investment practices which are not
at present contemplated for use by the Fund or which currently are not available
but which may be developed, to the extent such investment practices are both
consistent with the Fund's investment objective and are legally permissible for
the Fund. Such investment practices, if they arise, may involve risks which
exceed those involved in the activities described in the Prospectus and
Statement of Additional Information. Prior to commencing any new investment
practice, the Fund will notify shareholders by means of prospectus supplement.
Portfolio Turnover
The turnover rate for the Fund's investment portfolio is calculated by
dividing the lesser of the Fund's purchases or sales of portfolio securities for
the year by the monthly average value of the portfolio securities. The
calculation excludes all securities whose maturities, at the time of
acquisition, were one year or less. Because of this exclusion, portfolio
turnover is expected to be zero percent for regulatory purposes.
VALUATION OF PORTFOLIO SECURITIES
As indicated in the Prospectus, the net asset value ("NAV") of the Fund
is determined and the shares of the Fund are priced as of the close of regular
trading of the New York Stock Exchange ("NYSE") ("the Valuation Time(s)") on
each Business Day of the Fund. A "Business Day" is a day on which the NYSE is
open for trading, the Federal Reserve Bank of Cleveland is open and any other
day (other than a day on which no shares of the Fund are tendered for redemption
and no order to purchase any shares is received) during which there is
sufficient trading in portfolio instruments that the Fund's net asset value per
share might be materially affected. The NYSE, or the Federal Reserve Bank of
Cleveland will not open in observance of the following holidays: New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving, and
Christmas.
When the NYSE is closed, or when trading is restricted for any reason
other than its customary weekend or holiday closings, or under emergency
circumstances as determined by the Commission to warrant such action, the Fund's
transfer agent will determine the Fund's NAV at the close of business, normally
4:00 p.m., eastern time. The Fund's NAV may be affected to the extent that its
securities are traded on days that are not Business Days.
The Fund has elected to use the amortized cost method of valuation
pursuant to Rule 2a-7 under the 1940 Act. This involves valuing an instrument at
its cost initially and thereafter assuming a constant amortization to maturity
of any discount or premium, regardless of the impact of fluctuating interest
rates on the market value of the instrument. This method may result in periods
during which value, as determined by amortized cost, is higher or lower than the
price the Fund would receive if it sold the instrument. The value of securities
in the portfolio can be expected to vary inversely with changes in prevailing
interest rates.
Pursuant to Rule 2a-7, the Fund will maintain a dollar-weighted average
portfolio maturity appropriate to its objective of maintaining a stable net
asset value per share, provided that the Fund will not purchase any security
with a remaining maturity of more than 397 days (securities subject to
repurchase agreements may bear longer maturities) nor maintain a dollar-weighted
average portfolio maturity which exceeds 90 days. The Victory Portfolios'
Trustees have also undertaken to establish procedures reasonably designed,
taking into account current market conditions and the Victory Portfolios'
investment objectives, to stabilize the net asset value per share of the Fund
for purposes of sales and redemptions at $1.00. These procedures include review
by the Trustees, at such intervals as they deem appropriate, to determine the
extent, if any, to which the net asset value per share of the Fund calculated by
using available market quotations deviates from $1.00 per share. In the event
such deviation exceeds one-half of one percent, the Rule requires that the Board
promptly consider what action, if any, should be initiated. If the Trustees
believe that the extent of any deviation from the Fund's $1.00 amortized cost
price per share may result in material dilution or other unfair results to new
or existing investors, they will take such steps as they consider appropriate to
eliminate or reduce to the extent reasonably practicable any such dilution or
unfair results. These steps may include selling portfolio instruments prior to
maturity, shortening the dollar-weighted average portfolio maturity, withholding
or reducing dividends, reducing the number of the Fund's outstanding shares
without monetary consideration, or utilizing a net asset value per share
determined by using available market quotations.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Matters Affecting Redemption
The Fund may suspend the right of redemption or postpone the date of
payment for shares during any period when (a) trading on the NYSE is restricted
by applicable rules and regulations of the Commission, (b) the NYSE is closed
for other than customary weekend and holiday closings, (c) the Commission has by
order permitted such suspension, or (d) an emergency exists as determined by the
Commission.
[If, in the opinion of the Board of Trustees, conditions exist which
make cash payment undesirable, redemption payments may be made in whole or in
part in securities or other property, valued for this purpose as they are valued
in computing the Fund's NAV. Shareholders receiving securities or other property
on redemption may realize a gain or loss for tax purposes, and will incur any
costs of sale, as well as the associated inconveniences.]
Pursuant to Rule 11a-3 under the 1940 Act, the Fund is required to give
shareholders at least 60 days' notice prior to terminating or modifying its
exchange privilege. Under the Rule, the 60-day notification requirement may be
waived if (i) the only effect of a modification would be to reduce or eliminate
an administrative fee, redemption fee, or deferred sales charge ordinarily
payable at the time of exchange, or (ii) a Fund temporarily suspends the
offering of shares as permitted under the 1940 Act or by the Commission, or
because it is unable to invest amounts effectively in accordance with its
investment objective and policies.
In the Prospectus, the Fund, Key Advisers and the Sub-Adviser have
notified shareholders that they reserve the right at any time without prior
notice to shareholders to refuse exchange purchases by any person or group if,
in Key Advisers' or the Sub-Adviser's judgment, the Fund would be unable to
invest effectively in accordance with its investment objective and policies, or
would otherwise potentially be adversely affected.
Purchasing Shares
Shares are sold at their net asset value without a sales charge on days
the NYSE and the Federal Reserve Wire System are open for business. The
procedure for purchasing shares of the Fund is explained in the prospectus under
"Investing in the Fund."
Conversion to Federal Funds
It is the Fund's policy to be as fully invested as possible so that
maximum interest may be earned. To this end, all payments from shareholders must
be in federal funds or be converted into federal funds. This conversion must be
made before shares are purchased. Converting the funds to federal funds is
normally accomplished within two business days of receipt of the check.
Redeeming Shares
The Fund redeems shares at the next computed net asset value after the
redemption request is received. Redemption procedures are explained in the
prospectus under "Redeeming Shares."
[Redemption in Kind
Although the Fund intends to redeem shares in cash, it reserves the
right under certain circumstances to pay the redemption price in whole or in
part by a distribution of securities from the Fund. To the extent available,
such securities will be readily marketable.
Redemption in kind will be made in conformity with applicable Commission
rules, taking such securities at the same value employed in determining net
asset value and selecting the securities in a manner the Trustees determine to
be fair and equitable.
The Fund has elected to be governed by Rule 18f-1 of the 1940 Act under
which the Fund is obligated to redeem shares for any one shareholder in cash
only up to the lesser of $250,000 or 1% of the Fund's net asset value during any
90-day period.]
The Victory Portfolios may redeem shares involuntarily if redemption
appears appropriate in light of the Victory Portfolios' responsibilities under
the 1940 Act. (See "VALUATION" above.)
<PAGE>
Additional Tax Information
It is the policy of each fund of the Victory Portfolios to qualify for
the favorable tax treatment accorded regulated investment companies ("RICs")
under Subchapter M of the Code, for so long as such qualification is in the best
interest of its shareholders. By following such policy and distributing its
income and gains currently with respect to each taxable year, the Victory
Portfolios expects to eliminate or reduce to a nominal amount the federal income
and excise taxes to which it may otherwise be subject.
In order to qualify as a RIC, each fund must, among other things, (1)
derive at least 90% of its gross income from dividends, interest, payments with
respect to securities loans, and gains from the sale or other disposition of
stock or securities, foreign currencies or other income (including gains from
options, futures or forward contracts) derived with respect to its business of
investing in stock, securities or currencies, (2) derive less than 30% of its
gross income from the sale or other disposition of stock, securities, options,
futures, forward contracts, and certain foreign currencies (or options, futures,
or forward contracts on foreign currencies) held for less than three months, and
(3) diversify its holdings so that at the end of each quarter of its taxable
year (i) at least 50% of the market value of the fund's assets is represented by
cash or cash items, U.S. Government securities, securities of other RICs and
other securities limited, in respect of any one issuer, to an amount not greater
than 5% of the value of the fund's total assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of its
total assets is invested in the securities of any one issuer (other than U.S.
Government securities) or of two or more issuers that the Victory Portfolios
control and that are engaged in the same, similar, or related trades or
businesses. These requirements may restrict the degree to which the Victory
Portfolios may engage in short-term trading and concentrate investments. If a
fund qualifies as a RIC, it will not be subject to federal income tax on the
part of its net investment income and net realized capital gains, if any, that
it distributes to shareholders with respect to each taxable year within the time
limits specified in the Code.
A non-deductible excise tax is imposed on regulated investment companies
that do not distribute in each calendar year an amount equal to 98% of their
ordinary income for the year plus 98% of their capital gain net income for the
1-year period ending on October 31 of such calendar year. The balance of such
income must be distributed during the following calendar year. If distributions
during a calendar year are less than the required amount, the fund is subject to
a non-deductible excise tax equal to 4% of the deficiency.
Certain investment and hedging activities of a fund, including
transactions in options, futures contracts, hedging transactions, forward
contracts, straddles, foreign currencies, and foreign securities, are subject to
special tax rules. In a given case, these rules may accelerate income to the
fund, defer losses to the fund, cause adjustments in the holding periods of the
fund's securities, convert short-term capital losses into long-term capital
losses, or otherwise affect the character of the fund's income. These rules
could therefore affect the amount, timing and character of distributions to
shareholders. The Victory Portfolios will endeavor to make any available
elections pertaining to such transactions in a manner believed to be in the best
interest of the Victory Portfolios and their securities.
Each fund will be required in certain cases to withhold and remit to the
U.S. Treasury 31% of taxable dividends paid to any shareholder who has failed to
provide (or provided an incorrect) tax identification number, or is subject to
withholding pursuant to a notice from the Internal Revenue Service for failure
to properly include on his or her income tax return payments of interest or
dividends. This "backup withholding" is not an additional tax, and any amounts
withheld may be credited against the shareholder's ultimate U.S. tax liability.
Information set forth in the Prospectus and this Statement of Additional
Information that relates to federal taxation is only a summary of certain key
federal tax considerations generally affecting purchasers of shares of the
Victory Portfolios. No attempt has been made to present a complete explanation
of the federal tax treatment of a fund or its shareholders, and this discussion
is not intended as a substitute for careful tax planning. Accordingly,
potential purchasers of shares of a fund of these Portfolios are urged to
consult their tax advisers with specific reference to their own tax
circumstances. In addition, the tax discussion in the Prospectus and this
Statement of Additional Information is based on tax law in effect on the date
of the Prospectus and this Statement of Additional Information; such laws and
regulations may be changed by legislative, judicial or administrative action,
sometimes with retroactive effect.
<PAGE>
MANAGEMENT OF THE VICTORY PORTFOLIOS
Board of Trustees
Overall responsibility for management of the Victory Portfolios rests
with the Trustees, who are elected by the shareholders of the Victory
Portfolios. The Victory Portfolios are managed by the Trustees in accordance
with the laws of the Commonwealth of Massachusetts governing business trusts.
There are currently seven Trustees, six of whom are not "interested persons" of
the Victory Portfolios within the meaning of that term under the 1940 Act. The
Trustees, in turn, elect the officers of the Victory Portfolios to supervise
actively its day-to-day operations.
The Trustees of the Victory Portfolios, their addresses, ages and their
principal occupations during the past five years are as follows:
<TABLE>
Position(s) Held
With the Victory Principal Occupation
Name, Address and Age Portfolios During Past 5 Years
- --------------------- -------------------- -------------------
<S> <C> <C>
Robert G. Brown, 72
5460 N. Ocean Drive
Singer Island, FL 33404 Trustee Retired; from October 1983 to November 1990, President,
Cleveland Advanced Manufacturing Program (non-profit
corporation engaged in regional economic development);
Trustee, The Victory Funds.
Edward P. Campbell, 45
Nordson Corporation
28601 Clemens Road
Westlake, OH 44145 Trustee From March, 1994 to present, Executive Vice President and
Chief Operating Officer of Nordson Corporation
(manufacturer of application equipment); from May, 1988
March 1994, Vice President of Nordson Corporation; from
1987 to August 1994, member of the Supervisory
Committee of Society's Collective Investment Retirement
Fund; from May 1991 to August 1994, Trustee, Financial
Reserves Fund and from May 1993 to August 1994,
Trustee, Ohio Municipal Money Market Fund; Trustee, The
Victory Funds and Spears, Benzak, Salomon and Farrell
("SBSF") Funds.
Dr. Harry Gazelle, 67
17822 Lake Road
Lakewood, Ohio 44107 Trustee Retired radiologist, Drs. Hill and Thomas Corp. Trustee,
The Victory Funds.
<PAGE>
Dr. Thomas F. Morrissey, 62
Weatherhead School of
Management
Case Western Reserve
University
10900 Euclid Avenue
Cleveland, OH 44106-7235 Trustee 1995 Visiting Scholar, Bond University, Queensland,
Australia; Professor, Weatherhead School of Management,
Case Western Reserve University; from 1989 to 1995,
Associate Dean of Weatherhead School of Management;
from 1987 to August 1994, Member of the Supervisory
Committee of Society's Collective Investment Retirement
Fund; from May 1991 to August 1994, Trustee, Financial
Reserves Fund and from May 1993 to August 1994,
Trustee, Ohio Municipal Money Market Fund; Trustee, The
Victory Funds.
Stanley I. Landgraf, 70
41 Traditional Lane
Albany, NY 12211 Trustee Retired; currently, Trustee, Rensselaer Polytechnic Institute;
Director, Elenel Corporation, Albany International
Corporation and Mechanical Technology, Inc.; Member,
Board of Overseers, School of Management, Rensselaer
Polytechnic Institute; Member, The Fifty Group (a Capital
Region business organization); Trustee, The Victory Funds.
Leigh A. Wilson*, 51
River Tower
420 East 54th Street
Apt. 10H
New York, NY 10022 Trustee and President From 1989 to present, Chairman and Chief Executive
Officer, Glenleigh
International Limited;
from 1984-1989, Chief
Executive Officer,
Paribas North America and
Paribas Corporation;
Trustee, The Victory
Funds and SBSF Funds.
Dr. H. Patrick Swygert, 52
Howard University
2400 6th Street, N.W.
Suite 320
Washington, D.C. ___ Trustee Currently President, Howard University; Trustee, The
Victory Funds; formerly President, State University of New
York at Albany; formerly, Executive Vice President,
Temple University.
</TABLE>
- ------------
* Mr. Wilson is deemed to be an "interested person" of The Victory Portfolios
under the 1940 Act solely by reason of his position as President.
The Board presently has an Investment Policy Committee and a Business,
Legal, and Audit Committee. The members of the Investment Policy Committee are
Messrs. Morrissey, Brown and Landgraf (Chairman), who will serve until May 1996.
The function of the Investment Policy Committee is to review the existing
investment policies of the Victory Portfolios, including the levels of risk and
types of funds available to shareholders, and make recommendations to the Board
of Trustees regarding the revision of such policies or, if necessary, the
submission
<PAGE>
of such revisions to the Victory Portfolios' shareholders for their
consideration. The members of the Business, Legal and Audit Committee are
Messrs. Swygert (Chairman), Campbell and Gazelle who will serve until May 1996.
The function of the Business, Legal and Audit Committee is to recommend
independent auditors and monitor accounting and financial matters; to nominate
persons to serve as disinterested Trustees and Trustees to serve on committees
of the Board; and to review compliance and contract matters.
The Investment Policy Committee met four times during the current
fiscal year commencing November 1, 1994. The Business, Legal and Audit Committee
was constituted on May 24, 1995 (and has met once since then) and replaced the
Audit Committee, the Legal Committee and the Nominating Committee, which met
three times, one time and one time, respectively, during the current fiscal year
prior to May 31, 1995.
REMUNERATION OF TRUSTEES AND CERTAIN EXECUTIVE OFFICERS
Effective June 1, 1995, each Trustee (other than Leigh A. Wilson)
receives an annual fee of $27,000 for serving as Trustee of all the Funds of the
Victory Portfolios, and an additional per meeting fee ($2,400 in person and
$1,200 per telephonic meeting).
Effective June 1, 1995, Leigh A. Wilson receives an annual fee of
$33,000 for serving as President and Trustee for all of the Funds of the Victory
Portfolios, and an additional per meeting fee ($3,000 in person and $1,500 per
telephonic meeting).
The following tables indicate the compensation received by each Trustee
during the fiscal year of the Funds which ended on October 31, 1995:
<TABLE>
The Victory The Victory The Victory The Victory
The Victory Diversified Government The Victory Intermediate International
Balanced Fund1/ Stock Fund Mortgage Fund1/ Growth Fund2/ Income Fund Growth Fund2/
--------------- ---------- --------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee ........ $1,178.91 $2,331.48 $1,126.45 $1,168.23 $980.48 $880.52
Edward P. Campbell,
Trustee .......... 1,539.75 2,009.87 1,174.17 740.45 841.67 670.63
Harry Gazelle,
Trustee .......... 974.79 1,929.86 919.93 987.41 809.59 735.72
John W. Kemper,
Trustee* ......... 541.57 1,060.05 589.95 843.06 458.81 506.60
Thomas F. Morrissey,
Trustee .......... 1,539.75 2,009.87 1,174.17 1,151.74 841.67 802.87
Stanley I. Landgraf,
Trustee .......... 1,014.75 2,009.87 949.17 842.51 841.67 708.01
Leigh A. Wilson,
Trustee .......... 1,112.55 2,206.35 1,021.27 1,213.17 920.59 865.44
H. Patrick Swygert,
Trustee .......... 1,014.75 2,009.87 949.17 1,151.74 841.67 802.87
John Buckingham,*
Trustee .......... 541.57 1,060.05 589.95 226.15 458.81 409.93
John R. Young,*
Trustee .......... 577.04 1,132.82 621.95 750.08 488.98 494.95
</TABLE>
*Resigned
- ------------------------------------------------
1/ For certain Trustees, these amounts include payments made by the Society
Collective Investment Retirement Funds, which were reorganized into these
Funds as of December 19, 1994.
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
<TABLE>
The Victory The Victory The Victory The Victory The Victory The Victory
Investment Quality Limited Term Ohio Municipal Ohio Regional Prime Obligations Special
Bond Fund2/ Income Fund2/ Bond Fund Stock Fund Fund Value Fund
------------- ------------- ----------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee .......... $1,052.54 $1,155.92 $443.98 $271.80 $4,747.58 $1,091.75
Edward P. Campbell,
Trustee .......... 776.01 922.20 376.72 231.79 3,921.95 942.58
Harry Gazelle,
Trustee .......... 876.72 969.26 364.09 223.52 3,832.26 904.37
John W. Kemper,*
Trustee .......... 644.08 581.73 223.59 133.11 2,818.92 489.58
Thomas F. Morrissey,
Trustee .......... 966.09 1,045.87 376.72 231.79 3,921.95 942.58
Stanley I. Landgraf,
Trustee ......... 827.74 960.31 376.72 231.79 3,921.95 942.58
Leigh A. Wilson,
Trustee .......... 1,033.38 1,143.77 407.85 252.05 4,143.70 1,036.09
H. Patrick Swygert,
Trustee .......... 966.09 1,045.87 376.72 231.79 3,921.95 942.58
John D. Buckingham,*
Trustee .......... 504.76 495.35 223.59 133.11 2,818.92 489.58
John R. Young,*
Trustee .......... 619.72 590.17 236.57 140.98 2,915.30 523.93
</TABLE>
* Resigned
- ------------------------------------------------
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
<TABLE>
The Victory The Victory Victory
Tax-Free The Victory U.S. The Victory Institutional Stock
Money Government The Victory The Victory Government Money Index
Market Fund Obligations Fund2/ Value Fund2/ Fund for Income3/ Bond Fund3/ Market Fund3/ Fund
----------- ------------------ ------------ ----------------- ----------- ------------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee .......... $ 1,781.03 $ 5,774.42 $ 1,842.48 $ 217.14 $ 773.66 $ 3,820.17 $ 797.69
Edward P. Campbell,
Trustee .......... 1,523.27 4,324.24 1,581.23 114.18 389.76 2,204.64 689.90
Harry Gazelle,
Trustee .......... 1,467.67 4,922.46 1,522.01 189.79 675.74 3,425.47 661.40
John W. Kemper,*
Trustee .......... 853.51 3,098.06 841.91 161.55 624.83 2,554.32 356.16
Thomas F. Morrissey,
Trustee .......... 1,523.57 5,336.76 1,583.17 228.46 819.94 4,004.82 689.90
Stanley I. Landgraf,
Trustee .......... 1,523.57 4,828.66 1,580.86 157.16 535.10 2,927.66 689.90
Leigh A. Wilson,
Trustee .......... 1,661.60 5,902.24 1,732.57 248.70 874.92 4,397.12 759.38
H. Patrick Swygert,
Trustee .......... 1,523.57 5,336.76 1,583.17 228.46 819.94 4,004.82 689.90
John D. Buckingham,*
Trustee .......... 853.51 2,478.65 840.54 82.92 318.60 1,333.87 356.16
John R. Young,*
Trustee .......... 900.37 3,074.28 899.81 140.67 535.81 2,223.97 379.85
</TABLE>
* Resigned
- ------------------------------------------------
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
3/ For certain Trustees, these amounts include amounts paid by this Fund's
successor, a Portfolio of The Victory Funds, which was reorganized as the
Fund as of June 5, 1995.
<TABLE>
The Victory
The Victory The Victory The Victory Ohio The Victory Financial
National Municipal New York Municipal Money Special Growth Reserves
Bond Fund3/ Tax-Free Fund3/ Market Fund3/ ____Fund2/ Funds 3/
<S> <C> <C> <C> <C> <C>
Robert G. Brown,
Trustee .......... $39.89 $141.29 $2,962.00 $401.99 $4,834.58
Edward P. Campbell,
Trustee .......... 26.78 76.45 4,899.18 272.35 3,549.91
Harry Gazelle,
Trustee........... 37.48 123.38 3,548.52 341.34 5,474.20
John W. Kemper,*
Trustee .......... 18.20 100.45 1,893.61 260.65 2,913.01
Thomas F. Morrissey,
Trustee .......... 40.09 148.08 5,602.37 388.49 4,996.26
Stanley I. Landgraf,
Trustee .......... 38.83 104.47 3,183.11 307.57 5,112.02
Leigh A. Wilson,
Trustee .......... 49.44 162.90 3,424.84 417.32 5,729.73
H. Patrick Swygert,
Trustee .......... 40.09 148.08 3,102.37 388.49 4,996.26
John D. Buckingham,*
Trustee .......... 13.33 51.65 1,784.96 177.06 2,598.87
John R. Young,*
Trustee .......... 18.91 88.31 1,661.29 238.89 2,709.16
</TABLE>
- ------------------------------------------------
2/ For certain Trustees, these amounts include amounts paid by a Portfolio of
The Victory Funds which merged into this Fund as of June 5, 1995.
3/ For certain Trustees, these amounts include amounts paid by this Fund's
predecessor, a Portfolio of The Victory Funds, which was reorganized as the
Fund as of June 5, 1995.
<PAGE>
<TABLE>
Total Compensation
Pension or Retirement Benefits Estimated Annual from Victory
Accrued as Portfolio Expenses Benefits "Fund Complex"
Upon Retirement 4/
<S> <C> <C> <C>
Robert G. Brown, Trustee -0- -0- $39,815.98
Edward P. Campbell, Trustee -0- -0- 33,799.68
Harry Gazelle, Trustee -0- -0- 35,916.98
John W. Kemper, Trustee* -0- -0- 22,567.31
Thomas F. Morrissey, Trustee -0- -0- 40,366.98
Stanley I. Landgraf, Trustee -0- -0- 34,615.98
Leigh A. Wilson, Trustee -0- -0- 46,716.97
H. Patrick Swygert, Trustee -0- -0- 37,116.98
John D. Buckingham, Trustee -0- -0- 18,841.89
John R. Young, Trustee* -0- -0- 21,963.81
</TABLE>
* Resigned
- ------------------------------------
4/ For certain Trustees, these amounts include compensation received from
The Victory Funds (which were reorganized into the Current Company as
of June 5, 1995), the SBSF Funds (the investment adviser of which was
acquired by KeyCorp effective April, 1995) and Society's Collective
Investment Retirement Funds, which were reorganized into the Balanced
Fund and Government Mortgage Fund as of December 19, 1994. There are
presently 24 mutual funds from which the above-named Trustees are
compensated in the Victory "Fund Complex," but not all of the
above-named Trustees serve on the boards of each fund in the "Fund
Complex."
<TABLE>
Total Compensation
Pension or Retirement Benefits Estimated Annual from Victory
Accrued as Portfolio Expenses Benefits "Fund Complex"
Upon Retirement 4/
<S> <C> <C> <C>
Robert G. Brown, Trustee -0- -0- $39,815.98
Edward P. Campbell, Trustee -0- -0- 33,799.68
Harry Gazelle, Trustee -0- -0- 35,916.98
John W. Kemper, Trustee* -0- -0- 22,567.31
Thomas F. Morrissey, Trustee -0- -0- 40,366.98
Stanley I. Landgraf, Trustee -0- -0- 34,615.98
Leigh A. Wilson, Trustee -0- -0- 46,716.97
H. Patrick Swygert, Trustee -0- -0- 37,116.98
John D. Buckingham, Trustee -0- -0- 18,841.89
John R. Young, Trustee* -0- -0- 21,963.81
* Resigned
- ------------------------------------
4/ For certain Trustees, these amounts include compensation received from
The Victory Funds (which were reorganized into the Current Company as
of June 5, 1995), the SBSF Funds (the investment adviser of which was
acquired by KeyCorp effective April, 1995) and Society's Collective
Investment Retirement Funds, which were reorganized into the Balanced
Fund and Government Mortgage Fund as of December 19, 1994. There are
presently 24 mutual funds from which the above-named Trustees are
compensated in the Victory "Fund Complex," but not all of the
above-named Trustees serve on the boards of each fund in the "Fund
Complex."
</TABLE>
Officers
The officers of the Victory Portfolios, their addresses, ages
and principal occupations during the past five years are as follows:
<TABLE>
Position with the Principal occupation
Name Victory Portfolios during past 5 years
<S> <C> <C>
Leigh A. Wilson, 51 President and Trustee From 1989 to present, Chairman and
Chief Executive Officer, Glenleigh
International Limited; from 1984-1989,
Chief Executive Officer, Paribas North
America and Paribas Corporation; Trustee
to The Victory Funds and SBSF Funds.
William B. Blundin, 57 Vice President Senior Vice President of BISYS Fund
Services; officer of other investment
companies administered by BISYS Fund
Services; President and Chief Executive
Officer of Vista Broker-Dealer Services,
Inc., Emerald Asset Management, Inc. and
BNY Hamilton Distributors, Inc.,
registered broker/dealers.
<PAGE>
J. David Huber, 49 Vice President Executive Vice President, BISYS Fund
Services.
Scott A. Englehart, 33 Secretary From October 1990 to present, employee
of BISYS Fund Services, Inc.; from 1985
to October 1990, Manager of Banking
Center, Fifth Third Bank.
George O. Martinez, 36 Assistant Secretary From March 1995 to present, Senior Vice
President and Director of Legal and
Compliance Services, BISYS Fund
Services; from June 1989-March 1995,
Vice President and Associate General
Counsel, Alliance Capital Management.
Martin R. Dean, 31 Treasurer From May 1994 to present, employee of
BISYS Fund Services; from January 1987
- April 1994, Senior Manager, KPMG
Peat Marwick.
Adrian J. Waters, 32 Assistant Treasurer From May 1993 to present, employee of
BISYS Fund Services; from 1989-May
1993, Manager, Price Waterhouse.
</TABLE>
The mailing address of each of the officers of the Victory Portfolios
is 3435 Stelzer Road, Columbus, Ohio 43219-3035.
<PAGE>
The officers of the Victory Portfolios receive no compensation directly
from the Victory Portfolios for performing the duties of their offices. BISYS
Fund Services, Inc. receives fees from the Victory Portfolios for acting as
Administrator.
As of January 1, 1996, the Trustees and officers as a group owned
beneficially less than 1% of the Fund.
<PAGE>
Investment Adviser and Sub-Adviser
KeyCorp Mutual Fund Advisers, Inc. was organized as an Ohio corporation
on July 27, 1995 and is registered as an investment adviser under the 1940 Act.
It is a wholly-owned subsidiary of KeyCorp Asset Management Holdings, Inc.,
which is a wholly-owned subsidiary of Society National Bank, a wholly-owned
subsidiary of KeyCorp . Affiliates of Key Advisers manage approximately $37
billion for numerous clients including large corporate and public retirement
plans, Taft-Hartley plans, foundations and endowments, high net worth
individuals and mutual funds.
KeyCorp, a financial services holding company, is headquartered at 127
Public Square, Cleveland, Ohio 44114. As of June 30, 1995, KeyCorp had an asset
base of $67.5 billion, with banking offices in 25 states from Maine to Alaska,
and trust and investment offices in 16 states. KeyCorp is the resulting entity
of a merger between Society Corporation, the bank holding company of which
Society National Bank was a wholly-owned subsidiary, and KeyCorp, the former
bank holding company, which merger was consummated during the first quarter of
1994. KeyCorp's major business activities include providing traditional banking
and associated financial services to consumer, business and commercial markets.
Its non-bank subsidiaries include investment advisory, securities brokerage,
insurance, bank credit card processing, and mortgage leasing companies. Society
National Bank is the lead affiliate bank of KeyCorp.
The following schedule lists the advisory fees for each mutual fund that is
advised by Key Advisers.
.25 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Institutional Money Market Fund
.35 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Prime Obligations Fund
Victory U.S. Government Obligations Fund
Victory Tax-Free Money Market Fund
.50 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Ohio Municipal Money Market Fund
Victory Limited Term Income Fund
Victory Government Mortgage Fund
Victory Financial Reserves Fund
Victory Fund for Income #
.55 OF 1% OF AVERAGE DAILY NET ASSETS
Victory National Municipal Bond Fund
Victory Government Bond Fund
Victory New York Tax-Free Fund
.60 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Ohio Municipal Bond Fund
Victory Stock Index Fund
.65 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Diversified Stock Fund
.75 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Intermediate Income Fund
Victory Investment Quality Bond Fund
Victory Ohio Regional Stock Fund
1% OF AVERAGE DAILY NET ASSETS
Victory Balanced Fund
Victory Value Fund
Victory Growth Fund
Victory Special Value Fund
Victory Special Growth Fund+/-
1.10% OF AVERAGE DAILY ASSETS
Victory International Growth Fund
# First Albany Asset Management Corporation serves as
sub-adviser to the Victory Fund for Income, for which it
receives .20% paid by Key Advisers.
+/- T. Rowe Price Associates, Inc. serves as sub-adviser to
Society Special Growth Fund, for which it receives .25% of
average daily net assets up to $100 million and .20% of
average daily net assets in excess of $100 million paid by
Key Advisers.
<PAGE>
ADVISORY AND OTHER CONTRACTS
Unless sooner terminated, the Investment Advisory Agreement between Key
Advisers and the Funds provides that it will continue in effect as to a
particular Fund for an initial two-year term and for consecutive one-year terms
thereafter, provided that such continuance is approved at least annually by the
Victory Portfolios' Trustees or by vote of a majority of the outstanding shares
of such Fund (as defined under "GENERAL INFORMATION - Miscellaneous" in the
Prospectuses), and, in either case, by a majority of the Trustees who are not
parties to the Investment Advisory Agreement or interested persons (as defined
in the 1940 Act) of any party to the Investment Advisory Agreement, by votes
cast in person at a meeting called for such purpose.
The Investment Advisory Agreement is terminable as to a particular Fund
at any time on 60 days' written notice without penalty by the Trustees, by vote
of a majority of the outstanding shares of that Fund, or by Key Advisers. The
Investment Advisory Agreement also terminates automatically in the event of any
assignment, as defined in the 1940 Act.
The Investment Advisory Agreement provides that Key Advisers shall not
be liable for any error of judgment or mistake of law or for any loss suffered
by the Victory Portfolios in connection with the performance of services
pursuant to the Investment Advisory Agreement, except a loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith, or gross
negligence on the part of Key Advisers in the performance of its duties, or from
reckless disregard by it of either duties and obligations thereunder.
Under the Investment Advisory Agreement, Key Advisers has agreed to
provide investment advisory services as described in the Prospectus. For the
services provided and expenses assumed pursuant to the Investment Advisory
Agreement, the Fund pays Key Advisers a fee, computed daily and paid monthly, at
the annual rate of thirty-five one-hundredths of one percent (.35%) of the
average daily net assets of the Fund.
Prior to January, 1993, Society National Bank served as investment
adviser to the Fund. From January, 1993 to , 1995, Society Asset Management,
Inc. served as investment adviser to the Fund. For the fiscal years ended
October 31, 1992, 1993 and 1994 the Fund paid investment advisory fees of
$1,752,467, $1,787,412 and $1,614,950, respectively. For the six month period
ended April 30, 1995, the Fund paid investment advisory fees of $___________.
Under an investment advisory agreement between the Victory Portfolios,
on behalf of the Fund, and Key Advisers, Key Advisers may delegate a portion of
its responsibilities to a subadviser. In addition, the investment advisory
agreement provides that Key Advisers may render services through its own
employees or the employees of one or more affiliated companies that are
qualified to act as an investment adviser of the Fund and are under the common
control of KeyCorp as long as all such persons are functioning as part of an
organized group of persons, managed by authorized officers of Key Advisers.
Key Advisers has entered into an investment sub-advisory agreement with
its affiliate, Society Asset Management, Inc. on behalf of each of the Victory
Portfolios except Fund for Income and Special Growth Fund. The Sub-Adviser is a
wholly-owned subsidiary of KeyCorp Asset Management Holdings, Inc. With respect
to the day to day management of the Fund, under the sub-advisory agreement, the
Sub-Adviser makes decisions concerning, and places all orders for, purchases and
sales of securities and helps maintain the records relating tosuch purchases and
sales. The Sub-Adviser may, in its discretion, provide such services through
its own employees or the employees of one or more affiliated companies that are
qualified to act as an investment adviser to the Company under applicable laws
and are under the common control of KeyCorp; provided that (i) all persons, when
providing services under the sub-advisory agreement, are functioning as part of
an organized group of persons, and (ii) such organized group of persons is
managed at all times by authorized officers of the Sub-Adviser. This arrangement
will not result in the payment of additional fees by the Fund. For its services
under the investment sub-advisory agreement, Key Advisers pays the Sub-Adviser
sub-advisory fees at rates (based on an annual percentage of average daily net
assets) which vary according to the schedule below:
For the Balanced Fund, Diversified For the International Growth Fund, Ohio
Stock Fund, Growth Fund, Stock Index Regional Stock Fund and Special Value
Fund and Value Fund: Fund:
Rate of Rate of
Sub-Advisory Sub-Advisory
Net Assets Fee* Net Assets Fee*
Up to $10,000,000 0.65% Up to $10,000,000 0.90%
Next $15,000,000 0.50% Next $15,000,000 0.70%
Next $25,000,000 0.40% Next $25,000,000 0.55%
Above $50,000,000 0.35% Above $50,000,000 0.45%
For the Intermediate Income Fund, For the Prime Obligations Fund, Tax-Free
Investment Quality Bond Fund, Limited Money Market Fund, U.S. Government
Term Income Fund, Ohio Municipal Bond Obligations Fund, Financial Reserves
Fund, Goverment Bond Fund, Government Fund, Institutional Money Market Fund and
Mortgage Fund, National Municipal Ohio Municipal Money Market Fund:
Bond Fund and New York Tax-Free Fund:
Rate of Rate of
Sub-Advisory Sub-Advisory
Net Assets Fee* Net Assets Fee*
Up to $10,000,000 0.40% Up to $10,000,000 0.25%
Next $15,000,000 0.30% Next $15,000,000 0.20%
Next $25,000,000 0.25% Next $25,000,000 0.15%
Above $50,000,000 0.20% Above $50,000,000 0.125%
- --------------------
* As a percentage of average daily net assets. Note, however, that the
Sub-Adviser shall have the right, but not the obligation, to
voluntarily waive any portion of the sub-advisory fee from time to
time. Any such voluntary waiver will be irrevocable and determined in
advance of rendering sub-investment advisory services by the
Sub-Adviser, and shall be in writing and signed by the parties hereto.
Glass-Steagall Act
In 1971 the United States Supreme Court held in Investment Company
Institute v. Camp that the federal statute commonly referred to as the
Glass-Steagall Act prohibits a national bank from operating a fund for the
collective investment of managing agency accounts. Subsequently, the Board of
Governors of the Federal Reserve System (the "Board") issued a regulation and
interpretation to the effect that the Glass-Steagall Act and such decision: (a)
forbid a bank holding company registered under the Federal Bank Holding Company
Act of 1956 (the "Holding Company Act") or any non-bank affiliate thereof from
sponsoring, organizing, or controlling a registered, open-end investment company
continuously engaged in the issuance of its shares, but (b) do not prohibit such
a holding company or affiliate from acting as investment adviser, transfer
agent, and custodian to such an investment company. In 1981 the United States
Supreme Court held in Board of Governors of the Federal Reserve System v.
Investment Company Institute that the Board did not exceed its authority under
the Holding Company Act when it adopted its regulation and interpretation
authorizing bank holding companies and their non-bank affiliates to act as
investment advisers to registered closed-end investment companies. In the Board
of Governors case, the Supreme Court also stated that if a national bank
complied with the restrictions imposed by the Board in its regulation and
interpretation authorizing bank holding companies and their non-bank affiliates
to act as investment advisers to investment companies, a national bank
performing investment advisory services for an investment company would not
violate the Glass-Steagall Act.
Key Advisers and the Sub-Adviser believe that they may perform the
services for the Victory Portfolios contemplated by the Prospectus, this
Statement of Additional Information, and the Investment Advisory (Sub-Advisory)
Agreement with the Victory Portfolios without violation of applicable statutes
and regulations and has so represented in its Investment Advisory (Sub-Advisory)
Agreement with the Victory Portfolios. Key Trust Company of Ohio, N. A. believes
that it may perform the services for the Victory Portfolios contemplated by the
Prospectus, this Statement of Additional Information, and the Shareholder
Servicing Agreement with the Victory Portfolios (as described below) without
violation of applicable statutes and regulations and has so represented in such
Shareholder Servicing Agreement. Future changes in either federal or state
statutes and regulations relating to the permissible activities of banks or bank
holding companies and the subsidiaries or affiliates of those entities, as well
as further judicial or administrative decisions or interpretations of present
and future statutes and regulations, could prevent or restrict Key Trust Company
of Ohio, N. A., Key Advisers or the Sub-Adviser from continuing to perform such
services for the Victory Portfolios. Depending upon the nature of any changes in
the services which could be provided by Key Trust Company of Ohio, N. A., Key
Advisers or the Sub-Adviser the Trustees of the Victory Portfolios would review
the Victory Portfolios' relationship with Key Trust Company of Ohio, N. A., Key
Advisers or the Sub-Adviser and consider taking all action necessary in the
circumstances.
Should future legislative, judicial, or administrative action prohibit
or restrict the proposed activities of Key Trust Company of Ohio, N. A., Key
Advisers or the Sub-Adviser and its affiliated and correspondent banks and other
non-bank affiliates in connection with customer purchases of shares of the
Victory Portfolios, the banks and such non-bank affiliates might be required to
alter materially or discontinue the services offered by them to customers. It is
not anticipated, however, that any change in the Victory Portfolios' method of
operations would affect its net asset value per share or result in financial
losses to any customer.
From time to time, advertisements, supplemental sales literature and
information furnished to present or prospective shareholders of the Fund may
include descriptions of Key Trust Company of Ohio, N. A., Key Advisers and the
Sub-Adviser including, but not limited to, (i) descriptions of the operations of
Key Trust Company of Ohio, N. A., Key Advisers and the SubAdviser; (ii)
descriptions of certain personnel and their functions; and (iii) statistics and
rankings related to the operations of Key Trust Company of Ohio, N. A., Key
Advisers and the Sub-Adviser.
Portfolio Transactions
Pursuant to the Investment Advisory (Sub-Advisory) Agreement, Key
Advisers or the Sub-Adviser determines, subject to the general supervision of
the Trustees of the Victory Portfolios, and in accordance with each fund's
investment objective and restrictions, which securities are to be purchased and
sold by a fund, and which brokers are to be eligible to execute its portfolio
transactions. Purchases from underwriters and/or broker/dealers of portfolio
securities include a commission or concession paid by the issuer to the
underwriter and/or broker/dealer and purchases from dealers serving as market
makers may include the spread between the bid and asked price. While Key
Advisers and the Sub-Adviser generally seek competitive spreads or commissions,
the Fund may not necessarily pay the lowest spread or commission available on
each transaction, for reasons discussed below.
Allocation of transactions, including their frequency, to various
dealers is determined by Key Advisers or the Sub-Adviser in its best judgment
and in a manner deemed fair and reasonable to shareholders. The primary
consideration is prompt execution of orders in an effective manner at the most
favorable price. Subject to this consideration, dealers who provide supplemental
investment research to Key Advisers or the Sub-Adviser may receive orders for
transactions by the Victory Portfolios. Information so received is in addition
to and not in lieu of services required to be performed by Key Advisers or the
Sub-Adviser and does not reduce the advisory (sub-advisory) fees payable to Key
Advisers or the Sub-Adviser by the Victory Portfolios. Such information may be
useful to Key Advisers or the Sub-Adviser in serving both the Victory Portfolios
and other clients and, conversely, supplemental information obtained by the
placement of business or other clients may be useful to Key Advisers or the
Sub-Adviser in carrying out its obligations to the Victory Portfolios. In the
future, the Trustees may also authorize the allocation of brokerage to
affiliated broker-dealers on an agency basis to effect portfolio transactions.
In such event, the Trustees will adopt procedures incorporating the standards of
Rule 17e-1 of the Investment Company Act of 1940, as amended (the "1940 Act"),
which require that the commission paid to affiliated broker- dealers must be
"reasonable and fair compared to the commission, fee or other remuneration
received, or to be received, by other brokers in connection with comparable
transactions involving similar securities during a comparable period of time."
At times, the Fund may also purchase portfolio securities directly from dealers
acting as principals, underwriters or market makers. As these transactions are
usually conducted on a net basis, no brokerage commissions are paid by the Fund.
The Victory Portfolios will not execute portfolio transactions through,
acquire portfolio securities issued by, make savings deposits in, or enter into
repurchase or reverse repurchase agreements with Key Advisers, the Sub-Adviser,
Key Trust Company of Ohio, N.A. or its affiliates, Concord Holding Corporation,
Victory Broker-Dealer Services, Inc. or their affiliates, and will not give
preference to Key Trust Company of Ohio, N.A.'s correspondent banks or
affiliates, or Concord Holding Corporation or Victory Broker-Dealer Services,
Inc. with respect to such transactions, securities, savings deposits, repurchase
agreements, and reverse repurchase agreements.
Investment decisions for each fund are made independently from those
for the other funds or any other investment company or account managed by Key
Advisers or the Sub-Adviser. Any such other investment company or account may
also invest in the same securities as a particular fund. When a purchase or sale
of the same security is made at substantially the same time on behalf of a fund
and another fund, investment company or account, the transaction will be
averaged as to price, and available investments allocated as to amount, in a
manner which Key Advisers or the SubAdviser believes to be equitable to a fund
or the Victory Portfolios and such other investment company or account. In some
instances, this investment procedure may adversely affect the price paid or
received by a fund or the size of the position obtained by a fund. To the extent
permitted by law, Key Advisers or the Sub-Adviser may aggregate the securities
to be sold or purchased for a fund with those to be sold or purchased for the
other funds or for other investment companies or accounts in order to obtain
best execution. As provided by the Investment Advisory (Sub-Advisory) Agreement,
in making investment recommendations for the Victory Portfolios, Key Advisers
and the Sub-Adviser will not inquire or take into consideration whether an
issuer of securities proposed for purchase or sale by a Fund is a customer of
Key Advisers or the Sub-Adviser, their parents or subsidiaries or affiliates
and, in dealing with their commercial customers, Key Advisers or the
Sub-Adviser, their parents, subsidiaries, and affiliates will not inquire or
take into consideration whether securities of such customers are held by the
Victory Portfolios.
<PAGE>
Administrator
Currently, Concord Holding Corporation ("CHC") serves as general
manager and administrator (the "Administrator") to the Fund. Prior to CHC
becoming administrator to the Fund, The Winsbury Company ("Winsbury") served as
administrator. The Administrator assists in supervising all operations of each
fund (other than those performed by Key Advisers or the Sub-Adviser under the
Investment Advisory (Sub-Advisory) Agreement). The Administrator is a
broker-dealer registered with the Commission, and is a member of the National
Association of Securities Dealers, Inc. The Administrator provides financial
services to institutional clients.
CHC receives a fee from each fund for its services as Administrator and
expenses assumed pursuant to the Administration Agreements, calculated daily and
paid monthly, at the annual rate of fifteen one hundredths of one percent (.15%)
of each fund's average daily net assets. CHC may periodically waive all or a
portion of its fee with respect to any fund in order to increase the net income
of one or more funds of the Victory Portfolios available for distribution as
dividends.
Unless sooner terminated, the Administration Agreement will continue in
effect as to the Fund for a period of two years, and for consecutive one-year
terms thereafter, provided that such continuance is ratified at least annually
by the Victory Portfolios' Trustees or by vote of a majority of the outstanding
shares of that Fund , and in either case by a majority of the Trustees who are
not parties to the Administration Agreement or interested persons (as defined in
the 1940 Act) of any party to the Administration Agreement, by votes cast in
person at a meeting called for such purpose.
The Administration Agreement provides that CHC shall not be liable for
any error of judgment or mistake of law or any loss suffered by the Victory
Portfolios in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or from the reckless disregard by
it of its obligations and duties thereunder.
Under the Administration Agreement, CHC assists in the Fund's
administration and operation, including providing statistical and research data,
clerical services, internal compliance and various other administrative
services, including among other responsibilities, forwarding certain purchase
and redemption requests to the Transfer Agent, participation in the updating of
the prospectus, coordinating the preparation, filing, printing and dissemination
of reports to shareholders, coordinating the preparation of income tax returns,
arranging for the maintenance of books and records and providing the office
facilities necessary to carry out the duties thereunder. Under the
Administration Agreement, CHC may delegate all or any part of its
responsibilities thereunder.
CHC receives an annual fee of .15% of the Fund's average net assets,
paid monthly, for services performed under the Fund's Administration Agreement.
CHC may, from time to time, agree to reimburse the Fund for expenses above a
specified percentage of average net assets.
Victory Broker-Dealer Services, Inc. sells shares of the Fund as agent
on behalf of the Victory Portfolios at no cost to the Fund. Key Advisers and
the Sub-Adviser neither participate in nor are they responsible for the
underwriting of Victory Portfolios shares.
In the fiscal years ended October 31, 1992, October 31, 1993 and
October 31, 1994, the Funds paid to Winsbury aggregate administration fees of
$751,057, $766,034 and $679,754, respectively, for the U.S. Government
Obligations Fund, after fee reductions of $0, $1,662 and $12,368, respectively.
In the six month period ended April 30, 1995, the Fund paid administration fees
of $___________.
Business Management Agreement
In connection with its obligations under the investment sub-advisory
agreement, the Sub-Adviser has entered into a Business Management Agreement with
Key Advisers, pursuant to which Key Advisers provides certain administrative and
support services to the Sub-Adviser. Such services include preparing reports to
the Company's Board of Trustees, recordkeeping services, and services rendered
in connection with the preparation of regulatory filings and other reports, and
regulatory and other administrative and compliance systems and support services.
For such services, the Sub-Adviser pays fees to Key Advisers which vary
according to a sliding scale containing "breakpoints" at which decreases in the
business management fees correspond to increases in the average daily net asset
values of a Fund as follows:
For the Balanced Fund, Diversified For the International Growth Fund, Ohio
Stock Fund, Growth Fund, Stock Index Regional Stock Fund and Special Value
Fund and Value Fund: Fund:
Rate of Rate of
Business Business
Net Assets Management Fee* Net Assets Management Fee*
Up to $10,000,000 0.30% Up to $10,000,000 0.55%
Next $15,000,000 0.15% Next $15,000,000 0.35%
Next $25,000,000 0.05% Next $25,000,000 0.20%
Above $50,000,000 0.00% Above $50,000,000 0.15%
For the Intermediate Income Fund, For the Prime Obligations Fund, Tax-Free
Investment Quality Bond Fund, Limited Money Market Fund, U.S. Government
Term Income Fund, Ohio Municipal Bond Obligations Fund, Financial Reserves
Fund, Goverment Bond Fund, Government Fund, Institutional Money Market Fund and
Mortgage Fund, National Municipal Ohio Municipal Money Market Fund:
Bond Fund and New York Tax-Free Fund:
Rate of Rate of
Business Business
Net Assets Management Fee* Net Assets Management Fee*
Up to $10,000,000 0.25% Up to $10,000,000 0.20%
Next $15,000,000 0.15% Next $15,000,000 0.15%
Next $25,000,000 0.10% Next $25,000,000 0.10%
Above $50,000,000 0.05% Above $50,000,000 0.075%
- --------------------
* As a percentage of average daily net assets.
Shareholder Servicing Plan
The Victory Portfolios, on behalf of the Service Shares class of the Fund, has
adopted a Shareholder Servicing Plan to provide payments to shareholder
servicing agents (each a "Shareholder Servicing Agent") that provide
administrative support services to customers who may from time to time
beneficially own shares, which include: (i) aggregating and processing purchase
and redemption requests for shares from customers and transmitting promptly net
purchase and redemption orders to our distributor or transfer agent; (ii)
providing customers with a service that invests the assets of their accounts in
shares pursuant to specific or pre-authorized instructions; (iii) processing
dividend and distribution payments from the Victory Portfolios on behalf of
customers; (iv) providing information periodically to customers showing their
positions in shares; (v) arranging for bank wires; (vi) responding to customer
inquiries concerning their investment in shares; (vii) providing subaccounting
with respect to shares beneficially owned by customers or providing the
information to us necessary for subaccounting; (viii) if required by law,
forwarding shareholder communications from us (such as proxies, shareholder
reports, annual and semi-annual financial statements and dividend, distribution
and tax notices) to customers; (ix) forwarding to customers proxy statements and
proxies containing any proposals regarding this Plan; and (x) providing such
other similar services as we may reasonably request to the extent you are
permitted to do so under applicable statutes, rules or regulations. For expenses
incurred and services provided as Shareholder Servicing Agent pursuant to its
respective Shareholder Servicing Agreement, the Victory Portfolios pays each
Shareholder Servicing Agent a fee computed daily and paid monthly, in amounts
aggregating not more than twenty-five one-hundredths of one percent (.25%) of
the average daily net assets of the Fund per year. A Shareholder Servicing Agent
may periodically waive all or a portion of its respective shareholder servicing
fees with respect to the Fund to increase the net income of the Fund available
for distribution as dividends.
Expenses
Each fund bears the following expenses relating to its respective
operations: taxes, interest, brokerage fees and commissions, fees of the
Trustees of the Victory Portfolios, Commission fees, state securities
qualification fees, costs of preparing and printing prospectuses for
regulatory purposes and for distribution to current shareholders, outside
auditing and legal expenses, advisory and administration fees, fees and
out-of-pocket expenses of the custodian and transfer agent, certain insurance
premiums, costs of maintenance of the fund's existence, costs of shareholders'
reports and meetings, and any extraordinary expenses incurred in the fund's
operation.
If total expenses borne by any of the Victory Portfolios in any fiscal
year exceeds expense limitations imposed by applicable state securities
regulations, Key Advisers or the Sub-Adviser as applicable, and the
Administrator will waive their fees to the extent such excess expenses exceed
such expense limitations in proportion to their respective fees. As of the date
of this Statement of Additional Information, the most restrictive expense
limitation applicable to the Victory Portfolios limits each fund's aggregate
annual expenses, including management and advisory fees but excluding interest,
taxes, brokerage commissions, and certain other expenses, to 2.5% of the first
$30 million of a fund's average net assets, 2.0% of the next $70 million of a
fund's average net assets, and 1.5% of a Fund's remaining average net assets.
Any expenses to be borne by Key Advisers or the Sub-Adviser or the Administrator
will be estimated daily and reconciled and paid on a monthly basis. Fees imposed
upon customer accounts by Key Advisers, the Sub-Adviser, Key Trust Company of
Ohio, N.A. or its correspondents, affiliated banks and other non-bank affiliates
for cash management services are not fund expenses for purposes of any such
expense limitation.
Distributor
Victory Broker-Dealer Services, Inc. (the "Distributor") serves as
distributor for the continuous offering of the shares of each fund of the
Victory Portfolios pursuant to a Distribution Agreement. Prior to Victory
BrokerDealer Services, Inc. becoming the Distributor, Winsbury served as
distributor of each Fund. Unless otherwise terminated, the Distribution
Agreement will remain in effect for two years, and thereafter for consecutive
one-year terms, provided that it is approved at least annually (i) by the
Victory Portfolios' Trustees or by the vote of a majority of the outstanding
shares of the Victory Portfolios, and (ii) by the vote of a majority of the
Trustees of the Victory Portfolios who are not parties to the Distribution
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval. The Distribution Agreement
may be terminated in the event of its assignment, as defined in the 1940 Act.
For the Victory Portfolios' fiscal years ended October 31, 1992, October 31,
1993, and October 31, 1994, Winsbury received $34,615, $77,258 and $212,021,
respectively, in underwriting commissions, and retained $0, $0 and $15,
respectively. For the six months ended April 30, 1995, the Distributor received
$_________ in underwriting commissions.
Fund Accountant
BISYS Fund Services Ohio, Inc. serves as fund accountant for each fund
pursuant to a fund accounting agreement with the Victory Portfolios dated June
5, 1995 (the "Fund Accounting Agreement"). As fund accountant for the Victory
Portfolios, BISYS Fund Services Ohio, Inc. calculates the Victory Portfolios'
net asset value, the dividend and capital gain distribution, if any, and the
yield. BISYS Fund Services Ohio, Inc. also provides a current security position
report, a summary report of transactions and pending maturities, a current cash
position report, and maintains the general ledger accounting records for each
Fund. Under its Fund Accounting Agreement with the Victory Portfolios, BISYS
Fund Services Ohio, Inc. is entitled to receive annual fees of .03% of the first
$100 million of a Fund's daily average net assets, .02% of the next $100 million
of a Fund's daily average net assets, and .01% of a Fund's remaining daily
average net assets. These annual fees are subject to a minimum monthly assets
charge of $2,500 per taxable Fund, $2,917 per tax-free Fund, and $3,333 per
international Fund and do not include out-of-pocket expenses or multiple class
charges of $833 per month assessed for each class of shares after the first
class .
In the fiscal years ended October 31, 1992, October 31, 1993, and
October 31, 1994, the Victory Portfolios paid The Winsbury Service Corporation
fund accounting fees (after fee waivers) of $300,422.83, $306,082.43 and
$276,849, respectively, for the Fund. For the six months ended April 30, 1995,
the Fund paid $_________ in fund accounting fees.
Custodian
Cash and securities owned by each fund of the Victory Portfolios
(except the International Growth Fund) are held by Key Trust Company of Ohio,
N.A. as custodian; cash and securities owned by the International Growth Fund
are held by The Bank of New York and certain foreign sub -custodians, and by Key
Trust Company of Ohio, N.A. as sub-custodian. Key Trust Company of Ohio, N.A.
serves as custodian to each fund of the Victory Portfolios (except the
International Growth Fund) pursuant to a Custodian Agreement dated May 24, 1995.
The Bank of New York serves as custodian to the International Growth Fund
pursuant to a Custodian Agreement dated . Under these Agreements, Key Trust
Company of Ohio, N.A. and The Bank of New York each (i) maintain a separate
account or accounts in the name of each respective fund; (ii) make receipts and
disbursements of money on behalf of each fund; (iii) collect and receive all
income and other payments and distributions on account of portfolio securities;
(iv) respond to correspondence from security brokers and others relating to its
duties; and (v) make periodic reports to the Victory Portfolios' Trustees
concerning the Victory Portfolios' operations. Key Trust Company of Ohio, N.A.
and The Bank of New York each may, with the approval of a fund and at the
custodian's own expense, open and maintain a subcustody account or accounts on
behalf of a fund, provided that Key Trust Company of Ohio, N.A. or The Bank of
New York shall remain liable for the performance of all of its duties under its
respective Custodian Agreement.
Transfer Agent
The Primary Funds Service Corporation serves as transfer agent and
dividend disbursing agent for each fund, pursuant to a Transfer Agency and
Shareholder Servicing Agreement. Under its agreement with the Victory
Portfolios, Primary Funds Service Corporation has agreed (i) to issue and redeem
shares of the Victory Portfolios; (ii) to address and mail all communications by
the Victory Portfolios to its shareholders, including reports to shareholders,
dividend and distribution notices, and proxy material for its meetings of
shareholders; (iii) to respond to correspondence or inquiries by shareholders
and others relating to its duties; (iv) to maintain shareholder accounts and
certain sub-accounts; and (v) to make periodic reports to the Victory
Portfolios' Trustees concerning the Victory Portfolios' operations. For the
services provided under the Transfer Agency and Shareholder Servicing Agreement,
Primary Funds Service Corporation receives a maximum monthly fee of $1,250 per
fund to a maximum of $3.50 per account per fund.
Auditors
The financial highlights appearing in the Prospectus for the Fund,
other than unaudited information marked as such, has been derived from financial
statements of the Victory Portfolios which have been audited by Coopers &
Lybrand L.L.P., independent accountants, as set forth in their report
incorporated by reference herein, and are incorporated by reference in reliance
upon such report and on the authority of such firm as experts in auditing and
accounting. Coopers & Lybrand L.L.P.'s address is 100 East Broad Street,
Columbus, Ohio 43215.
Legal Counsel
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, 919 Third Avenue, New
York, New York 10022 are counsel to the Victory Portfolios.
<PAGE>
ADDITIONAL INFORMATION
Description of Shares
The Victory Portfolios (sometimes referred to as the "Trust") is a
Massachusetts business trust. The Victory Portfolios' Declaration of Trust,
pursuant to which the Victory Portfolios was originally called the North Third
Street Fund, was filed with the Secretary of State of the Commonwealth of
Massachusetts on February 6, 1986. On September 22, 1986, an Amended and
Restated Declaration of Trust was filed to change the name of the Trust to The
Emblem Fund and to make certain other changes. A second amendment was filed
October 23, 1986 providing for voting of shares in the aggregate except where
voting of shares by series is otherwise required by law. An amendment to the
Amended and Restated Declaration of Trust was filed on March 15, 1993 to change
the name of the Trust to The Society Funds. An Amended and Restated Declaration
of Trust was then filed on September 2, 1994 to change the name of the Trust to
The Victory Portfolios. The Declaration of Trust, as amended, authorizes the
Trustees to issue an unlimited number of shares, which are units of beneficial
interest, without par value. On or about February 29, 1996, contingent upon
shareholder approval, the Victory Portfolios will convert from a Massachusetts
business trust to a Delaware business trust. The Victory Portfolios presently
has twenty- eight series of shares, which represent interests in the U.S.
Government Obligations Fund, the Prime Obligations Fund, the Tax-Free Money
Market Fund, the Balanced Fund, the Stock Index Fund, the Value Fund, the
Diversified Stock Fund, the Growth Fund, the Special Value Fund, the Special
Growth Fund, the Ohio Regional Stock Fund, the International Growth Fund, the
Limited Term Income Fund, the Government Mortgage Fund, the Ohio Municipal Bond
Fund, the Intermediate Income Fund, the Investment Quality Bond Fund, the
Florida Tax-Free Bond Fund, the Municipal Bond Fund, the Convertible Securities
Fund, the Short-Term U.S. Government Income Fund, the Government Bond Fund, the
Fund for Income, the National Municipal Bond Fund, the New York Tax-Free Fund,
the Institutional Money Market Fund, the Financial Reserves Fund and the Ohio
Municipal Money Market Fund, respectively. The Victory Portfolios' Declaration
of Trust authorizes the Trustees to divide or redivide any unissued shares of
the Victory Portfolios into one or more additional series by setting or changing
in any one or more respects their respective preferences, conversion or other
rights, voting power, restrictions, limitations as to dividends, qualifications,
and terms and conditions of redemption.
Shares have no subscription or preemptive rights and only such
conversion or exchange rights as the Trustees may grant in its discretion. When
issued for payment as described in the Prospectus and this Statement of
Additional Information, the Victory Portfolios' shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Victory
Portfolios, shares of a fund are entitled to receive the assets available for
distribution belonging to the fund, and a proportionate distribution, based upon
the relative asset values of the respective funds, of any general assets not
belonging to any particular fund which are available for distribution.
As described in the Prospectus under the caption "ADDITIONAL
INFORMATION -- Voting Rights," shares of the Victory Portfolios are entitled to
one vote per share (with proportional voting for fractional shares) on such
matters as shareholders are entitled to vote. Shareholders vote as a single
class on all matters except (i) when required by the 1940 Act, shares shall be
voted by individual series, and (ii) when the Trustees have determined that the
matter affects only the interests of one or more series, then only shareholders
of such series shall be entitled to vote thereon. There will normally be no
meetings of shareholders for the purposes of electing Trustees unless and until
such time as less than a majority of the Trustees have been elected by the
shareholders, at which time the Trustees then in office will call a
shareholders' meeting for the election of Trustees. In addition, Trustees may be
removed from office by a written consent signed by the holders of two-thirds of
the outstanding shares of the Victory Portfolios and filed with the Victory
Portfolios' custodian or by a vote of the holders of two-thirds of the
outstanding shares of the Victory Portfolios at a meeting duly called for the
purpose, which meeting shall be held upon the written request of the holders of
not less than 10% of the outstanding shares. Upon written request by ten or more
shareholders, who have been such for at least six months, and who hold shares
constituting 1% of the outstanding shares, stating that such shareholders wish
to communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a Trustee, the
Victory Portfolios will provide a list of shareholders or disseminate
appropriate materials (at the expense of the requesting shareholders).
Except as set forth above, the Trustees shall continue to hold office and may
appoint their successors.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Victory Portfolios shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each fund of the Victory Portfolios affected by the
matter. For purposes of determining whether the approval of a majority of the
outstanding shares of a fund will be required in connection with a matter, a
fund will be deemed to be affected by a matter unless it is clear that the
interests of each fund in the matter are identical, or that the matter does not
affect any interest of the fund. Under Rule 18f-2, the approval of an investment
advisory agreement or any change in investment policy would be effectively acted
upon with respect to a fund only if approved by a majority of the outstanding
shares of such fund. However, Rule 18f-2 also provides that the ratification of
independent public accountants, the approval of principal underwriting
contracts, and the election of Trustees may be effectively acted upon by
shareholders of the Victory Portfolios voting without regard to series.
Shareholder and Trustee Liability
Under Massachusetts law, holders of units of interest in a business
trust may, under certain circumstances, be held personally liable as partners
for the obligations of the trust. However, the Victory Portfolios' Declaration
of Trust provides that shareholders shall not be subject to any personal
liability for the obligations of the Victory Portfolios, and that every written
agreement, obligation, instrument, or undertaking made by the Victory Portfolios
shall contain a provision to the effect that the shareholders are not personally
liable thereunder. The Declaration of Trust provides for indemnification out of
the trust property of any shareholder held personally liable solely by reason of
his or her being or having been a shareholder. The Declaration of Trust also
provides that the Victory Portfolios shall, upon request, assume the defense of
any claim made against any shareholder for any act or obligation of the Victory
Portfolios, and shall satisfy any judgment thereon. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Funds would be unable to meet its
obligations.
The Declaration of Trust states further that no Trustee, officer, or
agent of the Victory Portfolios shall be personally liable in connection with
the administration or preservation of the assets of the Funds or the conduct of
the Victory Portfolios' business; nor shall any Trustee, officer, or agent be
personally liable to any person for any action or failure to act except for his
own bad faith, willful misfeasance, gross negligence, or reckless disregard of
his duties. The Declaration of Trust also provides that all persons having any
claim against the Trustees or the Victory Portfolios shall look solely to the
assets of the Victory Portfolios for payment.
Delaware Law [to be inserted]
Calculation of Performance Data
Based on the seven-day period ended October 31, 1994 (the "base
period"), the yield and effective yield was 4.09% and 4.17%, respectively for
Institutional Shares of the Fund.
Performance information showing a fund's total return may be presented, from
time to time, in advertising and sales literature
For the one year period ended October 31, 1994, the average annual
total return of Institutional Shares of the Fund was 3.30%. The average annual
total return for Institutional Shares of the Fund for the five year period ended
October 31, 1994 was 4.69%.
<PAGE>
The average annual return for Institutional Shares of the Fund from commencement
of operations (November 18, 1986) through October 31, 1994 was 5.51%.
The Fund's average annual total return was determined by calculating the change
in the value of a hypothetical $1,000 investment in the Fund for each of the
periods shown. This figure is computed by determining the average annual
compounded rate of return over the applicable period that would equate the
initial amount invested to the ending redeemable value of the investment. The
ending redeemable value includes dividends and capital gain distributions
reinvested at net asset value. The resulting percentages indicated the positive
or negative investment results that an investor would have experienced from
changes in share price and reinvestment of dividends and capital gains
distributions.
Current yields will fluctuate, from time to time, and are not
necessarily representative of future results. Accordingly, the Fund's yield may
not provide a basis for comparison with bank deposits or other investments that
pay a fixed return for a stated period of time. Yield is a function of the
portfolio's quality, composition, and maturity, as well as expenses allocated to
the Fund. Fees imposed upon customer accounts by Key Advisers, the Sub-Adviser,
their correspondents, affiliated banks and other non-bank affiliates for cash
management services will reduce the Fund's effective yield to customers.
From time to time, performance information for the Fund showing the
Fund's average annual total return, aggregate total return, and/or yield may be
presented in advertisements, sales literature and in reports to shareholders.
Such performance figures are based on historical earnings and are not intended
to indicate future performance. Average annual total return will be calculated
over a stated period. Average annual total return is measured by comparing the
value of an investment in the Fund at the beginning of the relevant period (as
adjusted for sales charges, if any) to the redemption value of the investment at
the end of the period (assuming immediate reinvestment of any dividends or
capital gains distributions), and then annualizing that figure. Average annual
total return is a hypothetical return, and is generally not the same as actual
annual total return. Aggregate total return is calculated similarly to average
annual total return except that the return figure is aggregated over the
relevant period instead of annualized. Yield will be computed by dividing the
Fund's net investment income per share earned during a recent one-month period
by the Fund's maximum offering price per share (reduced by any undeclared earned
income expected to be paid shortly as a dividend) on the last day of the period.
Investors may also judge, and the Victory Portfolios may at times
advertise, the performance of the Fund by comparing it to the performance of
other mutual funds or mutual fund portfolios with comparable investment
objectives and policies, which performance may be contained in various unmanaged
mutual fund or market indices or rankings such as those prepared by Dow Jones &
Co., Inc., Standard & Poor's Corporation, Lehman Brothers, Merrill Lynch, and
Salomon Brothers, and in publications issued by Lipper Analytical Services, Inc.
and in the following publications: IBC/Donoghue's Money Fund Reports, Ibbotson
Associates, Inc., Morningstar, CDA/Wiesenberger, Money Magazine, Forbes,
Barron's, The Wall Street Journal, The New York Times, Business Week, American
Banker, Fortune, Institutional Investor, U.S.A. Today. In addition to yield
information, general information about the Victory Portfolios that appear in a
publication such as those mentioned above may also be quoted or reproduced in
advertisements or in reports to shareholders.
From time to time, the Victory Portfolios may include the following
types of information in advertisements, supplemental sales literature and
reports to shareholders: (1) discussions of general economic or financial
principles (such as the effects of inflation, the power of compounding and the
benefits of dollar-cost averaging); (2) discussions of general economic trends;
(3) presentations of statistical data to supplement such discussions; (4)
descriptions of past or anticipated portfolio holdings for one or more funds of
the Victory Portfolios; (5) descriptions of investment strategies for one or
more of such funds; (6) descriptions or comparisons of various savings and
investment products (including but not limited to insured bank products,
annuities, qualified retirement plans and individual stocks and bonds) which may
or may not include the Victory Portfolios; (7) comparisons of investment
products (including the Victory Portfolios) with relevant market or industry
indices or other appropriate benchmarks; and (8) discussions of fund rankings or
ratings by NRSROs.
Yield and performance are functions of the type and quality of
instruments held in the portfolio, operating expenses, and market conditions.
Consequently, current yields and performance will fluctuate and are not
necessarily representative of future results. Any fees charged by Key Advisers,
the Sub-Adviser or other service providers with respect to customer accounts for
investing in the Victory Portfolios will not be reflected in performance
calculations.
Miscellaneous
As used in the Prospectus and in this Statement of Additional
Information, "assets belonging to a fund" means the consideration received by
the Victory Portfolios upon the issuance or sale of shares in that fund,
together with all income, earnings, profits, and proceeds derived from the
investment thereof, including any proceeds from the sale, exchange, or
liquidation of such investments, and any funds or payments derived from any
reinvestment of such proceeds and any general assets of the Victory Portfolios,
which general liabilities and expenses are not readily identified as belonging
to a particular fund that are allocated to that fund by the Victory Portfolios'
Trustees. The Trustees may allocate such general assets in any manner they deem
fair and equitable. It is anticipated that the factor that will be used by the
Trustees in making allocations of general assets to a particular fund of the
Victory Portfolios will be the relative net asset value of the respective fund
at the time of allocation. Assets belonging to a particular fund are charged
with the direct liabilities and expenses in respect of that fund, and with a
share of the general liabilities and expenses of each of the funds not readily
identified as belonging to a particular fund but that are allocated to a fund in
proportion to the relative net asset values of the respective fund of the
Victory Portfolios at the time of allocation. The timing of allocations of
general assets and general liabilities and expenses of the Victory Portfolios to
a particular fund will be determined by the Trustees of the Victory Portfolios
and will be in accordance with generally accepted accounting principles.
Determinations by the Trustees of the Victory Portfolios as to the timing of the
allocation of general liabilities and expenses and as to the timing and
allocable portion of any general assets with respect to a particular fund are
conclusive.
As used in the Prospectus and in this Statement of Additional
Information, a "vote of a majority of the out standing shares" of the Victory
Portfolios or a particular fund means the affirmative vote of the lesser of (a)
67% or more of the shares of the Victory Portfolios or such fund present at a
meeting at which the holders of more than 50% of the outstanding shares of the
Victory Portfolios or such fund are represented in person or by proxy, or (b)
more than 50% of the outstanding votes of shareholders of the Victory Portfolios
or such fund.
Organizational expenses are allocated to each of the Victory Portfolios
and are amortized over a period of two years from the commencement of the public
offering of shares of the Victory Portfolios.
As of January 1, 1996, the Trustees and officers of the Victory
Portfolios, as a group, owned less than one percent of the shares of the Fund.
As of that date, the Fund believes that Society National Bank was the
shareholder of record of _____% of the shares of the Fund.
As of January 1, 1996, National Financial Services Corp.,
For the Benefit of our Customers, One World Financial Center, 200 Liberty St.,
4th Floor, New York, NY 10281-0000 owned beneficially ______________ shares
(____%) of the Fund.
<PAGE>
Individual Trustees are elected by the shareholders and, subject to
removal by the vote of the holders of two-thirds of the outstanding shares of
the Victory Portfolios, serve for a term lasting until the next meeting of
shareholders at which trustees are elected. Such meetings are not required to be
held at any specific intervals. Individual Trustees may be removed by vote of
the shareholders voting not less than a majority of the shares then outstanding
cast in person or by proxy at any meeting called for that purpose, or by a
written declaration signed by shareholders voting not less than two-thirds of
the shares then outstanding.
The Victory Portfolios is registered with the Securities and Exchange
Commission as a management investment company. Such registration does not
involve supervision by the Commission of the management or policies of the
Victory Portfolios.
The Prospectus and this Statement of Additional Information omit
certain of the information contained in the Registration Statement filed with
the Securities and Exchange Commission. Copies of such information may be
obtained from the Commission upon payment of the prescribed fee.
The Prospectus and this Statement of Additional Information are not an
offering of the securities herein described in any state in which such offering
may not lawfully be made. No salesman, dealer, or other person is authorized to
give any information or make any representation other than those contained in
the Prospectus and this Statement of Additional Information.
The 1994 Annual Report and 1995 Semi-Annual Report to shareholders of
The Victory Portfolios are incorporated herein in their entirety. These reports
include the financial statements for the fiscal year ended October 31, 1994 and
for the semi-annual period ended April 30, 1995. The opinion in the Annual
Report of Coopers & Lybrand L.L.P., independent accountants, is incorporated
herein in its entirety to such Annual Report, and such financial statements are
incorporated in their entirety in reliance upon such report of Coopers &
Lybrand L.L.P. and on the authority of such firm as experts in auditing and
accounting.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
FINANCIAL STATEMENTS
<PAGE>
APPENDIX
The nationally recognized statistical rating organizations
(individually, an "NRSRO") that may be utilized by KeyCorp Advisers or Society
with regard to portfolio investments for the Funds include Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P"),Duff & Phelps,
Inc. ("Duff"), Fitch Investors Service, Inc. ("Fitch"), IBCA Limited and its
affiliate, IBCA Inc.(collectively, "IBCA"), and Thomson BankWatch, Inc.
("Thomson"). Set forth below is a description of the relevant ratings of each
such NRSRO. The NRSROs that may be utilized by Key Advisers or the Sub-Adviser
and the description of each NRSRO's ratings is as of the date of this Statement
of Additional Information, and may subsequently change.
Long-Term Debt Ratings (may be assigned, for example, to corporate and
municipal bonds).
Description of the five highest long-term debt ratings by Moody's
(Moody's applies numerical modifiers (e.g., 1, 2, and 3) in each rating category
to indicate the security's ranking within the category):
Aaa. Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa. Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than in Aaa securities.
A. Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.
Baa. Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba. Bonds which are rated Ba are judged to have speculative elements -
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times in the future. Uncertainty of
position characterizes bonds in this class.
Description of the five highest long-term debt ratings by S&P (S&P may
apply a plus (+) or minus (-) to a particular rating classification to show
relative standing within that classification):
AAA. Debt rated AAA has the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA. Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A. Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB. Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB. Debt rated BB is regarded, on balance, as predominately speculative
with respect to capacity to pay interest and repay principal in accordance with
the terms of the obligation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposure to adverse conditions.
Description of the three highest long-term debt ratings by Duff:
AAA. Highest credit quality. The risk factors are negligible being
only slightly more than for risk-free U.S. Treasury debt.
AA+. High credit quality Protection factors are strong.
AA. Risk is modest but may vary slightly from time to time
AA-. because of economic conditions.
A+. Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic stress.
Description of the three highest long-term debt ratings by Fitch (plus
or minus signs are used with a rating symbol to indicate the relative position
of the credit within the rating category):
AAA. Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA. Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA." Because
bonds rated in the "AAA" and "AA" categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these
issues is generally rated "[-]+."
A. Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
IBCA's description of its three highest long-term debt ratings:
AAA. Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and
interest is substantial. Adverse changes in business, economic or
financial conditions are unlikely to increase investment risk
significantly.
AA. Obligations for which there is a very low expectation of investment
risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic, or financial
conditions may increase investment risk albeit not very significantly.
A. Obligations for which there is a low expectation of investment risk.
Capacity for timely repayment of principal and interest is strong,
although adverse changes in business, economic or financial conditions
may lead to increased investment risk.
Short-Term Debt Ratings (may be assigned, for example, to commercial
paper, master demand notes, bank instruments, and letters of credit)
Moody's description of its three highest short-term debt ratings:
Prime-1. Issuers rated Prime-1 (or supporting institutions) have a
superior capacity for repayment of senior short-term promissory obligations.
Prime-1 repayment capacity will normally be evidenced by many of the following
characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate reliance
on debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.
Prime-2. Issuers rated Prime-2 (or supporting institutions) have a
strong capacity for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Prime-3. Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
S&P's description of its three highest short-term debt ratings:
A-1. This designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to have extremely
strong safety characteristics are denoted with a plus sign (+).
A-2. Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated "A-1."
A-3. Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher
designations.
Duff's description of its five highest short-term debt ratings (Duff
incorporates gradations of "1+" (one plus) and "1-" (one minus) to assist
investors in recognizing quality differences within the highest rating
category):
Duff 1+. Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations.
Duff 1. Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk
factors are minor.
Duff 1-. High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk factors are
very small.
Duff 2. Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good. Risk
factors are small.
Duff 3. Satisfactory liquidity and other protection factors qualify
issue as to investment grade.
Risk factors are larger and subject to more variation. Nevertheless,
timely payment is expected.
Fitch's description of its four highest short-term debt ratings:
F-1+. Exceptionally Strong Credit Quality. Issues assigned this
rating are regarded as having the strongest degree of assurance for
timely payment.
F-1. Very Strong Credit Quality. Issues assigned this rating reflect
an assurance of timely payment only slightly less in degree than
issues rated F-1+.
F-2. Good Credit Quality. Issues assigned this rating have a
satisfactory degree of assurance for timely payment, but the margin of
safety is not as great as for issues assigned F-1+ or F-1 ratings.
F-3. Fair Credit Quality. Issues assigned this rating have
characteristics suggesting that the degree of assurance for timely
payment is adequate, however, near-term adverse changes could cause
these securities to be rated below investment grade.
IBCA's description of its three highest short-term debt ratings:
A+. Obligations supported by the highest capacity for timely repayment.
A1. Obligations supported by a very strong capacity for timely
repayment.
A2. Obligations supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
Short-Term Loan/Municipal Note Ratings
Moody's description of its two highest short-term loan/municipal note
ratings:
MIG-1/VMIG-1. This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support
or demonstrated broad-based access to the market for refinancing.
MIG-2/VMIG-2. This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
S&P's description of its two highest municipal note ratings:
SP-1. Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus (+) designation.
SP-2. Satisfactory capacity to pay principal and interest.
Short-Term Debt Ratings
Thomson BankWatch, Inc. ("TBW") ratings are based upon a qualitative
and quantitative analysis of all segments of the organization including, where
applicable, holding company and operating subsidiaries.
BankWatch Ratings do not constitute a recommendation to buy or sell
securities of any of these companies. Further, BankWatch does not suggest
specific investment criteria for individual clients.
The TBW Short-Term Ratings apply to commercial paper, other senior
short-term obligations and deposit obligations of the entities to which the
rating has been assigned.
The TBW Short-Term Ratings apply only to unsecured instruments that
have a maturity of one year or less.
The TBW Short-Term Ratings specifically assess the likelihood of an
untimely payment of principal or interest.
TBW-1. The highest category; indicates a very high degree of likelihood
that principal and interest will be paid on a timely basis.
TBW-2. The second highest category; while the degree of safety
regarding timely repayment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated "TBW-1".
TBW-3. The lowest investment grade category; indicates that while more
susceptible to adverse developments (both internal and external) than
obligations with higher ratings, capacity to service principal and interest in a
timely fashion is considered adequate.
TBW-4. The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.
Definitions of Certain Money Market Instruments
Commercial Paper
Commercial paper consists of unsecured promissory notes issued by
corporations. Issues of commercial paper normally have maturities of less than
nine months and fixed rates of return.
Certificates of Deposit
Certificates of Deposit are negotiable certificates issued against
funds deposited in a commercial bank or a savings and loan association for a
definite period of time and earning a specified return.
Bankers' Acceptances
Bankers' acceptances are negotiable drafts or bills of exchange,
normally drawn by an importer or exporter to pay for specific merchandise, which
are "accepted" by a bank, meaning, in effect, that the bank unconditionally
agrees to pay the face value of the instrument on maturity.
U.S. Treasury Obligations
U.S. Treasury Obligations are obligations issued or guaranteed as to
payment of principal and interest by the full faith and credit of the U.S.
Government. These obligations may include Treasury bills, notes and bonds,
and issues of agencies and instrumentalities of the U.S. Government, provided
such obligations are guaranteed as to payment of principal and interest by the
full faith and credit of the U.S. Government.
U.S. Government Agency and Instrumentality Obligations
Obligations issued by agencies and instrumentalities of the U.S.
Government include such agencies and instrumentalities as the Government
National Mortgage Association, the Export-Import Bank of the United States, the
Tennessee Valley Authority, the Farmers Home Administration, the Federal Home
Loan Banks, the Federal Intermediate Credit Banks, the Federal Farm Credit
Banks, the Federal Land Banks, the Federal Housing Administration, the Federal
National Mortgage Association, the Federal Home Loan Mortgage Corporation, and
the Student Loan Marketing Association. Some of these obligations, such as those
of the Government National Mortgage Association are supported by the full faith
and credit of the U.S. Treasury; others, such as those of the Export-Import Bank
of the United States, are supported by the right of the issuer to borrow from
the Treasury; others, such as those of the Federal National Mortgage
Association, are supported by the discretionary authority of the U.S. Government
to purchase the agency's obligations; still others, such as those of the Student
Loan Marketing Association, are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored instrumentalities if it
is not obligated to do so by law. A Fund will invest in the obligations of such
instrumentalities only when the investment adviser believes that the credit risk
with respect to the instrumentality is minimal.
<PAGE>
[LOGO]
THE VICTORY FUNDS
SEMI-ANNUAL
REPORT
---------------------
THE VICTORY PORTFOLIOS
APRIL 30, 1995
<PAGE>
C O N T E N T S
<TABLE>
<S> <C>
Shareholder Letter 1
Investment Review and Outlook 2
FINANCIAL STATEMENTS
--------------------
Understanding Your Financial Statements 3
Statements of Assets and Liabilities 5
Statements of Operations 10
Statements of Changes in Net Assets 15
Schedules of Portfolio Investments 22
Notes to Financial Statements 73
Financial Highlights 83
</TABLE>
Society Asset Management, Inc. ("SAM"), a subsidiary of KeyCorp, is the
investment adviser to The Victory Portfolios. The Victory Portfolios is
sponsored and distributed by Victory Broker Dealer Services, Inc., which is not
affiliated with SAM, KeyCorp, any KeyCorp bank or their affiliates. SAM and
Society National Bank, also a subsidiary of KeyCorp, receive fees from The
Victory Portfolios for their services.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus for The Victory Portfolios.
Yields will fluctuate, and there can be no assurance that the money market funds
of The Victory Portfolios will be able to maintain a stable net asset value of
$1.00 per share. An investment in these portfolios is neither insured nor
guaranteed by the U.S. Government. The composition of the fund's holdings is
subject to change.
- --------------------------------------------------------------------------------
NOT
FDIC
INSURED
- --------------------------------------------------------------------------------
SHARES OF THE VICTORY PORTFOLIOS ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR
GUARANTEED BY, ANY KEYCORP BANK, SOCIETY ASSET MANAGEMENT, INC., OR THEIR
AFFILIATES, AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE
PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------
<PAGE>
THE VICTORY
PORTFOLIOS
DEAR SHAREHOLDER:
The Victory Portfolios is pleased to provide you with this semi-annual report
for the six-month period ended April 30, 1995. We are very proud to inform you
that the Diversified Stock Fund, the Ohio Regional Stock Fund and the Fund for
Income Portfolio all received 4 star ratings by Morningstar as of April 30,
1995.* For more information about your funds, rankings or for article reprints
call 1-800-KEY-FUND (539-3863).
Last year, when we changed our name to The Victory Portfolios, we also added a
number of convenient service and investment features. These initiatives marked
the beginning of a broader plan to restructure and expand our products and
services. Most recently, shareholders of The Victory Funds, an affiliated group
of funds with 14 investment portfolios, approved a reorganization that took
place on June 5, 1995. This date marked the final steps of a year-long process
focused on streamlining our product offerings and increasing the efficiency of
other services necessary to support the funds' operations. On June 5, The
Victory Funds merged with The Victory Portfolios. Seven portfolios of our
affiliate were merged with comparable investment portfolios, and seven new
portfolios were added. In all, there are now 24 Victory Portfolios available to
investors as part of the combined $5.1 billion complex.
I won't go into the enormous detail of this restructuring effort except to thank
management, our service providers and our investment professionals for their
support.
WOULDN'T IT BE NICE IF . . . (some summertime thoughts)
- - the information superhighway actually cut our commute time
- - major league baseball players had to get real jobs at real wages (at least for
a while)
- - the Paperwork Reduction Act actually resulted in less paperwork for America's
businesses
Thank you for choosing to invest in The Victory Portfolios. Our goal is to
become America's First Choice for Investors.
LEIGH A. WILSON
Leigh A. Wilson, President
THE VICTORY PORTFOLIOS
P.S. For more information about any of The Victory Portfolios, please request a
prospectus by calling 1-800-KEY-FUND (539-3863). The prospectus contains more
complete information, including charges and expenses. Read the prospectus
carefully before you invest or send money.
*Morningstar proprietary ratings reflect historical risk-adjusted performance as
of April 30, 1995. The ratings are subject to change every month. Star ratings
are calculated from the fund's three- and five-year average annual returns in
excess of 90-day Treasury bill returns with appropriate fee adjustments, and a
risk factor that reflects fund performance below 90-day Treasury bill returns.
For the three- and five-year periods ended April 30, 1995, 1,190 and 891 equity
funds, 561 and 372 fixed-income funds were rated. Diversified is rated 4 stars
for the three- and five-year periods; Ohio Regional is rated 3 stars for the
three-year period and 4 stars for the five-year period; and Fund for Income is
rated 3 stars for the three-year period and 4 stars for the five-year period.
Ten percent of the funds in an investment category receive 5 stars, 22.5%
receive 4 stars, 35% receive 3 stars, 22.5% receive 2 stars, and 10% receive 1
star. Past performance is no guarantee of future results. These ratings do not
include the effect of a sales charge. Fees have been waived for certain periods;
without the effect of these waivers performance and ratings may have varied.
1
<PAGE>
INVESTMENT
REVIEW
AND
OUTLOOK
(AS OF MAY 5, 1995)
IN OUR OPINION . . .
FROM 75 TO 45 (mph)
The widely predicted SOFT LANDING of the U.S. economy is not "on the way" . . .
it's already "arrived." More and more fresh economic data depict an economy
which, in recent months, has "slowed" from a "75 mile-per-hour" pace throughout
1994 (especially during the fourth quarter) to a more modest "speed" of roughly
"45 miles per hour." This slowing appears to be very satisfying to the economy's
primary "traffic cop" . . . the Federal Reserve.
The latest economic numbers describe an "economic vehicle" with the "brakes" now
firmly applied. The May 3 release of the Index of Leading Economic Indicators
for March recorded its largest decline in two years. February and March also
registered as the largest back-to-back monthly declines since the summer of
1992. Equally exciting (only to economists) was a surprising 0.1% decline in
factory orders during March, another sign of some "bad gas" in the "economic
engine." In addition, factory inventories rose more than expected in March and
were revised higher for February. This stronger inventory buildup suggests that
the most recent U.S. Commerce Department estimate of a 2.8% real GDP growth
"speed" during the first quarter of 1995 will be revised to a "faster speed."
This expected upward revision will come at the expense of a weak current
quarter . . . perhaps as "sluggish" as a 1.2-1.8% real annual rate.
The May 5 release of the April unemployment numbers, which jumped from 5.5% to
5.8%, shed further light on the "engine's diagnosis." These particularly weak
numbers could "fuel" additional near-term strength in both stocks and bonds.
IS THE FED FINISHED TIGHTENING?
The data of recent days provided more "high octane" fuel to the financial
markets' belief that the Fed will likely "stay on cruise control" for some time
to come. Many economists now suggest the Fed's next move will be to "step on the
gas" (ease policy). Although we would like to believe that, we expect a modest
resurgence of the economy during the second half of 1995, "fueled" by rising
exports, solid manufacturing output, strong capital spending, and improved
consumer interest in housing. This combination, added to some worrisome economic
"exhaust" (inflation pressure), could force the Fed's foot to the "brake pedal"
once again.
Society Asset Management, Inc.
2
<PAGE>
UNDERSTANDING YOUR FINANCIAL STATEMENTS
o The FINANCIAL STATEMENTS summarize and describe a fund's financial
transactions. They are broken down into four different statements,
which are illustrated below:
THE STATEMENTS OF ASSETS AND LIABILITIES lists all of the assets and
liabilities of the mutual fund. This is the individual fund's "balance sheet."
Also disclosed on this statement is the fund's net asset value per share and
its maximum offering price per share as of the date of the statement. The
statement also lists the accounts that comprise the mutual fund's net assets
(capital stock, undistributed income, etc.).
[FORM] SUMMARY OF THE MUTUAL FUND'S INVESTMENTS AND ALL
OTHER ASSETS OWNED BY THE FUND, INCLUDING AMOUNTS
OWED TO THE FUND BY OUTSIDE PARTIES
SUMMARY OF ALL AMOUNTS OWED TO OUTSIDE PARTIES BY
THE MUTUAL FUND
NET RESULT OF ASSETS LESS LIABILITIES
THE MARKET WORTH OF THE MUTUAL FUND'S TOTAL ASSETS
DIVIDED BY THE NUMBER OF SHARES OUTSTANDING
THE CURRENT NET ASSET VALUE PER SHARE PLUS SALES CHARGE
THE STATEMENT OF OPERATIONS shows the amount of dividend and interest income
earned from the mutual fund's investments, the expenses incurred by the fund
from its operations, and any gains or losses recognized by the fund from
holding and/or selling any investments.
[FORM] ANY INCOME EARNED FROM THE MUTUAL FUND'S INVESTMENTS
OPERATING EXPENSES INCURRED BY THE MUTUAL FUND DURING
THE PERIOD
GAINS OR LOSSES REALIZED UPON THE SALE OF THE MUTUAL
FUND'S INVESTMENTS ALONG WITH UNREALIZED GAINS OR LOSSES
ON FUND HOLDINGS AT THE REPORT DATE
NET CHANGE DUE TO MUTUAL FUND OPERATIONS
3
<PAGE>
THE STATEMENT OF CHANGES IN NET ASSETS shows the total assets of the mutual
fund for the two most recent reporting periods. The changes in net assets are
generally broken down into four distinct sections:
[FORM] OPERATIONS - SEE STATEMENT OF OPERATIONS
DIVIDENDS TO SHAREHOLDERS - TOTAL INCOME DIVIDENDS PAID
TO SHAREHOLDERS DURING THE PERIODS
NET REALIZED GAINS - TOTAL REALIZED GAINS DISTRIBUTED TO
SHAREHOLDERS DURING THE PERIODS
CAPITAL STOCK TRANSACTIONS - DOLLAR VALUE OF MUTUAL FUND
SHARES PURCHASED, REDEEMED OR REINVESTED DURING THE
PERIODS
THE PORTFOLIO OF INVESTMENTS lists each investment holding in the mutual fund
as of the date of the report. Investments may be grouped by category (by
industry or security type, for example). The percentage of the mutual fund's
net assets that these groupings represent is also disclosed.
[FORM] TYPE OF SECURITY
INDUSTRY SECTOR AND PERCENTAGE OF THE MUTUAL FUND's
NET ASSETS REPRESENTED BY INVESTMENTS IN THAT SECTOR
(IF APPLICABLE)
ACTUAL PORTFOLIO HOLDINGS WITH SHARES AND MARKET
VALUE AS OF REPORT DATE
o The NOTES TO FINANCIAL STATEMENTS are footnotes to the statements listed
above. 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.
o The FINANCIAL HIGHLIGHTS show, for a single share outstanding throughout the
period, the net investment income, the realized and unrealized gains and
losses, and the dividends and distributions of the fund. It also shows key
data and ratios, such as the total return for the period, the portfolio
turnover rate for funds other than money market mutual funds, and the
ratio of net investment income to average net assets.
4
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. TAX-FREE
GOVERNMENT PRIME MONEY
OBLIGATIONS OBLIGATIONS MARKET
FUND FUND FUND
(000) (000) (000)
-------- -------- --------
<S> <C> <C> <C>
ASSETS:
Investments, at value $228,336 $392,425 $208,031
Repurchase agreements 296,998 37,315
- ---------------------------------------------------------------------------------------------------------
525,334 429,740 208,031
Cash 322
Interest receivable 1,525 2,467 2,066
Prepaid expenses 5 34 7
- ---------------------------------------------------------------------------------------------------------
Total Assets 526,864 432,241 210,426
- ---------------------------------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 2,381 1,867 675
Accrued expenses and other payables:
Investment advisory fees 153 125 62
Administration fees 66 54 27
Accounting and transfer agent fees 44 52 22
Other 77 143 34
- ---------------------------------------------------------------------------------------------------------
Total Liabilities 2,721 2,241 820
- ---------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 524,337 432,505 209,606
Accumulated undistributed net realized losses from investment
transactions (194) (2,505)
- ---------------------------------------------------------------------------------------------------------
Net Assets $524,143 $430,000 $209,606
- ---------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) 524,337 430,000 209,606
- ---------------------------------------------------------------------------------------------------------
Net asset value--redemption and offering price per share $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------
Investments, at cost $525,334 $429,740 $208,031
- ---------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
5
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY FUNDS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK
TAX- FUND FOR
FREE INCOME
PORTFOLIO PORTFOLIO
(000) (000)
------------ ---------
<S> <C> <C>
ASSETS
Investments, at value $ 16,410 $23,678
Repurchase agreements 1,003
- -----------------------------------------------------------------------------------------------------
16,410 24,681
Interest receivable 338 183
Cash 4
Receivable for capital shares issued 429
Receivable from brokers for investments sold 93
Receivable from fund adviser 41 36
- -----------------------------------------------------------------------------------------------------
Total Assets 17,218 24,997
- -----------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 58
Payable to brokers for investments purchased 195 64
Payable for capital shares redeemed 111 85
Dividends payable 44 119
Accrued expenses and other payables:
Administrative fee 2 3
Other 13
- -----------------------------------------------------------------------------------------------------
Total Liabilities 410 284
- -----------------------------------------------------------------------------------------------------
NET ASSETS
Capital 15,880 26,101
Undistributed (distributions in excess of) net investment income 6 (90)
Net unrealized appreciation on investments 925 509
Accumulated undistributed net realized losses on investments (3) (1,807)
- -----------------------------------------------------------------------------------------------------
Net Assets $ 16,808 $24,713
- -----------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) -- class A 1,277 2,571
- -----------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) -- class B 67
- -----------------------------------------------------------------------------------------------------
Net asset value -- redemption price per share -- class A $ 12.51 $ 9.61
- -----------------------------------------------------------------------------------------------------
Offering price (100%/(100% --
Maximum Sales Charge) of net asset value adjusted to
nearest cent) per share -- class A $ 13.13 $ 9.81
- -----------------------------------------------------------------------------------------------------
Maximum Sales Charge -- class A 4.75% 2.00%
- -----------------------------------------------------------------------------------------------------
Net asset value -- offering and redemption price per share -- class B $ 12.50
- -----------------------------------------------------------------------------------------------------
Investments at cost $ 15,485 $24,172
- -----------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
6
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED INVESTMENT OHIO
TERM GOVERNMENT INTERMEDIATE QUALITY MUNICIPAL
INCOME MORTGAGE INCOME BOND BOND
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value $ 165,669 $142,962 $130,878 $ 91,366 $ 57,871
Interest receivable 2,571 983 2,429 1,453 1,157
Receivable for capital shares issued 21 24
Receivable from brokers for investments sold 2,753 2,048 2,035
Unamortized organization costs 8 9
Prepaid expenses 14 16 13 3
- ---------------------------------------------------------------------------------------------------------------
Total Assets 168,240 146,733 133,331 94,889 61,090
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable to brokers for investments purchased 3,136 2,542 2,845
Payable for capital shares redeemed 1 4
Accrued expenses and other payables:
Investment advisory fees 65 59 52 38 14
Administration fees 21 18 16 11 7
Accounting and transfer agent fees 15 13 13 11 9
Other 26 68 25 85 78
- ---------------------------------------------------------------------------------------------------------------
Total Liabilities 128 3,298 106 2,687 2,953
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 169,603 150,214 139,577 99,169 58,717
Undistributed net investment income 190 194 168 122 55
Net unrealized appreciation (depreciation) from
investments (519) (4,357) (2,607) (2,022) 275
Accumulated undistributed net realized losses
from investment transactions (1,162) (2,616) (3,913) (5,067) (910)
- ---------------------------------------------------------------------------------------------------------------
Net Assets $ 168,112 $143,435 $133,225 $ 92,202 $ 58,137
- ---------------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest
(shares) 16,853 13,587 14,164 9,827 5,356
- ---------------------------------------------------------------------------------------------------------------
Net asset value--redemption price per share $ 9.98 $ 10.56 $ 9.41 $ 9.38 $ 10.85
- ---------------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%--Maximum
Sales Charge) of net asset value adjusted to
nearest cent) per share $ 10.18 $ 11.09 $ 9.88 $ 9.85 $ 11.39
- ---------------------------------------------------------------------------------------------------------------
Maximum Sales Charge 2.00% 4.75% 4.75% 4.75% 4.75%
- ---------------------------------------------------------------------------------------------------------------
Investments, at cost $ 166,188 $147,319 $133,485 $ 93,388 $ 57,596
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
7
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK DIVERSIFIED
BALANCED INDEX VALUE STOCK GROWTH
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value $158,944 $105,660 $263,048 $323,032 $43,646
Cash 1
Foreign currency (Cost $509) 504
Interest and dividends receivable 1,163 201 484 404 51
Receivable for capital shares issued 13 239
Receivable from brokers for investments sold 2,497 658 10,016 203
Net variation margin on open futures contracts 25 5
Unamortized organization costs 6 4 10 4
Prepaid expenses 18 10 23 9 9
- --------------------------------------------------------------------------------------------------------------
Total Assets 163,145 105,901 264,228 333,700 43,913
- --------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for capital shares redeemed 3 14
Payable to brokers for investments purchased 4,141 2,178 11,833
Accrued expenses and other payables:
Investment advisory fees 78 38 134 156 23
Administration fees 19 33 39 5
Accounting and transfer agent fees 18 7 21 24 7
Other 124 22 32 41 17
- --------------------------------------------------------------------------------------------------------------
Total Liabilities 4,383 67 2,398 12,107 52
- --------------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 153,504 95,719 241,936 281,878 40,340
Undistributed (distributions in excess of) net
investment income (411) 179 406 151 8
Net unrealized appreciation from investments 7,080 9,685 17,472 30,351 3,288
Net unrealized depreciation from translation of
assets and liabilities in foreign currencies (12)
Accumulated undistributed net realized gains
(losses) from investment and foreign currency
transactions (1,399) 251 2,016 9,213 225
- --------------------------------------------------------------------------------------------------------------
Net Assets $158,762 $105,834 $261,830 $321,593 $43,661
- --------------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) 15,549 9,545 24,346 26,055 4,054
- --------------------------------------------------------------------------------------------------------------
Net asset value--redemption price per share $ 10.21 $ 11.09 $ 10.75 $ 12.34 $ 10.82
- --------------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%--Maximum Sales
Charge) of net asset value adjusted to nearest
cent) per share $ 10.72 $ 11.64 $ 11.29 $ 12.96 $ 11.36
- --------------------------------------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 4.75% 4.75% 4.75% 4.75%
- --------------------------------------------------------------------------------------------------------------
Investments, at cost $151,871 $ 95,975 $245,576 $292,681 $40,358
- --------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
8
<PAGE>
Statements of Assets and Liabilities
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO
SPECIAL SPECIAL REGIONAL INTERNATIONAL
VALUE GROWTH STOCK GROWTH
FUND FUND FUND FUND
(000) (000) (000) (000)
-------- ------- ------- -------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value $153,966 $19,539 $35,164 $84,863
Foreign currency (Cost $2,485) 2,542
Interest and dividends receivable 275 16 41 181
Receivable for capital shares issued 9 27 26
Receivable from brokers for investments sold 980 259
Unamortized organization costs 5 2
Prepaid expenses 20 4 10
- ----------------------------------------------------------------------------------------------------------
Total Assets 155,255 19,561 35,232 87,881
- ----------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for capital shares redeemed 3 2
Payable to brokers for investments purchased 1,519 142 1,193
Accrued expenses and other payables:
Investment advisory fees 86 10 20 67
Administration fees 19 2 4 11
Accounting and transfer agent fees 14 6 8 52
Other 26 15 14 26
- ----------------------------------------------------------------------------------------------------------
Total Liabilities 1,664 175 49 1,351
- ----------------------------------------------------------------------------------------------------------
NET ASSETS:
Capital 139,501 22,102 23,813 84,285
Undistributed (distributions in excess of) net
investment income 155 (3) 5 (613)
Net unrealized appreciation from investments 11,380 1,362 10,524 (5,172)
Net unrealized appreciation from translation of assets
and liabilities in foreign currencies 9,285
Accumulated undistributed net realized gains (losses)
from investment and foreign currency transactions 2,555 (4,075) 841 (1,255)
- ----------------------------------------------------------------------------------------------------------
Net Assets $153,591 $19,386 $35,183 $86,530
- ----------------------------------------------------------------------------------------------------------
Outstanding units of beneficial interest (shares) 13,646 2,073 2,398 7,268
- ----------------------------------------------------------------------------------------------------------
Net asset value--redemption price per share $ 11.26 $ 9.35 $ 14.67 $ 11.91
- ----------------------------------------------------------------------------------------------------------
Maximum Offering Price (100%/(100%--Maximum Sales
Charge) of net asset value adjusted to nearest cent)
per share $ 11.82 $ 9.82 $ 15.40 $ 12.50
- ----------------------------------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 4.75% 4.75% 4.75%
- ----------------------------------------------------------------------------------------------------------
Investments, at cost $142,586 $18,177 $24,640 $80,807
- ----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
9
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S.
GOVERNMENT PRIME TAX-FREE
OBLIGATIONS OBLIGATIONS MONEY MARKET
FUND FUND FUND
(000) (000) (000)
------- ------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $13,510 $18,407 $4,368
- ----------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 820 1,128 389
Administration fees 351 484 167
Shareholder service fees 222
Accounting fees 141 193 68
Legal and audit fees 41 86 22
Trustees' fees and expenses 16 29 8
Transfer agent fees 21 36 14
Registration and filing fees 24 21 10
Printing fees 27 28 14
Other 6 11 3
Expenses voluntarily reduced (16)
- ----------------------------------------------------------------------------------------------------------
Total Expenses 1,447 2,238 679
- ----------------------------------------------------------------------------------------------------------
Net Investment Income 12,063 16,169 3,689
- ----------------------------------------------------------------------------------------------------------
REALIZED GAINS FROM INVESTMENTS:
Net realized gains from investment transactions 54 1
- ----------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $12,117 $16,170 $3,689
- ----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
10
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY FUNDS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK FUND FOR
TAX-FREE INCOME
PORTFOLIO PORTFOLIO
(000) (000)
-------- ---------
<S> <C> <C>
INVESTMENT INCOME
Interest income $530 $ 1,054
- -----------------------------------------------------------------------------------------------------------
EXPENSES
Investment advisory fees 44 65
Administration fees 12 19
Registration fees 18 37
Shareholder servicing fees 19 32
Accounting fees 16 9
Transfer agent fees 11 14
Legal 5 6
Custodian fees and expenses 2
Trustees' fees and expenses 1
Other 9 8
Expenses voluntarily reduced (41) (43)
- -----------------------------------------------------------------------------------------------------------
Total Expenses 94 149
- -----------------------------------------------------------------------------------------------------------
Net Investment Income 436 905
- -----------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS
(LOSSES) FROM INVESTMENTS
Net realized losses from investment transactions (3) (369)
Net change in unrealized appreciation from investments 353 834
- -----------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments 350 465
- -----------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $786 $ 1,370
- -----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
11
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED INVESTMENT OHIO
TERM GOVERNMENT INTERMEDIATE QUALITY MUNICIPAL
INCOME MORTGAGE INCOME BOND BOND
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 3,810 $ 5,718 $ 4,461 $ 3,544 $ 1,533
- ------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 287 368 448 344 167
Administration fees 86 110 90 69 42
Accounting fees 38 48 39 33 20
Legal and audit fees 9 16 12 9 5
Organization fees 7 7
Trustees' fees and expenses 3 6 4 3 2
Transfer agent fees 10 11 10 10 9
Registration and filing fees 10 9 22 20 7
Printing fees 10 11 11 10 10
Other 2 3 3 1
Expenses voluntarily reduced (11) (12) (161) (122) (85)
- ------------------------------------------------------------------------------------------------------------
Total Expenses 444 570 485 384 177
- ------------------------------------------------------------------------------------------------------------
Net Investment Income 3,366 5,148 3,976 3,160 1,356
- ------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized losses from investment transactions (491) (1,978) (1,415) (1,048) (511)
Change in unrealized appreciation from investments 2,323 6,541 3,611 3,845 3,179
- ------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments 1,832 4,563 2,196 2,797 2,668
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 5,198 $ 9,711 $ 6,172 $ 5,957 $ 4,024
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
12
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK DIVERSIFIED
BALANCED INDEX VALUE STOCK GROWTH
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 2,504 $ 301 $ 952 $ 491 $ 30
Dividend income 1,262 1,141 3,381 4,004 522
- ----------------------------------------------------------------------------------------------------------------
Total Income 3,766 1,442 4,333 4,495 552
- ----------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 722 283 1,142 906 259
Administration fees 108 71 171 209 39
Accounting fees 48 28 70 85 17
Legal and audit fees 13 9 19 24 6
Organization fees 5 3 8 3
Trustees' fees and expenses 5 3 7 9 2
Transfer agent fees 15 10 12 15 9
Registration and filing fees 24 16 30 7 15
Printing fees 12 11 13 14 9
Other 2 1 4 3
Expenses voluntarily reduced (294) (161) (434) (59) (93)
- ----------------------------------------------------------------------------------------------------------------
Total Expenses 660 274 1,042 1,213 266
- ----------------------------------------------------------------------------------------------------------------
Net Investment Income 3,106 1,168 3,291 3,282 286
- ----------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND
FOREIGN CURRENCY:
Net realized gains from investment transactions 203 257 2,038 9,257 225
Net realized gains from foreign currency transactions 514
Net change in unrealized appreciation from investments 9,034 8,129 18,512 18,099 1,924
Change in unrealized depreciation from translation of assets
and liabilities in foreign currencies (5)
- ----------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments and foreign
currency 9,746 8,366 20,550 27,356 2,149
- ----------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $12,852 $9,554 $23,841 $30,638 $2,435
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
13
<PAGE>
Statements of Operations
Six months ended April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO
SPECIAL SPECIAL REGIONAL INTERNATIONAL
VALUE GROWTH STOCK GROWTH
FUND FUND FUND FUND
(000) (000) (000) (000)
------- ------- ------ -------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 240 $ 41 $ 49 $ 62
Dividend income 1,431 104 352 421
Foreign tax withholding (48)
- ------------------------------------------------------------------------------------------------------------
Total Income 1,671 145 401 435
- ------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 647 103 123 436
Administration fees 97 16 25 60
Custodian and accounting fees 41 8 12 120
Legal and audit fees 12 3 4 7
Organization fees 4 1
Trustees' fees and expenses 4 1 1 3
Transfer agent fees 10 8 18 11
Registration and filing fees 19 10 7 13
Printing fees 11 9 10 10
Other 2 1
Expenses voluntarily reduced (193) (40) (7) (61)
- ------------------------------------------------------------------------------------------------------------
Total Expenses 654 120 193 599
- ------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 1,017 25 208 (164)
- ------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gains (losses) from investment transactions 2,555 (3,750) 840 (2,264)
Net realized loss from foreign currency transactions 1,440
Net change in unrealized appreciation (depreciation) from
investments 8,232 4,497 1,267 (3,388)
Change in unrealized appreciation from translation of assets and
liabilities in foreign currencies 42
- ------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains (losses) from investments and
foreign currency 10,787 747 2,107 (4,170)
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $11,804 $ 772 $2,315 $(4,334)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
14
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT TAX-FREE MONEY
OBLIGATIONS FUND PRIME OBLIGATIONS FUND MARKET FUND
------------------------ -------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
YEAR
ENDED
YEAR ENDED YEAR ENDED OCTOBER
OCTOBER 31, OCTOBER 31, 31,
1994 1994 1994
(000) (000) (000)
----------- ----------- ---------
SIX SIX MONTHS SIX
MONTHS ENDED MONTHS
ENDED APRIL 30, ENDED
APRIL 30, 1995 APRIL 30,
1995 (000) 1995
(000) ----------- (000)
--------- ---------
(UNAUDITED)
(UNAUDITED) (UNAUDITED)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 12,063 $ 14,747 $ 16,169 $ 26,637 $ 3,689 $ 4,538
Net realized gains (losses) from
investment transactions 54 (167) 1 (2,506) 7
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
operations 12,117 14,580 16,170 24,131 3,689 4,545
- -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (12,063) (14,747) (16,169) (26,637) (3,689) (4,538)
From net realized gains on
investments (81) (7)
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (12,063) (14,828) (16,169) (26,637) (3,689) (4,545)
- -------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 729,038 935,449 1,021,057 2,109,682 256,968 534,878
Dividends reinvested 1,416 1,179 7,281 8,381 350 355
Cost of shares redeemed (618,413) (1,040,066) (1,380,642) (2,055,784) (246,273) (526,023)
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions (112,041) (103,438) (352,304) 62,279 11,045 9,210
- -------------------------------------------------------------------------------------------------------------------------
Contribution by KeyCorp 2,506
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets (112,095) (103,686) 352,303 62,279 11,045 9,210
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 412,048 515,734 782,303 720,024 198,561 189,351
- -------------------------------------------------------------------------------------------------------------------------
End of period $ 524,143 $ 412,048 $ 430,000 $ 782,303 $ 209,606 $ 198,561
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 729,038 935,449 1,021,057 2,109,682 256,968 534,878
Dividends reinvested 1,416 1,179 7,281 8,381 350 355
Redeemed (618,413) (1,040,066) (1,380,642) (2,055,784) (246,273) (526,023)
- -------------------------------------------------------------------------------------------------------------------------
Change in shares 112,041 (103,438) (352,304) 62,279 11,045 9,210
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
15
<PAGE>
THE VICTORY FUNDS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK TAX-FREE FUND FOR INCOME
PORTFOLIO PORTFOLIO
------------------------ ------------------------
JANUARY 1, FEBRUARY
1994 TO 1, 1994 TO
OCTOBER OCTOBER
31, 1994 31, 1994
(000) (000)
SIX MONTHS ---------- SIX MONTHS ----------
ENDED ENDED
APRIL 30, APRIL 30,
1995 1995
(000) (000)
---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
OPERATIONS
Net investment income $ 436 $ 1,033 $ 905 $ 1,967
Net realized gains (losses) from investment
transactions (3) 229 (369) (654)
Net change in unrealized gain (loss) from
investments 353 (2,384) 834 (2,075)
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 786 (1,122) 1,370 (762)
- ------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders from net investment income
-- class A (421) (1,033) (946) (1,911)
Distributions in excess of net investment income
class A (49)
Dividends to shareholders from net investment income
-- class B (9)
Dividends to shareholders from net realized gains
class A (225)
Dividends to shareholders from net realized gains
class B (5)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from distributions to
shareholders (660) (1,033) (946) (1,960)
- ------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS(1)
Proceeds from shares issued 2,735 6,305 2,077 3,073
Dividends reinvested 234 455 185 525
Shares redeemed (4,127) (15,295) (7,331) (18,150)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from capital transactions (1,158) (8,535) (5,069) (14,552)
- ------------------------------------------------------------------------------------------------------------
Change in net assets (1,032) (10,690) (4,645) (17,274)
- ------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 17,840 28,530 29,358 46,632
- ------------------------------------------------------------------------------------------------------------
End of period $ 16,808 $ 17,840 $ 24,713 $ 29,358
- ------------------------------------------------------------------------------------------------------------
(1) SHARE TRANSACTIONS (IN DOLLARS):
Class A:
Issued 1,941 6,305 2,077 3,073
Distributions reinvested 221 455 185 525
Redeemed (4,127) (15,295) (7,331) (18,150)
- ------------------------------------------------------------------------------------------------------------
Net decrease (1,965) (8,535) (5,069) (14,552)
- ------------------------------------------------------------------------------------------------------------
Class B:
Issued 794
Distributions reinvested 13
Redeemed
- ------------------------------------------------------------------------------------------------------------
Net increase 807
- ------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS (IN SHARES):
Class A:
Issued 156 482 218 312
Distributions reinvested 18 35 20 54
Redeemed (337) (1,185) (779) (1,853)
- ------------------------------------------------------------------------------------------------------------
Net decrease in shares (163) (668) (541) (1,487)
- ------------------------------------------------------------------------------------------------------------
Class B:
Issued 67
Distributions reinvested
Redeemed
- ------------------------------------------------------------------------------------------------------------
Net increase in shares 67
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
16
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED TERM INCOME GOVERNMENT MORTGAGE INTERMEDIATE INCOME
FUND
FUND FUND ---------------------
-------------------- -------------------- DECEMBER
YEAR YEAR 10,
ENDED ENDED 1993 TO
OCTOBER OCTOBER OCTOBER
31, 31, 31,
1994 1994 1994 (A)
(000) (000) (000)
SIX -------- SIX -------- SIX --------
MONTHS MONTHS MONTHS
ENDED ENDED ENDED
APRIL APRIL APRIL
30, 30, 30,
1995 1995 1995
(000) (000) (000)
-------- -------- --------
(UNAUDITED (UNAUDITED (UNAUDITED
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 3,366 $ 4,521 $ 5,148 $ 10,593 $ 3,976 $ 5,951
Net realized gains (losses)
from investment
transactions (491) (671) (1,978) 615 (1,415) (2,498)
Net change in unrealized
appreciation (depreciation)
from investments 2,323 (4,406) 6,541 (16,536) 3,611 (6,218)
- ----------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 5,198 (556) 9,711 (5,328) 6,172 (2,765)
- ----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (3,314) (4,506) (5,273) (10,495) (4,036) (5,724)
From net realized gains from
investments (357) (1,233) (386)
- ----------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (3,314) (4,863) (6,506) (10,881) (4,036) (5,724)
- ----------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 102,064 34,263 25,202 119,347 34,623 159,988
Dividends reinvested 3,313 4,378 6,502 9,714 4,036 5,511
Cost of shares redeemed (18,299) (35,843) (39,642) (97,422) (20,493) (44,087)
- ----------------------------------------------------------------------------------------------------------
Change in net assets from
capital transactions 87,078 2,798 (7,938) 31,639 18,166 121,412
- ----------------------------------------------------------------------------------------------------------
Change in net assets 88,962 (2,621) (4,733) 15,430 20,302 112,923
- ----------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 79,150 81,771 148,168 132,738 112,923
- ----------------------------------------------------------------------------------------------------------
End of period $168,112 $ 79,150 $143,435 $148,168 $133,225 $112,923
- ----------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 10,367 3,336 2,439 10,724 3,739 16,205
Dividends reinvested 336 433 630 906 436 579
Redeemed (1,858) (3,529) (3,833) (8,967) (2,220) (4,575)
- ----------------------------------------------------------------------------------------------------------
Change in shares 8,845 240 (764) 2,663 1,955 12,209
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
17
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT QUALITY BOND
FUND BALANCED FUND
--------------------------- OHIO MUNICIPAL BOND FUND ---------------------------
DECEMBER 10, ----------------------------- DECEMBER 10,
1993 TO YEAR ENDED 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 ENDED 1994 (A)
(000) APRIL 30, (000) APRIL 30, (000)
------------ 1995 -------------- 1995 ------------
(000) (000)
---------- ----------
SIX MONTHS (UNAUDITED) (UNAUDITED)
ENDED
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 3,160 $ 5,712 $ 1,356 $ 2,580 $ 3,106 $ 3,706
Net realized gains (losses)
from investment transactions (1,048) (4,019) (511) (399) 203 (2,116)
Net realized gains from foreign
currency transactions 514
Net change in unrealized
appreciation (depreciation)
from investments 3,845 (5,867) 3,179 (4,662) 9,034 (1,961)
Change in unrealized
depreciation from translation
of assets and liabilities in
foreign currencies (5)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 5,957 (4,174) 4,024 (2,481) 12,852 (371)
- ----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (3,235) (5,516) (1,385) (2,557) (3,678) (3,545)
From net realized gains from
investments (1,169)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (3,235) (5,516) (1,385) (3,726) (3,678) (3,545)
- ----------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 18,694 139,893 8,944 28,815 66,281 176,193
Dividends reinvested 3,234 5,495 1,384 2,767 3,663 3,529
Cost of shares redeemed (27,133) (41,013) (12,534) (18,347) (47,641) (48,521)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions (5,205) 104,375 (2,206) 13,235 22,303 131,201
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets (2,483) 94,685 433 7,028 31,477 127,285
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 94,685 57,704 50,676 $127,285
- ----------------------------------------------------------------------------------------------------------------------------------
End of period $ 92,202 $ 94,685 $ 58,137 $ 57,704 $158,762 $127,285
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 2,032 14,142 845 2,625 6,905 17,854
Dividends reinvested 352 582 132 255 375 366
Redeemed (2,958) (4,323) (1,206) (1,693) (4,964) (4,987)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in shares (574) 10,401 (229) 1,187 2,316 13,233
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
18
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK INDEX FUND VALUE FUND DIVERSIFIED STOCK FUND
--------------------------- --------------------------- -------------------------
DECEMBER 3, DECEMBER 3, YEAR ENDED
1993 TO 1993 TO OCTOBER
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS 31,
1994 (A) ENDED 1994 (A) ENDED 1994
(000) APRIL 30, (000) APRIL 30, (000)
------------ 1995 ------------ 1995 ----------
(000) (000)
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 1,168 $ 1,515 $ 3,291 $ 3,602 $ 3,282 $ 5,177
Net realized gains (losses)
from investment transactions 257 (6) 2,038 3,124 9,257 30,135
Net change in unrealized
appreciation (depreciation)
from investments 8,129 1,556 18,512 (1,040) 18,099 (18,237)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 9,554 3,065 23,841 5,686 30,638 17,075
- ------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (1,173) (1,331) (3,198) (3,289) (3,481) (4,738)
From net realized gains from
investments (3,146) (29,668) (26,397)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to shareholders (1,173) (1,331) (6,344) (3,289) (33,149) (31,135)
- ------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 30,344 114,187 120,235 229,389 64,652 94,732
Dividends reinvested 1,173 1,321 6,344 3,283 33,132 22,231
Cost of shares redeemed (23,750) (27,556) (70,430) (46,885) (36,907) (97,081)
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions 7,767 87,952 56,149 185,787 60,877 19,882
- ------------------------------------------------------------------------------------------------------------------------------
Change in net assets 16,148 89,686 73,646 188,184 58,366 5,822
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 89,686 188,184 263,227 257,405
- ------------------------------------------------------------------------------------------------------------------------------
End of period $105,834 $ 89,686 $261,830 $188,184 $321,593 $263,227
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 2,981 11,441 11,942 22,949 5,494 7,718
Dividends reinvested 114 135 639 336 2,997 1,830
Redeemed (2,356) (2,770) (6,813) (4,707) (3,199) (8,003)
- ------------------------------------------------------------------------------------------------------------------------------
Change in shares 739 8,806 5,768 18,578 5,292 1,545
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
19
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND SPECIAL VALUE FUND SPECIAL GROWTH FUND
-------------------------- -------------------------- --------------------------
DECEMBER 3, DECEMBER 3, DECEMBER 3,
1993 TO 1993 TO 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 (A) ENDED 1994 (A)
(000) APRIL 30, (000) APRIL 30, (000)
----------- 1995 ----------- 1995 -----------
(000) (000)
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 286 $ 636 $ 1,017 $ 1,020 $ 25 $ 60
Net realized gains (losses) from
investment transactions 225 298 2,555 588 (3,750) (325)
Net change in unrealized appreciation
(depreciation) from investments 1,924 1,364 8,232 3,148 4,497 (3,135)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
operations 2,435 2,298 11,804 4,756 772 (3,400)
- -----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (328) (586) (955) (927) (29) (59)
From net realized gains from
investments (298) (588)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from distributions
to shareholders (626) (586) (1,543) (927) (29) (59)
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 7,230 92,029 46,521 137,158 3,811 44,544
Dividends reinvested 626 584 1,542 924 29 56
Cost of shares redeemed (32,725) (27,404) (23,333) (23,311) (9,790) (16,548)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital
transactions (24,869) 65,209 24,730 114,771 (5,950) 28,052
- -----------------------------------------------------------------------------------------------------------------------------------
Change in net assets (23,060) 66,921 34,991 118,600 (5,207) 24,593
NET ASSETS:
Beginning of period 66,921 118,600 24,593
- -----------------------------------------------------------------------------------------------------------------------------------
End of period $ 43,861 $ 66,921 $153,591 $ 118,600 $ 19,386 $ 24,593
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 712 9,240 4,410 13,472 441 4,515
Dividends reinvested 63 60 148 91 3 6
Redeemed (3,262) (2,759) (2,217) (2,258) (1,134) (1,758)
- -----------------------------------------------------------------------------------------------------------------------------------
Change in shares (2,487) 6,541 2,341 11,305 (690) 2,763
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Period from commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
20
<PAGE>
THE VICTORY PORTFOLIOS Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO REGIONAL STOCK INTERNATIONAL GROWTH
FUND FUND
----------------------- -----------------------
YEAR ENDED YEAR ENDED
OCTOBER OCTOBER
31, 31,
1994 SIX MONTHS 1994
(000) ENDED (000)
---------- APRIL 30, ----------
1995
(000)
SIX MONTHS ----------
ENDED (UNAUDITED)
APRIL 30,
1995
(000)
----------
(UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 208 $ 438 $ (164) $ (136)
Net realized gains (losses) from investment
transactions 840 1,699 (2,264) 4,064
Net realized losses from foreign currency transactions 1,440 (152)
Net change in unrealized appreciation (depreciation)
from investments 1,267 (867) (3,388) 2,879
Change in unrealized appreciation from translation of
assets and liabilities in foreign currencies 42 15
- ------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 2,315 1,270 (4,334) 6,670
- ------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (221) (409)
From net realized gains from investments (1,699) (1,293) (3,925)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from distributions to shareholders (1,920) (1,702) (3,925)
- ------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 4,152 16,543 23,300 53,804
Dividends reinvested 1,917 1,560 3,922
Cost of shares redeemed (5,246) (18,632) (13,740) (9,796)
- ------------------------------------------------------------------------------------------------------------
Change in net assets from capital transactions 823 (529) 13,482 44,008
- ------------------------------------------------------------------------------------------------------------
Change in net assets 1,218 (961) 5,223 50,678
- ------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 33,965 34,926 81,307 30,629
- ------------------------------------------------------------------------------------------------------------
End of period $ 35,183 $ 33,965 $ 86,530 $ 81,307
- ------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 297 1,143 2,012 4,323
Dividends reinvested 144 109 337
Redeemed (376) (1,297) (1,187) (784)
- ------------------------------------------------------------------------------------------------------------
Change in shares 65 (45) 1,162 3,539
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
21
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
U.S. GOVERNMENT OBLIGATIONS FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- -------------------------------------------
U.S. TREASURY BILLS (4.7%)
25,000 5.73%, 6/29/95 $ 24,765
- -------------------------------------------------------
TOTAL U.S. TREASURY BILLS 24,765
- -------------------------------------------------------
- -------------------------------------------------------
U.S. TREASURY NOTES (38.8%)
30,000 4.25%, 7/31/95 29,862
150,000 3.875%, 8/31/95 148,923
25,000 3.875%, 9/30/95 24,786
- -------------------------------------------------------
TOTAL U.S. TREASURY NOTES 203,571
- -------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE 228,336
- -------------------------------------------------------
- -------------------------------------------------------
REPURCHASE AGREEMENTS (56.6%)
15,000 Barclays Bank
5.90%, 5/1/95
(Collateralized by 14,778
U.S. Treasury Notes,
7.38%-7.88%, 11/15/97-
4/15/98, market value-
$15,301) 15,000
20,000 Chase Securities
5.92%, 5/1/95
(Collateralized by 20,444
U.S. Treasury Bills,
5/4/95-5/18/95,
market value-$20,401) 20,000
20,000 Dean Witter
5.93%, 5/1/95
(Collateralized by 23,287
various U.S. Treasury
securities, 5/15/95-
2/29/00, 0.00%-7.13%,
market value-$20,401) 20,000
22,998 Donaldson, Lufkin &
Jennerette
5.93%, 5/1/95
(Collateralized by 25,691
various U.S. Treasury
securities, 5/15/95-
11/15/98, 0.00%-5.13%,
market value-$23,458) 22,998
15,000 Goldman Sachs
5.90%, 5/1/95
(Collateralized by 19,050
U.S. Treasury securities,
8/15/98, 0.00% market
value-$15,301) 15,000
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
20,000 Harris Securities
5.95%, 5/1/95
(Collateralized by 20,372
various U.S. Treasury
securities, 6/8/95-
10/15/98, 0.00%-8.75%,
market value-$20,400 $ 20,000
15,000 Lehman Brothers
5.90%, 5/1/95
(Collateralized by 14,455
U.S. Treasury Notes,
8.63%, 8/15/97, market
value-$15,054) 15,000
129,000 NationsBank
5.96%, 5/1/95
(Collateralized by 131,793
various U.S. Treasury
securities, 0.00%-
11.25%, 4/30/95-4/15/00,
market value-$131,585 129,000
20,000 Nomura Securities
5.92%, 5/1/95
(Collateralized by 20,217
U.S. Treasury Notes,
4.63%-7.75%, 2/29/96-
1/31/00, market value-
$20,400) 20,000
20,000 UBS Securities
5.93%, 5/1/95
(Collateralized by 19,630
U.S. Treasury Notes,
7.50%, 12/31/96, market
value-$20,405) 20,000
- -------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 296,998
- -------------------------------------------------------
TOTAL (COST $525,334)(B) $525,334
- -------------------------------------------------------
</TABLE>
(a) Percentages indicated are based on net assets of $524,143.
(b) Cost and value for federal income tax and financial reporting purposes are
the same.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
22
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments
PRIME OBLIGATIONS FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
CERTIFICATES OF DEPOSIT (3.5%)
BANKING (3.5%):
15,000 Canadian Imperial Bank
Commerce
6.45%, 8/7/95 $ 14,999
- ------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT 14,999
- ------------------------------------------------------------
- ----------------------------------------------
COMMERCIAL PAPER (42.1%)
BANKING (2.3%):
10,000 Cogentrix of Richmond
Virginia
6.02%, 5/18/95 9,972
----------
BEVERAGES (4.3%):
3,373 PepsiCo, Inc.
5.95%, 5/17/95 3,364
15,000 PepsiCo, Inc.
6.25%, 8/24/95 15,000
----------
18,364
----------
FINANCIAL SERVICES (20.7%):
5,000 American Express Co.
5.95%, 5/22/95 4,983
15,000 Bankers Trust
6.23%, 7/10/95 14,818
5,000 Broadway Capital Corp.
6.00%, 5/9/95 4,993
11,218 Fleet Funding Corp.
6.02%, 5/10/95 11,201
5,138 Fleet Funding Corp.
6.00%, 5/24/95 5,118
5,000 Ford Motor Credit Corp.
6.00%, 5/8/95 4,994
6,000 Ford Motor Credit Corp.
6.00%, 5/31/95 5,970
15,000 Hanson Finance
6.05%, 6/1/95 14,922
5,000 Transamerica Finance Corp.
5.98%, 5/15/95 4,988
11,050 Retailer Funding Corp.
6.00%, 5/24/95 11,008
6,044 Retailer Funding Corp.
6.00%, 5/31/95 6,014
----------
89,009
----------
INDUSTRIAL GOODS & SERVICES (2.3%):
10,000 Xerox Co.
6.00%, 5/15/95 9,977
----------
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MISCELLANEOUS (3.5%):
15,000 135 Bishopgate Funding
6.02%, 5/19/95 $ 14,955
----------
OFFICE EQUIPMENT & SERVICES (3.5%):
15,000 Canon USA, Inc.
5.98%, 5/12/95 14,973
----------
OIL & GAS EXPLORATION (1.2%):
5,000 British Oil New Zealand Ltd.
Discount
5.95%, 5/15/95 4,988
----------
PRINTING & PUBLISHING (1.2%):
5,000 Reed Publishing
6.05%, 6/27/95 4,952
----------
RECEIVABLE (3.2%):
5,000 Blue Hawk Funding
6.00%, 5/24/95 4,981
5,000 Blue Hawk Funding
5.98%, 5/31/95 4,975
3,840 Blue Hawk Funding
6.02%, 5/9/95 3,835
----------
13,791
- ------------------------------------------------------------
TOTAL COMMERCIAL PAPER 180,981
- ------------------------------------------------------------
- ----------------------------------------------
CORPORATE BONDS (3.3%)
BEVERAGES (0.2%):
1,000 PepsiCo, Inc.
5.63%, 7/1/95 1,000
----------
FINANCIAL SERVICES (1.9%):
8,050 Associates Corp. of N.A.
8.88%, 8/1/95 8,113
----------
MISCELLANEOUS (1.2%):
5,000 Hanson Overseas
5.50%, 1/15/96 4,960
- ------------------------------------------------------------
TOTAL CORPORATE BONDS 14,073
- ------------------------------------------------------------
- ----------------------------------------------
FLOATING RATE NOTES (14.3%)
MASTER DEMAND NOTES (5.1%):
22,000 Lehman Government
Securities
6.20%*, 5/1/95 22,000
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
23
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments -- Continued
PRIME OBLIGATIONS FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
SECURITY BROKER, DEALER (8.1%):
10,000 Goldman Sachs Group
6.03%*, 6/15/95** $ 10,000
10,000 Goldman Sachs Group
6.03%*, 6/16/95** 10,000
10,000 Lehman Brothers Holdings,
Inc.
6.16%*, 7/28/95** 10,000
5,000 Lehman Brothers Holdings,
Inc.
6.42%*, 3/11/96** 5,000
----------
35,000
----------
TAXABLE MUNICIPAL DEMAND NOTES (1.0%):
4,500 Springfield
6.08%*, 12/31/10** 4,500
- ------------------------------------------------------------
TOTAL FLOATING RATE NOTES 61,500
- ------------------------------------------------------------
- ----------------------------------------------
MEDIUM TERM NOTES (5.8%)
FINANCE (3.7%):
1,000 Ford Motor Credit Corp.
9.20%, 5/1/95 1,000
5,000 General Electric Capital
Corp.
6.25%, 5/1/95 5,000
10,000 General Electric Capital
Corp.
4.89%, 5/29/95 9,999
----------
15,999
----------
TOBACCO (2.1%):
9,000 Philip Morris Co.
6.25%, 5/22/95 9,003
- ------------------------------------------------------------
TOTAL MEDIUM TERM NOTES 25,002
- ------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (3.5%)
FEDERAL HOME LOAN BANK
10,000 5.19%, 6/13/95 9,999
5,000 6.60%, 4/25/95 5,000
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 14,999
- ------------------------------------------------------------
- ----------------------------------------------
VARIABLE RATE NOTES (18.8%)
5,034 Adesa Funding Corp.
6.08%*, 1/1/99** 5,034
2,500 Astro Alum
6.15%*, 4/1/05** 2,500
3,500 Baylis Group Partnership
6.30%*, 1/1/10** 3,500
15,000 C-River Maritime Exxon
Shipping
6.09%*, 10/1/01** 15,000
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
3,517 Capital One Funding Corp.
Service
6.08%*, 6/2/08** $ 3,517
2,725 Carelife, Inc.
6.15%*, 8/1/11** 2,725
1,600 Cleveland Steel Container
6.15%*, 12/1/08** 1,600
2,000 Cuyahoga County Ohio
Taxable Economic
Development Revenue
6.51%*, 6/1/22** 2,000
925 Dietz Road Ltd Partnership
6.15%*, 11/1/08** 925
3,000 Dome Corp -- Dome Corp
Project
6.15%*, 8/31/16** 3,000
8,388 Erie Funding
6.25%*, 11/1/16** 8,388
320 Fremont Plastics
6.15%*, 4/1/03** 320
1,500 GMH Enterprises
6.15%*, 7/1/03** 1,500
455 Highland Rd Partners
6.15%*, 10/1/04** 455
975 McKinley Air Transport
6.15%*, 8/1/09** 975
1,000 MCMC Pob LII
6.15%*, 8/1/14** 1,000
1,000 Olen Corp.
6.15%*, 12/1/04** 1,000
1,655 Olen Corp.
6.15%*, 8/1/08** 1,655
1,400 Pellerin Melnor Corp.
6.15%*, 9/1/02** 1,400
5,842 Primex Funding
6.08%*, 2/1/00** 5,842
700 Rivnut Engineered Products
6.15%*, 2/1/01** 700
980 S & SLP Project
6.15%*, 12/1/07** 980
420 Schipper-DJA Properties
6.17%*, 10/1/05** 420
3,060 Schipper Enterprises
6.17%*, 4/1/09** 3,060
1,295 Technisand, Inc.
6.15%*, 11/1/01** 1,295
1,800 Tell-Schipper Properties,
Inc.
6.17%*, 10/1/03** 1,800
8,300 Tyler Health Facilities
6.35%*, 11/1/25** 8,300
1,980 Zanetos Partnership Project
6.15%*, 7/1/13** 1,980
- ------------------------------------------------------------
TOTAL VARIABLE RATE NOTES 80,871
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
24
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments -- Continued
PRIME OBLIGATIONS FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
REPURCHASE AGREEMENTS (8.7%)
12,000 Chase Securities
5.92%, 5/2/95
(Collateralized by 12,287
U.S. Treasury Bills,
5/18/95-5/25/95,
market value-$12,244) $ 12,000
13,315 Donaldson-Lufkin Jenrette
5.93%, 5/1/95
(Collateralized by 15,318
various U.S. Treasury
securities, 0.00%-5.13%,
8/15/95-2/15/00,
market value-$13,582) 13,315
12,000 UBS Securities, Inc.
5.93%, 5/2/95
(Collateralized by 11,780
U.S. Treasury Notes,
7.90%, 12/31/96, market
value-$12,245) 12,000
- ------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 37,315
- ------------------------------------------------------------
TOTAL (COST $429,740)(B) $ 429,740
- ----------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $430,000.
(b) Cost and value for federal income tax and financial reporting purposes are
the same.
* Floating Rate Demand Notes are securities with yields that vary with a
designated market index or market rate. These securities are payable on the
date of demand. The rate reflected on the Schedule of Portfolio Investments is
the effective rate at April 30, 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 ON PAGES 73 TO 78.
25
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
TAX-FREE MONEY MARKET FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (98.6%)
ALABAMA (2.1%):
2,530 Ardmore Industrial
Development Revenue,
4.95%*, 6/1/04** $ 2,530
1,800 Montgomery, Alabama BMC,
4.75%*, 12/1/30** 1,800
--------
4,330
--------
ARKANSAS (2.4%):
5,000 University of Arkansas,
4.80%*, 12/1/19** 5,000
--------
CALIFORNIA (6.8%):
5,000 California Housing Finance
GIC, 4.60%, 8/1/27** 5,000
6,000 California School Cash
Reserve, 4.50%, 7/5/95 6,008
3,080 Los Angeles, California
Redevelopment, 8.85%,
7/1/95 3,115
--------
14,123
--------
COLORADO (1.3%):
2,645 Arapahoe County, Capital
Improvement, 4.45%,
8/31/96** 2,645
--------
FLORIDA (8.3%):
4,500 Broward County, Housing
Finance Authority, 4.95%*,
12/1/29** 4,500
9,700 Dade County, Housing Finance
Authority, Highway
Revenue, 4.95%*, 8/1/05** 9,700
490 Florida State Board of
Education, 5.50%, 1/1/96 492
2,500 Hillsborough County,
Ringhaven, 4.75%*,
12/1/11** 2,500
--------
17,192
--------
ILLINOIS (7.5%):
1,700 Illinois Development,
Kindlen, 4.80%*, 5/1/06** 1,700
5,000 Illinois Development, Power
& Light, 4.10%, 5/31/95** 5,000
5,000 Illinois Health Facility,
4.50%*, 11/15/24** 5,000
1,000 Illinois State, 8.13%,
6/1/95 1,023
2,700 Kankakee County, Industrial
Development Revenue,
4.95%*, 12/1/07** 2,700
--------
15,423
--------
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INDIANA (4.5%):
4,000 Indiana Bond Bank, 5.25%,
7/10/95 $ 4,005
1,150 Indianapolis, Indiana
Calderon, 4.95%*, 2/1/99** 1,150
1,995 Scottsburg, Indiana, 5.20%*,
10/1/09** 1,995
1,020 Syracuse, Economic
Development Revenue,
4.80%*, 12/1/05** 1,020
1,220 Wakarusa, Economic
Development Revenue,
4.80%*, 7/1/03** 1,220
--------
9,390
--------
IOWA (5.0%):
4,325 City of Urbandale, 4.25%*,
10/1/15** 4,325
6,000 Iowa Schools, 4.25%, 7/17/95 6,008
--------
10,333
--------
KANSAS (1.8%):
2,300 Fairway, Kansas, 4.25%*,
11/1/14** 2,300
1,500 Wamego Pollution Control
Revenue, 4.10%*, 11/1/14** 1,500
--------
3,800
--------
KENTUCKY (2.4%):
2,475 Boone County, 5.20%*,
12/1/09** 2,475
2,465 Covington, Kentucky, 4.70%*,
4/1/05** 2,465
--------
4,940
--------
MICHIGAN (1.3%):
1,725 Michigan State Strategic,
4.75%*, 4/1/06** 1,725
1,000 Oakland County Economic,
5.80%, 9/1/95 1,012
--------
2,737
--------
MINNESOTA (1.6%):
3,340 St. Cloud, Housing Webway,
4.95%*, 11/1/05** 3,340
--------
MISSOURI (5.3%):
3,600 Kansas City, J.C. Nichols
Project, 4.25%*, 5/1/15** 3,600
2,860 St. Charles County, Cedar
Ridge, 4.75%*, 10/1/07** 2,860
4,600 St. Louis Industrial
Development, Multi Family
Housing Revenue Bond,
Series 86, 5.05%*,
2/1/07** 4,600
--------
11,060
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
26
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
TAX-FREE MONEY MARKET FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
NEBRASKA (2.4%):
4,000 Nebraska Investment Finance
Authority, 4.75%,
7/15/95** $ 4,000
915 Nebraska Investment Finance
Authority, 5.00%, 7/1/15** 915
--------
4,915
--------
NEVADA (1.4%):
1,300 Director State Nevada H2W
Part, 4.95%*, 8/1/14** 1,300
1,600 Director State Nevada No.
Sail, 4.95%*, 8/1/01** 1,600
--------
2,900
--------
NEW YORK (0.8%):
1,700 New York, New York, 5.00%*,
2/1/20** 1,700
--------
NORTH CAROLINA (4.0%):
8,240 Person County, Pollution
Control Revenue, Carolina
Power & Light Project,
4.80%*, 11/1/19** 8,240
--------
OHIO (18.1%):
440 Akron Bath Copley, Ohio
Township Hospital, 4.80%*,
5/1/13** 440
2,000 Berea, Ohio, 4.50%, 10/25/95 2,002
1,500 Cuyahoga County, 4.80%*,
12/1/12** 1,500
2,850 Dublin School District,
5.57%, 12/20/95 2,854
885 Fairfield County, 4.88%,
10/26/95 887
2,550 Fayetteville Perry, Ohio,
4.68%, 4/12/96 2,554
2,500 Franklin County Hospital,
4.70%*, 6/1/16** 2,500
4,380 Franklin County, Wesley
Glen, 4.82%*, 4/1/13** 4,380
2,680 Gallia County, Industrial
Development Revenue,
Scenic Hills Nursing
Center, 4.40%*, 12/15/10** 2,680
3,400 Greene County, Ohio Apple
Valley, 4.30%*, 8/1/09** 3,400
3,000 Highland Heights, 5.65%,
12/28/95 3,008
3,800 Kings School District,
5.45%, 6/21/95 3,803
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
4,000 Lakewood, Ohio, 3.72%,
5/11/95 $ 4,000
2,495 Student Loan Funding Corp.,
Cincinnati, Ohio, Student
Loan Revenue, 4.60%*,
12/29/98** 2,495
790 Summit County, Ohio, Texler
Project, 4.40%, 5/1/09** 790
--------
37,293
--------
PENNSYLVANIA (2.7%):
3,100 Sayre, Health Care Facility,
4.75%*, 12/1/20** 3,100
2,450 Williamsport, Area School
District, 3.89%, 6/30/95 2,451
--------
5,551
--------
SOUTH CAROLINA (1.2%):
2,500 Job Economic Development
Revenue, 4.95%*, 12/1/99** 2,500
--------
TENNESSEE (3.0%):
6,200 Hawkins County, Kingston,
5.00%*, 8/1/09** 6,200
--------
TEXAS (3.6%):
4,140 Harris County, 4.95%*,
10/1/16** 4,140
2,240 Texas A&M University, 8.50%,
7/1/95 2,255
950 Texas A&M University, 9.00%,
7/1/95 957
--------
7,352
--------
UTAH (0.3%):
500 Intermountain Power Agency,
9.90%, 7/1/95 517
--------
VIRGINIA (1.5%):
3,000 State Housing Development,
3.90%, 5/10/95 3,000
--------
WASHINGTON (0.7%):
500 Everett Water & Sewer,
8.20%, 7/1/95 503
1,000 Pierce County, 4.55%,
11/1/04** 1,000
--------
1,503
--------
WISCONSIN (8.6%):
1,200 Appleton, Pensor, 4.95%*,
8/1/01** 1,200
1,525 Berlin Wenninger, 4.95%*,
4/1/07** 1,525
4,000 Evansville, Wisconsin,
4.95%*, 12/1/08** 4,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
27
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
TAX-FREE MONEY MARKET FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
4,000 Kenosha Metalmen, 4.95%*,
9/1/14** $ 4,000
1,000 Milwaukee, Wisconsin, 5.25%,
9/1/95 1,003
1,400 Oshkosh, Schloesser, 4.95%*,
3/1/02** 1,400
2,800 Plymouth, Industrial
Development Revenue,
4.95%*, 8/1/04** 2,800
1,800 Prairie Du Chien, Wisconsin,
4.80%*, 6/1/02** 1,800
--------
17,728
- ----------------------------------------------------------
TOTAL MUNICIPAL BONDS 203,712
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (2.1%)
4,318 Federated #15 Tax-Free Money
Market Fund 4,318
1 Fidelity Ohio Tax Free Fund 1
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 4,319
- ----------------------------------------------------------
TOTAL (COST $208,031)(B) $208,031
- ---------------------------------------------------------
</TABLE>
- ------------
(a) Percentages indicated are based on net assets of $206,606.
(b) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities collateralized by bank letters of credit or other
bank credit 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 Portfolio Investments is the rate in
effect at April 30, 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 ON PAGES 73 TO 78.
28
<PAGE>
Schedule of Portfolio Investments
THE VICTORY FUNDS April 30, 1995
NEW YORK TAX-FREE PORTFOLIO (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (94.5%)
250 Metropolitan Transportation
Authority, New York,
Revenue Bond, Series I,
AMBAC, 7.00%, 7/1/09 $ 282
1,200 Metropolitan Transportation
Authority, New York,
Service Contract, Refunding
Revenue Bond, Series K,
AMBAC, 7.50%, 7/1/17 1,318
250 Nassau County, New York,
Industrial Development
Agency, Civic Facilities
Revenue Bond, Hofstra
University Project, AMBAC,
6.75%, 8/01/11 263
700 New York City, New York, City
Housing Development,
Refunding Revenue Bond,
Multi-Unit Mortgage, Series
A, FHA, 7.30%, 6/1/10 741
335 New York City, New York, City
Housing Development,
Revenue Bond, Series 1,
MBIA, 7.38%, 4/1/17 352
675 New York City, New York, City
Housing Development,
Refunding Revenue Bond,
Multi-Unit Mortgage, Series
A, FHA, 7.35%, 6/1/19 717
200 New York City, New York,
Industrial Development
Agency, Civic Facilities
Revenue Bonds, USTA
National Tennis Center,
6.38%, 11/15/14 205
220 New York City, New York, City
Transportation Authority,
Revenue Bond, Livingston
Plaza Project, FSA, 7.50%,
1/1/20 247
680 New York City, New York,
Cultural Resources, Revenue
Bond, AMBAC, 6.63%, 1/1/11 711
300 New York City, New York,
General Obligation Bond,
Series B, FSA, 7.00%,
10/1/18 312
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
$ 350 New York City, New York,
General Obligation Bond,
Series C, FGIC, 7.00%,
2/1/12 $ 360
750 New York City, New York,
Municipal Water Finance
Authority, Water & Sewer
System Revenue Bonds,
Series A, FGIC, 6.75%,
6/15/16 780
700 New York State Dormitory
Authority Revenue Bonds,
City University, Series 2,
MBIA 6.75%, 7/01/24 738
750 New York State Dormitory
Authority, Revenue Bonds,
Ithaca College, MBIA,
6.50%, 7/1/10 782
400 New York State Dormitory
Authority, Revenue Bonds,
State University
Educational System, Series
B, AMBAC, 6.00%, 5/15/17 395
225 New York State Dormitory
Authority, Revenue Bond,
Judicial Facilities Leases,
Series B, MBIA, 7.00%,
4/15/16 239
370 New York State General
Obligation Bonds, AMBAC,
6.75%, 8/1/18 392
325 New York State General
Obligation Bonds, AMBAC,
6.75%, 8/1/19 343
500 New York State Medical Care
Facilities Finance Agency,
Unrefunded/Revenue Bond,
MBIA, 7.38%, 8/15/19 543
200 New York State Medical Care
Facilities Finance Agency,
Montefiore Medical Center,
AMBAC, 5.75%, 2/15/25 188
815 New York State Medical Care
Facilities Finance Agency,
Refunding Revenue Bond,
North Shore University
Hospital, MBIA, 7.20%,
11/1/20 879
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
29
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY FUNDS April 30, 1995
NEW YORK TAX-FREE PORTFOLIO (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
550 New York State Medical Care
Facilities Finance Agency,
Revenue Bond, Series A,
BIG, 7.10%, 2/15/27 $ 575
340 New York State Medical Care
Facilities Finance Agency,
Revenue Bond, St. Luke's,
Series B, MBIA, 7.45%,
2/15/29 382
550 New York State TWY Authority
General Revenue Bonds,
Series C, FGIC, 6.00%,
1/01/25 539
1,000 New York State Urban
Development Correctional
Facilities, Revenue Bond,
Series D, AMBAC, 7.50%,
1/1/12 1,088
400 New York State Urban
Development Correctional
Facilities, Series 1, FSA,
7.50%, 1/1/20 449
900 Triborough Bridge & Tunnel
Authority, Revenue Bond,
Series T, MBIA, 7.00%,
1/1/20 1,002
1,000 Triborough Bridge & Tunnel
Authority, Special
Obligation Refunding
Revenue Bond, Series B,
AMBAC, 6.88%, 1/1/15 1,061
- ---------------------------------------------------------
TOTAL MUNICIPAL BONDS $15,883
- ---------------------------------------------------------
- ---------------------------------------------------------
INVESTMENT COMPANIES (3.1%)
527 Municipal Fund for New York $ 527
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 527
- ---------------------------------------------------------
TOTAL (COST $15,485)(b) $16,410
- ---------------------------------------------------------
</TABLE>
- ------------
(a) Percentages indicated are based on net assets of $16,808.
(b) 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 $ 925
Unrealized depreciation
-------
Net unrealized appreciation $ 925
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
30
<PAGE>
Schedule of Portfolio Investments
THE VICTORY FUNDS April 30, 1995
FUND FOR INCOME (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
U.S. TREASURY OBLIGATION (1.2%)
U.S. TREASURY STRIP
2,000 zero%, 8/15/20 $ 296
- ---------------------------------------------------------
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (40.3%)
1,084 Bear Stearns Mortgage Capital
Corp., Series 1991-A/B1,
9.40%, 6/25/21 1,084
2,220 Bear Stearns Secured
Investors Trust, Series
1991-2/H, 7.50%, 9/20/20 2,151
104 Drexel, Burnham & Lambert
Trust, Series U/1, 6.30%,
8/1/17 107
1,000 General Electric Capital
Mortgage, Series 93-4f,
7.00%, 3/25/08 896
1,985 Housing Securities, Inc.,
Series 1993-B/B4M, 7.25%,
4/25/08 1,878
1,000 Kidder, Peabody Acceptance
Corp., Series 1993-C1/A3,
6.80%, 9/1/06 927
153 Merrill Lynch Trust, Series
27/D, 8.90%, 10/20/15 155
1,366 Prudential Home Mortgage,
Series 1992-42/M, 7.00%,
1/25/08 1,291
1,500 Resolution Trust Corp.,
Series 1992-2/B4, 8.20%,
11/25/21 1,476
- ---------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 9,965
- ---------------------------------------------------------
- ---------------------------------------------------------
U.S. GOVERNMENT AGENCIES (41.7%)
FEDERAL HOME LOAN MORTGAGE CORPORATION:
335 8.85%, 4/15/20 338
115 9.30%, 8/15/15 117
1,337 9.50%, 8/1/19-12/1/22 1,389
237 10.00%, 2/1/17-9/1/19 253
18 12.00%, 10/1/10-7/1/14 21
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION:
1,304 8.00%, 11/25/20 $ 1,221
1,683 8.50%, 8/1/24-1/13/25 1,712
25 9.50%, 1/1/19 28
154 10.00%, 5/1/13-2/1/18 172
10 10.50%, 1/1/18 11
55 12.00%, 8/1/13-4/1/15 61
36 13.00%, 12/1/12 41
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION:
2,272 9.50%, 8/15/17-10/15/19 2,390
2,115 10.00%, 3/15/16-6/15/21 2,289
97 10.25%, 3/15/19-6/15/19 103
82 10.50%, 2/15/16 90
66 11.00%, 9/20/14 74
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 10,310
- ---------------------------------------------------------
- ---------------------------------------------------------
REAL ESTATE MORTGAGE INVESTMENT
CONDUITS (12.6%)
1,000 Federal National Mortgage
Association, Series 1991-
13/C, 8.25%, 3/25/04 1,017
76 Federal National Mortgage
Association, Series G-18/6,
8.75%, 7/25/01 76
1,920 Federal National Mortgage
Association, Series
1988-4/Z, 9.25%, 3/25/18 2,014
- ---------------------------------------------------------
TOTAL REAL ESTATE MORTGAGE INVESTMENT
CONDUITS 3,107
- ---------------------------------------------------------
- ---------------------------------------------------------
REPURCHASE AGREEMENT (4.1%)
1,003 Donaldson, Lufkin & Jenrette
Securities Corp., 5.93%,
dated 4/28/95, due 5/1/95
(Collateralized by various
U.S. Treasury securities) 1,003
- ---------------------------------------------------------
TOTAL REPURCHASE AGREEMENT 1,003
- ---------------------------------------------------------
TOTAL (COST $24,172)(B) $ 24,681
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $24,713.
(b) 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 $ 842
Unrealized depreciation (333)
--------
Net unrealized appreciation $ 509
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
31
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
LIMITED TERM INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
ASSET BACKED SECURITIES (1.8%)
1,000 American Express Co., 6.05%,
7/15/97 $ 978
1,000 Capital Auto Receivables
Trust, 5.35%, 2/15/98 989
955 Capital Auto Receivables
Trust, 4.90%, 2/17/98 952
201 GMAC 1993 A Grantor Trust,
4.15%, 3/15/98 198
- ----------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 3,117
- ----------------------------------------------------------
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (8.6%)
FEDERAL HOME LOAN MORTGAGE CORP.:
1,540 7.00%, 7/15/98 1,535
2,000 5.50%, 10/15/02 1,933
2,000 5.50%, 11/15/03 1,924
482 8.40%, 1/15/05 487
937 6.00%, 2/15/13 933
258 8.00%, 1/15/18 258
1,300 8.50%, 9/15/19 1,316
FEDERAL NATIONAL MORTGAGE ASSOC.:
2,000 6.00%, 10/25/03 1,965
1,000 8.00%, 3/25/04 1,007
1,522 5.75%, 6/25/06 1,471
849 7.00%, 2/25/18 844
883 7.50%, 7/25/18 879
--------
14,552
--------
- ---------------------------------------------------------
CORPORATE BONDS (18.5%)
AUTOMOTIVE (0.3%):
500 Ford Motor, 7.88%, 10/15/96 506
--------
BANKING & FINANCIAL SERVICES (0.3%):
500 Bankers Trust, 7.25%, 11/1/96 502
--------
BROKERAGE SERVICES (2.0%):
2,000 Lehman Brothers, 5.75%,
11/15/98 1,858
1,500 Lehman Brothers Holding,
5.50%, 6/15/96 1,474
--------
3,332
--------
BUSINESS EQUIPMENT (1.3%):
2,175 International Business
Machines Corp., 6.38%,
11/1/97 2,145
--------
CHEMICALS (0.6%):
1,000 Dow Capital, 5.75%, 9/15/97 972
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
CONSUMER GOODS & SERVICES (0.6%):
1,000 PepsiCo, Inc., 5.63%, 7/1/95 $ 1,000
--------
FINANCIAL SERVICES (6.5%):
2,000 American General Corp.,
6.88%, 7/1/99 1,957
1,000 Associates Corp.,6.88%,
1/15/97 1,000
1,500 Associates Corp.,7.25%,
9/1/99 1,492
3,000 Ford Motor Credit Corp.,
7.13%, 12/1/97 3,004
1,000 ITT Finance, 7.38%, 10/15/95 1,005
2,000 Norwest Corp., 7.75%,
12/31/96 2,030
500 Norwest Financial, 7.10%,
11/15/96 502
--------
10,990
--------
FOOD PRODUCTS (0.4%):
775 H.J. Heinz Co., 5.50%,
9/15/97 756
--------
GOVERNMENTS (FOREIGN) (0.6%):
1,000 Province of Ontario Global
Bonds, 5.70%, 10/1/97 973
--------
INDUSTRIAL GOODS & SERVICES (1.2%):
2,000 Burlington Resources, 7.15%,
5/1/99 1,985
--------
INSURANCE (2.1%):
500 International Lease Finance
Corp., 6.38%, 11/1/96 496
2,000 International Lease Finance
Corp., 8.35%, 10/1/98 2,063
1,000 Transamerica Finance, 5.40%,
9/1/95 997
--------
3,556
--------
POLLUTION CONTROL SERVICES (1.5%):
500 Waste Management, 6.38%,
7/1/97 493
2,000 WMX Technologies, 7.13%,
3/22/97 2,005
--------
2,498
--------
UTILITIES -- ELECTRIC & GAS (1.1%):
1,000 Northern Illinois Gas, 5.50%,
2/1/97 976
1,000 Northern States Power, 5.50%,
2/1/99 944
--------
1,920
- ----------------------------------------------------------
TOTAL CORPORATE BONDS 31,135
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 73 TO 78.
32
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
LIMITED TERM INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
U.S. GOVERNMENT AGENCIES (1.7%)
FEDERAL NATIONAL MORTGAGE ASSOC.:
3,000 5.23%, 11/25/98 $ 2,826
- ----------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 2,826
- ----------------------------------------------------------
- ---------------------------------------------------------
U.S. TREASURY NOTES (64.8%)
4,000 5.50%, 4/30/96 3,968
1,000 7.63%, 5/31/96 1,013
8,000 6.50%, 9/30/96 8,002
9,000 7.50%, 12/31/96 9,136
18,000 7.50%, 1/31/97 18,273
1,000 6.75%, 2/28/97 1,003
16,000 6.88%, 2/28/97 16,078
10,000 6.63%, 3/31/97 10,005
7,000 6.50%, 8/15/97 6,978
3,000 7.38%, 11/15/97 3,046
1,500 6.00%, 12/31/97 1,475
4,500 5.13%, 4/30/98 4,306
6,500 8.25%, 7/15/98 6,774
7,000 5.25%, 7/31/98 6,689
12,000 7.13%, 2/29/00 12,110
- ----------------------------------------------------------
TOTAL U.S. TREASURY NOTES 108,856
- ----------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
INVESTMENT COMPANIES (3.1%)
5,183 Shearson U.S. Treasury Fund $ 5,183
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 5,183
- ----------------------------------------------------------
TOTAL (COST $166,188)(B) $165,669
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $168,112.
(b) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 1,161
Unrealized depreciation (1,681)
--------
Net unrealized depreciation $ (520)
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 73 TO 78.
33
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
GOVERNMENT MORTGAGE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATIONS (10.6%)
FEDERAL HOME LOAN MORTGAGE CORP.:
5,000 5.50%, 10/15/02 $ 4,832
500 5.00%, 8/15/11 492
FEDERAL NATIONAL MORTGAGE ASSOC.:
10,000 7.50%, 8/25/22 9,809
- ---------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS 15,133
- ---------------------------------------------------------
- ---------------------------------------------------------
U.S. GOVERNMENT
AGENCIES (86.8%)
FEDERAL HOME LOAN MORTGAGE CORP.:
5,927 8.00%, 1/1/00 5,922
209 9.50%, 8/1/21 218
3,128 5.99%, 12/1/23 3,136
19,787 7.50%, 4/1/24 19,351
FEDERAL NATIONAL MORTGAGE ASSOC.:
1,395 8.00%, 5/1/17 1,394
2,322 9.50%, 6/1/22 2,420
9,768 6.50%, 4/1/24 9,050
3,888 8.50%, 8/1/24 3,952
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
105 8.50%, 6/15/16 107
252 8.50%, 7/15/16 257
109 9.00%, 9/15/16 113
181 8.50%, 10/15/16 185
108 9.50%, 11/15/16 114
726 8.50%, 1/15/17 740
578 8.50%, 2/15/17 589
233 8.50%, 4/15/17 238
200 8.50%, 5/15/17 204
473 8.50%, 6/15/17 483
2,093 9.50%, 11/15/17 2,195
113 10.00%, 1/15/18 121
517 9.00%, 11/15/18 536
423 9.50%, 1/15/19 444
317 10.50%, 8/15/19 344
469 8.50%, 12/15/19 478
45 8.50%, 2/15/20 46
1,426 9.50%, 5/15/20 1,496
3,278 9.75%, 1/15/21 3,504
1,551 9.00%, 3/15/21 1,606
121 8.50%, 5/15/21 124
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
1,185 9.00%, 5/15/21 $ 1,227
311 8.00%, 6/15/21 311
1,332 9.00%, 6/15/21 1,379
2,307 9.50%, 6/15/21 2,422
13,249 8.00%, 5/15/22 13,257
4,043 8.00%, 10/15/22 4,046
3,088 9.00%, 2/15/23 3,202
2,870 8.50%, 3/15/23 2,928
803 7.50%, 6/15/23 786
4,591 7.50%, 7/15/23 4,490
1,527 8.00%, 8/15/23 1,528
4,887 7.00%, 9/15/23 4,636
2,833 7.00%, 10/15/23 2,687
4,619 7.00%, 12/15/23 4,384
8,295 7.50%, 1/15/24 8,106
3,933 7.50%, 2/15/24 3,842
4,048 8.50%, 10/15/24 4,134
1,714 8.75%, 8/15/25 1,739
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 124,471
- ---------------------------------------------------------
- ---------------------------------------------
U.S. TREASURY NOTES (1.5%)
1,000 5.50%, 4/30/96 992
1,100 8.75%, 8/15/00 1,189
- ---------------------------------------------------------
TOTAL U.S. TREASURY NOTES 2,181
- ---------------------------------------------------------
- ---------------------------------------------
INVESTMENT COMPANIES (0.8%)
1,177 Shearson U.S. Treasury Fund 1,177
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,177
- ---------------------------------------------------------
TOTAL (COST $147,319)(B) $142,962
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $143,435.
(b) 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 $41. Cost for federal income tax purposes differs from value
by net unrealized depreciation of securities as follows (amounts in
thousands):
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation $ 422
Unrealized depreciation (4,820)
--------
Net unrealized depreciation $ (4,398)
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
34
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
INTERMEDIATE INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
ASSET BACKED SECURITIES (0.7%)
CAPITAL AUTO RECEIVABLES TRUST
1,000 5.35%, 2/15/98 $ 989
- ---------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 989
- ---------------------------------------------------------
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (17.0%)
FEDERAL HOME LOAN MORTAGAGE CORP.
1,000 7.00%, 5/15/99 992
1,800 6.50%, 5/15/03 1,713
1,406 5.00%, 11/15/04 1,401
2,500 5.80%, 4/15/14 2,468
1,994 6.50%, 7/15/16 1,959
258 8.00%, 1/15/18 258
1,968 7.50%, 9/15/20 1,963
2,500 8.40%, 1/15/21 2,520
FEDERAL NATIONAL MORTGAGE ASSOC.
2,475 6.00%, 10/25/03 2,432
1,103 7.50%, 7/25/18 1,098
4,000 6.25%, 5/25/19 3,755
2,000 8.50%, 8/25/19 2,051
- ---------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 22,610
- ---------------------------------------------------------
- ---------------------------------------------------------
CORPORATE BONDS (39.1%)
APPLIANCES (0.8%):
1,000 Whirlpool Corp. Notes
9.50%, 6/15/00 1,089
--------
AUTOMOTIVE (2.8%):
1,000 Ford Motor Co.
9.00%, 9/15/01 1,076
500 Ford Motor Credit Co.
9.50%, 4/15/00 542
500 Ford Motor Holdings, Inc.
9.25%, 3/1/00 534
500 General Motors Corp.
9.75%, 5/15/99 514
1,000 General Motors Corp.
9.63%, 12/1/00 1,086
--------
3,752
--------
BANKING (0.4%):
500 Comerica, Inc.
10.13%, 6/1/98 537
--------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
BROKERAGE SERVICES (10.9%):
4,000 Bear Stearns Co.
9.38%, 6/1/01 $ 4,305
5,000 Lehman Brothers Holdings
5.75%, 11/15/98 4,643
2,500 Merrill Lynch & Co.
8.25%, 11/15/99 2,563
3,500 Salomon, Inc.
6.75%, 1/15/06 2,993
--------
14,504
--------
CHEMICALS (1.5%):
1,000 Dow Chemical
5.75%, 9/15/97 973
1,000 Monsanto Defined
8.13%, 12/15/06 1,032
--------
2,005
--------
FINANCIAL SERVICES (7.0%):
2,000 American Express
8.50%, 8/15/01 2,115
3,000 American General Corp.
7.70%, 10/15/99 3,034
1,000 Norwest Corp.
7.75%, 12/31/96 1,015
3,000 Transamerica Financial
8.75%, 10/1/99 3,138
--------
9,302
--------
FOOD PRODUCTS (0.7%):
1,000 Super Valu, Inc.
5.88%, 11/15/95 998
--------
GOVERNMENT AGENCY (0.4%):
500 Private Export Funding
9.00%, 1/31/96 508
--------
INDUSTRIAL GOODS & SERVICES (8.4%):
2,000 American Home Products
7.70%, 2/15/00 2,025
3,000 Amoco Canada
7.25%, 12/1/02 2,985
1,000 Grand Metropolitan Investment
Corp.
8.63%, 8/15/01 1,070
3,000 Service Corp. International
8.38%, 12/15/04 3,131
2,000 WMX Technologies Waste
Management
7.13%, 3/22/97 2,005
--------
11,216
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
35
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERMEDIATE INCOME FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INSURANCE (0.4%):
500 St. Paul Cos., Inc.
9.38%, 6/15/97 $ 526
--------
OIL & GAS EXPLORATION (1.2%):
500 British Petroleum America
10.15%, 3/15/96 514
1,000 Cheveron Corp. Amortization
Notes
8.11%, 12/1/04 1,044
--------
1,558
--------
PRINTING & PUBLISHING (1.6%):
1,000 Knight Ridder, Inc.
8.50%, 9/1/01 1,063
1,000 R.R. Donnelly & Sons Co.
9.13%, 12/1/00 1,095
--------
2,158
--------
RETAIL STORES (0.8%):
500 J.C. Penney, Inc.
9.05%, 3/1/01 538
500 Sears Roebuck & Co.
9.50%, 6/1/99 537
--------
1,075
--------
TELECOMMUNICATIONS (2.2%):
750 Communications Satellite
8.13%, 4/1/04 775
2,000 GTE Corp. Notes
9.10%, 6/1/03 2,143
--------
2,918
- ---------------------------------------------------------
TOTAL CORPORATE BONDS 52,146
- ---------------------------------------------------------
- ---------------------------------------------------------
U.S. GOVERNMENT AGENCIES (1.4%)
FEDERAL NATIONAL MORTAGE ASSOC.:
2,000 5.23%, 11/25/98 1,884
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 1,884
- ---------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
U.S. TREASURY NOTES (38.6%)
7,500 9.25%, 1/15/96 $ 7,651
3,000 9.38%, 4/15/96 3,087
2,000 5.50%, 4/30/96 1,984
5,000 7.38%, 5/15/96 5,049
6,500 6.88%, 4/30/97 6,534
2,000 5.63%, 1/31/98 1,945
5,000 7.25%, 2/15/98 5,068
7,000 7.00%, 4/15/99 7,050
2,000 7.50%, 10/31/99 2,048
1,000 6.38%, 1/15/00 980
8,000 7.13%, 2/29/00 8,073
2,000 6.88%, 3/31/00 1,997
- ---------------------------------------------------------
TOTAL U.S. TREASURY NOTES 51,466
- ---------------------------------------------------------
- ---------------------------------------------------------
INVESTMENT COMPANIES (1.3%)
1,783 Shearson U.S. Treasury Fund 1,783
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,783
- ---------------------------------------------------------
TOTAL (COST $133,485)(B) $130,878
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $133,225.
(b) 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 $ 885
Unrealized depreciation (3,492)
--------
Net unrealized depreciation $ (2,607)
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
36
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
INVESTMENT QUALITY BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
ASSET BACKED SECURITIES (1.6%)
CAPITAL AUTO RECEIVABLES ASSET TRUST
979 4.90%, 2/17/98 $ 976
RAILCAR TRUST, SERIES 92-1
459 7.75%, 6/1/04 465
- ------------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 1,441
- ------------------------------------------------------------
- ----------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (1.5%)
FEDERAL HOME LOAN MORTGAGE CORP.:
1,180 7.50%, 4/1/07 1,178
FEDERAL NATIONAL MORTGAGE ASSOC.:
67 7.00%, 3/25/18 67
155 7.25%, 6/25/18 154
- ------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATION 1,399
- ------------------------------------------------------------
- ----------------------------------------------
CORPORATE BONDS (28.4%)
AUTOMOTIVE (1.7%):
1,000 Ford Motor Co.
9.00%, 9/15/01 1,076
500 General Motors
9.13%, 7/15/95 535
----------
1,611
----------
BANKING (6.2%):
600 BankAmerica Corp.
9.63%, 2/13/01 657
1,500 Crestar Finance Corp.
8.75%, 11/15/04 1,591
500 First Bank System
8.00%, 7/2/04 514
1,020 First Union Corp.
9.45%, 6/15/99 1,095
800 SunTrust Banks, Inc.
7.38%, 7/1/02 799
1,000 Wells Fargo & Co.
8.75%, 5/1/02 1,061
----------
5,717
----------
BROKERAGE SERVICES (2.3%):
1,000 Morgan Stanley
8.88%, 10/15/01 1,056
1,280 Morgan Stanley
7.25%, 10/15/23 1,069
----------
2,125
----------
COMPUTER (0.6%):
510 International Business
Machines
9.00%, 5/1/98 510
----------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
CREDIT INSTITUTIONS -- PERSONAL (0.6%):
510 General Electric Credit
Corp.
8.75%, 11/26/96 $ 524
----------
FINANCIAL SERVICES (7.6%):
1,025 BHP Finance Ltd.
6.75%, 11/1/13 880
255 Ford Motor Credit Co.
9.40%, 11/16/95 259
1,000 General Motors Acceptance
Co.
6.28%*, 6/7/96 999
1,000 General Motors Acceptance
Co.
7.13%, 6/1/99 985
1,000 General Motors Acceptance
Co.
5.50%, 12/15/01 886
1,020 Merrill Lynch
8.25%, 11/15/99 1,046
2,000 Salomon Brothers
4.44%, 8/9/95 1,988
----------
7,043
----------
GOVERNMENTS (FOREIGN) (0.5%):
500 Republic of Iceland
6.13%, 2/1/04 449
----------
INDUSTRIAL GOODS & SERVICES (4.4%):
1,000 American Home Products
7.70%, 2/15/00 1,013
1,000 Georgia-Pacific
9.95%, 6/15/02 1,116
700 Philip Morris Co.
9.00%, 1/1/01 746
1,200 RJR Nabisco, Inc.
8.00%, 1/15/00 1,182
----------
4,057
----------
INSURANCE (1.0%):
1,100 Nationwide Mutual
Insurance Surplus
7.50%, 2/15/24 954
----------
OIL & GAS EXPLORATION (0.8%):
700 Atlantic Richfield Co.
9.00%, 4/1/21 765
----------
OIL & GAS TRANSMISSION (0.6%):
510 Shell Oil Co.
7.00%, 9/15/95 511
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
37
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INVESTMENT QUALITY BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TELECOMMUNICATIONS (2.1%):
510 GTE Hawaiian Telephone
Service
9.00%, 12/1/00 $ 525
510 MCI Communications
7.63%, 11/7/96 514
360 Northern Telecom Ltd.
8.25%, 6/13/96 366
510 Southwestern Bell Co.
8.30%, 6/1/96 518
----------
1,923
- ------------------------------------------------------------
TOTAL CORPORATE BONDS 26,189
- ------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (38.0%)
FEDERAL HOME LOAN MORTGAGE CORP.:
150 8.00%, 5/1/02 151
350 8.00%, 8/1/02 354
238 8.00%, 6/1/08 237
277 8.00%, 11/1/08 276
FEDERAL NATIONAL MORTGAGE ASSOC.:
994 8.00%, 1/1/23 993
1,562 7.50%, 3/1/24 1,529
1,500 9.00%, 5/1/25 1,549
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
2,815 6.50%, 2/15/09 2,705
1,597 9.00%, 2/15/17 1,654
1,513 8.50%, 9/15/17 1,544
891 9.00%, 6/15/18 923
1,667 9.00%, 10/15/19 1,727
2,738 9.00%, 12/15/19 2,836
1,742 9.00%, 1/15/20 1,809
1,128 9.00%, 2/15/20 1,168
740 8.50%, 11/15/21 756
2,657 7.50%, 8/15/22 2,600
1,646 8.50%, 8/15/22 1,681
1,228 8.50%, 2/15/23 1,253
1,464 7.00%, 10/15/23 1,389
1,378 7.50%, 10/15/23 1,345
4,794 7.50%, 1/15/24 4,683
1,962 7.50%, 5/15/24 1,916
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 35,078
- ------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BONDS (12.5%)
2,600 8.88%, 2/15/19 $ 3,001
3,000 8.00%, 11/15/21 3,188
2,900 7.13%, 2/15/23 2,798
1,500 7.50%, 11/15/24 1,520
1,000 7.63%, 2/15/25 1,035
- ------------------------------------------------------------
TOTAL U.S. TREASURY BONDS 11,542
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY NOTES (14.9%)
3,000 7.50%, 2/29/96 3,029
1,000 7.50%, 12/31/96 1,015
1,000 8.00%, 1/15/97 1,024
1,000 7.75%, 12/31/99 1,034
2,500 7.75%, 1/31/00 2,585
3,000 7.13%, 2/29/00 3,027
2,000 7.50%, 2/15/05 2,061
- ------------------------------------------------------------
TOTAL U.S. TREASURY NOTES 13,775
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (2.1%)
1,942 Shearson U.S. Treasury Fund 1,942
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,942
- ------------------------------------------------------------
TOTAL (COST $93,388) (B) $ 91,366
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $92,202.
(b) Represents costs 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 $ 646
Unrealized depreciation (2,668)
----------
Net unrealized depreciation $ (2,022)
==========
</TABLE>
* Corporate Bonds with floating rates are securities with yields that vary with
a designated market index or market rate. These securities are payable on the
date of demand. The rate reflected on the Schedule of Portfolio Investments
is the effective rate at April 30, 1995.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
38
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
OHIO MUNICIPAL BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
MUNICIPAL BONDS (97.6%)
ALTERNATIVE MINIMUM TAX PAPER (11.1%):
2,500 Student Loan Funding Corp.,
Series A
5.50%, 12/1/01 $ 2,463
4,000 Student Loan Funding Corp.,
Series A
5.85%, 8/1/04 4,005
- ------------------------------------------------------------
TOTAL ALTERNATIVE MINIMUM TAX PAPER 6,468
- ------------------------------------------------------------
- ----------------------------------------------
GENERAL OBLIGATION BONDS (43.2%)
COUNTY, CITY, SPECIAL DISTRICT & SCHOOLS (39.7%):
1,500 Batavia, Ohio Local School
District
7.00%, 12/1/14 1,656
750 Batavia, Ohio Local School
District
6.30%, 12/1/22 769
500 Canton, Waterworks System
5.75%, 12/1/10 491
1,325 Clyde-Green Springs Village,
Ohio School District
6.10%, 12/1/19 1,302
500 Columbus, Ohio, Series B
6.10%, 1/1/03 531
1,500 Columbus, Ohio
6.20%, 1/1/04 1,604
1,385 Crawford County, Ohio,
AMBAC
6.75%, 12/1/19 1,477
1,000 Cuyahoga Falls, Ohio, MBIA
6.00%, 12/1/15 987
2,500 Franklin County, Ohio
Courthouse
6.38%, 12/1/01 2,724
1,000 Hilliard, Ohio School
District
6.15%, 12/1/06 1,035
2,500 Indian Valley, Ohio Local
School District
7.00%, 12/1/14 2,760
750 Kings, Ohio Local School
District
7.00%, 12/1/09 795
1,250 Lakeview, Ohio Local School
District
AMBAC
6.95%, 12/1/19 1,380
540 Lakewood, Ohio
5.40%, 12/1/05 540
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
600 Madison County, Ohio
7.00%, 12/1/19 $ 667
1,000 Munroe Falls, Ohio, Series A
AMBAC
6.95%, 12/1/14 1,103
500 Toledo, Ohio, AMBAC
6.10%, 12/1/14 501
1,820 Trumbull County, Ohio
5.75%, 12/1/03 1,892
880 Tuscarawas Valley, Ohio
Local
School District, AMBAC
6.00%, 12/1/19 863
----------
23,077
----------
STATE (3.5%):
2,000 Ohio State, Refunding &
Improvement
5.50%, 8/1/03 2,044
- ------------------------------------------------------------
TOTAL GENERAL OBLIGATION BONDS 25,121
- ------------------------------------------------------------
- ----------------------------------------------
REVENUE BONDS (43.3%)
HOSPITALS, NURSING HOMES & HEALTH CARE (17.7%):
2,250 Butler County, Ohio
Middletown Regional
Hospital, GFIC
6.75%, 11/15/10 2,411
1,000 Clermont County Hospital
Facility
6.00%, 9/1/19 977
1,720 Franklin County, Riverside
Hospital
7.25%, 5/15/20 1,864
1,000 Garfield Heights, Ohio
Marymount Hospital,
Refunding & Improvement
6.70%, 11/15/15 1,016
2,400 Lake County Hospital
Improvement Facilities
6.38%, 8/15/03 2,523
1,480 Lucas County, Ohio Hospital,
Series B
5.75%, 8/15/03 1,526
----------
10,317
----------
HOUSING (3.1%):
1,775 Ohio Cap Corp.
6.35%, 7/1/22 1,775
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
39
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
OHIO MUNICIPAL BOND FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
PUBLIC FACILITIES (CONVENTION, SPORT) (5.3%):
2,000 Ohio State Building
Authority,
Adult Correctional
Facilities
6.00%, 10/1/07 $ 2,048
1,000 Ohio State Public
Facilities,
Higher Education
5.88%, 12/1/04 1,029
----------
3,077
----------
UTILITIES (SEWERS, TELEPHONE, ELECTRIC) (17.2%):
540 Cambridge, Ohio Water
System
5.50%, 12/1/08 526
1,935 Cleveland Public Power
Systems, MBIA
7.00%, 11/15/24 2,147
1,000 Cleveland Public Power
Systems, MBIA
6.00%, 11/15/02 1,051
1,750 Cleveland Regional Sewer
District
6.75%, 5/15/04 1,940
1,000 Cleveland, Ohio Waterworks
Series 1-92B
6.25%, 1/1/05 1,055
1,950 Columbus, Ohio Sewer
6.25%, 6/1/08 2,006
750 Columbus, Ohio Water
Systems
6.38%, 11/1/10 769
500 Southwest Regional Water,
MBIA
6.00%, 12/1/20 488
----------
9,982
----------
TOTAL REVENUE BONDS 25,151
- ------------------------------------------------------------
TOTAL MUNICIPAL BONDS 56,740
- ------------------------------------------------------------
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
(000) SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (1.9%)
Dreyfus Ohio Money Market
1,131 Institutional Fund $ 1,131
- ------------------------------------------------------------
Total Investment Companies 1,131
- ------------------------------------------------------------
TOTAL (COST $57,596) (B) 57,871
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of 58,137.
(b) 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 $26. Cost for federal income tax purposes differs from value
by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C> <C> <C>
Unrealized appreciation 1,006
Unrealized depreciation (757)
----------
Net unrealized appreciation $ 249
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
40
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATION (2.4%)
FEDERAL HOME LOAN MORTGAGE CORP.:
465,548 7.50%, 4/1/07 $ 465
FEDERAL NATIONAL MORTGAGE ASSOC.:
968,818 7.40%, 7/25/17 968
925,817 6.50%, 4/25/22 872
1,500,000 9.00%, 5/1/25 1,548
- ------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 3,853
- ------------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (53.7%)
AEROSPACE/DEFENSE (3.3%):
21,400 Boeing Co. 1,177
11,800 General Dynamics Corp. 547
20,300 Lockheed Martin Corp.(c) 1,173
33,650 Raytheon Co. 2,448
----------
5,345
----------
ALUMINUM (1.4%):
50,300 Aluminum Co. of America 2,257
----------
AUTOMOBILES (1.0%):
8,000 Chrysler Corp. 345
1,200 Fiat - ADR 24
45,000 Ford Motor Co. 1,215
----------
1,584
----------
BANKS (4.7%):
900 BBV - ADR 24
54,900 BankAmerica Corp. 2,718
28,200 Comerica, Inc. 811
13,800 CoreStates Financial Corp. 450
27,600 First Union Corp. 1,249
1,300 IMI - ADR 24
33,150 J.P. Morgan & Co., Inc. 2,176
----------
7,452
----------
BEVERAGES (1.3%):
33,900 Anheuser Busch Co., Inc. 1,971
1,300 Coca-Cola Femsa - ADR 26
----------
1,997
----------
CHEMICALS (1.2%):
10,100 Dow Chemical Co. 702
8,300 Eastman Chemical 471
1,200 Imperial Chemical - ADR 58
18,200 Lubrizol Corp. 635
3,200 Montedison - ADR(c) 24
1,000 Norsk Hydro - ADR 40
----------
1,930
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
COMPUTERS & PERIPHERALS (0.9%):
13,600 Cisco Systems(c) $ 542
13,400 Hewlett Packard Co. 886
----------
1,428
----------
CONGLOMERATES (0.0%):
3,000 Hanson PLC, ADR 57
----------
CONTAINERS (0.4%):
28,600 Newell Co. 676
----------
COSMETICS & RELATED (0.6%):
15,400 Avon Products 974
----------
ELECTRICAL EQUIPMENT (1.8%):
13,100 Emerson Electric Co. 881
34,400 General Electric Co. 1,926
900 Hitachi - ADR 92
----------
2,899
----------
ELECTRONIC COMPUTING EQUIPMENT (0.7%)
26,900 Compaq Computer Corp.(c) 1,022
----------
ENTERTAINMENT (0.1%)
450 Matsushita Electric - ADR 76
1,500 Sony - ADR 76
----------
152
----------
FINANCIAL SERVICES (2.2%):
26,400 American Express Co. 917
15,300 Federal National Mortgage
Assoc. 1,350
27,300 Household International,
Inc. 1,280
----------
3,547
----------
FOOD DISTRIBUTORS (0.3%):
16,500 Supervalu, Inc. 435
----------
FOOD PROCESSING & PACKAGING (0.2%):
10,000 Sara Lee Corp. 279
----------
FOREST PRODUCTS (2.8%):
20,300 Georgia Pacific Corp. 1,611
25,000 International Paper Co. 1,925
19,700 Union Camp Corp. 987
----------
4,523
----------
HEAVY MACHINERY (0.5%):
9,000 Deere & Co. 738
----------
HOSPITAL & NURSING EQUIPMENT (0.1%):
3,100 Johnson & Johnson, Inc. 202
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
41
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INSURANCE (1.3%):
25,100 Allstate $ 762
12,000 American General Corp. 396
9,200 Chubb Corp. 736
3,200 St. Paul Cos., Inc. 154
----------
2,048
----------
MANUFACTURING (0.9%):
24,700 Allied Signal, Inc. 979
12,300 Litton Industries, Inc.(c) 426
----------
1,405
----------
MEDICAL SUPPLIES (0.3%):
6,600 Medtronic, Inc. 491
----------
METALS (0.3%):
1,300 SKF Corp. - ADR(c) 27
17,100 USX U.S. Steel Group 522
----------
549
----------
OFFICE EQUIPMENT & SUPPLIES (0.3%):
1,000 Canon - ADR 83
9,700 Pitney Bowes, Inc. 360
----------
443
----------
OIL (7.0%):
12,000 Atlantic Richfield Co. 1,374
700 British Petroleum Co., PLC,
ADR 60
49,800 Chevron Corp. 2,359
15,000 Exxon Corp. 1,044
28,700 Mobil Corp. 2,723
1,400 Repsol - ADR 45
400 Royal Dutch Petroleum - ADR 50
49,500 Texaco, Inc. 3,385
1,000 YPF S.A. - ADR(c) 20
----------
11,060
----------
OIL & GAS EXPLORATION (2.5%):
52,600 Enron Corp. 1,788
60,200 Phillips Petroleum Co. 2,107
----------
3,895
----------
OILFIELD EQUIPMENT & SERVICES (0.7%):
46,500 Baker Hughes, Inc. 1,046
----------
PAINT, VARNISHES & ENAMELS (0.2%):
7,700 Sherwin Williams Co. 274
----------
PAPER (0.0%):
800 Fletcher Challange - ADR 22
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
PHARMACEUTICALS (3.4%):
49,000 Abbott Laboratories $ 1,929
11,400 American Home Products Corp. 879
13,600 Merck & Co., Inc. 583
11,900 Pfizer, Inc. 1,031
12,100 Schering-Plough 912
1,400 SmithKline Beecham 54
----------
5,388
----------
PUBLISHING (0.2%):
3,800 Dun & Bradstreet Corp. 198
2,500 News Corp. - ADR(c) 49
----------
247
----------
RETAIL (1.7%):
9,700 Dayton Hudson Corp. 651
21,900 Pep Boys-Manny, Moe & Jack 564
14,500 Sears & Roebuck Co. 787
7,500 Wal Mart Stores, Inc. 178
10,900 Walgreen Co. 512
----------
2,692
----------
SEMICONDUCTORS (0.8%):
11,850 Intel Corp. 1,213
600 Kyocera - ADR 94
----------
1,307
----------
SHOES, LEATHER GOODS & CLOTHING (0.1%):
4,400 Reebok International Ltd. 138
----------
SOAPS & CLEANING AGENTS (0.1%):
1,300 Procter & Gamble Co. 91
----------
SOFTWARE & COMPUTER SERVICES (1.1%):
13,650 Microsoft Corp.(c) 1,118
32,000 Novell, Inc.(c) 696
----------
1,814
----------
STEEL (0.1%):
2,100 British Steel - ADR 57
800 Broken Hill Proprietary -
ADR 46
2,300 Worthington Industries, Inc. 43
----------
146
TELECOMMUNICATIONS (0.3%):
26,800 Comsat Corp. 536
----------
TOBACCO & TOBACCO PRODUCTS (0.8%):
4,000 B.A.T. Industries - ADR 60
16,500 Philip Morris Cos., Inc. 1,118
3,900 UST, Inc. 110
----------
1,288
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
42
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TOOLS & HARDWARE MANUFACTURING (0.3%):
11,100 Stanley Works $ 440
----------
TRANSPORTATION (0.0%):
900 British Airways -ADR 58
3,000 TMM - ADR 20
----------
78
----------
UTILITIES - ELECTRIC & GAS (3.3%):
64,900 Consolidated Edison Co. NY,
Inc. 1,801
20,300 Duquesne Light Co. 685
83,300 Texas Utilities Co. 2,718
----------
5,204
----------
UTILITIES - TELECOMMUNICATIONS (4.5%):
68,600 A T & T Corp. 3,481
900 British Telecom - ADR 56
60,500 GTE Corp. 2,065
1,000 Hong Kong Telecom - ADR 20
9,000 MCI Telecommunications
Corp. 196
31,000 Nynex Corp. 1,267
1,000 Telefonica De Espana -
ADR(c) 37
1,000 Telephones De Mexico - ADR 30
700 Telephonos De Chile - ADR 48
----------
7,200
- ------------------------------------------------------------
TOTAL COMMON STOCKS 85,299
- ------------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS - FOREIGN (0.7%)
BRITAIN (0.0%):
PUBLISHING (0.0%):
2,200 Reed Elsevier International 28
----------
FOOD MANUFACTURING (0.0%):
5,000 United Biscuits 28
- ------------------------------------------------------------
TOTAL BRITAIN 56
- ------------------------------------------------------------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FRANCE (0.1%):
AUTOMOBILES (0.0%):
200 PSA Peugeot Citroen $ 29
----------
BANKS (0.0%):
500 Cie Financiere De Paribas-A 30
----------
BUILDING MATERIALS (0.0%):
250 Compagnie De Saint Gobain 32
----------
OIL & GAS PRODUCTION (0.0%):
400 Elf Aquitaine 32
----------
TELECOMMUNICATIONS (0.0%):
300 Alcatel-Alsthom 28
----------
UTILITIES - WATER (0.0%):
300 Cie Generale Des Eaux 32
- ------------------------------------------------------------
TOTAL FRANCE 183
- ------------------------------------------------------------
GERMANY (0.1%):
AUTOMOBILES (0.0%):
90 Volkswagen 25
----------
CHEMICALS (0.0%):
100 Bayer 25
----------
MACHINERY & ENGINEERING (0.0%):
100 Mannesmann 27
----------
MANUFACTURING (0.0%):
50 Siemens(c) 25
----------
UTILITIES - ELECTRIC (0.0%):
70 Veba 26
- ------------------------------------------------------------
TOTAL GERMANY 128
- ------------------------------------------------------------
HOLLAND (0.1%):
BANKING (0.0%):
700 ABN/Amro Holding 27
----------
CHEMICALS (0.0%):
200 Akzo Nobel NV 23
----------
TELECOMMUNICATIONS (0.0%):
700 Koninklijke PTT NED NV 25
- ------------------------------------------------------------
TOTAL HOLLAND 75
- ------------------------------------------------------------
HONG KONG (0.0%):
BROKERAGE (0.0%):
20,000 Peregrine Inv 21
----------
REAL ESTATE (0.0%):
5,000 Cheung Kong 21
- ------------------------------------------------------------
TOTAL HONG KONG 42
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
43
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
JAPAN (0.3%):
AUTOMOBILES (0.0%):
2,000 Nippon Denso Co., Ltd. $ 40
----------
BANKS (0.1%):
2,000 Mitsubishi Bank 49
2,000 Sumitomo Bank 43
----------
92
----------
CHEMICALS (0.0%):
6,000 Mitsubishi Chemical, Inc. 35
5,000 Toray Industries, Inc.(c) 35
----------
70
----------
CONSTRUCTION (0.0%):
4,000 Kajima Corp. 40
----------
HOUSEHOLD PRODUCTS (0.0%):
3,000 Kao Corp. 37
----------
PAPER (0.0%):
3,000 New Oji Paper Co., Ltd. 34
----------
PHARMACEUTICALS (0.0%):
1,000 Sankyo Co., Ltd. 24
----------
RETAIL (0.1%):
1,000 Ito Yokado Co. 54
2,000 Marui Co., Ltd. 31
----------
85
----------
RUBBER & RUBBER PRODUCTS (0.0%):
2,000 Bridgestone 32
----------
UTILITIES - ELECTRIC (0.0%):
1,100 Tokyo Electric Power 35
----------
UTILITIES - WATER (0.0%):
1,000 Kurita Water Ind. 24
- ------------------------------------------------------------
TOTAL JAPAN 513
- ------------------------------------------------------------
SWITZERLAND (0.1%):
ENGINEERING (0.0%):
25 Brown Boveri Series A 25
----------
FOOD MANUFACTURING (0.0%):
25 Nestle SA Registered 24
----------
PHARMACEUTICALS (0.0%):
5 Roche Genussshein 30
- ------------------------------------------------------------
TOTAL SWITZERLAND 79
- ------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS 1,076
- ------------------------------------------------------------
- ----------------------------------------------
CONVERTIBLE PREFERRED STOCKS (0.2%)
AUTOMOTIVE (0.2%):
4300 Ford Motor Co. 379
- ------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS 379
- ------------------------------------------------------------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
CORPORATE BONDS (11.1%)
BANKING (3.1%):
300,000 BankAmerica Corp., 9.63%,
2/13/01 $ 328
800,000 Crestar Finance Corp.,
8.75%,
11/15/04 849
1,000,000 First Bank System, 8.00%,
7/2/04 1,027
1,200,000 First Union Corp., 9.45%,
8/15/01 1,329
500,000 NationsBank Corp., 5.38%,
12/1/95 497
300,000 SunTrust Banks Inc., 7.38%,
7/1/02 300
500,000 Wells Fargo & Co., 8.75%,
5/1/02 531
----------
4,861
----------
BROKERAGE SERVICES (0.5%):
750,000 Morgan Stanley, 8.88%,
10/15/01 792
----------
COMPUTER (0.2%):
300,000 International Business
Machines, 9.00%, 5/1/98 300
----------
FINANCIAL SERVICES (2.9%):
1,000,000 Associates, 7.50%, 10/15/96 1,010
800,000 BHP Finance Ltd., 6.75%,
11/1/13 687
500,000 General Motors Acceptance
Corp., 5.50%, 12/15/01 443
1,000,000 Merrill Lynch Corp., 8.25%,
11/15/99 1,025
500,000 Merrill Lynch Corp., 4.75%,
6/24/96 488
1,000,000 Morgan Stanley, 7.25%,
10/15/23 835
200,000 U.S. West Capital Funding,
Inc., 8.00%, 10/15/96 203
----------
4,691
----------
GOVERNMENTS (FOREIGN) (0.2%):
300,000 Republic of Iceland, 6.13%,
2/1/04 269
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
44
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INDUSTRIAL GOODS & SERVICES (3.0%):
500,000 American Home Products,
7.70%, 2/15/00 $ 506
1,500,000 General Motors, 9.13%,
7/15/01 1,605
500,000 Georgia-Pacific, 9.95%,
6/15/02 558
900,000 Philip Morris, 9.00%, 1/1/01 960
700,000 RJR Nabisco, Inc., 8.00%,
1/15/00 690
500,000 Waste Management, 7.88%,
8/15/96 506
----------
4,825
----------
INSURANCE (0.7%):
1,200,000 Nationwide Mutual Insurance
Surplus, 7.50%, 2/15/24 1,041
----------
OIL & GAS EXPLORATION (0.3%):
500,000 Atlantic Richfield Co.,
9.00%,
4/1/21 546
----------
TELECOMMUNICATIONS (0.2%):
300,000 Southwestern Bell Co.,
8.30%,
6/1/96 305
- ------------------------------------------------------------
TOTAL CORPORATE BONDS 17,630
- ------------------------------------------------------------
- ----------------------------------------------
FLOATING RATE NOTES (0.3%)
500,000 General Motors Acceptance
Corp., 5.66%*, 6/7/96 499
- ------------------------------------------------------------
TOTAL FLOATING RATE NOTES 499
- ------------------------------------------------------------
- ----------------------------------------------
MEDIUM TERM NOTES (0.9%)
1,500,000 Salomon Brothers, 4.44%,
8/9/95 1,491
- ------------------------------------------------------------
TOTAL MEDIUM TERM NOTES 1,491
- ------------------------------------------------------------
- ----------------------------------------------
U.S. GOVERNMENT AGENCIES (15.7%)
FEDERAL HOME LOAN MORTGAGE CORP.:
133,439 8.00%, 5/1/02 135
FEDERAL NATIONAL MORTGAGE ASSOC.:
2,250,200 6.00%, 11/1/08 2,116
1,837,646 7.50%, 3/1/24 1,798
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOC.:
1,802,848 6.50%, 2/15/09 $ 1,730
251,367 9.50%, 7/15/09 264
1,514,925 9.00%, 10/15/16 1,573
226,173 9.00%, 11/15/16 234
850,334 9.00%, 6/15/18 881
25,890 10.00%, 10/15/18 28
779,707 9.00%, 9/15/19 807
1,188,568 9.00%, 10/15/19 1,231
1,483,116 9.00%, 12/15/19 1,536
870,959 9.00%, 1/15/20 904
557,334 9.00%, 2/15/20 577
1,667,441 8.50%, 5/15/20 1,701
610,779 8.50%, 4/15/21 623
828,801 7.50%, 12/15/22 811
462,219 8.50%, 3/15/23 472
951,881 7.50%, 11/15/23 930
2,013,452 7.50%, 1/15/24 1,967
1,471,279 7.50%, 5/15/24 1,437
3,046,512 8.50%, 9/15/24 3,111
- ------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 24,866
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY BONDS (2.6%)
700,000 8.88%, 2/15/19 808
2,000,000 7.13%, 2/15/23 1,929
1,400,000 7.50%, 11/15/24 1,419
- ------------------------------------------------------------
TOTAL U.S. TREASURY BONDS 4,156
- ------------------------------------------------------------
- ----------------------------------------------
U.S. TREASURY NOTES (7.7%)
1,300,000 5.88%, 5/15/95 1,300
1,000,000 7.50%, 12/31/96 1,015
500,000 7.13%, 9/30/99 505
1,000,000 7.75%, 12/31/99 1,034
4,700,000 7.75%, 1/31/00 4,860
1,000,000 7.13%, 2/29/00 1,009
1,500,000 7.25%, 5/15/04 1,518
1,000,000 7.50%, 2/15/05 1,031
- ------------------------------------------------------------
TOTAL U.S. TREASURY NOTES 12,272
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
45
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
BALANCED FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (4.7%)
126,487 Federated Treasury
Obligation
Fund $ 127
5,600 Global Privatization Fund 68
6,000 Italy Fund, Inc. - ADR 49
2,300 Latin American Equity
Fund(c) 34
2,000 Malaysian Fund 35
7,109,522 Shearson U.S. Treasury Fund 7,110
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 7,423
- ------------------------------------------------------------
TOTAL (COST - $151,871)(B) $ 158,944
- ---------------------------------------------------------
CURRENCY
200 French Franc 0
42,346,513 Japanese Yen 504
- ------------------------------------------------------------
TOTAL CURRENCY 504
- ------------------------------------------------------------
</TABLE>
- ---------------
* Floating Rate Demand Notes are securities with yields that vary with a
designated market index or market rate. These securities are payable on the
date of demand. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect at April 30, 1995.
(a) Percentages indicated are based on net assets of $158,762.
(b) 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 $1,136. 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 $ 6,153
Unrealized depreciation (216)
----------
Net unrealized appreciation $ 5,937
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
46
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMERCIAL PAPER (7.9%)
FINANCIAL SERVICES (7.9%):
1,500,000 American Express, 5.90%,
5/3/95 $ 1,500
2,000,000 Ford Motor Credit Co.,
5.91%, 5/1/95 2,000
2,000,000 General Motors Acceptance
Corp., 6.00%, 5/10/95 2,000
2,000,000 General Motors Acceptance
Corp., 6.16%, 5/10/95 2,000
900,000 Prudential Funding, 5.91%,
5/10/95 900
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 8,400
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (90.6%)
ADVERTISING (0.1%):
1,986 Interpublic Group Cos., Inc. 75
--------
AEROSPACE/DEFENSE (1.4%):
8,666 Boeing Co. 477
1,600 General Dynamics Corp. 74
4,761 Lockheed Martin Corp.(c) 275
3,046 McDonnell Douglas 189
1,298 Northrop Grumman Corp. 64
5,620 Rockwell International Corp. 245
2,280 Textron, Inc. 130
--------
1,454
--------
AIRCRAFT & AIRCRAFT PARTS (0.2%):
3,204 United Technologies Corp. 234
--------
AIR FREIGHT (0.1%):
1,906 AMR Corp. Delaware(c) 128
1,534 U.S. Air Group, Inc.(c) 11
--------
139
--------
AIRLINES (0.1%):
1,237 Delta Air Lines 81
--------
ALUMINUM (0.2%):
4,560 Aluminum Co. of America 205
--------
APPAREL (0.0%):
2,002 Liz Claiborne, Inc. 36
--------
AUTOMOBILES (1.9%):
9,021 Chrysler Corp. 389
26,094 Ford Motor Co. 704
19,240 General Motors 868
1,900 Navistar International
Corp.(c) 27
972 Paccar, Inc. 45
--------
2,033
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
AUTOMOTIVE PARTS (0.5%):
1,104 Cummins Engine, Inc. $ 49
2,558 Dana Corp. 66
1,928 Eaton Corp. 111
1,454 Echlin, Inc. 53
3,114 Genuine Parts Co. 121
294 SPX Corp. 4
145 Strattec Strategy Corp.(c) 2
1,631 TRW, Inc. 121
--------
527
--------
BANKS (3.3%):
2,733 Bank of Boston Corp. 91
9,491 BankAmerica Corp. 470
2,022 Bankers Trust New York 110
2,516 Barnett Banks, Inc. 118
3,236 Boatmens Bancshares, Inc. 107
4,577 Chase Manhattan Corp. 200
6,187 Chemical Banking Corp. 258
2,322 First Chicago Corp. 128
2,064 First Fidelity Bancorp. 99
1,906 First Interstate Bancorp. 146
4,464 First Union Corp. 202
4,813 J.P. Morgan & Co., Inc. 316
7,014 NationsBank Corp. 351
7,849 Norwest Corp. 208
6,014 PNC Bank Corp. 151
3,024 SunTrust Banks, Inc. 164
4,322 Wachovia Corp. 152
1,315 Wells Fargo & Co. 218
--------
3,489
--------
BANKS -- MONEY CENTERS (REGIONAL) (0.8%):
10,090 Citicorp 468
3,607 CoreStates Financial Corp. 118
1,531 Golden West Financial Corp.
Delaware 70
3,947 NBD Bancorp., Inc. 121
3,850 National City Corp. 105
--------
882
--------
BANKS -- OUTSIDE MONEY CENTER (0.3%):
10,348 Banc One Corp. 305
--------
BEVERAGES (3.3%):
6,558 Anheuser Busch Co., Inc. 381
1,721 Brown Forman Corp., Class B 57
32,812 Coca Cola Co. 1,907
943 Coors Adolph Co., Class B 15
20,182 PepsiCo, Inc. 840
9,471 Seagram Co. Limited 257
--------
3,457
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
47
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
BUILDING MATERIALS (0.6%):
943 Armstrong World Industries,
Inc. $ 43
766 Centex Corp. 18
746 Crane Co. 26
1,160 Fleetwood Enterprises, Inc. 27
804 Kaufman & Broad Home Corp. 10
4,031 Masco Corp. 103
2,946 Monsanto Co. 245
3,754 Morton International, Inc. 116
1,121 Owens Corning Fiberglas
Corp.(c) 41
707 Pulte Corp. 15
255 Skyline Corp. 4
--------
648
--------
CHEMICALS (0.1%):
1,748 Great Lakes Chemical 103
--------
CHEMICALS -- GENERAL (2.8%):
2,868 Air Products & Chemicals,
Inc. 144
7,106 Dow Chemical Co. 494
17,394 E.I. Du Pont De Nemours Co. 1,146
2,073 Eastman Chemical 118
1,732 Ecolab, Inc. 40
924 FMC Corp.(c) 57
491 First Mississippi Corp. 12
2,963 Hercules, Inc. 148
1,925 Mallinckrodt 69
1,709 Nalco Chemical Co. 60
5,404 PPG Industries, Inc. 213
3,459 Praxair, Inc. 82
1,689 Rohm & Haas Co. 98
1,300 Sigma-Aldrich 57
3,812 Union Carbide Corp. 122
2,358 W.R. Grace & Co. 126
--------
2,986
--------
CHEMICALS -- SPECIALTY (0.1%):
1,354 Avery Dennison Corp. 55
--------
COMPUTERS & PERIPHERALS (3.1%):
2,968 Amdahl Corp.(c) 35
2,988 Apple Computer, Inc. 114
6,550 Cisco Systems(c) 261
1,356 Computer Sciences Corp.(c) 67
688 Cray Research, Inc.(c) 13
904 Data General Corp.(c) 7
3,621 Digital Equipment Corp.(c) 167
13,010 Hewlett Packard Corp.(c) 860
14,942 International Business
Machines Corp. 1,416
1,098 Integraph Corp.(c) 12
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
3,650 Silicon Graphics(c) $ 137
2,452 Sun Microsystems, Inc.(c) 98
2,949 Tandem Computers, Inc.(c) 37
4,386 Unisys Corp.(c) 45
--------
3,269
--------
CONGLOMERATES (0.8%):
5,849 Corning Glass Works 195
10,724 Minnesota Mining &
Manufacturing Co. 639
--------
834
--------
CONSTRUCTION (0.0%):
924 Foster Wheeler Corp. 34
--------
CONSUMER CREDIT (0.2%):
4,384 Dean Witter Discover & Co. 186
--------
CONSUMER GOODS (0.1%):
1,867 American Greetings Corp. 51
1,160 Jostens, Inc. 23
--------
74
--------
CONTAINERS -- METAL, GLASS, PAPER, PLASTIC (0.4%):
727 Ball Corp. 25
1,257 Bemis, Inc. 35
2,280 Crown, Cork & Seal, Inc.(c) 97
1,121 Federal Paper Board, Inc. 33
3,990 Newell Co. 94
4,147 Rubbermaid, Inc. 122
2,343 Stone Container Corp.(c) 46
--------
452
--------
COSMETICS & RELATED (0.8%):
727 Alberto Culver Co. 23
1,748 Avon Products 110
2,358 Dial Corp. 57
5,620 Gillette Co. 461
2,789 International Flavor &
Fragrance, Inc. 143
--------
794
--------
DEPARTMENT STORES (0.4%):
2,849 Dillard Department Stores,
Inc., Class A 74
5,934 J. C. Penney 260
943 Mercantile Stores, Inc. 42
--------
376
--------
DIVERSIFIED -- CONGLOMERATES, HOLDINGS (0.3%):
2,746 International Telephone &
Telegraph 287
1,218 National Service Industries,
Inc. 34
--------
321
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
48
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
DRUG STORES (0.1%):
491 Longs Drug Stores Corp. $ 17
2,180 Rite Aid Corp. 51
--------
68
--------
ELECTRICAL EQUIPMENT (3.1%):
1,179 Bally Manufacturing Corp.(c) 12
2,890 DSC Communications Corp.(c) 107
5,698 Emerson Electric Co. 383
43,648 General Electric Co. 2,444
1,082 Johnson Controls, Inc. 59
472 Thomas & Betts Corp. 30
1,257 W.W. Grainger, Inc. 76
9,121 Westinghouse Electric Corp. 137
--------
3,248
--------
ELECTRICAL SERVICES (0.1%):
2,950 General Public Utilities
Corp. 84
--------
ELECTRONIC COMPUTING EQUIPMENT (0.2%):
6,609 Compaq Computer Corp.(c) 251
--------
ELECTRONIC & ELECTRICAL -- GENERAL (2.1%):
2,419 Advanced Micro Devices(c) 87
5,366 Amp, Inc. 229
967 Andrew Corp.(c) 48
2,968 Cooper Industries 116
1,415 E G & G, Inc. 24
1,179 General Signal Corp. 44
982 Harris Corp. 46
3,259 Honeywell, Inc. 126
14,954 Motorola, Inc. 850
3,111 National Semiconductor
Corp.(c) 71
3,179 Raytheon Co. 231
1,825 Tandy Corp. 90
746 Tektronix, Inc. 34
2,322 Texas Instruments, Inc. 246
--------
2,242
--------
ELECTRONICS -- DEFENSE RELATED (0.1%):
885 E Systems, Inc. 56
2,103 Loral Corp. 99
--------
155
--------
ENTERTAINMENT (1.1%):
2,397 Brunswick Corp. 51
2,280 Hasbro, Inc. 72
943 King World Productions(c) 38
4,034 Lowes Cos., Inc. 116
2,634 Promus Cos., Inc.(c) 101
13,668 Walt Disney Co. 757
--------
1,135
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ENVIRONMENTAL CONTROL (0.1%):
7,000 Laidlaw, Inc., Class B $ 63
--------
FINANCIAL SERVICES (3.3%):
12,900 American Express Co. 448
3,576 Automatic Data Processing,
Inc. 230
4,700 Bank of New York Co., Inc. 155
1,376 Beneficial Corp. 56
1,121 Ceridian Corp.(c) 39
4,619 Federal Home Loan Mortgage
Corp. 301
6,996 Federal National Mortgage
Corp. 617
3,498 Fleet Financial Group 115
2,103 Fluor Corp. 108
3,421 Great Western Financial
Corp. 72
3,007 H.F. Ahmanson & Co. 63
2,477 Household International,
Inc. 116
3,782 MBNA Corp. 114
3,746 Mellon Bank Corp. 147
4,904 Merrill Lynch & Co., Inc. 223
2,710 Salomon, Inc. 98
3,077 Shawmut National Corp. 82
1,745 Transamerica Corp. 99
8,168 Travelers, Inc. 338
2,545 U.S. Bancorp 70
--------
3,491
--------
FOOD DISTRIBUTORS (0.2%):
6,505 Albertsons, Inc. 206
--------
FOOD DISTRIBUTORS (SUPERMARKETS &
WHOLESALERS) (0.4%):
943 Fleming Cos., Inc. 23
963 Great Atlantic & Pacific
Tea,
Inc. 24
2,952 Kroger Co.(c) 75
1,848 Supervalu, Inc. 49
4,716 Sysco Corp. 132
1,925 Winn Dixie Stores, Inc. 107
--------
410
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
49
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FOOD PROCESSING & PACKAGING (2.6%):
13,201 Archer Daniels Midland Co. $ 241
3,731 CPC International, Inc. 219
6,286 Campbell Soup Co. 322
6,286 ConAgra, Inc. 209
4,047 General Mills 247
6,325 H.J. Heinz Co. 266
2,219 Hershey Foods Corp. 116
5,656 Kellogg Co. 359
2,209 Pioneer Hi-Bred
International,
Inc. 83
3,396 Quaker Oats Co. 122
2,513 Ralston-Ralston Purina Group 119
12,300 Sara Lee Corp. 343
3,007 Wm. Wrigley Jr., Co. 133
--------
2,779
--------
FOREST PRODUCTS -- LUMBER & PAPER (1.7%):
1,379 Alco Standard Corp. 98
1,163 Boise Casacade Corp. 38
2,358 Champion International Corp. 104
2,319 Georgia Pacific Corp. 184
3,204 International Paper Co. 247
2,083 James River Corp. Virginia 57
4,047 Kimberly Clark Corp. 229
2,810 Louisiana Pacific Corp. 72
1,554 Mead Corp. 80
2,555 Moore Corp. Ltd. 50
727 Potlatch Corp. 31
1,886 Scott Paper Co. 168
1,415 Temple Inland, Inc. 62
1,828 Union Camp Corp. 92
1,670 Westvaco Corp. 70
5,288 Weyerhauser Co. 222
--------
1,804
--------
FUNERAL SERVICES (0.1%):
2,422 Service Corp. International 68
--------
FURNITURE (0.1%):
2,771 Maytag Corp. 48
1,100 Zenith Electronics(c) 8
--------
56
--------
GOLD & SILVER MINING (0.0%):
3,300 Santa Fe Pacific Gold Corp. 42
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
HEALTH CARE (0.4%):
9,278 Columbia HCA Healthcare $ 390
--------
HEAVY MACHINERY (0.9%):
3,556 Baker Hughes, Inc. 80
5,148 Caterpillar Tractor, Inc. 301
452 Clark Equipment Co.(c) 39
2,222 Deere & Co. 182
1,169 Harnischfeger Industries,
Inc. 34
2,733 Ingersoll Rand Co. 98
1,357 McDermott International,
Inc. 37
1,879 Tyco Laboratories, Inc. 99
1,118 Varity Corp.(c) 47
--------
917
--------
HOSPITAL & NURSING EQUIPMENT (1.0%):
1,357 Bard C.R., Inc. 40
16,383 Johnson & Johnson, Inc. 1,065
--------
1,105
--------
HOTELS & MOTELS (0.1%):
1,198 Hilton Hotels Corp. 91
--------
HOUSEHOLD GOODS -- APPLIANCES & FURNITURE
(0.2%):
316 Bassett Furniture Ind. 8
1,732 Premark International, Inc. 84
1,928 Whirlpool Corp. 106
--------
198
--------
INDUSTRIAL SERVICES (0.7%):
7,820 American Home Products Corp. 603
1,434 Dover Corp. 93
--------
696
--------
INSURANCE -- LIFE (0.5%):
1,237 Jefferson Pilot Corp. 70
2,474 Providian Corp. 84
1,867 Torchmark Corp. 73
4,350 United Healthcare 158
4,050 U.S. Healthcare, Inc. 108
530 USLIFE Corp. 20
--------
513
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
50
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
INSURANCE -- MULTI-LINE (2.0%):
2,910 Aetna Life & Casualty Co. $ 166
1,101 Alexander & Alexander
Services, Inc. 26
5,262 American General Corp. 174
8,091 American International
Group, Inc. 864
1,848 Cigna Corp. 134
1,415 Continental Corp. 28
2,142 General Re Corp. 273
2,377 Lincoln National Corp. 97
1,867 Marsh & McLennan Cos., Inc. 146
1,612 SafeCo Corp. 91
2,142 St. Paul Cos., Inc. 103
2,242 USF & G Corp. 33
--------
2,135
--------
INSURANCE -- PROPERTY, CASUALTY, HEALTH (0.2%):
2,180 Chubb Corp. 174
1,800 UNUM Corp. 77
--------
251
--------
LEISURE -- RECREATION, GAMING (0.0%):
885 Handleman Co. 9
--------
MACHINE TOOLS (0.0%):
885 Cincinnati Milacron, Inc. 24
904 Giddings & Lewis, Inc. 16
--------
40
--------
MANUFACTURING -- CAPITAL GOODS (0.2%):
2,949 Illinois Tool Works, Inc. 148
707 Trinova Corp. 25
--------
173
--------
MANUFACTURING -- CONSUMER GOODS (0.1%):
491 Outboard Marine Corp. 11
1,415 Teledyne, Inc.(c) 35
1,360 Western Atlas(c) 61
--------
107
--------
MANUFACTURING -- MISCELLANEOUS (1.0%):
7,212 Allied Signal, Inc. 286
726 Briggs & Stratton Corp. 26
607 Millipore Corp. 37
866 Morrison Knudsen Corp. 7
2,901 Pall Corp. 68
1,218 Parker-Hannifin Corp. 63
4,047 Unilever N.V. 541
2,671 Whitman Corp. 49
--------
1,077
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (0.2%):
2,203 Beverly Enterprises, Inc.(c) $ 32
1,121 Community Psychiatric
Centers, Inc. 15
1,544 Manor Care, Inc. 45
5,025 National Medical
Enterprises, Inc.(c) 85
--------
177
--------
MEDICAL SUPPLIES (0.7%):
1,473 Bausch & Lomb, Inc. 57
7,235 Baxter International, Inc. 251
1,706 Becton Dickinson & Co. 95
2,888 Biomet, Inc.(c) 51
200 Boston Scientific Corp.(c) 5
2,908 Medtronic, Inc. 216
1,179 St. Jude Medical, Inc. 51
1,415 United States Surgical Corp. 31
--------
757
--------
METALS -- FABRICATION (0.6%):
5,769 Alcan Aluminum Ltd. 164
1,101 Asarco, Inc. 30
2,400 Cyprus Amax Minerals 67
3,498 Homestake Mining Co. 59
1,124 Inland Steel Industries,
Inc. 29
2,227 Newmont Mining Corp. 93
1,828 Phelps Dodge Corp. 104
1,573 Reynolds Metals Co. 79
--------
625
--------
METAL & MINERAL PRODUCTION (0.6%):
2,713 Armco, Inc. 19
8,877 Barrick Gold Corp. 214
2,839 Bethlehem Steel Corp.(c) 40
2,830 Echo Bay Mines Ltd. 27
2,447 Englehard Corp. 94
3,010 Inco Ltd. 78
2,261 Nucor Corp. 109
1,913 USX U.S. Steel Group 58
--------
639
--------
NEWSPAPERS (0.5%):
3,534 Gannett Co., Inc. 186
1,395 Knight-Ridder, Inc. 76
2,552 New York Times Co., Class A 58
3,282 Times Mirror Co., Class A 59
1,670 Tribune Co. 99
--------
478
--------
OFFICE EQUIPMENT & SUPPLIES (0.5%):
4,009 Pitney Bowes, Inc. 149
2,713 Xerox Corp. 334
--------
483
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
51
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
OIL & GAS EXPLORATION AND PRODUCTION (1.7%):
2,358 Amerada Hess Corp. $ 119
1,573 Ashland, Inc. 58
2,623 Coastal Corp. 78
1,237 Columbia Gas System(c) 36
530 Eastern Enterprises 16
6,473 Enron Corp. 220
1,670 Enserch Corp. 29
669 Helmerich & Payne, Inc. 20
1,298 Kerr-McGee Corp. 67
885 Louisiana Land &
Exploration Co. 32
3,085 Noram Energy Corp. 19
7,962 Occidental Petroleum Corp. 183
688 Oneok, Inc. 13
2,516 Oryx Energy Co.(c) 35
1,160 Pennzoil Co. 57
6,622 Phillips Petroleum Co. 232
2,122 Rowan Cos.(c) 15
2,319 Sante Fe Energy Resources,
Inc.(c) 22
2,261 Sonat, Inc. 69
2,752 Sun Co., Inc. 83
7,290 USX - Marathon Group 137
6,231 Unocal Corp. 179
2,294 Williams Co., Inc. 75
--------
1,794
--------
OIL & GAS PRODUCTION (1.2%):
3,201 Burlington Resource, Inc. 125
10,139 Mobil Corp. 962
4,664 Tenneco, Inc. 214
--------
1,301
--------
OIL -- INTEGRATED COMPANIES (6.0%):
12,655 Amoco Corp. 830
4,128 Atlantic Richfield Co. 473
16,606 Chevron Corp. 787
31,639 Exxon Corp. 2,203
13,637 Royal Dutch Petroleum Co. 1,691
6,583 Texaco, Inc. 450
--------
6,434
--------
OILFIELD EQUIPMENT & SERVICES (0.6%):
4,718 Dresser Industries, Inc. 103
2,868 Halliburton Co. 110
6,231 Schlumberger Limited 392
--------
605
--------
PAINT, VARNISHES & ENAMELS (0.1%):
2,200 Sherwin Williams Co. 78
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
PHARMACEUTICALS (4.9%):
20,544 Abbott Laboratories $ 809
1,570 Allergan, Inc. 43
2,106 Alza Corp., Class A(c) 41
13,066 Bristol-Myers Squibb Co. 851
7,468 Eli Lilly & Co. 558
32,116 Merck & Co., Inc. 1,377
8,037 Pfizer, Inc. 696
4,852 Schering-Plough 366
4,441 Upjohn Co. 161
3,379 Warner-Lambert Co. 269
--------
5,171
--------
PHOTOGRAPHY (0.5%):
8,692 Eastman Kodak Co. 500
1,179 Polaroid Corp. 40
--------
540
--------
POLLUTION CONTROL SERVICES & EQUIPMENT (0.5%):
5,022 Browning-Ferris
Industries, Inc. 166
1,444 Safety Kleen 25
12,342 WMX Technologies, Inc. 336
275 Zurn Industries, Inc. 6
--------
533
--------
PRECISION INSTRUMENTS & RELATED (0.0%):
1,040 Perkin Elmer 32
--------
PUBLISHING, EXCEPT NEWSPAPER (0.9%):
2,103 Deluxe Corp. 65
2,455 Dow Jones & Co., Inc. 86
4,300 Dun & Bradstreet Corp. 224
766 John H. Harland Co. 17
1,218 McGraw Hill, Inc. 91
626 Meredith Corp. 16
3,870 R.R. Donnelley & Sons Co. 132
9,682 Time Warner, Inc. 355
--------
986
--------
RADIO & TELEVISION (1.2%):
1,555 CBS, Inc. 100
3,930 Capital Cities ABC, Inc. 332
5,775 Comcast Class A Special
Shares 91
300 Comcast Corp., Class A 5
204 Cox Communications, Inc.,
Class A(c) 3
15,585 Tele-Communications, Inc.,
Class A(c) 298
9,087 Viacom, Class B(c) 417
--------
1,246
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
52
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RAILROAD & RAILROAD HOLDING COMPANIES (0.8%):
2,300 Burlington Northern, Inc. $ 137
2,713 CSX Corp. 216
1,964 Conrail, Inc. 107
3,845 Santa Fe Southern Pacific
Corp. 90
5,188 Union Pacific Corp. 285
--------
835
--------
RAILROADS (0.2%):
3,437 Norfolk Southern Corp. 232
--------
RESTAURANTS (0.7%):
607 Luby's Cafeterias, Inc. 12
17,820 McDonald's Corp. 624
1,376 Ryan's Family Steak House(c) 10
1,082 Shoney's, Inc.(c) 12
2,555 Wendy's International 43
--------
701
--------
RETAIL (2.9%):
3,656 American Stores Co. 94
1,945 Brunos, Inc. 24
2,594 Charming Shoppes, Inc. 14
1,848 Dayton Hudson Corp. 124
2,025 Harcourt General, Inc. 83
11,656 K-Mart Corp. 162
3,194 Marriott International, Inc. 115
6,328 May Department Stores 229
2,103 Nordstrom, Inc. 81
5,012 Price/Costco, Inc.(c) 73
8,921 Sears & Roebuck Co. 484
58,600 Wal Mart Stores, Inc. 1,392
3,104 Walgreen Co. 146
3,421 Woolworth Corp. 55
--------
3,076
--------
RETAIL -- SPECIALTY STORES (1.2%):
2,497 Circuit City Stores, Inc. 65
3,715 The Gap 118
1,473 Giant Food, Inc. 40
11,531 Home Depot, Inc. 481
9,096 The Limited, Inc. 194
2,733 Melville Corp. 98
1,592 Pep Boys -- Manny, Moe &
Jack 41
1,867 TJX Cos., Inc. 21
7,268 Toys R Us, Inc.(c) 184
--------
1,242
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RUBBER & RUBBER PRODUCTS (0.2%):
669 B.F. Goodrich, Inc. $ 31
2,122 Cooper Tire & Rubber Co. 52
3,834 Goodyear Tire & Rubber Co. 146
--------
229
--------
SEMICONDUCTORS (1.3%):
2,100 Applied Materials, Inc.(c) 129
10,550 Intel Corp. 1,080
2,550 Micron Technology, Inc. 210
--------
1,419
--------
SERVICES (NON-FINANCIAL) (0.4%):
3,379 Amgen, Inc.(c) 246
3,050 First Data Corp. 172
1,240 Ogden Corp. 25
--------
443
--------
SHOES, LEATHER GOODS & CLOTHING (0.2%):
452 Brown Group, Inc. 13
1,906 Nike, Inc. 146
2,061 Reebok International Ltd. 64
1,237 Stride Rite Corp. 15
--------
238
--------
SOAPS & CLEANING AGENTS (1.5%):
1,395 Clorox Co. 82
3,670 Colgate Palmolive, Inc. 258
17,471 Procter & Gamble Co. 1,221
--------
1,561
--------
SOFTWARE & COMPUTER SERVICES (2.0%):
1,198 Autodesk, Inc. 41
4,125 Computer Associates
International, Inc. 266
1,271 Lotus Development Corp.(c) 40
14,900 Microsoft Corp.(c) 1,220
9,462 Novell, Inc.(c) 206
10,919 Oracle Systems Corp.(c) 333
630 Shared Medical Systems 24
--------
2,130
--------
STEEL (0.0%):
2,319 Worthington Industries, Inc. 44
--------
TAX RETURN PREPARATION (0.1%):
2,652 H. & R. Block 112
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
53
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TELECOMMUNICATIONS (2.3%):
12,612 Airtouch Communications(c) $ 339
4,800 Alltel Corp. 119
11,144 Bell Atlantic Corp. 612
649 M A Com, Inc.(c) 8
6,447 Northern Telecom Ltd. 235
10,772 Pacific Telesis Group 333
1,966 Scientific-Atlanta, Inc. 45
8,866 Sprint Corp. 293
11,591 U.S. West, Inc. 480
--------
2,464
--------
TEXTILE MANUFACTURING (0.1%):
866 Hartmarx Corp.(c) 5
313 Oshkosh B Gosh, Inc. 5
1,001 Russell Corp. 30
452 Springs Industries, Inc.,
Class A 18
1,631 V.F. Corp. 82
--------
140
--------
TOBACCO & TOBACCO PRODUCTS (1.7%):
5,149 American Brands, Inc. 209
21,904 Philip Morris Cos., Inc. 1,484
5,146 UST, Inc. 145
--------
1,838
--------
TOOLS & HARDWARE MANUFACTURING (0.2%):
2,122 Black & Decker Corp. 64
1,121 Snap On Tools, Inc. 42
1,160 Stanley Works 46
746 Timken Co. 30
--------
182
--------
TOYS & BICYCLES -- MANUFACTURING (0.1%):
5,725 Mattel, Inc. 136
--------
TRANSPORTATION -- AIR (0.1%):
3,650 Southwest Airlines Co. 84
--------
TRANSPORTATION LEASING & TRUCKING (0.2%):
924 Consolidated Freightways,
Inc.(c) 24
1,395 Federal Express Corp.(c) 95
1,101 Pittston Services Group 26
963 Roadway Services, Inc. 47
2,006 Ryder Systems, Inc. 47
707 Yellow Corp. 13
--------
252
--------
TRUCKS -- MANUFACTURING (0.1%):
236 Nacco Industries, Inc. 13
6,073 Placer Dome, Inc. 144
--------
157
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
UTILITIES -- ELECTRIC (3.0%):
4,697 American Electric Power $ 154
4,047 Carolina Power & Light 111
4,855 Central & South West Corp. 120
3,728 Cinergy Corp. 94
6,014 Consolidated Edison Co. NY,
Inc. 167
3,653 Detroit Edison Co. 103
4,415 Dominion Resources 161
5,188 Duke Power Co. 205
5,761 Entergy Corp. 125
4,735 FPL Group, Inc. 174
3,301 Houston Industries 130
3,676 Niagara Mohawk Power Corp. 51
1,670 Northern States Power Co.
Minnesota 74
3,931 Ohio Edison 79
7,196 Pacificorp 137
5,640 Peco Energy Co. 145
6,231 Public Service Enterprise 171
1,101 Raychem Corp. 39
11,438 SCEcorp. 192
16,712 Southern Co. 345
5,759 Texas Utilities Co. 188
5,423 Unicom Corp. 142
2,594 Union Electric Co. 92
--------
3,199
--------
UTILITIES -- ELECTRIC & GAS (0.4%):
3,724 Baltimore Gas & Electric 88
11,024 Pacific Gas & Electric Co. 296
904 Peoples Energy Corp. 23
--------
407
--------
UTILITIES -- NATURAL GAS (0.3%):
2,358 Consolidated Natural Gas 93
1,315 Nicor, Inc. 32
4,022 Pacific Enterprises 99
3,827 Panhandle Eastern Corp. 92
--------
316
--------
UTILITIES -- TELECOMMUNICATIONS (5.4%):
39,898 A T & T Corp. 2,025
14,016 Ameritech Corp. 631
12,636 Bellsouth Corp. 774
24,513 GTE Corp. 837
17,340 MCI Telecommunications Corp. 377
10,733 Nynex Corp. 439
15,249 SBC Communication, Inc. 673
--------
5,756
- ----------------------------------------------------------
TOTAL COMMON STOCKS 95,925
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
54
<PAGE>
Statements of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
STOCK INDEX FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BILLS (0.4%)
400,000 5.76%, 6/15/95 $ 397
- ----------------------------------------------------------
Total U.S. Treasury Bills 397
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (0.9%)
938,389 Shearson U.S. Treasury Fund 938
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 938
- ----------------------------------------------------------
TOTAL (COST $96,230)(B) $105,660
- ----------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $105,834.
(b) 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 $498. 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 $ 11,629
Unrealized depreciation (2,697)
--------
Net unrealized appreciation $ 8,932
=========
</TABLE>
(c) Represents non-income producing securities.
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------
FUTURES CONTRACTS
</TABLE>
<TABLE>
<CAPTION>
MARKET
NUMBER OF VALUE
CONTRACTS (000)
<S> <C> <C>
Short, Standard & Poor's 500
Index Futures Contracts, face
amount $8,788, expiring
6/16/95 35 $9,043
------
Total Futures Contracts $9,043
=======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
55
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMERCIAL PAPER (5.4%)
FINANCIAL SERVICES (5.4%):
7,000,000 Ford Motor Credit Corp.,
5.94%, 5/8/95 $ 7,000
7,000,000 General Electric Credit
Corp., 5.94%, 5/8/95 7,000
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 14,000
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (91.8%)
AEROSPACE/DEFENSE (5.0%):
73,000 Boeing Co. 4,015
48,000 General Dynamics Corp. 2,226
34,500 Lockheed Martin Corp.(c) 1,992
65,000 Raytheon Co. 4,729
--------
12,962
--------
AUTOMOTIVE (3.4%):
65,000 Chrysler Corp. 2,803
86,000 Ford Motor Co. 2,322
47,000 Pep Boys-Manny, Moe & Jack 1,210
35,900 TRW, Inc. 2,670
--------
9,005
--------
BANKS (7.4%):
93,000 BankAmerica Corp. 4,603
95,000 Comerica, Inc. 2,731
76,000 CoreStates Financial Corp. 2,479
77,000 First Union Corp. 3,484
81,000 J.P. Morgan & Co., Inc. 5,316
30,000 Norwest Corp. 795
--------
19,408
--------
BEVERAGES (1.2%):
53,000 Anheuser Busch Co., Inc. 3,081
--------
CHEMICALS (2.6%):
25,000 Dow Chemical Co. 1,738
31,000 Eastman Chemical 1,759
45,000 Lubrizol Corp. 1,569
15,000 Nalco Chemical Co. 525
60,000 RPM, Inc., Ohio 1,185
--------
6,776
--------
COMPUTER SOFTWARE (1.5%):
29,000 Microsoft Corp.(c) 2,374
67,000 Novell, Inc.(c) 1,457
--------
3,831
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
COMPUTERS & OFFICE EQUIPMENT (1.2%):
12,000 International Business
Machines Corp. $ 1,137
53,000 Pitney Bowes, Inc. 1,968
--------
3,105
--------
ELECTRICAL EQUIPMENT (2.6%):
22,500 Emerson Electric Co. 1,513
95,000 General Electric Co. 5,320
--------
6,833
--------
ELECTRONICS (2.5%):
50,000 Hewlett Packard Co. 3,306
31,000 Intel Corp. 3,174
--------
6,480
--------
FINANCIAL SERVICES (4.3%):
70,000 American Express Co. 2,433
105,000 American General Corp. 3,465
32,000 Federal National Mortgage
Assoc. 2,824
52,500 Household International,
Inc. 2,461
--------
11,183
--------
FOOD (0.4%):
31,000 Pioneer Hi-Bred
International, Inc. 1,163
--------
HEALTH CARE (1.1%):
75,000 Abbott Laboratories 2,953
--------
HOME PRODUCTS (1.9%):
57,000 Newell Co. 1,347
45,000 Sherwin Williams Co. 1,603
51,500 Stanley Works 2,041
--------
4,991
--------
INSURANCE (3.4%):
64,000 Aetna Life & Casualty Co. 3,648
77,000 Allstate 2,339
23,000 Chubb Corp. 1,840
25,000 St. Paul Cos., Inc.(c) 1,203
--------
9,030
--------
INDUSTRIAL - MISCELLANEOUS (2.6%):
42,000 Allied Signal, Inc. 1,664
35,000 Minnesota Mining &
Manufacturing Co. 2,087
25,000 Textron, Inc. 1,425
62,000 WMX Technologies, Inc. 1,690
--------
6,866
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
56
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MACHINERY & MANUFACTURING (1.5%):
45,000 Cooper Industries $ 1,755
27,000 Deere & Co. 2,214
--------
3,969
--------
MEDIA (1.9%):
30,001 Cox Communications, Inc.
Class A(c) 458
40,000 Dun & Bradstreet Corp. 2,085
43,000 Time Warner, Inc. 1,575
50,000 Times Mirror Co., Class A 906
--------
5,024
--------
METALS & MINING (2.8%):
63,000 Aluminum Co. of America 2,827
70,000 Cyprus Amax Minerals 1,951
80,000 USX U.S. Steel Group 2,440
--------
7,218
--------
OIL - INTEGRATED (DOMESTIC) (3.1%):
34,000 Atlantic Richfield Co. 3,893
117,500 Phillips Petroleum Co. 4,113
--------
8,006
--------
OIL - INTEGRATED (INTERNATIONAL) (8.4%):
111,500 Chevron Corp. 5,282
34,000 Exxon Corp. 2,367
73,000 Mobil Corp. 6,926
107,000 Texaco, Inc. 7,316
--------
21,891
--------
OILFIELD WELL EQUIPMENT & SERVICES (1.3%):
110,000 Baker Hughes, Inc. 2,475
13,000 Schlumberger Ltd. 817
--------
3,292
--------
PAPER & FOREST PRODUCTS (3.9%):
47,000 Georgia Pacific Corp. 3,731
61,500 International Paper Co. 4,736
37,500 Union Camp Corp. 1,880
--------
10,347
--------
PHARMACEUTICALS (3.6%):
13,800 American Home Products Corp. 1,064
55,000 Merck & Co., Inc. 2,358
40,000 Pfizer, Inc. 3,465
35,000 Schering-Plough 2,638
--------
9,525
--------
RESTAURANTS (0.9%):
65,000 McDonald's Corp. 2,275
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RETAIL - FOOD & DRUGS (1.2%):
75,000 Supervalu, Inc. $ 1,978
25,000 Walgreen Co. 1,175
--------
3,153
--------
RETAIL - TRADE (4.0%):
51,000 Dayton Hudson Corp. 3,423
83,000 Sears & Roebuck Co. 4,503
--------
7,926
--------
SOAPS & PERSONAL CARE (1.8%):
45,000 Avon Products 2,846
25,000 Procter & Gamble Co. 1,747
--------
4,593
--------
TELECOMMUNICATIONS (7.3%):
168,500 A T & T Corp. 8,551
15,000 Ameritech Corp. 675
43,000 Comsat Corp. 860
155,000 GTE Corp. 5,289
90,000 Nynex Corp. 3,679
--------
19,054
--------
TOBACCO (1.7%):
47,000 Philip Morris Cos., Inc. 3,184
42,000 UST, Inc. 1,181
--------
4,365
--------
TRANSPORTATION (1.2%):
8,000 Burlington Northern, Inc. 476
18,500 Norfolk Southern Corp. 1,246
28,000 Roadway Services, Inc. 1,358
--------
3,080
--------
UTILITIES - ELECTRIC (5.1%):
130,000 Consolidated Edison Co. NY,
Inc. 3,608
70,000 Duquesne Light Co. 2,363
95,000 Public Service Co. of
Colorado 2,862
141,000 Texas Utilities Co. 4,600
--------
13,433
--------
UTILITIES - NATURAL GAS (2.2%):
65,500 Consolidated Natural Gas 2,579
39,000 Enron Corp. 1,326
30,000 Enserch Corp. 518
48,000 Peoples Energy Corp. 1,212
--------
5,635
- ----------------------------------------------------------
TOTAL COMMON STOCKS 240,453
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
57
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
U.S. TREASURY BILLS (0.2%)
410,000 4.13%, 6/22/95 $ 407
- ----------------------------------------------------------
TOTAL U.S. TREASURY BILLS 407
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (3.1%)
8,188,301 Shearson U.S. Treasury Fund 8,188
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 8,188
- ----------------------------------------------------------
TOTAL (COST 245,679)(B) $263,048
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $261,830.
(b) 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 $168. 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 $ 23,151
Unrealized depreciation (5,950)
--------
Net unrealized appreciation $ 17,201
=========
</TABLE>
(c) Represents non-income producing securities.
- ---------------------------------------------------------
FUTURES CONTRACTS
<TABLE>
<CAPTION>
MARKET
NUMBER OF VALUE
CONTRACTS (000)
<S> <C> <C>
Short, Standard & Poor's 500
Index Futures Contracts,
face amount $2,480, expiring
6/16/95 10 $2,584
------
Total Futures Contracts $2,584
------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
58
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
DIVERSIFIED STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMERCIAL PAPER (1.5%)
FINANCIAL SERVICES (1.5%):
5,000,000 General Motors Acceptance
Corp. 5.94%, 5/3/95 $ 5,000
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER 5,000
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (93.9%)
AEROSPACE/DEFENSE (4.7%):
128,500 Boeing Co. 7,067
78,000 General Dynamics Corp. 3,617
80,000 Lockheed Martin Corp.(c) 4,620
--------
15,304
--------
ALUMINUM (1.0%):
70,200 Aluminum Co. of America 3,150
--------
BANKS (6.9%):
125,800 BankAmerica Corp. 6,227
225,000 Comerica, Inc. 6,469
81,800 J.P. Morgan & Co., Inc. 5,368
24,800 National City Corp. 679
132,400 Norwest Corp. 3,509
--------
22,252
--------
BEVERAGES (2.7%):
66,400 Anheuser Busch Co., Inc. 3,859
120,000 PepsiCo, Inc. 4,995
--------
8,854
--------
CHEMICALS (1.8%):
40,200 Dow Chemical Co. 2,794
145,000 RPM, Inc., Ohio 2,864
--------
5,658
--------
COMPUTERS & PERIPHERALS (0.6%):
20,000 International Business
Machines Corp. 1,895
--------
CONGLOMERATES (0.6%):
30,000 Minnesota Mining &
Manufacturing Co. 1,789
--------
COSMETICS & RELATED (2.0%):
100,300 Avon Products 6,344
--------
ELECTRICAL EQUIPMENT (3.3%):
30,000 Emerson Electric Co. 2,017
150,800 General Electric Co. 8,445
--------
10,462
--------
ELECTRONIC COMPUTING EQUIPMENT (0.6%):
50,000 Compaq Computer Corp.(c) 1,900
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ELECTRONIC & ELECTRICAL - GENERAL (2.1%):
85,000 Motorola, Inc. $ 4,834
18,900 Texas Instruments, Inc. 2,003
--------
6,837
--------
ENGINEERING & CONSTRUCTION (1.8%):
113,700 Fluor Corp. 5,855
--------
ENTERTAINMENT (0.8%):
70,400 Promus Cos., Inc.(c) 2,710
--------
FINANCIAL SERVICES (1.1%):
39,000 Federal National Mortgage
Assoc. 3,442
--------
FOREST PRODUCTS (3.5%):
50,000 International Paper Co. 3,850
66,900 Mead Corp. 3,462
78,900 Union Camp Corp. 3,955
--------
11,267
--------
FUNERAL SERVICES (0.5%):
61,000 Service Corp. International 1,723
--------
INDUSTRIAL - MISCELLANEOUS (1.0%):
54,000 Textron, Inc. 3,078
--------
INSURANCE (4.2%):
40,000 Aetna Life & Casualty Co.(c) 2,280
52,900 American International
Group, Inc. 5,647
70,000 Chubb Corp. 5,600
--------
13,527
--------
MANUFACTURING MISCELLANEOUS (1.2%):
100,000 Allied Signal, Inc. 3,962
--------
METALS (1.3%):
134,300 USX U.S. Steel Group 4,096
--------
OFFICE EQUIPMENT & SUPPLIES (1.6%):
136,100 Pitney Bowes, Inc. 5,053
--------
OIL (10.9%):
40,400 Atlantic Richfield Co. 4,626
250,000 Chevron Corp. 11,844
105,500 Exxon Corp. 7,345
165,500 Texaco, Inc. 11,316
--------
35,131
--------
OIL & GAS EXPLORATION (3.6%):
170,000 Enron Corp. 5,780
170,000 Phillips Petroleum Co. 5,950
--------
11,730
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
59
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
DIVERSIFIED STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
OILFIELD EQUIPMENT & SERVICES (4.7%):
235,000 Baker Hughes, Inc. $ 5,287
227,600 Dresser Industries, Inc. 4,979
75,100 Schlumberger Ltd. 4,722
--------
14,988
--------
PHARMACEUTICALS (3.4%):
75,000 Merck & Co., Inc. 3,216
25,000 Pfizer, Inc. 2,166
20,000 Schering-Plough 1,507
50,000 Warner-Lambert Co. 3,988
--------
10,877
--------
POLLUTION CONTROL SERVICES (1.2%):
142,000 WMX Technologies, Inc. 3,870
--------
REAL ESTATE INVESTMENT TRUSTS (0.3%):
28,500 Weingarten Realty Investors 998
--------
RETAIL (1.0%):
46,500 Dayton Hudson Corp. 3,121
--------
RETAIL - SPECIALTY STORES (1.1%):
133,000 Pep Boys - Manny, Moe & Jack 3,425
--------
RUBBER & RUBBER PRODUCTS (2.3%):
120,000 Cooper Tire & Rubber Co.(c) 2,940
119,600 Goodyear Tire & Rubber Co. 4,545
--------
7,485
--------
SEMICONDUCTORS (1.8%):
30,000 Applied Materials, Inc.(c) 1,849
40,000 Intel Corp. 4,095
--------
5,944
--------
SHIPPING (1.1%):
152,650 TNT Freightways Corp. 3,587
--------
SOFTWARE & COMPUTER SERVICES (4.0%):
111,800 Microsoft(c) 9,154
175,000 Novell, Inc.(c) 3,806
--------
12,960
--------
TOBACCO & TOBACCO PRODUCTS (1.7%):
80,000 Philip Morris Cos., Inc. 5,420
--------
UTILITIES - ELECTRIC (5.4%):
200,000 Consolidated Edison Co. NY,
Inc. 5,550
20,000 Duquesne Light Co. 675
150,000 Southern Co. 3,094
248,500 Texas Utilities Co. 8,107
--------
17,426
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
UTILITIES - TELECOMMUNICATIONS (8.1%):
230,000 A T & T Corp. $ 11,673
300,000 GTE Corp. 10,238
98,100 Nynex Corp. 4,010
--------
25,921
- ----------------------------------------------------------
TOTAL COMMON STOCKS 302,041
- ----------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (5.0%)
2,433,734 Federated Treasury
Obligation Fund 2,434
13,557,653 Shearson U.S. Treasury Fund 13,557
- ----------------------------------------------------------
TOTAL INVESTMENT COMPANIES 15,991
- ----------------------------------------------------------
TOTAL (COST $292,681)(B) $323,032
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $321,593.
(b) 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 $366. 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 $ 33,693
Unrealized depreciation (3,708)
--------
Net unrealized appreciation $ 29,985
=========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
60
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (97.4%)
BANKS (4.6%):
20,500 BankAmerica Corp. $ 1,015
37,500 Norwest Corp. 994
----------
2,009
----------
BEVERAGES (2.8%):
21,300 Coca Cola Co. 1,238
----------
COMPUTERS & PERIPHERALS (1.1%):
9,000 3Com Corp.(c) 504
----------
CONGLOMERATES (2.7%):
36,000 Corning Glass Works 1,202
----------
COSMETICS & RELATED (3.2%):
17,000 Gillette Co. 1,394
----------
ELECTRICAL EQUIPMENT (5.7%):
26,300 General Electric Co. 1,473
18,700 Johnson Controls, Inc. 1,014
----------
2,487
----------
ELECTRONICS & ELECTRICAL (3.4%):
26,200 Motorola, Inc. 1,490
----------
ENTERTAINMENT (3.0%):
24,000 Walt Disney Co. 1,329
----------
FINANCIAL SERVICES (5.8%):
16,900 Federal National Mortgage
Assoc. 1,491
25,000 First USA, Inc. 1,063
----------
2,554
----------
FOREST PRODUCTS (4.1%):
13,000 Georgia Pacific Corp. 1,032
10,000 International Paper Co. 770
----------
1,802
----------
HOUSEHOLD PRODUCTS (3.2%):
34,300 Newell Co. 810
20,400 Rubbermaid, Inc. 602
----------
1,412
----------
INSURANCE (2.9%):
11,900 American International
Group, Inc. 1,270
----------
LEISURE-RECREATION, GAMING (1.3%):
43,700 International Game
Technology 563
----------
MEDICAL-BIOTECHNOLOGY (0.7%):
4,200 Amgen, Inc.(c) 305
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (1.5%):
23,900 Health Care & Retirement
Corp.(c) $ 675
----------
OIL & GAS EXPLORATION, PRODUCTION (1.6%):
18,000 Burlington Resource, Inc. 704
----------
OIL-INTEGRATED COMPANIES (11.3%):
11,800 Amoco Corp. 774
9,600 Atlantic Richfield Co. 1,099
25,000 Chevron Corp. 1,184
14,100 Mobil Corp. 1,338
8,100 Texaco, Inc. 554
----------
4,949
----------
PHARMACEUTICALS (3.4%):
20,000 Ivax Corp. 517
13,000 Schering-Plough 980
----------
1,497
----------
POLLUTION CONTROL SERVICES (1.8%):
29,000 WMX Technologies, Inc. 790
----------
RETAIL (5.3%):
30,000 The Gap 956
33,300 Home Depot, Inc. 1,390
----------
2,346
----------
SEMICONDUCTORS (3.7%):
16,000 Intel Corp. 1,638
----------
SOAPS & CLEANING AGENTS (3.0%):
18,800 Procter & Gamble Co. 1,814
----------
SOFTWARE & COMPUTER SERVICES (6.0%):
20,000 Microsoft Corp.(c) 1,638
45,000 Novell, Inc.(c) 979
----------
2,617
----------
TELECOMMUNICATIONS (6.8%):
22,400 Telefonos de Mexico 678
21,900 AT&T Corp. 1,111
20,300 SBC Communication, Inc. 1,191
----------
2,980
----------
TOBACCO & TOBACCO RELATED (1.0%):
6,600 Philip Morris Cos., Inc. 447
----------
TRANSPORTATION-AIR (2.3%):
43,700 Southwest Airlines Co. 1,011
----------
UTILITIES-NATURAL GAS (5.0%):
36,500 El Paso Natural Gas 1,068
33,300 Enron Corp. 1,132
----------
2,200
- ------------------------------------------------------------
TOTAL COMMON STOCKS 42,727
- ------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
61
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
INVESTMENT COMPANIES (2.1%)
98,561 Shearson U.S. Treasury Fund $ 919
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 919
- ------------------------------------------------------------
TOTAL (COST $40,358)(B) $ 43,646
- ---
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $43,861.
(b) 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 $ 5,809
Unrealized depreciation (2,521)
----------
Net unrealized appreciation $ 3,288
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
62
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
SPECIAL VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (94.6%)
AEROSPACE/DEFENSE (3.4%):
113,400 GenCorp, Inc. $ 1,432
29,500 General Dynamics Corp. 1,368
86,700 Thiokol Corp. Delaware 2,416
----------
5,216
----------
AUTOMOTIVE PARTS (4.7%):
44,200 Genuine Parts Co. 1,713
46,600 Hayes Wheels 874
72,200 Kaydon Corp. 1,985
51,600 Mascotech, Inc. 574
13,000 Stewart & Stevenson
Services,
Inc. 487
95,775 T B C Corp.(c) 1,017
33,915 Walbro Corp. 634
----------
7,284
----------
BANKS (5.7%):
30,100 Central Fidelity Banks, Inc. 769
119,200 Comerica, Inc. 3,427
36,401 Michigan National Corp. 3,818
17,500 Star Bank 731
----------
8,745
----------
BEVERAGES (1.0%):
71,000 Coca Cola Enterprises, Inc. 1,588
----------
CHEMICALS (7.8%):
57,875 A. Schulman, Inc. 1,816
42,550 Avery Dennison Corp. 1,729
22,400 Geon Co. 605
32,000 Lubrizol Corp. 1,116
12,900 Lyondell Petrochemical 320
57,500 Olin Corp. 3,213
96,500 RPM, Inc. 1,905
30,000 WD 40 Co. 1,320
----------
12,024
----------
CONSTRUCTION (1.2%):
71,100 Foster Wheeler Corp. 2,631
----------
CONTAINERS (1.1%):
71,000 Sonoco Products Co. 1,766
----------
ELECTRICAL EQUIPMENT (8.4%):
39,200 Arrow Electronics, Inc.(c) 1,823
22,500 W.W. Grainger, Inc. 1,361
121,332 Mark IV Industries 2,184
33,300 Molex Corp. 1,257
45,400 Teleflex, Inc. 1,878
75,529 Vishay Intertechnology,
Inc.(c) 4,466
----------
12,969
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ENVIRONMENTAL CONTROL (1.1%):
179,650 Laidlaw, Inc. Class B $ 1,617
----------
FINANCIAL SERVICES (4.6%):
53,300 Equifax, Inc. 1,726
61,850 MBNA Corp. 1,870
42,800 PMI Group, Inc.(c) 1,594
69,100 UJB Financial Corp. 1,892
----------
7,082
----------
FOOD DISTRIBUTORS (0.3%):
15,500 SuperValu, Inc. 409
----------
FOOD PROCESSING & PACKAGING (2.4%):
72,100 Dean Foods Co. 2,055
45,250 IBP, Inc. 1,674
----------
3,729
----------
FOREST PRODUCTS (1.9%):
62,262 Pentair, Inc. 2,848
----------
FUNERAL SERVICES (1.8%)
95,500 Service Corp. International 2,698
----------
FURNITURE (0.7%):
28,300 Leggett & Platt, Inc. 1,090
----------
HEAVY MACHINERY (2.3%):
61,800 Baker Hughes, Inc. 1,391
40,650 Tyco Laboratories, Inc. 2,134
----------
3,525
----------
HOLDING COMPANIES (0.2%):
7,900 Northern Trust Corp.(c) 289
----------
HOTELS & MOTELS (1.4%):
72,300 Mirage Resorts, Inc.(c) 2,169
----------
INSURANCE (5.4%):
46,200 American Re Corp. 1,756
55,200 Kemper Corp. 2,498
47,500 Progressive Corp. 1,793
34,500 TransAtlantic Holdings 2,190
----------
8,237
----------
MACHINE TOOLS (2.9%):
90,900 Albany International Corp. 1,988
22,900 Greenfield Industries 676
67,200 Manitowoc Industries 1,756
----------
4,420
----------
MANUFACTURING (2.2%):
38,000 Briggs & Stratton Corp. 1,335
19,100 Hillenbrand 566
56,466 Pall Corp. 1,320
11,100 Paragon Trade Brands, 172
Inc.(c)
----------
3,393
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
63
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
SPECIAL VALUE FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (3.8%):
139,300 Community Psychiatric
Centers, Inc.(c) $ 1,845
43,200 Lincare Holdings(c) 1,334
60,100 Quorum Health Group(c) 1,240
7,100 Ventritex(c) 107
42,437 Vivra, Inc.(c) 1,363
----------
5,889
----------
MEDICAL SUPPLIES (0.2%):
10,000 Sunrise Medical, Inc.(c) 303
----------
METALS (3.3%):
86,100 CBI Industries, Inc. 2,132
28,000 Kennametal, Inc. 938
31,800 Minerals Technologies, Inc. 1,057
32,500 USX U.S. Steel Group 991
----------
5,118
----------
NEWSPAPERS (1.6%):
41,100 Tribune Co. 2,430
----------
OIL & GAS EXPLORATION (2.1%):
80,100 Anadarko Petroleum 3,294
----------
OIL & GAS PRODUCTION (1.2%):
46,100 Snyder Oil Corp. 663
42,500 Vastar Resources, Inc. 1,137
----------
1,800
----------
RETAIL (1.7%):
70,800 Hannaford Brothers 1,867
22,500 TJX Companies, Inc. 259
13,800 Tiffany & Co. 443
----------
2,569
----------
RUBBER (1.0%):
15,800 Bandag, Inc. 938
4,500 Bandag, Inc. Class A 249
19,125 Standard Products Co. 378
----------
1,565
----------
SEMICONDUCTORS (0.5%):
13,500 Applied Materials Inc.(c) 832
----------
SHOES, LEATHER GOODS (1.3%):
25,600 Nike, Inc. 1,962
----------
SOFTWARE & COMPUTER SERVICES (1.2%):
10,000 American Software, Inc. 41
14,750 Analysts International Corp. 372
28,300 Policy Management
Systems(c) 1,426
----------
1,839
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
STEEL (1.5%):
36,700 A.K. Steel Holding Corp.(c) $ 987
68,620 Worthington Industries, Inc. 1,295
----------
2,282
----------
TELECOMMUNICATIONS (0.8%):
4,600 Comsat Corp. 92
53,333 Federal Signal Corp. 1,207
----------
1,299
----------
TOBACCO (0.4%):
23,773 Universal Corp. 544
----------
TRANSPORTATION (3.8%):
45,350 Gatx Corp. 2,041
40,800 Pittston Services Group 969
80,750 Illinois Central Corp. 2,836
----------
5,846
----------
UTILITIES -- ELECTRIC & GAS (8.0%):
32,400 Brooklyn Union Gas Co. 786
27,020 DQE Co. 912
118,600 Florida Progress Corp. 3,617
148,300 Northeast Utilities 3,244
79,400 Public Service Co. of 2,392
Colorado
8,500 Raychem Corp. 303
27,700 Washington Gas Light Co. 1,080
----------
12,334
----------
UTILITIES -- TELECOMMUNICATIONS (1.1%):
69,400 LDDS Communications(c) 1,665
- ------------------------------------------------------------
TOTAL COMMON STOCKS 145,300
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (5.6%)
1,806,695 Federated Treasury 1,806
Obligation
6,859,515 Shearson U.S. Treasury Fund 6,860
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 8,666
- ------------------------------------------------------------
TOTAL (COST $142,586)(A) $ 153,966
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $153,591.
(b) 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 $ 16,787
Unrealized depreciation (5,407)
----------
Net unrealized appreciation $ 11,380
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
64
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments
SPECIAL GROWTH FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (94.8%)
AUTOMOTIVE PARTS (3.8%):
8,900 Breed Technologies, Inc. $ 179
20,000 Kaydon Corp. 550
----------
729
----------
BANKS (1.7%):
8,163 First Bank Systems, Inc. 331
----------
COMPUTERS & PERIPHERALS (4.9%):
12,000 Optical Data Systems(c) 486
10,000 Sungard Data Systems,
Inc.(c) 466
----------
952
----------
DRUG STORES (1.0%):
7,000 Eckerd Corp.(c) 204
----------
ELECTRONIC & ELECTRICAL (2.5%):
11,000 Avnet, Inc. 490
----------
FINANCIAL SERVICES (4.0%):
34,300 Aames Financial Corp. 429
8,500 Green Tree Financial Corp. 347
----------
776
----------
FURNITURE (4.1%):
24,000 Juno Lighting 498
11,000 LaZBoy Chair Co. 297
----------
795
----------
HOSPITAL & NURSING EQUIPMENT (3.1%):
15,000 Invacare Corp. 593
----------
INSURANCE -- LIFE (5.3%):
48,090 Gainsco, Inc. 511
14,500 Reliastar Financial Corp. 520
----------
1,031
----------
LEISURE -- RECREATION, GAMING (2.2%):
16,000 Aldila(c) 98
26,200 Callaway Golf Co. 324
----------
422
----------
MISCELLANEOUS MANUFACTURING (5.0%):
18,000 Keystone International, Inc. 378
25,000 Pall Corp. 584
----------
962
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
MEDICAL SERVICES (7.4%):
15,800 Lincare Holdings(c) $ 488
14,300 Mid Atlantic Medical
Services,
Inc.(c) 247
5,400 Pacificare Health System(c) 335
15,200 Sun Healthcare Group(c) 366
----------
1,436
----------
METALS (7.3%):
40,000 Addington Resources, Inc.(c) 450
13,000 Commercial Metals Co. 345
15,000 Mueller Industries, Inc.(c) 624
----------
1,419
----------
OFFICE EQUIPMENT & SUPPLIES (2.5%):
50,000 Checkmate Electronics(c) 481
----------
OIL & GAS EXPLORATION (5.6%):
10,000 Barrett Resources Corp.(c) 235
13,000 Devon Energy Corp. 270
10,000 H.S. Resource, Inc.(c) 165
18,000 Newfield Exploration(c) 414
----------
1,084
----------
PHARMACEUTICALS (3.2%):
18,000 Teva Pharmaceutical
Industries Ltd. 617
----------
PUBLISHING (2.9%):
5,000 Belo Corp. 300
15,000 Valassis Communications(c) 263
----------
563
----------
RETAIL (5.1%):
23,000 Lillian Vernon Corp. 469
16,000 Medicine Shoppe
International, Inc. 512
----------
981
----------
SEMICONDUCTORS (11.7%):
12,000 Advanced Micro Devices(c) 432
5,300 Alliance Semiconductor
Corp.(c) 215
14,100 Atmel Corp.(c) 620
30,000 Integrated Circuit 311
Systems(c)
5,000 Lam Research Corp.(c) 253
7,400 Linear Technology 442
----------
2,273
----------
SERVICES (NON-FINANCIAL) (1.8%):
20,000 Safecard Services 350
----------
TELECOMMUNICATIONS (2.4%):
21,000 Digi International, Inc.(c) 467
352 Intellicall, Inc.(c) 2
----------
469
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
65
<PAGE>
THE VICTORY PORTFOLIOS Schedule of Portfolio Investments -- Continued
SPECIAL GROWTH FUND April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
TRANSPORTATION -- RAIL (2.3%):
16,000 Railtex, Inc.(c) $ 444
----------
TRUCKING (5.0%):
21,000 American Freightways, 491
Inc.(c)
20,500 TNT Freightways Corp. 481
----------
972
- ------------------------------------------------------------
TOTAL COMMON STOCKS 18,374
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (6.0%)
295,621 Federated Treasury 296
Obligation
868,947 Shearson U.S. Treasury Fund 869
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,165
- ------------------------------------------------------------
TOTAL (COST $18,177)(B) $ 19,539
- ----------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $19,386.
(b) 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 $34. 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 $ 2,271
Unrealized depreciation (943)
----------
Net unrealized appreciation $ 1,328
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
66
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
OHIO REGIONAL STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
COMMON STOCKS (94.7%)
AEROSPACE/DEFENSE (0.2%):
5,361 GenCorp, Inc. $ 67
----------
AMUSEMENT & RECREATION SERVICES (0.6%):
7,000 Cedar Fair L.P. 219
----------
AUTOMOTIVE PARTS (5.2%):
24,000 Dana Corp. 617
15,000 Lamson & Sessions Co.(c) 96
15,000 TRW, Inc. 1,115
----------
1,828
----------
BANKS (7.2%):
26,000 Charter One Financial, Inc. 594
14,000 First Merit Corp. 324
9,375 Huntington Bancshares, Inc. 176
23,000 National City Corp. 630
15,000 Provident Bancorp 506
2,000 Second Bancorp 45
6,000 Star Bank 250
----------
2,525
----------
BUILDING MATERIALS (1.2%):
10,000 Medusa Corp. 226
5,000 Owens Corning Fiberglas
Corp.(c) 183
----------
409
----------
CHEMICALS (8.1%):
12,500 A. Schulman, Inc. 392
16,000 Chemed Corp. 492
23,500 Chempower, Inc.(c) 73
20,000 Ferro Corp. 568
6,000 Lesco, Inc. 95
20,000 Lubrizol Corp. 697
26,250 RPM, Inc. 518
----------
2,835
----------
CONSUMER GOODS (2.1%):
12,000 American Greetings Corp. 327
43,000 Gibson Greetings, Inc. 430
----------
757
----------
ELECTRICAL EQUIPMENT (4.7%):
60,000 Pioneer-Standard
Electronics,
Inc. 1,170
20,000 Robbins & Myers Inc. 485
----------
1,655
----------
ENGINEERING (0.3%):
5,000 Corrpro(c) 93
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
FINANCIAL SERVICES (2.4%):
15,000 Haverfield Corp. $ 203
16,000 McDonald & Co. Investments 232
24,000 State Auto Financial 402
----------
837
----------
FOOD DISTRIBUTORS (0.9%):
10,000 Chiquita Brands 134
International
7,000 Kroger Co.(c) 178
----------
312
----------
FOREST PRODUCTS (2.9%):
12,000 Mead Corp. 621
15,000 Reynolds & Reynolds Co. 398
----------
1,019
----------
HEALTH CARE (0.4%):
9,000 Health Power, Inc.(c) 138
----------
HOSPITAL & NURSING EQUIPMENT (5.6%):
25,000 Invacare Corp. 988
20,000 Omnicare, Inc. 972
----------
1,960
----------
HOUSEHOLD GOODS (3.1%):
26,221 Lancaster Colony Corp. 911
20,000 Sun Television & Appliance 168
----------
1,079
----------
INDUSTRIAL SERVICES (3.9%):
45,000 ACME Cleveland Corp. 934
22,000 Amcast Industrial Corp. 440
----------
1,374
----------
INSURANCE (2.4%):
10,000 Ohio Casualty 293
15,000 Progressive Corp. 566
----------
859
----------
MACHINE TOOLS (8.3%):
15,750 Bearings, Inc. 488
17,000 Cincinnati Milacron, Inc. 455
37,050 Commercial Intertech Corp. 820
46,500 Gorman Rupp Co. 703
8,250 LDI Corp.(c) 27
5,000 Monarch Machine Tool Co. 49
25,000 Telxon Corp. 393
----------
2,935
----------
MANUFACTURING (2.2%):
10,000 Parker-Hannifin Corp. 520
7,000 TRINOVA Corp. 243
----------
763
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
67
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
OHIO REGIONAL STOCK FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
METALS (1.0%):
10,000 Brush Wellman, Inc. $ 197
5,000 Cold Metal Products, Inc.(c) 34
10,000 Park-Ohio Industries, 114
Inc.(c)
----------
345
----------
OFFICE EQUIPMENT & SUPPLIES (2.7%):
23,000 Diebold, Inc. 955
----------
OIL & GAS EXPLORATION (1.8%):
33,000 USX -- Marathon Group 619
----------
PAINT, VARNISHES & ENAMELS (1.4%):
14,000 Sherwin Williams Co. 499
----------
POLLUTION CONTROL SERVICES (0.7%):
51,100 Mid American Waste
Systems(c) 243
----------
PRECISION INSTRUMENTS (1.4%):
30,000 Keithley Instruments, Inc. 506
----------
PRINTING (0.3%):
20,000 Multi-Color Corp.(c) 98
----------
PUBLISHING (2.0%):
25,000 Scripps (E.W.) Co. 716
----------
REAL ESTATE INVESTMENT TRUSTS (1.0%):
16,000 Health Care REIT, Inc. 348
----------
RESTAURANTS (3.3%):
30,000 Bob Evans Farms, Inc. 615
20,000 Frisch's Restaurants 185
22,000 Wendy's International 374
----------
1,174
----------
RETAIL (2.8%):
15,000 Consolidated Stores Corp.(c) 257
17,000 Fabri-Centers of America, 315
Inc.(c)
15,000 The Limited, Inc. 320
10,000 Value City Department
Stores,
Inc.(c) 90
----------
982
----------
RUBBER & RUBBER PRODUCTS (1.6%):
5,000 Cooper Tire & Rubber Co. 123
12,000 Goodyear Tire & Rubber Co. 456
----------
579
----------
SERVICES (NON-FINANCIAL) (0.3%):
4,200 Roto Rooter, Inc. 103
----------
SHIPPING (0.3%):
3,000 Oglebay Norton Co. 98
----------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
STEEL (3.3%):
35,000 Shiloh(c) $ 333
9,000 Timken Co. 363
25,000 Worthington Industries, Inc. 472
----------
1,168
----------
TEXTILE MANUFACTURING (1.1%):
25,000 Essef Corp.(c) 394
----------
TRANSPORTATION (1.6%):
22,500 Comair Holding, Inc. 567
----------
TRUCKS (1.2%):
20,000 Thor Industries, Inc. 418
----------
UTILITIES -- ELECTRIC (3.2%):
14,000 American Electric Power 459
22,500 D.P.L., Inc. 470
10,000 Ohio Edison 200
----------
1,129
----------
UTILITIES -- TELECOMMUNICATIONS (2.0%):
30,000 Cincinnati Bell 720
- ------------------------------------------------------------
TOTAL COMMON STOCKS 33,325
- ------------------------------------------------------------
- ----------------------------------------------
RIGHTS & WARRANTS (0.2%)
10,000 Cincinnati Microwave, 59
Inc.(c)
- ------------------------------------------------------------
TOTAL RIGHTS & WARRANTS 59
- ------------------------------------------------------------
- ----------------------------------------------
INVESTMENT COMPANIES (5.1%)
303,843 Federated Treasury 304
Obligation
1,476,549 Shearson U.S. Treasury Fund 1,476
- ------------------------------------------------------------
TOTAL INVESTMENT COMPANIES 1,780
- ------------------------------------------------------------
TOTAL (COST $24,640)(B) $ 35,164
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $35,183.
(b) 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 $ 12,135
Unrealized depreciation (1,611)
----------
Net unrealized appreciation $ 10,524
==========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
68
<PAGE>
Schedule of Portfolio Investments
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
- ----------------------------------------------
CORPORATE BONDS (0.1%)
FRANCE (0.1%):
1,313 Axa SA Convertible(c),
4.50%, 1/1/99 $ 78
- ----------------------------------------------------------
TOTAL CORPORATE BONDS 78
- ----------------------------------------------------------
- ----------------------------------------------
COMMON STOCKS (97.2%)
AUSTRALIA (1.0%):
Energy Sources
60,000 The Broken Hill Proprietary
Co., Ltd.(c) 873
- ----------------------------------------------------------
TOTAL AUSTRALIA 873
- ----------------------------------------------------------
BRITAIN (9.1%):
BANKS (1.3%):
231,000 Standard Chartered Bank 1,119
--------
BROADCASTING & PUBLISHING (1.2%):
78,400 Reed International 1,009
--------
BUSINESS & PUBLIC SERVICES (4.3%):
122,200 British Airport Authority 932
122,600 Cable Wireless 792
65,800 Carlton Communications Plc. 1,000
127,800 Reuters 972
--------
3,696
--------
OIL & GAS PRODUCTION (1.2%):
144,400 British Petroleum 1,040
--------
TELECOMMUNICATIONS EQUIPMENT (1.1%):
311,000 Vodafone 973
- ----------------------------------------------------------
TOTAL BRITAIN 7,837
- ----------------------------------------------------------
FINLAND (1.2%):
ELECTRONIC & ELECTRICAL (1.2%):
25,000 Nokia AB 1,022
- ----------------------------------------------------------
TOTAL FINLAND 1,022
- ----------------------------------------------------------
FRANCE (9.9%):
ADVERTISING (0.7%):
5,750 Euro RSCG Worldwide 634
--------
AUTOMOTIVE PARTS (1.3%):
18,700 Valeo 1,067
--------
ELECTRONIC & ELECTRICAL (2.3%):
680 LeGrand 987
13,300 Schneider 1,024
--------
2,011
--------
INSURANCE (1.2%):
19,700 Axa 1,040
--------
MANUFACTURING - CONSUMER GOODS (1.3%):
4,550 Pinault-Printemps 1,031
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
RECREATION/OTHER CONSUMER GOODS (1.9%):
6,700 BIC Corp. $ 1,119
3,600 Castorama(c) 597
--------
1,716
--------
RETAIL (1.2%):
2,120 Carrefour 1,065
- ----------------------------------------------------------
TOTAL FRANCE 8,564
- ----------------------------------------------------------
GERMANY (7.6%):
BANKS (2.1%):
1,980 Depfa Bank 1,007
1,620 Deutsche Bank(c) 796
--------
1,803
--------
COSMETICS & RELATED (1.2%):
1,360 Beiersdorf AG 1,061
--------
ENGINEERING/INDUSTRIAL
CONSTRUCTION (1.0%):
2,620 AGIV 844
--------
HEALTH & PERSONAL CARE (1.1%):
1,260 Schering 938
--------
MACHINE TOOLS (1.1%):
3,550 Mannesmann 970
--------
UTILITIES - ELECTRIC (1.1%):
2,660 Veba 994
- ----------------------------------------------------------
TOTAL GERMANY 6,610
- ----------------------------------------------------------
HOLLAND (8.4%):
BREWERIES (1.0%):
6,400 Heineken Holdings 839
--------
COMPUTERS & PERIPHERALS (0.5%):
10,900 Getronics 447
--------
FOREST PRODUCTS (1.0%):
29,300 Koninklijke KNP 885
--------
INSURANCE (1.1%):
18,600 Internationale Nederlanden 982
--------
LEISURE (1.2%):
18,400 Polygram 1,040
--------
POLLUTION CONTROL SERVICES (1.0%):
7,500 Ver Ned Uitgevers(c) 840
--------
SERVICES (NON-FINANCIAL) (1.2%):
16,600 Randstad Holdings 996
--------
SHIPPING & SHIPBUILDING (1.0%):
32,600 IHC Caland 892
--------
WHOLESALE & INTERNATIONAL TRADE (0.4%):
4,500 Hagemeyer 389
- ----------------------------------------------------------
TOTAL HOLLAND 7,310
- ----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
69
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
HONG KONG (5.3%):
BANKS (1.0%):
217,000 Guoco Group $ 824
--------
DIVERSIFIED (1.9%):
197,000 Hutchinson Whampoa 855
122,000 Swire Pacific "A" 816
--------
1,671
--------
RADIO & TELEVISION (0.8%):
179,000 Television Broadcast 666
--------
REAL ESTATE (1.6%):
3,000,000 China Resources 752
124,000 Henderson Land 639
--------
1,391
- ----------------------------------------------------------
TOTAL HONG KONG 4,552
- ----------------------------------------------------------
ITALY (1.8%):
AUTOMOBILES (0.4%):
37,800 Pininfarina 363
--------
INSURANCE (0.5%):
20,000 Assicurazioni Generali 481
--------
UTILITIES - TELECOMMUNICATIONS (0.9%):
282,000 Telecom Italia 751
- ----------------------------------------------------------
TOTAL ITALY 1,595
- ----------------------------------------------------------
JAPAN (33.3%):
AEROSPACE/DEFENSE (0.8%):
100,000 Mitsubishi Heavy Industry 726
--------
BANKS (4.0%):
62,000 Asahi Bank 797
32,000 Mitsubishi Bank 785
47,000 Sanwa Bank 1,027
38,000 Sumitomo Bank 823
--------
3,432
--------
BUILDING MATERIALS (0.9%):
22,000 Tostem Corp. 799
--------
BUSINESS & PUBLIC SERVICE (0.6%):
17,600 Mos Food Services 517
--------
CHEMICALS (1.6%):
36,000 Shin Etsu Chemical 698
127,000 Tosoh Corp.(c) 676
--------
1,374
--------
ELECTRICAL EQUIPMENT (3.5%):
7,300 Keyence(c) 779
14,000 Kyocera 1,083
28,000 Murata Manufacturing 1,126
--------
2,988
--------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
ELECTRONIC & ELECTRICAL (5.2%):
52,000 Canon, Inc. $ 860
88,000 Hitachi, Ltd. 896
9,000 Riso Kagaku 614
25,000 Rohm Co., Ltd. 1,157
32,000 Tokyo Electron 998
--------
4,525
--------
ENGINEERING/INDUSTRIAL CONSTRUCTION (0.3%):
11,000 Kinden 219
--------
FINANCE (1.6%):
50,000 Daiwa Securities 631
12,000 Nichiei Co. 767
--------
1,398
--------
HOUSEHOLD GOODS (0.9%):
20,400 Amway Japan 760
--------
MANUFACTURING - CAPITAL GOODS (1.2%):
16,000 Secom & Co. 1,044
--------
MERCHANDISING (0.9%):
11,000 Seven-eleven Japan 792
--------
PHARMACEUTICALS (1.3%):
51,000 Yamanouchi Pharmaceutical 1,147
--------
RADIO & TELEVISION (0.9%):
3,270 Nippon Television Network 728
--------
REAL ESTATE (0.9%):
60,000 Sekisui House 793
--------
RUBBER & RUBBER PRODUCTS (1.0%):
56,000 Bridgestone 906
--------
STEEL (1.8%):
195,000 Nippon Steel 775
268,000 NKK Corp.(c) 750
--------
1,525
--------
STORAGE & WAREHOUSING (1.0%):
51,000 Mitsubishi Warehouse 880
--------
TELECOMMUNICATIONS EQUIPMENT (1.0%):
98 DDI Corp. 863
--------
UTILITIES - ELECTRIC (0.9%):
66,000 Matsushita Electric Works 793
--------
UTILITIES - TELECOMMUNICATIONS (1.0%):
99 Nippon Telephone & Telegraph 875
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
70
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
WHOLESALE & INTERNATIONAL TRADE (2.0%):
33,000 Canon Sales $ 872
122,000 Itochu Corp. 828
--------
1,700
- ----------------------------------------------------------
TOTAL JAPAN 28,784
- ----------------------------------------------------------
MALAYSIA (1.9%):
DIVERSIFIED (0.9%):
496,000 Renong Berhad 759
--------
FINANCIAL SERVICES (0.5%):
125,000 Hong Leong Credit 456
--------
FOREST PRODUCTS (0.5%):
99,000 Adkam Perdana 445
- ----------------------------------------------------------
TOTAL MALAYSIA 1,660
- ----------------------------------------------------------
NEW ZEALAND (1.1%):
FOREST PRODUCTS (1.1%):
338,000 Fletcher Challenge 910
- ----------------------------------------------------------
TOTAL NEW ZEALAND 910
- ----------------------------------------------------------
SINGAPORE (2.0%):
AIRLINES (1.0%):
84,000 Singapore Airlines, Series F 808
--------
BANKS (1.0%):
81,000 Overseas Chinese Banking
Corp. 884
- ----------------------------------------------------------
TOTAL SINGAPORE 1,692
- ----------------------------------------------------------
SPAIN (1.3%):
DIVERSIFIED (0.3%):
92,000 Cofir 299
--------
FOOD DISTRIBUTORS (1.0%):
48,600 Pryca 861
- ----------------------------------------------------------
TOTAL SPAIN 1,160
- ----------------------------------------------------------
SWEDEN (5.1%):
AUTOMOBILES (0.9%):
41,400 Volvo AB 777
--------
COSMETICS & RELATED (1.3%):
37,300 Astra A Free(c) 1,088
--------
ELECTRONIC & ELECTRICAL (0.9%):
41,000 Allgon 804
--------
MANUFACTURING (1.2%):
16,000 Ericsson (L.M.) Series B 1,059
--------
MEDICAL SUPPLIES (0.8%):
45,000 Arjo 700
- ----------------------------------------------------------
TOTAL SWEDEN 4,428
- ----------------------------------------------------------
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT SECURITY DESCRIPTION (000)
<S> <C> <C> <C>
SWITZERLAND (4.3%):
DIVERSIFIED (0.9%):
750 Baer Holdings Bearer $ 788
--------
FOOD PROCESSING (1.1%):
960 Nestle Registered 941
--------
PHARMACEUTICALS (1.1%):
165 Roche Holdings AG
Genusscheine NPV 995
--------
UTILITIES - ELECTRIC (1.2%):
1,020 Brown Boveri, Series A 1,010
- ----------------------------------------------------------
TOTAL SWITZERLAND 3,734
- ----------------------------------------------------------
UNITED STATES (3.9%):
BROKERAGE FIRMS & SECURITY DEALERS (0.3%):
8,700 Brazilian Investment Co. 273
--------
INDUSTRIAL SERVICES (0.9%):
750,000 China North Industries(c) 750
--------
INVESTMENT FUNDS - CLOSED END (2.2%):
17,000 Chile Fund 805
12,700 India Magnum Fund NV A(c) 722
122 Korea Eurofund(c) 435
--------
1,962
--------
UTILITIES - TELECOMMUNICATIONS (0.5%):
25,700 Videotron Holdings PLC.(c) 402
- ----------------------------------------------------------
TOTAL UNITED STATES 3,387
- ----------------------------------------------------------
TOTAL COMMON STOCKS 84,118
- ----------------------------------------------------------
- ---------------------------------------------------------
INVESTMENT COMPANIES (0.8%)
667,222 Shearson U.S. Treasury Fund 667
- ---------------------------------------------------------
TOTAL INVESTMENT COMPANIES 667
- ----------------------------------------------
TOTAL (COST $80,808)(B) $ 84,863
- ---------------------------------------------------------
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $86,530.
(b) 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 $ 6,255
Unrealized depreciation (2,199)
-------
Net unrealized
appreciation $ 4,056
========
</TABLE>
(c) Represents non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
71
<PAGE>
Schedule of Portfolio Investments -- Continued
THE VICTORY PORTFOLIOS April 30, 1995
INTERNATIONAL GROWTH FUND (Unaudited)
- --------------------------------------------------------------------------------
- ---------------------------------------------------------
FORWARD CURRENCY CONTRACTS
<TABLE>
<CAPTION>
CONTRACT
VALUE
CONTRACT (U.S. APPRECIATION DELIVERY
CURRENCY PRICE DOLLARS) (DEPRECIATION) DATE
- ----------------------------------------- --------- ---------- -------- -------
<S> <C> <C> <C> <C>
CURRENCY SOLD:
Japanese Yen 84.125032 $ (258,668) $ (331) 5/2/95
---------- --------
Total currency sold $ (258,668) $ (331)
========= ========
CURRENCY PURCHASED:
Dutch Guilder 1.514748 $ 258,668 $ (5,760) 5/2/95
---------- --------
Total currency purchased $ 258,668 $ (5,760)
========= ========
Net payable for forward currency
contracts purchased and sold $ (6,091)
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
72
<PAGE>
Notes to Financial Statements
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
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, Tax-Free Money Market Fund, Limited
Term Income Fund, Government Mortgage Fund, Intermediate Income Fund, Investment
Quality Bond Fund, Ohio Municipal Bond Fund, Balanced Fund, Stock Index Fund,
Value Fund, Diversified Stock Fund, Growth Fund, Special Value Fund, Special
Growth Fund, Ohio Regional Stock Fund, and International Growth Fund.
2. SIGNIFICANT ACCOUNTING POLICIES:
SECURITIES VALUATION:
- --------------------
Investments of the U.S. Government Obligations Fund, the Prime Obligations Fund
and the Tax-Free 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, the
Government Mortgage Fund, the Intermediate Income Fund, the Investment Quality
Bond Fund, the Ohio Municipal Bond Fund, the Balanced Fund, the Stock Index
Fund, the Value Fund, the Diversified Stock Fund, the Growth Fund, the Special
Value Fund, the Special Growth Fund, the Ohio Regional Stock Fund, and the
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 in the Balanced Fund and the
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 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.
The Funds isolate that portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuation arising
from changes in market prices of securities held.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, purchases
and sales of foreign currencies, currency gains or losses realized between the
trade and settlement dates on securities transactions and the difference between
the amount of interest recorded on a Fund's books, 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 the
exchange rate.
73
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
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
an unrealized gain or loss. When the Forward is closed, the Fund records a
realized gain or loss equal to the difference between the value at the time it
was opened and the value at the time it was closed. 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:
- -----------------
Each 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. The 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 move 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; during the period
between purchase and settlement no payment is made and no interest accrues. A
segregated account is established and maintains cash and marketable securities
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.
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 and distributable net realized capital gains, if any, are declared and
distributed at least annually for the Stock Index Fund, the Value Stock Fund,
the Diversified Stock Fund, the Growth Fund, the Special Value Fund, the Special
Growth Fund, the Ohio Regional Stock Fund, and the International Growth Fund.
Dividends from net investment income are declared and paid monthly and
distributable net realized capital gains, if any, are declared and distributed
at least annually for the Limited Term Income Fund, the Government Mortgage
Fund, the Intermediate Income Fund, the Investment Quality Bond Fund, the Ohio
Municipal Bond Fund, and the Balanced Fund.
74
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
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, 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.
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.
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the six
months ended April 30, 1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Limited Term Income Fund............. $108,053,386 $ 27,036,296
Government Mortgage Fund............. $ 34,141,401 $ 41,957,068
Intermediate Income Fund............. $ 45,696,863 $ 32,245,604
Investment Quality Bond Fund......... $ 53,718,571 $ 49,102,816
Ohio Municipal Bond Fund............. $ 35,466,334 $ 36,043,062
Balanced Fund........................ $ 79,112,448 $ 62,383,648
Stock Index Fund..................... $ 20,540,742 $ 9,328,966
Value Fund........................... $ 63,655,162 $ 17,814,533
Diversified Stock Fund............... $142,784,968 $116,116,919
Growth Fund.......................... $ 1,331,614 $ 25,478,542
Special Value Fund................... $ 47,216,203 $ 23,119,184
Special Growth Fund.................. $ 7,686,792 $ 11,925,297
Ohio Regional Stock Fund............. $ 1,531,661 $ 2,110,048
International Growth Fund............ $ 30,178,013 $ 19,936,541
</TABLE>
4. 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 and sub-investment advisory agreements, SAM is entitled to receive
fees based on a percentage of the average net assets of the Funds. Society
serves the Funds as custodian for all funds except the International Growth
Fund. Society received no fees from the Funds for providing custodian services
except for reimbursement of actual out-of-pocket expenses incurred. During the
year ended October 31, 1994, KeyCorp made a capital contribution of $2,506,027
to the Prime Obligations Fund.
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,
75
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
and assisting shareholders in changing dividend options, account designations
and addresses. For providing such services, Society may receive a fee computed
daily as a percentage of the average net assets of the Funds.
Affiliates of The BISYS Group, Inc. ("BISYS") serve as the Fund's administrator
and distributor. Effective March 29, 1995, Concord Holding Corporation (the
"Administrator"), an indirect, wholly-owned subsidiary of BISYS, became the
administrator to the Funds and Victory Broker Dealer Services, Inc. (the
"Distributor") became the distributor to the Funds. Prior to March 29, 1995,
other affiliates of BISYS served as the Fund's administrator and distributor.
Certain officers of the Funds are affiliated with BISYS. Such officers receive
no direct payments from the Funds for serving as officers of the Funds. Such
officers are paid no fees directly by the Funds for serving as officers of the
Funds.
Under the terms of the administration agreement, the Administrator's fees
are computed daily as a percentage of the average net assets of the Funds. The
Distributor receives no fees from the Funds for providing distribution services
and is entitled to receive commissions on sales of shares of the variable net
asset value funds. For the six months ended April 30, 1995, the Distributor
received $171,000 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 $74,000 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 net assets.
Fees may be voluntarily reduced to assist the Funds in maintaining competitive
expense ratios.
Information regarding related party transactions is as follows for the six
months ended April 30, 1995:
<TABLE>
<CAPTION>
U.S. TAX-FREE
GOVERNMENT PRIME MONEY
OBLIGATIONS OBLIGATIONS MARKET
FUND FUND FUND
-------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .35% .35% .35%
Voluntary fee reductions $ 16,151
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15%
Voluntary fee reductions $ 260
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $140,500 $193,436 $ 67,915
</TABLE>
<TABLE>
<CAPTION>
LIMITED INVESTMENT
TERM GOVERNMENT INTERMEDIATE QUALITY
INCOME MORTGAGE INCOME BOND
FUND FUND FUND FUND
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .50% .50% .75% .75%
Voluntary fee reductions $ 11,015 $ 12,348 $160,661 $122,074
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15% .15%
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 38,451 $ 48,386 $ 39,466 $ 32,928
</TABLE>
76
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO
MUNICIPAL STOCK
BOND BALANCED INDEX
FUND FUND FUND
-------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .60% 1.00% .60%
Voluntary fee reductions $ 85,187 $293,792 $ 72,524
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15%
Voluntary fee reductions $ 70,657
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 20,140 $ 47,761 $ 10,560
Voluntary fee reductions: $ 17,703
</TABLE>
<TABLE>
<CAPTION>
DIVERSIFIED
VALUE STOCK GROWTH
FUND FUND FUND
-------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) 1.00% .65% 1.00%
Voluntary fee reductions $434,192 $ 58,363 $ 93,184
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15%
Voluntary fee reductions $ 303 $ 240
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 70,468 $ 84,805 $ 16,607
</TABLE>
<TABLE>
<CAPTION>
OHIO
SPECIAL SPECIAL REGIONAL INTERNATIONAL
VALUE GROWTH STOCK GROWTH
FUND FUND FUND FUND
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) 1.00% 1.00% .75% 1.10%
Voluntary fee reductions $192,792 $ 39,953 $ 7,022 $ 61,413
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .15% .15% .15% .15%
Voluntary fee reductions $ 144
SHAREHOLDER SERVICE FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets) .25% .25% .25% .25%
MUTUAL FUND ACCOUNTANT FEES: $ 40,759 $ 7,725 $ 11,588 $ 59,708
</TABLE>
77
<PAGE>
Notes to Financial Statements--Continued
April 30, 1995
THE VICTORY PORTFOLIOS (Unaudited)
- --------------------------------------------------------------------------------
5. 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>
Aggressive Growth Portfolio1 to Special Growth Fund
Corporate Bond Portfolio1 to Investment Quality Bond Fund
Equity Income Portfolio1 to Value Fund
Equity Portfolio1 to Growth Fund
Foreign Markets Portfolio1 to International Growth Fund
Short-Term Government Income Portfolio1 to Limited Term Income Fund
U.S. Treasury Money Market Portfolio1 to U.S. Government Obligations Money Fund
</TABLE>
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 Portfolio1 to Financial Reserves Fund
Fund for Income Portfolio to Fund for Income
Government Bond Portfolio1 to Government Bond Fund
Institutional Money Market Portfolio1 to Institutional Money Market Fund
National Municipal Bond Portfolio1 to National Municipal Bond Fund
New York Tax-Free Portfolio to New York Tax-Free Fund
Ohio Municipal Money Market Portfolio1 to Ohio Municipal Money Market 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 acquisition was
accomplished by a tax-free exchange of 858,745 shares of the Growth Fund for the
882,905 shares of the Society Earnings Momentum Fund outstanding on March 17,
1994. These share transactions are included in the Growth Fund's statement of
changes in net assets. The Society Earnings Momentum Fund's net assets at March
17, 1994 of approximately $8,794,000, including $649,000 of unrealized
appreciation, were combined with those of the Growth Fund. The combined net
assets immediately after the acquisition were approximately $70,777,000.
- ---------------
1 Not included in this report.
78
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION:
The Victory Funds (the "Fund"), organized as a Massachusetts business trust on
January 6, 1982, is an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"). The Fund's
Declaration of Trust permits the Board of Trustees (the "Trustees") to create an
unlimited number of Portfolios. Victory New York Tax-Free Portfolio and the Fund
for Income Portfolio are two series (of a total of 14 series) of the Fund. Each
Portfolio's capitalization consists of an unlimited number of shares of
beneficial interest without par value.
On April 30, 1994, all of the assets and liabilities of the Investors Preference
New York Tax-Free Fund, Inc. ("IPNY") and the Investors Preference Fund for
Income, Inc. ("IPFFI") were acquired by the New York Tax-Free Portfolio and the
Fund for Income Portfolio, respectively, of the Fund pursuant to separate
Agreements and Plans of Reorganization approved by the shareholders of each IPNY
and IPFFI.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies for New York
Tax-Free Portfolio and Fund for Income Portfolio (the "Portfolios").
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles.
SECURITIES VALUATION:
- --------------------
The securities of the Fund for Income Portfolio that are traded on an exchange
or on the over-the-counter market are valued based upon the last sale price, or
if no sale has occurred, at the closing bid price. Securities for which market
quotations are not readily available are valued at the closing over-the counter
bid price, if available, or at their fair value as determined in good faith by
management following procedures approved by the Fund's Trustees. Short term debt
instruments with remaining maturities of 60 days or less at the time of purchase
are valued at amortized cost or original cost plus accrued interest, both of
which approximates market value.
The securities of New York Tax-Free Portfolio are valued by a pricing service
based upon a computerized matrix system or appraisals, in each case in reliance
upon information concerning market transactions and quotations from recognized
municipal securities dealers. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by
management following procedures approved by the Fund's Trustees.
REPURCHASE AGREEMENTS:
- -----------------------
When each Portfolio enters into a repurchase agreement, the repurchase price of
the securities will generally equal the amount paid by each Portfolio plus a
negotiated interest amount. The seller under the repurchase agreement will be
required to provide securities (collateral) to each Portfolio whose value will
be at least equal to the repurchase agreement amount. Each Portfolio monitors
the value of the collateral on a daily basis, and if the value of the collateral
falls below required levels, each Portfolio intends to seek additional
collateral from the seller to terminate the repurchase agreements. If the seller
defaults, each Portfolio would suffer a loss to the extent that the proceeds
from the sale of the underlying securities were less than the repurchase price.
Any such loss would be increased by any cost incurred on the disposing of such
securities. A repurchase agreement entered into by each Portfolio will be
limited to transactions with broker-dealers or domestic banks believed to
present minimal credit risks, and each Portfolio will take delivery of all
securities underlying the repurchase agreement until such agreement expires.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTION:
- ----------------------------------------------
The New York Tax-Free Portfolio may engage in when-issued or delayed delivery
transactions. To the extent the Portfolio engages in such transactions, it will
do so for the purpose of acquiring portfolio securities consistent with its
investment objectives and policies and not for the purpose of investment
leverage. The Portfolio will record a when-issued security and the related
liability on the trade date. Until the securities are received and paid for, the
Portfolio will maintain security positions such that sufficient liquid assets
will be available to make payments for the securities purchased. Securities
purchased on a when-issued or delayed delivery basis are marked to market daily
and begin earning interest on settlement date.
79
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements--Continued
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
INCOME TAXES:
- -------------
It is the policy of each Portfolio 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.
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. 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.
DIVIDENDS TO SHAREHOLDERS:
- -------------------------
Dividends from net investment income are declared and paid monthly and
distributable net realized capital gains, if any, are declared and distributed
at least annually for the New York Tax-Free Portfolio and the Fund for Income
Portfolio.
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, 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.
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the six
months ended April 30, 1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
New York Tax-Free $ 1,117,454 $ 1,736,206
Fund for Income $ 7,973,666 $ 15,709,007
</TABLE>
4. RELATED PARTY TRANSACTIONS:
ADVISORY AGREEMENT:
- -------------------
Key Trust Company ("Key Trust") is the investment adviser for each Portfolio and
receives a fee based on average daily net assets at an annual rate of 0.55% and
0.50% for New York Tax-Free Portfolio and Fund for Income Portfolio,
respectively. For the six months ended April 30, 1995, Key Trust accrued $44,599
and $64,663 in advisory fees, of which $41,068 and $42,981 was voluntarily
waived, for New York Tax-Free Portfolio and Fund for Income Portfolio,
respectively.
ADMINISTRATION AGREEMENT:
- -------------------------
Concord Financial Group (the "Administrator" or "Concord") is the Administrator
to each Portfolio under an Administration Agreement with respect to each
Portfolio. The Administrator receives an annual fee of 0.15% of each Portfolio's
average net assets for services performed under each Portfolio's Administration
Agreement. For the six months ended April 30, 1995, the administrator accrued
$12,094 and $19,284 from the New York Tax-Free Portfolio and Fund for Income
Portfolio, respectively, in administration fees, none of which were waived.
Effective March 29, 1995 Concord became BISYS Investment Services Inc., a wholly
owned subsidiary of The BISYS Group, Inc. ("BISYS"). BISYS serves as
administrator on substantially identical terms as described above.
80
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements--Continued
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
DISTRIBUTION AGREEMENT:
- -----------------------
Victory Broker Dealer Services, Inc. (the "Distributor"), an affiliate of the
Administrator, serves as Distributor to each
Portfolio. The Distributor sells shares of the Portfolios as agent on behalf of
the Fund at no cost to the Portfolios. The Fund has adopted a Distribution and
Service Plan (the "Plan") for the Class A shares of New York Tax-Free Portfolio
and The Fund for Income Portfolio under Rule 12b-1 under the Investment Company
Act of 1940. Under the Plan, the Adviser or Administrator may use their fee
revenues, or other resources to pay expenses associated with activities
primarily intended to result in the sale of the shares of the Portfolios. The
Fund has adopted a Distribution Plan for Class B shares of New York Tax-Free
Portfolio to compensate the Distributor for its services and costs in
distributing Class B shares and servicing accounts. Under the Distribution Plan,
the Fund pays the Distributor an annual "asset-based sales charge" of 0.75% per
year on Class B shares that are outstanding for six years or less. This fee is
computed on the average annual net assets of Class B shares, determined as of
the close of each regular business day.
* Directors fees and expenses for the six months ended April 30, 1995 of $777
for New York Tax-Free Portfolio and $126 for Fund for Income Portfolio were paid
to directors having no affiliation with the Fund other than in their capacity as
directors.
5. MERGERS:
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 Portfolio of the Victory Funds to a
corresponding investment fund of the Victory Portfolios in exchange for the
assumption of liabilities of each Victory Fund. The following Portfolios of The
Victory Funds merged into existing funds of The Victory Portfolios:
<TABLE>
<CAPTION>
THE VICTORY FUNDS THE VICTORY PORTFOLIOS
- ---------------------------------------- ------------------------------------------------------
<S> <C> <C>
Aggressive Growth Portfolio1 to Special Growth Fund
Corporate Bond Portfolio1 to Investment Quality Bond Fund
Equity Income Portfolio1 to Value Fund
Equity Portfolio1 to Growth Fund
Foreign Markets Portfolio1 to International Growth Fund
Short-Term Government Income Portfolio1 to Limited Term Income Fund
U.S. Treasury Money Market Portfolio1 to U.S. Government Obligations Money Fund
</TABLE>
Additionally, the following series of The Victory Funds merged into newly
created series of The Victory Portfolios:
<TABLE>
<CAPTION>
THE VICTORY FUNDS THE VICTORY PORTFOLIOS
- ---------------------------------------- ------------------------------------------------------
<S> <C> <C>
Financial Reserves Portfolio1 to Financial Reserves Fund
Fund for Income Portfolio to Fund for Income
Government Bond Portfolio1 to Government Bond Fund
Institutional Money Market Portfolio1 to Institutional Money Market Fund
National Municipal Bond Portfolio1 to National Municipal Bond Fund
New York Tax-Free Portfolio to New York Tax-Free Fund
Ohio Municipal Money Market Portfolio1 to Ohio Municipal Money Market Fund
</TABLE>
As of June 2, 1995 the fund accounting for the Portfolios is being performed by
BISYS Fund Services Ohio, Inc., a wholly owned subsidiary of the The BISYS
Group, Inc.
6. SPECIAL SHAREHOLDER MEETING:
On April 28, 1995, a special meeting of the shareholders of The Victory Funds
was held to consider various proposals, including, among other things, the
approval of an Agreement and Plan of Reorganization whereby the 14 series
portfolios of The Victory Funds were reorganized into corresponding series of
The Victory Portfolios, the election of certain nominees to serve on the Board
of Trustees of The Victory Funds and the ratification of the selection of
Coopers & Lybrand L.L.P. as independent auditors for each portfolio of The
Victory Funds2.
- ---------------
1 Not included in this report.
2 The April 28, 1995 meeting was adjourned until May 26, 1995 with respect to
the New York Tax Free and Fund For Income Portfolios due to a lack of a quorum
on such date. On May 26, 1995, a quorum was present and voted the shares of
such portfolios as indicated.
81
<PAGE>
THE VICTORY FUNDS Notes to Financial Statements--Continued
New York Tax-Free Portfolio April 30, 1995
Fund for Income Portfolio (Unaudited)
- --------------------------------------------------------------------------------
Election of Trustees -- The shareholders of The Victory Funds, as a group, were
requested to direct the proxies to vote for or withhold authority to vote for
the election of certain individuals to serve as Trustees of The Victory Funds.
The shareholders of The Victory Funds approved each nominee. The results of such
solicitation are as follows:
<TABLE>
<CAPTION>
NOMINEE VOTES FOR VOTES WITHHELD
------------------------------------------ -------------- ---------------
<S> <C> <C>
Robert G. Brown 1,306,537,258 38,671,464
Edward P. Cambell 1,308,422,096 36,786,627
Harry Gazelle 1,307,262,991 37,945,462
Thomas F. Morrissey 1,310,379,551 34,828,901
Stanley I. Landgraf 1,308,450,924 36,757,800
Leigh A. Wilson 1,310,734,626 34,474,098
H. Patrick Swygert 1,311,252,568 34,456,155
</TABLE>
Agreement and Plan of Reorganization -- the shareholders of each Portfolio
approved an Agreement and Plan of Reorganization with respect to each Portfolio
as follows:
<TABLE>
<CAPTION>
PORTFOLIO IN FAVOR OPPOSED ABSTAIN
------------------------------------ ------------ ---------- -----------
<S> <C> <C> <C>
NY Tax Free-Class A 871,430 15,011 37,413
NY Tax Free-Class B 29,267 -- 1,666
Fund For Income 1,834,471 11,902 105,207
</TABLE>
Reclassification and Changes in Fundamental Policies -- The shareholders of the
below-listed Portfolios approved certain reclassifications and changes in
fundamental policies of the relevant Portfolio (and the successor Portfolio
post-reorganization) by the following votes:
<TABLE>
<CAPTION>
PORTFOLIO IN FAVOR OPPOSED ABSTAIN
------------------------------------ ------------ ---------- -----------
<S> <C> <C> <C>
NY Tax Free-Class A 871,550 15,011 37,293
NY Tax Free-Class B 29,267 -- 1,666
Fund for Income 1,803,283 40,439 107,858
</TABLE>
Ratification of Independent Auditors -- the shareholders of each Portfolio
ratified the appointment of Coopers & Lybrand L.L.P. as independent auditors for
each Portfolio for the next fiscal year as follows:
<TABLE>
<CAPTION>
PORTFOLIO IN FAVOR OPPOSED ABSTAIN
------------------------------------ ------------ ---------- -----------
<S> <C> <C> <C>
NY Tax Free-Class A 891,636 727 31,490
NY Tax Free-Class B 29,267 -- 1,666
Fund For Income 1,860,529 7,123 83,928
</TABLE>
- --------------------------------------------------------------------------------
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Fund. The report is not
authorized for distribution to prospective investors in the Fund, unless
preceded or accompanied by an effective prospectus. Neither the Fund nor Victory
Broker Dealer Services, Inc. is a bank and Fund shares are not backed or
guaranteed by any bank or insured by the FDIC, the Federal Reserve Board, or any
other agency. Victory Broker Dealer Services, Inc., which distributes The
Victory Funds, is not affiliated with Key Trust Company. Investing in mutual
funds involves risks, including the possible loss of principal amount invested.
An investment in a money market Portfolio is not insured or guaranteed by the
U.S. Government, and there can be no assurance that a money market Portfolio
will maintain a stable $1.00 share price.
- --------------------------------------------------------------------------------
82
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT OBLIGATIONS FUND
---------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.025 0.032 0.026 0.036 0.060 0.076
Distributions
Net investment income (0.025) (0.032) (0.026) (0.036) (0.060) (0.076)
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Total Return 2.57%(a) 3.30% 2.62% 3.66% 6.14% 7.83%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $524,143 $412,048 $515,734 $579,836 $430,248 $376,021
Ratio of expenses to
average net assets 0.62%(b) 0.63% 0.60% 0.60% 0.60% 0.62%
Ratio of net investment income
to average net assets 5.15%(b) 3.20% 2.57% 3.50% 5.92% 7.56%
Ratio of expenses to
average net assets* 0.80%
Ratio of net investment income
to average net assets* 3.03%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
<TABLE>
<CAPTION>
PRIME OBLIGATIONS FUND
---------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.025 0.035 0.030 0.037 0.061 0.078
Net realized losses on investments (0.003)
- ----------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities 0.025 0.032 0.030 0.037 0.061 0.078
- ----------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.025) (0.035) (0.030) (0.037) (0.061) (0.078)
Capital transactions 0.003
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Total Return 2.53%(a) 3.57% 3.05% 3.77% 6.32% 8.06%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $430,000 $782,303 $720,024 $524,338 $442,263 $444,238
Ratio of expenses to average net assets 0.69%(b) 0.62% 0.60% 0.61% 0.62% 0.62%
Ratio of net investment income to
average net assets 5.02%(b) 3.52% 2.96% 3.68% 6.14% 7.76%
Ratio of expenses to average net
assets* 0.79%
Ratio of net investment income to
average net assets* 3.35%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
83
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND
----------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 100
- -----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.016 0.021 0.020 0.027 0.043 0.054
Distributions
Net investment income (0.016) (0.021) (0.020) (0.027) (0.043) (0.054)
- -----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Total Return 1.66%(a) 2.17% 2.06% 2.77% 4.44% 5.48%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 209,606 $198,561 $189,351 $151,012 $129,601 $134,652
Ratio of expenses to average net assets 0.61%(b) 0.60% 0.59% 0.61% 0.62% 0.63%
Ratio of net investment income to
average net assets 3.32%(b) 2.14% 2.04% 2.70% 4.29% 5.32%
Ratio of expenses to average net
assets* 0.63%(b) 0.79% 0.60%
Ratio of net investment income to
average net assets* 3.30%(b) 1.95% 2.02%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
84
<PAGE>
THE VICTORY FUNDS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK TAX-FREE PORTFOLIO
-----------------------------------------------------------------------------------
CLASS A
-------------------------------------------------
CLASS B PERIOD
----------------------------- FROM
PERIOD FROM JANUARY 1,
SEPTEMBER 26, 1994 TO YEARS ENDED
1994 TO OCTOBER DECEMBER 31,
OCTOBER 31, 31, -------------------
1994 SIX MONTHS 1994 1993 1992
------------- ENDED ---------- ------- -------
APRIL 30,
1995
----------
SIX MONTHS (UNAUDITED)
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 12.39 $12.62 $ 12.39 $ 13.54 $ 12.76 $ 12.50
- -------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.31 0.07 0.32 0.57 0.70 0.74
Net realized and unrealized
gains (losses) on
investments 0.27 (0.23) 0.30 (1.15) 0.84 0.26
- -------------------------------------------------------------------------------------------------------------------------
Total from investment
activities 0.58 (0.16) 0.62 (0.58) 1.54 1.00
- -------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.30) (0.07) (0.33) (0.57) (0.70) (0.74)
Net realized gains (0.17) -- (0.17) -- (0.06) --
- -------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.47) (0.07) (0.50) (0.57) (0.76) (0.74)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.50 $12.39 $ 12.51 $ 12.39 $ 13.54 $ 12.76
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charge) 4.80%(b) (1.25)%(b) 5.16%(b) (4.31)%(b) 12.34% 8.26%
RATIOS -- SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $ 834 -- $ 15,974 $ 17,840 $28,530 $26,034
Ratio of expenses to average net
assets 2.72%(c) 0.52%(c) 1.10%(c) 0.91%(c) 0.87% 0.66%
Ratio of net investment income to
average net assets 9.48%(c) 5.94%(c) 5.18%(c) 5.33%(c) 5.28% 5.89%
Ratio of expenses to average net
assets* 3.07%(c) 0.86%(c) 1.45%(c) 1.25%(c) 0.96% 0.96%
Ratio of net investment income to
average net assets* 9.13%(c) 5.60%(c) 4.83%(c) 4.99%(c) 5.19% 5.59%
Portfolio turnover rate 17.00% 18.00% 17.00% 18.00% 12.00% 14.00%
<CAPTION>
PERIOD FROM
FEBRUARY 11,
1991 TO
DECEMBER 31,
1991(A)
------------
<S> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 12.00
- ----------------------------------
Investment Activities
Net investment income 0.64
Net realized and unrealized
gains (losses) on
investments 0.50
- ----------------------------------
Total from investment
activities 1.14
- ----------------------------------
Distributions
Net investment income (0.64)
Net realized gains --
- ----------------------------------
Total Distributions (0.64)
- ----------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.50
- ----------------------------------
Total Return (excludes sales
charge) 11.06%(b)
RATIOS -- SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $ 20,995
Ratio of expenses to average net
assets 0.45%(c)
Ratio of net investment income to
average net assets 6.28%(c)
Ratio of expenses to average net
assets* 0.95%(c)
Ratio of net investment income to
average net assets* 5.78%(c)
Portfolio turnover rate 61.00%
</TABLE>
- ---------------
*During the period, certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
FUND FOR INCOME PORTFOLIO
--------------------------------------------------------------------------------------
PERIOD FROM
FEBRUARY 1,
1994 TO YEARS ENDED JANUARY 31,
OCTOBER 31, -------------------------------------------------------
1994 1994 1993 1992 1991 1990
SIX MONTHS ----------- ------- ------- ------- ------- -------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.43 $ 10.14 $ 10.57 $ 10.55 $ 10.19 $ 9.90 $ 9.73
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (0.05) 0.52 0.80 0.80 0.85 0.91 0.93
Net realized and unrealized gains
(losses) on investments 0.58 (0.71) (0.41) 0.06 0.36 0.29 0.17
- ----------------------------------------------------------------------------------------------------------------------------------
Total from investment activities 0.53 (0.19) 0.39 0.86 1.21 1.20 1.10
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.35) (0.52) (0.80) (0.80) (0.85) (0.91) (0.93)
Net realized gains -- -- (0.02) (0.04) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.35) (0.52) (0.82) (0.84) (0.85) (0.91) (0.93)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.61 $ 9.43 $ 10.14 $ 10.57 $ 10.55 $ 10.19 $ 9.90
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charge) 5.70%(a) (1.99)%(a) 3.75% 8.45% 12.34% 12.75% 11.77%
RATIOS -- SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $ 24,713 $29,358 $46,632 $55,075 $58,055 $44,097 $35,788
Ratio of expenses to average net assets 0.57%(b) 1.12%(b) 1.13% 1.12% 0.92% 0.50% 0.29%
Ratio of net investment income to
average net assets 3.51%(b) 7.21%(b) 7.65% 7.56% 8.18% 9.15% 9.34%
Ratio of expenses to average net assets* 0.74%(b) 1.26%(b)
Ratio of net investment income to
average net assets* 3.34%(b) 7.07%(b)
Portfolio turnover 27.00% 18.00% 47.00% 23.00% 24.00% 5.00% 5.00%
</TABLE>
- ---------------
*During the period, certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 79 TO 82.
85
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED TERM INCOME FUND
----------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.88 $ 10.53 $ 10.45 $ 10.33 $ 10.02 $ 10.04
- ---------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.27 0.54 0.57 0.64 0.73 0.76
Net realized and unrealized gains
(losses) on investments 0.11 (0.61) 0.08 0.13 0.31 (0.01)
- ---------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.38 (0.07) 0.65 0.77 1.04 0.75
- ---------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.28) (0.54) (0.57) (0.64) (0.73) (0.77)
Net realized gains (0.04) (0.01)
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions (0.28) (0.58) (0.57) (0.65) (0.73) (0.77)
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.98 $ 9.88 $ 10.53 $ 10.45 $ 10.33 $ 10.02
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 3.80%(a) (0.66)% 6.39% 7.77% 10.82% 7.75%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 168,112 $ 79,150 $ 81,771 $ 55,565 $ 43,763 $ 31,303
Ratio of expenses to average net
assets 0.77%(b) 0.79% 0.77% 0.78% 0.80% 0.82%
Ratio of net investment income to
average net assets 5.86%(b) 5.29% 5.49% 6.18% 7.20% 7.63%
Ratio of expenses to average net
assets* 0.79%(b) 0.97% 0.78%
Ratio of net investment income to
average net assets* 5.84%(b) 5.10% 5.48%
Portfolio turnover 24.49% 41.26% 50.27% 14.97% 9.79%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
<TABLE>
<CAPTION>
GOVERNMENT MORTGAGE FUND
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31, MAY 18, 1990
ENDED APRIL ---------------------------------------------- TO OCTOBER 31,
30, 1995 1994 1993 1992 1991 1990(A)
----------- -------- -------- -------- ------- --------------
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.33 $ 11.36 $ 11.07 $ 10.73 $ 10.18 $ 10.00
- --------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.36 0.68 0.66 0.74 0.80 0.35
Net realized and unrealized gains
(losses) on investments 0.32 (1.02) 0.32 0.34 0.55 0.18
- --------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.68 (0.34) 0.98 1.08 1.35 0.53
- --------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.37) (0.67) (0.66) (0.74) (0.80) (0.35)
Net realized gains (0.08) (0.02) (0.03)
- --------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.45) (0.69) (0.69) (0.74) (0.80) (0.35)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.56 $ 10.33 $ 11.36 $ 11.07 $ 10.73 $ 10.18
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 6.64%(b) (3.01)% 9.05% 10.34% 13.77% 5.37%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 143,435 $148,168 $132,738 $ 73,660 $42,616 $ 31,972
Ratio of expenses to average net
assets 0.77%(c) 0.76% 0.75% 0.77% 0.78% 0.82%(c)
Ratio of net investment income to
average net assets 6.99%(c) 6.38% 5.92% 6.82% 7.68% 7.98%(c)
Ratio of expenses to average net
assets* 0.79%(c) 0.96% 0.76%
Ratio of net investment income to
average net assets* 6.97%(c) 6.18% 5.92%
Portfolio turnover 24.12% 131.63% 50.18% 11.19% 20.70%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
86
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE INCOME FUND INVESTMENT QUALITY BOND FUND
---------------------------------- ----------------------------------
DECEMBER 10, DECEMBER 10,
1993 1993
TO OCTOBER 31, TO OCTOBER 31,
1994(A) 1994(A)
SIX MONTHS ENDED ---------------- SIX MONTHS ENDED ----------------
APRIL 30, APRIL 30,
1995 1995
---------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.25 $ 10.00 $ 9.10 $ 10.00
- -----------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.30 0.52 0.31 0.53
Net realized and unrealized gains
(losses) on investments 0.17 (0.76) 0.29 (0.92)
- -----------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.47 (0.24) 0.60 (0.39)
- -----------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.31) (0.51) (0.32) (0.51)
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.41 $ 9.25 $ 9.38 $ 9.10
- -----------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 5.07%(b) (2.48)%(b) 6.74%(b) (3.92)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $133,225 $112,923 $ 92,202 $ 94,685
Ratio of expenses to average net
assets 0.81%(c) 0.79%(c) 0.84%(c) 0.79%(c)
Ratio of net investment income to
average net assets 6.65%(c) 6.23%(c) 6.89%(c) 6.33%(c)
Ratio of expenses to average net
assets* 1.08%(c) 1.25%(c) 1.10%(c) 1.25%(c)
Ratio of net investment income to
average net assets* 6.38%(c) 5.77%(c) 6.63%(c) 5.87%(c)
Portfolio turnover 28.74% 55.06% 54.92% 89.92%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
OHIO MUNICIPAL BOND FUND
-----------------------------------------------------------------------------
YEARS ENDED OCTOBER 31, MAY 18, 1990
------------------------------------------ TO OCTOBER 31,
1994 1993 1992 1991 1990(A)
SIX MONTHS ------- ------- ------- ------ --------------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.33 $ 11.52 $ 10.52 $ 10.37 $10.06 $10.00
- ------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.26 0.49 0.52 0.60 0.65 0.28
Net realized and unrealized gains
(losses) on investments 0.52 (0.94) 1.00 0.15 0.31 0.04
- ------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.78 (0.45) 1.52 0.75 0.96 0.32
- ------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income 0.26 (0.49) (0.52) (0.60) (0.65) (0.26)
Net realized gains (0.25)
- ------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.26) (0.74) (0.52) (0.60) (0.65) (0.26)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.85 $ 10.33 $ 11.52 $ 10.52 $10.37 $10.06
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 7.67%(b) (4.08)% 14.75% 7.34% 9.87% 3.27%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $58,137 $57,704 $50,676 $17,676 $8,042 $6,315
Ratio of expenses to average net
assets 0.64%(c) 0.51% 0.42% 0.09% 0.01% 0.38%(c)
Ratio of net investment income to
average net assets 4.88%(c) 4.58% 4.77% 5.76% 6.39% 6.11%(c)
Ratio of expenses to average net
assets* 0.95%(c) 1.09% 0.86% 0.84% 0.82% 1.17%(c)
Ratio of net investment income to
average net assets* 4.58%(c) 4.01% 4.33% 5.01% 5.58% 5.32%(c)
Portfolio turnover 64.80% 52.59% 150.76% 47.28% 15.06% 17.62%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
87
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED FUND STOCK INDEX FUND VALUE FUND
--------------------------- -------------------------- ---------------------------
DECEMBER 10, DECEMBER 3, DECEMBER 3,
1993 TO 1993 TO 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 (A) ENDED 1994 (A)
------------ APRIL 30, ----------- APRIL 30, ------------
1995 1995
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.62 $ 10.00 $ 10.18 $ 10.00 $ 10.13 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.21 0.33 0.12 0.20 0.14 0.21
Net realized and unrealized gains
(losses) on investments 0.62 (0.39) 0.92 0.16 0.79 0.11
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.83 (0.06) 1.04 0.36 0.93 0.32
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.24) (0.32) (0.13) (0.18) (0.14) (0.19)
Net realized gains (0.17)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.24) (0.32) (0.13) (0.18) (0.31) (0.19)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.21 $ 9.62 $ 11.09 $ 10.18 $ 10.75 $ 10.13
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 8.77%(b) (0.57)%(b) 10.28%(b) 3.66%(b) 9.43%(b) 3.27%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $158,762 $127,285 $105,834 $ 89,686 $261,830 $188,184
Ratio of expenses to average net
assets 0.91%(c) 0.87%(c) 0.58%(c) 0.58%(c) 0.91%(c) 0.92%(c)
Ratio of net investment income to
average net assets 4.30%(c) 3.97%(c) 2.48%(c) 2.35%(c) 2.88%(c) 2.32%(c)
Ratio of expenses to average net assets* 1.32%(c) 1.49%(c) 0.92%(c) 1.10%(c) 1.29%(c) 1.48%(c)
Ratio of net investment income to
average net assets* 3.89%(c) 3.35%(c) 2.14%(c) 1.82%(c) 2.50%(c) 1.76%(c)
Portfolio turnover 45.32% 118.49% 11.06% 1.44% 8.95% 39.05%
</TABLE>
- ------------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
DIVERSIFIED STOCK FUND
---------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS -------- -------- -------- -------- --------
ENDED
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.68 $ 13.39 $ 12.16 $ 11.44 $ 9.25 $ 9.90
- -------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.14 0.25 0.18 0.19 0.23 0.26
Net realized and unrealized gains
(losses) on investments 1.05 0.64 1.50 1.11 2.20 (0.67)
- -------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 1.19 0.89 1.68 1.30 2.43 (0.41)
- -------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.15) (0.23) (0.21) (0.19) (0.24) (0.24)
Net realized gains (1.38) (1.37) (0.24) (0.39)
- -------------------------------------------------------------------------------------------------------------------
Total Distributions (1.53) (1.60) (0.45) (0.58) (0.24) (0.24)
- -------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.34 $ 12.68 $ 13.39 $ 12.16 $ 11.44 $ 9.25
- -------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 10.83%(a) 7.39% 14.04% 11.57% 27.50% (4.29)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $321,593 $263,227 $257,405 $227,839 $177,472 $121,754
Ratio of expenses to average net
assets 0.87%(b) 0.89% 0.89% 0.91% 0.91% 0.91%
Ratio of net investment income to
average net assets 2.35%(b) 2.06% 1.45% 1.63% 2.06% 2.75%
Ratio of expenses to average net
assets* 0.91%(b) 1.10% 0.90%
Ratio of net investment income to
average net assets* 2.31%(b) 1.86% 1.43%
Portfolio turnover 43.76% 103.62% 86.32% 74.83% 50.78% 63.10%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
88
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND SPECIAL VALUE FUND SPECIAL GROWTH FUND
--------------------------- --------------------------- ---------------------------
DECEMBER 3, DECEMBER 3, DECEMBER 3,
1993 TO 1993 TO 1993 TO
OCTOBER 31, SIX MONTHS OCTOBER 31, SIX MONTHS OCTOBER 31,
1994 (A) ENDED 1994 (A) ENDED 1994 (A)
------------ APRIL 30, ------------ APRIL 30, ------------
1995 1995
SIX MONTHS ---------- ----------
ENDED (UNAUDITED) (UNAUDITED)
APRIL 30,
1995
----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.23 $ 10.00 $ 10.49 $ 10.00 $ 8.90 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.06 0.10 0.08 0.11 0.01 0.02
Net realized and unrealized gains
(losses) on investments 0.64 0.22 0.82 0.48 0.45 (1.10)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.70 0.32 0.90 0.59 0.46 (1.08)
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.06) (0.09) (0.08) (0.10) (0.01) (0.02)
Net realized gains (0.05) (0.05)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.11) (0.09) (0.13) (0.10) (0.01) (0.02)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.82 $ 10.23 $ 11.26 $ 10.49 $ 9.35 $ 8.90
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales
charges) 6.91%(b) 3.22%(b) 8.65%(b) 5.92%(b) 5.20%(b) (10.81)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 43,861 $ 66,921 $153,591 $118,600 $ 19,386 $ 24,593
Ratio of expenses to average net
assets 1.03%(c) 0.94%(c) 1.01%(c) 1.00%(c) 1.16%(c) 0.98%(c)
Ratio of net investment income to
average net assets 1.11%(c) 1.10%(c) 1.57%(c) 1.23%(c) 0.25%(c) 0.24%(c)
Ratio of expenses to average net assets* 1.39%(c) 1.51%(c) 1.31%(c) 1.49%(c) 1.54%(c) 1.58%(c)
Ratio of net investment income
(loss) to average net assets* 0.75%(c) 0.52%(c) 1.27%(c) 0.74%(c) (0.14)%(c) (0.36)(c)
Portfolio turnover 2.56% 28.09% 18.88% 17.90% 39.58% 118.39%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations.
(b) Aggregate.
(c) Annualized.
<TABLE>
<CAPTION>
OHIO REGIONAL STOCK FUND
------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
--------------------------------------------------------
1994 1993 1992 1991 1990
SIX MONTHS ------- ------- ------- ------- --------
ENDED
APRIL 30,
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.56 $ 14.69 $ 12.12 $ 11.15 $ 6.75 $ 9.72
- -----------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.09 0.18 0.16 0.20 0.21 0.24
Net realized and unrealized gains
(losses) on investments 0.85 0.39 2.63 1.07 4.39 (2.98)
- -----------------------------------------------------------------------------------------------------------------
Total from Investment Activities 0.94 0.57 2.79 1.27 4.60 (2.74)
- -----------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.09) (0.17) (0.18) (0.21) (0.20) (0.23)
Net realized gains (0.74) (0.53) (0.04) (0.09)
- -----------------------------------------------------------------------------------------------------------------
Total Distributions (0.83) (0.70) (0.22) (0.30) (0.20) (0.23)
- -----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 14.67 $ 14.56 $ 14.69 $ 12.12 $ 11.15 $ 6.75
- -----------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) 7.06%(a) 3.96% 23.16% 11.50% 68.68% (28.63)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $35,183 $33,965 $34,926 $36,115 $27,092 $ 13,039
Ratio of expenses to average net
assets 1.18%(b) 1.04% 1.04% 1.04% 1.08% 1.11%
Ratio of net investment income to
average net assets 1.27%(b) 1.27% 1.17% 1.73% 2.16% 2.66%
Ratio of expenses to average net
assets* 1.22%(b) 1.27% 1.06%
Ratio of net investment income to
average net assets* 1.22%(b) 1.04% 1.15%
Portfolio turnover 4.86% 14.38% 7.25% 7.56% 14.59% 11.17%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Aggregate.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
89
<PAGE>
THE VICTORY PORTFOLIOS Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH FUND
-------------------------------------------------------------------------------
SIX MONTHS
ENDED YEARS ENDED OCTOBER 31, MAY 18, 1990
APRIL 30, -------------------------------------------- TO OCTOBER 31,
1995 1994 1993 1992 1991 1990(A)
----------- ------- -------- ------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.32 $ 11.93 $ 8.93 $ 9.20 $ 9.46 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (0.01) (0.03) (0.02) 0.51 0.09
Net realized and unrealized gains
(losses) on investments (0.79) 1.40 3.03 (0.17) (0.25) (0.55)
- ------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities (0.79) 1.39 3.00 (0.19) 0.26 (0.46)
- ------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income (0.01) (0.52) (0.08)
Net realized gains (0.62) (0.07)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.91 $ 13.32 $ 11.93 $ 8.93 $ 9.20 $ 9.46
- ---------------------------------------------------------------------------------------------------------------------
Total Return (excludes sales charges) (5.82)%(b) 11.65% 33.59% (2.08)% 2.93% (4.54)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $ 86,530 $81,307 $ 30,629 $11,091 $ 5,682 $ 9,878
Ratio of expenses to average net
assets 1.51%(c) 1.48% 1.46% 1.56% 1.72% 1.70%(c)
Ratio of net investment income
(loss) to average net assets (0.29)%(c) (0.51)% (0.74)% (0.20)% 5.97% 2.51%%(c)
Ratio of expenses to average net
assets* 1.66%(c) 1.83% 1.63% 1.72%
Ratio of net investment loss to
average net assets* (0.45)%(c) (0.86)% (0.91)% (0.35)%
Portfolio turnover 26.04% 50.66% 45.43% 91.92% 102.53% 12.16%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would be as indicated.
(a) Period from commencement of operations
(b) Aggregate.
(c) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 73 TO 78.
90
<PAGE>
[LOGO]
THE VICTORY FUNDS
1-800-539-FUND
RS/VP-001 5/95
<PAGE>
BULK RATE
U.S. POSTAGE
PAID
CLEVELAND, OH
Permit 469
[LOGO]
THE VICTORY FUNDS
1-800-539-FUND
RS/VP-001 5/95
<PAGE>
[This page left blank intentionally]
<PAGE>
<PAGE>
Registration Statement
of
THE VICTORY PORTFOLIOS
on
Form N-1A
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A:
-- Condensed Financial Information.
Included in Part B:
Unaudited financial reports for the six months ended April 30, 1995.
(b) Exhibits:
(1) (a) Amended and Restated Declaration of Trust dated as
of September 19, 1986 is incorporated herein by
reference to Exhibit 1 to the Registrant's Registration
Statement on Form N-1A filed on September 24, 1986.
(b) Amendment to the Declaration of Trust dated October 22,
1986 is incorporated herein by reference to Exhibit
1(b) to Pre-Effective Amendment No. 1 to the
Registrant's Registration Statement on Form N-1A filed
on November 13, 1986.
(c) Certificate of Secretary of Resolution of the Board of
Trustees of the Trust dated February 24, 1993, whereby
the Trustees changed the name of the Trust to "The
Society Funds" is incorporated herein by reference to
Exhibit 1(c) to Post-Effective Amendment No. 13 to the
Registrant's Registration Statement on
Form N-1A filed on February 26, 1993.
(d) Amended and Restated Declaration of Trust dated
September 2, 1994 is incorporated herein by reference
to Exhibit 1(d) to Post-Effective Amendment No. 18 to
the Registrant's Registration Statement on Form N-1A
filed on September 2, 1994.
(e) Certificate of Secretary of Resolution of the Board of
Trustees of the Trust dated August 30, 1994, whereby
the Trustees changed the name of the Trust to "The
Victory Portfolios" is incorporated herein by reference
to Exhibit 1(e) to Post-Effective Amendment No. 18 to
the Registrant's Registration Statement on
Form N-1A filed on September 2, 1994.
(f) Amendment to the Declaration of Trust dated October 20,
1995 is incorporated herein by reference to Exhibit
1(f) to Post-Effective Amendment No. 23 to the
Registrant's Registration Statement on Form N-1A filed
on October 31, 1995.
(2) Code of Regulations is incorporated herein by reference to
Exhibit 2 to Pre-Effective Amendment No. 1 to the Registrant's
Registration Statement on Form N-1A filed on November 13,
1986.
(3) None.
(4) None.
(5) (a) Form of Investment Advisory Agreement dated as of
January 1, 1996, between the Funds and KeyCorp Mutual
Fund Advisers, Inc. is incorporated herein by reference
to Exhibit 5(a) to Post-Effective Amendment No. 23 to
the Registrant's Registration Statement on Form N-1A
filed on October 31, 1995.
(b) Form of Investment Sub-Advisory Agreement between
KeyCorp Mutual Fund Advisers, Inc. and Society Asset
Management, Inc. dated as of January 1, 1996, is
incorporated herein by reference to Exhibit 5(b) to
Post-Effective Amendment No. 23 to the Registrant's
Registration Statement on Form N-1A filed on
October 31, 1995.
(c) Form of Investment Sub-Advisory Agreement between
KeyCorp Mutual Fund Advisers, Inc. and T. Rowe Price
Associates Inc. dated as of January 1, 1996, regarding
the Special Growth Fund is incorporated herein by
reference to Exhibit 5(c) to Post-Effective Amendment
No. 23 to the Registrant's Registration Statement on
Form N-1A filed on October 31, 1995.
(d) Form of Investment Sub-Advisory Agreement between
KeyCorp Mutual Fund Advisers, Inc. and First Albany
Asset Management Corporation dated as of January 1,
1996, regarding the Fund for Income is incorporated
herein by reference to Exhibit 5(d) to Post-Effective
Amendment No. 23 to the Registrant's Registration
Statement on Form N-1A filed on October 31, 1995.
(6) (a) Distribution Agreement between the Registrant and
Victory Broker-Dealer Services, Inc. dated March 31,
1995 with an amended Schedule A dated June 5, 1995 is
incorporated by reference to Exhibit 6(a) to
Post-Effective Amendment No. 22 to the Registrant's
Registration Statement on Form N-1A filed on August 28,
1995.
(7) None.
(8) (a) Amended and Restated Mutual Fund Custody Agreement
dated May 24, 1995 by and between the Registrant and
Society National Bank is incorporated by reference to
Exhibit 8(a) to Post-Effective Amendment No. 22 to the
Registrant's Registration Statement on Form N-1A filed
on August 28, 1995.
(9) (a) Administration Agreement dated June 5, 1995 between the
Registrant and Concord Holding Corporation is
incorporated by reference to Exhibit 9(a) to
Post-Effective Amendment No. 22 to the Registrant's
Registration Statement on Form N-1A filed on
August 28, 1995.
(b) Transfer Agency and Dividend Disbursing Agreement dated
September 6, 1994 as amended June 5, 1995, between the
Registrant and Primary Funds Service Corporation is
incorporated by reference to Exhibit 9(b) to
Post-Effective Amendment No. 22 to the Registrant's
Registration Statement on Form N-1A filed on August 28,
1995.
(c) Form of Asset Purchase and Liquidation Agreement is
incorporated by reference to Exhibit 9(e) to
Post-Effective Amendment No. 7 to the Registrant's
Registration Statement on Form N-1A filed on December
1, 1989.
(d) Fund Accounting Agreement dated May 31, 1995 between
the Registrant and BISYS Fund Services Ohio, Inc., and
Schedule A thereto, are incorporated by reference to
Exhibit 9(d) to Post-Effective Amendment No. 22 to the
Registrant's Registration Statement on Form N-1A filed
on August 28, 1995.
(e) Shareholder Servicing Agreement is incorporated herein
by reference to Exhibit 9(e) to Post-Effective
Amendment No. 23 to the Registrant's Registration
Statement on Form N-1A filed on October 31, 1995.
(f) Shareholder Servicing Plan dated June 5, 1995 for The
Victory Portfolios is incorporated herein by reference
to Exhibit 9(f) to Post-Effective Amendment No. 23 to
the Registrant's Registration Statement on Form N-1A
filed on October 31, 1995.
(10) (a) Opinion of Counsel was filed with Registrant's Rule
24f-2 Notice in respect of the fiscal year ending
October 31, 1994, submitted on December 21, 1994.
(11) (a) Consent of Kramer, Levin, Naftalis, Nessen, Kamin &
Frankel is filed herewith.
(b) Consent of Coopers & Lybrand L.L.P. is filed herewith.
(12) Financial reports for the year ended October 31, 1994 is
incorporated by reference to Exhibit 12 to Post Effective
Amendment No. 20 Registrant's Registration Statement on
Form N-1A filed February 28, 1995.
(13) (a) Purchase Agreement dated November 12, 1986 between
Registrant and Physicians Insurance Company of Ohio is
incorporated herein by reference to Exhibit 13 to
Pre-Effective Amendment No. 1 to the Registrant's
Registration Statement on Form N-1A filed on November
13, 1986.
(b) Purchase Agreement dated October 15, 1989 is
incorporated by reference to Exhibit 13(b) to
Post-Effective Amendment No. 7 to the Registrant's
Registration Statement on Form N-1A filed on December
1, 1989.
(c) Purchase Agreement is incorporated by reference to
Exhibit 13(c) to Post-Effective Amendment No. 7 to the
Registrant's Registration Statement on Form N-1A filed
on December 1, 1989.
(14) None.
(15) (a) Distribution and Service Plan dated June 5, 1995 for
The Victory Portfolios Class A Shares of Government
Bond Fund, National Municipal Bond Fund, New York
Tax-Free Fund, Fund for Income, Financial Reserves
Fund, Institutional Money Market Fund and Ohio
Municipal Money Market Fund is incorporated by
reference to Exhibit 15(a) to Post-Effective Amendment
No. 22 to the Registrant's Registration Statement on
Form N-1A filed on August 28, 1995.
(b) Distribution Plan dated June 5, 1995 for Class B Shares
of National Municipal Bond Fund, Government Bond Fund
and New York Tax-Free Fund is incorporated by reference
to Exhibit 15(b) to Post-Effective Amendment No. 22 to
the Registrant's Registration Statement on Form N-1A
filed on August 28, 1995.
(16) (a) Forms of computation of performance quotation are
incorporated by reference to Exhibit 16 to
Post-Effective Amendment No. 19 to the Registrant's
Registration Statement on Fund N-1A filed on December
23, 1994.
(b) Computation of performance quotation dated August 31,
1995 for the Ohio Municipal Money Market Fund is to be
filed by amendment.
(17) Financial Data Schedules are filed herewith.
(18) Rule 18f-3 Multi-Class Plan adopted effective June 5, 1995 is
incorporated by reference to Exhibit 17 to Post-Effective
Amendment No. 22 to the Registrant's Registration Statement on
Form N-1A filed on August 28, 1995.
(19) Powers of Attorney are incorporated by reference to
Exhibit 17 to Post-Effective Amendment No. 19 to the
Registrant's Registration Statement on Form N-1A filed
on December 23, 1994.
Item 25. Persons Controlled by or under Common Control with Registrant.
None.
Item 26. Number of Holders of Securities.
As of October 31, 1995 the number of record holders of each series of
Class A Shares of the Registrant were as follows:
Number of
Title of Series Record Holders
U.S. Government Obligations Fund 135
Prime Obligations Fund 827
Tax Free Money Market Fund 66
Balanced Fund 884
Stock Index Fund 45
Value Fund 63
Diversified Stock Fund 3,671
Growth Fund 272
Special Value Fund 565
Special Growth Fund 82
Ohio Regional Stock Fund 948
International Growth Fund 988
Limited Term Income Fund 152
Government Mortgage Fund 297
Ohio Municipal Bond Fund 261
Intermediate Income Fund 22
Investment Quality Bond Fund 76
Florida Tax-Free Bond Fund 0
Municipal Bond Fund 0
Convertible Securities Fund 0
Short-Term U.S. Government 0
Income Fund 0
Financial Reserves Fund 79
Fund For Income 1,485
Government Bond Fund 141
Institutional Money Market Fund 8
National Municipal Bond Fund 94
New York Tax-Free Fund 551
Ohio Municipal Money Market Fund 100
As of October 31, 1995 the number of record holders of each series of
Class B Shares of the Registrant were as follows:
Number of
Title of Series Record Holders
Government Bond 49
National Municipal Bond Fund 16
New York Tax-Free Fund 78
As of October 31, 1995 the number of record holders of each series of
Service shares of the Registrant were as follows:
Number of
Title of Series Record Holders
Institutional Money Market Fund 8
Item 27. Indemnification
Article IX, Section 9.2 of the Registrant's Declaration of Trust,
incorporated by reference as Exhibit 1(a) hereto, provides for the
indemnification of Registrant's Trustees and officers.
Indemnification of the Fund's principal underwriter, custodian,
investment adviser, manager and administrator, and transfer agent is
provided for, respectively, in Section 1.11 of the Distribution
Agreement incorporated by reference as Exhibit 6(a), hereto, Section
16 of the Custodian Agreement incorporated by reference as Exhibit
8(a) hereto, Section 8 of the Investment Advisory Agreements
incorporated by reference as Exhibits 5(a) through 5(d) hereto,
Section 4 of the Management and Administration Agreement incorporated
by reference as Exhibit 9(a) hereto, and Section 7 of the Transfer
Agency Agreement incorporated by reference as Exhibit 9(b) hereto.
Registrant has obtained from a major insurance carrier a trustees'
and officers' liability policy covering certain types of errors and
omissions. In no event will Registrant indemnify any of its trustees,
officers, employees or agents against any liability to which such
person would otherwise be subject by reason of his willful
misfeasance, bad faith, or gross negligence in the performance of his
duties, or by reason of his reckless disregard of the duties involved
in the conduct of his office or under his agreement with Registrant.
Registrant will comply with Rule 484 under the Securities Act of 1933
and Release 11330 under the Investment Company Act of 1940 in
connection with any indemnification.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to trustees, officers, and controlling
persons or Registrant pursuant to the foregoing provisions, or
otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Investment Company Act of 1940, as
amended, and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment
by Registrant of expenses incurred or paid by a trustee, officer, or
controlling person of Registrant in the successful defense of any
action, suit, or proceeding) is asserted by such trustee, officer, or
controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
Society Asset Management, Inc. is the investment adviser to each fund
of the Victory Portfolios. Society Asset Management, Inc. is a
wholly-owned subsidiary of Society National Bank, the lead affiliate
bank of KeyCorp, a bank holding company which had projected total
assets of approximately $66.8 billion as of December 31, 1994.
KeyCorp is a leading financial institution in 25 states from Maine to
Alaska, providing a full array of trust, commercial, and retail
banking services. Its non-bank subsidiaries include investment
advisory, securities brokerage, insurance, bank credit card
processing, mortgage and leasing companies. Society Asset Management,
Inc. advises and manages over $17 billion in assets, and provides a
full range of investment management services to personal and
corporate clients. Society Asset Management, Inc. manages private
money market portfolios similar to those of the Society Funds with
assets totalling over $2 billion as of December 31, 1994.
T. Rowe Price, which maintains its principal office at 100 East Pratt
Street, Baltimore, Maryland 21202, was founded in 1937 by the late
Thomas Rowe Price, Jr. As of December 31, 1994, the firm and its
affiliates managed over $57 billion for over 3 million individual and
institutional investor accounts.
First Albany Asset Management Corporation, 41 State Street, Albany,
New York 12207, was incorporated on July 3, 1991, as a newly formed
subsidiary of First Albany Companies, Inc. It utilizes the expertise
of an experienced staff of research personnel employed by its
affiliate, First Albany Corporation.
To the knowledge of Registrant, none of the directors or officers of
Society Asset Management, Inc. T. Rowe Price Associates, Inc., or
First Albany Asset Management Corporation, except those set forth
below, is or has been at any time during the past two calendar years
engaged in any other business, profession, vocation or employment of
a substantial nature, except that certain directors and officers of
Society Asset Management, Inc. also hold positions with KeyCorp or
its subsidiaries.
Position With Other
Society Asset Substantial
Name Management, Inc. Occupation
Frank J. Riccardi Senior Vice President From 1986 to July, 1992,
served as Portfolio Manager
for First Boston Asset
Management, New York,
New York (an investment
adviser).
James R. Kirk Director, President and Director of The Astrup
COO Company, 2937 West 25th
Street, Cleveland, Ohio;
Director of Fund Securities
Corporation, 1105 North
Market Street, Suite 1300,
P.O. Box 8985, Wilmington,
Delaware.
Item 29. Principal Underwriter
(a) Victory Broker-Dealer Services, Inc. acts solely as distributor for
the Registrant and Concord Holding Corporation serves as
administrator for the Registrant. Victory Broker-Dealer Services,
Inc.
(b) Directors, officers and partners of Victory Broker-Dealer Services,
Inc. as of October 31, 1995 were as follows:
<PAGE>
Name and Principal Positions and Officers with Positions and Offices
Business Addresses Victory Broker- with the Registrant
Dealer Services, Inc.
BISYS Fund Services, Inc. None None
3435 Stelzer Road
Columbus, Ohio 43215
Lynn J. Mangum Chairman None
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43215
Richard E. Stierwalt
BISYS Fund Services, Inc.
3435 Stelzer Road President/CEO None
Columbus, Ohio 43215
Robert J. McMullen
BISYS Fund Services, Inc.
3435 Stelzer Road Executive Vice President None
Columbus, Ohio 43215
William B. Blundin
BISYS Fund Services, Inc.
3435 Stelzer Road Vice President None
Columbus, Ohio 43215
Dennis Sheehan
BISYS Fund Services, Inc.
3435 Stelzer Road Vice President None
Columbus, Ohio 43215
Catherine T. Dwyer
BISYS Fund Services, Inc.
3435 Stelzer Road Vice President/Secretary None
Columbus, Ohio 43215
Michael D. Burns
BISYS Fund Services, Inc.
3435 Stelzer Road Vice President-Compliance None
Columbus, Ohio 43215
Annamarie Porcaro
BISYS Fund Services, Inc.
3435 Stelzer Road Assistant Secretary None
Columbus, Ohio 43215
Robert Tuch
BISYS Fund Services, Inc.
3435 Stelzer Road Assistant Secretary None
Columbus, Ohio 43215
Kristen Hiestand
BISYS Fund Services, Inc.
3435 Stelzer Road Assistant Secretary None
Columbus, Ohio 43215
George O. Martinez
BISYS Fund Services, Inc.
3435 Stelzer Road Senior Vice President None
Columbus, Ohio 43215
Dale Smith
BISYS Fund Services, Inc.
3435 Stelzer Road Vice President/CFO None
Columbus, Ohio 43215
Sean Kelly
BISYS Fund Services, Inc.
3435 Stelzer Road First Vice President None
Columbus, Ohio 43215
(c) Inapplicable.
Item 30. Location of Accounts and Records
(1) Society Asset Management, Inc., 127 Public Square, Cleveland, Ohio
44114-1306 (records relating to its functions as investment adviser
and custodian).
(2) Society National Bank, 127 Public Square, Cleveland, Ohio 44114-1306
(records relating to its functions as shareholder servicing agent).
(3) T. Rowe Price Associates, Inc., 100 East Pratt Street, Baltimore,
Maryland 21202 and First Albany Asset Management Corporation, 41
State Street, Albany, New York 12207 (records relating to its
functions as sub-investment adviser).
(4) BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, Ohio
43219 (records relating to its functions as general manager,
administrator).
(5) Primary Funds Service Corporation, 859 Williard Street, Quincy,
Massachusetts, 02269- 9110 (records relating to its function as
transfer agent).
(6) The Bank of New York, 90 Washington Street, New York, New York 10286
(records relating to its function as foreign sub-custodian).
Item 31. Management Services
None.
Item 32. Undertakings
Registrant undertakes to call a meeting of shareholders, at the
request of holders of 10% of the Registrant's outstanding shares, for
the purpose of voting upon the question of removal of a trustee or
trustees and undertakes to assist in communications with other
shareholders as required by Section 16(c) of the Investment Company
Act of 1940.
Registrant undertakes to furnish to each person to whom a prospectus
is delivered a copy of the Registrant's latest Annual Report to
Shareholders upon request and without charge.
NOTICE
A copy of the Agreement and Declaration of Trust of The Victory Funds is on
file with the Secretary of State of The Commonwealth of Massachusetts and notice
is hereby given that this instrument is executed on behalf of the Registrant by
an officer of the Registrant as an officer and not individually and that the
obligations of or arising out of this instrument are not binding upon any of the
trustees, officers or shareholders individually but are binding only upon the
assets and property of the Registrant
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has duly caused this Post-Effective Amendment No. 24 to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York and State of New York, on the 29th day
of November, 1995.
THE VICTORY PORTFOLIOS
By: /s/Leigh A. Wilson
Leigh A. Wilson,
President and Trustee
As required by the Securities Act of 1933, this Post-Effective Amendment No. 24
to the Registration Statement has been signed by the following persons in the
capacities indicated on the 29th day of November, 1995.
/s/ Leigh A. Wilson President
Leigh A. Wilson
/s/ Martin Dean Treasurer
Martin Dean
* Trustee
Robert G. Brown
* Trustee
Edward P. Campbell
* Trustee
Harry Gazelle
* Trustee
Stanley I. Landgraf
* Trustee
Thomas F. Morrissey
* Trustee
H. Patrick Swygert
*By: /s/ Carl Frischling
Carl Frischling
Power of Attorney
Attorney-in-Fact pursuant to powers of attorney, dated December 12, 1994,
as filed with Post-Effective Amendment No. 19 to Registrant's Registration
Statement on December 23, 1994.
<PAGE>
The Victory Portfolios
THE VICTORY PORTFOLIOS
INDEX TO EXHIBITS
Exhibit Number
11(a) Consent of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel.
11(b) Consent of Coopers & Lybrand L.L.P.
17.1 Financial Data Schedule under Article 6 for The Balanced Fund
17.2 Financial Data Schedule under Article 6 for The Diversified
Stock Fund
17.3 Financial Data Schedule under Article 6 for The International
Growth Fund
17.4 Financial Data Schedule under Article 6 for The Ohio Regional
Stock Fund
17.5 Financial Data Schedule under Article 6 for The Special Value Fund
17.6 Financial Data Schedule under Article 6 for U.S. Government
Obligations Fund
<PAGE>
The Victory Portfolios
EXHIBIT 11(a)
Consent of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
<PAGE>
The Victory Portfolios
November 20, 1995
The Victory Portfolios
3435 Stelzer Road
Columbus, Ohio 43219
Re: The Victory Portfolios
File No. 33-8982
Post-Effective Amendment
to Registration Statement on Form N-1A
Gentlemen:
We hereby consent to the reference of our firm as Counsel in the
Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A.
Very truly yours,
/s/ Kramer, Levin, Naftalis, Nessen,
Kamin & Frankel
<PAGE>
The Victory Portfolios
EXHIBIT 11(b)
Consent of Coopers & Lybrand L.L.P.
<PAGE>
The Victory Portfolios
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Post-Effective Amendment
No. 24 to the Registration Statement on Form N-1A (File No. 33-8982) of The
Victory Portfolios, of our report dated December 19, 1994 on our audits of the
financial statements and financial highlights of the U.S. Government Obligations
Fund, Prime Obligations Fund, Tax-Free Money Market Fund, Limited Term Income
Fund, Government Mortgage Fund, Intermediate Income Fund, Investment Quality
Bond Fund, Ohio Municipal Bond Fund, Balanced Fund, Stock Index Fund, Value
Fund, Diversified Stock Fund, Growth Fund, Special Value Fund, Special Growth
Fund, Ohio Regional Stock Fund and International Growth Fund constituting The
Victory Portfolios which report is included in the Annual Report to Shareholders
for the year ended October 31, 1994 which is incorporated by reference in the
Registration Statement. We also consent to the reference to our Firm under the
captions "Financial Highlights" and "Auditors" in the prospectuses relating to
the Victory Portfolios in this Post-Effective Amendment No. 24 to the
Registration Statement on Form N-1A. We also consent to the reference to our
Firm under the captions "Auditors" and "Miscellaneous" in the Statement of
Additional Information relating to The Victory Portfolios in this
Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A.
COOPERS & LYBRAND L.L.P.
Columbus, Ohio
November 27, 1995
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The schedule contains summary financial information extracted from the financial
statments and supporting schedules as of the end of the most current period and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 802716
<NAME> VICTORY PORTFOLIOS
<SERIES>
<NUMBER> 1
<NAME> BALANCED FUND
<MULTIPLIER> 1,000
<CURRENCY> 0
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-1-1994
<PERIOD-END> APR-30-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 151,871
<INVESTMENTS-AT-VALUE> 158,944
<RECEIVABLES> 3,673
<ASSETS-OTHER> 528
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 163,145
<PAYABLE-FOR-SECURITIES> 4,141
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 242
<TOTAL-LIABILITIES> 4,383
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 153,504
<SHARES-COMMON-STOCK> 15,549
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (411)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,399)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,068
<NET-ASSETS> 158,762
<DIVIDEND-INCOME> 1,262
<INTEREST-INCOME> 2,504
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 3,106
<REALIZED-GAINS-CURRENT> 9,746
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 12,852
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,678)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,905
<NUMBER-OF-SHARES-REDEEMED> (4,964)
<SHARES-REINVESTED> 375
<NET-CHANGE-IN-ASSETS> 31,477
<ACCUMULATED-NII-PRIOR> 161
<ACCUMULATED-GAINS-PRIOR> (2,116)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 722
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 954
<AVERAGE-NET-ASSETS> 158,762
<PER-SHARE-NAV-BEGIN> 9.62
<PER-SHARE-NII> 0.21
<PER-SHARE-GAIN-APPREC> 0.62
<PER-SHARE-DIVIDEND> (0.24)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.21
<EXPENSE-RATIO> 0.91
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATMENTS AND SUPPORTING SCHEDULES AS OF THE END OF THE MOST CURRENT
PERIOD AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 802716
<NAME> THE VICTORY PORTFOLIOS
<SERIES>
<NUMBER> 2
<NAME> DIVERSIFIED STOCK FUND
<MULTIPLIER> 1,000
<CURRENCY> 0
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-1-1994
<PERIOD-END> APR-30-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 292,681
<INVESTMENTS-AT-VALUE> 323,032
<RECEIVABLES> 10,659
<ASSETS-OTHER> 9
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 333,700
<PAYABLE-FOR-SECURITIES> 11,833
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 274
<TOTAL-LIABILITIES> 12,107
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 281,878
<SHARES-COMMON-STOCK> 26,055
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 151
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9,213
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 30,351
<NET-ASSETS> 321,539
<DIVIDEND-INCOME> 4,004
<INTEREST-INCOME> 491
<OTHER-INCOME> 0
<EXPENSES-NET> 1,213
<NET-INVESTMENT-INCOME> 3,282
<REALIZED-GAINS-CURRENT> 9,257
<APPREC-INCREASE-CURRENT> 18,099
<NET-CHANGE-FROM-OPS> 30,638
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,481
<DISTRIBUTIONS-OF-GAINS> 29,668
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,494
<NUMBER-OF-SHARES-REDEEMED> (3,199)
<SHARES-REINVESTED> 2,997
<NET-CHANGE-IN-ASSETS> 58,366
<ACCUMULATED-NII-PRIOR> 350
<ACCUMULATED-GAINS-PRIOR> 29,624
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 906
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,272
<AVERAGE-NET-ASSETS> 321,593
<PER-SHARE-NAV-BEGIN> 12.68
<PER-SHARE-NII> 0.14
<PER-SHARE-GAIN-APPREC> 1.05
<PER-SHARE-DIVIDEND> (0.15)
<PER-SHARE-DISTRIBUTIONS> (1.38)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.34
<EXPENSE-RATIO> 0.87
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
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PERIOD AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
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</LEGEND>
<CIK> 802716
<NAME> THE VICTORY PORTFOLIOS
<SERIES>
<NUMBER> 3
<NAME> INTERNATIONAL GROWTH FUND
<MULTIPLIER> 1,000
<CURRENCY> 0
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-1-1994
<PERIOD-END> APR-30-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 80,807
<INVESTMENTS-AT-VALUE> 84,863
<RECEIVABLES> 466
<ASSETS-OTHER> 2,552
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 87,881
<PAYABLE-FOR-SECURITIES> 1,193
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 158
<TOTAL-LIABILITIES> 1,351
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 84,285
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (613)
<ACCUMULATED-NET-GAINS> (1,255)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,113
<NET-ASSETS> 86,530
<DIVIDEND-INCOME> 421
<INTEREST-INCOME> 62
<OTHER-INCOME> (48)
<EXPENSES-NET> 599
<NET-INVESTMENT-INCOME> (164)
<REALIZED-GAINS-CURRENT> (824)
<APPREC-INCREASE-CURRENT> (3,346)
<NET-CHANGE-FROM-OPS> (4,334)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,323
<NUMBER-OF-SHARES-REDEEMED> (784)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 50,678
<ACCUMULATED-NII-PRIOR> (449)
<ACCUMULATED-GAINS-PRIOR> 3,494
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 436
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 599
<AVERAGE-NET-ASSETS> 86,530
<PER-SHARE-NAV-BEGIN> 13.32
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> (0.79)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.62)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.91
<EXPENSE-RATIO> 1.51
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
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PERIOD AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
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</LEGEND>
<CIK> 802716
<NAME> Victory Portfolios
<SERIES>
<NUMBER> 4
<NAME> OHIO REGIONAL STOCK FUND
<MULTIPLIER> 1,000
<CURRENCY> 0
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-1-1994
<PERIOD-END> APR-30-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 24,640
<INVESTMENTS-AT-VALUE> 35,164
<RECEIVABLES> 27
<ASSETS-OTHER> 41
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 35,232
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 49
<TOTAL-LIABILITIES> 49
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 23,813
<SHARES-COMMON-STOCK> 2,398
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 5
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 841
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,524
<NET-ASSETS> 35,183
<DIVIDEND-INCOME> 352
<INTEREST-INCOME> 49
<OTHER-INCOME> 0
<EXPENSES-NET> 193
<NET-INVESTMENT-INCOME> 208
<REALIZED-GAINS-CURRENT> 840
<APPREC-INCREASE-CURRENT> 1,276
<NET-CHANGE-FROM-OPS> 2,315
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (221)
<DISTRIBUTIONS-OF-GAINS> (1,699)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 297
<NUMBER-OF-SHARES-REDEEMED> (376)
<SHARES-REINVESTED> 144
<NET-CHANGE-IN-ASSETS> 1,218
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,700
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 123
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 200
<AVERAGE-NET-ASSETS> 35,183
<PER-SHARE-NAV-BEGIN> 14.56
<PER-SHARE-NII> 0.09
<PER-SHARE-GAIN-APPREC> 0.85
<PER-SHARE-DIVIDEND> (0.09)
<PER-SHARE-DISTRIBUTIONS> (0.74)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.67
<EXPENSE-RATIO> 1.22
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATMENTS AND SUPPORTING SCHEDULES AS OF THE END OF THE MOST CURRENT
PERIOD AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 802716
<NAME> VICTORY PORTFOLIOS
<SERIES>
<NUMBER> 5
<NAME> SPECIAL VALUE FUND
<MULTIPLIER> 1,000
<CURRENCY> 0
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-1-1994
<PERIOD-END> APR-30-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 142,586
<INVESTMENTS-AT-VALUE> 153,966
<RECEIVABLES> 1,264
<ASSETS-OTHER> 25
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 155,255
<PAYABLE-FOR-SECURITIES> 1,519
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 145
<TOTAL-LIABILITIES> 1,664
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 139,501
<SHARES-COMMON-STOCK> 13,646
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 155
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,555
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,380
<NET-ASSETS> 153,591
<DIVIDEND-INCOME> 1,431
<INTEREST-INCOME> 240
<OTHER-INCOME> 0
<EXPENSES-NET> 654
<NET-INVESTMENT-INCOME> 1,017
<REALIZED-GAINS-CURRENT> 2,555
<APPREC-INCREASE-CURRENT> 8,232
<NET-CHANGE-FROM-OPS> 11,804
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (955)
<DISTRIBUTIONS-OF-GAINS> (588)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,410
<NUMBER-OF-SHARES-REDEEMED> (2,217)
<SHARES-REINVESTED> 148
<NET-CHANGE-IN-ASSETS> 34,991
<ACCUMULATED-NII-PRIOR> 93
<ACCUMULATED-GAINS-PRIOR> 588
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 647
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 847
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 10.49
<PER-SHARE-NII> 0.08
<PER-SHARE-GAIN-APPREC> 0.82
<PER-SHARE-DIVIDEND> (0.08)
<PER-SHARE-DISTRIBUTIONS> (0.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.26
<EXPENSE-RATIO> 1.01
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATMENTS AND SUPPORTING SCHEDULES AS OF THE END OF THE MOST CURRENT
PERIOD AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 802716
<NAME> VICTORY PORTFOLIOS
<SERIES>
<NUMBER> 6
<NAME> U.S. GOVERNMENT OBLIGATIONS FUND
<MULTIPLIER> 1,000
<CURRENCY> 0
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> APR-30-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 525,334
<INVESTMENTS-AT-VALUE> 525,334
<RECEIVABLES> 1,525
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 526,864
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,721
<TOTAL-LIABILITIES> 2,721
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 524,337
<SHARES-COMMON-STOCK> 524,337
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (194)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 524,143
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13,510
<OTHER-INCOME> 0
<EXPENSES-NET> 1,447
<NET-INVESTMENT-INCOME> 12,063
<REALIZED-GAINS-CURRENT> 54
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 12,117
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (12,063)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 729,038
<NUMBER-OF-SHARES-REDEEMED> (618,413)
<SHARES-REINVESTED> 1,416
<NET-CHANGE-IN-ASSETS> (112,095)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 820
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,447
<AVERAGE-NET-ASSETS> 524,553
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> (0.025)
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.025)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
</TABLE>
